Large Groups Are Positioned Well in New Healthcare Arena

Robert Laszewski

Just days after the November 4 midterm election results were announced, Robert Laszewski, president of Health Policy and Strategy Associates Inc, in Washington, DC, told urologists to expect even bigger changes in reimbursement and payment models than they had originally anticipated—but that large-group practices would be especially well equipped to handle them.

While Laszewski said the Affordable Care Act (ACA), which is driving many of the changes, may end up being altered, he doesn’t expect the program to be disbanded due to the political shift in legislative power.

“The majority want it fixed, not repealed,” he said in a keynote address during LUGPA’s annual meeting. “What there will have to be is a bipartisan compromise.”

Under the ACA, a cost-cutting move by health insurers to narrow their networks—or limit the number of participating providers— is continuing, Laszewski pointed out.

A Robert Wood Johnson Foundation study of narrow network plans studied six states (Colorado, Maryland, New York, Oregon, Rhode Island, and Virginia) to check the prevalence of narrow networks.¹ In four of the states, individual market insurers modified networks in advance of 2014. In the other two (Maryland and Rhode Island), at least some insurers have narrowed networks to prepare for 2015.

As they focus on the price of their plans, insurers are making more “sweetheart deals” with provider organizations, Laszewski said, and providers are making conscious decisions to join forces with insurers who might, for example, exclude their competitors. Laszewski said insurers want to work with the most organized large-scale providers. His advice to doctors gathered at the Drake Hotel: “Be sure, as your accountable care organization (ACO) negotiations are going on, that you know you have enormous bargaining leverage. Don’t be shy about that. You’ve got what they want.”

He noted that Medicare Advantage programs are also focusing on narrow, high-performance networks. As a result, those networks are narrowing, by some estimates, by 10% to 15% per year. When they look for the providers who offer the highest ratings in quality and cost, they, too, will be looking at large-group practices, Laszewski said.

“When you have negotiations with Medicare Advantage providers, you need to show them how you can improve their quality ratings,” he said.

Large group practices will also have the upper hand when it comes to the implementation of ICD-10 coding, or the 10th Revision of the International Statistical Classification of Diseases and Related Health Problems, set to take place on October 1, 2015.

While insurance companies, hospitals, and large practices are ready and have been for some time, small practices are not, Laszewski said.

“Small practices just can’t live in the new world,” he said. “They can’t get their systems up to date. It’s another reason why you need to consolidate or be consolidated.”

Looking ahead, Laszewski warned the doctors not to be discouraged by reports showing that savings, so far, have been small in ACOs. A recent Medicare Payment Advisory Commission report found that aggregate savings for 114 ACOs since 2012 was 0.3%.² But the process will take time, he said, because the investments and expenses are up front, and because a lot of return can’t be expected in these early years. Laszewski urged his audience not to interpret slow results as a sign that the payment model won’t last.

“Let me be clear. The train has left the station to end fee-for-service,” he said. “Republicans and Democrats, and particularly Republicans, believe that markets are the solution, and they mean integrated care. If we don’t make this work, everyone in this room will be working for the government. We will make this work because we have to make this work.”

His advice to urologists given the new economic realities: Be proactive. Pick your partners up front, rather than waiting to be picked. Primary care providers may be driving the ACOs, but they still need specialists. Look for the ACOs that have the patients you want.

“They’re going to want to work with specialists who want to play the game and not undermine their strategies…You have to say, ‘I get it. I know what my role is,’” Laszewski said.

References

1. Colette S, Lucia K, Ahn S. Implementation of the Affordable Care Act: cross-cutting issues. Six-state case study on network adequacy. Robert Wood Johnson Foundation. http://tinyurl.com/qaxea28. Published September 2014. Accessed November 24, 2014.
2. Glass D, Stensland J. Update on Medicare accountable care organizations. Medicare Payment Advisory Commission. http://tinyurl.com/n35xbbh. Published September 11, 2014. Accessed November 24, 2014.