Ken Terry

During the past year, there has been an upsurge in the number of doctors using patient Web portals, say healthcare consultants and EHR vendors. While the drive to show "meaningful use" of EHRs is fueling much of this new interest, the value of a patient portal can go far beyond that, some physician practices have discovered.

Medhavi Jogi, a Houston endocrinologist, says that the patient portal interfaced with his GE Centricity EHR has helped him and his partner build their 7-year-old practice. When consumers go to the practice's website, they can click on a link that takes them to the portal, where they can register as new patients. Three or four people a day do this, he says. Meanwhile, letting patients make their own appointments on the portal has reduced his practice's call volume by 20 percent to 30 percent. That, plus the elimination of most faxes, has allowed the practice to get by with just two support staff per doctor, Jogi adds.

Efficiency has also increased at Desert Ridge Family Practice in Phoenix, Ariz., over the year since it added a patient portal to its NextGen EHR, says family physician Tiffany Nelson. Phone calls are down, and the staff has to play phone tag with fewer patients as a result of the portal, she says. Moreover, the portal has turned out to be a terrific channel for patient communications, whether it's providing lab results, handling refill requests, or monitoring a patient with a chronic condition. Tiffany Nelson says the portal has increased patient, physician, and staff satisfaction.

Still, despite these and other advantages, some evidence suggests that the majority of doctors with EHRs haven't yet adopted patient portals. A representative from eClinicalWorks (ECW), a leading EHR vendor, says that only 20 percent to 25 percent of its customers bought ECW's patient portal when it was a standalone product (it recently became part of ECW's standard package). And a recent KLAS report found that more than two-thirds of ambulatory-care providers who had purchased an EHR were not sharing records electronically with patients. A portal is not the only way to do this to show meaningful use, as we'll see, but it's the easiest way to do it.

Consultants advise practices to start using portals for several reasons.

"The cost of running a practice can be reduced by using a portal," says Rosemarie Nelson, an MGMA consultant based in Syracuse, N.Y. "If we get patients off the phone, we get staff off the phone. If staff aren't on the phone, they're doing something else or we need less staff."

Moreover, she points out, physicians can use portals to increase the number of patients who receive recommended preventive and chronic care. That not only benefits patients, but can also boost doctors' earnings from pay-for-performance and medical home programs.

Michelle Mann, a principal in the IT Strategy Group of consulting firm CSC, agrees. As healthcare reform moves more of the financial responsibility for care to providers, she notes, portals could help doctors keep their patients healthier and out of the hospital and the ER. In addition, she says, portals may become a requirement to obtain government financial incentives in the future.

Given all of these reasons to use patient portals, it's not surprising that they're becoming increasingly popular with doctors. Here's what you need to know if you're considering adding a portal to your EHR.

In Stage 1 of the meaningful use criteria, there are two core measures and one optional measure related to sharing records with patients. The first core requirement is to provide a clinical summary of each visit to at least 50 percent of your patients within three business days. The second criterion specifies that, upon request, you must provide half of your patients with electronic copies of their health information (including lab results, problem lists, medication lists, and allergies).

The leading EHRs can generate a standardized clinical summary known as the Continuity of Care Document (CCD). Consultants and vendors say that the CCD can satisfy the two core requirements of meaningful use. The CCD doesn't have to be sent to a patient portal, but it does have to be provided to patients in electronic form. A summary downloaded to a thumb drive or a CD would suffice.

The main problem with the latter approach is that it requires a lot of staff work. In contrast, moving a CCD to a patient portal - especially if your EHR automatically triggers the transmission - doesn't take up staff time.

Seth Eaton, a med-peds specialist in Laurel, Md., cites another reason why it might be hard for a practice to show meaningful use without using a portal. "The criteria say that 50 percent of patients have to get a summary of their visit notes within three days of visit. How do you do that if you're a busy primary-care doctor and your note is not necessarily finished when the patient leaves the office?"

There's also a possibility that more patient data-sharing requirements may be added in Stages 2 and 3 of meaningful use, notes Mann. For instance, one measure in the Stage 1 optional menu requires doctors to show that "more than 10 percent of patients are provided patient-specific education resources" electronically. This would have to be done on a patient portal or a practice website - and it could well become a core requirement in Stage 2, Mann says.

