Implications of Recent Medicare Announcements on Trends in Physician Payment Methods

Implications of Recent Medicare Announcements on Trends in Physician Payment Methods

August 21, 2012 2:00 pm

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A free educational webinar on Implications of Recent Medicare Announcements on Trends in Physician Payment Methods with Ralph Z. Levy JR., Attorney with Dickinson Wright and April Sage, Director of Healthcare Vertical and Marketing at Online Tech.

When: August 21, 2012 @ 2 P.M. ET
Where: Online.
Who: Ralph Z. Levy Jr., Attorney with Dickinson Wright and April Sage, Director of Heatlhcare Vertical and Marketing at Online Tech.
What: Implications of Recent Medicare Announcements on Trends in Physician Payment Methods
Description: Recent announcements by Medicare regarding pilot programs and 2013 payment changes represent developments in methodologies and policy changes that will impact Medicare physician payment in the future.  

This webinar explores these recent announcements and the underlying trends that will likely have a dramatic impact on physician payment in the future. It also includes thoughts about how physician practice groups can plan today for these potential future changes.




View slides (PDF).

April: Hi, everyone and thanks so much for joining us today. Today’s webinar will be about the implications of recent announcements by Medicare and the possible trends in future physician payment methods. To help us understand more about that I’m very pleased to welcome Ralph Levy, Jr., from Dickinson Wright. Ralph, thanks for joining us today.

Ralph: April, thank you very much for inviting me to participate. This is my first webinar and I look forward to it.

April: Wonderful, very good. Give a sense of what you’re seeing as a trend. I know that you are going to do a recap of some of the announcements for us. Where do you think all of this is heading for?

Ralph: That’s a good question. To a certain extent, I call it back to the future. By back to the future I mean that there are certain trends which would indicate going back to the practice of medicine in the 50’s and 60’s where individuals would be treated and be seen by a single physician as opposed to several specialists. Back to the future means that we’re definitely changing the traditional payment methods away from a traditional fee-for-service model.

The two drivers in this whole process are initiatives that were embedded within the affordable act. A lot of the publicity related on the recent case and test case in regard to the constitutionality of the Affordable Care Act. However, there were certain initiatives and funding for certain programs that were part of that very large package of legislation that Medicare is now in the process of implementing and those did not receive much publicity.

The second driver to this whole process relates to policy changes within Medicare in regard to certain areas that they’re concerned about as part of their cost savings initiatives. You always see a company with any of these announcements, and I’m going to work through three announcements that occurred in May, June, and July of this year, by the acting administrator who is Marilyn Tavenner who will say that the purpose of these initiatives are to improve patient care and lower healthcare costs long term. The objective to require physicians to provide a higher level of care or a different of care depending on the policy is. Of course, Medicare (CMS) is trying to reduce their costs. Those are the two drivers. As we work through these three different announcements we’ll try to talk about which were driven by the Affordable Care Act and which were driven by the policy changes. I’m going to refer to three different announcements, again in May, June, and July of 2012; and I’m also at the end when we talk about trends going to refer to a pilot program that was announced by Medicare in August 2011 as we talk about trends.

Ralph: By way of background, I’ve been practicing law in the Nashville, Tennessee, area for almost 35 years. The 10 years, I call it chapter two of my legal career, I was joint counsel to a kidney dialysis company and as part of that I saw in regard to reimbursement for dialysis patients certain trends where markets were being tested and payment methodologies were being tested in regards to payment for care of patients with end-stage renal disease. I think that CMS is utilizing some of what it learned through that process as it rolls out these potential new payment models. That’s the background behind my premises to the presentation which are that CMS is willing to explore different payment methodologies. These include bundle payments which will be payments for multiple types of care consolidating what were previously separate payments. In addition, we need to be aware that any of these announcements that we’re going to talk about could be early indicators of future trends at least in regard to Medicare payments, and then to a certain extent we also have to watch out for the possible adoption of these trends by private insurers in the future.

I think it’s also important for physician groups to plan today for the implications of the future changes. As payment methodologies change the ability of physician groups to keep up with the payment methodologies, and in particular to track and monitor the quality of care and to what I call quantification of the quality of care through electronic health record systems that are integrated with billing records will become increasingly important.

April: The rate of change is pretty high right now.

