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Prepare. Prepare. Protect. Protect. Persevere. Persevere. In a world where statistics In a world where statistics can be against you, we’ll can be against you, we’ll always be 100% for you. always be 100% for you. With solid planning and strong With solid planning and strong partners, you can overcome any partners, you can overcome any obstacle. Johnson Insurance obstacle. Johnson Insurance has the expertise and resources has the expertise and resources to help you reduce risks and to help you reduce risks and build peace of mind – for you, build peace of mind – for you, your family and your business. your family and your business. We’ll be at your side. And on We’ll be at your side. And on your side. From day one. your side. From day one.
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MCMS Members: You’re Invited to the MCMS 2015 Annual Event!
what’s inside welcome new members minutes president’s page marketplace
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Celebrating 60 Years
- 015 1955 2
round-up Volume 61 • Number 9 • September/October 2015
Providing news and information for the medical community since 1955.
PAGE 24, MEMBER PROFILE: JAMES F. CARLAND, III, MD
Physicians at the top – perspectives on practice, liability, and challenges facing the modern physician. 22 The controlled substances prescription monitoring program. Just do it!
36 Funding a succession plan with insurance – two ways to go.
32 MACRA & MIPS: An analysis.
38 How much life insurance should you have and what type?
42 Business models, innovation, and leadership: key performance factors for every organization. 46 High deductibles: why physicians must adjust how they practice.
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what’s inside?
IN THIS ISSUE September 2015: Insurance By Jay Conyers, PhD
MCMS Executive Director Jay Conyers, PhD jconyers@mcmsonline.com 602-251-2361
T
here can not be a more controversial word in medicine than insurance. It’s what puts food on the table for most physicians, and it’s what drives many out of the practice of medicine. It’s the safeguard that many Americans still don’t have, and those who do have it don’t truly understand it until they need it. If there’s one thing all can agree on, it’s that insurance has become too complex and too pervasive in the practice of medicine.
I was curious to know how insurance came about, so I first asked one of the Society’s longest tenured members, Dr. Paul Jarrett (also our profile physician for our November membership issue!). A Society member since 1946, Dr. Jarrett provided the following explanation when I asked him about how and when the system changed and physicians no longer got paid directly by patients:
Indeed I remember when most physician fees were paid out of pocket. There were some drawbacks in that many were never paid, but there were advantages in that there was no third party to come between the patient and his physician. The patient was attended by the doctor of his choice, and the doctor had the right to refuse service.
No lay clerk determined what surgical procedure would be authorized nor how long the patient would be hospitalized, what medications would be covered or what accommodations would be approved, or indeed if another doctor would be selected to attend the patient in hospital. It was improper to give the physician the responsibility for an unfavorable outcome in a malpractice action while interfering with his decisions. There was a minimum of paperwork. Some physicians found sure payment to be 4 • Round-up Magazine • September/October 2015
what’s inside? attractive and were pleased with third party coverage on that sole account, but I do not believe they were a majority.
Years ago the profession was, in my opinion, more dedicated to service being wholly dedicated to that end. As a matter of fact, many did not want to know who owed them for fear it would influence their future decisions concerning their care. The more we practice for money, the less we remain a profession, within reason of course. A union is a far cry from a profession.
Dr. Jarrett gave me some good insight, but I still needed to know more, so I reached out to my most trusted source of information – Google – and did some research. What we call health insurance today was first seen in the United States during the Civil War, when individuals and/or or groups could purchase ‘accident’ insurance to cover injuries that may occur during travel. According to historians, the first to have offered this type of coverage was Massachusetts Health Insurance of Boston, which began writing policies as early as 1847. Even early insurance executives realized how lucrative writing policies could be and began offering distinguishable coverage for specific illnesses, injury, and disability before the turn of the century.
These policies were constructed to replace wages, not pay for medical services, and were commonly referred to as sickness policies. The term ‘health insurance’ didn’t appear until the United Kingdom adopted the National Insurance Act of 1911 and formalized universal coverage. Policy writers began offering health insurance as an alternative to sickness insurance, although most Americans still felt it was unnecessary well into the late 1920s.
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However, things changed in 1929 when a group of teachers in Dallas partnered with a local hospital and negotiated a fixed fee â&#x20AC;&#x201C; the evolution of the insurance premium â&#x20AC;&#x201C; in exchange for a predetermined about of coverage. In many ways, this was the first formalization of an HMO, and led to the growth of the insurance industry as we
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see it today. That same year, the American Hospital Association (AHA) began aiding hospitals nationwide in developing similar plans with employment groups, referring to these plans as Blue Cross, which proved to provide a nice revenue stream for participating hospitals.
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what’s inside Blue Cross served hospitals and patients well, but even then, physicians felt they were getting the short end of the stick. It didn’t take long for them to band together, with the assistance of some employment groups, and form Blue Shield. For a fixed monthly fee, individuals with Blue Shield coverage could go to any number of physicians and receive care.
During the early years of Blue Cross and Blue Shield, President Roosevelt began exploring nationalized health insurance as it was assembling Social Security. As the rumor circulated throughout the physician community, the AMA set out to kill any such efforts to nationalize healthcare, fearing that federal oversight would limit patient choice and deteriorate doctor-patient relationships. The insurance companies of the time agreed. The insurance landscape changed dramatically in 1965 when Congress enacted Medicare and Medicaid. Looking for a viable health plan to administer Medicare, the federal government partnered with Blue Cross and Blue Shield, quickly positioning them as the lead dogs in the industry (if they weren’t already). In the coming decades, Congress enacted additional legislation that ensured that those in need of care could get access to it, with Medicaid expansion of childspecific care, HIPAA, COBRA, CHIP, and finally, Obamacare.
While the landscape of insurance has surely changed dramatically over the last half century, physicians haven’t had many seats at the table when the big decisions were made. While most would agree that more access to care and more affordable care has been great for our nation, many feel that health insurance serves the insurance company first, the policy holders (patients) second, and physicians, third. Getting paid has become incredibly burdensome and time consuming, and the regulatory red tape means physicians often don’t get paid. Or when they do, they get pennies on the dollar. Surely there’s a tipping point sometime in the near future, but when, nobody knows. Will we ever adopt a universal healthcare system? Will physicians ever get a more equal piece of the pie? Will physician pay ever get to a point where they truly get paid for quality, and not quantity, and for keeping their patients out of the hospital, rather than in?
