California Family Physician (Winter 2012)

California

FAMILY PHYSICIAN Vol . 6 3 No.1 Winter 2 012

Preparing for ICD-10 Step 1: ANSI 5010 — Will You Be Ready?

21

2012: The Year We Prepare for Health Care Reform

24

ACO Final Regulations: Are They Considered a Boon ... or Bust?

26

A Success Story About a Physician Who Achieved Meaningful Use

28

Ahead in 2012 ...

Much like the Old Farmer’s Almanac offers long range weather forecasts, this issue will help you be aware of the new health care rules and laws for 2012 . . . . . . . . . .

LITTLE ROCK, AR PERMIT NO. 2437 CALIFORNIA ACADEMY OF FAMILY PHYSICIANS FOUNDATION 1520 PACIFIC AVE SAN FRANCISCO, CA 94109 -2627

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T H E C A L I F O R N I A A C A D E M Y O F F A M I LY P H Y S I C I A N S • S T R O N G M E D I C I N E F O R C A L I F O R N I A

21-28

2 California Family Physician Winter 2012

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1520 Pacific Avenue • San Francisco, California 94109 • www.familydocs.org Phone (415) 345-8667 • Fax (415) 345-8668 • E-mail: cafp@familydocs.org

Officers and Board

Staff

President Carol Havens, MD

Cecilia Awayan

President-Elect Steven Green, MD

cafp@familydocs.org

Immediate Past President Jack Chou, MD Speaker Mark Dressner, MD Vice-Speaker Delbert Morris, MD Secretary/Treasurer Jay Lee, MD, MPH Executive Vice President Susan Hogeland, cae Foundation President Robert Bourne, MD AAFP Delegates Jack Chou, MD Carla Kakutani, MD AAFP Alternates Jeffrey Luther, MD Eric Ramos, MD CMA Delegation Steve Green, MD Nathan Hitzeman, MD Carla Kakutani, MD Kevin Rossi, MD Patricia Samuelson, MD Ashby Wolfe, MD

Susan Hogeland, CAE Receptionist and Membership Executive Vice President Administrator shogeland@familydocs.org Jane Cho Manager, Medical Practice Affairs

Cody Mitcheltree Student and Resident Coordinator

cmitcheltree@familydocs.org

Karisa Juachon, CPA

Chris Navalta

Chief Financial Officer

Manager, Publications and Marketing

ktop@familydocs.org

cnavalta@familydocs.org

jcho@familydocs.org

Cynthia Kear, ccmep

Leah Newkirk

Adam Francis

ckear@familydocs.org

Senior Vice President

Director, Health Policy

Assistant Director, Government Relations

Callie Langton, PhD

Sophia Henry

clangton@familydocs.org

Tom Riley Director, Government Relations triley@familydocs.org

afrancis@familydocs.org

Associate Director, Health Care Workforce Policy

Membership Manager

lnewkirk@familydocs.org

Shelly Rodrigues, CAE, FACME Deputy Executive Vice President CAFP Foundation Executive Director

shenry@familydocs.org

srodrigues@familydocs.org

California FAMILY PHYSICIAN Quarterly publication of the California Academy of Family Physicians

Michelle Quiogue, MD, Editor Chris Navalta, Managing Editor

Communications Committee: Michelle Quiogue, MD, Chair • Albert Ray, MD • Julia Blank, MD • Jeffrey Luther, MD • Nathan Hitzeman, MD • Jay Mongiardo, MD The California Family Physician (CFP) is published quarterly by the California Academy of Family Physicians (CAFP).

Opinions are those of the authors and not necessarily those of the members and staff of the CAFP. Non-member subscriptions are $35 per year. Call 415-345-8667 to subscribe.

Cover image courtesy of “The Old Farmer’s Almanac”. Print versions of “The Old Farmer’s Almanac” can be purchased at www.almanac.com. E-book versions are available at www. amazon.com.

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Looking for a job?

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4 California Family Physician Winter 2012

Ahead in 2012 ...

21 Preparing for ICD-10 Step 1: ANSI 5010 — Will You Be Ready?

Mary Jean Sage

24 2012: The Year We Prepare for Health Care Reform

Adam Francis

26 ACO Final Regulations: Are They Considered a Boon ... or Bust?

Don Crane

28 A Success Story About a Physician Who Achieved Meaningful Use

Dorian Seamster, MPH

6 Editorial

Let’s Make 2012 the Year We Empower Ourselves

Michelle Quiogue, MD

7 President’s Message

New Laws and Regulations? CAFP is Here to Help Make Sense of It All

8 Political Pulse

2011 Marked a Year of Big CAFP Legislative Wins

10 Student News

When Selecting a Residency, Personal Fit Is More Important than Best Program

11 Resident News

CAFP’s Family Medicine Summit Helped Reshape Clinical Care in Meaningful New Ways

12 QI Corner

Four-Month QI Project Proved to Be Beneficial to Practices

14 Practice Management News

Indemnification in Health Care Contracts

Carol Havens, MD Tom Riley Edwin Kwon

Cono Badalamenti, MD and Sunny Pak, MD Jane Cho

Barbara Hensleigh

16 News in Brief 18 In The Spotlight

Have a Smartphone? Download a Medical App ... or a Few

19 Membership

CAFP Members Continue Fast and Furious Media Blitz

30 Executive Vice President's Forum

Cuts to Medi-Cal Will Hurt Patients Far More than Physicians

For the upcoming CME calendar go to www.familydocs.org

Tipu V. Kahn, MD Chris Navalta

Susan Hogeland, CAE

editorial

Michelle Quiogue, MD

Let’s Make 2012 the Year We Empower Ourselves As we enter another presidential election cycle, the Occupy Wall Street movement calls attention to economic inequalities, and health care reform implementation continues to move with an antalgic gait. While the political and economic environments have changed dramatically in the last year, there are forces that remain unchanged. Money talks.

cians Political Action Committee (FP-PAC) contributions help us gain access to that seat. With your financial help, congressional representatives ask us to the table, as invited guests and leaders, to share our stories of the realities of delivering heath care on the front lines – and our stories inform their understanding of the issues and their subsequent work and votes.

More likely than not, you have been approached by several advocacy organizations and charities in recent months, and it might be difficult to know where your money will do the most good. How can you differentiate black holes from organizations that promote values and a future that align with your own professional and personal values? Results.

Of all the organizations asking for your donation, the CAFP is the only organization that has your professional interests at heart. We are the strongest voice in the state for primary care, and we are working to insure a strong and growing pipeline of future family physicians.

I never imagined I would someday be talking to In this issue, you will state senators and assem“Of all the organizations asking find those results. You bly members, face-to-face, will see evidence of the about the importance of for your donation, the CAFP is value of your memberfamily medicine and their ship. In the last year, role in strengthening it. the only organization that has your Academy’s LegislaI never imagined I would tive Committee and govhave one state senator’s your professional interests at ernment relations staff cell phone number or promoted the family call another’s legislative heart. We are the strongest voice medicine message and aide by name on the day achieved results. Fifteen of a vote and actually in the state for primary care, of 16 CAFP-supported change his senator’s vote bills were signed by the from oppose to support and we are working to insure a governor, and the few because I had already strong and growing pipeline of bills we were against, met with this aide twice on which CAFP voiced before. I never imagfuture family physicians.” opposition or caution, ined my first call to CAFP were vetoed.

Executive Vice President Susan Hogeland, CAE four You will see that a years ago to find out how growing number of family physicians, your friends and to get more involved would lead to personal empowercolleagues, are putting their money where their hearts ment. Imagine what could happen after you call the are. Today’s participation in the FP-PAC is double the CAFP. Imagine what could be accomplished with your numbers from 2006. donation to the FP-PAC. If you would like to become an agent of change rather than a passive witness, contact We often quote the maxim, “If you don’t have a seat at your chapter leader or the CAFP office today. Let’s hit the table, you may be on the menu.” Your Family Physi- the ground running in 2012!

6 California Family Physician Winter 2012

president’s message

Carol Havens, MD

New Laws and Regulations?