It sounds like the rate of change is pretty fast right now and the physician groups are going to be faced with trying to keep up with that in addition to making these changes to the patient care workflow.

Ralph: Absolutely correct. What I’ve seen based on the subscriptions and I subscribe to some of the CMS services, of course, the health law newsletters, etc., is that we’re seeing an announcement even at the rate of one to two a week. Some of this, I hate to say it, maybe it’s politically motivated given that we’re in an election year where they’re trying to indicate that the current Obama administration is expanding health care and trying to limit costs along the way. We’re seeing a significant amount of announcements. What I’ve tried to do is just pick three of the announcements and put it together as I call it weaving the web which is appropriate given that we’re on the web and online seminar, so we can identify whatever trends are possible out of those three announcements.

April: Great.

Ralph: The first one I’d like to talk about has to do with an announcement that was made by Medicare and I’ll refer to CMS, Centers for Medicare and Medicaid Services, as Medicare or sometimes CMS depending on what comes to my mind, where they announced in May 2012 as part of an affordable care initiative that they would make supplemental payments to primary care physicians. Now primary care physicians for purposes of this particular announcement would be persons who are eligible for these payments including, family medicine physicians, general internal medicine physicians, and pediatric medicine physicians, and related specialties. This special payment stream relates to those primary care physicians, or I’ll call them PCPs for purposes of this presentation webinar, so they received those payments for Medicaid patients that they treat.

One of the drivers behind this announcement is an increased trend, and I saw some statistics over the weekend that indicate physicians in general, and to a certain extent primary care physicians, are refusing to treat Medicaid patients and it varies on a state by state basis. I think the worst culprit in refusal to accept Medicaid patients was the state of New Jersey and the highest acceptance rate was the state of Wyoming. One of the concerns that CMS has is that even though they’re in the process of trying to expand health care including those available under Medicaid population they want to make sure there’s sufficient number of physicians out there who will accept Medicaid patients. Part of this is the initiative through the Affordable Care Act to make a supplemental payment where the purpose of the payment is to equalize the payment that will be received by a primary care physician who provides services to a Medicaid patient as if that patient were a Medicare patient.

Again, we’re talking about a subset of services which would be services only in regard to Medicaid patients and it’s only for primary care services. The purpose of this initiative apart from what I told you what’s going on behind the scenes which is refusal to treat certain Medicaid patients. There are two purposes behind it. One is to increase preventative care and you’ll see this is a theme through a couple of the announcements, this one included, in regard to preventative care in order to avoid hospitalizations which is where the expensive health care costs come into play. A second is to put Medicaid on an equal playing field with Medicare so that if a primary care physician treats a Medicaid patient they’re not being economically disadvantaged and receiving the same lower compensation level as if that patient had been a Medicare patient. Keep in mind that states pay a portion of the Medicaid costs, so in regard to this particular initiative the supplemental payments which are being made by CMS to the states are advanced by the states to the primary care physicians who treat the Medicaid patients, but then they’re subject to being reimbursed 100% by CMS. At least for this payment stream, the states do not have to incur any portion of the costs. This is 100% being incurred by Medicare as part of one of the initiatives in the Affordable Care Act.

The purpose of the supplemental payments here is, number one, to eliminate the payment disparity between Medicare and Medicaid patients, and number two, to indicate as part of the Affordable Care Act but really was an underlying policy decision to emphasize preventative care as opposed to primary care keeping in mind that they’re trying to cut down on the total costs of health care being provided to the Medicaid population. That’s announcement number one which took place in May 2012.

April: Currently in effect, Ralph, or will this come into play at a date in the future?

Ralph: No, it’s currently in effect. I have not seen any materials on the extent to which states are applying for this, etc., but it’s currently in effect.

April: Ok, thanks.

Ralph: The second announcement was an initiative which is not yet in effect. It’s called the Comprehensive Primary Care Initiative. The purpose of this initiative which was announced by CMS in June 2012 was to allow practice groups to integrate multipayer funding streams into a single payment stream and to support those multipayment streams. What that means is they’re trying to encourage physicians to become less dependent on Medicare and Medicaid for their payments and they’re trying to promote a partnership with the private sector. You have several different drivers for this particular initiative. As part of this initiative, there are requests for application from 75 different primary care practices in seven different designated markets to provide enhanced primary care. Some people call this the direct patient care trend. The announcement indicated that it’s an enhanced primary care initiative.

