MACRA’s Physician-Focused Alternative Payment Model Options: A Multispecialty Perspective

Asa C. Lockhart, MD, MBA
Co-Founder and Principal, Golden Caduceus Consultants, Seabrook, TX

The Medicare Access and CHIP Reauthorization Act (MACRA), which replaced the perennial Sustainable Growth Rate (SGR) formula, created two options for compliance. The first path, which does not require assumption of insurance risks, is the Merit-Based Incentive Payment System (MIPS) that consolidated existing quality programs and added clinical practice improvement. The other fork in the new highway is the Alternative Payment Model (APM), with one subgroup variant being the Physician-Focused (PF-APM), in which the physician accepts some level of risk for services and expenses over which they have some control. Another subgroup variant is the Hospital-Focused (HF-APM). This article focuses on PF-APMs with an emphasis on potential multispecialty models that may provide subtle opportunities or be developed by others in the community where anesthesia may play a role. While physicians may have a wide range of experience with some MIPS elements, few physicians have any idea how APMs might apply to their practice.

Our current system is oriented toward intervention and what is possible; emerging models emphasize prevention and experientially-based minimization of avoidable complications. Modeling focuses on balancing optimization of outcomes, costs and patient satisfaction versus fragmented silos of care (e.g., particular physicians or specialties). Disconnects between the consumer (patient) and the producer (professionals) are barriers to balancing costs and utility. The current system does not value or anticipate the questions of how often it meets expectations, at what costs and relative risks. Additionally, the patient has no affirmative responsibility to optimize their personal health. And finally, the system itself is a barrier.

Barriers to Redesign

Existing models may not address barriers to redesigning services that may provide higher value to healthcare. To innovate, one must have the latitude to reallocate precious but limited resources and have space to make the transition. Two commonly mentioned barriers are either no or inadequate payment for many high-value services and transitional financial risk for a different mix of services despite reduced costs to society. Patients may benefit from enhanced personal time in an alternative model or pursue lower cost options with improved or neutral outcomes. Yet we are not paid to take the time to counsel patients on lifestyle or various options available to them that are time-intensive or require relational databases. Physicians are best positioned to evaluate alternative delivery systems and optimize cost delivery settings and different combinations of services and providers. But that takes time and requires support and resources (human and financial capital) not currently available. It also takes an alignment of incentives that focus more on outcome, utility and coordination rather than component production and what is merely possible. A transition from the current model to emerging models still requires keeping the doors open! As current transactional practice revenue decreases with the delivery of fewer or lower cost services, a transitional strategy will be necessary to shield operating losses, as changes will not be proportional and may even be higher in a temporarily dual system.

No or inadequate payment is a barrier to both Medicare and private health plans for high-value services that would benefit patients and help reduce avoidable spending. For example, responding to a phone call about a symptom or problem might help patients avoid a more expensive ER visit. There is no recognition of the value of coordination of care between primary care physicians and specialists for the time saved by avoiding duplicate tests or conflicting medications, or for facilitating discharge planning in emergency departments to enable safe discharge without hospitalization. A proactive, early-stage telephone call might optimize preventive care and lower comorbidities in high-risk patients. Patients, especially deconditioned patients, would benefit from prehabilitation, but there is little support for developing this intervention. Smoking cessation reduces respiratory complications and length of stay as well as improvements in wound dehiscence. Current paradigms do not recognize these benefits. However, a well-designed APM would leverage these opportunities.

Financial penalties for delivering a different mix of services pose transitional risks to physicians in several ways. As their health improves, patients require fewer services or avoid developing a disease. They experience fewer complications and comorbidities requiring intervention. However, despite these improvements, practice overhead does not decrease; rent and utilities are not pegged to quality of care or resource utilization.

Most APM savings do not come from physician payments; savings can be realized without financial targeting or implicit penalization of physician practices for delivering a societal goal. With healthier patients, physician practices would receive less income under current methodologies. This is the essential problem that must be addressed if we are to make substantial progress as APM options are developed.

