HCI3 Update from the Field: Not Rewarding the Hard Work

Submitted by francois.debrantes@hci3.org on Friday, March 16, 2012 - 12:45

Newtown, CT – March 16, 2012

Dr. Hammond, like many independent physicians, is trying to do his best to make ends meet and continue to serve his patients – And unlike many physicians, Dr. Hammond has received several Bridges To Excellence recognitions, attaining level 2 recognition for Diabetes and Cardiac care, Level 3 for office systems and, as a result, a BTE Medical Home recognition. There are very few doctors in the country that have achieved this level of excellence. Yet, as reported in the WSJ, Dr. Hammond is not being adequately rewarded for his hard work. And it is hard work. To get to a level 2 BTE recognition in Diabetes and Cardiac care, you need a very effective EMR system, you have to track patients most at risk for hospitalizations, and you have to manage them. That takes time and people…both of which are expensive. More than two years ago we published a report that illustrated how new payment models could financially sustain real medical homes. That model, if applied for Dr. Hammond, would solve his problem. The good news is that we've embarked on that process with the support of the Colorado Health Foundation and are working with commercial insurers like Anthem and Aetna, as well as the Colorado Business Group on Health's self-insured employers to write new contracts with physicians that will truly reward them for better management of patients with chronic conditions. Not by providing them with a meager pmpm, or by hoisting onto them unmanageable insurance risk, but by providing them with significant upside tied to reductions in potentially avoidable complications.

What this means to you – Field work is essential to understanding the way incentives can positively or negatively impact patient care and physician behavior. And so far, despite rumors to the contrary, that field work is proving the case. In New Jersey, Horizon Healthcare Innovations' efforts are starting to pay off, and the surgeons involved in their new payment effort are providing more effective and efficient care to patients. Across the country, physicians and hospitals are starting to understand the benefits of managing "technical risk" and that managing that risk can bring rewards, if you're careful in how you contract for that risk. To help physicians navigate this new world of risk contracts, the AMA has published a guide that payers and providers should use as reference. Each party to a risk contract views costs differently. Dr. Hammond' costs of providing good care to his patients have increased. As a result he needs either a higher payment per unit of service delivered, or a better payment model that will cover his costs and provide him with a reasonable margin. For payers, that higher unit price, prima facie, seems like higher cost, but our research suggests it isn't when you measure cost of care appropriately. Understanding the difference is essential and RWJF has published a report that attempts to reconcile these potentially conflicting points of view. We've known how to solve Dr. Hammond's financial problem for at least two years, and we're going to. But we can't do this alone, and there are many other Dr. Hammonds in the country that need the same help. It's really time to stop the tinkering at the edges and to get serious. Many have started. We welcome all.


Francois de Brantes
Executive Director
Health Care Incentives Improvement Institute, Inc.
w: www.hci3.org