The concept here is that Medicare and Medicaid patients, and they’re treated the same in this particular initiative, don’t access preventative care to the extent that they should in part because they don’t access, they locations are geographically away from where the patients’ live. As part of this program, the primary care physicians who elect to participate in this program must agree to enhanced amount of services in regard to longer and more flexible hours. They’re required to utilize electronic health records, and I’ll come back to electronic health records later because it is an important future trend. They are going to be required to coordinate care with other providers, and they’re also going to be required to provide enhanced care for patients with multiple diseases.

Now this is very similar and reminded me eerily of a program that was included when Medicare updated its dialysis services standards to require an interdisciplinary plan of care for patients. As part of this model, I suspect CMS to the extent that the various groups within CMS talk to each other which I assume they do, adopted what it learned in regards to implementation of the interdisciplinary team approach to the care of dialysis patients to the care, primary care in particular, of Medicare and Medicaid patients. As part of this initiative, what’s the carrot? It always is the carrot and a stick as you evaluate these initiatives. CMS will pay an additional care management fee that’s expressed on a per patient basis. For the four-year demonstration project, the first two years are anticipated to be in the range of $20 per month per Medicare and Medicaid patients.

For those patients who are participating in the program, the practice group, the primary care practice group, that is approved to participate in the comprehensive primary care initiative, the CPC initiative, would receive during the first two years of the four-year project $20 per patient per month. Then, in the out year, which would be years three and four of the project, it’s anticipated that the payment will be reduced from $20 a month to $15 a month. What’s also important is that there will be a shared savings opportunity during years two, three, and four. In other words, after the first year of the initiative, there will be an opportunity to share in savings from the initiative based on a reduction in costs of this type of service. Again, the primary care services based on the reduction in the costs of those services as compared to total medical costs for the population as a whole, the details of which are really beyond the scope of this seminar, but the point is that this is an additional payment stream or payment model that CMS is in the process of exploring and is going to utilize this initiative to refine its payment methodologies which could indicate potential trends in the future for a change in the method of payment for care of patients as opposed to the more services that are provided, the more physician receives in compensation.

Ralph: Turning to the third initiative, this was one that was announced in July 2012. This announcement was included as part of the Medicare physician fee schedule. Each year under the Medicare physician payment program there are announcements of adjustments to the payments by Medicare for physician services. Now these payments adjust by type of specialty. What’s interesting is as I reviewed this announcement was that, for example, family physicians received a 7% annual increase in 2012 services as compared to 2013. Other physicians such as internal medicine physicians and other types of primary care physicians received anywhere from a 3% to a 5% increase in compensation. Whereas, general practitioners received a zero increase, and more importantly, certain of the specialties that relate to the treatment of certain illnesses received reductions, particularly the anesthesiologists and the cardiologists will receive a 3% reduction in 2013. This fee schedule and this announcement was independent of the sustained growth adjustment that was adopted a few years ago and which Congress keeps extending. As part of this announcement, CMS said that unless Congress wants once again to extend the implementation of sustained growth formula there’ll be an overall 27% reduction on all physician payments for the year 2013. Assuming that the sustained growth adjustment does not take place, the figures I’m giving you are a reduction of anywhere from 3% to the top increase of 7% for family physicians. I’ll talk about that in just a minute what was announced for 2013.

What’s important, at least for the purposes of this presentation, is are there any themes? Are there any trends that could be identified as part of this announcement? The most significant aspect apart from this disparity and the payments as affecting the various specialties is a new payment stream that compensates what is referred to in the announcement as community physicians for the first 30 days of care after discharge from a hospital or nursing home. It’s called a transition care payment and it represents a significant portion of the payment stream that was announced. For example, for the family physicians the discharge transition payment represented 5% of the 7% increase that those family physicians are going to receive. Obviously, because of the nature of this particular reimbursement stream which is to emphasize the community physicians, in other words, those who are primarily taking care of the patients after discharge from a nursing or a hospital, the specialists such as anesthesiologists, cardiologists, pathologists, that type, will not participate in that type of payment stream.

