Gastroenterology (GI) is constantly changing in response to technological, demographic, economic, and political influences. Current health care reform efforts will accelerate this change. The increase in demand for GI services and the imperative to provide higher quality care, at less cost, through novel delivery and payment models with greater transparency and better care coordination between providers, will transform the independent GI practice and force consolidation and integration to leverage combined clinical, financial, and management resources. Which practice models will prevail in the postreform era will depend on the details of health care reform implementation over the next several years.
“When nothing is sure, everything is possible” —[Dame Margaret Drabble, English Novelist, born 1939]
It has been widely recognized that the United States health care system is expensive, fragmented, and ineffective. According to the latest data set from the Organization for Economic Development (OECD), health care expenditures are outpacing overall economic productivity by 2% annually and now account for 17.3% of gross domestic product. The United States currently spends a total of $2.5 trillion per year on health care, or approximately $8000 per person, 2.5 times more than the average developed nation. Despite such massive spending, the United States is alone among developed countries in not providing health care coverage for all its citizens, and is being ranked last or second to last in quality, access, patient safety, efficiency, adoption of information technology, and quality improvement, when compared with Australia, Canada, Germany, New Zealand, and the United Kingdom. With government budgets increasingly dominated by the need to finance the cost of Medicare and Medicaid, and the country’s competitive position in a global market eroding, the political pressure has been rising to fix what is perceived to be a broken system. The health reform law now commonly referred to as the Accountable Care Act (ACA) of 2010 is the most comprehensive effort yet to accomplish this task.
Many have opined that the fragmentation of the health care system, the lack of care coordination between sites of care and providers, as well as a payment system that incentivizes providers to maximize the volume of services, not the value of care, are among the fundamental structural issues that need to be addressed. Berwick and colleagues have proposed the “Triple Aim” as a conceptual framework for health reform, describing a set of interdependent goals that need to be pursued simultaneously to achieve high-value health care: improving the individual experience of care; improving the health of populations; and reducing the per capita cost of care of populations. Of importance, these investigators suggest care integration as the main vehicle for achieving the Triple Aim. The physician and writer Atul Gawande noted in his recent commencement address at Harvard Medical School that the complexity of medicine now exceeds the capabilities of individual physicians, and that the current structure of the health care system needs to be changed because it “emerged in an era when doctors could hold all the key information patients needed in their heads and manage everything required themselves.” Gawande further notes that in 1970, it took 2.5 full-time equivalents (FTEs) to take care of a typical hospital patient when today, due to the increasing complexity of medicine, that number has risen to more than 19 FTEs. He concludes that the complexity and range of required specialized skills force teamwork and well-tested protocols. Providers need to work more as “pit crews” and less as “cowboys,” that is, system changes are necessary that encourage better communication and coordination between providers as well as transparency in measuring and rewarding quality performance. Therefore, while the need to reform the health care system has been long recognized and many efforts have been made, the recent passage of the ACA promises to accelerate this evolution with a specific emphasis on care integration, transparency in the pursuit of quality care, and accountability for and management of shared financial incentives.
Current state of gastroenterology practice
Before discussing the transformative impact of health care reform on gastroenterology (GI) practices, it is useful to take stock of the current state of GI in this country. Our specialty stands out among internal medicine specialties for its large proportion of ambulatory care and its procedure orientation. Gastroenterologists typically spend most of their time in ambulatory endoscopy units and in the office, focusing on colorectal and esophageal cancer prevention and on patients with a variety of prevalent disorders such as gastroesophageal reflux disease, liver problems, and inflammatory bowel disease. GI is a mostly consultative specialty, and as such is dependent on referrals from primary care providers. American medicine traditionally has been a “cottage industry” with most medical care being provided in small, privately owned practices. GI is no exception. According to recent surveys by the American Gastroenterological Association (AGA) and the American Society for Gastrointestinal Endoscopy (ASGE), approximately 80% of the 11,000 clinical gastroenterologists in the United States are practicing outside of academic medical centers. (John Allen, AGA membership survey 2010, personal communication.) There has been a slow trend toward practice consolidation, but as of 2009 at least 50% to 60% of GI practices still had 4 or fewer physicians, and fewer than 20% had 11 or more physicians. Roughly half of private-practice gastroenterologists have a financial interest in an ambulatory endoscopy center (AEC). Informal estimates suggest that in 2012, approximately 65% to 70% of practice revenues are derived from procedures and related services. Although this makes GI practices uniquely vulnerable to disruptive technologies, at present endoscopy continues to be a key diagnostic tool and colonoscopy remains the preferred technique for colorectal cancer screening. Thus, any trends that put pressure on small practices or disproportionately affect procedure revenues will substantially alter the practice environment and pose potential threats to the financial stability of GI practitioners.