CAFP is Here to Help Make Sense of It All

It’s hard to imagine there is a physician shortage given how many of our legislators and policymakers seem to want to practice medicine. It seems there is an ever-increasing number of laws and policies which affect our ability to practice medicine and have the potential to adversely affect our practices and patients.

Sometimes it’s really hard to even make sense of some of these regulations. I started this column prior to the Centers for Medicare and Medicaid Services’ (CMS) affirmation of the 10 percent Medi-Cal payment cuts, and since then I’ve been even more confused.

There were new bills to mandate CME content (luckily, defeated), new policies taking effect as part of health care reform (encouraging accountable care organizations, linking payment to quality outcomes and reducing hospital re-admissions), ICD-10 and coding changes, as well as the ongoing meaningful use regulations, among others.

How on earth can we even keep track of all the laws and regulations affecting our practices? And isn’t there something we can do to fight/block/repeal the most onerous ones?

deliberations, making sure the voices of family physicians are heard and considered. But that voice is only as loud as the chorus singing along – have you joined the chorus? (No singing talent required!) I don’t believe our legislators and policymakers are trying to make our lives and the lives of our patients more difficult – I think they actually think they are making it better. It’s not malice, but ignorance, which is behind many of these decisions, and it’s up to us to make sure our viewpoints are heard before decisions are made … and after. (OK, that may be the optimistic view, but that’s the nature of ukulele players!) I thank all those who took the time to call or visit their legislators, write to newspapers, do interviews to make sure the voices of family physicians are heard.

“As family physicians, we are committed to primary prevention and making sure these ill-conceived bills don’t become law.”

Fortunately, the CAFP staff and committees do a great job of keeping up with the new requirements affecting our practices and trying to make sure we know about them.

See many of the articles in this magazine, and take advantage of other resources such as the CAFP website (www. familydocs.org), Academy in Action eNewsletters and inperson meetings such as the Congress of Delegates and the Annual Scientific Assembly.

In addition, those staff and members are also fighting the good fight during legislative sessions and policy

As family physicians, we are committed to primary prevention and making sure these ill-conceived bills don’t become law. Making sure policies that have a detrimental effect aren’t enacted is certainly the best way to protect ourselves and our patients. If primary prevention doesn’t work, we will still try to address secondary prevention – to prevent some of the complications and minimize the disease burden.

If you are confused by the array of changes, stay tuned and read the information provided by CAFP. And if you want to be part of the defense against practicing medicine by legislation, contact CAFP staff or your district director.

Come join our chorus!

California Family Physician Winter 2012 7

Tom Riley

2011 Marked a Year of Big CAFP Legislative Wins Sixteen new CAFP-Supported laws will go into effect in 2012. Many more CAFPOpposed bills will not. CAFP’s 2011 success is the result of our advocacy efforts in dozens of policy hearings at the State Capital, hundreds of votes by state lawmakers and thousands of informed acts of advocacy by you and other CAFP members.

In the heat of legislative battles, we don’t always get the opportunity to thank you or to communicate the outcome of your letters, calls, emails, testimony and other advocacy efforts. Here, then, is that thank you (THANK YOU!) and a description of just some of the legislative policies that your 2011 efforts have brought to fruition: Telehealth Payment: AB 415 (Logue) Repeals the current prohibition for paying for a service provided by telephone or facsimile and, instead, prohibits the Department of Health Care Services from limiting the type of setting where services are provided, i.e., family physicians can now be paid for telemedicine services. The new law also prohibits health plans and insurers from requiring in-person contact between physician and patient before payment is made for appropriate telehealth contracted services. This is a crucial first-step toward ensuring that Patient Centered Medical Homes and other delivery models that utilize telemedicine (now called telehealth) to improve access, quality and effectiveness of services can actually be paid for these services.

Immunizations: SB 614 (Kehoe) Childhood immunization: In 2010, California experienced a 418-percent increase in the number of pertussis (whooping cough) cases over those in 2009. In response, CAFP and other organizations supported AB 354 (Arambula) Chapter 434, Statutes of 2010, that requires California’s Department of Public Health to consider diseasespecific recommendations of the American

8 California Family Physician Winter 2012

Academy of Family Physicians (among others) including the recommendation that all students in grades seven to 12 not be unconditionally admitted to classes unless vaccinated against pertussis. But the bill did not take effect until July 1, 2011. And while many school administrators used telephone and mail alerts and sent notices home with students prior to this, once the 2010-11 school year was over, contact with students and their parents declined.

Fearing that too many students would arrive at the start of the school year unimmunized, supporters of AB 354 worked with Senator Kehoe’s staff to give flexibility to the law while remaining firm on the mandate. The result seems to be working: By allowing students 30 calendar days beyond the first day of attendance, most schools throughout the state have increased their

immunization rates. Those few areas in the state where immunizations remain low, such as in parts of Marin County, are likely the result of parents exercising their right to exempt children from immunizations, often due to misinformation about the health effects of vaccines. This may be the focus of 2012 trailer legislation.

Public Safety: SB 746 (Lieu) Tanning facilities: CAFP supported a first-in-the-nation law that bans teenagers from indoor tanning facilities. The bill, sponsored by the California Society of Dermatology and Dermatologic Surgery and the AIM at Melanoma Foundation, brings to public policy a growing body of peer-reviewed literature showing the devastating effect on primarily young women and girls of exposure to ultraviolet light in concentrations that are 10-15 times that of peak sunlight. The suc-

political pulse cess of this hard-fought legislation was, in part, due to the advocacy efforts of CAFP key contacts in areas of the state that were crucial to the bill’s passage.

Mandatory CME: SB 747 (Kehoe) CAFP successfully opposed legislation that would have required physicians and nonphysician health care providers to take at least one three- to five-hour continuing education course that provides instruction on cultural competency, sensitivity and best practices for providing adequate care to lesbian, gay, bisexual and transgender persons (LGBT) on and after January 1, 2013. CAFP recommended alternatives to the author while opposing the bill throughout 2011. CAFP also expressed its concern for LGBT health care and CME issues to Governor Jerry Brown, while explaining that this bill would not adequately address them. Although Governor Brown subsequently vetoed this legislation, CAFP has vowed to work with the author toward what it believes is a more viable alternative in 2012.

Prior Authorization: SB 866 (Hernandez) Requires the Department of Managed Health care and the Department of Insurance to jointly develop a uniform prior authorization form for prescription drug benefits (by July 1, 2012). The form must be no longer than two pages, be made electronically available and be amenable to electronic submission to the health plan by the prescribing provider. Under the new law, authorization is deemed granted if a health plan or health insurer (except within Medi-Cal) fails to respond in two business days.

Other CAFP victories in 2011 include support of legislation to: • Promote access to, and financial support for, perinatal care services.

• Improve access to healthy food in poor communities.

• Establish a standardized application form for publicly-funded health care programs.

• Advance school-based health care.

• Urge the President and Congress to support graduate medical education funding.

• Reduce blood-borne diseases through needle exchange • Offer diagnosis and treatment options to parents of children with autism.

For a complete list of CAFP 2011 bills, go to: http://www.familydocs.org/advocacy/ cafp-positions-on-legislation.php. Here’s to even greater wins in 2012!

Tom Riley is CAFP’s Director of Government Relations.

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California Family Physician Winter 2012 9

By Edwin Kwon

STUDENT NEWS

When Selecting a Residency, Personal Fit Is More Important than Best Program Opposed … unopposed, lots of OB … little OB, lots of peds … little peds, social justice, underserved, community, advocacy, academic, non-academic and electronic medical records.

These are some of the most common subjects of conversation and inquiry at a family medicine residency fair.

And the residency fair from this year’s CAFP Family Medicine Summit in Los Angeles was no exception.

I remember my first family medicine residency fair; I was a first-year medical student trying to learn what opposed and unopposed actually meant and trying to figure out where the “best” family medicine residency was. I quickly learned that some programs train you to perform C-Sections, while others emphasize inpatient medicine.

Residents tried to communicate what was unique about their programs, but the more I learned, the more they blurred together.

could not be caught without a smile, because they were happy.