Through this fee schedule, CMS adopts a policy change again to focus on preventative care and also this is another means to address the concern that CMS has which is they’re concerned about excessive readmissions to certain hospitals for certain medical conditions. There was an initiative in the Affordable Care Act by which, that’s separate and apart from this particular announcement, by which CMS was mandated to go and explore a means to reduce the hospital readmissions. Again, they’re looking to reduce the overall care costs for patients, particularly in regard to hospital admissions. In general, the payment to specialists as I noted are for the most part flat or were reduced. The justification that was contained in the announcement in regard to the payments to the anesthesiologists and cardiologists is because their practices assumed that they’re going to utilize expensive medical equipment in their practice and because the interest rate environment is a lot lower than what it was in 2012 that their borrowing costs and their cost to pay interest to finance those capital intensive items is reduced as a result. They should receive a reduction in payments for 2013.

There’s one other aspect of that announcement that took place in July 2012 which is just last month that I wanted to alert everyone to. That is that there is also a voluntariy program that was contained in that particular announcement that encourages physician groups of at 25 physicians to receive payments in part based on the quality of care that they provide to their patients. It’s a voluntariy program which means that physician groups, where there are 25 physicians or more, were not required to participate in the program, but if they did they received a couple of carrots, one of which is really a stick. One of the carrots is the ability to participate in upside potential of the program through shared savings, but the downside is that they could potentially have their payments reduced if they don’t provide the quality of care at the standards and at the requirements that are imposed by the physicians. Second aspect was even it was a voluntary program there was a 1% payment reduction for those physician groups of 25 physicians or more who elect not to participate in the so called voluntary program.

Those that participate received both a carrot and a stick which is that their payments will fluctuate based on quality of care they provide. There was a secondary stick which is that if you don’t participate and you’re a large physician group that you’re going to experience a 1% reduction. Included in that program is a requirement to maintain electronic health records system which is probably why they limited that program to physician groups of 25 physicians or more because those are the groups that have the financial ability to make those expenditures for electronic health records.

We had several different trends in aspects going on with announcement three. Number one, it continues the theme of enhanced emphasis on preventative care as opposed to the treatment of disease. It also helps bolster and is another aspect of the provisions in the Affordable Care Act to discourage readmissions of discharge patients to hospitals on a fairly short basis after they’re discharged. In addition, it indicates that physicians need to be concerned about maintenance of electronic health records because with this initiative for the 25 physicians or more it’s likely that there will be continued emphasis on electronic health records as part of CMS policy and/or future legislation which is driven in part by Medicare.

Ralph: Turning to the implications which is what does all this mean, I think there are three trends that at least I’ve identified as part of these three announcements. One is the increased emphasis on preventative care and not on disease treatment. The payment for post discharge treatment, the transition care payment to avoid re-hospitalization is an indication of that type of focus. In addition, the intent to normalize the payments to principally care physicians that we talked about in announcement one back in May, for Medicaid patients as compared to Medicare patients would again an emphasis on Medicare as most of the treatment of diseases.

The second important aspect of these announcements as well as one that was adopted in August 2011, which I’ll mention in just a minute, is the new payment methodology will abound in the future. A good example would be a capitated payment system by which all physicians who are responsible for primary care for a designated set of patients will receive X dollars per patient per month regardless of the amount of care. With that type of a system, the physician groups will be responsible for any cost overages and they will also be responsible for subcontracting for the subset of services that are required to be provided to those other patients. By the same token, they will benefit if they’re able to provide services to the patients for an amount that’s below the amount that they receive on a capitated, i.e., per beneficiary, payment per month.

The second potential example is the single bundle of payment of previously separately billed charges for services. An example I can think of here is a pilot program that was announced by Medicare in August 2011 exploring different models when a patient is admitted to the hospital that patient receives a lot of different services from a lot of different providers including the physicians who treat the patient, laboratory services, pathology services, blood work. For those of you have been admitted to the hospital I’m sure you’re aware that when you’re discharged you may receive six, seven different categories of bills from different types of healthcare providers who treated you while in the hospital. The purpose of this program that was announced in August of 2011, would be for Medicare to make a single payment. They didn’t say to whom and it would cover all costs incurred in regard to the single stay in the hospital and a couple of the models that even explored the possibility of inclusion of care during the next 30 days post discharge. Again, it’s a single bundle payment.

