In our previous article, we discussed how payment reform is leading to bundled payments, a single, predetermined payment that encompasses all aspects of an episode of care, which attempts to strike a balance between fee-for-service model and capitation. We have been studying these issues closely and believe its important for all groups to understand future payment methodologies now.
Its imperative to understand a critical and unique dilemma: You will need to negotiate for and against your physician colleagues, administrators, and insurance companies in order to come out ahead! This is a special skill set which we will begin to describe in the paragraphs below. Most providers and administrators will benefit from some skilled help to create, compile and utilize the data needed to negotiate and monitor the bundle. Contact us at AnesthesiaStat.com to get started.
Points of Negotiation
In an era of bundled payments, it’s imperative that physicians become strong advocates in order to receive the compensation they deserve. Here are several factors to consider when negotiating a deal:
Risk Adjustment: All patients are not equal. Those with an increased risk for readmission or complications because of factors like age or comorbidities are more likely to require more of your services. Negotiate tiered rates that take into account patient variables.
Know Your Data: You went to school to be a doctor, not an actuary. Nevertheless, you need to have a solid understanding of the literature relating to the risks and outcomes of various conditions and treatments. The key to lessening your financial risk is being able to accurately predict your level of involvement.
Clearly Define the Episode: An episode of care that goes from surgery to seven days post-op should be paid at a different rate than one that extends to 90 days post-op. It’s imperative to agree on the definition of “episode of care.”
Benchmarking in Gainsharing: The theory behind benchmarking is that you shouldn’t be financially penalized for another doctor’s less-than-stellar performance. For example, if surgeon X has higher (and more costly) complication rates that another, your gainshare of the savings pool should be greater. While collegiality might take a hit, benchmarking gainshare to performance is not only equitable, but it can lead to increased cost savings. If it’s clear to everyone that surgeon Y uses an approach that curbs costs, that approach can be implemented by others, thus increasing the savings pool and others’ gainshare. When negotiating your gainshare, consider a floor for hitting a minimum target (for example, being in the 85 percentile of a given performance metric) and bonuses for surpassing that target.
Transparency: Insist on transparency in how bundled payments are allocated (including the identities of each party), how payment will be apportioned, and how benchmarking data is collected and used.
Timing: There are a number of timing issues involved with bundled payments. The first – and most important – is the duration of the bundle. If it is a straight bundle, you can negotiate when you will receive your payment. If there is a gainsharing element, you can discuss the lag time for distribution of the savings pool.
Laying the Groundwork
Before you walk into negotiations, it’s important to understand your position relative to the positions of the other parties. “This is one area where groups can really use some help”, says Dr. Pierre of AnesthesiaStat Consulting. “I’ve seen deals become very unprofitable because a group did not do the proper groundwork ahead of time…. And this is not a physicians area of expertise” .
Most bundles are constructed on procedures that are easily protocolized and have less cost variation than “condition based” ones. Here are a few examples:
- Cardiac Surgery/Cardiovascular Procedures
- Major Joint Replacements
- Hip and Knee Arthroscopy
- Carpal Tunnel Surgery
- Colorectal Surgery
For cases like these, it’s best to start by calculating your average revenues and cost (typically labor) for each procedure. Depending on who you are negotiating the bundle (insurer vs. hospital), you may need to analyze your average reimbursement by procedure.
You will want to start with at least a year worth of data. We would recommend the following list:
- Payer(s) information
- List of services provided per episode of care
- Billable units
- Average Anesthesia case time
- Anesthesia Case time by surgeon (a slow surgeon can make a case lose money)
- Average cost of care (median anesthesia compensation (include benefits) + overhead/total OR minutes= cost per minute)
There are other methods of estimating revenues and costs which we have employed when they provide transparency or added advantage. At a minimum, you need to know your costs and get a good idea of volume to make sure you are covering your expenses. As you mix fee for service with bundles, make sure your volumes are keeping up with both payment models to keep your numbers intact. We have found that most groups need a lot of help in the beginning to get started, particularly with the volume conundrum. In one example, under pressure from the hospital, a group bundled total knee replacements. In this case, they only had to account for the cost of labor. The revenue per case value seemed to exceed the cost by a 15% margin. Any profit, however, was more than offset by the decreased volume and the unreimbursed cost of 4 cancellations, three revision surgeries and a wound dehiscence. The group ended up with a loss on the TKR’s for a six month period. Faced with a full year of losses, they turned to help to renegotiate with their hospital.
