College of American Pathologists
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  Payers, CMS looking at gain-sharing, capitation models


CAP Today




August 2010
Feature Story

Jane Pine Wood Esq.

It’s early but not too early to be thinking about accountable care organizations and how pathologists and labs would fit in, says Jane Pine Wood. Under the health care reform law, the CMS has to implement an ACO demo in 2012. Here is some of what she said at the Executive War College and more recently.

In the most basic format, we’re looking at expanded forms of both gain-sharing, which isn’t so bad, and capitation. I know capitation is a bad word, one that makes people cringe. But that is what many private payers are considering. In addition, the CMS has proposed several demonstration projects that involve bundled payments. Initially, however, the CMS is exploring gain-sharing through an accountable care organization, which is probably going to be a physician-hospital organization or something similar to a PHO. Perhaps it will be an academic medical center. But it will be some mixture of physician, hospital, and other ancillary providers.

The CMS will assign patients to the ACO. Patients are not required to receive all of their care through the ACO, but the ACO will be primarily responsible for the care of the assigned patients. Looking at historical data, the CMS will also estimate the aggregate amount the Medicare program would spend on the care of those patients in a given year. Providers will continue to be paid as they are now—physicians on a fee-for-service basis, hospitals under the prospective payment system. At the end of the year, if the actual expenditures are less than the estimated amount, the CMS and the ACO will share the savings. This is known as gain-sharing. At least initially, there will be no penalty for overages. The idea is to provide physicians and other health care providers with an incentive to focus on preventive medicine, to order only the services that are necessary, to try to keep people healthy—that is, to practice smarter medicine, not more expensive medicine. And the incentive is they’ll have more of those dollars to keep at the end of the day.

Payers in various states, including Florida, Massachusetts, and Ohio, are considering the ACO model very seriously. Select Medicare demonstration projects will make bundled payments for the care of patients with particular diagnoses and/or procedures—more of a combined hospital/physician capitation payment.

In these gain-sharing and bundled-payment models, my concern is that if pathologists and other laboratory providers—as the recipients of referrals—are not proactive, it’s going to be the strong hospitals and the orthopedic and cardiac surgeons who are going to get most of the money.

On the other hand, assuming the idea behind ACOs is smart, more-effective medicine, who’s in a better position than pathologists to control costs in a hospital setting and to help members of the hospital medical staff make cost-effective decisions on the ordering of laboratory tests? I don’t have to tell you how much money is spent on laboratory tests that may not be necessary or are not the most appropriate testing. If pathologists play things right, they are in a very good position to promote that they are a focal point in helping to control health care costs in that setting.

Though this is several years away, now is the time to start building up your credibility with other members of the medical staff and the hospital administration, whoever you see in your community as being the logical accountable care organization. Explain your role in cost-effective medicine and how you would be a key player in any type of ACO. Try to position yourself such that you’re one of the central players, you’re at the table talking about how such an organization is going to be formed, how the money will be divvied up.

Within your own practice, consider whether you are in a position such that you could go to an ACO and say, ‘Here is our baseline of costs for laboratory and pathology services. We would like some type of gain-sharing arrangement with the ACO whereby we will get a certain percentage of the cost savings that we can help you achieve because we are in the best position to educate the medical staff and be the gatekeeper for the clinical laboratory and anatomic pathology costs in our community.’



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