Today, there are more- and less-robust portals available. The most elaborate ones have as many as two dozen features. These portals may allow practices to:

• Post lab results
• Post clinical summaries
• Send general health reminders, such as the need for flu shots
• Send alerts to specific subpopulations of patients (e.g., women over 40 who are overdue for mammograms)
• Receive and route prescription refill requests
• Receive and route appointment requests
• Have patients send messages to doctors, nurses, and/or administrative staff
• Let patients see statements and pay bills
• Let patients fill out medical histories
• Provide patient education materials
• Register new patients
• Create personal health records for patients

Generally, practices can turn on or off any of these portal features and use only the ones they want. But in some cases, it's impossible to inactivate particular components without hobbling others. For example, Jogi turned off the secure messaging feature of his portal because he's not getting paid for e-mailing with patients. But he can't send reminders to patients on the portal without the online messaging feature, so his staff has to phone patients or use regular e-mail to remind them to come in.

Eaton, whose seven-doctor practice has been using the eClinicalWorks portal with its EHR since 2006, says the group recently began letting patients make same-day or next-day urgent appointments on the portal. (They could always request appointments online.) Patients can also fill out a family history that populates the EHR directly, and they may soon be able to complete medical histories online. Also, patients can send messages to their doctor describing their symptoms after a visit or asking questions about their healthcare. All the physicians in the practice respond to these messages, which have become part of their workflow, says Eaton.

The ability of a practice to use a patient portal for clinical reminders may depend as much on the group as on the product, Rosemarie Nelson points out. Practices must understand how to run reports in their EHRs so they can identify subgroups of patients who need reminders about particular preventive screenings or types of chronic disease care, she says.

Basically, there are three different kinds of patient portals. A few EHR vendors, including Epic, NextGen, and eClinicalWorks, have created their own portals, which are integrated with their EHRs. Other vendors have interfaced third-party portals with their EHRs: For example, GE Centricity's portal comes from Kryptiq, and Allscripts uses the Intuit Health portal. Other independent portal vendors have interfaces with particular EHRs. Some of these companies contract directly with physician practices; others, like Axolotl and Medicity, are available only through healthcare systems. Some third-party portals offer unique features: PatientPoint, for instance, uses claims data from certain payers to help practices alert portal visitors about their coverage gaps.

If you have a non-interfaced third-party portal, your staff may have to enter information from the portal in your EHR, creating additional work. Interfaced portals sold by EHR vendors may pose a similar problem or may allow only documents to be sent to EHRs, instead of populating them with discrete data. Some of these portals seem to fit well into the work flow of the practices we looked at. But only portals designed for EHRs provide true integration.

Rosemarie Nelson says a good portal will let you interact online with your patients and will be connected to your EHR. "The key components would be interactive forms and functionality that gets the patients and the staff off the phone. If the patients have to call in to get their prescriptions refilled, let's let them do it on the portal; ditto for appointments."

Tiffany Nelson explains how NextMD, the integrated NextGen portal, handles refill requests. "The portal has a text box for messages and one for refills. We have the doctors do the refills, so you'll see a request within your NextMD message box, and you can respond to the patient and say you're sending the prescription to the pharmacy, and then refill the medication. In an office where the medical assistant gets the refill request first, you can route it to the MAs."

Brett Smith, administrator of a seven-doctor internal-medicine group in Sandy Springs, Ga., near Atlanta, also cites refills as an example of the work flow integration between the practice's Allscripts EHR and its Allscripts-branded Intuit Health portal. When a patient asks for a refill on the portal, he says, the patient sees a list of her current medications and can request one of them. The message pops up on the doctor's website, and when he clicks on the refill request, the patient's chart opens up. The physician sees the medication and dosage requested and clicks on "refill," and the prescription goes online to the patient's pharmacy of record.

Most EHR vendors charge separately for their portals, says Mann. Some of them charge an upfront license and implementation fee as well as a monthly subscription fee that depends on the amount of usage. Sometimes the latter is scaled to the number of patients using the portal (Epic) or the number of cumulative hits on the site (Allscripts), Mann says.

eClinicalWorks recently bundled its portal with its EHR for a monthly-based subscription price, per provider per month, including new mobile and "interoperability" features, says ECW CEO Girish Navani. Tiffany Nelson says that the efficiencies gained through the use of NextMD have saved more money than the portal costs her practice. But Smith says that hasn't been true for his practice's Allscripts portal. "If you're looking at the portal as a purely money-saving venture, that's going to be a tough sell," he says. "It's a very expensive feature to have."