So why do I go to residency fairs? I go to meet people who make me feel good, people I can picture myself being friends with, and people who inspire me to be the best physician I can be. More than opposed, unopposed, academic, underserved, peds, OB or anything else, I want to spend my residency years with people I won’t mind spending 24 hours a day with. So to the residents from … (residency program to be named later), I admit I don’t remember all the distinctive elements of your program, but I remember your genuine kindness and remember feeling comfortable around you, and that makes me want to come to your program.

Edwin Kwon is a third-year resident at the UC Irvine School of Medicine.

CAFP thanks Kaiser Permanente for its I realized I would receive excellent training at most support of the 2011 Family Medicine Summit. programs, and that opposed or unopposed is not the most important factor in choosing a residency. Rather, it seems that “personal fit” is more important.

It became clear at this particular residency fair, where most residents eventually abandoned their sales pitch and admitted that they simply felt right about their program. After my third or fourth residency fair (I’ve lost count), I realize that my rank list will likely come down to “fit” and intuition. Sure, a few logistical factors will weigh in on my choice of residency, but most things feeling equal, I will remember that I laughed with residents from one program, that I perceived genuine kindness in a program director and that certain residents The residency fair at the conclusion of the 2011 Family Medicine Summit was beneficial for the 75 students in attendance.

10 California Family Physician Winter 2012

resident news

Cono Badalamenti, MD and Sunny Pak, MD

CAFP’s Family Medicine Summit Helped Reshape Clinical Care in Meaningful New Way It was a memorable weekend in October at the 2011 CAFP Family Medicine Summit in Los Angeles. As a pair of family medicine residents from Loma Linda University Medical Center (LLUMC), we entered the weekend with hopes of influencing – and being influenced by – the leaders in our field (not to mention being able to enjoy having leisure time with colleagues to network and share ideas from all over the state). Many thanks to the CAFP Foundation for putting such a great weekend together!

What became very quickly apparent was that family medicine leaders in California have an eye on the future and a hand on technology. For the first time, CAFP devoted two sessions to social media and its influence on medicine. Mike Sevilla, MD (aka Dr. Anonymous by his social media followers) from the Family Practice Center of Salem, OH expressed how physicians can use the speed and convenience of the Internet to bring better medicine to our patients, better collaboration among our colleagues and better information to the public.

We revisited the Patient Centered Medical Home (PCMH) model and how it serves as an opportunity to “End Medical Homelessness, Patient Helplessness and Physician Hopelessness.” During group sessions, we shared our encouragement for a better future with a rich collaborative network for our patients. Clinicians from Group Health in Seattle then discussed the realities of transitioning to a PCMH model. They highlighted the difficulties of adding administrative and patient care functions for the clinician without adding extra time to accomplish them, but contrasted that with the successes of the group in improving quality for providers and patients alike by adding time for email messages, phone time, virtual visits along with face-to-face traditional patient care visits.

How exciting and encouraging for us as residents knowing there is a blueprint for the future and committed leaders here in California finding ways to transition us to a 21st Century care model.

We also listened to an ambitious group of young future medical leaders from the University of Southern California describe a collaborative effort initiated by Brian Prestwich, MD to model team-based care at their Student-Run Clinic. One speaker emphasized this effort with a quote: “Teamwork is the fuel to allow common people to reach uncommon results.” How incredibly forward-thinking it is to bring student physicians, pharmacists, occupational therapists and other health professionals together to train and work.

This model for training future health care profes-

(Left) Cono Badalamenti, MD (Right) Sunny Pak, MD

sionals brings team-based care and lifestyle medicine to the bedside.

In breakout sessions, we dove further into learning about health policy and advocacy, selected procedures, the impact of nutrition, and the usefulness of mobile computing in patient care in addition to group visits and other emerging care delivery models. In a collaborative spirit, Susan Wu, MD, our fellow primary care partner in Pediatrics from Children’s Hospital Los Angeles, inspired us with the hospital’s organized efforts in health policy and advocacy at the residency program level, while LLUMC’s Lauren Simon, MD showed us how residents can have direct communication with politicians at the State Capitol in Sacramento to influence legislation that can directly benefit our patients. Jay W. Lee, MD, CAFP’s New Family Physician Director, shared excellent news with us that our governor signed into law 15 of the 16 CAFP-supported bills.

From the opening announcements to the breakout sessions, it became clear that now is an amazing time to be a family physician. The Summit’s overall theme emphasized the growing need for the family physician to be the voice that speaks clearly and deliberately to reshape clinical care models to reach our patients in meaningful new ways. Attending events such as the Family Medicine Summit revives the fire that brought us into this challenging and rewarding field.

Cono Badalamenti, MD is a second-year resident and Sunny Pak, MD is a third-year resident. Both are from Loma Linda University Medical Center.

CAFP Past President Tom Bent, MD, left, chats with interested residents about his everyday tasks at his Laguna Beach Community Clinic.

California Family Physician Winter 2012 11

Jane Cho

QI Corner

Four-Month QI Project Proved to Be Beneficial to Practices — and CAFP CAFP recruited several Bay Area practice teams interested in participating in a four-month quality improvement project designed to bring family physician practices into step with the Patient Centered Medical Home (PCMH) and enhancing the team’s ability to care for chronic care patients. In May 2011, the teams (Prima Medical Group; Livermore Medical Group; Tripgy Gandhi, MD; Bay Valley Medical Group, and Street Level Health Project) met at our annual meeting for an all day workshop, at which they developed aim statements and tasks to work on over the course of the project. Bo Greaves, MD, Chris Sadler, PA, and Lenora Lorenzo, NP served as faculty for the workshop, a live session at the ASA and as advisors to the teams.

In September, four months after the ASA, CAFP hosted a conference call where all participating teams provided a final progress report to the group. Each team described what they worked on and shared small wins, barriers, and next steps. Here’s what the teams had to share: Prima Medical Group: The team instituted quarterly meetings to discuss quality improvement efforts and, as a result, developed and implemented group visits for their patients with diabetes. The group visits were led by the practice’s diabetes educator. Patients were engaged, but medical assistants were active listeners and, as a result, shared what they learned with other patients during individual appointments.

Livermore Medical Group: Solo physician Richard Kilker, MD wanted to implement a diabetes registry with the help of his medical assistant. The team does not have an electronic health record (EHR), so Dr. Kilker used a Microsoft Excel spreadsheet to track his patients with diabetes. His medical assistant put sticky notes on charts to designate patients and identified a total of 52. Of the 52 patients, the healthiest saw Dr. Kilker, and those with the highest A1Cs were referred to an endocrinologist.

Tripgy Gandhi, MD: Another solo physician, Dr. Gandhi instituted team huddles with her support staff. The team huddled approximately 70 percent of the time before patient visits. When they didn’t have time, they huddled at the end of the day to discuss the day’s work and prepare for the next day. The group tested both huddle periods and agreed that pre-visit huddles were more efficient.

The team also implemented a diabetes registry using a Microsoft Excel spreadsheet from the American Academy of Family Physicians’ website as a sample guide. Medical assistants were trained to perform foot exams with monofilaments provided by CAFP.

12 California Family Physician Winter 2012

Bay Valley Medical Group: The practice did not have an EHR but managed to pull diabetes charts using a coding list. The office manager pulled a total of 160 diabetes patients and inserted a flow sheet in each patient’s chart. The team’s clinical focus was to capture micro albumin urine tests from each patient. They are 24 patients shy of completing their goal. Front office staff are calling the remaining 24 and are determined to get these patients back on track.

Street Level Health Project: This team is a non-profit organization that operates like a clinic but mostly works with underserved, uninsured, urban immigrant communities. The team created a diabetes registry to better track their patient retinopathy screening and lab work. Another goal was to increase the number of patients attending exercise and nutrition workshops. To increase the number of patients attending, staff made reminder phone calls, but this turned out to be ineffective. After some testing, the team agreed that it wasn’t the best use of staff time. Instead, Street Level Health decided to encourage more frequent visits for their poorly-controlled patients with diabetes.

CAFP’s Team Approach to Diabetes was designed to build a culture of “team.” The five practice teams participating in our project couldn’t be more different, but their goals to work as a team and improve diabetes care are the same. Teams created aim statements tailored to their practice environments and patient populations and worked diligently to meet those goals. The faculty introduced teams to myriad resources and activities to test: developing a teamlet, instituting daily huddles, using a flow sheet, setting up a registry.

