Say farewell to fee for service

National Report-Urologist Gary M. Kirsh, MD, says it’s time to bid farewell to fee for service and embrace the concept of value-based compensation in medicine.

Dr. Kirsh“Don’t cry over this loss. It’s not a loss; it’s an opportunity,” said Dr. Kirsh, president of LUGPA (formerly the Large Urology Group Practice Association).

U.S. Department of Health and Human Services Secretary Sylvia Mathews Burwell outlined the government’s goals for the transition from fee for service to value-based payment models in a Jan. 26, 2015 blog.

“Our first goal is for 30% of all Medicare provider payments to be in alternative payment models that are tied to how well providers care for their patients, instead of how much care they provide-and to do it by 2016. Our goal would then be to get to 50% by 2018,” she wrote.

Even fee for service will evolve, according to Burwell, who wrote: “Our second goal is for virtually all Medicare fee-for-service payments to be tied to quality and value; at least 85% in 2016 and 90% in 2018.”

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New models that “put patients first” include accountable care organizations, patient-centered medical homes, and bundled payments, Burwell says in her blog.

The Centers for Medicare & Medicaid Services has a plan for surgeons, according to Frank Opelka, MD, medical director for health policy at the American College of Surgeons. The goal, he says, is to move surgeons from fee for service to fee for service with additional reimbursement tied to performance measurement, and, even better, alternative payment models that have components of shared savings, shared risks, and similar value-based performance measures. The alternative payment models tend to have more upside potential. The government’s highest goal is to have more surgeons tied to advanced systems with global payments for a set population.

“The more advanced payment models call for more advance measurement, more risk sharing, and more advanced internal incentives that align to a larger overall strategy,” Dr. Opelka said.

NEXT: 'Two desirable endpoints'

‘Two desirable endpoints’

Dr. Kirsh and other urology health policy leaders who spoke with Urology Times expressed guarded optimism and concern regarding the payment model shift.

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While urology groups seem to be warm to the concept of value-based payment options, they have yet to adopt a formal position on the topic.

Dr. Penson“The AUA does not have a formal position on value-based payment and care,” according to David F. Penson, MD, MPH, chair of the AUA’s Public Policy Council and professor and chair of urologic surgery at Vanderbilt University Medical Center, Nashville, TN. “The AUA wants to ensure that all patients have access to the highest quality urological care, and that urologists are able to provide this care in a sustainable and fair fashion. If value-based payment and care allows us to achieve these two desirable endpoints, then I suspect the AUA would be supportive of these initiatives.”

Fee for service has drawbacks

Fee for service has become a barrier for urologists and other providers, Dr. Kirsh says.

“The reality is that in order for physicians to make ends meet, they have to run a hamster wheel in a fee-for-service system. They have to see more patients; do more procedures,” Dr. Kirsh said. “There are a lot of things that we could do that the fee-for-service system restricts us from. For example, we can’t manage a patient by email. We can’t manage a patient by phone. The fee-for-service system requires us to see a patient in the office to be compensated.

“That’s not always efficient for the patient or for us. If we’re given the opportunity to manage a population of patients based on their outcomes, we will be able to generate more efficiency.”

Another benefit of a non-fee-for-service environment is the concept of risk, Dr. Kirsh says.

“When you get into the value-based world, then some of your contracts would be at-risk contracts, meaning that if you outperform-if you deliver efficient, measurable, high-quality care-and you’re at-risk, you actually will benefit economically,” he said.

Dr. FrankelBut not every urologist is suited for an at-risk environment, according to Jeffrey Frankel, MD, American Association of Clinical Urologists health policy chair and a urologist in private practice in Seattle.

“Whether to take risk depends on the individual practice. If you have an integrated group and you take control of ancillary care, you can definitely take on risk. If you’re a small practice, you need to know how many patients you’re taking risk for because if you have one bad case and have to send that patient to the hospital for a lot of tests, it’s going to be more expensive,” Dr. Frankel said.

Value-based programs will encourage care standardization, according to Dr. Penson.

“This will improve physicians’ ability to control costs and also reduce uncertainty on a number of levels,” Dr. Penson said.

NEXT - Value based: The challenges are in the reality

Value based: The challenges are in the reality

Urologists say the segment of the specialty they worry most about in the transition is small practices that don’t have the business infrastructure to navigate the market change.

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Dr. Kirsh says it takes a village to understand and participate in value-based compensation models. Practices need an accountant, IT professionals, and a finance staff that understands the nuances of these newer contracts. Not to mention the need for legal input.

“Practices need to have physician leadership and business leadership that can evaluate these kinds of opportunities and, then, know how to negotiate favorable contracts in this new environment,” Dr. Kirsh said.

Another requirement for a smooth transition is ensuring the group is clinically integrated, such that doctors follow appropriate clinical pathways and guidelines.

