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Physicians Can Remain Independent in the Face of Healthcare Reform


Complying with health reform mandates isn't easy. The wise physician will pick and choose those measures that make sense for his practice.

Over the last two decades, most physicians have found themselves feeling the effects of multiple initiatives that have often forced them to completely change the way they practice medicine. Long gone are the days of lengthy patient visits and inquiring after extended family. Now healthcare reform is in full bloom, bringing with it a panoply of government mandates and quality measures. In response, many physicians are joining partnerships like accountable care organizations (ACOs), seeking status as Patient-Centered Medical Homes (PCMHs), or even selling their practices to local hospitals.

But what if you don't want to get on the reform bandwagon? We asked our experts to give us a road map, complete with land mines. Here's what reform means if you don't change a thing.

Manage via mandate

Who is choosing not to participate in health reform initiatives? Aside from the older physician only a few years from retirement, typically it is the solo doc who practices independently or in a small group who doesn't want to be "managed" by payers or government agencies. The physicians we talked to all told us that the decision to not fully participate in healthcare reform initiatives really boiled down to being in control of their own practices.

Family physician John Machata owns a micropractice based in Wickford, R.I. He does everything himself: scheduling patients, submitting claims, even answering the phone. Though he has practiced medicine in a variety of settings - a local group practice and 15 years spent in community health centers - he says of his micropractice: "I've never been happier practicing medicine … I am my own boss. And, I can set my own schedule - it's the most satisfying part of my career to date."

Machata says primarily he is not making changes for health reform because his patient panel is full, and he is "as busy as I want to be." He believes strongly in extending insurance coverage to all Americans, but thinks the path to this goal will be bumpy. "I absolutely embrace the [Affordable Care Act] … I am really seeing that people of fairly modest means who were priced out of the Medicaid market and priced out of the commercial market can now get insurance. … I think it is going to be a benefit to healthcare across the board," Machata says.

But he notes that his patients are perplexed when it comes to understanding the intricacies of new insurance products bought through health insurance exchanges. "Approximately 5 percent of my patients who were uninsured are affected by Obamacare, for lack of a better term, and they have faced many challenges; I've helped to guide them," he says. Many patients assume they are covered by insurance as soon as they enroll through the exchange - Machata says they don't know that they must also have a "start date." And for those patients who have never had insurance, understanding the concept of deductibles is a struggle. Machata makes a point to educate his patients during their medical visits on understanding how health insurance works. He says, "[Education] is as important as their medicine or any testing that might be considered."

Onerous reform measures

Several pieces of landmark legislation have increased administrative burdens on practices and required costly technology investments over the past 18 years - from the advent of the HIPAA Act to the HITECH Act.

But it appears that the advent of the Affordable Care Act in March 2010 will be a game-changer for physician practices. While a prime imperative was to expand access to care for uninsured patients by creating more affordable insurance products and subsidies, placing controls on insurance companies to discourage unfair practices, and eliminating denial of coverage because of pre-existing conditions, the full influence on physician practices is yet unclear.

Susanne Madden, founder and CEO of The Verden Group, a practice management consulting firm based in Nyack, N.Y., says that her firm has many clients who initially say they are "just going to duck [reform measures] and hope that it goes fleetingly by." Certainly, if this happened, it wouldn't be the first time that government mandates have been revised or delayed. However, she thinks this is a short-sighted approach.

For example, Madden notes many commercial insurance companies are creating pay-for-performance (P4P) programs that reward physicians for meeting quality metrics in the form of higher reimbursement rates. She asks, "What happens, particularly in primary care, for practices that decide to forego things like Patient-Centered Medical Homes? Will they then be viewed as providing substandard care, because they haven't gone through this path of recognition?"

She adds, "If you are happy getting paid Medicaid rates from commercial payers, then that is where you are going to end up. … If you are not going to participate in any of the quality programs, fully expect that your rates are going to be in the lower stratosphere."

If that possibility makes your stomach churn, what other options do you have? Madden says that other than being bought out by a hospital system, joining an ACO, or becoming a PCMH, your only real choice is to not participate in insurance at all.

