Risk Contracting, v.2.0 Print
Written by Lawrence Schimmel, M.D., FACS   
Thursday, 26 January 2012 00:00

In the late 80s and through the 90s risk contracting was seen throughout our Florida market. Primary Care physicians or healthcare entrepreneurs working with a physician assumed partial or full risk for providing care to a subset of a health plan’s enrollees. The “risk taker” would then capitate specialty care and other services to minimize their risk. Success or failure depended on the ability of the primary care giver to manage the patient and control outpatient and hospital resources. Success if viewed through the bottom line depended on performing the right services at the right time in the right setting. Unfortunately, some risk takers viewed underutilization as a sure way to enhance the bottom line and quality of care issues would then arise. HEDIS reporting and NCQA accreditation requirements were measured to insure “quality care”. In some instances instead of full risk, “shared risk” arrangements developed between plan and risk taker and we can also remember the financial incentives for primary care physicians that were set in place to assure HEDIS compliance and patient satisfaction.

Does this all sound like something you have been hearing a lot about lately??

Let’s be clear, an ACO is little more than a risk contract with a lot of the bells and whistles now available to us with technology. There is nothing magical and mystical about this entity. The government has recently eliminated the need to take risk for those who choose to create and ACO and allows you as an ACO up to 50% of the savings. Should you choose to take risk you would be entitled to 60% of the savings. Who would want to take risk for an additional 10%?

So what we have is an entity with 5000 Medicare lives that will contract with providers, hospitals, and pharmacy and ancillary services to provide care to a specific set of patients. Should your cost of care over a period of time be less than that a similar group of non-ACO patients you will receive 50% of the savings. Your reporting requirements are tied into quality indicators that the government has identified which also tie into the meaningful use criteria as required in the HITECH Act for EHRs. Risk contracting v2.0 is the development of the ACO. At this time many patients are still cared for in our community under risk contracts from plan to provider. Those patients are part of some type of Medicare Advantage Plan. 

Why are ACOs being talked about so much? Large parts of our Medicare population are free agents, not part of any Medicare Advantage plan. Those are the patients that are targeted for ACOs. To the extent a primary care physician joins an ACO the patient will not really know any difference. The physician will refer to specialists and hospitalize as needed and all ancillary services will still be provided. The patient for all practical purposes will not notice any difference. Internally, all of the physicians, hospitals, ancillary services within a specific ACO will be linked electronically for reporting and financial purposes. Since the primary care doctor is the one who manages the care of his or her Medicare patients, the key component of any ACO is putting them together to meet the minimum criteria (5000 unaffiliated Medicare patients). This is very similar to the old-fashioned risk contracting of the 80s and 90s packaged differently. Since the final rules from CMS a few months ago regarding ACOs, risk is not even a requirement anymore. The battle about who should control the patient is now beginning. All of the stakeholders that are involved are jockeying for control of the patient and management of the ACO. Whether it is the managed care organization, the hospital, the physician, or the healthcare entrepreneur that prevails is yet to be determined. v. 3.0 is not far behind. Stay tuned.

Dr. Schimmel is a Principal at Marcum Healthcare.  You may contact the author at lawrence.schimmel@MarcumHealthcare.com or 305.995.9801.

Last Updated on Monday, 13 February 2012 10:09