Much Ado About Very Little – the Deferral of ED Care Boondoggle

Boondoggle – a scheme that wastes time and money. Perhaps this is not the best way to describe the many efforts that are being made to try to keep patients with non-urgent problems from using the emergency department, but from where I sit, deferral of ED care is a cost-saving tactic that not only fails to deliver much in the way of cost savings, it also is a strategy that can be both risky and unethical. More importantly, the focus on deferral of care and ‘unnecessary ED visits’ as a cost-containment tactic is a distraction from efforts that would yield far more savings at far less risk to patients, and to our fragile emergency care safety net.

Recently, I worked with one of the major health plans to look at over 637,000 consecutive commercial and Medicaid California ED patient visits over a one-year period (excluding ED patients who were admitted to the hospital). Based on the data below, it is clear that those 20% of patient visits that represented the least costly visits (facility plus professional ‘allowable payments’) accounted for less than 4% of the total cost for all non-admitted ED patient visits.

Rank            Total Allowed             % of Total Allowed
1                 $520,314,096                       54%
2                 $195,156,385                       20%
3                 $129,376,962                       13%
4                  $84,949,393                          9%
5                  $33,929,559                          4%

Remember, this data just represents patients who were not admitted (facility costs for ED care of admitted patients are bundled into inpatient payments). Thus, it is likely that the bottom 20% of admitted, discharged, and transferred ED patient visits likely represented between 2 and 3% of the total cost of care for all ED visits. ACEP has been saying for a while now that (depending on the source of the data) ED care accounts for around 2% of the $2.4 trillion spent on all health care costs. Now the estimates of the percentage of ED patients who ‘don’t need to be there’ or have ‘non-urgent’ or ‘non-emergency’ problems is a bit more wide-ranging, depending on the agenda of the estimator; and numbers as low as 10% and as high as 50% get thrown around all the time. The Rand Corporation put the number at 17%, the CDC at 8%, and HCA Gulf Coast Hospitals put the number at 40% !!! Clearly, no one seems to be able to define this group in a standardized way, but it is clear that as the poster child for unnecessary and expensive care, the ED has become the target of many attempts to reduce costs by keeping patients out of the ED, or sending them away, based on screening criteria that may, or may not, meet EMTALA standards. Much has been written about the down-sides of the deferral of ED care strategy, and ACEP has a policy that opposes deferral of care, especially when it is not accompanied by adequate access to alternative care venues and carefully designed programs to arrange for timely and appropriate care for those whose care in the ED is deferred. Most ED physicians agree that the way to reduce unnecessary visits to the ED is by improving access for non-urgent care in clinics and primary care offices. However, my issue with all the hubbub about cost-containment through deferral (or denial) of ED care goes beyond the ethical and risk issues: it simply is not a cost-effective strategy.

Let’s assume that it is possible to accurately identify and screen the patients that do not need ED care without missing the patients who really do have an impending medical emergency in the early stages of presentation, and that we could reasonably eliminate the 20% of ED visits that use the least amount of ED resources. I don’t actually believe this is possible, but let’s make this assumption. If it were, we could reduce the US health care budget by something like 3% x 2%, or 0.06%. But wait- surely some money would have to be spent caring for most of these patients in the clinic or PCP’s office. So perhaps the actual savings from deferral of ED care might amount to 0.05% of the health care budget (50 cents for every $1,000). Probably, the number is even lower. Yes, I know, it is real money, but in relative terms, they call this ‘budget dust’.