Even if a patient portal isn't a moneymaker, it can help your practice show meaningful use and prepare you for the value-based reimbursement approach that's widely expected to take over. So a patient portal is a wise investment in your future.

Obviously, a patient portal isn't going to have much impact if only 10 percent of your patients enroll in it. But some practices have been able to persuade a majority of their patients to get aboard. This requires effort and an effective strategy.

Rosemarie Nelson recalls, for instance, that one primary-care group was frustrated because few patients provided their e-mail addresses when receptionists requested them at the front desk without explaining why. The solution was to ask patients for their e-mail addresses at checkout after telling them that they could get their lab results and communicate with the practice online.

Tiffany Nelson and her colleagues take a different approach. When a medical assistant rooms a patient, she talks about the portal's benefits. If the patient is interested, the medical assistant collects his e-mail address and starts the enrollment by giving the patient a portal security "token." The nurse lets the doctor know the patient has begun the process, and the doctor tells the patient that if he finishes enrolling, he'll be able to get his lab results, a visit summary, and/or educational materials on the portal.

This approach has worked well: 3,500 of the practice's 9,000 patients and 50 percent to 60 percent of those seen in the office have enrolled on the portal, Tiffany Nelson says.

Smith's internal medicine practice uses another method to induce patients to go on the portal. When new patients register with the practice, they're asked for their e-mail address, and they receive a "welcome to the practice" e-mail that urges them to set up a user account on the portal, says Smith. Over the past year, he says, nearly all of the practice's new patients enrolled on the portal. One reason, he adds, is that he provides his own name and e-mail address in case they have any problem setting up the user interface.

Patient portals can help practices in many ways that go beyond meaningful use. But they need a portal that can interact with patients and connect with their EHR. Here are the main points to remember:

• Use portal features, such as refill and appointment requests, which reduce the volume of phone calls.
• Look for a portal that provides interactive forms and fits well into your practice's workflow.
• Sending a clinical summary to your portal can meet key requirements of meaningful use.
• Portals can help physicians send patients alerts about needed preventive and chronic care.

 is a New Jersey-based freelance writer and the author of the book "Rx for Health Care Reform." He can be reached at 

This article originally appeared in the July/August 2011 issue of

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While practices are using patient portals to show meaningful use of EHRs, they can also help increase practice efficiency and improve the quality of care.

Patient Portals: Beyond Meaningful Use

Bill Russell, a geriatrician and vice president of clinical information for Erickson Living Management in Silver Spring, Md., looks forward to being able to get hospital information on his nursing home patients through a state-sponsored health information exchange (HIE) known as CRISP. Among other things, the HIE will help the hospital and ER physicians who care for his patients by giving them access to outpatient records.

Russell acknowledges that it will be difficult for physicians to assimilate all the new patient data that they will eventually get through HIEs. "If they're going to be drinking from a fire hose of information, it's a tremendous amount of extra work for doctors to process all of that information," he points out.

Still, he believes that if the outside data is properly structured and filtered and can be accessed through an EHR, it "can enrich your decision-making process."

Today, there are only 73 operational, multi-stakeholder HIEs throughout the country, according to the eHealth Initiative, an organization that tracks these exchanges. But the number is expected to grow rapidly in the next few years, partly because of the $564 million in federal funds that are starting to flow to the states to accelerate the formation and expansion of HIEs.

Authorized by the American Recovery and Reinvestment Act of 2009, the money designated for HIE is intended to increase the interoperability of health IT systems, including electronic health records, and to support providers in their efforts to show "meaningful use" so they can obtain government incentives. Most states are funneling these stimulus funds to private, nonprofit organizations called "state-designated entities," or SDEs, which are responsible for administering HIE. In Maryland, for example, the SDE is CRISP.

While $564 million sounds like a lot of money, it isn't when you're talking about HIEs in 56 states and territories, including the District of Columbia. But many states will build on existing HIEs, and some are getting money from other sources. For example, both the New York and Massachusetts legislatures have appropriated funds for HIE development; Vermont is assessing health plans for a percentage of claims; and Maryland is getting extra HIE funding indirectly from payers through the state's hospital rate-setting mechanism.