6 • Round-up Magazine • September/October 2015
There is so much to discuss about insurance as it applies to healthcare, and I’ve not even mentioned medical liability coverage and tory reform! We’ll leave that topic to this month’s profile physician, Dr. Jim Carland, CEO of the Mutual Insurance Company of Arizona (MICA). After a decorated career as a Valley pediatrician, Dr. Carland has been a C-suite executive in the insurance industry for nearly two decades now, and works tirelessly to defend the practice of medicine throughout the Southwest United States.
Next month we focus on community and profile Dr. Randy Christensen, Medical Director of the Crews’n Healthmobile, a mobile clinic established by Phoenix Children’s Hospital in 2000 for providing medical services to homeless and at-risk adolescents and young adults. Dr. Christensen has received numerous honors and accolades for his commitment to this growing and underserved community throughout the Valley. If there’s ever a doctor that embodies the spirit of community, it’s Dr. Christensen. We hope you enjoy reading about him.
Please mark your calendars for our Annual Event, to be held at El Chorro on October 23rd, beginning at 6 pm, with Dr. Randall Friese as our guest speaker for the evening. Dr. Friese is a trauma surgeon at the University Medical Center in Tucson and also represents Legislative District 9 in the Arizona State House. Go to our website (www.mcmsonline.com) to register for the event. I hope to see you there! ru
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round-up
September/October 2015
Providing news and information for physicians and the healthcare community since 1955. Published monthly by the Maricopa County Medical Society.
4 10 11 16
what’s inside
18
president’s page
22
new members
38
minutes Sitting at the corner of Insurance Road and Reimbursement Avenue.
42
personal How much life insurance should you have and what type?
innovation Business models, innovation, and leadership – key performance factors for every organization.
public health
member profile: james carland, III, MD
business Funding a succession plan with insurance – two ways to go.
welcome!
The controlled substances prescription monitoring program. Just do it!
24
36
46
health insurance High deductibles: why physicians must adjust how they practice
51
marketplace: classifieds
Physicians at the top – perspectives on practice, liability, and challenges facing the modern physician.
32
medicare MACRA & MIPS: An analysis.
On the cover: Dr. Carland in the board room at MICA headquarters. Cover photo by: Denny Collins Photography / www.dennycollins.com / 602-448-2437. Connect with your Society. Letters and electronic correspondence will become the property of Round-up, which assumes permission to publish and edit as necessary. Please refer to our usage statement for more information. Editor: Ryan Stratford, MD, MBA / rstratford@mcmsonline.com. Managing Editor: Jay Conyers, PhD / jconyers@mcmsonline.com. 8 • Round-up Magazine • September/October 2015
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Round-up Staff
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Round-up is a publication of the Maricopa County Medical Society (MCMS). Submissions, including advertisements, are welcome for review and approval by our editorial staff at roundup@mcmsonline.com. All solicited and unsolicited written materials and photos submitted to Round-up will be treated as unconditionally and irrevocably assigned to and the property of MCMS and may be used at MCMS’ sole discretion for publication and copyright purposes and use in any publication, website or brochure. MCMS accepts no responsibility for the loss of or damage to material submitted, including photographs or artwork. Submissions will not be returned. The opinions expressed in Round-up are those of the individual authors and not necessarily of MCMS. Round-up reserves the right to refuse certain submissions and advertising and is not liable for the authors’ or advertisers’ claims and/or errors. Round-up considers its sources reliable and verifies as much data as possible, but is not responsible for inaccuracies or content. Readers rely on this information at their own risk and are advised to seek independent legal, financial or other independent advice regarding the content of any submission. No part of this magazine may be reproduced or transmitted in any form or by any means without written permission by the publisher. All rights are reserved.
Round-up Magazine • September/October 2015 • 9
welcome
EMPOWERING physicians. IMPROVING healthcare. On behalf of the Maricopa County Medical Society (MCMS), we wish to thank you for your dedication to the citizens of our community. Your continued commitment to caring for the people of our community is what we stand for, and we aim to help you focus your time on doing what you do best. The Society understands the needs of physicians and recognizes that not all physicians are alike. Those that deliver medicine in the private practice arena have a unique set of needs that the Society has long been poised to meet. Those practicing medicine in any of our region’s excellent hospitals or clinics have a different set of needs, and the Society is striving to adapt to this growing population of physicians. Despite the differences in what employed and self-employed physician want and need, medicine can only survive through a unified physician voice. The cost of membership in MCMS is one of the lowest in the nation. We know that with specialty societies and other organizational commitments, physicians have to be selective. We want to ensure that every member gets considerable value for the price of membership. Taking advantage of one or more of our business partnerships all but pays for your annual membership. We also run a physician referral line and referred nearly 10,000 patients to Society members in 2014. Depending upon your specialty, one or two referrals may well cover the cost of your membership. So join us today. If you are already a member, we encourage you to renew your membership for 2016. Let us help you continue deciding what care your patients need — and when they need care. Let us help you navigate the complexity of a changing national healthcare system that puts more and more pressure on our physicians. Sincerely, Jay Conyers, PhD Executive Director
10 • Round-up Magazine • September/October 2015
Ryan Stratford, MD, MBA 2015 President
new members
The physicians highlighted on these pages recently joined the Maricopa County Medical Society. Please reach out to one or more of them, welcome them aboard, and share your insight on how the Society can be of service. Interested in learning more about the Society? We invite you to visit our website at www.mcmsonline.com or call the MCMS Membership Office at 602-252-2015.