The study on ED visits in CA that I mentioned above also looked at costs by procedure and costs by diagnosis for those 637,000 patients. I was surprised to learn that renal and ureteral stones accounted for $25 million of the $963 million spent on all these patients. So, roughly, the same amount of money was spent taking care of 7,900 patients with kidney stones as was spent on taking care of the 127,000 patients who might have qualified for deferral of ED care. In fact, the data from the study suggested that we could save as much money by reducing the number of CT scans done in the ED by 1 out of 12 scans as we could by barring the door of the ED to every single one of the 127,000 patients in this study who accounted for the lowest 20% of ED costs.  My point is that all sorts of legislators and health plan executives and government regulators are screaming about, and scheming about, reducing unnecessary ED visits, and distracting us all from focusing on where the real money gets spent, and the real savings could be achieved. You want to talk about saving health care dollars: let’s look at back surgery, depression, end of life care, obesity. But no, the focus of TENCare and HCA and the Dr. Thompson’s in Washington State and elsewhere is on the ‘imprudent’ parent who takes their screaming, vomiting, febrile 2 year old child into the ED at 3 AM, only to be diagnosed with a lowly ear infection. And to top it off, the solution to this problem that many Medicaid program directors and legislators have lit upon, the best way to keep these patients out of the ED, is simply to decide, after the fact, not to pay the ED physician for having provided this care. Yep, that makes a lot of sense.


#1 by Jay Sheers – May 17th, 2011 at 23:10

“And to top it off, the solution to this problem that many Medicaid program directors and legislators have lit upon, the best way to keep these patients out of the ED, is simply to decide, after the fact, not to pay the ED physician for having provided this care. Yep, that makes a lot of sense.”

man, this kind of stuff just bugs me to no end. Why, why, why???


Participation by Emergency Physicians in Compensation Driven Cost Containment Strategies

It strikes me that in developing payment reform related, compensation driven cost-containment strategies aimed at constraining the cost of emergency care, policy makers, emergency physicians, and health insurers should adhere to certain principles. ACEP should be at the forefront when it comes to establishing these principles, which I hope will be focused on protecting our patients first, and our specialty second.

The concept and practice of ‘managed care’ has raised some very reasonable concerns about the way some physicians’ commitments to the welfare of their patients has been compromised by the financial incentives inherent in compensation arrangements like capitation and risk-pools. If emergency physicians are going to be engaged, willingly or reluctantly, in cost-containment oriented incentive compensation programs; we need to make sure that the competing interests of patients, providers and insurers (including the government) are balanced properly, and morally.

I thought I would take a shot at formulating a few of these principles, and encourage readers of this blog to suggest changes and propose additions.

1. Cost containment strategies for emergency care should focus first and foremost on cost-effective care, with the emphasis on effective.
2. Shared-savings, pay-for-performance, capitation, risk-pools, and similar payment reform programs designed to incentivize emergency physicians to reduce the cost of providing emergency care must not result in a reduction in necessary care, an unreasonable delay in the provision of care, a significant increase in medical risk to patients, or a significant decrease in patient satisfaction with care; or shift the burden of care to those who are unwilling and/or unable to provide this care.
3. Cost-effective care strategies should be evidence-based where possible, though common sense strategies should also be considered even if evidence in favor of such strategies is not abundant.
4. The proportion of total reimbursement that emergency physicians derive from the successful adoption of cost-containment strategies, relative to the proportion derived from payment for services rendered, should be limited in order to ensure that these cost-containment incentives do not overwhelm service-driven and outcome-driven medical decision-making.
5. Strategies that rely on the deferral of care in the ED should be considered as relatively high-risk, low-reward strategies when compared to others that are focused on cost-effective care and high-cost services.
6. Cost-containment strategies for emergency care should be transparent to patients, providers, insurers, and policy-makers.

Any other ideas out there?


Attribution and Emergency Medicine, a Payment Reform Conundrum

Several years ago, the medical director of the emergency department I was working in at the time decided to take a closer look at productivity amongst our physician and PA staff. In order to ensure that data on patients seen and visit times was being appropriately attributed to the treating physician or PA, we took a closer look at how the patient and the treating provider were linked in the hospital’s IT system (the data source), since we had a fair amount of double and triple coverage. It was a bit surprising, not to mention perplexing, to discover that at registration, the physician who arrived for the latest shift was assigned in the IT system to all the patients who arrived during this shift, until the next physician arrived, regardless of which provider actually took care of the patient. Thus, all the data related to provider productivity, and the attribution of the ordering provider for diagnostic tests, consults, medications, admissions, etc. which was derived from the IT system, was flawed. An approach initially designed to facilitate speedy order entry was never subjected to reconciliation at the end of the day, as we all assumed. Bummer.

