Emergency Medicine and Payment Reform – Becoming Part of the Solution PART III

Health care is bankrupting this country. The truth is, emergency physicians are as much a part of the problem as any other provider, health plan, or patient in this country. Many emergency physicians over-order scans and tests, practice defensive medicine, over-utilize consultants, don’t pay much attention to the cost of drugs and treatments we order or prescribe, and generally spend too much money for too little benefit. I could argue convincingly that we are more effective and efficient than most physicians, especially in light of the difficulties of practice in the ED; but our challenge is not just to dispel the mistaken assumption that ED services do not meet the value proposition. We must simultaneously participate in developing solutions to the cost-effective care conundrum, or the payers and politicians will focus on ways to work around us, or through us.

Policy makers have selected payment reform as the primary path to cost-effective care, and fee for service as the principle foil responsible for our health care financing predicament. I could argue that tacking ‘for profit’ in front of ‘health plans’ is equally responsible, but this is, after all, America. Health reform is in many respects predicated on the concept of risk sharing: sharing the financial risks of care (and the rewards of cost-effective care) between insurers, providers, and patients on the assumption that having ‘skin in the game’ will solve the problem. Bundled payments, episodes of care, ACOs, pay for performance: its all designed to restrain costs by sharing risk, which is presumed to motivate providers to adopt strategies and develop infrastructure designed to cut costs (first) and improve care (second). The most critical role that ACEP has in the next few years is to determine how EPs can participate in the context of payment reform while preserving our value and protecting our practices.
Let’s talk about ACOs first. To make a very complicated story short, ACOs are likely to be about full capitation, or about risk pools, or both; and they are also about consolidation of physician practices to facilitate this risk sharing. In my experience, one consequence of this consolidation is that the PHOs (physician hospital organizations – soon to morph into ACOs) tend to pay lower rates to EPs than health plans pay. EPs are going to have to find ways to share risk in ACOs as independent practitioners or as hospital employees without sacrificing significant income or undermining practice quality and autonomy. Half of ED physicians are either hospital employees or the employees of academic institutions, and the other half are partners or independent contractors (or employees) of groups contracted to staff the ED.

What the former need to understand about the latter is that the independent practice of emergency medicine is key to defining the commercial value of EP services: anything that undermines the payment of claims from an EP who is engaged in the ‘independent practice’ of EM undermines the wages of the EP who is employed by a hospital, a university or an HMO. We are all part of a national market for EP services. If the mode of our participation in ACOs, either as contracted groups, or employees, turns EP services into a commodity, we, and perhaps our patients, will suffer. Thus, when ACEP talks about EP participation in ACOs, or contributes to the development of model contracts, or policies for revenue or risk-pool distribution, or strategies for coordination of care with other ACO-participating providers; these three different modes of EM practice (independent contractor, employee, educator) need to be factored into the equation, most likely in separate and distinct approaches.

Another set of strategies for cost-containment and payment reform is the concept of bundled payments and episodes of care. I liken this to carving off most of the meat before throwing the bone to the pack of hounds. I suspect it will not be easy to identify episodes of care or bundled payment categories that will accurately reflect the contribution of EPs to the overall effort expended on these patient groupings. The management of abdominal pain is s tree with so many branch points it makes knee replacement look like an asparagus stalk. To complicate matters further, the three modes of EM practice will also have to be addressed in defining the EP’s share of the bundled payment for these episodes of care. For example, the work-up and management of a patient with abdominal pain in an environment like Kaiser is likely to be quite different than for the same patient in a community ED or a university teaching hospital where access to consultants, follow-up, and coordination of care are organized on a different model; even if you assume that under ACOs, access to EMRs and diagnostic services were equivalent. Personally, I think even though most episodes of care and bundled payments will focus on the higher-cost conditions, these approaches to payment reform are not likely to cover more than a modest percentage of the work EPs do, or the compensation we earn. Mostly, I believe, independent EM practitioners will be carved out of these payment reform modules because our level of participation will be difficult to predict, and our ability to restrict our role is limited. We are, after all, one of the few players on the team that regularly plays just about every position. The danger of being carved out, however, is that we then stick out like a sore thumb, an expense item begging to be trimmed.

I think one of the most effective ways for EPs and ACEP to contribute to solving the cost of care conundrum, and thus demonstrate our value to patients and payers alike, is through cost-effective care protocols. It is through the use of such protocols that EPs can earn a piece of the cost-sharing incentives, especially in risk pools. If we get carved out of bundled payments, we can get integrated back in under the risk-sharing umbrella through risk pools. Even so, it will still be necessary to utilize cost-effective care protocols that take into consideration each of the three EM practice modes. For example, hearing hoofbeats, you are more likely to encounter zebras in the ED of a major university teaching and referral center than in a small community hospital. Likewise, we should also focus on the most costly patients and types of care first, use best evidence, and take great care to protect our integrity as professionals and care givers. This last is what I mean by preserving the quality of our practice. An emphasis on cost-effectiveness is an invitation to inappropriate deferral of care, denial of access to needed testing and consultation, inappropriate discrimination in service, avoidable delays, and excessive risk taking, all of which hurts our patients and ourselves. Development of these protocols will not be easy, but adoption of these protocols across the spectrum of EM practice will be the real challenge. As I mentioned in the very beginning of this three-part diatribe, one hospital’s welcome cost effective protocol is another’s inadvertent financial misstep. It will take time to align incentives across all our modes of practice, medical staffs, hospital administrations, payers, and patients. Patient education as well as resident and provider training will be an essential part of the process, and all of us need to be part of the solution.

#1 by Suzy Wier – October 11th, 2010 at 11:27
At last!! It’s so refreshing to see a perspective that reflects systems thinking! You are spot on!
It is time to turn that telescope around friends, you look through the tiny end not the big end


#2 by Joseph Nowoslawski – October 18th, 2010 at 09:11

Yes systems perspective is very important here.

When the suits (non physicians) look at this business problem they may see another solution that will have more impact.

Please note that if 42% of acute care is provided in the primary care physicians office and only 28% in the ED’s when comparing the relative cost per visit in the ED to the primary care setting the conclusion will become more primary carea less ED.

My prediction is closing ED’s (see European ED/patient ratios) expanding primary care (probably with ancillary medical staff not physicians).

It is the only way the math works in the “ACO” world. T he time frame may take a decade to flower but the market (and the math) is always right.


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