GI practices have already encountered significant challenges in recent years related to escalating costs and a continued decline in reimbursement rates. As an example, the average Medicare physician payment for a colonoscopy with biopsy has steadily decreased from approximately $500 in 1989 to $265 in 2011. Practices have partially offset rising financial pressures by increasing efficiencies through optimizing endoscopy unit scheduling and workflow, adopting open-access endoscopy and GI hospitalist programs, and by adding ancillary service lines such as pathology, anesthesia, and infusion services. AECs are now “focus factories,” providing much needed endoscopic services in a safe, efficient, reduced cost environment and in a patient-centered manner. However, the recent modification of the ambulatory surgical center payment system as put forth by the Centers for Medicare and Medicaid Services (CMS) has led to a precipitous decline in facility fees for endoscopic services (a decrease of more than 25% over 4 years) and has posed a significant threat to the viability of these centers. Many AECs now operate at or below cost when performing a screening colonoscopy on a Medicare patient. In addition, GI practices are wrestling with an increasing number of unfunded regulatory mandates, the threat of further decreases in Medicare professional fees, the change in practice models of their primary care referral base, to name but a few ongoing challenges.
The affordable care act: general observations
The Patient Protection and Affordable Care Act (Public Law 111-148) was passed by the 111th United States Congress and signed by President Barack Obama March 23, 2010. Together with its subsequent amendment, the Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), this law is sometimes referred to as PPACA or simply as the Affordable Care Act (ACA). The ACA is an imposing piece of legislation which, on its 1083 pages, prescribes sweeping changes to the United States health care system to be implemented over several years. In general terms, the goals are to reform the insurance system, delivery system, and payment system for medical care in this country. To fully understand its impact, the ACA needs to be viewed in concert with other recent legislative efforts, such as the health information technology provisions of the American Recovery and Reinvestment Act (ARRA). A detailed review of all aspects of the ACA is beyond the scope of this article, and the interested reader is referred to the article by Dorn elsewhere in this issue and other recent summaries. Instead, the following discussion focuses on selected ACA provisions that are expected to result in trends that will transform GI care and the role of the independent GI practice in the delivery of such care.
It is worth noting that while the ACA provides an extensive legal framework, the specific effects of the reform on individual providers and practices will not be fully understood for several years. The “devil is in the details,” and it is the implementation of the ACA, through regulations and interpretation of many provisions, that will ultimately determine many of these details. During the current multiyear implementation phase of the law, considerable uncertainty exists as to the exact shape of the health system in the postreform era, and providers who are currently trying to position themselves within the rapidly changing health care environment have to base their strategic decisions on “best-guess” scenarios. Physicians are generally risk averse, and it should therefore come as no surprise that some GI providers have decided to mitigate the risk associated with this period of uncertainty by “seeking shelter” with hospitals and health systems through selling practices and becoming employed providers. If previous economic pressures have put their practices on the fence, they believe that uncertainties associated with ACA are pushing them to give up their independent practice model. Whether this strategy will prove to be the best way forward will not be known for some time, but the movement toward employment has clearly accelerated and may not be easily reversible.
It also needs to be recognized that although the ACA has already undergone some changes and further modifications are likely, broad repeal and defunding of the entire legislation is not expected, given current majorities in Congress and the President’s veto power. Suit has been filed in federal court by numerous organizations and a majority of states, challenging the constitutionality of the ACA, especially one central part relating to the individual mandate to obtain health insurance. At the time of writing, federal appellate judges are divided on the issue, making it likely that these challenges will end up before the Supreme Court. Despite such legal and legislative challenges, the majority of the ACA will likely remain in place and the principles rooted in the law—that the uninsured should have health coverage and that clinicians and hospitals need to exhibit quality and efficiency value—will remain at the forefront of health care policy. Assuming that “this too shall pass” and that “things will look better in the morning” would be a mistake. GI practitioners need to prepare, anticipate, and proactively “skate to where the puck will be.” The Administration’s vision of the postreform era has been clearly articulated by the Director of the White House Office of Health Reform, Nancy Min DeParle and her colleagues.