The more we looked at the issue, the more complex it became. How should we attribute an inpatient admission when one ER physician handed off to another in mid-workup at change of shift? What about when a PA was supervised by two different physicians? Should a double bounce-back be attributed to the first treating physician, or the second, or both? You might think that provider-order-entry would solve many of the issues related to attribution of diagnostic test and treatment orders and consults and such; but if a patient is sent in to the ED by their primary care provider to have a work-up for RUQ pain, should the PCP or the ED physician be ‘credited’ with ordering the GB Ultrasound? Is the ED physician, or the hospitalist, responsible for ordering the admission? If a consultant requests a serum porcelain level before he will see the patient in the ED, is the consultant or the ED physician acting as the ordering provider?

You might think all of this is irrelevant, or as I am fond of saying, academic (meaning almost irrelevant); but in light of payment reform and Accountable Care Organizations and the push for cost-effective, error-free care: the need for accurate attribution in the ED is likely to be pretty important. If you can’t count correctly, you can’t have accountability. Since many ED physicians are employees of the hospital or academic institution where they work, accurate attribution might, in an era where cost-effectiveness and resource utilization is likely to be scrutinized at the individual provider level, mean the difference between continuing employment and getting the boot. Attribution might even be more important for contracted ED staffing groups working under contractual agreements with PHOs and hospital-owned or affiliated ACOs in risk-sharing or shared-savings arrangements that predicate payment of withholds or payouts to the ED group on performance against cost-effective care or use-reduction targets. These staffing contracts often have no-cause 90 day cancellation clauses hanging over these ED staffing groups, putting everyone’s job at risk.

I raise the issue of attribution and accountability in ED care because our practice environment is very complex – ED care is a team sport, with many providers having varied positions (sometimes the ED physician is the quarterback, sometimes the trauma surgeon, and sometimes the PA or NP), and the field of play is often unmarked and multidimensional, and the game challenging to track and score. If a quarterback throws a touchdown pass, who gets the credit: the QB, the receiver, or the offensive line? If a patient has wrong-side chest-tube placement, is the ED physician, the radiology tech who mislabeled the film, or the surgeon at the head of the gurney responsible? Who gets credit for the unnecessary dye-enhanced rescan, the risk-averse radiologist who insists he needs more contrast to make the diagnosis, the ED physician who is prepared to make the diagnosis of appendicitis clinically, or the surgeon demanding a scan before doing the consult? I am not advocating that ED care be carved out of the risk-sharing or shared-savings or pay for performance calculation simply because attribution in the ED is complicated. If we get carved out of these arrangements, ED physicians will simply become another expense item, inviting even less favorable treatment. I am just saying that we need to start working on developing systems and standards for the attribution of the work done in the ED now, before this payment reform cake is fully baked.


PPACA, Medical Loss Ratios, and Capitation – a Loop Hole Big Enough to Drive an Armored Truck Through

One of the new health reform provisions in the PPACA regulations is a requirement for health insurers to spend a certain proportion of health insurance premiums on actual medical care, thus limiting to some extent the proportion of these premiums that can be allocated to administrative expenses and profits. This proportion is called the medical loss ratio (MLR), and in the regs the proportion that must be spent on care is 85% or higher in large-group markets and 80% or higher in individual and small-group markets. I believe the impetus for this rule is two fold: 1) to try to get insurers to minimize the costs associated with administration of the plan (so as to maximize their profits within the MLR restriction), and 2) to try to insure that any successful cost-effective care strategies that are adopted go directly to reducing the premium costs for enrollees. Insurers that fail to meet this standard must rebate some premiums back to enrolees. It doesn’t take much savvy to imagine that insurance companies executives would, in response to this reform of their market, launch aggressive advocacy strategies to modify these regulations in order to recoup their potential profit margins and maintain their obscene executive salaries.

