Value-based pay in 2017: Where does urology fit?

March 22, 2017

Value-based payment models tend to fall into three general categories: shared savings programs, capitation models, and episode-of-care models. In this article, Robert A. Dowling, MD, reviews the current landscape of these payment models, including public and private-sector models that may serve as examples for urology.

Dr. DowlingThe first performance year of the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) is underway, and most urologists are participating whether they know it or not. At the end of 2017, the Centers for Medicare & Medicaid Services will determine how a provider will be scored (Merit-Based Incentive Payment System [MIPS], MIPS alternative payment model [APM], or advanced alternative payment model) based on participation lists submitted by approved APMs to CMS.

It is widely anticipated that almost all urologists will be subject to MIPS in 2017 and that most urologists are not participating in CMS-designated APMs in 2017. It is also widely predicted that MACRA and general trends in national health expenditures will drive more and more care into value-based payment models-commercial and public.

Also by Dr. Dowling: MedPAC proposals seek to mitigate Part B spending

Value-based payment models tend to fall into three general categories: shared savings programs, capitation models, and episode-of-care models. In this article, I review the current landscape of these payment models, including public and private-sector models that may serve as examples for urology.

Shared savings programs

Shared savings programs generally involve payment models that encourage coordination of care, best practices to achieve high quality, and management of the total cost of care for a defined group of patients. Typically, a target expenditure for a year is identified, and if costs are managed below that benchmark, the “savings” are shared according to a predetermined formula. If costs exceed the target amount, then the organization may share in that risk (owe money back to the payer) in “downside” models. Examples include commercial accountable care organizations (ACOs) and Medicare ACOs (Medicare Shared Savings Programs or MSSPs). MSSP tracks 2 and 3 include downside risk for the participating physicians and increasing opportunity for savings as well.

According to a Leavitt Partners presentation at the 2017 Healthcare Information and Management Systems Society annual conference, as of January 2017 there were 928 ACOs in the US covering 32 million lives. (Also see related blog: bit.ly/ACOsin2016) ACO penetration varies widely across the country, with some service areas having over 20% of covered lives in ACOs and others having no ACOs at all. There are 480 MSSPs covering over 9 million lives, including 438 in track 1, 6 in track 2, and 36 in track 3 (bit.ly/CMSsharedsavings). Again, penetration varies widely even among metropolitan areas: from 25% in Boston to 6% in Seattle.

Next: "ACOs generate savings by reducing spending, and this model has the potential to create 'winners' and 'losers' "

 

ACOs generate savings by reducing spending, and this model has the potential to create “winners” and “losers.” Robert Kocher, MD, and Anuraag Chigurupati, MS, recently published a New England Journal of Medicine perspective on this potential entitled “The Coming Battle over Shared Savings-Primary Care Physicians versus Specialists” (bit.ly/Sharedsavingsbattle). In the article, they identify the likely sources of savings: reduced hospital days, emergency room visits, length of stay in skilled nursing facilities; referrals to specialists; and intensity of diagnostic testing by specialists. The authors also cite reports that Medicare ACO shared savings distributions have gone to primary care physicians (49%), specialists (11%), and hospitals (9%).

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The authors conclude: “As health care reimbursement shifts from fee-for-service to risk-based payments, PCPs are well positioned economically and strategically. Their incomes are likely to grow substantially over the next decade, at the expense of hospitals and specialists. Specialists who fail to expand their role and develop the capabilities and relationships to drive value improvement will face a threat to their incomes and practices.”

Little data exist to indicate how many urologists are contracted in commercial ACOs, but it is likely their participation is proportional to penetration in their local markets. MSSP is a different story: When the program was originally implemented in 2011, CMS developed a process for attribution of patients based on the plurality of primary care services, and physicians who provided the plurality of those services (based on their tax identification number [TIN]) could only be in one MSSP. Furthermore, if one physician in a billing TIN was part of the MSSP, all physicians in the same TIN were required to participate. These constraints prevented most physicians in a specialty from participating in MSSP in the early years of the program because they occasionally deliver the plurality of primary care services (E&M codes) to patients.

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In June 2015, a new final rule was published modifying the attribution process by excluding a number of specialties (including urology) from the patient attribution process. Thus, urologists can technically participate in more than one Medicare ACO-but all members of a billing TIN must participate.

Next: Capitation models

 

Capitation models

Capitation models typically pay physicians a negotiated, fixed payment for each enrolled patient for a specified time. Urologists may participate through independent practice associations, specialty networks, or other entities that determine how to contract for the cap payment.

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One popular approach is the “single specialty carve-out,” wherein the payer contracts with a network of specialists for a designated range of services. Some Medicare Advantage programs are based on capitation, and risk elements of Medicare’s Next Generation ACO are also based on capitation. There are four Next Generation ACOs in the Medicare Program (bit.ly/NextgenACO), and the Next Gen ACO is considered an advanced APM under MACRA.

Episode-based payment

Episode-based payment, or bundled payment, is another type of value-based payment model that is based in a discrete, defined patient care episode. The history of bundled payments dates to 1983, when the inpatient prospective payment system based on diagnosis-related groups was implemented. Since then, Medicare has piloted many different bundled payment programs including coronary artery bypass surgery, the Acute Care Episode, the BPCI (Bundled Payment for Care Improvement) and CJR (Comprehensive Joint Replacement).

Last year, CMS began a voluntary episode-based program known as the Oncology Care Model. This model attempts to improve the quality and efficiency of care in cancer patients with a reimbursement method based on 6-month episodes triggered by chemotherapy treatment. Participating providers agree to certain practice transformation measures and in return are paid a monthly care management fee for each patient (in addition to fee-for-service payments); they also have the potential to earn a performance based payment from CMS if certain quality measures are met.

This model-fee for service plus care management fee and performance-based payment based on care episodes is generalizable to many specialties, including urology. In the private sector, Horizon Healthcare Services manages one of the largest specialty-based episode of care programs in the country (bit.ly/Episodesofcare).

Episodes of care are constructed retrospectively (after normal fee-for-service payments) based on quality, patient experience, and total cost of care; if benchmarks are beat, savings are shared with the providers of those services. This model has now been applied across many specialties-including urology-and almost a million covered lives resulting in lower rates of ED visits, hospital admission, and lower total cost of care.

Bottom line: Reimbursement in health care is shifting from pure fee for service to fee for value. Many value-based programs do not replace, but rather complement the fee-for-service model-with fee adjustments, bonuses, penalties, care management fees, shared savings, or recoupments. While shared savings programs are in their infancy, with about 10% penetration nationally, MACRA is expected to encourage participation in these and other types of value-based payment models. Episode-based payments are mature in many commercial markets, and lend themselves well to acute urologic care episodes.

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