Here are some issues to consider in assessing your leverage:
Know your goals and strengths: Have a clear vision of your short- and long-term objectives, as well as the unique value proposition you can deliver to your negotiating partner. Understanding your priorities will help you determine which points require steadfastness and which elements are more flexible. An inventory of your strengths serves as both a point of negotiation and a reality check. Always remember that 90 percent of something is better than 100 percent of nothing.
Value and competition: If you’re in a relatively large physician group in a relatively small city, you’ll have more leverage than a small group in a large city. On the other hand, if you have many Medicare patients and are part of an accountable care organization, you likely bring a lot of value to the organization. As a result, your position will be stronger. Research your competition to see the alternate paths available to your negotiating partner. This will prevent you from taking an unwavering stand on a point that isn’t an issue for your competition. In addition, keep in mind that your relative value may change depending upon your negotiating partner. For example, your value to a hospital might be different than your value to an insurer.
Allies and allegiances: Consider the outcome you want and determine who will help you best achieve your goal. Your allies might be other physicians, the hospital, the insurer, or your patients. Forming allegiances to get results is a sound strategy, but one that may have long-term implications. Remember that, over time, allies and allegiances can shift, so review each negotiation with a fresh mindset.
Knowing how to approach a negotiation is different from proficiency in the actual art of negotiation. Here are four negotiation methods that can help you achieve your goals.
Foot-in-the-door technique: Social psychologists call this compliance technique “successive approximations.” The theory is that it’s easier to get someone to agree to a larger request by first gaining their assent to a smaller request. Once you get the first “yes,” it’s easier to get subsequent agreements. In your negotiation, begin with the least contentious points and work your way up.
Door-in-the-face technique: Those who solicit charitable contributions know that once the request for a large donation is refused, it’s easier to obtain a small donation. It’s a concept called social reciprocity. If your negotiations are stuck in one thread, ask for more than you want in a different arena. Then back down and ask for what you actually want. There’s a good chance you’ll succeed.
Changing the subject: When negotiations flatline, take a break and then come back to a different topic. Once that topic is successfully settled, it will be easier to return to and get cooperation for more contentious point.
Side door tactic: If talks have stalled, it might be time for someone not on the negotiating team to step in. If salient points and potential resolutions are suggested by someone outside of the primary group, the opposing party may be more likely to listen.
The ability to negotiate your segment of the bundled payment is critical to obtaining just compensation, but so is the ability to create a paradigm shift. For example, orthopedic surgeons who have the ability to discharge joint replacement patients within 24 hours are beginning to move from hospital settings to ambulatory surgery centers. While not every patient is a candidate, those who are slash the episodic care cost by half while decreasing the potential for hospital-acquired infections. Hospitals are scrambling to address this outpatient migration trend, and surgeons and anesthesiologists are dealing with divided loyalties. Is it in doctors’ best interest to collaborate with a hospital to protect its patient volume or to develop innovative protocols that deliver value and, in the process, increase physician compensation?
When CMS proposed a rule to pay for outpatient knee replacements, American Hospital Association lobbyists effectively killed it. While the Ambulatory Surgery Center Association has recently tried to convince CMS to revive the rule, there’s no indication that change is in the offing. Yet a few private payers are agreeing to bundled payment outpatient joint replacements. In the meantime, some practice groups are dividing their patients between hospitals and ambulatory surgery centers, and some hospitals are opening their own outpatient centers and offering ancillary services like patient education programs to accommodate the trend. Yet the central question – partnership vs. competition – has not yet been resolved.
Bundled payments are the wave of the future, but you need to stay on your toes to ensure that you receive the compensation you deserve. In addition to having a thorough understanding of the potential points you can raise and honing your negotiation skills, it’s imperative that you understand every element of an agreement before signing on the dotted line. In order to maximize compensation, be on the lookout for game-changing opportunities. If you can find ways to slash costs, improve patient outcomes, or form strong alliances, you’ll be in the enviable position of garnering a larger slice of the proverbial payment pie.
