Betting on Pay-for-Performance

James Matera, DO, a nephrologist in central New Jersey, has a vision of the future of medicine in this country. He believes that the nuances of the Patient Protection and Affordable Care Act have created a need for physicians to become business experts, noting that it is not unusual for physicians to go back to school in pursuit of an MBA or enroll in a certificate program in healthcare business management.

“By and large, when we were trained in medical school, we came out and started seeing patients. You opened your practice and it drove itself. Things have changed now, though. Business as usual in medicine is not going to continue. It is simply not sustainable,” Dr. Matera said in a conversation with First Report Managed Care.

It is this vision that led Dr. Matera to extend an offer to 40 nephrologists in four counties in New Jersey (Middlesex, Monmouth, Ocean, and Somerset) to create what he terms a Group Practice without Walls. So far, 26 physicians, covering 13 area hospitals, have signed on.

In the current fee-for-service model of Medicare reimbursement, the physician submits a billing code and receives payment for that code. “It does not matter how much time the physician has spent with the patient, nor the actual complexity or context of the clinical situation; you see a patient, you submit a bill, you get paid,” Dr. Matera explains. A nephrologist, a cardiologist, or neurologist can submit the same code and get the same pay for the same service.

In the current climate, however, reimbursements for procedures and services are decreasing, Dr. Matera notes. “The pie is not getting bigger, the pieces are getting smaller.”

“In the current fee-for-service model, if you see 40 patients a day, you are going to receive X amount less of reimbursement, because the reimbursements continue to decrease.” As of April 1, the reimbursement were cut by another 2% due to the federal budget sequester for example, so that in order to maintain income, a physician has to increase volume.

Dr. Matera does not think that simply increasing volume is “the way to go.” Rather than practice volume-based medicine, he feels strongly that “quality-based medicine” offers a preferred goal for any medical practice.

Predicting that the paradigm shift away from fee-for-service to pay-for-performance, Dr. Matera and his colleagues have created a business model that relies on strength in numbers. The goal of the effort was to combine independent practices while maintaining their independence, to achieve large enough patient volumes to measure clinical performance parameters accurately.

One of the key tenets of Dr. Matera’s model is the utilization of measurement of various clinical performance characteristics or quality metrics. Metrics have been increasingly been used by hospitals to measure quality of care and Dr. Matera sees that trend filtering down to the private-care practitioner level.

In anticipation of a pay-for-performance reimbursement model utilizing quality metrics   to determine the amount of reimbursement, Dr. Matera and his nephrologist colleagues first must put aside their current level of competitiveness and work together in an attempt to drive the process themselves.

The group is currently developing quality metrics that will enable the group as a whole to optimize performance.  One aspect will be the ability to quickly identify any physician in the group whose outcomes do not match those of the other member physicians. “We will know who is an outlier in the group,” Dr. Matera says.

He provides the example of a single practitioner with 20 patients on dialysis where two of those patients happen to be outside the accepted metric for a given clinical outcome that will have a noticeable negative effect on the overall quality rating of that specific practitioner. If however, the metric is blended with those in a large group, the single practitioner’s data improves. However, the group can then identify the specific member whose numbers are not on a par with the established norms and have the data to dispassionately review that practitioner’s practice and provide support  for performance  improvement .

Dr. Matera cites the specific example of chronic kidney disease patients due to start hemodialysis having an angio-access for dialysis in place prior to their first treatment. Though the current standard for having an existing access is approximately 70%, Dr. Matera’s group would set the standard at 90% to 95%, creating a measurable outcome metric well above the average to demonstrate an enhanced quality of care provided by the group.

Once metrics are measured, the physicians in the group will be in a position to approach payers with their higher quality care. Matera imagines a future conversation with a given insurance plan as proceeding something like this: “Here are our outcomes and we know we can save you money on your dialysis patients so you should use us more”

The arrangement might be viewed as a co-management agreement rather than traditional accountable care organization model. The new model will manage a hospital’s renal patients, providing total transparency with the metrics to demonstrate the outcomes and quality of care.

In the model being created by the 29 New Jersey nephrologists in this group, each practice will remain independent within the larger group with one tax identification number and one central billing office.  Based on whatever the individual practice submits, after applying any centralized fees established, the reimbursement funds will flow back to that local practice.

Additional possibilities for increased efficiencies from the large group concept include the creation of a dialysis education program available to the patients in each practice. The education program would require two nurse practitioners as facilitators, so the cost will be spread out among the 26 physicians in the group, creating savings for the practices while providing a valuable service to patients.

When asked about possible downsides to this concept, Dr. Matera acknowledges that there is some uncertainty involved. “The downside is that we are going into this where it is kind of murky about where the healthcare landscape will actually end up, both locally and nationally,” he states. “Though we have a great group that is ready to go forward, we are just not absolutely100% sure we are right about pay-for-performance becoming the dominant reimbursement model. As a result, we are structuring things with an ‘easy-in, easy-out’ mechanism. If we are right, though, down the road we will be a dominant stakeholder in the state healthcare scene and we may evolve into a ‘Group Practice with Walls,’ connecting the practices more formally.”

While it is not certain that the prevailing model will be the pay-for-performance plan, Dr. Matera and his colleagues are clearly betting that it will. That contention is based on the firm belief that it is a good thing for quality of care to be tied to payment.

“This is about the patients when it comes down to it,” he says. “I do not know of any doctor who does not want to provide quality care.”

The group is currently working to build the infrastructure of the practice without walls. Once that infrastructure is in place, there are plans to reach out to nephrologists throughout New Jersey to expand the group. The group has developed a Mission Statement (see sidebar), and is currently establishing criteria for quality metric guidelines, assigning committee members to develop and refine the metrics, and ensuring that the IT infrastructure is capable of supporting the effort. The key to the success of this effort, according to Dr. Matera, is developing the group’s own quality measures based on available guidelines and being able to track those measures.

Dr. Matera describes the current climate in healthcare as the need to “provide the best quality care for the least expensive price with the best outcomes. That is what is comes down to. That is what we want for our patients.”

“Changing the culture of physicians is hard,” he adds. “Whatever version of the ACA is ultimately in place, the current culture needs to change; we need to make the physician more of a business person. We need physician leaders to be willing to step up to adapt to the changing healthcare landscape. If we do not have that, it is just not going to work.”

Click here for an expert response to this story: Benefits Clear but Questions Remain

Dr. Matera is a practicing nephrologist in Central NJ since 1994.  His main area of interest is in dialysis care and ICU Nephrology. He also has over 12 years experience in medical leadership having served as chief of staff, chairman of internal medicine, and chairman of peer review at CentraState Medical Center in Freehold, NJ.