ACTIVE
LUKE GARCIA, DO Pain Management & Rehabilitation; Interventional Pain Management Medical School: New York College of Osteopathic Medicine, NY Internship: Nova Southeastern University/Palmetto General Hospital Residency: Nassau County Medical Center Office: Luke W. Garcia D.O., PLLC, 530 E. McDowell Rd. Suite 107-428, Phoenix, AZ 85004 Phone: 623-299-9630
DAVID E. NAGATA, MD Internal Medicine Medical School: University of Arizona — College of Medicine Internship & Residency: Danbury Hospital, Danbury, CT Practice Information: Honor Health Medical Group — North Phoenix, 9100 N. 2nd St., Suite 121, Phoenix, AZ 85020 Phone: 602-997-7331 Website: www.honorhealth.com
RANDY WEISMAN, MD Critical Care Medicine Medical School: Albert Einstein College of Medicine, Bronx Residency: Jackson Memorial Hospital, Miami, FL Fellowship: James A. Haley Veterans Hospital, Tampa, FL Office: Scottsdale Critical Care, 3370 N. Hayden Rd., #123-407, Scottsdale, AZ 85251 Phone: 480-947-1130
EDUCATION
ELZADA HASECIC U of A College of Medicine — Phoenix, Class of 2020
VICTORIA MARQUEZ U of A College of Medicine — Phoenix, Class of 2020
CODY “CJ” MILLER-MUNOZ U of A College of Medicine — Phoenix, Class of 2020
OGAYA OJAMEMGE U of A College of Medicine — Phoenix, Class of 2020 SANDY PEOPLES U of A College of Medicine — Phoenix, Class of 2020
TRI PHAM Midwestern University, Class of 2016 SHOVNA MISHRA A.T. Still University SOMA, Class of 2019 HILLARY PARK A.T. Still University SOMA, Class 2019
NAFEE TALUKDER A.T. Still University SOMA, Class of 2019 MICHAEL WEST A.T. Still University SOMA, Class of 2019
Round-up Magazine • September/October 2015 • 11
new members We are pleased to announce and welcome the physicians of the Cancer Treatment Centers of America at Western Regional Medical Center to the MCMS family. Thank you for your support! 14200 W. Celebrate Life Way / Goodyear, AZ 85338 Main hospital: 623-207-3956 www.cancercenter.com/western/ BRIAN ACORD, MD Gynecologist Medical School: University of California, Davis School of Medicine Internship / Residency: OB/GYN — Mercy Hospital, San Diego LILA AMMOURI, MD Hospitalist Medical School: University of Arizona College of Medicine, Tucson Internship / Residency: Internal Medicine — Banner Good Samaritan Medical Center/Carl T. Hayden VA Medical Center, Phoenix Fellowship: Hospice & Palliative Medicine — Mayo Clinic, Phoenix
DAVID BOYD, MD Intake Physician & Director of Wellness, Prevention & Primary Care Medical School: Ross University School of Medicine, Portsmouth, Commonwealth of Dominica, West Indies Internship / Residency: Virginia Commonwealth University / St. Francis Family Medicine Residency Program, Richmond SHARAD CHANDRIKA, MD Pulmonologist & Intensivist Medical Degree: MB — Coimbatore Medical College, Tamil Nadu, India, BS — Dr. M.G.R. University, Tamil Nadu, India Internship / Residency: Internal Medicine — Guthrie Robert Packer Hospital Fellowship(s): Pulmonary Medicine — Norwalk Hospital, Norwalk, CT; Critical Care Medicine — Yale New Haven Hospital, New Haven, CT
12 • Round-up Magazine • September/October 2015
LANCEFORD CHONG, MD, MPH Medical Director of Radiation Oncology Medical School: University of California, San Francisco School of Medicine Internship / Residency: Radiation Oncology — University of California, San Francisco School of Medicine Advanced Degree(s): Master of Public Health, Health Services Administration — University of California, Los Angeles, School of Public Health RANDALL CRAFT, MD Plastic / Reconstructive Surgeon Medical School: The Ohio State University College of Medicine Internship / Residency: Plastic Surgery — Harvard Plastic Surgery, Harvard University, Cambridge, MA; General Surgery — Mayo School of Graduate Medical Education, Scottsdale, AZ Fellowship(s): Clinical Training in Microsurgery & Laboratory Research — Bernard O’Brien Institute of Microsurgery, Melbourne, Australia PIERRETTE DSAMOU, MD Hospitalist Medical School: University of Yaounde, Cameroon, Africa Internship / Residency: University Specialty Hospital, Baltimore; Maricopa Integrated Health System BRANDY FICEK, MD Medical Director, Quality of Life & Palliative Medicine Medical Degree: University of Iowa, Carver College of Medicine, Iowa City Internship / Residency: Family Medicine — Scottsdale Healthcare, Scottsdale Fellowship(s): Faculty Development — University of Arizona College of Medicine, Phoenix; Hospice & Palliative Medicine — Mayo Clinic Hospital, Phoenix
new members DEBORAH GELBSPAN, MD Medical Director Laboratory Services, Pathology Medical Degree: University of Vermont College of Medicine Internship / Residency: University of Arizona Health Sciences Center Fellowship(s): University of Arizona Health Sciences Center
RICHARD GILSON, MD Internal Medicine Medical School: University of Arizona College of Medicine — Tucson Internship / Residency: Residency, Internal Medicine — Banner Good Samaritan Medical Center; Phoenix Veterans Administration Medical Ctr.
