CMA Responds to CPTA POPTS Mandates

Well it appears that the California Medical Association (CMA) isn't going to just sit back and let the California Physical Therapy Association (CPTA) break up their POPTS clinics without a little more money and a some more legal fighting.  Imagine that!?  If I spent over $2.4 million dollars trying to get a piece of legislation passed (and lost), I think I might counter punch a few more times on principle alone.
The next round will more than likely happen in a court of law after the California Board gets sued for the first clinic they force to disband via their new interpretation of California business law: see brief description of the Moscone-Knox Act below: 

Moscone-Knox Professional Corporation Act is the general corporation law which govern the professional corporations of California. Certain professionals those who must be licensed by the State of California to carry on their professional trade may only incorporate their practice as a Professional Corporation. Such Corporations are governed by the Moscone-Knox Professional Corporations Act

 To see the details of the objections being put forth, please read the following letter which was sent by the California Medical Association's legal counsel to the CA PT Board:

So the PT Board has their legal argument and so does the California Medical Association.  Stay tuned to see who wins the next round.  In the meantime, the POPTS will continue to do business as usual.

ACO and Insurance Company Ownership

In my last blog I discussed some of the basic tenants of what an Accountable Care Organization (ACO) is all about.  So now that you are up to speed, I'd like to now talk more about how insurance companies work with the ACO model and why that topic is relevant to the national healthcare discussion.

• To date, most people in the PT world that know anything about ACO's probably have taken the position, "Isn't that what Kaiser is all about?  But they are their own thing, not competing for my PPO or Medicare business, so who cares?"  Well, Given that Kaiser Permanente has figured out how to make a profit on servicing 6.7 million enrollees, maybe we should.   Other insurance companies are starting to get it, but more on that in a minute.   Regarding ACO structure, the Integrated Healthcare Association points out that the most successful ACO in California is Kaiser Permanente,

"where there is an exclusive relationship between the insurer and its medical groups and, in most regions, with its own hospitals.  Some thought leaders consider vertical integration with an insurance provider to be core to the success of this ACO...."

• That's right, everyone is on the same team: The hospital, the doctors, and the insurance company.  (Start making your cries about socialized medicine now, it might be closer than you think in some regions!)  Imagine that, all the players with the same goal; control services to make a profit while providing adequate enough care to keep new customers rolling in.  If you think I'm stretching this idea, then check out this piece from June 2011 in The Washington Post: http://www.washingtonpost.com/insurers-quietly-gaining-control-of-doctors-covered-by-companies-plans/2011/06/29/AG5DNftH_story.html.  The article points out how insurance companies are quietly purchasing medical groups.  Why you ask?  Can you think of a better way for an insurer to control costs than to control the providers that see their members?  "Oh, you don't want to streamline your care and help us save on the bottom line?  We aren't going to kick you out of our network, we are going to FIRE YOU."  Has a nice ring to it, doesn't it?  "Now go treat some patients!"
• So if you are an insurance company and you want to have the most bang for your buck regarding control, where would you turn?  Wouldn't you try to purchase as many services as possible?  In doing so, you'd have better control of the entire healthcare ship (that includes ancillary services, which is where the high and mighty PT profession stands in this grand discussion).  Enter: ACO structure.  You have a nice and neat working community with all the services under one managed umbrella.  It then comes down to grabbing enough market share in an area, controlling costs well enough to keep premiums down so you can attract new enrollees, and slowly you start to take over the market in that area.  
• Would joining a Kaiser system (as a patient) be that bad if the majority of your doctors worked in that system?  Wouldn't that take out the need to have infinite choice as a consumer and make the HMO you are looking at more attractive, especially if it were cheaper and had a much more solid cap on your maximum out of pocket expenses?  (Oh, and what if there were also a way to see those few doctors out of network by paying a little more out of pocket for their services?  See more in my next Blog on how that can be done.)
• Hopefully by now you are beginning to see how big the players are in this equation and how the PT victory of AB 783 could really mean next to nothing in the grand scheme of things if these types of groups start to form across the state.  If you still aren't putting the pieces together, know that these groups are going to have their own PT groups.  If the ones they have aren't adequate, they could very well build satellite clinics to meet their needs.  The only reason they'd need to contract out to an independent PT clinic would be if it made financial sense to have them provide service to a zip code outside the spheres of their primary locations.  So for those of you about to cry, "that's not fair!  What about national anti-trust laws, can't they help us?"  The ACO model is Stark exempt, so they can refer to themselves as much as they want and nobody can cry foul (this is because the ACO model removes the entire concept of referral for profit.  Both the doctor and the PT want the patient out in the fewest visits possible to control costs and make the group more profitable.  There is no inherent reason to regulate over utilization in a capitated system).  
• So toss this thought around a little bit longer, all the players on the same team: doctors, hospitals, insurer, ancillary services.... the real question is, will your clinic even be on the field?  
• My next post will discuss how ACO's that aren't partnered directly with a single insurer can still turn your lights out.