This is very similar to what is taking place in the dialysis reimbursement area. At one time, there was a base treatment charge, and then efforts from a legislative standpoint by Medicare have taken place in the past recent years, 2011, 2012 in particular, to go to a bundled payment by which payments for certain drugs and other previously separately billable items are now to be included in a baseline bundled payment. In fact, starting 2013 there’s an intention to go what’s referred to as a super bundle so previously excluded separately billable drugs would be included in the bundle of payment for services being made to the dialysis clinic, and then the clinic is responsible to compensate those who provided the subset of services for it receives reimbursement rather than being able to bill separately. Again, the intent is to adopt different payment methodologies. I’m just giving you two different examples of potential payment methodologies in part based on my experience in what has happened in regard to reimbursement in the dialysis area.

The third trend, and this is very important, is the increased emphasis on, I call it quantification, of quality. Again, Medicare will use a carrot and a stick. They’ll agree to pay you full reimbursement, but you have to meet certain quality standards. Again, this payment and takeaway if you don’t meet the quality indicators is prevalent at present in the dialysis industry. It’s a trend that I think is going to take place in the normal population. The vast bulk of the patients in the U.S. who do not have end-stage renal disease by which physician groups in order to receive full payment are going to have to meet certain minimum quality markers, and then as part of that they’re going to have to provide evidence that they’ve met the quality markers that are adopted by Medicare. It’s possible that those markers could vary by diagnosis code, in which case that’s very important for the electronic health record system that’s maintained by the physician group to be able to integrate with the billing record because the billing record that goes to Medicare is going to have to indicate the diagnosis codes and it’s going to have to have certain quality indicators along with it in order for the reimbursement or the payment to be considered by Medicare as part of its billing. Those are the implications of those three trends which includes a little discussion about the August 2011 pilot program that was announced in regards to bundled payments.

Ralph: What does this mean for physicians and physician groups? I think there are three implications that should be considered. One is, as I’ve indicated, the electronic health records will be critical. Those EHR systems must be able to track quality of care that’s provided. It’s going to vary by specialty because the quality of care for a primary care physician, how do you measure quality of care for primary care services? It’s measured very differently than, for example, quality of care being provided by an oncologist. There’s going to be a different set of quality indicators, quality markers, quality minimums, whatever you want to call them, that’s going to vary either by the specialty of the physician that’s treating the patient or by diagnosis where a patient that is diagnosed with congestive heart failure, for example, may have a set of quality indicators than an individual who suffers, for example, from high blood pressure. Even in those announcements that I’ve previously discussed, there were a couple of references to electronic health records. I think you can anticipate that in the future there’ll be increased pressure on physician groups to adopt and to maintain electronic health records systems.

The second idea for preparation is that a lot of times the electronic health record systems are separately computer systems to the physician billing systems, but those systems need to be able to talk to each other. They must interface so that the physicians can be fully paid for the services rendered so that Medicare, and private payers, once they adopt these methodologies will be able to quantify quality, and then they’ll pay for quality as long as the quality of care is there. If you don’t meet the quality of care standards, it’s likely that Medicare and to a certain the private payers will do takeaways as they utilize the stick as well as the carrot.

The final aspect is that in order to continue to take advantage of the multiple payment streams, which was one of the purposes one of the announcements that I’ve talked about earlier is, that the physician should not go on their own in the future. They should explore affiliations either with hospitals, perhaps with other types of physician with laboratories or even insurance companies to make sure that they continue to have access to payments for services that are provided to patients. That could be through an accountable care organization or not, ACO is accountable care organization, and keeping in mind that the programs that I’ve described in the webinar and adopted in May, June, and July of this year, and even the one back August 2011 need not be provided by ACOs, but they could be provided by physician groups and ACOs. The whole issue about accountable care organizations and how they interplay with these trends is even a more complicating factor. As I said back to the future, the back aspect would be the emphasis on single physician treating a single patient, in the future would be the potential changes in payment methodologies in part based on the announcements that I’ve described. Where the future holds or what the future holds in regards to payment to physician groups remains to be seen, but my prediction is it’s not going to be the same. The physician groups needs to be nimble and need to anticipate the change so they can plan, particularly from a personnel standpoint and an infrastructure standpoint, for these changes.

