Value Based Care Regulations Yield Physician Discontent, No Change in Behavior

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Mike Arrigo, Managing Partner & CEO No World Borders, Inc.
Mike Arrigo, Managing Partner & CEO No World Borders, Inc.

The Patient Protection and Affordable Care Act seeks to change medicine from Fee for Service (FFS) to a value based model.   Is it working? A RAND study, sponsored by the American Medical Association (AMA), describes alternative health care payment models (i.e., models other than fee-for-service payment):

“Alternative payment models have not substantially changed how physicians delivered face-to-face patient care. Additional nonclinical work created significant discontent. Most physicians in practice leadership positions were optimistic and enthusiastic about alternative payment models, while most physicians not in leadership roles expressed at least some level of apprehension.”

In other words, many well-intended regulations are simply creating a higher administrative burden for clinicians.  The alternate payment models explored  capitation, episode-based and bundled payment, shared savings, pay for performance-based practice, accountable care organizations, and patient centered medical homes (PCMHs).

Remember that the sponsor of this study is the AMA which has generally been against additional regulations that impact physicians (see our post regarding CMS’s grace period for Medicare Part B providers and ICD-10).  Rather than take an anti-regulatory approach, let’s examine the facts and consider a different perspective to help solve the problem.

Price vs ValueRAND Recommendations to Address the Problem

Recommendations from the RAND report included ensuring physician practices get support and guidance, improving effectiveness of alternative payment models, and addressing concerns by physicians about the extra burden of these models vs. enabling them to realize the benefits in terms of reimbursement and improved care.  Aligning physician incentives with population health care goals is also essential.


New Regulations, More Data

Let’s go beyond the RAND study and dive a bit deeper on what physicians are being asked to do.  Recent regulations burden health care providers to increase the data they capture and the data they report.  For example:

  • ICD-10 increases the need for improved clinical documentation and more specificity in medical diagnosis and procedure codes. Use of the codes is required starting October 1, 2015. Not using the codes means physicians may not get paid (excepting Medicare Part B providers for one year).
  • Medicare Advantage and Accountable Care Organizations require additional reporting to receive financial incentives
  • Meaningful Use of Electronic Health Records require clinical quality measures (CQMs) with beneficial and punitive financial provisions relating to compliance
  • PQRS has a set of quality measures with beneficial and punitive financial provisions relating to compliance

Risk Adjustment, New Standards

Another standard that is important to consider in alternative payment models is risk adjustment.  Medicare  classified ICD-9 diagnosis codes into HCCs (Hierarchical Condition Categories) for chronic conditions that end up costing  more money over the long run, such as diabetes, kidney failure, old myocardial infarction, etc. When patients are assigned these ICD-9 codes, Medicare sees those beneficiaries as being more severely ill than the “average” Medicare beneficiary.   Unfortunately the groupings for HCCs and ICD-10 aren’t clearly defined as of this date.

Gaps and Data Silos

When evaluated as a single initiative, each regulation has standards to collect and report discrete data.  When taken together, these initiatives sometimes conflict invite questions. For example, how will clinical documentation developed in an electronic health record work to support ICD-10 requirements?  How will documentation of the patient condition expressed in ICD-10 impact reimbursement in Medicare Advantage and ACOs that use the companion coding HCC standard?

Optimization vs. Fraud, Waste, Abuse

New tools to document the patient condition, risk adjust populations, and code with more specificity can be used to provide better information, create documentation for medically necessary care, and valid reasons for higher reimbursement.  They can also be abused.  CMS defines fraud in several contexts, and specifically states, “Misusing codes on a claim, such as upcoding or unbundling codes” constitutes fraud.   The companion to Fraud in the same CMS publication is the False Claims Act (FCA).  FCA provides for treble damages.  Complexity requires tools to analyze and manage information and make it available to those who need it using secure methods to investigate exceptions.

Missing? A Biomedical Informatics Perspective

Clinicians  are in a knowledge management crisis – there is a massive amount of data, but getting the right information to clinicians, IT personnel and others at the right time is the challenge. What was missing from the RAND report were biomedical informatics perspectives.

  • Informatics is the logic of healthcare. Digital information has made knowledge infinitely larger and more available for clinicians, but contextual knowledge is often unavailable.
  • Biomedical Informatics seeks to discern the difference between data, information, knowledge and wisdom by increasing sharing and comprehension when needed.
  • The world is aging and there are increasing numbers of people with chronic disease; it is recognized that a key sustainable strategy is planning and delivery of healthcare through technology innovation.

Caveat:  innovation without clinician engagement is likely to fail, just as well-intended regulations are failing so far to realize change.[/fusion_builder_column][/fusion_builder_row][/fusion_builder_container]

Michael F. Arrigo

Michael is Managing Partner & CEO of No World Borders, a leading healthcare management and IT consulting firm. He serves as an expert witness in Federal and State Court and was recently ruled as an expert by a 9th Circuit Federal Judge. He serves as a patent expert witness on intellectual property disputes, both as a Technical Expert and a Damages expert. His vision for the firm is to continue acquisition of skills and technology that support the intersection of clinical data and administrative health data where the eligibility for medically necessary care is determined. He leads a team that provides litigation consulting as well as advisory regarding medical coding, medical billing, medical bill review and HIPAA Privacy and Security best practices for healthcare clients, Meaningful Use of Electronic Health Records. He advises legal teams as an expert witness in HIPAA Privacy and Security, medical coding and billing and usual and customary cost of care, the Affordable Care Act and benefits enrollment, white collar crime, False Claims Act, Anti-Kickback, Stark Law, physician compensation, Insurance bad faith, payor-provider disputes, ERISA plan-third-party administrator disputes, third-party liability, and the Medicare Secondary Payer Act (MSPA) MMSEA Section 111 reporting. He uses these skills in disputes regarding the valuation of pharmaceuticals and drug costs and in the review and audit of pain management and opioid prescribers under state Standards and the Controlled Substances Act. He consults to venture capital and private equity firms on mHealth, Cloud Computing in Healthcare, and Software as a Service. He advises ERISA self-insured employers on cost of care and regulations. Arrigo was recently retained by the U.S. Department of Justice (DOJ) regarding a significant false claims act investigation. He has provided opinions on over $1 billion in health care claims and due diligence on over $8 billion in healthcare mergers and acquisitions. Education: UC Irvine - Economics and Computer Science, University of Southern California - Business, studies at Stanford Medical School - Biomedical Informatics, studies at Harvard Medical School - Bioethics. Trained in over 10 medical specialties in medical billing and coding. Trained by U.S. Patent and Trademark Office (USPTO) and PTAB Judges on patent statutes, rules and case law (as a non-attorney to better advise clients on Technical and Damages aspects of patent construction and claims). Mr. Arrigo has been interviewed quoted in the Wall Street Journal, New York Times, and National Public Radio, Fortune, KNX 1070 Radio, Kaiser Health News, NBC Television News, The Capitol Forum and other media outlets. See and for more about the company.

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