Physician Collaboration and Reimbursement Impact Analysis

Evolving healthcare regulations are incentivizing #physicians to deliver more cost-effective care while simultaneously focusing attention to quality of care and outcome, through various #valuebasedcare based care (VBC) programs.

The growth of value-based care programs has led to an increased interest in collaborative, cost-effective ventures, including, but not limited to, clinically integrated networks (“CINs”) and group practice subsidiary models (“GPSMs”).

Such endeavors serve as a way to bring hospitals and physicians together to pursue common goals while allowing physicians to maintain some level of independence through a private practice setting. CINs and GPSMs create an environment to manage clinical and financial data more efficiently, which, in turn, can promote well-informed decisions that lead to improved patient outcomes.

Reimbursement Analysis

It is essential for the parties to understand the financial implications of the participation agreement. A reimbursement analysis will help paint a clearer picture of the potential change in reimbursement from forming CINs or GPSMs.

Clinically Integrated Networks (CINs)

CINs are structured as a collaborative partnership (a “Network”) between a health system and independent physicians with a shared goal of delivering quality care, improved efficiency, and a higher coordination of care.?

A CIN model provides independent physicians the opportunity to maintain various aspects of independence while simultaneously creating a strategic alliance with larger health systems in their community. Some of the other benefits experienced by independent physicians under the CIN model include cost savings attributed to increased operational efficiencies, administrative support and the ability for joint-payer contracting negotiated by the Network. With joint payer contracting, alignment with a large community hospital can offer participating physicians with access to more advantageous reimbursement contracts.

Under the CIN organizational structure, participating physicians are compensated by the Network based on their practice’s achievement of predetermined quality metrics, which serves as an incentive to provide patients with more efficient, higher quality care at a lower cost.

Group Practice Subsidiary Models (GPSM)

Under a GPSM, a large health system creates a subsidiary under a new TIN (Tax Identification Number). As a wholly owned entity of the health system, the new entity is subject to a certain level of control by the health system. While under a GPSM structure, independent physicians are technically employees of the subsidiary, the model still serves as a more autonomous option than direct hospital employment. Given that the subsidiary does not subsidize practice operations under a GPSM, independent participating physicians remain economically at risk.

In a GPSM, the subsidiary negotiates contracts with payers and directly receives all reimbursement for the professional services rendered by participating physicians. Physicians are compensated based on whatever money is left to be distributed after the entity covers all subsidiary and practice overhead costs. Similar to the CIN model, the distribution of physician compensation can be based on achievement of various predetermined production and/or quality metrics, which creates further incentive for participating physicians to provide patients with a higher level of care.

Reimbursement Analyses: The Distinctions

Patient vs. Insurance Payments: When analyzing a practice’s billing reports, it is important to distinguish between insurance payments for services rendered versus patient payments. Additionally, it is important to ensure the comparability of payer contracts. (Hint: CodeToolz Contract Analyzer)

Capitated Contracts: Under a capitated contract, a payer compensates a provider of healthcare services through a flat monthly fee for each member the practice covers, regardless of the number of patient visits per month.

Bundled Payments: Under value-based care models, the term “bundled payments” is used to describe the scenario in which a singular payment is made for multiple services provided to an individual over a determined period of time.

Lesser-Of Provisions: Lesser-of provisions allow a health insurance company to reimburse a practice the lesser-of the practice’s billed charges or its contracted rate specific to all #cptcodes . This is critical to watch.

Multi-Procedure Billing: When multiple procedures are performed during the same patient encounter, by the same provider, multiple procedure payment reductions (MPPRs) can come into play. In these scenarios, it is important to note that most payers will typically only fully reimburse the subject practice for the highest-value procedure, while subsequent procedures are reimbursed at a reduced amount.

Pareto Principle (80-20 Rule): When reviewing billing reports in connection with a reimbursement analysis, it is vital to ensure that the data being analyzed accounts for at least 80 percent of the practice’s total collections. In CodeToolz’s experience, approximately 20 percent of the billed CPT? Codes, as measured by volume, account for nearly 80 of total collections. Following this guidance ensures that you are painting an accurate depiction of the practice’s potential change in reimbursement. We suggest using weighted averages (discussed in previous Articles).

Summary

With the shift to a value-based healthcare environment, alternative payment models are incentivizing large health systems and independent physicians to build strategic partnerships that can help them reach common goals of providing quality services and promoting positive patient outcomes within their community. #physicians #valuebasedcare #cptcodes

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