These reforms will unleash forces that favor integration across the continuum of care. Some organizing function will need to be developed to track quality measures, account for and manage shared financial incentives, and oversee care coordination. Consequently, the health care system will evolve into one of two forms: organized around hospitals or organized around physician groups. …Only hospitals or health plans can afford to make the necessary investments in information technology and management skills. This is not inevitable. As physicians organize themselves into increasingly larger groups- patient-centered medical home practices and accountable care organizations—they are, out of necessity, investing in information technology tools that are becoming both cheaper and more capable and investing in the acquisition or development of management skills that could provide these organizing functions efficiently for physician groups.
The affordable care act: general observations
The Patient Protection and Affordable Care Act (Public Law 111-148) was passed by the 111th United States Congress and signed by President Barack Obama March 23, 2010. Together with its subsequent amendment, the Health Care and Education Reconciliation Act of 2010 (Public Law 111-152), this law is sometimes referred to as PPACA or simply as the Affordable Care Act (ACA). The ACA is an imposing piece of legislation which, on its 1083 pages, prescribes sweeping changes to the United States health care system to be implemented over several years. In general terms, the goals are to reform the insurance system, delivery system, and payment system for medical care in this country. To fully understand its impact, the ACA needs to be viewed in concert with other recent legislative efforts, such as the health information technology provisions of the American Recovery and Reinvestment Act (ARRA). A detailed review of all aspects of the ACA is beyond the scope of this article, and the interested reader is referred to the article by Dorn elsewhere in this issue and other recent summaries. Instead, the following discussion focuses on selected ACA provisions that are expected to result in trends that will transform GI care and the role of the independent GI practice in the delivery of such care.
It is worth noting that while the ACA provides an extensive legal framework, the specific effects of the reform on individual providers and practices will not be fully understood for several years. The “devil is in the details,” and it is the implementation of the ACA, through regulations and interpretation of many provisions, that will ultimately determine many of these details. During the current multiyear implementation phase of the law, considerable uncertainty exists as to the exact shape of the health system in the postreform era, and providers who are currently trying to position themselves within the rapidly changing health care environment have to base their strategic decisions on “best-guess” scenarios. Physicians are generally risk averse, and it should therefore come as no surprise that some GI providers have decided to mitigate the risk associated with this period of uncertainty by “seeking shelter” with hospitals and health systems through selling practices and becoming employed providers. If previous economic pressures have put their practices on the fence, they believe that uncertainties associated with ACA are pushing them to give up their independent practice model. Whether this strategy will prove to be the best way forward will not be known for some time, but the movement toward employment has clearly accelerated and may not be easily reversible.
It also needs to be recognized that although the ACA has already undergone some changes and further modifications are likely, broad repeal and defunding of the entire legislation is not expected, given current majorities in Congress and the President’s veto power. Suit has been filed in federal court by numerous organizations and a majority of states, challenging the constitutionality of the ACA, especially one central part relating to the individual mandate to obtain health insurance. At the time of writing, federal appellate judges are divided on the issue, making it likely that these challenges will end up before the Supreme Court. Despite such legal and legislative challenges, the majority of the ACA will likely remain in place and the principles rooted in the law—that the uninsured should have health coverage and that clinicians and hospitals need to exhibit quality and efficiency value—will remain at the forefront of health care policy. Assuming that “this too shall pass” and that “things will look better in the morning” would be a mistake. GI practitioners need to prepare, anticipate, and proactively “skate to where the puck will be.” The Administration’s vision of the postreform era has been clearly articulated by the Director of the White House Office of Health Reform, Nancy Min DeParle and her colleagues.
These reforms will unleash forces that favor integration across the continuum of care. Some organizing function will need to be developed to track quality measures, account for and manage shared financial incentives, and oversee care coordination. Consequently, the health care system will evolve into one of two forms: organized around hospitals or organized around physician groups. …Only hospitals or health plans can afford to make the necessary investments in information technology and management skills. This is not inevitable. As physicians organize themselves into increasingly larger groups- patient-centered medical home practices and accountable care organizations—they are, out of necessity, investing in information technology tools that are becoming both cheaper and more capable and investing in the acquisition or development of management skills that could provide these organizing functions efficiently for physician groups.