It will take hard work and help from informed advisors like the physicians at AnesthesiaStat.com, but you can make it work! Contact us today at anesthesiastat.com to sign up for our newsletter, read our informative articles, or get the help you need.
Tony Mira, “http://www.anesthesiallc.com/publications/anesthesia-industry-ealerts/738-bundled-payment-episode-of-care-resources-for-anesthesiologists“
The statistics are startling. According to the Centers for Disease Control (CDC), while the amount of pain suffered by Americans has remained steady over the past 15 years, the number of prescription opioids has quadrupled. And, tragically, so has the number of overdose deaths from prescription opioids.
As fee for service payment arrangements fade with healthcare reform and financial risk shifts from payers to providers, anesthesiologists must become adept at a new style of negotiation. The bundled payment framework – a single, predetermined payment that encompasses all aspects of an episode of care – attempts to strike a balance between the unsustainable fee-for-service model and the one-size-fits-none capitation approach.
Healthcare executives, according to a survey by KPMG reported in Becker’s Hospital CFO, are pessimistic about value based contracts. Forty-five percent of surveyed executives expect a decrease in profits. Healthcare providers expect a modest (25%), significant (21%) or steep (6%) decline in profits. Nevertheless, with proper help and guidance, there does not need to be any fear.
Its imperative to understand a critical and unique dilemma: You will need to negotiate for and against your physician colleagues, administrators, and insurance companies in order to come out ahead! This is a special skill that is a dramatic departure from business-as-usual.
Initial forays into bundled payments date back to the mid-1980s, when the Texas Heart Institute charged flat fees for cardiovascular surgeries. Medicare initiated a trial of bundled payments in the early 1990s, when it created a demonstration project that paid a flat rate for coronary bypass surgery and related readmissions. In the mid-2000s, a Pennsylvania health
system began to charge insurers a flat rate that included bypass surgery and any necessary follow-up care for 90 days post-surgery. Soon after, the Centers for Medicare and Medicaid Services (CMS) conducted another bundled payment demonstration project for orthopedic and cardiovascular surgeries.
In 2010, the Affordable Care Act created the Center for Medicare and Medicaid Innovation (under CMS), which in turn launched the Bundled Payments for Care Improvement (BPCI) initiative. This pilot program encompasses four models of bundled payments. The first model is for episodic care at an acute care hospital for an inpatient stay. Under this model, Medicare continues to pay physicians separate from instutions. The second and third models are retrospective. Medicare makes fee-for-service payments but then compares the total price for episodic care against a bundled target price and either pays or recoups the difference. This second model applies to an inpatient hospital stay, while the third model applies to post acute services, such as skilled nursing, home health, and rehabilitation. The fourth model is a truly bundled approach, covering soup to nuts (including physician payments) for an inpatient stay. In this model, the physician submits a “no pay” claim to Medicare but is paid from the bundle.
Under the BPCI initiative, participants are divided into two groups: Awardees and Episode Initiators. Awardees are those that assume financial liability for the spending associated with an episode of care. Episode Initiators – such as hospitals and physician groups – trigger episodes of care but don’t bear the burden of financial risk (unless they also happen to be Awardees). Forty-eight different episodes of care – ranging from spinal fusion to coronary bypass to joint replacement – are being tested. Some Awardees are participating in a single type of episode, while others are participating in a range of episodes.
In November 2015, CMS issued a rule mandating bundled payments to 800 hospitals for knee and hip replacements. Called the Comprehensive Care for Joint Replacement (CJR) Payment Model, it will cover about a quarter of the surgeries for which Medicare currently pays. This five-year CMS test will use the second BPCI payment model, in which actual costs are compared to a bundled episodic care payment, and then CMS pays or recoups the difference. Under this program, the episode of care is defined from admission to 90 days post-discharge.
The CJR is not a true bundled payment. Basically, all providers continue to operate as they do now by performing services and collecting in a fee for service model. At the end of the year, the hospital is charged a penalty or given a bonus based on the grand total of all the payments made. Ultimately, the hospital bears the risk of the system. They may try to pass this on to providers, but it is not done by the payer. Thus, it is not a true bundled payment but more of a pay-for-performance system. The truth is, this can actually discourage innovation. Let’s say, for example, that better monitoring or a home based rehab/nursing program could provide a good outcome. This service is not paid for by medicare. Thus, there would be little incentive to implement it– even though it could save money. In a true bundle, the providers would work together to create programs like this to avoid utilization of services. Also, the retrospective nature take the providers “skin out of the game”.
