Article

Preparing for Fee-for-Value

The ophthalmic ASC industry’s first clinically integrated network

As the momentum for value-based healthcare grows in the public and private sector, ophthalmic ambulatory surgery centers (ASCs) are considering a variety of options to ensure their success in a changing reimbursement environment.

Consolidation through mergers and private equity investment are increasing. Another approach for one group of ophthalmic ASCs in New York and New Jersey has been to form a clinically integrated network. While there are about 500 clinically integrated networks across the country primarily composed of hospitals and physician practices, the Vision Center Network of America (VCNA) is the first, and, so far, only such entity formed exclusively for the benefit of ophthalmic ASCs.

“We all felt that times are changing and that forming a network was buying insurance for the future,” says Jerome H. Levy, MD, managing director of New York Eye Surgery Associates and the Ambulatory Surgery Center of Greater New York, and founder and board chairman of VCNA. “We see the CIN as a way to prepare for a fee-for-value future.”

Though reimbursement for the ophthalmic ASC is still predominantly fee-for-service, alternative payment models that link cost with outcomes (fee-for-value) are gaining traction throughout the healthcare industry. The Centers for Medicare and Medicaid Services has been aggressively rolling out value-based programs under the Medicare Access and CHIP Reauthorization Program of 2015 (MACRA), including the 2018 Bundled Payments for Care Improvement—Advanced BPCI, which CMS announced, has been joined by almost 1,300 healthcare entities. Commercial insurance companies have endorsed value-based models in a 2018 survey by the Health Care Payment Learning and Action Network finding that 34% of all healthcare payments in 2017 flowed through alternative payment models.

“We’re going to wake up one day and it’s going to be that every payer—government or commercial or large employer—is going to be paying on a value-based system,” says Ellis “Mac” Knight, MD, senior vice president and chief medical officer of the Coker Group, a healthcare advisory firm that works with CINs. “I think that the CINs are going to be way ahead of the curve and be able to thrive in that environment.”

What is a CIN, Exactly?

A clinically integrated network or CIN is a strictly defined legal entity comprised of health providers, such as physicians’ practices, hospitals, and specialists, that join together as a group to reduce costs, improve the quality of patient care, and negotiate payer contracts. CINs typically share electronic health records and practice management software systems to track costs, outcomes, and patient satisfaction, and to adhere to mutually established quality and performance measures. The CIN also must meet specific legal criteria to avoid running afoul of the Federal Trade Commission and antitrust laws. Those requirements include having physician governance, rules for participation, shared information technology systems, and incentive alignments, among other things.

“Being a legal CIN has more to do with how you operate on a day-to-day basis than with the title,” says Neil Levinbook, an attorney with the Levinbook Law Firm, PC, and the VCNA’s chief operating officer. “You don’t just set it up and forget it. You have to have a legal structure for the organization that is constantly being monitored by your executive management, your compliance department, and outside counsel.”

Advocates of CINs argue that the structure enables healthcare entities to join together without merging to create a sizable collective. Private equity investment is compatible with the CIN structure and, in fact, several of the VCNA ophthalmic ASCs are owned by different private equity groups.

Theoretically, the CIN represents more potential patients and thus has more clout to negotiate group purchasing arrangements with suppliers and reimbursement contracts with insurance companies and large corporations seeking value for their employee healthcare dollars than do individual ophthalmic ASCs. VCNA includes nine ophthalmic ASCs in New York and New Jersey and is looking to expand.

“Instead of doing 10,000 cataracts a year, as one really large ASC might do, the VCNA organization may do 60,000 or 70,000 cataracts in a region, and that has appeal to a payer,” says Robert Nelson, PA-C, executive director of Island Eye Surgicenter and vice president of VCNA.

Critical mass alone, however, is not enough to guarantee success.

“If you have a clinically integrated network, all you have is a ticket to the game,” says Kevin J. Corcoran, COE, CPC, CPMA, FNAO, president of the Corcoran Consulting Group, which represents 6,000 ophthalmology clients nationwide. “It’s what the CIN does that matters. The CIN is a tool for negotiating, but it isn’t in itself the answer.”

The foundational pillars for a successful CIN are cost efficiency and quality outcomes. To achieve either, the CIN participants have to know – down to the minute and the penny, case by case – how much it costs to operate their centers and exactly what factors affect outcomes, good and bad. And that requires significant data capture, reporting, and analysis on a common platform.

“To qualify legally as a CIN you have to show that you’re driving toward improved quality at lower cost,” says Brian Wnorowski, MD, a cataract surgeon and director of information technology for VCNA. “If you don’t do some quality data collection and analysis, you’re not going to withstand a legal challenge to your organization.”