TERESA GOLDIN Pathology Medical School: University of Florida College of Medicine — Gainesville, FL Internship / Residency: Medical University of South Carolina, Charleston
ANDREW GOLDSTEIN, MD Thoracic Surgeon Medical School: Columbia University College of Physicians and Surgeons, New York Internship / Residency: General Surgery — Rochester School of Medicine, New York Fellowship(s): Cardiothoracic Surgery - Yale University School of Medicine JOEL GRANICK, MD, MS Medical Oncologist Medical School: State University of New York, Brooklyn Internship / Residency: Presbyterian Hospital, University of Pennsylvania Medical Center, Philadelphia Advanced Degree(s): MS, Bioengineering — Polytechnic Institute of Brooklyn Fellowship(s): Hematology — Kings Country Hospital / Downstate Medical Center, Brooklyn; Postdoctoral Fellow - The Rockefeller University, New York
CHETAN GUJRATHI, MD Otolaryngologist Medical School: University of Toronto, Ontario Internship / Residency: Otolaryngology, Head & Neck Surgery — University of Toronto Fellowship(s): Head & Neck Oncology/Surgery — University of California, Davis, Sacramento VIVEK IYER, MD Interventional Pain Management Specialist Medical School: University of Cincinnati, Ohio Internship / Residency: Medical College of Virginia, Richmond; Anesthesiology — University of North Carolina at
Chapel Hill Fellowship(s): Pain Medicine — University of North Carolina at Chapel Hill PANKAJ JAIN, MD, MBA Urologist Medical School: Feinberg School of Medicine, Northwestern University, Evanston, IL Internship / Residency: Feinberg School of Medicine, Northwestern University Advanced Degree(s): MBA — Kellogg School of Management, Northwestern University TOUFIC KACHAAMY, MD Gastroenterologist and Advanced Endoscopist Medical School: American University of Beirut, Lebanon Internship / Residency: Internal Medicine — Duke University, Durham Fellowship(s): Advanced Endoscopy — Mayo Clinic, Phoenix, Arizona; Gastroenterology — Virginia Commonwealth University, Richmond, Virginia
Round-up Magazine • September/October 2015 • 13
new members NAWAZISH KHAN, MD, MS, LDN Medical Oncologist/Hematologist Medical School: Medical College at University of Punjab, Punjab, Pakistan Internship / Residency: Internal Medicine — Pitt County Memorial Hospital, East Carolina University, Greenville Advanced Degree(s): Master of Science, Clinical Nutrition — East Carolina University, Greenville Fellowship(s): Hematology/Oncology — Loma Linda University, Loma Linda VIVEK KHEMKA, MD, MBA Medical Oncologist Medical School: Sri Ramachandra Medical College, Chennai, India Internship / Residency: Wyckoff Heights Medical Center, Brooklyn, NY; Brookdale University Hospital & Medical Center, Brooklyn Fellowship(s): Medical Oncology & Hematology — Cooper Cancer Institute, UMDNJ/Robert Wood Johnson Medical School, Camden, NJ; Palliative Medicine — Montefiore Medical Center, Albert Einstein College of Medicine, Bronx, NY; Geriatrics — North Shore University Hospital, Manhasset, NY
DAVID LITVAK, MD Chair, Department of Surgery; Chief of Staff Medical School: University of Chicago, Pritzker School of Medicine Internship / Residency: Surgery — University of California, Davis - East Bay, Oakland Fellowship(s): Research — University of Texas Medical Branch, Galveston; Surgical Oncology — John Wayne Cancer Institute, Santa Monica, CA
14 • Round-up Magazine • September/October 2015
JIAXIN (JASON) NIU, MD, PhD Medical Oncologist Medical School: China Medical University, Shenyang, China Internship / Residency: Internal Medicine — Cook County Hospital, Chicago; General Surgery — China Medical University Advanced Degree(s): PhD, Molecular Pharmacology — University of Illinois-Chicago Fellowship(s): Hematology / Oncology — Baylor College of Medicine / MD Anderson Cancer Center, Houston; Molecular Biology & Cell Biology — University of Illinois
College of Ohio
WALTER QUAN, JR, MD Chief of Medical Oncology & Director of Immunotherapy Medical School: Ohio State University College of Medicine, Columbus Internship / Residency: Medical College of Ohio, Toledo Fellowship(s): Oncology — Medical
ASHISH SANGAL, MD Medical Oncologist & Medical Director of Medical Education Medical School: Coimbatore Medical College, Dr. M.G.R. University, Tamil Nadu, India Internship / Residency: Internal Medicine - Brookdale University Hospital & Medical Center, Brooklyn Fellowship(s): Hematology & Oncology — Brookdale University Hospital & Medical Center RICHARD SHILDT, MD Medical Oncologist Medical School: University of Pittsburgh School of Medicine Internship / Residency: William Beaumont Army Medical Center Fellowship(s): Hematology/Oncology Brooke Army Medical Center, Houston
new members BENJAMIN SLANE, MD, MS Radiation Oncologist Medical School: Doctor of Medicine with Research Distinction — University of Iowa, Roy J. and Lucille A. Carver College of Medicine, Iowa City Internship / Residency: Radiation Oncology Residency — University of Arizona, Tucson; Transitional Year Residency — Iowa Health System, Iowa Methodist Medical Center, Des Moines Advanced Degree(s): Master of Science, Free Radical and Radiation Biology — University of Iowa, Iowa City
MARNEE SPIERER, MD Radiation Oncologist Medical School: Columbia University College of Physicians and Surgeons, New York Internship / Residency: Saint Barnabas Medical Center, Livingston, NJ; Radiation Oncology — Memorial Sloan Kettering Cancer Center, New York Advanced Degree(s): MA — Teachers College, Columbia University, NY ROBERT WASCHER, MD Chief of Surgery Medical School: Creighton University School of Medicine, Omaha, NE Internship / Residency: Surgery — Letterman Army Medical Center, San Francisco; Surgery — Tripler Army Medical Center, Honolulu Fellowship(s): Neurosurgery — Brooke Army Medical Center, San Antonio, TX; Surgical Oncology — John Wayne Cancer Institute, Santa Monica, CA
JEFFREY WEBER, MD Chief of Medicine & Director of Gastroenterology & Metabolic Support Services Medical Degree: University of Wisconsin-Madison Internship / Residency: Internal Medicine — Georgetown Division of the District of Columbia General Hospital, Washington, D.C. Fellowship(s): Gastroenterology - Medical College of WI - Milwaukee GLEN WEISS, MD, MBA Director of Clinical Research & Medical Oncologist Medical School: Sackler School of Medicine, Tel Aviv, Israel Internship / Residency: Internal Medicine — SUNY Downstate Medical Center, Brooklyn, NY Advanced Degree(s): MBA — W.P. Carey School of Business, Arizona State University Fellowship(s): Hematology & Medical Oncology — University of Colorado Health Sciences Center, Aurora ROBERT WHITEHEAD, MD Medical Oncologist Medical School: University of Maryland Medical School, Baltimore Internship / Residency: University of Maryland Hospital, Baltimore; Internal Medicine — Mayo Clinic, Rochester, MN Fellowship(s): Medical Oncology — University of Wisconsin-Madison
OLIVER GREY WALDROP, MD Hospitalist Medical School: University of Mississippi Medical Center, Jackson, Mississippi Internship / Residency: Department of Family Medicine, University of Mississippi Medical Center, Jackson, Mississippi
Round-up Magazine • September/October 2015 • 15
mcms board of directors meeting minutes
Maricopa County Medical Society and the Medical Society Business Services August 18, 2015 / 6 pm BOARD MEMBERS
Drs. Ryan Stratford, John Couvaras, Kelly Hsu, Mark Wallace, Shane Daley, Ross Goldberg, Tanja Gunsberger, Lee Ann Kelley, Marc Lato, Anthony Lee, May Mohty, and Anita Murcko were present. STAFF
Jay Conyers was present.
