Are You Ready for P4P?

As payers step away from fee for service, they’re taking a closer look at your outcomes.

BY JOSEPH BURNS

For better or worse, pay for performance is coming. Though it has yet to take hold in significant numbers, within the next year or two ophthalmologists can expect to see the widespread implementation of pay for performance (P4P) and other compensation systems such as bundled payment and risk-sharing agreements, according to consultants and practice administrators.

With P4P comes the obvious potential advantage of more income. But it also brings downsides as well. Practices may need more robust information systems to collect the data and perform the analyses they’ll need to develop new performance metrics. Seeking to ease the data collection and performance analysis burden, the American Academy of Ophthalmology is testing a new system to gather and report data from EHRs that one advocate says could solve many of the problems inherent in measuring and analyzing physician outcomes. (See “‘Game Changer’: AAO Registry Will Support Practices in Data Collection,” page 56.)

Risk Sharing Is Coming

Factors driving the movement to P4P include the passage of the Affordable Care Act in 2010 and the development of patient-centered medical homes, accountable care organizations (ACOs) and physician-hospital organizations (PHOs) that push payers and physicians to share the financial risk of delivering care, says David Dopp, administrator of the Wheaton Eye Clinic, a practice outside Chicago with 27 ophthalmologists.

Each of these factors is forcing the health-care system away from fee-for-service payment based on volume toward payment based on value. The challenge for ophthalmologists is to recognize how payers define value. One way involves having eye specialists share the savings they generate or share the financial risk of delivering care.

“There will be more risk sharing among all providers,” says Mr. Dopp who also is executive director of DuPage Valley Physicians, an independent practice association of 358 multispecialists. “All physicians will be affected, including ophthalmologists and other eye specialists,” he says.

Ophthalmology may not be among the first specialties to share risk or adopt P4P arrangements because it does not contribute to hospitals’ bottom lines as other specialties do, Mr. Dopp says. Instead, the first wave may take in cardiologists and orthopedists. “But there’s no doubt that ophthalmology will move in that direction as well,” he predicts.

Capitation Déjà vu

Risk sharing may take the form of capitation models that were prevalent in the 1980s and 1990s and are now being implemented again, Mr. Dopp says. Also, payers may adopt bundled payment systems in which physicians get a set price for a procedure. The set price may cover all costs for cataract surgery, for example, including the ASC or hospital fee, he adds.

Bundled payment for eye surgery, although rare today, is ideal for cataracts, says William L. Rich, III, MD, FACS, the AAO’s medical director of health policy. Dr. Rich is also a senior partner in Northern Virginia Ophthalmology Associates, an 11-physician practice in Fairfax, Va. “Potentially there is a significant amount of money to be made in shared risk or shared savings arrangements for eye surgery,” Dr. Rich says. “In fact, it will be easier to do with eye surgery than it is with hips and knees.”

The volume of cataract surgeries — some 3.2 million such surgeries were done in 2010, according to the Centers for Medicare & Medicaid Services (CMS) — make it an ideal candidate for bundled payment, Dr. Rich adds. Yet, hip and knee replacements are among the most common surgeries that health plans and CMS are covering under bundles.

Bundled payment is one way for plans to contain costs and shift the risk of complications to providers because, as Dr. Rich points out, the ophthalmologist is responsible for the patient throughout the entire episode of care, including any postoperative complications.

Shared Risk, Shared Rewards

In addition to sharing the risk, payers also are willing to share the savings that ophthalmologists can produce by doing procedures more efficiently. Mr. Dopp cites LASIK surgery as an example. Years ago, such surgery was costly and time consuming. But after years of doing this laser refractive procedure many times over, ophthalmologists have become more adept and more efficient. Also, competition helped drive down the price.

“Physicians who have relationships with ambulatory surgery centers have already seen what happened with LASIK procedures,” Mr. Dopp explains. Similarly, payers will want lower prices for certain common procedures, and so will patients who will be paying more out of pocket, he adds. “The day will come when you will see cataracts and the surgical side of ophthalmology moving in the same direction: toward lower payment,” Mr. Dopp says.

The movement toward incentive-based payment formulas results from a shift away from paying for volume, says Jeffrey B. Milburn, a compensation consultant with the MGMA Healthcare Consulting Group in Colorado Springs. “In addition to productivity bonuses that many practices have, at least 25% of practices have other financial incentive systems in place or they are giving them serious consideration,” he says.

“I wouldn’t be surprised if over the next three to five years we see 50% to 75% of most physician reimbursement tied to an incentive payment system,” Mr. Milburn adds. He foresees practices adding financial incentive payments for physicians who achieve clinical quality targets. Eventually they will move to risk-based population management resembling capitation, and medical and surgical subspecialties will need to participate with these new models, he says.