The federal government's emphasis on information exchanges also is having a spillover effect in the private sector, notes Jennifer Covich, CEO of the eHealth Initiative. "People recognize that HIE is for real now, and the federal government is supporting it, so there's a lot of action in the industry and a ramp-up for the implementation phase."

What all of this means is that you may soon have access to an information exchange that goes beyond your local hospital system. If you have an EHR, this HIE will help you gain access to hospital, lab, and imaging data on your patients without spending big bucks on interfaces, and it will make it easier for you to show meaningful use. If you haven't made the EHR plunge yet, you should still be able to view patient care summaries and other clinical data on a Web portal.

As Russell indicates, there are plusses and minuses to this new world of information access. But it's the world we're entering, so here's some background about federally funded state HIEs and what to expect from them.

So far, only a dozen states have actually received HIE funds from the federal Office of the National Coordinator for Health IT (ONC). But at the latest count, ONC had approved the HIE plans of 35 states. Among other things, the government wants all state HIEs to help healthcare providers receive structured lab results online, prescribe electronically, and exchange care summaries in 2011. The state-designated entities are also supposed to devise strategies to fill in gaps in the ability of providers to show meaningful use. And they must create strategies for public health reporting and quality reporting to the Centers for Medicare and Medicaid Services (CMS).

The states are taking a wide variety of approaches to achieving these goals, and some are much further ahead than others, notes Mickey Tripathi, president of the Massachusetts eHealth Collaborative (MAeHC). States that already have regional or local HIEs will build on those, while other states will use the federal grants as seed money to launch HIEs.

New Hampshire, for instance, is eligible for only $5.5 million from ONC, Tripathi notes. But the state has several hospital-based HIEs that cover 75 percent of its ambulatory-care physicians. So in the grant application that MAeHC helped write for New Hampshire, the focus is on creating a "network of networks" that will help the existing HIEs fill in gaps and make their services available to all of the physicians in the area. In addition, the New Hampshire HIE will need to figure out how to link together practices and hospitals in regions where there are no networks.

The biggest question about the viability of the state HIE approach is whether it will help states to provide or augment the local connectivity required to improve the quality of care and lower costs. Mark Anderson, a veteran health IT consultant based in Montgomery, Texas, is skeptical.

"It still seems that the state HIEs are primarily built on how to get data out of the hospital to the doctor," Anderson observes. "They're talking about exchanging care summaries among doctors, but that's way off in the distance. It's all about getting lab and hospital data to the doctors. Connectivity has to be doctor to doctor - the primary-care physician to the specialist - to have a real impact on how care is delivered. But it doesn't seem to be a high priority to the states right now."

HIE leaders don't dispute the fact that their initial focus is on hospitals. In Maryland, for example, CRISP plans to have 10 hospitals online in the first quarter, but no physician practices except for some community health centers. But David Horrocks, CRISP's president, points out that the state HIE also has connections with Quest, LabCorp, and several imaging centers, which he believes will attract doctors by reducing their interface costs.

Marc Overhage, a physician and, until recently, president of the Indiana Health Information Exchange,, the largest HIE in the country, says it makes sense for the state HIEs to go after hospitals first, because "in most markets they produce the bulk of the outpatient lab results."

And, since funds are limited, he says, the state HIEs should connect large-volume providers first to maximize the amount of online data available to other providers.

A handful of states, including Maryland, Rhode Island, Vermont, and Utah, are using a "public utility model" to connect all of the state's providers to a single network that they can use to exchange information at the local level. Most other states seem to be doing variations on the "network of networks" concept. Under that approach, the state HIE functions as an organizer and supporter of local HIEs and a conduit for exchanging data between them.

Some states are hiring commercial vendors to provide the connectivity platforms for their HIEs. In Maryland and a few other states, that vendor is Axolotl, based in San Jose, Calif. Aside from providing CRISP with technical expertise on connectivity, Axolotl also offers a certified, Web-based EHR that can help doctors who don't have another EHR get connected quickly, Horrocks says.

MedChi, the state medical society, supports CRISP but is worried about Axolotl now being part of Ingenix, a subsidiary of UnitedHealth Group. "Our concern is that the [patient] data will be compromised by the insurers," says Gene Ransom, CEO of MedChi. "They'll collect it and try to use it to deny care to patients."