PROCEEDINGS
Dr. Stratford called the meeting to order at 6:11 pm.
OLD BUSINESS
Jay provided a summary of the pension plan lawsuit and the status of the Arizona Medical Board audit. CONSENT AGENDA
A motion was made to approve the consent agenda, comprising June Board minutes and the June membership report. The motion carried. COUNTY HEALTH DEPARTMENT UPDATE
Dr. Bob England, ex officio member of the Board, updated the Board on several public health initiatives, included the recent stakeholder’s meeting on the immunization exemption, convened by Rep. Heather Carter. Dr. England also updated the Board on the Maricopa Health Matters initiative and the planned restart of the Community Health Plan. Updates on the recent Saint Louis encephalitis cases, the incidence of syphilis co-infection with HIV, and the ASH Line were also discussed. BYLAWS
A motion was made to accept the finalized version of the bylaws. The motion carried. FINANCE COMMITTEE
Dr. Wallace summarized the recent meeting of the Finance Committee. They reviewed Q2 finances and the performance of the Society and Businesses through the 16 • Round-up Magazine • September/October 2015
first half of 2015. A motion was made to approve the June financials. The motion carried.
The Board also discussed the server upgrade for MCMS. It was recommended that the Finance Committee convene another meeting in order to consider a recommendation for the Board. Dr. Wallace agreed to work with Jay to discuss with the Committee and report back to the Board. ELECTIONS
Jay discussed the new elections process with the Board and described how the online voting would work this year, and going forward. ANNUAL EVENT SUBCOMMITTEE
Jay reported to the Board that the Subcommittee recommended El Chorro for the event again this year, with a target date of October 23rd. It was also announced that Dr. Randall Friese, Tucson trauma surgeon and State Representative (LD-9), would be the featured speaker for the event. STRATEGIC PLANNING MEETING
The Board discussed the strategic planning meeting and agreed to change the time to noon to 6 pm. Jay was tasked with finding a facilitator and reserving a location. NEW BUSINESS
The Board discussed the concerns about the increase in the number of Level I Trauma Centers throughout the Valley. It was recommended that the Policy Committee convene a meeting and discuss the issue. ADJOURNMENT
The meeting was adjourned at 7:57 pm. ru
WHY MOVE TO 3811 BELL ?
president’s page
Sitting at the Corner of Insurance Rd. and Reimbursement Ave. By Ryan R. Stratford, MD, MBA
MCMS President 2015 Ryan Stratford, MD, MBA Dr. Stratford specializes in Urogynecology/Pelvic Reconstructive Surgery. He joined MCMS in 2005. Contact Information: The Woman's Center for Advanced Pelvic Surgery 4344 E. Presidio Street Mesa, AZ 85215 www.TheWomansCenter.com P: 480-834-5111 E: rstratford@mcmsonline.com
T
he landscape of physician payment has grown dramatically in the last four years, with very specific changes in this past year. In my conversations with physician colleagues, I have learned that many of the new legislative changes are not well understood. Like some of you, I was confused at first, and until I gained some understanding, I did not see the major crossroads that I think we are currently facing. I have been shocked to discover how pivotal our input is right now in determining the future landscape of physician reimbursement.
Understanding what is happening is very confusing – no wonder given the veritable moving target enshrouded in a myriad of acronyms and ambiguity. Some practices are scrambling to adapt while others are paralyzed, following the proverbial advice of “putting their head in the sand” – not necessarily a bad strategy if nearing the end of one’s career. Although in all of my previous articles I have avoided technicalities, in this article, I am going to dig in the weeds a bit because I want to emphasize the importance of what is occurring. It is my hope that there will be more physicians at the table offering creative, new ideas that will drive our future reimbursement. To stimulate visionary thinking, I think we first need to know the details. On April 16, 2015, President Obama signed into law, H.R.2, the Medicare Access and Chip Reauthorization Act (MACRA). With this new law, the annual cliff in Medicare physician payment ended and a new era began. Under this new law:
• Physician Quality Reporting System (PQRS) will continue as is until 2019. Many of us participate in PQRS in some way or another. Either through Medicare Part B Claims Reporting, a Qualified Physician Reporting Registry, a Qualified Electronic Health Record (EHR), a Group Practice Reporting (GPRO), or a Qualified Clinical Data Registry(QCDR). Most of us who 18 • Round-up Magazine • September/October 2015
president’s page work for institutions may be only vaguely aware of which systems we are participating in. In smaller practices, the participation may be a little more obvious because resources have to be allocated to one reporting system over another. Under the current law, there will be a 2% reduction in Medicare payments for noncompliance with PQRS. The unknown shocker is that measurement of compliance began in 2013 as there is a two-year reporting lag (i.e. 2013 reporting is determining the 2015 penalty).
years then the Medicare conversion factor will be flat for five years. After 2026, increases of 0.75% will be given to those who participate in alternative payment models and 0.25% for everyone else.
Given the new rules of MACRA, legislators are essentially forcing or at least strongly encouraging physicians to consider one of two pathways for payment. Either: 1.) Choosing a Merit Incentive Payment System (MIPS); or 2.) Choosing an Alternative Payment
• Value Based Modifier (VBM) will also continue as is. The VBM is used to adjust Medicare reimbursement and is based upon the quality of care furnished compared to the cost of care during a performance period. The VBM will increase or decrease Medicare reimbursement by as much as 2-4% beginning in 2016. • Meaningful Use will continue as is. Most of us are familiar with Meaningful Use because we all had to adopt EHRs in the past few years. Although incentive based initially, future noncompliance with Meaningful Use will result in a 2% penalty in 2016, 3% penalty in 2017, 4% penalty in 2018 and 5% penalty in 2019.