CMS isn’t the only player making the transition toward bundled payments. State-run programs are taking a cue from the BPCI initiative (and receiving support from CMS). Self-insured employers are contracting with health or hospital systems for specific types of surgeries and procedures. And an increasing number of big name insurers are pursuing bundled payment contracts for a range of conditions and treatments.
Bundled payments have distinct advantages. From the payer’s perspective, it reins in superfluous tests and procedures; from the provider’s perspective, it doesn’t extract a capitation penalty for patients who have chronic conditions. Yet, for physicians – especially anesthesiologists and surgeons – bundled payments present significant compensation challenges. At one end of the spectrum is the potential for working “off the clock” when a patient has complications requiring subsequent surgeries and you’re receiving a single payment for episodic care. At the other end is the issue of being compensated fairly – day in and day out – for the services you provide. Put another way, you must advocate for yourself in order to get the slice of the bundled payment pie that you rightfully deserve.
As of April 2016, BPCI had 321 Awardees and 1201 Episode Initiators. Notably, there are only ten participants in the fourth model, where the physician is paid from the bundle and submits a Medicare “no pay” claim. An annual report from February 2015 (the latest available) reported that engaged physicians championed BPCI’s Model 4, both as a program and in selecting episodes of care. It noted that financial opportunities topped the list of Awardee rationales for participating in this fourth model, including the ability to employ a technique called gainsharing. Gainsharing promotes coordinated and efficient care by passing along cost savings to providers. While each Awardee allocates gainsharing as it wishes, one reported calculating monthly internal cost savings (ICS), adjusting for readmission expenses, and then placing half of the ICS into a savings pool. Payments from the pool are distributed (to individual physicians or groups) monthly, but with a 45- to 60-day lag. Because this model is prospective, gainsharing only occurs when cost savings are realized.
Bundled payment arrangements with entities other than the federal government can include gainsharing, yet it’s important to keep in mind that federal laws prohibit certain types of gainsharing financial arrangements. One of the concerns about the CJR Payment Model rule was that it didn’t waive the Anti-Kickback Statute or Stark Law. In response, CMS and the Office of Inspector General issued a notice outlining the process for obtaining waivers. Keep in mind that, while there are federal carve-outs that allow gainsharing, always ensure an agreement’s legality prior to entering into it.
One must also consider applicable state laws that introduce their own complexity. In Maryland, for example, the state Self Referral Law is more restrictive than national prohibitions. Efforts to open up the law to bundle payments have led to competing bills from hospitals, corporations and coalitions of specialty groups each looking to carve out or oppose “profit centers”. Its not certain, at the moment, what compromise will look like.
In our next article, we will discuss details and strategies from expert negotiators to create the ideal bundle. It will take hard work and help from informed advisors like the physicians at AnesthesiaStat.com, but you can make it work! Contact us to sign up for our newsletter and ask for an advance copy of “Bundle Payment Negotiation Strategies and Pitfalls”.
Fill the form bellow to read part 2 of this post: Protecting Income in an Era of Payment Reform (Bundle Payment Negotiation Strategies and Pitfalls)
Ayla Ellison, “Majority of healthcare executives expect finances to suffer in move to value-based contracts” Beckers Hospital CFO, June 21, 2016
The Center for Healthcare Quality and Payment Reform, “http://chqpr.org/blog/index.php/2015/07/bundling-badly-the-many-problems-with-medicares-comprehensive-care-for-joint-replacement-proposal/”
The United States is in the middle of an Opioid Addiction epidemic which doesn’t seem to be ending soon. According to the National Survey on Drug Use and Health, 4.3 million Americans age 12 years or older were engaged in the non-medical use of prescription painkillers. In addition, 435,000 Americans were using heroin.
Recently, a confidential Qui Tam federal motion by the Florida Society of Anesthesia (FSA) has been made public. In this suit, the FSA alleges unlawful “company model” schemes by several practice groups, mainly gastroenterologists, and filed a federal false claims act complaint.