Though MedChi has a legitimate concern, CRISP's contract with Axolotl prohibits United from gaining access to the HIE data, says Horrocks.

Instead of relying on commercial vendors, some states are incorporating a new national standard for exchanging information that will also be used in the National Health Information Network (NHIN). Known as NHIN Direct, or the Direct Project, this is a messaging protocol that allows providers to exchange clinical data securely online. EHRs can be configured to accept Direct messaging without creating interfaces or buying additional software.

"In the early stage of meaningful use, a provider will be able to meet their exchange requirement and do coordination of care by using Direct to push a CCD [Continuity of Care Document] message to another provider who is known and trusted," explains Denise Webb, health IT coordinator for the Wisconsin Department of Health Services. "If I'm a primary-care physician and I want to refer my patient to a cardiologist who's on a different EHR, I can use Direct to securely send a clinical care summary. The other physician can then send me the result of the consult."

Wisconsin is using its $9.4 million federal grant to build a network of networks that leverages the state's extensive HIEs. Fifteen large health systems in the state use the Epic EHR, which has its own HIE. The Marshfield Clinic and Ministry Health Care are partnered in a separate HIE. And Milwaukee hospital systems exchange data through the Wisconsin Health Information Exchange (WHIE). Overall, about 70 percent of the state's physicians participate in local exchanges.

Besides linking up those networks, the state HIE - led by the Wisconsin medical and hospital associations, plus two other organizations - will focus on bringing non-affiliated practices and critical-access hospitals into the fold. It will do this partly by working with WITECH, the state's regional extension center for health IT, to identify physicians who need help in connecting to local networks. If a doctor is having trouble getting online results from a particular lab or in implementing the Direct messaging protocol, WITECH will refer the doctor to WHIE, which provides technical support for the state HIE.

Tennessee has far fewer EHR users than Wisconsin does, but it does have a couple of operational HIEs in Kingsport and Memphis, and the state will help build more exchanges in Knoxville, Nashville, and Chattanooga. That's according to Didi Davis, acting CEO of CareSpark, the HIE based in Kingsport.

In contrast to Wisconsin, where most physicians link online to the HIE of their own group or healthcare system, Tennessee doctors will connect with one of these regional HIEs. For example, CareSpark covers eight counties in Tennessee (as well as nine in Virginia). In that region, there are 21 hospitals and roughly 1,500 doctors. "The state is going to push all those folks to connect to CareSpark," says Davis, adding that the state HIE will also link the regional exchanges as they come up.

CareSpark plans to use state funding to build its infrastructure and add new components, including Direct messaging. Local hospitals will use Direct to "push" their lab results and imaging reports to medical practices, and doctors can use the same method to exchange data with one another. Connectivity with reference labs is coming soon.

CareSpark will help physicians show meaningful use and qualify for government incentives, says Davis. Small-practice doctors who can't afford EHRs can use CareSpark's own "EHR lite" to demonstrate meaningful use, she adds.

Even the most enthusiastic proponents of HIEs don't believe that the federal grants alone will put them over the top. For one thing, the grants will expire in four years, and users must to be willing to pay fees after that to keep the HIEs going. For that to happen, there must be a business case for connectivity. What might help make that case are new reimbursement models - including bundled payments, shared savings, and value-based purchasing - that require better care coordination.

Meanwhile, Tripathi says, the federal grants are prompting most states to put a priority on developing health information exchanges. And if the states use flexible approaches that can go in whatever direction the market does, he says, it's likely that physicians will have greater connectivity than they would have had otherwise.

Indiana HIE pioneer Overhage also believes that the infusion of federal funds will facilitate HIE formation across the country. But even the government's immediate goals - sending lab results, prescriptions, and care summaries online - will require a lot of heavy lifting, he says. "This is hard work. We've been at it for at least 15 years, and we feel like we're maybe starting to see the top of the mountain."

Private practice doctors who want to start exchanging information with each other and with their hospitals should first check with their state-designated entity (SDE) to find out whether their state has received a federal grant for supporting health information exchanges (HIEs), and, if so, where that money is going. A list of SDEs across the country can be found at 

A good source of information on community and regional HIEs is the eHealth Initiative. 