CAFP also provided many resources from our New Directions in Diabetes Care Resource Center (http://www.familydocs.org/newdirections-diabetes-care/tools-and-resources.php).

At the individual and practice level, this project helped practices improve their clinical care of patients with diabetes and adopt a range of measures related to practice redesign. The project also improved CAFP’s understanding of important issues that affect small practices in California. We have developed close relationships with our local teams and will continue to provide assistance, checking in on the practices as they evolve in the ever-changing health care environment.

This project is part of the CAFP’s Team Approach Diabetes initiative, supported by educational grants from Boerhinger Ingleheim, Lilly, Merck, and sanofi aventis.

Jane Cho is CAFP’s Manager of Medical Practice Affairs.

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prac tice management news

Indemnification in Health Care Contracts

By Barbara Hensleigh

Contractual indemnification has long been an area of contention between physicians and those with whom they contract: hospitals, payors, other physicians and electronic health record (EHR) companies. Indemnity clauses are a way for one party (the indemnified party) to be protected from liability by another party (the indemnifying party). In other words, the purpose of an indemnification clause in a contract is to shift responsibility from one person or entity to another, commonly to the physician or his or her practice. Today, indemnity clauses serve as mechanisms for allocating and transferring risk, but physicians should be aware that, in many instances, these clauses can be one-sided NOT in the physician’s favor.

When Does the Indemnity Arise?

Indemnity may arise in the absence of a legal agreement as an operation of law. For example, if your practice issued for a slip and fall caused by the negligence of the building owner, your practice may be able to sue the owner for indemnity; e.g., pay any damages sustained by the practice as a result of the lawsuit.

Contracting parties may also agree to indemnify one another for matters not subject to indemnification by operation of law or as a backstop to indemnification provided by law in the absence of a written agreement. Indemnity language is prevalent in health care contracts today, partly because it has been written and rewritten by lawyers, becoming more “refined” each time. In some cases, a contract’s main purpose may be to shift liability to the physician through indemnification. This is prevalent when a physician works as an independent contractor and provides medical services at a clinic owned by a hospital.

14 California Family Physician Winter 2012

What are the types of contractual indemnification?

Contractual indemnification clauses fall into five categories: 1. Mutual Indemnification: The indemnity clause is contained in a single paragraph and states that “Each of the parties will indemnify, defend and hold harmless the other party, their agents and employees from and against all liability, claims, demand, damages or costs arising out of or in any way connected with the terms of this agreement to the extent that such liability, claims, demands, damages or costs arise from the intentional or negligent acts or omissions of one of the parties.”

2. O ne-Sided Indemnification: The party drafting the contract proposes indemnification, but the indemnification is not mutual. It requires a greater degree of indemnification on the physician than the other signatory is willing to give itself. The indemnification for each side will be in a separate paragraph. The physician can tell the indemnification is not mutual because the provision requiring the physician to indemnify the other party is lengthier. In this situation, the physician may be agreeing to contractually indemnify the entity for negligence or to pay its attorneys’ fees in the defense of a case, while the other party only agrees to indemnify the physician in cases of gross negligence.

3. Limited Indemnification: Contractual indemnification will often be limited.

It will not require the indemnifying party to indemnify the other party except in limited circumstances. Gross negligence is an example of limited indemnification.

4. I ndemnification Including the Cost of Attorneys’ Fees: An example of this states that the “Physician shall indemnify and hold harmless hospital and its affiliates, and their respective directors, officers, employees or agents, from and against any and all claims, causes of action, liabilities, losses, damages, penalties, assessments, judgments, awards or costs, including reasonable attorneys’ fees and costs of hospital’s in-house counsel.”

5. Indemnification Including Defense of the Action: Many indemnity clauses may require a physician to provide a “defense,” e.g., pay the attorneys’ fees of the indemnified party on an ongoing basis if the indemnified party is sued for actions it believes are covered by the clause.

What’s Unfair about Indemnification Clauses?

At first glance, indemnification clauses may not seem out of line. Why should a contracting party risk liability for what the physicians do (or fail to do)? One answer is that these provisions are frequently one-sided. The unfairness of such a onesided scheme needs no commentary.

The same one-sidedness often appears in the first draft of professional service contracts. As negotiations progress, the party seeking to impose the indemnification may offer to reduce the unfairness by having each party indemnify the other through mirror-image provisions. Such provisions can still cause problems for physicians. Many professional malpractice carriers take the position that their standard physician malpractice policies exclude coverage for “contractually-assumed” liabilities.

Indemnification provisions offer an opening to the malpractice insurer to claim that “but for” the indemnification

prac tice management news provision, the insured would not be facing liability. Therefore, the insurer is not obligated to pay (or even defend).

An indemnification provision can lead to a gap in coverage, leaving the physician and group in jeopardy: • Battling with the carrier about whether an exposure arises under the policy or instead is “contractually-assumed;” • At odds with a hospital, HMO or other interested party and its carrier in any settlement negotiations; and • At personal risk for uncovered claims.

There is yet another reason why indemnification clauses are unfair. Although provisions make sense in the context of other business relationships, they do not in health care. In a typical health care scenario, the provider is being asked to protect someone else — a hospital, EHR provider or Independent Practice Association (IPA) — from the normal risks of that party’s business, but each party should bear its own risks of operating a business and insure for those risks.

The unfairness of these clauses caused the California Legislature to take action to improve the situation, at least where Knox-Keene licensed plans are concerned. The Knox-Keene Health Care Service Plan Act was amended to make each licensed health care service plan (such as a state-licensed HMO), each entity contracting with a plan (such as a hospital or a local IPA); and each provider responsible for its own acts or omissions and not liable for the acts or omissions of, or the costs of defending, others. That law further states that “any provision to the contrary in a contract with providers . . . (is) . . . void and unenforceable.” (California Health and Safety Code §1361.2) The statute is limited to managed care plans and, therefore, does not directly prevent hospitals or other facilities from including indemnification provisions in physician contracts. But it does give physicians another basis for seeking to remove the provisions. Physicians can argue that: 1) the hospital or facility contracts with plans that are subject to the restriction; 2) any indemnification

provision should be limited to nonmanaged care situations; or 3) the law demonstrates that this sort of risk shifting is considered bad public policy.

What to do with Indemnity Clauses?

When faced with a contract containing an indemnity clause, a physician should do the following: • Seek to remove it. Complain loudly that the provision is likely not covered by insurance and will unfairly expose you to personal liability or the practice to bankruptcy.

• If unable to remove the clause, consider how badly the practice needs the contract and whether there are alternative contracting parties.

• Scrutinize the provision, seeking to limit it in the following ways: 1) ensure the provision is bilateral, thereby encouraging the other party to make it less one-sided on the proposition that what is “good for the goose is good for the gander;” 2) remove any requirement for the payment of attorneys’ fees or any requirement to “defend;” and 3) limit indemnification to “gross negligence” of both parties.

Barbara Hensleigh co-authored this article with Hilary Cohen. For more than 25 years, Ms. Cohen has represented physicians and their practice managers in contracting and negotiation, structuring and financing joint ventures, health care business management, and medical group relations. Ms. Cohen may be contacted at LawRx@aol.com.

DISCLAIMER

The articles provided in Practice Management News are general. They do not constitute legal, practice management or coding advice in any particular factual situation or create an attorney-client relationship. Consult your attorney or other professional for advice in your particular situation.

Copyright © 2011 The California Academy of Family Physicians - San Francisco, CA, USA. All rights reserved.

California Family Physician Winter 2012 15

news in brief CAFP’s 64th ASA in Indian Wells; Register Today!

CAFP’s 64th Annual Scientific Assembly will be held April 21-22 at the Renaissance Esmeralda in Indian Wells, CA. Register for this year’s meeting for the member price of $119 until March 1, 2012; the rate will increase to $149 after March 1.

Register now by calling 415-345-8667.