Three major trends and their impact on the independent GI practice
Demand for GI Services will Increase While Payments Continue to Decrease
Increased demand
The ACA increases access to health insurance coverage for United States citizens and legal residents by expanding Medicaid eligibility, by subsidizing private insurance premiums, and by cost sharing for certain lower-income individuals enrolled in health insurance exchanges. Starting in 2014, state Medicaid programs will be expanded to non-Medicare eligible individuals up to 133% of the federal poverty level (FPL), with subsidies for persons earning up to 400% of the FPL ($88,000 for a family of 4 in 2010), so their maximum “out-of-pocket” payment for annual premiums will be on a sliding scale from 2% to 9.8% of income. State insurance exchanges will be created that provide access to private health insurance plans with standardized minimum benefit and cost-sharing packages for eligible individuals and small businesses. A tax penalty will be phased in for lack of coverage. The law prohibits denial of coverage and denial of claims based on pre-existing conditions. As a result of these changes, the number of insured individuals is projected to increase by more than 32 million, and half of these individuals will be covered by Medicaid (which traditionally pays an average of 72% of Medicare fees). The ACA also eliminates copayments for Medicare and Medicaid enrollees for preventive screenings such as colorectal cancer screening examinations, and Medicare waives the deductible for such screenings. Private sector health plans are now required to provide a minimum benefits package and cover colorectal cancer and other preventive screenings, with no cost sharing for the patient.
Decreased payments
Many factors contribute to the continued decline in payments for GI services. Section 3134 of the ACA authorizes the Secretary of Health and Human Services (HHS) to adjust codes that are deemed “misvalued,” with specific mention made of high-volume codes that have not been subject to review since the implementation of the current Resource Based Relative Value System. Several GI procedure codes fall into this category. The American Medical Association (AMA) Relative Value Update Committee has already begun an extensive review of these codes, and a downward adjustment of many GI code values and thus Medicare payments over the next few years is a likely outcome of this review. Much to the chagrin of physicians, the ACA does not address the Medicare physician payment update and the problematic Sustainable Growth Rate formula, thus leaving physicians at risk every year for additional significant cuts in Medicare reimbursement. Whether such cuts will continue to be avoided through Congressional action is anything but certain in times of increasing budget deficits. The sweep of new reimbursement models, yet to be developed, is also likely to include further efforts to redistribute income from specialists to primary care providers to address perceived payment inequalities.
Among the most controversial provisions of the ACA is Section 3403, which establishes a 15-member Independent Payment Advisory Board (IPAB). Starting in 2015, the IPAB will make recommendations to Congress on lowering costs to the Medicare program. The recommendations will take effect unless Congress rejects the proposal and offers a recommendation that achieves the same savings. The board will be prohibited from making decisions that ration care, increase beneficiary premiums, or eliminate benefits, making health care providers the most likely parties to receive cuts. Opponents of the IPAB have raised concerns about possible rationing of care, and some lawmakers have expressed concern about ceding their jurisdiction to an unelected panel. Legislation and amendments to repeal the IPAB have been introduced, and could receive some attention during upcoming legislative discussions over deficit reduction and the fiscal budget for 2012.
The cumulative effect of these anticipated changes in demand and payments for GI services, together with the demographic trend of an aging population, is the imperative to care for more individuals at lower reimbursement levels. Practices will need to closely examine and understand their cost structure and profitability. Practices are well advised to conduct a “stress test” to determine whether they will still be economically viable if payments for GI services dropped by 20% to 30% and costs continue to increase at current rates. The pressure to gain efficiencies and drive down costs by eliminating waste will continue to intensify, favoring practice consolidation to be able to share resources and management capabilities. However, until the current fee-for-service system has been replaced with a new payment model, the opportunities for efficiency and revenue gains, and cost containment, will not change fundamentally. Optimizing endoscopy center and provider schedules and exploring additional revenue streams remains important. Practice models that rely on lower-cost nonphysician providers for office and inpatient work and maximize physician time in the endoscopy center will also help increase practice profitability. Although health care reform is not the only potentially transformative force, and disruptive technologies such as self-propelled endoscopes, remotely controlled capsules, and serum or stool DNA testing for colorectal cancer screening may eventually lead to a complete paradigm shift with regard to the demand of GI care, such changes do not appear to be imminent within the next few years.