Ralph: April, I think that wraps up everything I’d like to talk about. I can talk about a lot more but it’s not on topic.

April: That’s a great overview, Ralph. At this time, we would invite anyone with questions to go ahead and submit them in the chat window. Ralph, I had a couple of questions that came up during the presentation that we could go ahead and address now. Would you anticipate a fair amount of administrator adaptations to the receipt and then the appropriate dispersal of these bundled payments? It sounds like there might not be an infrastructure that used to handling that type of payment method.

Ralph: If you think about the traditional physician office, they have an accounts payable function. What is accounts payable function? What does it typically do? What it typically does is it pays vendors for the usual stuff that used inside a physician’s office, the medications, the Q-Tips, the swabs, depending on the nature of the practice, the needles, the syringes, etc. The typical accounts payable function that’s utilized by a physician practice I’m assuming that where the billing is being done in house as is an accounts payable function is not set up today to accommodate the ability and need to maintain subcontracts, for example, with laboratory services.

For example, if a physician receives a single payment that’s supposed to include a set of blood tests every year as a standard of care for a primary care patient, that physician group would not only have to pay the laboratory that provides those blood tests on an annual basis to meet the requirement, but they would also have to enter into a contract, a subcontract so to speak, to have those services provided to the patient of the physician group. It goes to, April, more than just accounts payable function. It includes the administering subcontracts as well. Yes, there is a significant administrative burden that’s going to be incurred by physician groups based on these potential payment methodologies. I’m not convinced that physician groups are aware of that or are ready for that. The hope is, though, that if they’re able to benefit by providing those bundle of services at a lower than targeted cost that they would be able to participate at least some of the savings. Of course, indirect costs, administrative costs to support that type of payment methodology would have to be taken into account and development of the targeted cost.

April: Has CMS given any direction? You mentioned that different diagnosis codes may have different type of payment options or reimbursements related. Do we know at point ICD-10 diagnosis codes will be incorporated into the workflow or will they be starting straight off with the ICD-10 codes to have greater specificity?

Ralph: I think the ICD-10 codes are an important starting point. They were scheduled to go into effect as I recall last month, but then under pressure from various constituencies they were delayed. It’s not clear when they’re going to be implemented. What you’ll see is that ICD-10 codes will be the first part of what could be a future sea change as these payment methodologies become refined. For example, the billing codes now in the dialysis services area are very complicated because you may have to have a billing for a dialysis treatment that’s a monthly treatment, but as part of that you’ll have to provide quality of care information as a, they call it a G code at least in the dialysis area. I think you’ll see ICD-10 coding adopted once it’s adopted. They may approach this in a specialty by specialty basis, maybe starting even with the primary care, although that to me would be the most complicated with modifiers, payment modifiers, so that they can track the payment streams that are coming in to make sure that you’re eligible to receive the full payment based on quality of care. I think you’ll see ICD-10 plus, so to speak. The plus being the modifiers.

April: Interesting. From your experience, Ralph, you’ve had a unique background to perhaps foreshadow some of the impacts based on what you saw happen with the dialysis patient workflow. What was the net effect that you saw in that area and where were the greatest obstacles encountered with those changes?

Ralph: One good example deals with a product that’s manufactured by Amgen, which is a publicly traded corporation. It’s a product called Epo which is designed to deal with blood deficiencies of dialysis patients in the red blood cell area. Up until recently, Epogen was separately billable on a per click basis, so the more you diagnosed to prevent anemia among dialysis patients, the more the dialysis clinic got reimbursed. As a result of the bundling of the payments, there have been significant reductions in the number of orders of Epo to dialysis patients because the dialysis clinic owners are trying to discourage as opposed to encourage the use of Epogen. In fact, I saw recent announcement by which one of the Amgen factories that manufactured Epogen had to lay off anywhere from 20%-30% of its workforce as a result of these initiatives. That’s a real life example of how these payment initiatives, the purpose of which is even though they say it’s to improve quality of patient care, truly to keep down on the costs, cut down on the costs, has a real life impact on workers at the particular Amgen factory where the factory workers got laid off.

April: What impact might that have had on the dialysis patients?