Be sure to reserve your hotel room by logging on to https://resweb.passkey. com/Resweb.do?mode=welcome_ei_ new&eventID=5590438 for the CAFP discount.

Cancellation Policy: All cancellations must be made in writing to the CAFP office by April 13, 2012 for a full refund, minus a $35 administrative fee. No refunds will be issued after April 13, 2012.

Registration fee includes clinical sessions, breakfast and lunch on Saturday and

16 California Family Physician Winter 2012

breakfast and lunch on Sunday, but excludes hotel accommodations and SAMs Group sessions.

We look forward to seeing you in Indian Wells! If you have any questions, please contact Ms. Rodrigues at 415-345-8667.

Congress Deadline Looming – Room Reservations Available

The 2012 Congress of Delegates will be held at The Citizen Hotel in Sacramento on March 3-5; the room rate is $155 plus tax. If you would like to attend, contact CAFP at 415-345-8667. To make reservations, please call The Citizen Hotel and identify yourself as part of the CAFP group – 916-492-4460. Deadline for the $155 room rate is February 17, 2012.

Deputy EVP Shelly Rodrigues Wins Leadership Award!

CAFP Deputy Executive Vice President Shelly Rodrigues, CAE was notified by

the Alliance for CME that she will receive the 2012 Alliance Leadership Award recognizing involvement in organizational or educational initiatives having an impact on the field of continuing medical education (CME), actions that have had a positive effect on the CME profession, and serving as a role model both in the field of CME and within the Alliance at the Alliance’s Awards Ceremony on Sunday, January 22, 2012 in Orlando, FL. Congratulations, Shelly!

CAFP Member Named to Two Clean Air Boards

CAFP member Alex Sherriffs, MD, a cleanair advocate, has been named to the governing board for both the San Joaquin Valley Air Pollution Control District and the California Air Resources Board. Congratulations, Dr. Sherriffs!

Tipu V. Kahn, MD

IN THE SPOTLIGHT

Have a Smartphone?

Download a Medical App ... or a Few Mobile phone applications (or apps) are released every day and by the time this article is published, there will be more than 30,000 new apps, hundreds of which may be medical. With the continuing integration of mobile technology and clinical medicine, finding a balance between usability and practicality can be challenging. To start down the path of using your Smartphone (Android or iOS) efficiently, here are a few must-have apps for every clinician and a couple of websites to follow. www.medgadget.com: Log on to this website to keep up to date on forthcoming medical gadgets. www.imedicalapps.com: Keep up to date on newly-released medical apps with reviews. http://db.tt/dadUVzY: Dropbox is a way to store and sync your files in the cloud. Sign up for Dropbox for free!

Happy downloading!

Apps for iOS (iPhones) Only:

Apps for Both Phones: eProcrates (Drug and topic reference)

Medscape (Drug and topic reference)

Calculate by QxMD (Numerous medical calculators)

Skyscape (Access to medical resources such as Pocket Medicine, Five-minute Clinical Consult) Harvard Public Health (Public health/policy news updates) AHRQ EPSS (Routine health screening guidelines from DHHS)

UpToDate (Medical reference) QuantiaMD (Free CME) New England Journal of Medicine (Access to articles and procedure videos for the week)

Dropbox (Best free cloud-based storage)

Mediabble (Common medical phrases translated to Spanish, Italian, Creole, Russian, Mandarin or Cantonese)

DocsToGo (View and/or edit office filed on your phone)

Apps for Android Phones Only:

AFP by Topic (Search and read selected articles from AFP magazine)

Medpage (Health news updates)

Monthly Prescribing Reference (Drug reference e-version of the popular print) Pub Med (Literature search engine)

18 California Family Physician Winter 2012

Tipu V. Khan, MD is an OB Fellow/Faculty at the USC School of Family Medicine and a member of CAFP’s first CME Leaders Institute Class. Check out his website www.DocTipu.com.

membership

Chris Navalta

CAFP Members Continue Fast and Furious Media Blitz Another year has come and gone … and 2011 was a great year for CAFP and its members. You may have come across the Political Pulse article in this edition of California Family Physicians about the mark CAFP made in Sacramento. On October 9, Governor Jerry Brown signed 15 out of 16 bills supported by the Academy.

Credit for that victory goes to the key contacts who supported CAFP’s advocacy efforts throughout the year, as well as the many stakeholders and health care groups that worked tirelessly to see these bills passed.

It doesn’t seem that long ago that CAFP members who offered their expertise to the media for specific health care stories were turned away. Now, thanks to the help of our media consultant, Catherine Direen, the Academy is considered a reliable source for interview subjects and important data. Since joining CAFP in 2008, Ms. Direen has done a marvelous job turning family physicians into trusted media contacts. Those interested in becoming media contacts (CAFP is always looking for more) are trained thoroughly by Ms. Direen during a series of media trainings, which usually occur during the annual Congress of Delegates (another reason why members should attend this year’s meeting). Once members have been trained, Ms. Direen adds them to the stable of potential spokespeople, and serves as the contact point for media calls.

The result? As of this writing, CAFP members have been featured (or mentioned) in news outlets 143 times. In 2010, members were mentioned 141 times. Two years ago, members were mentioned 86 times; in 2008, 69 times compared to the 2007 number of fewer than 20. You can find the latest newest article featuring a CAFP member on the homepage of our website (just below the Member of the Month).

CAFP member Michael Zimmerman, MD chats with a reporter from the FOX affiliate in San Francisco.

It may sound a bit trite, but it REALLY IS a great time to be a family physician as health care reform and new models of care have created perfect conditions for change in our health care system. CAFP will continue to work hard on your behalf and champion family medicine the best way it knows how. We say thank you to those who have taken time out of their schedules to talk to reporters and legislators about their concerns over the health care landscape. For everyone else, we hope you will join us in fighting the good fight for family medicine, your practice and your patients.

Chris Navalta is CAFP’s Manager of Publications and Marketing.

CAFP President Carol Havens, MD is interviewed by the CBS affiliate in Sacramento.

CAFP also made its mark on other aspects of health care – whether it was through talking to legislators or the media. President Carol Havens, MD talked to several media outlets about the state’s ban on minors using tanning beds (one of the 16 bills CAFP supported).

Several members, led by Dr. Havens, expressed their concern over the Centers for Medicare and Medicaid Services’ (CMS) approval of the state’s plan to cut Medi-Cal 10 percent ($623 million) across a variety of health care programs. Other members discussed hot-button issues, including the primary care physician shortage and free one-day clinics to help the uninsured.

California Family Physician Winter 2012 19

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ahead in 2012 ...

Preparing for ICD-10 Step 1: ANSI 5010 — Will You Be Ready?

By Mary Jean Sage

EDITOR’S NOTE: This is an updated version of a previous Practice Management News article, which was first published by CAFP in July 2011.

The International Statistical Classification of Diseases and Related Health Problems 10th Revision (ICD-10) is the largest health care compliance-driven convergence and coordination of people, information, technology and education in more than 20 years. Have you stopped to consider how your practice is going to meet the challenge? Are partners, vendors and hospitals ready? And how will this affect payments and claim submissions? More questions than answers are available right now, but with some strategy and preparation, your practice can make the transition and be ready. But, you must start now!

Three main issues are pertinent to ICD-10: 1. Compliance Deadlines 2. Relationship to the Health Insurance Portability and Accountability Act Version 5010 (HIPAA 5010) 3. Code Changes

Compliance Deadlines: The HIPAA 5010 and ICD-10 industry changes for physician services and Electronic Data Interchange (EDI) transactions by compliance date are: Rule Publish Date.............................. Compliance Date 4010 / American National Standards Institute (ANSI) X12 March 22, 2008......................... August 17, 2000 4010A1 (amendment) May, 2002................................. October, 2003 5010 January 16, 2009....................... October 1, 2013 ICD-10 August 15, 2009......................... October 1, 2013

ICD-10 – What You Need to Know: The International Statistical Classification of Diseases and Related Health Problems 9th Revision Clinical Modification (ICD-9-CM) is nearly 30 years old; many of its diagnosis categories are finite. It prevents further expansion and may not be flexible enough to quickly incorporate emerging diagnoses and procedures. Also, ICD-9 is not accurate enough to identify diagnoses and procedures precisely. ICD10, by contrast, provides detailed information on procedures, allows ample space for capturing new technology and devices and has a logical structure with clear, consistent definitions. (See Table to Right) American National Standards Institute (ANSI) 5010 – What You Need to Know: The Health Insurance Portability and Accountability Act (HIPAA) requires the U.S. Department of Health and Human Services (HHS) to

adopt required standards for covered entities to use when conducting certain health care transactions electronically such as claims, remittance advices, requests and responses for eligibility and claims status.

