Direct and Indirect Incentives for Physicians in Medical Home Programs

Monday, February 13th, 2012
This post was written by Patricia Donovan

Physician performance-based reimbursement in the same state can vary widely, as evidenced by this interview with representatives of two Colorado medical home initiatives.

Dr. David West, Grand Junction hospitalist, family physician and healthcare consultant, describes the indirect rewards for specialists in Grand Junction’s shared savings model while Julie Schilz, co-chair of the Center for Multi-Stakeholder Demonstrations and IPIP manager for the Colorado Clinical Guidelines Collaborative, explains how the collaborative determines PMPM care management fees and some of the challenges of a multi-payor initiative.

Note: This interview was excerpted from MORE Medical Home Reimbursement Models: ROI from Risk Adjustment, Shared Savings and Multi-Payor Partnership.

HIN: Dr. West, which incentives are built into medical home reimbursement models for Mesa County specialists taking care of a patient whose care is managed by a medical home?

Response: (Dr. David West) The specialists are looked at by specific procedures from our IPA data. Using orthopedic surgeons as an example, maybe we will have a hip replacement, which is done by most orthopedic surgeons in our area, and the orthopedic surgeons’ total cost for doing a hip repair — their hospital fees, medical supply fees and anesthesiologist fees — may all be tabulated. That information is then listed from the most cost-effective doctor to the least cost-effective. This is tricky; it takes much input from the orthopedic surgeons to make it as fair as possible. One orthopedic surgeon at the top of the list may have cost for a total hip replacement that is half of the cost for another surgeon at the bottom of the list.

The reward to that orthopedic surgeon is, when that data is known to all the members of the IPA, they can simply say, “I will send my patients to that orthopedic surgeon because they do it cost-effectively.” It’s an indirect reward, but a substantial one, when these medical home models share worthwhile, important data.

HIN: Ms. Schilz, which health plans participating in the Colorado program are paying a PMPM capitation or sub-capitation, and what is the payment range? Are the payments risk-adjusted in any way?

Response: (Julie Schilz) All of our health plans are paying a PMPM care management fee. We have Anthem, Aetna, CIGNA, Humana and United HealthCare as our private payors, and the Colorado Medicaid program and our safety net insurer CoverColorado.

The ranges for the PMPM are based on the level of NCQA PPC-PCMH that was achieved by the practices: Level 1, Level 2 or Level 3. The thought was, and this was not done through actuarial analysis, if you were performing at Level 1 in NCQA PPC-PCMH, you probably are not implementing as much of the PCMH concept as you would be if you are a Level 3. The ranges are: $3 to $4.50 for a Level 1, $4.50 to $6 for a Level 2 and then $6 to $8 for a Level 3. Some of the health plans may fall inside or outside of these ranges, but that gives you a general idea.

There was no risk adjustment for our private payors. Our Medicaid looked differently at their population, which was an adult population with some more intense needs. CoverColorado made some adjustments in their PMPMs to account for what they felt was to be a higher-risk population.

HIN: What are the challenges evaluating ROI and patient satisfaction in multi-payor programs and how can these be addressed?

Response: (Julie Schilz) There are many challenges. One is that we have 16 practices and 17 sites — anywhere from a single doctor practice to an eight-doctor practice. To build enough patient lives within those practices to get to data that feels statistically significant has been challenging. Because of that, we decided to pool the practices for utilization metrics, such as the ER and hospitalization, and generic e-prescribing use. But we did decide to keep their clinical measures separate; each practice will be evaluated on their own clinical measures.

The other challenge is having multiple payors at the table and making sure that we’re thoughtful in our discussions so that we don’t impact anti-trust considerations. We also want to be thoughtful when it comes to their competition: the components that need to be consistent among all the payors and providers and those that have a little flexibility. For example, when we first started, we thought we would want one standard contract that each health plan would use with each participating pilot practice. We found that this was probably not doable because of each health plan’s systems. We stepped back and asked which components would we want in an addendum or a contract with each practice and handled it that way.

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