MACRA repealed the Sustainable Growth Rate (SGR) for Medicare, which was instituted to cap Medicare payment growth with GDP growth and was being deferred each of the past six years by the Legislature with the risk of additive adjustments being executed in one year – the veritable Medicare payment cliff. In its place there will be a 0.5% increase in the Medicare conversion factor each year for the next 4 1/2
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Round-up Magazine • September/October 2015 • 19
president’s page Model (APM). It seems that legislators deep down want to get rid of fee-for-service. Of course, big changes like this do not happen overnight, but I can assure you that they are happening faster than you or I may think.
Let’s consider each pathway, MIPS and APM. Following the MIPS pathway requires compliance with multiple different quality and value based measures such as PQRS, VBM, and Meaningful Use. To successfully do this, practices have to develop complicated data capture and reporting mechanisms. Successfully reporting just ensures receipt of expected Medicare payment and avoids penalties but does not increase payment. For some that will mean entering data into registries and for others it will mean hiring staff to monitor outcomes. The key to success in this pathway is to have a say in defining the quality measures. Legislators are waiting for societies and physicians to define those measures. The process of getting measures approved is arduous but the rewards can be very significant. Because of the need to define quality measures, physicians are recognizing the growing importance of their specialty medical societies. Medical societies are quickly developing Qualified Clinical Data Registries (QCDR) to help their membership have access to quality reporting that fits their specialty. Following the pathway of MIPS is the likely future for all of us to some extent. Before MACRA, MIPS would have been the inevitable future, but MACRA seems to place an even greater emphasis on considering a different pathway: APMs. The alternative to keeping up with each of the components of MIPS is to participate in alternative payment models for reimbursement (APM). The problem with APMs is that little is known about how well they will work. Insurance companies who have access to massive databases of healthcare data are very interested in APMs, suggesting there are opportunities for success if physicians want to jump in. Those who are first to market may be the most likely to succeed.
If successfully structured, APMs can be lucrative, not just onerous. MACRA offers a 5% bonus each of five years beginning in 2019 if practices are using APMs. This bonus offered would be in addition to any increase revenue captured by the APM design. And, as long as the APM meets quality reporting (i.e. there are quality measures built in) the practice will be exempt from MIPS reporting. If your practice chooses to create APMs, it will have to adopt the APMs quickly because MACRA requires that at least 25% of the practice’s patients participate in the APM with later-year re-
20 • Round-up Magazine • September/October 2015
quirements reaching as high as 75% of the practice’s patients.
Large Accountability Care Organizations (ACO), the birth-children of the Accountability Care Act (ACA or Obamacare), are experimenting with APMs. Some larger practices and multi-specialty groups are also experimenting with APMs. They have taken on forms such as warrantied/bundled payment for surgical care, bundled payment for nonsurgical care, condition-based payments, and fee for service with quality adjustments. As an example, some ACO’s are offering a set fee for surgery that includes payments to the surgeon, hospital, anesthesiologist, and operating room staff. Based on quality measures, these APMs are also including warranties for the surgical care. The leaders in APMs, however, are the primary care physicians who are discovering clever ways to bundle condition-based payments.
Regardless of where your practices stands, it is clear that Washington and legislators are encouraging physicians to consider merit based payments by carrying the burden of managing multiple different quality-based rules, which if not fulfilled will result in penalties of decreased reimbursement (MIPS). Or coming up with alternative payment models that legislators hope will redistribute risk among providers and healthcare systems, reducing the unrestricted over-utilization of high-cost testing and procedures that do not necessarily improve healthcare (APMs).
I think we each need to consider how we can creatively price our services and negotiate with insurers based on those creative payment models. In addition, we need to participate in the creation of quality measures that are specific to our individual specialties. If we choose not to participate, I think we will find ourselves pulling our heads out of the sand looking down the barrel of an unforgiving gun.
I believe that legislators are beyond the tinkering stage and are moving forward with what they perceive as the new era of physician reimbursement. I hope we can all dig in and lend our creative minds to the discussion, because the truth is despite the unyielding movement towards new reimbursement models, the definition of quality measures and types of payment models developed is entirely up in the air, and as physicians, we can determine what those are. ru
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public health
A
s reported in previous public health articles in Round-up, Arizona’s Department of Public Health released Opioid Prescribing Guidelines for practicing healthcare providers. A key to those is usage by clinicians of the Controlled Substances Prescription Monitoring Program (CSPMP). However, barely one in three Arizona prescribers are using it at all.
Many of us may not be aware that a serious impediment to its use was removed last year. No longer must the physician or other prescriber be the one to login each time to use the system. Now, you may assign a delegate to perform this task, just as you do many other routine assignments.
The Controlled Substances Prescription Monitoring Program:
JUST DO IT! By Bob England, MD, MPH Dr. England is the Director of the Maricopa County Department of Public Health, the 3rd largest local public health jurisdiction in the US. He has been a public health physician his entire career. “Dr. Bob” received his Medical Degree from the University of Arizona and his Masters in public health from UCLA. Contact Information: Phone: 602-506-6900 bobengland@mail.maricopa.gov
Let’s face it, provider practices are busier than ever, with no end in sight. It was never realistic to expect that every physician would themselves independently login to check every patient before writing a prescription for a controlled substance. You just don’t have time.
Once you’ve registered once, your delegate may also register. You will then need to approve your delegate as his/her supervisor, and from then on your delegate may check patient records while you attend to the next patient or other duties.
We all need to do this for two reasons. First, the problem is huge. Enough narcotic pain relievers were prescribed last year in Arizona to give every single adult 52 pills each – roughly enough to medicate everyone around-the-clock for 2 weeks straight; most of it in the form of oxycodone or hydrocodone. Heroin use is surging, and 80% of heroin users report that prescription pain relievers were their gateway drug into heroin. That’s not surprising – once people become addicted, and their prescribers (properly) cut them off from their prescription opioids, heroin becomes a cheap and available alternative. We are seeing lots of middle-class, “Ozzie and Harriet” heroin users.