What is an ACO?

Many of you have probably never heard of an Accountable Care Organization (ACO), but many of you will begin hearing about them in the coming months due to their role in the Patient Protection and Affordable Care Act.  Due to their complexity, I will be making multiple posts describing them as well as highlighting how they may or may not influence your current practice.  Much of the data I will be quoting was provided by The Integrated Healthcare Association, a not-for-profit multi-stakeholder leadership group located in CA http://www.iha.org/.
Definition:   An ACO is a group of providers that work together in controlling health care costs while improving quality of care.  The group may or may not include a hospital in their structure.  They have traditionally been the operative arm of HMO contracts, where capitated rates could be paid to an ACO for the care of a group of participating patients, usually no less than 5000 in number.  In very simplistic theory, if the group kept their costs below their capitation pool total, they were rewarded by keeping the surplus.  The risk being that if the provided services exceed their capitation pool, they lost money.  Big picture: generally cut back on patient services, the ACO makes money.  The balance for patient protection was provided via various regulatory statutes on the ACO by the state of CA.
History:  When I started researching ACO's, I was under the impression they were a relatively new phenomena.  However, they have been present in California for 30 years and provide 54% of the medical services provided to insured Californians.  The largest of these groups is Kaiser Permanente, which provides service to over 6.6 million people.  There are 285 physician organizations (ACO's) in CA that range in structure and size, as well as the contracts they serve.  These variables make the topic quite confusing and complex when trying to apply it to your own zip code.
Relevance:  Health care providers need to understand the implications of ACO's, because they are a major structural tool that Medicare and other insurance providers intended use to address the demands of the Patient Protection and Affordable Care Act, aka "Obama-care," in CA and across the country.  For an Obama-care refresher, you can find details at: http://dpc.senate.gov/healthreformbill/healthbill04.pdf.  Currently, trial markets across specific areas of the US are participating in data collection that will help define future ACO structure.  South Orange County, CA  is one of these areas and the primary reason why I am investigating this topic.
Details:  Let's look at some of the ACO details to help you better understand what they really present to the health care community.

1. Size: ACO's can range in size from <5000 enrollees (26% of ACO's) to >100,000 enrollees (8% of ACO's).  The size of a group does not dictate the profitability of the group, however, larger groups benefit from modest economies of scale when investing in their infrastructure (IT, electronic records, supporting programs).
2. Structure:

• Integrated Medical Groups (IMG).  133 groups in CA.  They are groups of primary care and specialty physicians that are usually associated with a hospital or community clinics.  ( Example: Kaiser).   
• Independent Practice Associations (IPA).  152 groups in CA.  It is an umbrella organization that encompasses solo practitioners and small to mid-size groups.  This format serves 4.8 million HMO enrollees, where the network performs many of the same tasks as an IMG: contracting, paying physicians, providing information technology services, billing services, etc.  (Examples: Monarch HealthCare, Sharp Community Medical Group).
• Some organizations incorporate both models.
• Structure has not been directly linked to profitability or quality of care of a group.

    3.  Insurances:  The initial intent of an ACO was to provide capitated service to private HMO participants, Medicare (HMO), and Medicaid participants.  They have traditionally had trouble attracting PPO business, but due to the leveling of HMO and PPO costs (similar monthly premiums) and several other factors, this is no longer a cut and dry issue.  This key aspect of the insurance make-up of an ACO has been changing in certain markets and has the potential to significantly change in the future.  This will be the key topic I will touch on in my next post.  It is very important to understand that the regulation of PPO contracts (and the services they provide their members) is much less regulated than HMO contracts in CA.  See the California Department of Managed Health Care (DMHC).  As a result, if ACO's start attracting PPO clientele through more promising rates and better coordinated care, there will be very little watch dog supervision over them.  Did I mention that ACO's are Stark exempted as well?   Maybe you can start to connect the dots and see how this is going to effect PT.  Imagine your Medicare patients and a large chunk of your private pay patients becoming ACO participants during future open enrollments.  For them to continue to seek your services, they will have to pay more to go outside their network, similar to our current PPO provider network arrangements.  The difference in this case is that as an isolated PT provider you will have a marginal chance at becoming a future preferred provider and the pool of patients you will be out of network on could be greater than 300,000 patients (in the case of South Orange County, CA).   Do you think that your PT clinic could be influenced significantly?  Think about that for a few minutes....  There will be much more to come on the PPO/ ACO topic in my next post.  At least now you should have a feel for what an ACO is if you hear about one forming in your backyard in the coming months, and have justification for the headache that ensues.