Great debates have been sparked at DHHS and at the National Association of Insurance Commissioners over a wide range of MLR issues, especially around what types of activities should be included in the definition of ‘medical services provided to enrollees’ (should nurse advice lines and other ‘cost-containment strategies’ count as care?), whether federal taxes should be factored into or excluded from the calculations, to which types of plans should MLR standards apply (should mini-med plans be included?), and a whole host of other accounting, reporting, and procedural issues. Nothing generates gaming the system in Washington like new federal regulations, and health insurance lobbyists are having a field day. I had to laugh when I read that the former director of the Congressional Budget Office and president of the think tank American Action Forum was quoted as saying: “I was surprised to see the members of Congress try to influence this process.” Really?

In all the fuss, some of which has actually made it into the national news media, there appears to be one particular loophole for insurers that seems to have escaped much attention. This loophole is big enough to drive an armored truck through, on the way to the bank (with a brief stop-over in Wall Street to rack up some leveraged premium on the insurer’s stock price). When health plans, particularly HMOs, capitate medical groups and IPAs to service their enrollees, these plans typically pass, via the per-member-per-month cap payment, not only the risk of paying for care, but also much of the cost for managing the program. Capitated medical groups are often delegated the responsibility for paying non-contracted provider claims, credentialing providers, managing prior authorizations, investing in IT, marketing plans to potential enrollees, and a whole host of other administrative tasks normally performed by the plan. Yet in accounting for administrative overhead to meet the MLR requirements, it appears that these plans will be allowed to shift these administrative costs to their subcontracted medical groups and IPAs and count them as ‘medical services’. What a deal for the plans!

At a recent Department of Managed Health Care meeting in California, a representative of a large capitated medical group described the development of one of the first Accountable Care Organizations (ACOs) in the state, in concert with Blue Cross. When I asked this representative, during the public question period, which of the administrative costs associated with management of the ACO would be attributed to Blue Cross when it came time to calculate the MLRs for the plan; he at first hemmed and hawed, then said that the issue had not been discussed with the plan yet. Really? This far into the planning process, you would think that issue would be pretty high on the list. ACOs are not just going to be Medicare Advantage programs, they are going to evolve into the next iteration of commercial health coverage, and you can bet that many plans will skip right over shared savings and similar strategies and go directly to capitation, because there is nothing better for an insurance company than collecting premiums like a health plan, acting like a broker, and shucking all the risk on to the providers. At this same DMHC hearing, CAL/ACEP testified as to how EMTALA obligated providers were being ripped off by these unregulated subcontracting medical groups and IPAs, and left holding bags full of unpaid claims when these risk bearing organizations go belly up. The HMOs, of course, often respectfully decline to take responsibility for these unpaid claims. Remember the term ‘negligent delegation’ when an ACO near you goes bankrupt – it may come in handy.

But I digress. My point here is that, for some reason, DHHS seems to have been deterred from closing this ‘capitation-delegation model’ loophole in the MLR rules, and we can only hope they catch on before the rules are finalized.


The Independent and the Employee Models of EM Practice – Where Are We Going?

You will notice that the title of this blog is not ‘independent vs. employee model’: I readily acknowledge that I know little about being an employed emergency physician. Having spent my entire career as, initially, an independent contractor, and then as a partner in a large EM partnership; I am not the guy to be making a comparison between these modes of EM practice. However, I recently heard from one of ACEP’s Board members (Dr. Kivela) that approximately 55% of emergency physicians in this country are now employed by hospitals (or was that employed by someone?). In either case, this fact led me inevitably to reflect on these two modes of practice, and the many variations on these themes, and how this trend towards more EP employees and fewer EPs practicing as independent contractors or partners is likely to impact the practice of EM, our patients, our hospitals, and our specialty.

Of course, this is a topic that could never be covered in a blog, perhaps not even in a textbook, but I hope to generate some discussion of these issues here in The Central Line and elsewhere. I have far more questions than answers to offer, as you will see; but these are questions that we should try to answer before they are answered for us. Health Reform is going to put even more pressure on the independent EP practice model as policy makers and insurers push to consolidate providers into vertically integrated health care systems to foster accountability and coordination of care (euphemisms for risk-sharing and cost-cutting). How our specialty and the house of medicine respond to this pressure will have a major impact on the practice of EM, from the choice of meds we use to the professional affiliations we make.