DUI-Drug arrests have nearly doubled over the past decade in Arizona. We lose more than 1,000 Arizonans each year to drug-related deaths. And almost one in 300 babies are being born with Neonatal Abstinence Syndrome, mostly caused by maternal opiate use. The scale of this issue is alarming. The second reason to actively use the CSPMP is to keep from being forced to do so. One set of goals of the Arizona Prescription Drug Misuse & Abuse Initiative is to have 75% of prescribers signed up with the system, and to have half of prescriptions queried in the system before being written. If we don’t hit that target, this author believes there will be significant pressure to legally mandate compliance. Do we really want to go there? Please read on (page 23) for detailed instructions on how to register yourself and/or your delegate on the CSPMP. ru
22 • Round-up Magazine • September/October 2015
public health
REGISTERING THE PRESCRIBER
Step 1 – Register: Register for CSPMP at pharmacypmp.az.gov/. Click on “Register Now” and fill out the “New Registration” information. Step 2 – Verify: After you submit the registration form, you will receive a verification email with your CSPMP ID number and verification code. Follow the email link to verify your email address.
Step 3 – Login: Once you login, you will then be able to complete your registration profile with your CSPMP ID and DEA number. Fill out the “Registration Details” and certify that the application is complete and accurate, and then “Print Certificate.”
REGISTERING YOUR DELEGATE
Step 1 – Register: From www.azrxreporting.com, your delegate should click “Register,” and then pick a “Job Type.” Follow the instructions and designate a supervisor (who must already be registered) under the prescriber’s DEA number. A delegate may designate multiple supervisors. Step 2 – Approval: The supervisor will login, go to “My Account,” and approve or revoke delegates. GAINING ACCESS TO PATIENT DATA
Step 1 – Register: From pharmacypmp.az.gov/ follow the appropriate “Accessing the Data” link for either medical practitioners or pharmacists. A “New Registration” form will pop up. Complete the form and submit.
Step 2 – Confirm: Once completed, your access registration will be confirmed and you will receive a user name and password in your email, usually within 24-48 business hours.
Step 3 – Login: When you receive your name and password you will be able to login to the CSPMP. RUNNING A REQUEST IN THE CSPMP
Step 1 – Request: Login in to the CSPMP. Under the “Request” tab at the top left of the screen, select “New Request” and then fill out the request form.
Step 2 – Open: The request will appear as a PDF attachment.
When you want the very best for your patients and families.
5
EASY WAYS TO REFER PATIENTS TO HOSPICE OF THE VALLEY
1. Call 602.530.6920
2. 3. 4. 5.
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Download our app to any iPhone, iPad or Android device. Search iTunes or Google Play for “Hospice of the Valley.”
Hospice of the Valley has on-duty staff available 24/7.
Round-up Magazine • September/October 2015 • 23
Physicians at the top – perspectives on practice, liability, and challenges facing the modern physician.
MEMBER SPOTLIGHT: James F. Carland, III, MD It’s a big time in the medical professional liability industry. With acts and movements being considered that have the potential to change the way we practice, bill, license and insure healthcare, it has never been a more interesting time to be a physician in a top insurance executive position. Round-up had the chance to sit down with James F. Carland, III, MD, president and chief executive officer and chairman of the board of the Mutual Insurance Company of Arizona (MICA). Carland shares his story, as well as his perspective on the challenges, opportunities, and changing policies facing the modern-day physician. photography by Denny Collins Photography photo, page 25: left to right — Dr. Carland and Ronald E. Malpiedi, Vice President & Chief Operating Officer, MICA
24 • Round-up Magazine • September/October 2015
Impacting the Practice of Medicine
While he began his medical career as a pediatrician, Carland was always open to opportunities for deeper involvement.
During his 28 years as a practicing pediatrician, Carland served on multiple hospital medical staff committees and medical organizations. He was a member of the MedicalLegal Liaison Committee formed through a partnership of the Maricopa County Bar Association and the Maricopa County Medical Society (MCMS), and served on the Governor’s Medical-Legal Task force.
He chaired the formation of the Desert Physician Association and was also involved in the formation of Samaritan PPO and the Samaritan Health Plan. Carland is also a member of our Society and the Arizona Medical Association.
“I found through the years that I enjoyed actively participating in a wide variety of activities that had an impact on medicine, medical practice and physicians,” he said.
In 1997, Carland received an invitation to become a member of Mutual Insurance Corporation of Arizona’s (MICA) board of trustees, and decided to take advantage of the chance to get involved on a new level.
“Shortly after I joined, the position of CEO opened and I applied,” Carland said. “After a few months of interviews and my written assessment of MICA’s challenges and opportunities, the Board selected me to fulfill that role.”
In his position as CEO, Carland became very involved with the Physician Insurers Association of America (PIAA), and in 2013 he was recognized with the Peter Sweetland Award of Excellence for his work. MICA was a founding member of the PIAA, which was originally formed as a networking resource for insurance professionals and the physicians who partnered with them. The goal was to foster companies that would be physician owned, directed, and run.
In addition to providing networking opportunities, the PIAA conducted educational seminars focused on insurance and liability issues.
member profile
Round-up Magazine • September/October 2015 • 25
member profile
MICA’s staff celebrating their nearly 40 years of business.
26 • Round-up Magazine • September/October 2015
member profile “I attended many of those educational meetings and joined a number of committees focused on the PIAA’s external relationships,” Carland said.
“My involvement led to an invitation to join the PIAA Board of Directors where I remained for three terms, the maximum allowed. Ultimately I became Chairman of the PIAA Board at a time the organization transitioned from a “club” of similar companies to a trade association of mature medical professional liability carriers located the U.S., Canada, Europe, South America and Australia.” Taking on those challenges and opportunities has made Carland a strong physician voice in the changing world of medical professional liability (MPL).
Following the exit of commercial MPL carriers in the 1970s, virtually all new MPL companies had physicians in high-profile leadership roles. However, over the years insurance professionals have gradually moved into many of the positions once occupied by physician leaders. While most carriers still have a strong physician presence on the board, fewer and fewer physicians fill the role of CEO. “Perhaps fewer physicians participate on the operations side because they have more pressing responsibilities and problems to address,” Carland said.