Are the Rewards Enough?

CMS is promoting increased value through the Physician Quality Reporting System (PQRS). The problem with PQRS is that the rewards, which were about 0.5% of Medicare’s annual payment to a physician or group in 2012, may not be enough to get ophthalmologists’ attention, says Donald U. Stone, MD, at the Dean McGee Eye Institute at the University of Oklahoma College of Medicine. In fact, among all specialties qualifying for PQRS incentive payments in 2010, ophthalmology ranked first in average incentive payment received, but that only amounted to $7,751 per provider (TABLE).

Dr. Stone and his university colleagues published research last year in Archives of Ophthalmology on how PQRS will impact ophthalmologists specifically.¹ Funded in part by a grant from the Research to Prevent Blindness foundation, their research showed that implementation of the Physician Quality Reporting Initiative (or PQRI as it was called until this year), did not result in improved documentation of practice patterns.

“The amount of money from PQRI was not enough for ophthalmologists to make a difference in their usual practice patterns,” Dr. Stone says. “Also, most of the ophthalmologists were already following best practices but some of them may not have been checking the appropriate boxes to document compliance with PQRI,” he explains.

The research showed a slight difference in practice patterns before and after PQRI was introduced, from 80.9% compliance before PQRI was implemented to 77.9% in the first year of PQRI implementation. “From this research, you could argue that PQRI is one way to introduce pay-for-performance and that it is successful in getting ophthalmologists to check boxes on patients’ charts. But in terms of affecting practice patterns, it may not have that much of an effect,” Dr. Stone concludes.

Compliance Under PQRS

To be sure, rates of 78% to almost 81% are fairly high. Among ophthalmologists, compliance rates for PQRS (as the program is called now) fall in a range from 40% to 46%, says Dr. Rich, adding that AAO is working to improve those numbers. In agreement with Dr. Stone, Dr. Rich says many ophthalmologists are likely following best practice guidelines but simply failing to check the appropriate boxes on patients’ charts. To assess the difficulty of gathering information for P4P, Dr. Rich’s practice has been collecting data on complication rates and how many patients returned to the operating room within 30 days of surgery.

“For a cataract surgery bundled payment initiative, you might anticipate having to report to CMS the number of patients, the complication rate, how many times patients return to the OR in 30 days, and patient-reported outcomes or quality of life benefit,” Dr. Rich says. “To report on patient satisfaction and patient-reported outcomes, a practice needs to survey its patients and collect, analyze, and report the resulting data. Such data collection and reporting is time consuming and costly and has to be considered as part of your underlying cost, not just your surgical time.”

Recognizing the demands data collection places on practices for P4P or PQRS, the AAO is developing an electronic data collection system that will gather numbers from individual physicians’ and groups’ EHRs and compile the data into a patient registry. To be introduced in six beta sites this year, this system will allow ophthalmologists to increase the current level of PQRS compliance from about 46% to 90% or higher, Dr. Rich says.

How AAO’s Registry Works

This ophthalmic clinical registry will allow all ophthalmologists to see their own PQRS compliance scores and other practice metrics and compare them with competitors, national averages or other benchmarks. It will collect the requisite data automatically from each practice’s EHR and then submit that data to CMS and other payers. In this way, the system will help ophthalmologists comply with PQRS and avoid any noncompliance penalties. In addition, it will help practices comply with CMS’ Physician Feedback/Value-Based Payment Modifier Program and meet the government’s meaningful use standards for EHRs.

The Physician Feedback/Value-Based Payment Modifier Program is part of CMS’ efforts to push toward a value-based rather than volume-based payment model, CMS says. The program will use PQRS data that CMS will then report back to physicians in the form of comparative performance information, CMS says. Physicians and groups can use the data to improve the quality and efficiency of care they deliver.

“Practices will want to avoid the penalties in 2015 under PQRS, the value-based modifiers and meaningful use because those penalties could average 5% to 7% per year and will be compounded every year,” Dr. Rich says. “For all ophthalmologists, the revenue we get totals almost $6 billion per year. On that amount, 5% to 7% is a big number. For my group with 11 physicians, that’s a couple hundred thousand dollars.”

While P4P may not be present in many practices now, it is coming and will take a wide variety of forms. To achieve the maximum possible rewards, ophthalmologists first will need to put in place the systems required to collect and analyze the requisite data. OM

REFERENCE

1. Nikpoor N, Butt AL, Hromas AR, Stone DU. Effect of the physician quality reporting initiative on ophthalmologists’ documentation of practice patterns. Arch Ophthalmol. 2012;130:1351-1352.