Look up its latest report on national HIE activity

, which will show you whether there any HIE projects in your area. You should also ask your local hospital or healthcare system whether it plans to create an HIE for the medical staff and, if so, how you can participate.

Finally, the use of the Direct Project protocol is expected to spread rapidly. But you'll need a third party similar to your Internet service provider (ISP) to send and receive Direct messages. Among the parties that will become "health ISPs" are EHR vendors, community and state HIEs, Surescripts (the company that sends electronic prescriptions to pharmacies), and MedPlus, a Quest Labs subsidiary that provides connectivity services.

The American Recovery and Reinvestment Act of 2009 designated funding for Health Information Exchanges to increase the interoperability of health IT systems. Most of that funding is going to state HIEs, also known as SDEs. Here's what's happening as state HIEs develop:

• State HIEs are mainly focused around connecting hospitals and connecting physicians and hospitals. Physician-to-physician interoperability is a future goal of HIEs.

• State HIEs are using a number of models to develop interoperability, including "public utility" models and "network of networks" models, and many are using Direct messaging to push secure messages from one provider or health system to another.

• Making a strong business case for connectivity will be critical to the success of HIEs, as federal funding will run out after four years. But right now things look good for private practice physicians: HIEs can help improve patient care and outcomes and help practices achieve meaningful use of their EHR.

is a New Jersey-based freelance writer and the author of the book "Rx for Health Care Reform." He can be reached at 

This article originally appeared in the April 2011 issue of

You've probably heard of state and regional Health Information Exchanges, but what the heck are they, exactly, and can they be of any use to your practice?

Can a State HIE Help You Get Connected?

It’s been a very interesting year for doctors, to say the least. Highlights included the passage of the Patient Protection and Affordable Care Act; CMS’ adoption of the final rule on showing meaningful use to get government EHR incentives; and a last-minute, one-year reprieve on the scheduled 25 percent cut in Medicare payments. So what does it all mean?

What it means, in short, is that the old order is fading and a new order is starting to take its place. That new environment will reshape medical practice in ways that can be only glimpsed at present. But here are a few predictions for 2011:

More physicians will go to work for hospitals.

 AHA statistics indicate that hospitals already employ nearly 200,000 physicians - or roughly 

. That percentage will increase as hospitals try to align more closely with doctors, both to fend off competition and to prepare for new reimbursement methods that will emphasize care coordination.

Some physicians will form their own organizations.

 By that, I don’t mean a groundswell in large multispecialty groups. Instead, some private-practice physicians will try to 

 by forming IPAs or reviving physician-hospital organizations. If these doctors can integrate clinically with their colleagues, they’ll be able to bargain with payers for higher rates. They’ll also be well-positioned to form or join accountable care organizations (ACOs).

Payers will emphasize patient-centered medical homes.

 Some health plans and employers view this trend as a promising way to improve quality and control costs, and they’re providing financial incentives to medical homes. As a result, more and more groups are seeking and obtaining NCQA medical-home 

. It’s difficult for small practices to become medical homes, but some have, and more would if they were paid for care coordination.

 Despite substantial government incentives that begin in 2011, the bulk of physicians aren’t yet rushing to buy EHRs. But a confluence of factors may change that over the next few years: The Health IT Regional Extension Centers will start to help more small practices choose and implement EHRs. Federally funded state health information exchanges will help build the infrastructure needed to exchange key patient data. The spread of medical homes and the emergence of ACOs will create an urgent need for electronic data. And patients will demand that their physicians go online with them as their use of the new mobile technologies explodes.

In-office use of advanced imaging devices will decline. 

The Deficit Reduction Act of 2005 and the Affordable Care Act both took a whack at physician self-referral to 

. The reduction in Medicare fees for the technical component and some other restrictions have already had an impact on advanced imaging, which is an important revenue source for one in six physicians. Chances are good that the government and private payers will restrict self-referral revenue even further, not only because many tests are unnecessary but because this is low-hanging fruit for cost-cutters.

Medicare will start to phase in payment bundling. 

. Unlike past Medicare pilots, this one can be converted into an across-the-board policy if it shows promising results. So in the not-too-distant future, Medicare may start to offer bundled payments for episodes of care that include certain procedures and 30 days of post-acute services. This will probably be voluntary at first, and mandatory later. Doctors aren’t thrilled about bundling, but it’s going to happen anyway if it saves money. Moreover, private payers will undoubtedly follow Medicare’s lead. So be forewarned: it’s time to get together with your local hospitals to plan strategies.