Madden sees more physicians pushing back against payer demands by establishing cash-only practices to "get off the crazy train now." For example, some of her clients, particularly pediatric practices, are calculating an all-inclusive, yearly cash amount to cover well visits and estimated sick care, for cash-only patients. Madden says these practices are essentially choosing to "forego volume for sanity," and accepting a much smaller practice as the price.

Penalties for non-participation

So what are the challenges that practices face if they don't want to adopt reform measures or join a larger health system or physician group? There are multiple P4P programs that can affect medical practices' revenue and business models. Chief among them is CMS' Medicare and Medicaid EHR Incentive Programs - or in the vernacular, meaningful use.

Attestation for the Stage 2 rules of meaningful use began this year. Experts caution that it will be much more difficult to achieve than Stage 1 of meaningful use. Practices will need to meet a new set of metrics; some of which require new technology, like a patient portal.

Lucien Roberts, a practice management consultant and assistant administrator for Gastrointestinal Specialists, Inc., based in Richmond, Va., says, "The portal is a requirement, one of the [core] standards for meaningful use Stage 2. And, it is not just having patients pull the records off of it; it's essentially interaction with patients." He goes on to say that practices will need to educate their patients about using the portal to communicate with their physician, "a foreign format to many patients and certainly foreign to most practices."

Then there are those pesky financial penalties for practices that decide not to implement a certified EHR and participate in meaningful use; the first 1 percent reduction in Medicare reimbursement will begin in 2015; increasing to 3 percent over three years.

Roberts feels that many practices may choose to cut their losses when it comes to attesting to Stage 2. "A practice that has been enrolled and achieved meaningful use today has got $36,000 out of their possible $44,000 per doctor. So they've gotten most of their money at this point," he says.

That's the case with Mark Lawlor, a solo physician whose practice, Anderson Family Medicine, is based in Indiana. After seven years in the Air Force and a brief stint at a group practice, Lawlor bought out a retiring physician in 2003. He says he attested to the Stage 1 rules of meaningful use and received incentive payouts, but won't be attesting to Stage 2 because it would require him to alter his practice operations and procedures to accommodate the more restrictive rules. That, he says, would negatively affect his productivity.

"The ratio between the amount of work we are having to put in and the benefit is now tipped in the other direction," Lawlor says. "The first three years the bonuses were worth it … we were able to adapt to the [patient care] work flows pretty easily. For Stage 2 the work flows are considerably more difficult."

Another challenge Lawlor faces? He was recently "bumped off the UnitedHealthcare (UHC) Medicare" plan. Many payers are creating "narrow networks" that consist of a limited number of physicians who are considered in-network, to control costs.  Lawlor says it had nothing to do with his productivity or payer rating; he's a four-star physician according to their records. He thinks it has to do with his status as a solo physician. "It looked like locally that the pattern was they were keeping doctors that were employed by the major health systems, and they were bumping off the solo doctors."

He's sanguine about the effects on his practice. He says he's still seeing UHC Medicare patients as an out-of-network provider. "The only difference is, instead of paying a $15 copay, [patients] have to pay a $25 copay. And the majority of patients were willing to do that."

Technology considerations

Another group deciding not to participate fully in reform measures is physicians who don't or can't make significant investments to practice technology infrastructure - like an expensive upgrade to an EHR or practice management system.

Angela Sherwin, current program director of Brown University's Executive Master of Healthcare Leadership program, and past assistant director at HealthSource RI, Rhode Island's health insurance exchange, says that practices will need to possess technology such as an EHR or be part of a larger health system in order to benefit from quality programs and incentives that rely on reporting patient outcomes and satisfaction metrics. So, small practices that haven't adopted an EHR, or can't afford technology investments, may not be able to benefit from reform measures created through the health reform law.

Oklahoma dermatologist Carlos Garcia recognized the importance of having an EHR in the current practice environment. After leaving the University of Oklahoma, where he was director of dermatology and skin cancer, he bought into a small group practice: Dawson Medical Group, based in Oklahoma City. One of the first things he did was purchase an EHR. But he's not a fan.

