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Physicians skittish on ACOs over pay

Accountable care organization executives say doctors are skeptical about value-based payments and resistant to make the transition from fee for service.

By Sue Ter Maat — Posted Feb. 25, 2013

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A major stumbling block to the full implementation of accountable care organizations involves the challenge of moving the health care culture away from fee for service and toward payments based on the value of care, according to ACO executives speaking Feb. 13 at a National Committee for Quality Assurance webinar.

During the event, which featured some of the first ACOs to receive NCQA accreditation, some executives said physician compensation under their ACO models hasn’t changed but will soon. Some of the organizations became ACOs almost a decade ago, making them some of the earliest adopters of the business model that seeks to share savings through more coordinated care.

Some ACO executives said a major obstacle to internal alignment is the reluctance of some health professionals and payers to embrace the ACO model fully. It has resulted in a slower transition from fee for service to value-based payments, and, in some cases, the transition hasn’t even begun to take place.

“We are certainly not new to this, and despite the fact we have been involved with this on the Medicare side for a number of years, it really hasn’t had an impact on our marketplace,” said Douglas Carr, MD, medical director of education and system initiatives at the Billings Clinic in Montana, which became an ACO in 2005. “We are entirely fee for service. The managed care tidal wave never hit Montana at the end of the last century, so it never had an impact on the commercial market. It’s a very difficult environment to create an ACO discussion.”

The wait for acceptance

Some have been dubious of the ACO payment model because they are so used to fee for service, making it harder to transition to value-based care when most of the health care world is still functioning based on volume, said Hal Teitelbaum, MD. He’s managing partner and chief executive officer of Crystal Run Healthcare in Middletown, N.Y.

“So every time we standardize around best practices, improve efficiencies and eliminate waste, that potentially results in decreased compensation to providers and others in the health care system, and that concept of functioning with one foot in two canoes is certainly a challenging one.” Dr. Teitelbaum said.

Crystal Run Healthcare ACO legally formed in 2011. Its first accountable care contract started in April 2012 with its participation in the Medicare Shared Savings Program, said Jonathan Nasser, MD, Crystal Run’s co-chief clinical transformation officer. Crystal Run’s only risk-based contract is with the Centers for Medicare & Medicaid Services, but it expects to announce value-based contracts with private payers later in 2013.

“The reasons that we have not made this shift are related to private-payer factors — a lack of interest from some, who are advantaged from our current work in a fee-for-service contract, and a lack of sophistication from others, who do not have the data analytic capabilities to engage in this type of contract,” Dr. Nasser wrote in a statement.

At Crystal Run, physician compensation will become more aligned with the ACO model in the coming months, Dr. Teitelbaum wrote in an email to American Medical News after the webinar. The senior leadership has told doctors that fee for service is unsustainable because of external pressures, including the recent economic downturn, federal deficits, pressure on Medicare and commercial provider payments, and problems with the sustainable growth rate that helps determine Medicare physician pay, he said.

“We believe the time to adopt value-based care transformation is now — most importantly, because it is the right thing to do, but additionally, because it is the smart thing to do financially,” Dr. Teitelbaum said.

Bonus structure

Crystal Run has created a physician matrix that offers bonuses for doctors who meet quality, cost and patient experience benchmarks. It plans to change this model to reward based more on value than on volume.

It expects to pilot a different compensation plan in the first half of 2013 and roll out the model to all of its physicians in 18 months to two years, said Scott Hines, MD, Crystal Run’s co-chief clinical transformation officer, who also spoke with American Medical News after the webinar.

While going through the accreditation process, Crystal Run has learned that it must align physicians early on in the transition from volume to value, Dr. Teitelbaum said. Although ACOs are geared toward primary care physicians, specialists are important to their success, and getting them on board may involve more prodding, Dr. Teitelbaum said.

Specialists deal with patients on a more episodic basis than do primary care doctors, so they are more used to fee-for-service payments. Making a point to discuss the benefits of ACOs is key, but specialists must buy into the ACO concept, he said. “The question is: Do you want to get paid for procedures or paid for outcomes?”

At Essentia Health in Duluth, Minn., physicians’ pay has not been affected. Essentia will work on a physician compensation system to make sure that it aligns fully with ACO strategy, said John Smylie, Essentia’s chief operating officer, in an email to American Medical News after the webinar.

“We do see the need to have our internal compensation system fully aligned with external reimbursement,” Smylie said. “Aligning the internal compensation programs with the ACO program will be a key initiative this year that will include extensive involvement from our physicians.”

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