Two physician-group CEOs discuss in FierceHealthcare how to make Alternative Payment Models work well for their organizations.
“We really believe in this, and we think it’s better medicine,” said Pioneer Medical Group CEO John Kirk.
“Mr. Kirk’s organization, an employed-physician multispecialty group comprising 61 providers in Southern California, now gets 82 percent of its revenue from capitation, he said. It calls its approach a ‘coordinated care model.”’
Capitation–or an upfront, per-member, per-month payment for providing services for a set population for a set time period–is the core financial element of that model. “That payment was originally calculated just by age and gender, but now includes risk scores for individual patients, which is vital when it comes to negotiating rates with health plans, ” Fierce said.
Another capitation route is through an independent practice association (IPA)–such as Sharp Community Medical Group, in San Diego. About 800 independent physicians contract risk through the organization, CEO Paul Durr said.
Fierce summarized:
“The size and geographic reach of the organization gives Sharp Community Medical Group a leg up when contracting with health plans.” But Mr. Durr noted that a key to the IPA’s success was requiring doctors to belong exclusively to that group. “Another key was developing a common electronic medical system — though he noted it wasn’t easy to get specialists on board.”
Additional key elements of successful Alternative Payment Models, according to Messrs. Durr and Kirk, include:
- The power of data. The group should handle its own claims and provider credentialing. “Community Medical Group negotiated a 20 percent rate increase in a health plan contract by leveraging data to demonstrate how many patients with complex conditions it was treating who were ‘out of the norm.”’
- Patient-use management. Pioneer Medical Group has after-hours clinics, which divert patients to a lower-cost alternative to the emergency department.
- Provider engagement. It wasn’t until Sharp “required exclusivity from its providers, and then worked with them to design incentives, that it redefined its relationship with them.’’
- Quality incentives. There are many Alternative Payment Models to measure quality, such as the government’s star ratings, CAPG’s standards of excellent program and the Integrated Healthcare Association’s (IHA) pay-for-performance program. Pioneer Medical Group has been awarded $3.15 million in bonus payments since 2005 through IHA’s program.
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