Covered entities include health plans, health care clearinghouses and health care providers.

The current transaction standard is X12 version 4010A1 for health care claims, remittance advice, eligibility, claims status, referrals and the National Council for Prescription Drug Programs (NCPDP) version 5.1 for pharmacy claims. The Centers for Medicare and Medicaid Services (CMS) has mandated that the indutry upgrade to X12 version 5010 and NCPDP version D.0 in efforts to: • Increase transaction uniformity • Support pay-for-performance • Streamline reimbursement transactions • Support ICD-10-CM codification

The implementation of 5010 means substantial changes in the data that you submit with your claims as well as the data you receive in response to your electronic inquiries. The implementation may require changes to the software, systems and perhaps procedures that you use for billing Medicare and other payers. It is extremely important that you are aware of these HIPAA changes and plan for their implementation!

Transitioning to ANSI 5010 On January 1, 2012, if your practice management systems are not up to the new standards, you will risk not getting electronic payments from private insurers and Medicare. Now is the time to get organized to avoid significant disruptions to patient care and claims payments.

The new standard demands more specificity in what data must be entered and transmitted. The hope is that a more efficient claims process will decrease the need to re-file claims because of errors and confusion.

For example, physicians must submit a patient’s nine-digit (rather than a five-digit) ZIP code on all claims submissions and submit a patient’s street address rather than a post office box. Also, 5010 allows physicians to distinguish between principle diagnosis, admitting diagnosis, external cause of injury and patient reason for visit codes.

This could mean significant change for physician practices in how they ICD-9 ICD-10 ICD-10 Procedural Coding System (PCS) 13,600 codes Numeric + E&V*

5 digits long Ex: 789.00

69,000 codes Alpha/Numeric Always Starts w/Letter No V Codes 7 digits long Ex: M84.47 Ankle Fracture

71,000 codes Alpha/NumericAlways Starts w/Letter 7 digits

ICD-10, continued on page 22 California Family Physician Winter 2012 21

ahead in 2012 ...

ICD-10, from page 21

operate on a day-to-day basis, and how they submit claims to Medicare and other payers. For instance, how many practices currently gather the four digit extension for the patient’s ZIP code? How many practices require their patients to provide a street address as opposed to a Post Office Box address?

Do not assume that your practice management system vendor is taking care of your 5010 upgrade. According to CMS, vendors are not covered under the 5010 rule and thus are not responsible for ensuring that doctors are up to speed. A February 2-11 Medical Group Management Association survey showed that practices were contacting their vendors regarding 5010 (nearly 65 percent), but vendors were not necessarily responsive. In that same survey, only 48 percent of practices said vendors had contacted them.

Getting Ready: Every office’s preparation for 5010 will be different, but experts recommend early communication with your partners. Until recently, most vendors and clearinghouses were not ready, but in recent months, they have improved. Physicians who need to internally and externally test their systems can do so. If you have not contacted your practice management software vendor yet, do it today!

Ask your vendor the following questions: • Will you be upgrading your current system to accommodate Version 5010 transactions?

• When will you be able to support Version 5010 transactions?

• Will you be able to support Version 4010A.1 and Version 5010 transactions at the same time?

• When will upgrades be available?

• Will there be a charge for upgrades or will my current charges increase?

• When will software installations be completed for Version 5010?

• If there will be an update of our system, what fields are being added or changed?

• What business processes will be affected by 5010?

Identify changes to data reporting requirements in your own practice: • What data reporting changes will affect the transactions we use?

• What resources can we use to help us identify the data reporting changes? Will there be a cost?

• Can the new data be stored in our office’s current system or will it require a system upgrade?

• If our software vendor stated that there will be an update to our system, what fields are being added or changed?

• How do these changes fit into our existing operations?

• Will we need to purchase additional hardware for the new reporting requirements?

• Considering data changes needed by our practice, does anyone in our office need to be trained on workflow changes? Will training be provided?

• Which requirements for testing 5010 transactions are relevant to our work?

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22 California Family Physician Winter 2012

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ahead in 2012 ...

• What kinds of transactions do we need to test?

• Do our vendors’ testing plans cover all of our needs?

Talk to your trading partners: Trading partners include all organizations involved in the endto-end exchange of electronic health care data and transactions, such as payers, providers, clearinghouses, billing services, network service vendors and data transmission services.

If you utilize a billing service or send claims directly to payers, you must contact them to determine their plan for 5010.

The following questions should be considered when talking to your trading partners: • Will you be upgrading your systems to accommodate 5010 transactions?

• When will each of the upgrades be completed?

• Will there be additional fees for these upgrades?

• Do the upgrades require changes to the way we work with you today?

• When can we test for 5010 to ensure the system works properly?

• Do you have connections to multiple trading partners and will you be testing with all of them?

• Do we need to use test data or live data during testing?

• What are your requirements for testing 5010 transactions?

Testing is a very important part of the transition to 5010. To assist in this effort, CMS in conjunction with the Medicare Fee-For-Service (FFS) Program, planned a National 5010 Testing Day for August 24, 2011. This testing day is an opportunity for trading partners to come together and test compliance efforts that are already underway, with the added benefit of real-time help desk support and immediate access to Medicare Administrative Contractors (MACs). CMS encourages all trading partners to participate in the National 5010 Testing Days.

Palmetto GBA, the MAC for Jurisdiction 1 (includes California) has announced a free webinar on July 20, 2011, “Troubleshooting with our Contractor” to discuss the following topics, followed by a question and answer period: 1. Process for testing

2. Top ten suggestions to aid the transition process 3. Top ten error messages

Register now at www.palmettogba.com/J1B under the event calendar at the “Select the Learning and Education” section.

Consider the Financial Impact on Your Practice if You Cannot Submit Claims on January 1, 2012 There is one important aspect of 5010 that physicians need to consider carefully. Every physician should prepare for possible cash-flow issues once 5010 begins, not because of the lack of preparation, but because of possible technical glitches. We know CMS will be ready to accept 5010 claims on that date, but there is the possibility that other payers may not be as prepared.

The American Medical Association is recommending that a practice establish a line of credit with a financial institution and limit spending where possible in the months before January 1, 2012. It would also be wise to check with your MAC and commercial payers to see if they have any advance payment policies.

*E section – External causes of injury; V codes – Supplementary classification of factors influencing health status and contact with health services

Additional resources are available: • CMS Side-by-Side Comparison Documents for the 5010 • Washington Publishing Company website to purchase the 5010 Implementation Guides • CMS “Provider Action Checklist for a Smooth Transition” • Get Ready 5010 • The American Medical Association’s 7 Steps Practices Can Take Now to Prepare for 5010

Mary Jean Sage has extensive experience in the health care field spanning a period of more than 20 years during which time she has managed diverse groups of professionals in delivering patient care. A founding Principal and Senior Consultant with The Sage Associates, Mary Jean is a nationally-known speaker, consultant and educator.

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California Family Physician Winter 2012 23

ahead in 2012 ...

2012: The Year We Prepare for Health Care Reform

By Adam Francis

Major provisions of federal health care reform, the Patient Protection and Affordable Care Act (PPACA) of 2010, were initiated in 2011. CAFP fought at both the state and federal levels for these provisions. We hope these aspects of PPACA affected your practice and your patients in a positive way. The changes include: • A 10 percent Medicare bonus payment for primary care physician services; • Efforts to improve preventive health coverage (such as providing a free annual wellness visit and personalized prevention plan services for Medicare beneficiaries); and

ministration – consumers receive a rebate when less than 80 to 85 percent of premium dollars are used for benefits).