Increased Emphasis on Quality, Value, and Transparency
The report by the Commonwealth Fund, the Dartmouth Atlas project, and many other studies, as well as commentaries in the lay press have noted quality gaps and drawn public and political attention to the glaring variation in quality of care and resource use across the United States. As a result, there has been a growing interest in mandating that providers collect and report relevant quality and performance data, and improve the value of their care. Transparency of such quality measurement and improvement activities has been suggested as an important factor to enable patients to make informed choices about their care, enable purchasers to select higher-value health plans, and to motivate physicians to improve their performance. In a recent study by the Commonwealth Fund, 3 out of 4 health care opinion leaders considered increased transparency important for improving the health care system’s performance.
The ACA mentions the word “value” 214 times and includes multiple related provisions. It increases incentive payments for physicians participating in Medicare’s Physician Quality Reporting System (PQRS) through 2014. Starting in 2015, penalties will be assessed if providers do not successfully participate in the PQRS. The law also directs CMS to establish a hospital value-based purchasing program to pay hospitals based on performance on quality measures, and plans are to be developed to implement value-based purchasing programs for ambulatory surgical centers, home health agencies, and skilled nursing facilities. Furthermore, CMS is to develop a “value-based modifier,” which will be applied to all physician payments starting in 2017. The goal is to provide bonus payments to “high-value providers” while “low-value providers” will see their payments reduced. The details as to how CMS will reliably determine the quality and costs of individual providers remain to be determined. The CMS Physician Compare Web site will be developed to make information on physician performance, including participation in PQRS, publicly available by 2013. The site can be expected to be similar to the Hospital Compare Web site already in operation. Physicians should also be aware of private-sector initiatives such as the FAIR Health Web site launched in August of 2011. This free online database now allows patients to look up the average charges for specific medical services in their area. The database arose out of two settlements with UnitedHealth Group (UHG) in 2009, when the AMA and state medical societies alleged that UHG used an intentionally flawed database to increase its profits by underpaying patients’ medical bills. This new independent database could serve as a model for providing transparency and giving patients a better idea of what their financial responsibilities may be.
To remain successful in an era of transparency and practice and provider profiling, GI practices will have to proactively enter the “quality game.” Practices have to understand and enter the national quality environment and establish a culture of quality improvement, with incentives to providers and staff around quality and performance measures. While many remain appropriately skeptical as to whether the quality of medical care can truly be measured in a meaningful fashion across all relevant clinical situations, payment and care decisions will be increasingly based on demonstrated value. Payors already have access to a large amount of performance data on providers, and stand ready to use that data for practice tiering by quality and cost. Health systems control an increasing percentage of primary care providers and will be able to build referral prompts into their electronic medical records that promote referrals to “high-performance” specialists. Practices should monitor local and national activities to identify evolving GI quality measure sets and begin implementing a basic set of measures that can be expanded and modified. Practices need to start telling their “quality story.” Because patients perceive the quality of their experience more than they perceive the quality of their care, service excellence needs to be a key component of these performance improvement efforts, very much in line with the stated goal of the Triple Aim. The pursuit of clinical and service excellence will become increasingly broad, complex, and continuous, requiring a robust information technology (IT) infrastructure for data capture, aggregation, and analysis. The days of a “quality project” consisting of a manual review of a handful of paper charts are over. The GI practice that is able to demonstrate that it establishes, updates, and adheres to best practice guidelines, implements point-of-care decision tools, and benchmarks and distinguishes itself vis-a-vis competitors will do well in this new era of assessment and accountability, no matter what delivery and payment models will find widespread adoption.
Development of New Care Delivery and Payment Models
The ACA contains several provisions to create or study payment incentives and new service delivery models. Pilot projects such as those using bundled payments and shared savings contracts will encourage closer alignments between independent physician practices, hospitals, and payors. Collectively they represent a great shift of risk from the financiers of care to the providers of care.