“When you get into this value-based world, the whole notion is that we should agree, as urologists, on certain pathways and guidelines that we want to follow for efficient and high-quality care and outcomes for our patients,” Dr. Kirsh said. “If you don’t have the infrastructure, culture, and leadership needed, it’s going to be a challenge, and you’re going to struggle in this new environment.”

Even those practices that have everything in place could struggle with the reality of change. The need for broad collaboration and cost-cutting care could prove challenging for physicians and patients, according to Dr. Penson.

“We will need to not only work across specialties, but across provider entities… and proactively design ways to both standardize workflow and split any realized gains,” Dr. Penson said. “Finally, patients may not be comfortable with these programs, and they may reduce the amount of ‘discretionary’ care received. These programs will discourage physicians from using costly interventions that are of limited or no benefit. Patients might not take kindly to this.”

Conceptually, the value-based system’s notion of spending limited health care resources on the most effective interventions is a desirable goal, according to Dr. Penson.

“Of course, the devil is in the details,” Dr. Penson said. “I worry that physicians will face difficult decisions between providing care versus realizing financial gains.”

NEXT: Still a flimsy value framework

Still a flimsy value framework

Even if urologists are ready for the change, the concept’s framework is a work in progress.

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Dr. Frankel was in Washington in March for the Urology Joint Advocacy Conference, where he met with members of the House and Senate. He says U.S. representatives are eager to change care delivery systems and are looking at value-based payment.

The problem is in the metrics. The very quality measures that define quality in specialties, including urology, have yet to be finalized.

“[Members of Congress] are actually looking for help,” Dr. Frankel said. “What I would say to urologists is to try as much as we can to give them meaningful quality measures to work with.”

And questions remain about how to tie quality to how much care costs and how to attribute the care to the urologist, according to Dr. Frankel.

For example, let’s say a patient has a prostate operation at one hospital, then shows up days later in another emergency room with bleeding as a complication of the procedure. Who is attributed the cost of care? The urologist who did the surgery or the one who dealt with the complication?

“These are things I’ve heard from people putting the metrics together,” Dr. Frankel said. “They’ve been working on this for at least 5 years. It’s a lot of stuff. That’s why it’s a little scary.”

Ms. JacobsenAdding to administrative burdens for providers, the quality metrics that exist aren’t universal. Yet, meeting existing quality metrics is required for becoming a coveted low-cost, high-quality provider with government and commercial payers, according to Doral Jacobsen, senior manager at DHG Healthcare, a health care consulting firm in Asheville, NC.

Something that could help to provide more standardization is the government’s merit-based incentive program, which rolls out in 2018.

“[The government is] trying to make things easier,” Jacobsen said. “They’re going to consolidate PQRS [Physician Quality Reporting System], meaningful use, and value-based payment modifier initiatives, and add some other components.”

NEXT: Who's ready? And who needs to be?

Who’s ready? And who needs to be?

Not every practicing urologist needs to prepare for a value-based system, according to Dr. Kirsh.

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Academic urologists and those employed by hospitals or health systems don’t have the same pressures and concerns that independent urologists do, he says. Institutions, including universities and health systems, will do what’s needed to participate in value-based contracting.

Dr. Kirsh says he doesn’t believe small groups have, for the most part, taken the necessary steps to prepare for global compensation (also see, “Value-based care: Six steps to prepare"). And even though large groups are well positioned for the emerging paradigm, not all large groups are ready to embrace non-fee-for-service options.

“Some groups are more forward thinking than others. Some groups are further down the road of business integration than others,” Dr. Kirsh said. “The groups that are further down the road in business and clinical integration are better positioned to profit, thrive, and survive.”

Dr. OpelkaThe problem with business model transformation in health care is uncertainty, according to Dr. Opelka.

“Most physicians are concerned about the lack of certainty in the direction for their given specialty. They do not see how they contribute to the greater good, other than to perform in a volume-based system,” Dr. Opelka said. “Until a business model emerges that makes sense to the individual surgeon, gives them a sense of direction that defines a successful practice that contributes to the better, smarter, healthier strategy, it is extremely difficult to act. We need to bring some clarity to the business model and stabilize it for a period of time while the physicians catch up and optimize the new health care economy in which they practice.”

NEXT: Now or never?

Now or never?

Dr. Kirsh says he is not a fear monger. He thinks urology and independent medicine are going to be fine.

“I also think people have the time to adapt if they will because this is going to happen much slower than we think,” Dr. Kirsh said.

The urologist is skeptical that the government will achieve its goal for 30% of all Medicare provider payments to be in an alternative payment model by 2016.

“My message to my colleagues would be that they should not lament the decline of fee for service. Fee-for-service medicine has in many ways shackled the creativity and entrepreneurship of urologists to come up with new care delivery models that are better for the doctor and better for the patient,” Dr. Kirsh said.

However, even those who don’t like the idea of value-based compensation should look at the reality, according to Dr. Frankel.

“Value-based purchasing is not going away,” he said.

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