There will be intense pressure to cut readmissions.

 if they have excessive readmission rates, starting in 2012. So your hospital may reach out to you and your colleagues to do intensive disease management so that fewer patients are readmitted. There’s not much money in this for you - unless the original hospital care is covered by a bundled payment--but it could lead to better patient care.

So there are my good, bad, and ugly predictions for the upcoming year. You may or may not take these trends seriously and incorporate them in your business plans. But it seems clear that physicians who embrace change will be better prepared to roll with the punches as healthcare reform gathers momentum.
 

The old order is fading and a new order is starting to take its place. That new environment will reshape medical practice in ways that can be only glimpsed at present. But here are a few predictions for 2011.

Trendspotter: Hold Onto Your Hat in 2011, It’s Going to Be a Wild Ride

What are insurance companies good for? That’s the interesting question that health wonk and consultant Joe Paduda raises in 

. Paduda believes that in return for getting millions of new members as a result of the healthcare reform law, health plans should “manage care and control costs.” Otherwise, he says, they don’t have much of a purpose. But insurance companies are unlikely to have much more impact on spending growth than they’ve had for the past few decades. The real question about insurers’ role in health care is why they’ll be needed if providers can form organizations that are accountable for the cost and quality of care.

 about the Massachusetts reform law by Lora Pelligrini, president of the Massachusetts Association of Health Plans. While that 2006 statute has led to 97 percent of state residents getting health coverage, Pelligrini noted, it has failed to control skyrocketing healthcare costs. That’s why the state’s major health plans raised rates so much this year in the individual and small business markets - increases that Massachusetts Gov. Deval Patrick 

 to roll back. Because the Bay State’s program is the template for the insurance provisions in the Affordable Care Act, the state’s inability to get a handle on spending contains an obvious lesson for the nation as a whole.

Paduda doesn’t dispute Pelligrini’s point that the market dominance of certain hospital systems and physician groups enables them to demand higher payment rates from insurers. But he wonders why the health plans just pass on those rates to consumers and employers. Instead, he suggests, they should form narrower networks of the most cost-efficient providers and sell less expensive plans that use those networks for customers.

Paduda’s argument ignores some real world experience. For the past decade, employers have required insurers to provide broad networks of doctors and hospitals, responding to their employees’ desire for freedom of choice. And in areas like eastern Massachusetts, no plan can do without “brand-name” academic institutions such as Massachusetts General Hospital. Some insurers have tried to profile physicians on quality and efficiency - with inadequate measures and to great protests from doctors - but employers have generally rejected narrow networks.

Paduda also skips over the fact that physicians resist health plans’ efforts to manage care. You prize your independence, and you know far more about individual patients than insurance company staffers following preset rules do. Moreover, some health plan policies - such as requiring pre-authorizations to cover certain drugs - are purely designed to save money. That doesn’t excuse the refusal of some doctors to follow evidence-based guidelines that have been shown to benefit patients and save lives. But physicians basically don’t believe that health plans have the moral authority to tell them how to practice - and patients agree.

The Affordable Care Act tries to keep insurance premiums down in two ways: by setting up state insurance exchanges that will help small businesses and individuals shop for insurance; and by establishing a minimum percentage of the premium that health plans must spend on patient care. (That’s 85 percent for large-company plans and 80 percent for individual and small-group plans.) It remains to be seen whether the state exchanges will significantly limit premium increases; in Massachusetts, they have not. And it’s also unclear whether the floor on “medical loss ratios” will force health plans to reduce their administrative costs or their profits significantly. Conceivably, they could just raise insurance rates to maintain their profitability.

None of this really matters compared to the provisions of the Affordable Care Act that would restructure the healthcare delivery system. By changing how doctors and hospitals are paid, concepts like payment bundling and accountable care organizations could create real incentives for providers to hold down costs. But if providers form larger organizations and take financial risk, it will be increasingly difficult to understand why we need insurance companies at all.
 

Insurance companies are unlikely to have much more impact on spending growth than they’ve had for the past few decades. The real question about insurers’ role in health care is why they’ll be needed if providers can form organizations that are accountable for the cost and quality of care.

Author | Ken Terry

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