Page 15 - Layout 1

PUBLIC
challenge that a group practice had when they hired a physician and
paid a salary to the physician is that there was no incentive by the
salaried physician to properly code the patient’s condition, particu-
larly if the patient had a higher acuity when presenting. The docu-
mentation for a higher acuity patient is quite robust, and if you are
a physician on a salary, it will not impact your income if you code
at the appropriate higher level or simply code at a lower level. For
the group practice, however, it can make the difference between
profitability or loss!
Larger practices often have the capability to enter into risk con-
tracts with MCOs. There are many iterations regarding risk con-
tracts. Some group practices take on full capitated contracts, while
other simply take risk for their professional services. Capitation is a and probably account for over 50 percent of the patient “popula-
monthly payment, usually based on a per member per month
(PMPM). The per-patient fee is tied to the level of services the
group negotiates with an MCO. As a full capitated risk contract
suggests, the group is responsible for inpatient/outpatient hospital
care, ambulatory surgical centers, prescriptions drugs, mental health,
DME, specialty services, and PCP services. In other words, the
group is essentially taking on the risk of the MCO when they enter
into a full-risk capitated contract. Unless the group is very sophis-
ticated in managing their population of patients, this is not an op-
tion I would suggest for the average PCP group practice. The
rewards can be great for those who know how to manage compre-
hensive, and a tremendous failure for those who do not fully un-
derstand capitated risk.
There are other iterations of risk contracts. Some are upside risks,
whereby if the group practice performs well on various metrics,
they will receive additional payments or a bonus. When the bonus
payment is tied to the income they receive on an FFS basis; the
group practice can receive amounts above 110% of Medicare FFS.
Some risk payments are tied to a Medical Loss Ratio (MLR). The
MLR is calculated by dividing the dollar amount of claims in a given
period (monthly, quarterly, annual) to the revenue amount for the
same reporting period. It is often expressed in a single number such
as 85% MLR. If the group practice achieves an amount better than
a target MLR, then savings are split with the MCO. The aggregate
income to the practice is then further divided to the individual physi- cians that embrace the benefit of population health management
cians on some performance/productivity basis.
Medicare is now looking at outcome-based performance for their
members. The payment that CMS pays to the MCO is risk-based,
meaning each patient has a different risk score and each risk score
is correlated to a monthly payment for such patient. The Medicare
FINANCING
Advantage private patients are reimbursed in this manner. The re-
sults have been positive for CMS, and they are now looking at ways
to introduce such value-based payments on traditional patients. The
value-based reimbursement often involves “Population Health Man-
agement” (PHM) to accomplish a lower MLR.
Physician’s manage one patient at a time. Over the course of a
year, however, if we added up all the patients seen by a primary care
physician, the entirety of that population may have some common
characteristics that may need to be tracked and managed. And to
the extent a primary care physician averaged 20 patients visits a day
for 210 days out of the year, they would encounter approximately
4,200 patient visits. Some of the visits are repeat follow-up visits
tion.” Thus, a primary care physician may have a panel of patients
for a year of approximately 2,500 to 3,000 patients or more.
Of that “population” of patients, there are some characteristics
of patients that have similar disease classifications. Take Type II di-
abetes for example; The prevalence rate of Type II is approximately
9.3 percent (i.e., 29 million people) according to the CDC. However,
over 86 million have “pre-diabetes.” And of the 29 million people
who have Type II, approximately 8.1 million people don’t know they
have it and are undiagnosed!
This is a good example where population health management can
play an important role for both the patient and the doctor. Imagine
if a physician’s practice ran a report that looked at many of the risk
factors for type II diabetes. Some of the risk factors would be: Age,
weight, ethnicity, and gender, to name a few. That list could be
cross-referenced with known lab data to determine whether the
“population of interest” had their Hba1c or blood sugars tested and
resulted. If not, scheduling the patient for a visit to perform such a
test in the population of interest might reveal undiagnosed patients
and pre-diabetic patients. Treating the undiagnosed patient and the
pre-diabetic patient is the benefit of population health management.
And the Centers for Medicare and Medicaid Services (CMS) is
very interested in physicians that understand how to perform pop-
ulation health management functions. CMS understands that physi-
should be paid for their patient's improved healthcare outcomes.
Population health management involves many aspects of man-
aging a patient. The goal is to assure that for a given disease; the pa-
tient is contacted, treated, followed-up, and the outcome improved.
There have been some early elementary attempts at trying to get
physicians to adopt components of population health management.
continued on page 16
visit us at www.bcms.org 15