One of the first questions that come to mind when exploring independent and employee models of practice revolve around the corporate practice of medicine. There are only a handful of states that have a bar against the corporate practice of medicine, and enforcement of these bars vary considerably. The rationale for prohibiting corporations from influencing the practice of medicine is nicely summarized by the CA Medical Board: and the gist is that this bar is “intended to prevent unlicensed persons from interfering with or influencing the physician’s professional judgment”. The Medical Board provides examples of “types of behaviors and subtle controls that the corporate practice doctrine is intended to prevent”. Hospitals are sometimes exempted from such state bars, as hospitals are also licensed, but the concept is premised on an obligation to protect consumers (patients) from profiteers, and hospitals are no strangers to the profit motive. First question: Are EPs who are employed by hospitals more or less subject to controls and subtle pressures impacting medical decision-making than EPs who are employed by a medical group, or EPs who are part of a medical partnership, or EPs that are independent contractors? I know for a fact that EPs who practice in the ‘independent mode’ can be subjected to such pressures, geared towards improving the hospital’s bottom line, especially since EM group–hospital staffing contracts can be, and have been, canceled for ‘no cause’; and I suspect that employed EPs are regularly subjected to subtle (and not so subtle) pressures to adjust their practices to accommodate hospital employer expectations and financial goals. Put another way: if you were a patient in an ED, would you have more trust in an EP who was a hospital employee or an independent contractor or a partner in the EM practice? How about if he or she was an employee of your insurance plan? There probably isn’t any data to support your preference, but perhaps there should be. The rise of managed care, risk-sharing ventures, IT demands on investment capital, and the surge of interest in ACOs is going to put increasing pressure on states to eliminate or modify corporate bars on the practice of medicine. Wouldn’t it be appropriate for legislators to know how ‘corporate influences’ impact the care we provide, and how patients feel about that?

Here are some more questions that deserve to be answered: Which practice mode pays EPs more appropriately? Which contributes more towards enhancing the value of EM practice? Is a hospital CEO more likely or less likely to appreciate excellent EP care and service if the EP is an employee or a member of a contract staffing group? To whom do employed EPs look when seeking support for improved salaries or working conditions? Should ACEP develop into a union for these physicians? I heard a rumor that some hospitals have discouraged their EPs from joining ACEP – is that true?

Which mode of EM practice provides greater encouragement or incentive to document their care appropriately so as to assure appropriate third party reimbursement? Are hospital-employed EP salaries indirectly dependent on the ability of staffing-contract EPs to collect fair payment from health plans? Do independent mode EPs have greater or fewer opportunities to move to new communities and keep their ‘tenured’ pay rate? Are they happier with their practice setting? Which has the better malpractice experience? Which offers more support when the provider is sued?

I could go on, but you get the gist. There may be no good way to really answer many of these questions, but this shouldn’t deter us from discussing the issues. Let me give you just one example of why these considerations need to be aired. ACEP is going to be developing strategies for EP participation in ACO risk-sharing, payment bundling, and shared savings arrangements under health reform. I have no doubt that these strategies may be very different for hospital-employed EPs, for academic group EPs, staffing contract model EPs, and medical group employed EPs. ACEP may not have the resources to address each of these strategies for each of these member groups, so where should the emphasis be made? Here’s another: ACEP is increasing its advocacy role in DC, and reaching out to EPs to financially support this effort separate from ACEP dues. Which EPs are more likely to contribute to this effort? Should some ACEP advocacy resources be expended to support the independent practice of EM, or should ACEP be advocating for the right to represent employed EPs, or both?

If you are worried that discussing these questions exposes the soft underbelly of EM, or somehow might precipitate the deconstruction of the cooperative venture that ACEP represents: get over it. The forces aligned to divide and conquer the practice of emergency medicine, and the practice of medicine in general, have already begun their work, and everything that defines our profession is now in play.