What are the prerequisites to overcoming these barriers to successfully create new options? The Center for Healthcare Quality and Payment Reform (CHQPR) has identified three characteristics for enabling change:

1. Flexibility in Care Delivery: the APM must provide enough innovative flexibility and patient-centric focus to deliver a mix of services that makes sense but is not covered within today’s payment methodologies to provide new paths to efficiency and effectiveness.
2. Adequacy and Predictability of Payment: it is essential that financial resources be available to start the process and that there is confidence that the return on investment (ROI) will be there. The fear is that our success will be co-opted. Rules of engagement must deliver adequate and predictable resources to allow physicians to create alternative structures to identify high-quality service opportunities and address both start-up and transitional financial risk to physicians. Exposure must be risk-adjusted to recover the investment yet be within an acceptable financial risk corridor for small business medical practices.
3. Accountability for Costs and Quality Under Physicians’ Control: program design must assure non-provider stakeholders (patients and payers) that outlays will be controlled or reduced with an implicit assumption that quality will be maintained or improved. The beauty of PF-APMs is that individual physicians should only be at risk for those aspects of spending and quality they can materially control or influence.

Examples of Potential Models

A Guide to Physician-Focused Alternative Payment Models, prepared by the American Medical Association (AMA) and the CHQPR, identifies seven potential models. Since this is an emerging concept with no other resources that synthesize the material as well as this publication, the following excerpts/paraphrases in quotes are from that comprehensive document, followed by examples to stimulate thought on how these models could benefit practices and communities.

“APM #1: Payment for High-Value Services with physician payment for desirable services not currently billable enabling avoidance of other, more expensive services...physician bills and paid for time and resources needed to apply appropriate use criteria and engage in an education/shared decision-making process with patients to determine the most appropriate diagnostic tests.... In contrast to typical shared savings programs, physician payments would not be explicitly tied to how much money that practice saved. Instead, the physician practice would be paid adequately to deliver appropriate services, and the payer saves money by spending less on avoidable services.”

This could be a component of an early-stage perioperative surgical home (PSH) (e.g., preoperative testing protocols, prehabilitation, smoking cessation).

“APM #2: Condition-Based Payment for Physician’s Services...physician flexibility to use the most appropriate diagnostic or treatment option for a patient’s condition without reducing the operating margins of the physician’s practice...flexibility to use the payments for whatever combination of services were most effective—office visits, phone calls, emails.”

Monthly payments targeted to chronic conditions replace evaluation and management code limitations. Seamless transitions or smoking cessation achieved during PSH appeals to primary care physicians (PCPs) with global risk with enhanced management of COPD patients.

“APM #3: Multi-Physician Bundled Payment (BP)...the goal is to give multiple physicians providing services to the same patient flexibility and resources needed to redesign their services in coordinated ways to improve quality and reduce the costs of diagnosis or treatment.... Patients benefit as physicians delivering their care work together in more coordinated ways with additional resources and/or flexibility under the bundled payment to deliver different types or combinations of services not currently provided. Payers benefit because new payments enable physicians to deliver care more efficiently, order fewer or lower-cost services from other providers, and/or reduce avoidable complications. Physician practices benefit from the resources and flexibility to deliver optimal services and coordinated services agnostic to current revenue flow risks to the practices.”

This model has a very high potential and likelihood for anesthesiologists since it offers major benefits and aligns incentives for all stakeholders to coordinate care by virtue of shared risks and rewards. This model would allow acceptance of risks for professional services, especially in circumstances where the facility partner is unable or unwilling to participate.

“APM #4: Physician-Facility Procedure Bundle...the goal is to incentivize physicians to choose the most appropriate facility to deliver particular procedures and to work with the facility to improve efficiency and quality.... Patient benefits from receiving high quality care at the lowest-cost facility with coordinated and efficient care.... Payer benefits because the Alternative Payment Entity (APE) could accept a lower payment for the bundle than the total separate amounts under current payment systems. Physician practices benefit by using the BP to cover the costs of services not currently billable or inadequate, and by receiving compensation for innovations that reduce costs at the facility.”