"Well, I'm kind of caught in the middle because I'm not as technologically savvy as the younger generations, but I'm not about to retire. So it's a hard decision to make, because I still have 15 years of practice. … All these changes in the politics affect me directly and I have to make a decision about [purchasing technology]. It's not easy. We have [an EHR] but I don't like it," says Garcia.

Buying an EHR can be a mixed bag, with federal regulations and practice needs changing over the years. Internist Georgia Newman whose practice, Oberlin Internal Medicine Associates, Inc., is based in Oberlin, Ohio, says her decision about purchasing an EHR was easy. "In 2006, we could see the handwriting was on the wall about the paper charts; we made the decision because our chart room at the time was absolutely full of paper charts … and there wasn't room for another chart rack," says Newman.

She loves her EHR and that dedication is one of the reasons she has resisted hospital employment, as the regional health network uses a different system. "We were extremely lucky because we got e-Clinical Works which is a really wonderful, user-friendly, intuitive [EHR], basically run and founded by an internist with a tech friend," she says.

Partially adopting reform

By most accounts, solo practitioners or small group practices are not going the way of the dinosaur, even in the face of health reform. They will likely morph into some combination of independence and reform measures that will support their practice, yet minimize financial penalties. Almost like ordering from an a la carte menu. Here are some of the possibilities:

• Join an ACO. Becoming part of an ACO does not mean that you need to be owned by a hospital or become swallowed up into a mega-practice. Newman says she became a member of an ACO in partnership with local health system Mercy Allen Hospital, through long-standing affiliations with the community. Oberlin, Ohio, is a small college town and Newman knows all of the local doctors; who number roughly six. She also has been chief of staff at the hospital, and sits on its quality committee. So when it asked her to join, she said "yes" because she was intrigued by the potential to take better care of her patients.

• Become a PCMH. Madden says that while practices that transition to medical homes undergo a "rigorous transition that basically has instilled within the practice … more effective ways to manage patient care," there are financial benefits too. By holding the line on costs through less fragmented care, payers can pass on some of the savings to practices. Machata is in the middle of applying for PCMH status. He says the process involves "scut work" reminiscent of being a med student. But, he believes that he'll be driven out of business if he doesn't become a medical home - primarily because patients in his area that belong to them do not have to pay a copay to see their doctors.

• Convert to a cash-based or concierge practice. Newman says that one way to get off the treadmill is to "reconfigure your practice as a concierge practice." While it may seem the obvious answer, there are challenges to overcome. She says concierge groups often recruit for physicians who demonstrate "what they perceive as quality." These are physicians who already participate in quality measures like Medicare's Physician Quality Reporting System. Garcia ultimately hopes to become a cash-based practice, but says at present, it would be difficult. Forty percent of his practice is Medicare patients. And he says patients nowadays have an entitlement mentality - he does not think they would pay for his services out of pocket.

•Turn to referral-based, specialty care. Andrew Chung is an independent cardiologist practicing in Atlanta, Ga. He says because his practice is completely referral-based, he is largely unaffected by reform measures. He thinks the onus of reform will fall mainly on the shoulders of referring physicians, in the form of pushback from insurance companies. "Making that referral and the insurance possibly not covering [it] would be an issue. Or not being allowed to make that referral … because [primary-care physicians] are essentially the gatekeepers," says Chung.

In Summary

Physicians are trained to work autonomously. This way of operating often doesn't work well with reform measures that favor group collaboration, and require frequent reporting of patient metrics. Completely refusing to participate in reform can be problematic, but there are ways physicians can accommodate the law. Here are some options:

• Join an ACO

• Become a PCMH

• Practice referral-based, specialty care

• Convert to a cash-based or concierge practice

• Become a micropractice

Erica Sprey is an associate editor at Physicians Practice. She can be reached at

This article originally appeared in the June 2014 issue of Physicians Practice.

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