Ralph: The theory is dialysis patients have not suffered from a quality of care. That’s a big academic issue that’s going on right now. In addition to that particular initiative, the dialysis providers must meet certain quality of care standards and the care standards are on a rolling basis, so they’re being looked back on a two to three-year period. The indicators are being refined and changed in part based on the implementation of these new initiatives. Whereas, anemia prevention mandates occupied several of the quality indicators under the prior reimbursement stream, they’re trying to expand and go into different areas because they now know they have bundle payments, what are called super bundled payments, now in effect. They can start working on other different types of indicators as well as just anemia prevention.

April: The sands are continuing to shift. One other question here, it seems like we have a very strong trend towards integration of physicians with other care providers with different types of administrative systems like the electronic health records and the billing systems, and I’m sure the exchange of health information. Do you see anything over the next few years that would change this is trend towards tighter integration, or is this something that’s here to stay and something that everyone’s going to have to contend with in one way or another?

Ralph: I think integration is going to continue. Now whenever I think of integration there are two types of integration. There’s integration through acquisition, which I call equity integration. You’re seeing right now physician groups are selling to hospitals where hospitals are employing physicians as opposed to physicians maintaining themselves on a separate basis. The second aspect of integration is what I call contractual integration where there are affiliations in regard to a single group of patients. This could be through ACOs or it could be through a joint bid, for example, under some of these demonstration projects where, for example, you might have an insurance company pairing with a physician group to bid on a particular project. Those will vary on a project by project basis. Certain physician groups are not, to tell the truth, not able to accommodate and don’t understand the risks that are associated with some of those different types of methods. I don’t see anything in the future that’s going to reduce the amount of integration either from a contractual or from an equity integration standpoint. I think physician groups will continue to be consolidated into hospitals. I don’t think it’s too far afield to consider insurance companies may very well enter into the employment of physicians similar to what’s called a Kaiser Foundation model that’s fairly prevalent out in California and has been for a number of years.

April: It’ll be interesting to see how all of the intended and unintended impacts unfold with these changes. Ralph, thanks so much for helping us explore some of these issues. It was a pleasure having you this afternoon.

Ralph: I appropriate the opportunity, again. Hopefully, I didn’t bore the participants and everyone was able to understand what I was trying to present notwithstanding this Southern accent.

April: I’m sure your accent was just delightful. We enjoyed it [inaudible 00:48:54]. We will be posting a recording of the webinar as well as the slides and contact information. Those of you who have follow-up questions for Ralph, we’ll let you know how to get in touch with him. I hope that everyone enjoys the upcoming holiday. When we return in September, please join us for our September 11, Tuesday at 2 webinar. We’ll be talking about the trends in Internet security threats and best practices for incident response. Don’t forget to mark your calendars for Friday, September 14, you can join us in person or online for our Fall Into IT event. You can find more information about that at . Thanks again, Ralph, and thanks everyone for joining us. We’ll catch up with you on a webinar soon.

Ralph: Have a good afternoon, bye.

April: Thanks, Ralph. Bye.

ralphlevyRalph Z. Levy, Jr., Attorney, Dickinson Wright

Ralph Levy, Jr. is an attorney at Dickinson Wright PLLC’s Nashville Office. He focuses his practice in the areas of corporate, corporate governance, emerging business, estate planning & administration, healthcare, mergers & acquisitions, and taxation.

Mr. Levy is a member of the Nashville and Tennessee Bar Associations as well as the American Health Lawyers Association and the Middle Tennessee Estate Planning Council. He is a frequent speaker and writer with articles published in the Journal of Healthcare Compliance, the Nashville Bar Journal, Nephrology News & Issues, and Dialysis & Transplantation.

Mr. Levy received his A.B. from Colgate University, his J.D. from Vanderbilt University and his LL.M. in Taxation from New York University School of Law.


April Sage, CPHIMS, Director Healthcare Vertical, Online Tech 
April Sage has been involved in the IT industry for over two decades, initially founding a technology vocational program. In 2000, April founded a bioinformatics company that supported biotech, pharma, and bioinformatic companies in the development of research portals, drug discovery search engines, and other software systems.

Since then, April has been involved in the development and implementation of online business plans and integrated marketing strategies across insurance, legal, entertainment, and retail industries until her current position as Director Healthcare Vertical of Online Tech.


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