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 Arrigo, an expert witness, and healthcare executive, brings four decades of experience in the software, financial services, and healthcare industries. In 2000, Mr. Arrigo founded No World Borders, a healthcare data, regulations, and economics firm with clients in the pharmaceutical, medical device, hospital, surgical center, physician group, diagnostic imaging, genetic testing, health I.T., and health insurance markets. His expertise spans the federal health programs Medicare and Medicaid and private insurance. He advises Medicare Advantage Organizations that provide health insurance under Part C of the Medicare Act. Mr. Arrigo serves as an expert witness regarding medical coding and billing, fraud damages, and electronic health record software for the U.S. Department of Justice. He has valued well over $1 billion in medical billings in personal injury liens, malpractice, and insurance fraud cases. The U.S. Court of Appeals considered Mr. Arrigo's opinion regarding loss amounts, vacating, and remanding sentencing in a fraud case. Mr. Arrigo provides expertise in the Medicare Secondary Payer Act, Medicare LCDs, anti-trust litigation, medical intellectual property and trade secrets, HIPAA privacy, health care electronic claim data Standards, physician compensation, Anti-Kickback Statute, Stark law, the Affordable Care Act, False Claims Act, and the ARRA HITECH Act. Arrigo advises investors on merger and acquisition (M&A) diligence in the healthcare industry on transactions cumulatively valued at over $1 billion. Mr. Arrigo spent over ten years in Silicon Valley software firms in roles from Product Manager to CEO. He was product manager for a leading-edge database technology joint venture that became commercialized as Microsoft SQL Server, Vice President of Marketing for a software company when it grew from under $2 million in revenue to a $50 million acquisition by a company now merged into Cincom Systems, hired by private equity investors to serve as Vice President of Marketing for a secure email software company until its acquisition and multi $million investor exit by a company now merged into Axway Software S.A. (Euronext: AXW.PA), and CEO of one of the first cloud-based billing software companies, licensing its technology to Citrix Systems (NASDAQ: CTXS). Later, before entering the healthcare industry, he joined Fortune 500 company Fidelity National Financial (NYSE: FNF) as a Vice President, overseeing eCommerce solutions for the mortgage banking industry. While serving as a Vice President at Fortune 500 company First American Financial (NYSE: FAF), he oversaw eCommerce and regulatory compliance technology initiatives for the top ten mortgage banks and led the Sarbanes Oxley Act Section 302 internal controls I.T. audit for the company, supporting Section 404 of the Sarbanes Oxley Act. Mr. Arrigo earned his Bachelor of Science in Business Administration from the University of Southern California. Before that, he studied computer science, statistics, and economics at the University of California, Irvine. His post-graduate studies include biomedical ethics at Harvard Medical School, biomedical informatics at Stanford Medical School, blockchain and crypto-economics at the Massachusetts Institute of Technology, and training as a Certified Professional Medical Auditor (CPMA). Mr. Arrigo is qualified to serve as a director due to his experience in healthcare data, regulations, and economics, his leadership roles in software and financial services public companies, and his healthcare M&A diligence and public company regulatory experience. Mr. Arrigo is quoted in The Wall Street Journal, Fortune Magazine, Kaiser Health News, Consumer Affairs, National Public Radio (NPR), NBC News Houston, USA Today / Milwaukee Journal Sentinel, Medical Economics, Capitol ForumThe Daily Beast, the Lund Report, Inside Higher Ed, New England Psychologist, and other press and media outlets. He authored a peer-reviewed article regarding clinical documentation quality to support accurate medical coding, billing, and good patient care, published by Healthcare Financial Management Association (HFMA) and published in Healthcare I.T. News. Mr. Arrigo serves as a member of the board of directors of a publicly traded company in the healthcare and data analytics industry, where his duties include: member, audit committee; chair, compensation committee; member, special committee.

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