Radiology and the ACE: Reports From the Front Lines

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Neale Pashley, operations manager for Medical Management Professionals (MMP), found himself on the front lines of the CMS Acute Care Episode (ACE) Demonstration when a radiology practice with which he worked became a participant. “What the radiology industry should prepare for, more than anything else, is the impact this might have on utilization,” Pashley says. “The goal is to cut down on unnecessary utilization of procedures, and while the initial impact might be limited, over time, that will change.” The current ACE Demonstration, announced by CMS in 2009, took place at five hospital sites that agreed to be paid a single sum for all Part A and B services for Medicare inpatients (a five-year pilot, set to begin in 2013, will also look at payment bundling for postacute services in a variety of settings). The ACE pilot raised questions about the role of specialists (such as radiologists) who contract with hospitals. Initial experiences (including Pashley’s) offer some answers, although the demonstration project’s special circumstances make it a less-than-ideal test case, Pashley notes. “For hospitals participating in the pilot, patients were given an incentive for signing up, and the hospital would thus get more volume,” he says. “Per patient, the hospital was making less money, but it had more patients to do that with. One hospital in one market can make money—but when you apply that globally across the whole market, the math does not add up.” Pilot Challenges One of the biggest challenges faced by the radiology practice participating in the pilot was the hospital’s role as payor, Pashley says. “The way this program was presented, the practice would be paid at Medicare rates, but instead of billing Medicare, it would bill the hospital,” he says. “It was a wash, for the practice, in terms of payment. The downside was trying to get Medicare and the hospital to understand which patients fell into the program—because they were not on the same page, our claims would be denied. Medicare would claim a patient was not part of the program when he or she was.” A more insidious challenge, however, was that posed by the role of upstream specialty providers, including cardiologists and orthopedists. “To the extent that radiology groups can get a seat at the table in creating these payment arrangements, that is something they need to do,” Pashley says. “In this case, the hospital, the cardiologists, and the orthopedists set up a separate corporation into which to funnel the Medicare payments. The radiology practice, being a downstream provider, had to play along—or it would not get to read the exams at all.” That meant that the orthopedists and cardiologists ultimately had control over the care episode, relegating the radiologists to a commoditized role, Pashley says. “From the time the patient came to that specialist’s office, the specialist controlled the referrals and the ‘bundled’ episode of care,” he explains. “To the extent that they can, radiologists need to get in on the front end of this and get their piece of the pie—whatever that looks like.” He stresses that this will require advance work on the part of radiology practices—advance work that should start now, in most cases. “Radiologists have to be more proactive,” he says. “If they do not get involved in what is happening now, four or five years down the road, they will not get any say.” Potential Challenges Perhaps more onerous than the challenges that radiology practices face as part of the pilot are the challenges for which the pilot creates potential. As Pashley observes, radiology utilization and payment levels were not affected by the pilot program, but that was a function of its limited scope. “As soon as multiple, competing hospitals are doing this, the hospitals will be under pressure to try to make the money they used to make,” he says. “That money might be coming out of the radiologists’ pockets.” With upstream specialists (such as cardiologists and orthopedists) already framing themselves to take control of care episodes, specialists such as radiologists and emergency-department physicians will be pressured to take any terms that they are offered in order to continue seeing the same volume of patients, Pashley predicts. “If you play this globally, I do not see how it can work out for radiology,” he says. “The hospital gains and the upstream specialists gain—but someone has to lose money somewhere. When payments are bundled, they have an incentive to refer to the cheapest radiologist they can, so referral patterns are likely to change.” Medicare, Pashley notes, is focused on finding savings in traditionally high-cost episodes of care, such as heart problems. “It is not really a lot of bang for the buck for Medicare to focus on bundling for something like chest radiography,” he says. This means that specialists whose work is traditionally resource intensive have a built-in seat at the bargaining table. “Let us say Medicare wants to cut down expense for orthopedic implants, which are really expensive because the orthopedists control where they are buying them, and Medicare’s opinion might be that they are paying above market value,” he says. “The hospital could get together with the orthopedists and state that they would get a cut of whatever they could save in those payments, because they would have assisted in cutting down on that expense.” This kind of arrangement could work for imaging as well, Pashley says, but it will require radiologists to establish a much more consultative and collaborative role than many practices currently have with their contracted hospitals. “There is always a chance radiology will not wind up being the loser in these arrangements,” he concludes, “but radiologists need to understand the paths they are going down before they sign up for them.” Cat Vasko is editor of and associate editor of Radiology Business Journal.