Anesthesiology has seen a rise of proceduralists utilizing the company model. In this model, anesthesia providers are hired, turn over billing rights, and then are compensated below market rates. Alternately, CRNAs can replace physician anesthesiologists. Some believe this loss of business and income has larger implications. In an era of health reform, this may alter the value of Anesthesia Care in fee splitting/value based models of care. The company model is currently illegal under some state laws, such as Maryland, but not necessarily federal law. Other arrangements exist, however, that are legal. This article reviews the basics and the implications.
The past 10 years have seen an increase in surgical volumes as health reform has brought more people into the health system. Dr. Thomas Miller, in a recent ASA Monitor post (link), notes that Medicare beneficiaries increased 10% and the Anesthesia claims count increased 136%! Underlying this trend is something less reported– there is a big shift in case volume away from Hospital inpatient settings into freestanding Ambulatory Care Centers and Hospital owned outpatient centers
This trend is likely true among all payers as well. AnesthesiaStat is performing an analysis of data in an HCUP database to look at these trends. There appears to be a shift of of both acuity and volume across the board.
What does this mean for Anesthesia groups? How should you position yourself for the future?
Mark Weiss, JD, in a stimulating and provocative article called,” Impending Death of Hospitals: Will Your Anesthesia Practice Survive?“, argues that hospital consolidation and employment of physicians will be a failure. He believes the shift of volume in to more efficient ASC’s will lead to the failure of hospitals. He concludes with the following, “Freestanding facilities, even mobile ones, will be the future of the huge bulk of surgical care. If your practice isn’t already heavily focused on freestanding facility care, begin pivoting in that direction. ”
So, what does that mean? A simple answer is to start acquiring ASC’s. However, surgeons are getting wise to that solution. In fact, many are utilizing “company model” type solutions to employ Anesthesiologists at below market rates (or replace physicians with CRNA’s to profit) . In Maryland, a coalition of surgeons is attempting to roll back the state self referral law to allow for the company model. In many areas, surgeons are working to create accountable care or bundled payment models that allow them to control the money. Of course, they cannot entirely be to blame. Surgeons are facing decreasing reimbursement and facility fees. Insurers are rejecting out of network models of care, reducing their options. A future article will develop this concept futher and specifically, look at the pressures in GI Anesthesia.
Anesthesiologists must be ready to fight for their independence. Part of this is data driven. Don’t know how? Click here to get in touch. We are happy to help you develop the data driven message your practice needs to show its worth and the value you provide.
From time to time, we like to offer information about new services that you should consider. This article from AnesthesiaNews about Ketamine Infusions gives some useful background. Contact us for more information or help:
“A growing number of anesthesiologists are opening private clinics that provide off-label infusions of ketamine to patients suffering from treatment-resistant unipolar and bipolar depression, post-traumatic stress disorder (PTSD), anxiety, suicidality and other disorders. Psychiatrists and other physicians have also recently opened clinics.
The cost per infusion ranges from $400 to $1700, with most clinics charging about $500. Patients pay out-of-pocket since most health insurance plans do not cover the off-label procedure.
Despite the cost, patients seek the treatments after their antidepressants and other therapies prove ineffective. Proponents claim that, when administered as an IV infusion in a subanesthetic dose (typically 0.5 mg/kg body weight) over 40 to 45 minutes, ketamine begins reversing symptoms of depression for two of three patients in less than 24 hours, with effects persisting for a week or more. Nearly three of four patients suffering from suicidality experience an almost immediate reversal in thinking.”
Electronic health records (EHR) and anesthesia information management systems (AIMS) are here to stay. Seventy five percent of academic departments have adopted EHR and AIMS (“AIMS: Should We AIM Higher?” APSF Newsletter, June 2015) and hospital and ambulatory settings are quickly following suit.
Many of us feel like we are being forced to adopt large enterprise level AIMS solutions that are created for hospital administrators, not clinicians. EPIC and Cerner are the two most widely used.
These AIMS are usually part of a larger electronic medical records (EMR) purchase, so the software development, upgrades and support can feel like they are not truly customized to meet our needs. This article will discuss tips on managing the transition, how to make the systems work for you, and when and how to seek third-party help.