Moreover, as Levinbook notes, it’s impossible to negotiate a payer contract without having a full grasp of costs and outcomes. Each variable is scrutinized – facility overhead, medicines, supplies, turnover time for each OR – and each surgeon’s costs are analyzed individually. Surgeons whose costs exceed the norm or who have more complications – and are unwilling to make changes – may find themselves outside of the network or excluded from contracts.

“I do think there is going to be some anxiety on the part of some surgeons on achieving the marks that are set for them,” says Eric Donnenfeld, MD, FAAO, ophthalmic surgeon and VCNA Board of Managers member. “But at the end of the day, everything we do has to be geared toward patient outcomes.”

Fee-for-Value Model

Complications, always bad for the patient, are also bad for the ASC’s bottom line with at-risk bundled contracts, a mainstay of the fee-for-value model. Unlike fee-for-service reimbursement, in which providers are paid for each procedure, with at-risk bundled contracts, the provider assumes the cost of treating complications. If a surgeon has to return to the operating room because of a complication, the surgery center bears the cost. VCNA is currently negotiating at-risk contracts with major insurance companies and positioning itself to appeal to major employers, such as Walmart, who are aggressively pursuing value-based care for their employees.

“We’re saying, ‘Let’s negotiate a fee that makes sense, but if a patient has a complication, it’s covered under the contract,’” Nelson says. “That will have appeal on both sides of the negotiating table.”

Without question, at-risk bundled contracts increase the pressure to ensure quality and reduce complications. As VCNA medical director, Richard Mackool, MD, founder of the Mackool Eye Institute and Laser Center, focuses on the quality variable in the value equation. At his Queens, NY, center, Mackool often videotapes surgeons in the operating room and reviews the videos with them to assess their performance and identify opportunities for improvement.

“If you continue to practice medicine the same way without improving, if you don’t invest a certain percentage of your time and money into improvement, there is going to be a big price to pay,” says Mackool, “It won’t appear on your bottom line every year, but it’s there. You’ll do fewer procedures less efficiently with higher complications.”

Wave of the Future or Blip on the Radar?

The CIN structure has been slow to catch on among ophthalmic ASC owners and managers who are confident of continued fee-for-service reimbursements and don’t see the return on financial contributions required of members.

“It’s an interesting idea, maybe ahead of its time, and may not have sustainability if doctors don’t see any return on this in the form of meaningful contracts,” says Bruce Maller of BSM Consulting.

Stephen Sheppard, CPA, COE, managing partner Medical Consulting Group, sees little interest in consolidation among the ASCs his firm represents and even less interest in forming CINs. Moreover, Sheppard notes that only a handful of the more than 70 ASCs that his firm has helped develop have invested in electronic health records software, deferring instead to physicians’ practices to collect and manage patient outcome data. Many also make only limited use of practice management software for inventory cost analysis and control, he says.

“I think the CIN makes more sense in major metropolitan areas than it does out here in flyover country where I am,” says Sheppard, who is based in Springfield, MO. “A lot of our clients are already providing the only ophthalmic services in the community.”

VCNA members acknowledge that the start-up costs have been expensive and say they anticipate that dues, which pay for lawyers, consultants, and other expenses, should decline as the CIN grows. In the short term, savings from group purchasing agreements offset membership costs, Nelson says. Payer contracts are the objective. For VCNA members, though, the CIN is less about short-term costs and more about having the strength, patient volume, and clout to negotiate on a level playing field with the major insurance companies.

“If you’re a small, two-OR facility or a sole provider, and you’re competing against a hospital network or negotiating with a major insurance company, you don’t have a lot of clout,” says Nelson. “How do you get the contracts? In a changing reimbursement environment, it may be difficult for smaller centers to thrive. Clinical integration aligns like-minded ASC owners and gets them a seat at the negotiating table.”

It will be up to the marketplace to determine whether CINs take root among ophthalmic ASCs, Mackool says.

“If there is no reduction in costs or any improvements in efficiency on both sides, dollars per hour for effort aren’t better, patient outcomes aren’t better, and there are a lot of patient complaints, then it will fall on its face and it should,” says Mackool.

“If this thing enters the marketplace so that there are benefits on both sides of the aisle, then it will capture the day.” ■

References

  1. Centers for Medicare & Medicaid Services. CMS announced participants in new-value based bundled payment model. Available at: https://www.cms.gov/newsroom/press-releases/cms-announces-participants-new-value-based-bundled-payment-model
  2. Health Care Payment Learning & Action Network. Measuring progress: Adoption of alternative payment models in commercial, Medicaid, Medicare Advantage, and fee-for-service Medicare programs. Available at: https://hcp-lan.org/2018-apm-measurement ; last accessed July 11, 2019.