Reimbursement

The other major change that comes with this managed care is reimbursement. With capitated payments and quality incentives on the line, every doctor wants to make sure they are receiving their fair share.

Aaron Spitz, MD, a urologist with Orange County Urology Associates, has been working as part of an ACO for just more than a year. Their patient population includes fee-for-service as well as ACO patients and he said there are a host of things specialists need to consider when making the switch.

They had been receiving capitated payments for years, but for those who haven’t, he said the move will be a “radical shift.” To ease into the process initially, his group worked in a fee-for-service environment with an organization before moving into capitated payments for those patients. What they learned over time—and what each practice must understand—is how much they need to make to be financially viable in the new system, he said.


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“What we do know is how much we need to get paid and that is the greatest obstacle for nephrologists and urologists who have not been in this kind of contract before,” he said.

Dr. Spitz said they meticulously analyzed their data before ever accepting a capitated contract (see related article for tips). While they were still in transition and using fee-for-service, they analyzed how they could be more efficient in areas and how much they needed to get paid for various services.

Advantages

Dr. Spitz said taking part in an ACO has been advantageous for his practice in a couple of ways. First, it has allowed them to remain independent in a time of increasing mergers and acquisitions. They have made it known that they are available and have experience with ACOs. This enables them to work with different organizations and have a dedicated stream of patients.

Participating in an ACO also has allowed them to gather a larger number of fee-for-service patients. When you enter into an ACO arrangement, referring physicians send their ACO patients to you. But if they get good feedback, they are likely to begin sending their fee-for-service patient to you as well because of convenience, he said.

They have also learned how to streamline what they do for all of their patients.

“What you have to do is find a balance where you figure out how to do less for patients while still giving them same level of diagnostic and therapeutic care,” he said. “It’s not about less care, but about doing less things, requiring less visits or using less expensive labor to deliver the same care.”

Dr. Spitz, for example, has created a vasectomy clinic where 10 patients come in after normal business hours. They receive a consultation and watch a video explaining the procedure. When they are done, he visits each one individually for an exam and questions. He is able to process 10 patients in the time it would have taken for three and can use daytime slots for other patients.

The doctors agree that the movement toward ACOs and medical homes will likely occur heavily within the next two years. Eventually, they think most doctors will move to this managed care.

“I think we are at the beginning of a very long change in healthcare that may take a couple of generations to get worked out,” Dr. Spitz said. “I think the movement from fee-for-service is rational.”


To understand how much you will need to be reimbursed in a capitated or bundled payment model, you have to have a “very strong handle on data that is generated in your practice,” said Aaron Spitz, MD, of Orange County Urology Associates. Here is a list of what Dr. Spitz said you need to know about your utilization.

  • For a given population of patients, say you have 20,000, how many urology visits will that create in a year?
  • How many will spin off into new patient visits?
  • How many new seniors will you see in a year versus commercial payers?
  • For each new Medicaid patient, how many follow ups will that create in a year?
  • How many procedures and surgeries will a Medicaid patient need in a year including hospital procedures and office and hospital consultations?
  • What kind of supplies will you go through in a year including catheters and other disposables as well as medications you provide?
  • What services should you keep at fee-for-service in your contract like expensive chemotherapy, things you would purchase and resell, or highly specialized, complex or time-consuming care that you provide infrequently?