EMR/AIMS adoption has been encouraged by many promises such as increased legibility, more precise data capture, superior chart completion, better and faster charge capture for billing, enhanced quality data, participation in quality registries, decision support in real time and further prospects for clinical research (“AIMS: Should We AIM Higher?” APSF Newsletter, June 2015).
According to the Center for Medicare and Medicaid Services (CMS), up to 90% of future reimbursements from government, and eventually third-party payers, will be at risk for quality reporting data by 2018. Dr. Rick Dutton, medical director of the Anesthesia Quality Institute (AQI), notes that penalties could rise to as much as 11% of Medicare payments in that time. Anyone wishing to transition to alternative payment models, such as a surgical home, for increased reimbursement will absolutely need to be skilled in EMR-based reporting.
So, how do you make the best of the situation? The first and most important step, according to Mark Corey, a Baltimore-based EPIC systems independent consultant, is to be involved early. Make sure you are part of the design committee so you can create the build you want. After the build is done, it’s almost impossible to make alterations. This is particularly important when utilizing Cerner, according to Roger Whitehouse of Primus Healthcare Consulting, a third-party Cerner specialist.
Unlike EPIC, which focuses on standardization and best practice, Cerner allows you to customize your product more, so you need to be sure the design meets your specifications prior to the build (which may be done remotely). Much like a grocery store, the build puts the right products on the shelves. Macros later put the right products in you shopping cart at the right time. It’s a mistake to think that shared or customized macros can solve design problems after the fact.
Make sure you have the right people from the AIMS on site during the transition. Your “super users” should not working clinically. Multiple hour turnovers and delays are frequently reported between cases as providers and nurses adjust from clinical work to troubleshoot problems. Time is money, so avoid lost income and a transition failure by investing in adequate support.
The transition to an AIMS can be a multiyear process, says Moed Azam, an anesthesiologist for JLR and USAP who helped create a Cerner collaborative among several national hospitals. Considering input from stakeholders, deciding how to craft the intraoperative documentation and biomedical device integration are all individually time-consuming processes and all are part of the transition. When you can, “pull the extract” for the build and macros from a collaborative. You will get a working solution that can help you with common reporting and benchmarks, but that is only part of the process.
Converting to an electronic anesthesia record (EAR) can be a daunting experience for an anesthesia provider, write Roger Whitehouse and Brian Koelliker, also of Primus Healthcare Consulting. The anesthesia environment is unique among EHR’s because it is the only place where such a tool is used in real time in cases which can last 20 minutes or less. Delays in this area, caused by suboptimal design and build, directly result in lowered throughput and increased costs. More importantly, a successful effort cannot risk pulling the practitioner’s attention to the EAR rather than the patient. The right project approach, scope and team can serve to mitigate these problems and make the transition to AIMS a positive experience.
Whitehouse and Koelliker summarize five key factors for a successful transition:
- Craft an overall approach and plan before you even start with design of your EAR. Structuring how this will happen, who needs to participate and how to leverage expertise are all factors in success.
- Involve clinicians. Those who will use the EAR must be directly involved in designing, testing, training and championing the tool. The primary goal should be to create a system that fits the established workflow of the providers and minimizes clicks.
- Learn from others. These tools are working for other practitioners across the country and around the world. What is best practice? Knowing what works for others and refining it to meet the specific needs of your organization will increase the likelihood of success. Seek out consortiums of hospital groups, similar to the Pediatric Electronic Anesthesia Record (PEAR) Group, which will allow you to download and share reporting macros and useful knowledge.
- Scope the project to encompass every element of the practitioners’ workflow. Anesthesia practitioners don’t just use the EAR. What supports them in the pre-op environment? In the pre-admission environment? In PACU? And how do these seamlessly integrate with and flow to and from the rest of the organization’s EHR?
- Look to the future. Electronic data are only helpful if they become useful for quality and outcome improvement and other learning efforts. A host of quality reporting agencies exist. Design and build should drastically simplify reports for those agencies and a project must have this requirement in mind.
With physician involvement from the start and a good design, you can successfully convert to an AIMS with little or no impact on your current clinical schedule. Only then will you truly have a comprehensive set of tools to support you amidst the changing health care environment.