Making accountability work key to cap contracts
Making accountability work key to cap contracts
Good data, fair systems essential
Risk is a word with many connotations. To insurers, risk often means the downside, but to physicians practicing in managed care, risk represents the opportunity to benefit from the upside.
The fact is, risk is required for any upside in today’s managed care environment, as in any industry. The act of taking a risk, of putting your performance on the line, is required for any reward — be it a simple bonus for a primary care capitation contract or a substantial reward for managing a global capitation contract.
Once it is acknowledged that risk is always a factor of compensation under capitation contracts, the focus can turn to managing that risk in a way that reduces exposure to loss and enhances physicians’ ability to earn greater compensation. As providers of care, physicians also are charged with earning compensation in a way that brings value to the delivery of care. Ultimately, that stewardship must translate into outcomes of continually improved efficiencies in the care of patients, which are commonly referred to as quality of care and are rarely defined beyond anecdotal references and discussions in medical staff lounges.
As HMO enrollments grow and carriers pass on more capitation contracts to provider groups or independent practice associations (IPAs), providers will need to grow more sophisticated in their ability to incentivize themselves to "do the right thing." It bears repeating that the "right thing" must be right for both patients and doctors.
The ability to manage risks lies in building incentives and accountabilities into the system. Let’s use a physician organization of 100 primary care physicians and 100 specialists as an arbitrary example. Determining how to allocate accountability among physicians is the key to success for all stakeholders in the risk contract — individual physicians, each group practice, and the organization that oversees the contract (for example, an IPA).
The first consideration is who shares in the risk. Contract terms will dictate whether the risk is shared with hospitals or the HMO, or whether it will rest on the shoulders of the physician group only. Of course, if the physicians are ready to manage the full risk, they also will enjoy all of the upside. Younger physician organizations or those that have reason to co-venture with hospitals or HMOs may be better served by sharing the risk with these organizations.
Looking at risk management on a finer level, it makes sense to allocate the responsibility for treatment at the geographic level to physicians. This unit of allocation commonly is a subunit of physicians within the IPA who admit to the same hospital or who share on-call responsibilities.
The unit is likely to consist of seven to 15 physicians who also serve a common geographic area and may practice within one or more clinics. It is not uncommon for a subunit to consist of one large clinic. The size of the group needs to allow for strong peer-to-peer interaction and yet be large enough to see a significant number of enrollees flowing through the subunit to produce a meaningful volume for performance profile reports.
Primary care physicians in the subunit select the specialists for all specialist and subspecialist referrals. It is with these selected providers that risk is shared. This selection process is of the utmost importance, and much heated discussion often is generated in the process. To care for a growing number of enrollees who flow through risk contracts, many subunits decide to include more than one physician or clinic in each area of medicine.
Giving physicians performance incentives
As the process of subunit development continues and more enrollees participate in the capitation contracts, more specialists may become members of subunits. In the beginning stages of subunit development, the enrollee numbers are not likely to be large enough to incentivize physicians to practice the utilization management and patient management skills that are essential to managing risk contracts successfully. However, specialist subcapitation is likely to occur with even 1,000 enrollees. At this level of volume, specialist attention to subunit guideline development and interaction with primary care physicians is likely to intensify.
As in any business, peer-to-peer interaction is the optimal medium for building a culture of strong performers. Within the context of managed care, stronger performance refers to guideline adherence and a deepening relationship and communication between primary care physicians and specialists to which they refer.
Although this relationship building has been ongoing since long before managed care contracting came about, capitation contracts provide unparalleled incentives among providers for reciprocal support and adoption of physician-directed guidelines.
Physician report cards needed
The curbside consultants and water cooler discussions become peppered with specific quantitative information about comparative patient outcomes reflected in the physician/subunit profiling reports distributed on a quarterly or monthly basis.
These reports, simple in format for user-friendly readability, allow each physician to drill down data to his or her own practice. The data allow physicians to compare performance to a multitude of benchmarks established on at least four levels:
• intra-subunit;
• inter-subunit;
• at an IPA or physician-hospital organization (PHO) level;
• at the regional or national level.
One predictable and understandable objection faced by IPA and PHO leaders is the ability of data reports to factor in the case mix and severity adjustment of patients. Physicians will want to know they are not being penalized for taking on the most chronic patients.
It is common to hear physicians vent their fears about facing possible "train wrecks," as medical catastrophes are referred to in managed care. These wrecks range from cancer patients needing long-term care and technologically intensive treatments to natural catastrophes affecting the health and well-being of a large population.
The data must be carefully weighted to factor in the ebb and flow of the sickest of patients seen by physicians, often internists with excellent reputations for their care of the most chronically ill patients. This factor alone can cause physician groups to seek data information systems and management support of the highest quality. The capital investment and skill level required to manage this data system may even drive physician groups to seek a partnership with established IPA management firms of the caliber of Nashville, TN-based PhyCor’s NAMM or the management services organization system of Brown & Toland in San Francisco.
Under any circumstance, the search for the perfect data and support system is labor-intensive. The final selection usually calls for compromising clinical information in favor of financial claims information, or favoring the integrity of claims information and adding on a clinical module that is less sophisticated.
Deal with few hospitals
As mentioned, a factor that usually shapes the makeup of a subunit is the common usage within subunit membership of one or perhaps two hospitals. While hospitalist programs are enlarging the number of hospitals to which physicians admit patients, physicians are almost always more familiar with and favor one hospital. Building a subunit around physicians widely inclined to use no more than two hospitals sets the stage for the greatest accountability among that physician group.
The key to managing risk is the nature of the system of accountability established for physicians. Leaders must ask themselves these questions:
• Is the system fair?
• Are the data reliable and user-friendly?
• Are specialists being brought in to the subunits at the appropriate time to respond to the need to adhere to guidelines and improve communications?
• Have physicians been educated on an ongoing basis about the meaning of their numbers?
Underlying all the numbers and reports must be a belief among physicians that the culture is focused on the education process, not on punitive actions. While actions eventually may need to be taken to discourage behavior that is harmful to the group, it is tantamount that accountability be understood as an agreeable and fair way of building a health delivery system that benefits both physicians and patients. A culture of fair play backed up with reliable data and strong managers who understand how to break down the data is the best way to manage the risk all doctors are now facing in the managed care world.
Subscribe Now for Access
You have reached your article limit for the month. We hope you found our articles both enjoyable and insightful. For information on new subscriptions, product trials, alternative billing arrangements or group and site discounts please call 800-688-2421. We look forward to having you as a long-term member of the Relias Media community.