In 2012, implementation of health care reform will take a backseat to planning for the sweeping changes slated for 2013-14 (with the notable exception of Accountable Care Organization – see page for more information). Assuming no major aspects of health care reform are altered or repealed, 2013 will see primary care payments under Medi-Cal increase by nearly 70 percent to equal Medicare payments for two years; this provision is important in light of the recent 10 percent payment cut to Medi-Cal providers at the state level.

In 2014, the entire health care landscape will change. No lon• Enacting medical loss ratio provisions (which require ger will health plans be allowed to deny coverage based on an health insurers to report annually on the share of premium dollars they spend on medical care vs. profits or ad-T:7 inindividual’s pre-existing health condition. Health plans will also

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24 California Family Physician Winter 2012

ahead in 2012 ... be prohibited from charging higher rates because of health status or gender (premiums will only be allowed to vary based on age, geography, family size, and tobacco use). Health plans will no longer be allowed to impose annual limits on care an individual can receive. In return, most individuals will be required to obtain health insurance coverage or pay a penalty (known as the “individual mandate”). The same requirement holds for employers – those with 50 or more employees who do not offer coverage to their employees must pay $2,000 annually for each full-time employee above the first 30.

Millions of Californians will begin purchasing coverage through a new Health Benefit Exchange system in 2014. The Exchange will enable people to comparison shop for standardized health packages making apples-to-apples comparisons. It will facilitate enrollment and administer tax credits so people of all incomes can obtain affordable coverage (credits are available for people with incomes above Medicaid eligibility and below 400 percent of poverty, who are not eligible for or offered other acceptable coverage). CAFP is working with a coalition called the “Health Exchange Advocacy and Responsibility Team” (HEART), composed of organizations representing health care providers, labor, business, health plans and consumer groups, to advocate three shared principles: 1. Promoting robust competition among health plans and insurance carriers offering consumers the highest value in terms of quality and cost in an environment of informed consumer choice.

3. Promoting team-based care as vitally important to achieving high quality medical outcomes and reducing growth in costs, enabling a family physician or other qualified provider, working in an ongoing relationship with the patient and in concert with a multi-disciplinary team, to coordinate and deliver high quality health care across all settings.

In 2009-10, CAFP and other organizations fought to ensure many of these provisions were included in PPACA before it was signed by President Obama. In 2012-14, CAFP and its members will continue to advocate for the successful implementation of these provisions to ensure patients and family physicians fully benefit from health care reform. While this year seems like a good time to catch our breath, we must work hard to ensure California and family physicians are fully prepared for the heavy lifting that will be required sooner than we think. As former Health and Human Services Secretary and current Health Benefit Exchange board member Kim Belshé is fond of saying, “Everyone thinks that 2014 is years away. But 2014 is tomorrow.”

Adam Francis is CAFP’s Assistant Director of Government Relations

Eliminate pre-existing condition denials

Medicare ACOs

2012

2. Promoting consumer access to transparent, accurate, meaningful, and easily comparable data on medical outcomes and costs.

2013

Medi-Cal payment increase to Medicare rates

“Individual mandate” on consumers to purchase insurance

2014 Insurance sold on the Exchange

Eliminate annual limits on care

To read more about health care reform and what it means to you, please visit www.familydocs.org.

California Family Physician Winter 2012 25

ahead in 2012 ...

ACO Final Regulations: Are They a Boon ... or Bust?

By Don Crane

At long last, the vaunted final accountable care organizations (ACO) regulations were issued by CMS on October 21, 2011. The proposed regulations (or regs) – issued last March, 2011 to a chorus of criticism from the health care community, have been fully supplanted by the final regs, allowing us now to obtain an accurate view of what this Medicare Shared Savings ACO program means for California physicians. In the comments below, I will summarize some of the run-up to the rule, its key contents and changes and some thoughts on its strategic implications for California physicians.

The Affordable Care Act As we all recall, the Patient Protection and Affordable Care Act was signed into law last March 2010 by President Obama. PPACA includes sweeping provisions that set the stage for near universal coverage, address insurance industry abuses, create exchanges and launches a host of other important reforms. But within the some 2,400 pages of the law, a scant eight pages describe the only program that holds any promise of reforming the organizational structures under which care is delivered and paid for, and which stands some chance of moderating health care cost trends. Those eight pages describe Accountable Care Organizations, a program that bears remarkable resemblance to the managed care familiar to a majority of Californians. The phrase “new wine, old bottles” has lately seen an amazing uptick in use.

Criticism of Proposed Regs The proposed regs were initially lambasted by providers all across the country, most loudly by providers outside of California. As you may recall, the program is one based on shared savings – if total spending associated with services for the ACO population is less than historical spending, a “savings” results, and that savings is then trickled down to the providers in some undefined fashion. The generalized notion is that utilization, particularly hospital admissions and re-admissions will be decreased through a primary carecentric focus on coordinating care across the continuum. The benchmark by which savings are to be determined creates a kind of accountability for cost eerily similar to the incentive supplied by pre-paid capitation.

High on the list of complaints were the 65 quality metrics, a requirement that at least half of the participating providers demonstrate meaningful use of Electronic Health Records 26 California Family Physician Winter 2012

(EHRs), a “retrospective attribution” method of defining the covered population which literally would not permit an ACO to know who its patients were and a general sense that any payment model built principally on top of a fee-for-service chassis could not succeed. How can an ACO be accountable for cost and quality when it doesn’t know who its patients are; the patients don’t know they are in an ACO; and the patients can freely seek care from expensive providers outside the network?

Final Regs: Less Risk; More Reward; Reduced Burden In a rare and encouraging example of government hearing and heeding the constructive criticism of physicians, the final regs do make a considerable number of improvements to the program. Gone is the provision requiring that one half of the physicians demonstrate meaningful use of EHRs. The number of quality metrics was reduced to 33. The attribution of patients will now be mostly prospective (but subject to a retrospective reconciliation).

Most importantly, the economic terms of the deal have improved. The program continues to have two “tracks” that describe how the savings are to be split between CMS and the ACO. In the proposed regs, under each track the ACO would have been liable for losses – there was downside risk and no way to avoid it. That could and would be a significant deterrent to start-up ACOs not experienced with managed care practices, particularly managed care accounting. In the final regs, the exposure to downside risk in track one was entirely eliminated, leaving the ACO with only upside potential. Also, for both tracks the two percent “skim” that CMS was going to retain is now gone, such that an ACO may enjoy first-dollar savings. And, the “caps” on savings were also elevated – all in all, a significantly improved financial model.

Pioneer ACOs Operating on a parallel track to the CMS-produced Shared Savings program, the Medicare Innovations Center is in the process of launching the Pioneer ACO program. Under this separately administered program, the Innovations Center will enter into shared savings contracts with approximately 30 organizations across the country that are presently capable of operating an ACO, organizations that are, in most cases, already in the managed care business and fully capable of handling risk contracts and population-based payment. The idea behind the program is to send out a group of “scouts” to blaze the path and demonstrate to followers how a shared savings program operates. No doubt

Kaiser Permanente Southern California: the program is also designed to prove the ACO concept and establish an early success for political reasons; that is, to show the political world that PPACA, passed chiefly by the Democrats in Congress, could indeed succeed and bend the cost trend downward while improving quality.

It appears that California will lead all of the other states by a wide margin in the number and sophistication of Pioneer ACOs. While most of the Pioneer applicants have kept their candidacy quiet as requested by the Innovations Center, it appears that more than a dozen California physician organizations filed applications, and many observers think that California will land between five and eight contracts.

Commercial ACOs Not to be outdone by the government, the private sector has been hard at work launching ACOs in the commercial market.

California now boasts about a dozen health plan-inspired ACOs in the commercial market, and many more are springing up all over the country. Given the stodginess of federal regulations and the creativity of California providers, we should not be surprised if in three or four years we see that the commercial market has taken the lead over the Medicare ACO program in terms of the number of ACOs participating physicians, and covered lives.

Strategic Implications ACOs are most definitely not a get-richquick strategy. Our financial modeling reflects significant startup costs, even for organizations in California that already are in the business of coordinating care under capitation. And, while invested capital appears to have a good chance of producing a positive return, it is not likely to be realized for two to four years. That is not a highly attractive financial prospect for most physician groups.

