From Volume to Value: Minimizing a Major Healthcare Shift

August 18, 2013

The shift from volume- to value-based reimbursement doesn't necessarily mean reinventing your medical practice. Here's why.

Nearly everyone, including me, has written on the fact that reimbursement for medical care will move from "volume" (do more, get more) to "value" (do less, keep more). The assumption is that this shift is an irresistible force and, over the years ahead, population management including substantial incentives tied to quality metrics will replace the classic fee-for-service environment. Large health systems are investing heavily in data systems that can track patients across the continuum of care and have begun to add clinical staff providing the needed care coordination. Essentially they are placing fairly expensive bets on the inevitability of the value evolution.

So, what should private physicians do? Should they add staff that can track patients to see if they showed up at the specialist, took their medications, and received the diagnostic study? Should practices begin to rethink how they pay providers? Should you expect a visit from the dominant insurance carriers with a "take it or leave it" imperative to move to value? Maybe not.

While I still have confidence that there will be significant financial incentives tied to better management of chronic diseases, avoidance of high-end diagnostics when alternatives are appropriate, providing care in the least costly settings, and reporting quality indicators, I believe that many practices can benefit from these incentives without reinventing what they do.  What then should a practice do?

Medications: Many insurance plans provide incentives to practices that utilize generic medications when appropriate and the government already has bonuses for e-prescribing. This may change the way that physicians select therapeutics but the shift will not have any additional cost or require more staff.

Site of Service: Using an freestanding imaging center, an ambulatory surgery center, or a post-acute care environment may result in bonus payments from some carriers. While there is discussion about the elimination of the reimbursement differences between performing these services in a freestanding setting versus a hospital, this isn’t going to change quickly.

Patient Management: Practices that using an EHR may already have the capability to monitor chronic patients against care protocols that are developed within the practice or adopted from organizations such as the Centers for Disease Control or specialty academies. EHRs can highlight children that are overdue for immunizations, diabetics due for routine lab work, and patients that have skipped preventive care. All of these can ultimately result in cost reductions but add little effort to the practice. In many cases, care recalls can actually increase practice revenue.

I recently discussed the lack of dramatic cost savings from the early population management efforts. CMS reported in July that during the first year of operations the Pioneer accountable care organizations (ACOs) were able to reduce costs by 0.5 percent when compared against non-ACO patients. There was still a 0.3 percent increase in overall costs but better than the 0.8 percent in unmanaged care. Only 13 of the 32 Pioneer programs actually reduced costs. Results like this may provide support for more focused programs.

Some cost management efforts have produced reliable successes. Co-management arrangements where physicians and hospitals partner around high-cost procedures with the goal of assuring good outcomes while making the care process more efficient are good example. Physicians continue to do what they have but have financial incentives for standardizing care. Generic prescription initiatives produce millions in savings. These programs may be more likely to be the kind of initiatives that will be experienced by the bulk of physicians.

The shift from volume to value isn’t going to go away but it might take a much more conservative pathway than the model reflected in ACOs and other population management initiatives. Starting to examine prescriptive patterns, develop care protocols, identify your referral patterns and see if less expensive options are available, and reaching out to your two or three major payers and see if they have an incentive program that might match the steps that you can accomplish.

If none are available, then it’s business as usual for your medical practice.