This model has a very high potential and likelihood for participation by anesthesiologists since it offers major benefits and aligns management incentives between stakeholders but carries the utility risk of demand for certain services (e.g., GI, cataract). The marked variability in hospital charges will be a significant driver with an opportunity to engage payers. Since anesthesiologists cover multiple sites, they are in a unique position to help select the most efficient or progressive facilities (e.g., stable facilities with good policies and procedures versus lower performing options).

“APM #5: Warrantied Payment for Physician Services...the goal is adequate physician payment and flexibility to redesign care to prevent complications with reduced spending needed to treat them.... Contrasting penalties that reduce payments for complications, this approach provides greater upfront resources to redesign care for reduced complications. With the cost of treating some complications built into the warrantied payment amount, the physician is not financially penalized when a small number of complications occur yet rewarded for eliminating most or all complications.”

This could be a potential variant of a monetization strategy for a PSH.

“APM #6: Episode Payment for a Procedure...the goal is to give physicians and other providers the ability to deliver comprehensive care during and after particular procedures or treatments in coordinated, efficient ways...all of the costs involved in a procedure encompassing inpatient, rehabilitation services and treating any post-operative complications. The payment amount would be risk-adjusted, anticipating more or less inpatient or post-acute care. Payments would be adjusted based on quality and outcome measures.”

This essentially takes Models 4 and 5 and adds the post-discharge management and readmission risk components. While optimally a later, more mature option after experience in Models 4 and 5, market and political pressures may make this the initial option. The Comprehensive Care for Joint Replacement (CJR) Model added hip and femur fractures as a proposed rule APM in August.

“APM #7: Condition-Based Payment...gives physicians and other providers delivering care for acute or chronic conditions flexibility and accountability to deliver the most appropriate treatment for the patient’s condition in a coordinated, efficient, high-quality manner.”

An example was Condition-Based Payment for Post-Acute Care Following a Hospitalization for spine surgery. This model may be a separate initiative, perhaps with different provider groups, as either an early stand-alone or as an independent but complementary part of Model 3 or 4, but an integral part of Model 6. The post-discharge management of a PSH patient could be a standalone approach in some circumstances. In the procedural arena, I do not see this as a long-term option and would predict a rapid integration with one of the other models.

Conclusion

We are in the interim final rule phase of rulemaking, and the American Society of Anesthesiologists and AMA are diligently evaluating options to preserve your future. The multiple system options may be payer-designed, facility-designed or physician-designed. Close your eyes and make a guess; of those three options, which avenue is most likely to provide an optimal system that treats our colleagues and our patients in the most equitable manner? The above options will evolve with both the final rulemaking and system adaptation.

I would like to acknowledge briefing materials contained in the publication A Guide to Physician-Focused Alternative Payment Models jointly produced by the AMA and the CHQPR that provided the generous excerpts, direction and resources for this article. I would like to thank Sandra Marks (AMA) and Harold Miller (CHQPR) for their copyright permission in general, allowed use of generous excerpts and edits in particular. For a deeper understanding of how you can take control of your future, this excellent resource may be accessed at: www.ama-assn.org/ama/pub/advocacy/topics/medicare-alternative-payments-models.page.

Asa C. Lockhart, MD, MBA is Co-Founder and Principal of Golden Caduceus Consultants, an anesthesiology consulting firm in Seabrook, TX. Over the past 16 years, GCC has developed stabilization strategies for more than 185 hospitals and/or anesthesia groups and departments in 37 states. In addition to his consulting work, Dr. Lockhart had an active anesthesia practice in Tyler, TX and has an MBA with an emphasis in healthcare that brings validity and insight to the challenges facing many anesthesia groups and hospitals. Dr. Lockhart is the founder and course director for the ASA Certificate in Business Administration Course created by the ASA Committee on Practice Management. He was also a member of the ASA Committee on Future Models of Anesthesia Practice and has served as president and treasurer of the Texas Society of Anesthesiologists. He serves on the AMA Council on Medical Services, which develops healthcare policy options for consideration by the AMA House of Delegates, and is a vice-chair with the National Physicians’ Council for Health Care Policy. He can be reached at (903) 521-6728 and aclhart@goldencaduceusconsultants.com.