The strategic and competitive implications may be compelling, however. Under the attribution rules, Medicare beneficiaries will be “attributed” based on the plurality of their encounters with primary care physicians (and a few specialties).

Therefore, as go primary care physicians, so will go the “volume” of patients, volume which will be hotly sought-after by farsighted hospitals and physician groups. The competitive importance of primary care physicians will soar.

Whatever the economic terms, many hospitals, physicians and physician groups will feel they had better not be late to this party. The train is leaving, and they had better get on board. Time will tell.

Donald Crane is the President and CEO of the California Association of Physician Groups (CAPG). CAPG’s mission is to promote physician groups in the delivery of coordinated, accountable care, and clinically integrated care.

We take your administrative concerns and offer you a balanced call and work schedule.

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California Family Physician Winter 2012 27

ahead in 2012 ...

A Success Story About a Physician Who Achieved Meaningful Use

By Dorian Seamster, MPH

Joseph Bettencourt, MD is an energetic family physician in the prime of his career seeing patients in his solo private practice in Templeton, CA, two hours north of Santa Barbara. Dr. Bettencourt sees patients of all ages and particularly enjoys pediatrics and preventive medicine. Typical of many family physician offices, Dr. Bettencourt’s practice is very busy. Nonetheless, he worked toward early Meaningful Use attestation because, “if you don’t move with the tide, you’ll get left behind. You can’t survive by yourself.”

In July 2010, the practice first went live with eClinicalWorks, an electronic health record system (EHR) used mostly by small- and medium-sized practices. When asked about the transition to a new EHR, he reports that “the first few months were pretty rocky. Going through the process was clumsy. I’m getting used to using it now that I’m done with the transition.” When asked about the most challenging aspect of adopting an EHR, Dr. Bettencourt cited the transition time. “My biggest takeaway is this: if you want to succeed, you’ll need help. I’m too busy; I have no time. When I needed help, I needed someone to call that moment.” Dr. Bettencourt emphasized the importance of the support he received through the California Health Information Partnership and Services Organization (CalHIPSO), which provides subsidized assistance with EHR implementation and reaching Meaningful Use to eligible providers in much of California.

Dr. Bettencourt has already met Stage 1 Meaningful Use and earned his EHR Incentive payment from Medicare. Medicare started accepting Meaningful Use Attestations from eligible providers in April of 2011: Dr. Bettencourt needed to meet Meaningful Use for only 90 days in his first participation year. In subsequent years he will need to demonstrate a full 12 months of Meaningful Use. Providers choosing the Medi-Cal incentive program were able to register in December 2011 and will earn their first year incentive payment by demonstrating Adoption/Implementation/Upgrade (AIU).

Although Medi-Cal started late in 2011, providers will be able to submit verification of AIU through February 29, 2012 to earn an incentive for the participation year 2011. In 2012 providers who earned 28 California Family Physician Winter 2012

their incentive for AIU in 2011 will report on Meaningful Use for 90 days in 2012.

Meeting the Meaningful Use requirements can be challenging.

While the EHR vendors have built into their systems reports that allow providers to generate the information needed to demonstrate Meaningful Use, assuring that the data is being entered correctly in the first place is a priority. As Dr. Bettencourt noted, the work he did with the EHR preparing to attest for Meaningful Use “just made sense. It helped me get the most out of the system. I’ve had a change of perspective. It’s easy to be skeptical. The redundancy and waste in my workflow was huge. I’ve seen that improve.”

Meaningful Use includes requirements intended to improve patient and family engagement in care. Dr. Bettencourt has seen an increase in patient interactivity since introducing the patient portal. “Patient lab access has been really important to my practice. Patients are more proactive. The portal takes it to a different level. People feel more accountable, now that they have information in writing. They are more motivated; I see more lifestyle changes,” he explained. He also noted that visit summaries have decreased confusion about medications and anxiety about follow up. “I now document with the after-visit summary in mind. I believe I’m now giving better, more reliable care.”

Dorian Seamster, MPH is the Chief of Health Information Services with the California Health Information Partnership and Services Organization (CalHIPSO)

CAFP’s 64th AnnuAl sCientiFiC Assembly

Registration price: $119 for members Esmeralda | Indian Wells, CA April 21-22, 2012 | Renaissance

APRIL 21-22, 2012

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Susan Hogeland, cae

Executive Vice President’s Forum

Cuts to Medi-Cal Will Hurt Patients Far More than Physicians CAFP President-elect Steve Green, MD has asked that we provide a glossary of abbreviations/terms along with our Board of Directors’ agendas … an indication, no doubt, of our times and apropos of this issue of California Family Physician in which we try to explain who’s on first and what’s on second.

The pace of change and volume of additional work since the passage of the Patient Protection and Affordable Care Act (PPACA) has been nothing short of extraordinary. One was given to hoping that, finally, our nation would come close to achieving nearly universal coverage for its citizens in a system that didn’t shake up the status quo too much since it will still be based on coverage by private health insurance companies for those who don’t qualify for public programs. PPACA contained some very sensible things that became amazingly distorted, thanks to politics and the Internet, and public opinion that still demonstrate a profound lack of understanding of this landmark legislation. The big challenge will be to bend the cost curve, but we’re not doing such a great job of that under our current system.

CAFP has actively engaged with the California Health Benefit Exchange (HBEX), established by legislation signed into law by former Governor Schwarzenegger shortly after enactment of PPACA. The former Executive Vice President of the Pacific Business Group on Health, Peter Lee, left his position with the Centers for Medicare and Medicaid Services (CMS) Innovation Center to return to California and lead the HBEX. We have served on HBEX’s Eligibility and Enrollment Stakeholder Group in one of four “provider” slots and are collaborating with other provider organizations to monitor the actions of the HBEX as it finds its sea legs. CAFP submitted extensive comments on federallyproposed regulations on the HBEX as well.

How mystifying, then, that CMS which, on the one hand, is promoting innovation and expansion of access to care, on the other took an action that has exactly the opposite effect: on October 27, 2011, the California Department of Health Care Services announced that CMS approved its proposed Medi-Cal budget reductions of 10 percent for physicians and others.

This was an action which CAFP and many other provider organizations had actively advocated against over the past many months, suggesting instead the state implement cost savings programs such as the Patient Centered Medical 30 California Family Physician Winter 2012

Home. The California Medical Association (CMA) organized a coalition of interested groups to meet with representatives of CMS in San Francisco (CAFP’s new chair of our Legislative Affairs Committee, Ashby Wolfe, MD and Director of Health Care Policy Leah Newkirk attended the meeting) and met with Director Donald Berwick, MD, MPH in Washington, D.C. (Kara Odom-Walker, MD represented CAFP).

The 10 percent cut was, of course, enacted by the legislature as part of its 2011-12 Budget in Assembly Bill 97 (Committee on Budget, Chapter Three, Statutes of 2011) and signed by Governor Brown. The cut required federal approval, however, which is what was granted by CMS on the 27th.

This is simply wrong. As CAFP President Carol Havens, MD said in a press release issued by CAFP late in the afternoon of the 27th, “The state may view this as a great victory, but CAFP views it as a disaster for Medi-Cal patients. Our elected leaders have a multitude of other choices for saving health care dollars, none of which would be this punitive to patients and the family physicians who care for them. The CMS approval – and the state’s decision to proceed with the 10 percent cut – are an outrage.” An outrage, indeed.

The pace of change and volume of additional work since the passage of the Patient Protection and Affordable Care Act (PPACA) has been nothing short of extraordinary.

Since California is already 47th among the states in Medicaid payment, we may just have succeeded in being 48th, 49th or 50th! Congratulations! And, it makes terrific sense to further punish the really selfless physicians and others who care for our neediest people. Our legislators and bureaucrats will say “we had no choice.” But we always have choices, and very often they’re better. Why do we keep doing the same thing over and over and expecting a different result? Do they think this will result in greater access for Medi-Cal patients? Really?

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Our passion protects your practice California Family Physician Winter 2012 31

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