How Emergency Physicians Can Participate in Gain Sharing

the shared savings train is leaving the station

the shared savings train is leaving the station

Emergency physician groups across the country being asked to find ways to participate in gain sharing, in order to become more fully integrated with their hospital’s or ACO’s or HMO’s efforts to reduce the cost of care.  These groups (especially those that are contracted to staff their ED as opposed to emergency physicians that are employees of the hospital or HMO) are finding it very difficult to work out these types of risk/value-based compensation arrangements. A growing number of hospitals are sufficiently aligned with their medical staff and with third party managed care payers, such that their profits or reserves are more dependent on reducing utilization for capitated or DRG-related or per-diem fixed payment services than on utilization-dependent fee-for-service revenues. These hospitals would like to find ways to get all of their hospital-based contracted physician groups (or employed physicians) incentivized to reduce the cost of care for these patients, and in some ways are succeeding, but they find it particularly difficult to integrate emergency physicians into risk-bearing or gain-sharing programs. The open nature of the practice of emergency medicine, with multiple specialists involved in direct patient care activities in the ED, and with the on-demand nature of physician and clinic referrals of patients into the ED for evaluation and management by the emergency physician; make it difficult to properly attribute clinical decisions in the ED to the proper provider. This in turn makes it difficult to tie financial incentives to the cost-effective care related reductions in utilization that drive gain sharing. On top of that, there is the implied EMTALA requirement that cost-effective care strategies must be applied across the board, regardless of the patient’s insurance status.

The types of episodes of care that are being paid through bundled payments, one of the methods that payers and integrated health care systems are adopting to incent cost-effective care, really do not lend themselves to the inclusion of emergency physicians, whose participation in the hip replacement, or even hip fracture care bundle, is highly variable, and dependent on referral pattern, accident, or complication. Likewise, capitation of emergency physician services, which has been tried in a few restricted instances, is difficult for EPs to manage because of the aforementioned open practice, open door environment of the ED. Although emergency physicians have become leaders among their medical staffs in reporting, meeting, and even exceeding the pay-for-performance metrics that are have become the first line option for emergency physicians wishing to participate in the new value-based payment model; these metrics often have an uncertain or unproven relationship to quality and outcomes, and even less to do with cost-effectiveness or cost-savings. As a result, emergency physicians who practice in environments with partially or fully integrated hospitals, health systems, and commercial payers have either opted to, or been relegated to, being carved out of gain-sharing, and left to fall back on pay-for-performance adjusted fee-for-service compensation. This might be ok, were it not for the perception this promotes that emergency physicians will never be adequately incentivized to provide cost-effective care, or assist their institution in achieving revenue goals under payment reform. In addition, over time, the services of emergency physicians will be treated increasingly as a cost-center and a cost-driver to be squeezed; and of course the FFS piece of the pie is likely to shrink. As they say, if you are not at the table, you are on the table.

Participation in risk sharing and gain sharing is made even more difficult by the legislative and regulatory hurdles that providers and institutions must address in order to be compliant with restrictions on these incentives. These restrictions are designed to protect patients from financially incentivized delays, reductions, or restrictions on medically necessary health care services. HMOs, ACOs, and other integrated, managed health care systems are exempted from some of these state and federal restrictions on cost-reduction driven payment models because in other ways they are obligated to take steps to ensure access to and delivery of timely, quality driven, somewhat standardized and monitored patient-centered care. In the midst of these regulations, it is safe to say that the participation of emergency physicians, and most other physicians, in gain sharing programs is effectively restricted to those who are either employed by, or contractually tied to, these partially exempted systems. Regardless, there are certain limits and mandates around gain-sharing that must be addressed. The CMA has a good reference on these issues (Document #7101). State mandates will vary, but the federal mandates, especially those applying to Medicare and Medicaid managed care, are pretty much universal. [See 42 C.F.R. §417.479 (Medicare generally), §422.208 (Medicare Advantage Plans) and §438.6(h) (Medi-Cal), and also: ]

For example, there are restrictions and requirements around the issue of “Substantial financial risk”, which occurs when a physician incentive plan places the physician at risk for referral services (including lab, xray, etc) at amounts beyond a twenty-five (25%) percent threshold, that is, that more than twenty-five (25%) percent of potential payments are at risk. Payments based on other factors, such as quality of care furnished, are not considered in this determination. Withholds (percentage of payments . . . that an [organization] deducts from a physician’s service fee, capitation, or salary payment, and that may or may not be returned to the physician, depending on specific predetermined factors) greater than 25%, bonuses greater than 33%, capitation arrangements with at risk payments greater than 25%, or any other incentive arrangements that have the potential to hold a physician responsible for more than twenty-five (25%) percent of potential payments, all require the MCO to ensure the physician has stop loss insurance and conducts regular enrollee surveys. In addition, there are requirements for disclosure of gain sharing arrangements with beneficiaries, and a host of anti-kickback, fee splitting, and other Stark issues, and transparency, proper accounting, caps on cost-savings, duration limits, and other requirements and restrictions on gain sharing that may apply.   Clearly, legal assistance is a prerequisite for participation in gain sharing arrangements.   It might surprise you to know that pay for performance incentives also have programmatic safeguards designed to ensure that PFP plans do not provide a disguised means to encourage or reward hospital referrals.  The AMA’s Code of Medical Ethics Opinion 8.054 on Financial Incentives and the Practice of Medicine is also a good reference for participation in gain sharing arrangements.   Given the complexities of these programs, it is no wonder that ACEP committees that have reviewed this issue have found it very challenging, and some ACEP leaders have simply called for a generalized FFS carve-out for emergency care services as the only viable option.

I do think there are some ways for EPs to participate in this new compensation model, and to profit from the effort, both in terms of revenues and job security, assuming most of the aforementioned attribution issues and alignment predicates are in place. With the selection of appropriate cost-effective care clinical strategies around the use of expensive and frequently used diagnostic imaging studies, it should be possible to significantly reduce the unnecessary use of these studies in the ED. Achieving a 10% reduction in utilization of these studies could easily drive a 2% or 3% increase in reimbursement rates for all of the patients seen by the EP, or could be used to fund a significant shared-savings bonus pool (or withhold risk pool). I am not suggesting this would be easy, or without risk; but it is possible, and would go a long way to helping an EP group integrate with its partners in the hospital and the community. In any case, in many hospitals, this train is leaving the station.


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