New Payment Models and the Radiology Practice

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This article is third in a four-part series about health-care reform’s impact on radiology. To read the first article in the series, click here; to read the second, click here.Ed GainesIn the short term, radiology practices might have less to fear from the accountable-care organization (ACO) than from a similar term: the acute-care episode (ACE). That is the contention of Ed Gaines, JD, chief compliance officer for Medical Management Professionals Inc (MMP), Atlanta, Georgia. “CMS is now posting savings from the ACE demonstration project, and that is a stark difference from what we are seeing with ACOs,” he says. “In my opinion, although the ACOs have gotten a lot more press and attention, these bundled-payment demonstrations are potentially more threatening to radiology.”

The CMS ACE demonstration project involves bundling payments for specific high-cost Medicare Severity DRGs (MS-DRGs), such as heart-valve replacement or hip replacement. Many of the MS-DRGs included in the demonstration project are imaging intensive, and the project has reached the stage where the agency is able to demonstrate the savings that have resulted from bundling payment and allowing it to be distributed to individual physicians by the hospital.

Missy Lovell“Under the Patient Protection and Affordable Care Act (PPACA), CMS was supposed to run a nationwide bundled-payment demonstration by 2013,” Gaines says. “It recently announced that it is moving that up to 2012. CMS can go to Congress and say how many thousands of cardiac-valve replacements are performed annually on Medicare patients and that they can save over $1,100 per case.”

A Growing Trend

Missy Lovell, compliance manager for MMP, stresses that bundled payments are, of course, still theoretically fee-for-service medicine. “When the payment is broken up, you are still paid for what you did,” she says, “but the goal is to pay more attention to medical necessity and determine what test the patient really needs, so you can potentially get a bonus for saving money.”

Because tracking each individual physician’s fee for each component of the service will quickly prove burdensome, from an administrative standpoint, Lovell predicts that the model will eventually evolve into one similar to that used by Geisinger Health System (Danville, Pennsylvania), in which strict clinical pathways have been established for procedures such as coronary-artery–bypass grafts. “If you decide you have to vary from that, you can,” Gaines explains, “but you have to prove why you are doing it.”

In the past, some clinicians have objected to this model on the grounds that it represents cookbook medicine, but Gaines points out that in order to lower health-care costs, the kind of individualism that has historically been a hallmark of physician culture in the United States will have to fall by the wayside. “It is basic economics: The only way really to save money is to cut out variability,” he says. “Change is not something any of us do easily, but it has to happen.”

What is more, Gaines and Lovell say, as PPACA provisions to extend health care to all US residents kick in, private payors can be expected to follow the lead of CMS. “We know already, from Massachusetts, that with the expansion of health coverage to a greater number of people, programs like Blue Cross Blue Shield (BCBS) are actually listing high-cost hospitals to avoid,” Gaines notes. “The CEO of BCBS Massachusetts recently said he was encouraging a shift to a global payment plan, or fixed-dollar payments for a specific time period. He said this model gives the provider the financial risk.” 1Radiology’s Response

Gaines and Lovell urge radiologists to work with their hospitals to ensure that they will be given incentives for helping to reduce costs on targeted MS-DRGs. “The worst thing radiologists can do, right now, is to shrug their shoulders and give up,” Gaines says. “They have to be at the table in the hospital with the other specialists, saying that they have a role in reducing utilization and costs and achieving better outcomes. The other specialty groups are all at the table, and radiologists need to be pointing out how they can help and asking how they will benefit.”

Concerns remain about balancing the idea of predetermined clinical pathways against the kind of defensive medicine that malpractice litigation encourages, Gaines notes. “Medically unnecessary care can be very much in the eye of the beholder; it is tough to determine without looking at the