Bundled payments
Effective 2013, the Secretary of HHS is instructed to establish pilot programs on payment bundling to encourage providers to improve care coordination to achieve savings for the Medicare program. Bundled payment, also known as episode-based payment, may be defined as reimbursement “on the basis of expected costs for clinically defined episodes of care.” It has been described as a “middle ground” between fee-for-service reimbursement and capitation (in which providers are paid a lump sum per patient regardless of how many services the patient receives). Considering the advantages and disadvantages of fee-for-service, pay for performance, bundled payment for episodes of care, and global payment such as capitation, Mechanic and Altman concluded that “episode payments are the most immediately viable approach.” Compared with fee-for-service, bundled payment is less likely to encourage unnecessary care and more likely to encourage coordination across providers, and potentially improves quality. Moreover, because bundled payment approaches have been tested for years, real-life experience exists with this model. In 2007 the Geisinger Health System reported that a “ProvenCare” model for coronary artery bypass surgery that included best practices, patient engagement, and preoperative, inpatient, and postoperative care packaged into a fixed price led to shorter hospital stays and lower readmission rates in comparison with patients who received conventional care. Researchers from the RAND Corporation estimated that national health care spending could be reduced by 5.4% between 2010 and 2019 if the PROMETHEUS model for bundled payment were widely used.
Despite many open questions about bundled payments, addressed in numerous pilot projects by Medicare and various private payors, it seems likely, given the largely positive reports to date, that an increasing number of physician services will be paid via such bundling methodology in the future. GI practices need to prepare for this possibility by working to understand their average costs for discrete episodes of care as well as their cost range. Practices will need to implement a best-practice approach to defined care episodes, and need to benchmark themselves against other practices (and against themselves over time) to determine whether they can successfully offer “warranties” around specific care episodes for a bundled payment in a financially viable fashion. Their position in a competitive market will be enhanced by a lean cost structure, allowing the practice to derive a greater profit from the same episode-based payment. Practices with efficiently run AECs should be in a good position in this regard, relative to costlier, and often less efficient, hospital-based units.
Shared savings
While the new health care reform law encourages clinical integration in several pilot projects, perhaps the most direct encouragement is the Medicare Shared Savings Program for Accountable Care Organizations (ACOs). A more detailed discussion of ACOs by Komar appears elsewhere in this issue. In broad terms, they may be defined as networks of providers that can manage the full continuum of care for all patients within their network. Should the ACO cut costs and achieve documented quality improvements, their providers are rewarded with a share of the savings. The expectation is that integration and care coordination will result in higher quality of care and lower costs. Perhaps no part of the ACA has generated more activity on the part of provider organizations. Hospitals and physician groups are exploring ways to align and connect now to be ready for the future, and provider groups are spending considerable efforts and money to make sure they make the transition correctly. As an example, about 80 provider organizations are studying ACOs in the Accountable Care Organization Learning Network, a joint project of the Engelberg Center for Health Care Reform at the Brookings Institution and the Dartmouth Institute for Health Policy and Clinical Practice. The program offers members monthly webinars and an ability to share best practices. Meanwhile, commercial insurers who fear losing business to ACOs, and who may want to take on the financial risk of contracting directly with employers and patients, are building their own ACOs. UnitedHealth Group, through its Optum Health subsidiary, is making significant investments (rumored to be in the $1 billion range) to position itself as a leader of the emerging ACO field by buying medical groups and launching physician management groups throughout the country. Humana and WellPoint are said to be pursuing a similar strategy.
There are many challenges associated with implementing ACOs, and it will be several years before the results from various pilot projects can provide some insight as to what a successful ACO might look like and whether the predominant model will be structured as an integrated health system, a large multispecialty group, an independent practice association, a payer-owned organization, or an entirely different concept yet to be developed. GI practices need to become familiar with the various ACO models, explore the evolving dynamics in their local markets, and monitor this issue very closely, as it may truly revolutionize the way medical care is being provided in the future as well as the role independent practices can play in the provision of such care.
Related posts:
Electronic Medical Records and the Gastroenterologist
A Letter to Fellows: Transitioning From Training into Practice in Uncertain Times
Medical Practice Integration: Going Big in Private Practice
Gastroenterologists and the Triple Aim: How to Become Accountable
Demonstrating Value: Registries and Beyond
Gastroenterologists and Accountable Care Organizations
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