For Dr. Damian Folch, 59, is among thousands of physicians in Massachusetts whose pay depends on how their patients fare, not just on how many times they see them. If patients stay healthy and avoid costly medical care, he gets more money.
This simple shift in how healthcare is paid for — long seen as key to taming costs — has been occurring in pockets of the country. But nowhere is it happening more systematically than in Massachusetts, the state that blazed a trail in 2006 by guaranteeing its residents health insurance.
There have been few greater periods of change in American medical history … and this is the epicenter. It is striking how different Massachusetts is from the rest of the nation.
In the last three years, commercial insurers in the state have moved nearly 1 million patients into health plans that reward doctors and hospitals that control costs while improving quality.
About 180,000 Massachusetts seniors are on track to get care from physicians paid this way by Medicare through a new initiative included in the national health law.
And this summer, state lawmakers passed legislation aimed at moving 1.7 million government employees and Medicaid recipients into similar health plans.
Within a few years, close to half of the state’s 6.5 million residents could be in a health plan that pays for medical care in a fundamentally different way.
Massachusetts’ move to reshape how healthcare is financed is still in its infancy. And the state continues to have the nation’s highest medical costs, spending nearly 50% more per person than the national average.
That has fueled skepticism from conservatives who see too much government involvement and from liberals who say the state should more aggressively set medical prices.
But early research in Massachusetts suggests the approach may be slowing health spending. And medical providers, business leaders and elected officials are increasingly hopeful they are making headway.
The building block of the Massachusetts experiment is a contract between insurers and groups of doctors known as a global payment. In such contracts, physicians receive a budget to care for a cohort of patients. If doctors can care for their patients more economically, they keep a portion of the savings. If patient care exceeds the budget, they pay a penalty.
That is supposed to encourage physicians to keep their patients healthier and direct them to lower-cost hospitals and specialists.
If poorly designed, the arrangement can create a financial incentive to skimp on care. That perceived problem undermined earlier experiments with global payments and provoked a backlash against managed care in the 1990s.
In a key change, Blue Cross now links its contracts to dozens of quality metrics that track whether patients get the right screenings and exams, whether doctors and hospitals prescribe the correct drugs — even whether patients are satisfied with their care. That means a doctor who withholds care in hopes of saving money faces a penalty if patients suffer or are unhappy.
On a shelf in doctors’ offices are reams of spreadsheets, updated constantly, that outline how each of his patients is faring, which tests they have taken and which are due. With bonus payments from Blue Cross, they hire new aides and installed a new computer system to better track their patients.
Doctors also have to explain to patients why he wants them to get X-rays, eye exams and other routine care at the community hospital rather than at one of Boston’s famous teaching hospitals, where an MRI that normally runs about $1,100 can cost as much as $1,650.
Change has not come easily around the state, particularly for hospitals that depend on filling beds, not on keeping patients healthy enough to prevent hospitalizations.
Medical practices like Folch’s are already making significant strides, however.
Between 2008 and 2011, the percentage of Folch’s patients getting recommended colorectal cancer screenings increased from 61% to 82%. The share of patients with cardiovascular conditions managing their cholesterol jumped from 75% to 89%. And last year, all of Folch’s diabetic patients successfully managed their cholesterol and had their yearly diabetic eye exams.
“If he sees something he doesn’t like, he contacts me right away,” said Bill Wooster, a 59-year-old sales representative who began seeing Folch after having a stroke four years ago. “I’m his patient, but I feel like more of a friend.”
Although the cost savings were modest, healthcare spending increased more slowly for the Blue Cross medical practices compared with others. Patients were hospitalized less and used fewer expensive services like advanced imaging. These results suggest that global budgets with pay-for-performance can begin to slow underlying growth in medical spending while improving quality of care.
America is also trying a new system going by the name `New Current Procedural Terminology codes’ which entail that just about any practice can bill for coordinating the care of those discharged from a hospital or with multiple chronic conditions, even without having formally to transform into a patient-centered medical home or become part of an accountable care organization.
The American Medical Association created codes for transitional care management and complex chronic care coordination that have been in effect since Jan. 1. The hope of those who designed them, said chair of the AMA’s CPT Editorial Panel, is that some practices will use the codes as a means to finance a transition to become a patient-centered medical home, ACO or some other emerging delivery model. Other practices will be able to provide greater care coordination services without necessarily making significant transformations.
“This is a good opportunity for physician practices,” said vice president of revenue cycle coding with T-System, a company based in Dallas that works with medical practices on documentation and regulatory compliance issues. “These services are something physicians have been providing forever, but it was work that was unreimbursed. And there’s a lot of time involved in this type of work.”
The codes also may be used by practices participating in an ACO or medical home depending on insurer policies, although payment for these services most likely would be included in various bonus programs.
What the codes cover
The first step for practices, coding experts say, is to contact the various insurers to find out how they are responding to these new codes. Medicare will pay for transitional care management and expects to pay out about $600 million for practices to handle a patient’s move from a hospital to other settings in 2013. No additional money is on the table from Medicare for complex chronic care coordination, although that is expected to change. Commercial insurers are deciding which codes will be covered and how much money will be offered.
Commercial insurers are in the process of deciding which codes will be covered, and how much money will be offered.
The second step is to determine how to use the codes to make proper payment more likely.
For instance, the transitional care management codes should be used when a practice takes care of the issues of a patient returning home or going to another care setting from a hospital or skilled nursing facility. Both codes, 99496 and 99495, require a physician to have and document some kind of medical discussion, although not necessarily in person, with the patient or their caregiver within two business days of discharge.
The higher-level code, 99496, calls for a face-to-face visit within a week. For the lower-level code, 99495, the face-to-face visit may be within two weeks.The other set of new codes can be used for patients a physician or insurer considers in need of significant care coordination services outside of usual face-to-face visits. These services can be provided by a physician, but coding designers say they are a better fit for nurses or others staffers within their scope of practice. These codes cover designing care plans, linking patients with multiple medical professionals and community service agencies and organizing, and attending medical team conferences.
The code 99487 should be used if the patient is not actually seen by the physician, but instead if other practice staff spend an hour over a 30-day period on care coordination involving that patient. Code 99488 includes this hour of care coordination time and a face-to-face visit. Code 99489 should be used for 30-minute increments over the initial hour of care coordination.
Medicare considers these codes as bundled with other services, but commercial payers may cover them.
The key to the care coordination codes, consultants say, is to develop systems that track actual time spent.
A physician and medical practice staffers may spend 10 minutes coordinating a patient’s care one week and 15 minutes the next, but these codes are to be used only once per patient per month and are dependent on the total number of minutes spent on these activities over 30 days. Other evaluation and management services would be billed separately.
“Because it’s accumulated time over a month, it can be much harder to track,” said director of education with AAPC, an organization of professional coders.
Understanding how to use these codes properly is viewed as important even if local insurers are not on board, one consultant said.
“I would implement the codes and understand what it takes to bill them,” said Jim Watson, a director with SS&G Healthcare and a partner with Professional Business Consultants in Chicago who works with medical practices. “If insurers are not reimbursing them now, they probably will be in the future.”
The third step, coding experts say, is to have contacts with other parts of the health system to identify opportunities to provide these services. For example, strengthen links with local hospitals to make it more likely that a practice is notified when a patient is discharged. Consultants say most hospitals should be amenable, since improving transitions can reduce readmissions and Medicare penalties for having too many of them. Patients who are good candidates for complex chronic care coordination may be identified by the practice or an insurer.
“Find out what kind of care continuity programs they are working on,” Contreras said.
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