Physicians starting practice have a myriad of challenges facing them, he continued, “Including declining compensation in real terms, aggregation of practices, hospitals acquiring practices and, in a few instances, limited hospital access for non-hospital employed physicians.” However, according to Carland, those challenges should not include MPL.
“For many years, thanks to the successful efforts by companies like MICA, the cost and availability of medical professional liability has not been a priority concern,” he said. “A physician starting practice ten years ago has experienced flat or declining insurance premium costs.” Carland said that Arizona MPL rates and policies compare quite favorably to most other states, with MICA’s rates for all specialties coming in below the U.S. average.
“A remarkable achievement for a state with no caps on non-economic damages,” he said. In addition to lower rates, there are several statutes and requirements in place that help protect Arizona physicians in liability cases. One such example requires an affidavit of merit be provided by a qualified physician, outlining the manner in which a defendant physician allegedly fell below the standard of care, and how this could have led to the plaintiff’s injury, as well as examining and detailing the manner of injury.
Other Arizona statutes and rulings are in place that carefully define physician qualifications to offer these opinions, as well as ensuring that peer-reviewed science is used in liability cases regarding standard of care. Arizona also has a statute protecting a physician apologizing for an adverse clinical outcome that includes protection for an admission against interest. Pediatrics and the Path to Arizona
Carland had originally wanted to attend the Air Force Academy. He selected the engineering career track in high school intending to become a
pilot. While his eyesight made it impossible for him to join the Academy, Carland still obtained his commercial pilot license, and enjoys flying as a hobby. Once he found himself in need of a new course to pursue, it was a trusted neighbor and family friend that opened his eyes to the possibilities in the world of healthcare.
“At the time my family lived next door to a psychiatrist. Although no relation, he became my ‘Uncle Frank’ and set me on the path to medicine,” Carland said. “I attended the University of Colorado in Boulder and graduated with a bachelor’s degree in Psychology.” From there, he went on to attend the University of Colorado School of Medicine, where he took psychiatry as one of his earliest electives.
“I quickly learned that I did not have the personality, the patience and ultimately the interest to become a psychiatrist,” Carland said. “That left me with seven semesters to decide my field.” Exploring his options, he soon learned to value a field that would give him a far-reaching outlook, and he chose pediatrics.
“It was important to me that my patients, once treated, could enjoy long productive lives,” he said. “I liked working with parents to help them take care of their children instead of teaching children to care for their parents. I wanted to become what was, in my mind, an internist for kids.” Carland did his residency training in Denver, Colorado and in Seattle, Washington. Seattle’s weather made his decision to practice in Arizona very easy.
Round-up Magazine • September/October 2015 • 27
member profile
Dr. Carland in his home workshop. “If it wasn’t raining or snowing it was threatening to do so,” he said.
He considered staying in Denver, but ultimately decided he wanted a place where all of his patients would be in one or two hospitals. “This was at a time when pediatricians attended complicated deliveries and all C-Sections, attended newborns in the hospital when moms and babies stayed three days or more, and attended sick in-patients,” he said.
“Neonatologists were far and few between, hospitalists and intensivists were non-existent, and nurse practitioners were still a gleam in Dr. Henry Silver’s eye. So Carland began to look for a place that had everything he wanted.
“I really considered only Arizona and chose the Mesa-Tempe area for the opportunity to work with two wonderful pediatricians, Dr. John Kerr and Dr. Richard Brown,” he said.
Shortly after hanging his shingle in Mesa, Carland joined forces with a group of fellow solo pediatricians, eventually building a group of six pediatricians and three nurse practitioners.
Solo and small group practice made the most sense at the time since Carland was interested in neither an academic position nor a large group practice. And, as he put it, what else was there then?
While Carland found the decision to come to Arizona a clear and simple one, he admits the current physician shortage has left the state struggling to attract out-of-state residents-in-training and physicians to fill the constantly growing need.
“Arizona competes with all the other states for physicians and many of those states offer, on average, better levels of compensation and a more efficient licensing process,” he said. “For many years Arizona has enjoyed a substantial, sustained popula-
28 • Round-up Magazine • September/October 2015
tion growth. Even if we had above average growth in new physicians, keeping up with that sustained in-migration is very difficult. We have substantially increased the number of medical school graduates but have done little to expand our post-graduate training programs.”
In addition to a shortage of residency slots, the licensing issues of the last few years have not helped to make Arizona a desirable physician destination. Nevertheless, Carland does not think Arizona’s licensing issues are the cause of the shortage itself. Challenges and Opportunities
Licensing issues and delays have been a big topic of conversation of late, and not just in Arizona. In 2013, the Federation of the State Medical Boards (FSMB) proposed and developed the Interstate Medical Licensure Compact. The Compact would make qualified physicians looking to practice in multiple states eligible for expedited licensure in any and all participating states.
member profile Other states have already joined, and Carland feels The Compact would surely benefit Arizona physicians and their patients.
ON THE PERSONAL SIDE 1. Describe yourself in one word. Involved. 2. What is your favorite food, and favorite restaurant in the Valley? No favorite food but a number of foods I do not eat. I choose food based on what I think of it, not what it tastes like. I know I am missing out but...As much as for the ambiance as the food, my favorite restaurants in the Valley are Donovan’s on Camelback for steak followed quickly by El Chorro on Lincoln Drive for their “sticky buns.” 3. What career would you be doing if you weren’t a physician? Pilot. But I learned to fly even without the benefit of the Air Force Academy. Although I quit flying because of lack of time to remain proficient, I am a licensed Commercial pilot with a multi-engine and instrument rating. For a few years I towed banners behind a 1941 Stearman open cockpit biplane over outdoor events. And Jane and I have flown to areas throughout North America in private aircraft a lot faster and more comfortable than a Stearman! 4. What’s a hidden talent that you have that most wouldn’t know about you? Woodworking ranging from cabinetry to simply maintaining and repairing our 75 year old home. No real talent, just a close attention to detail. 5. Best movie you’ve seen in the last ten years? Avatar. Incredible computer generated imagery. 6. Best book you’ve read in the last two years? Augustus by Anthony Everitt. 7. Favorite Arizona sports team (college or pro)? None. None in any other state, either. 8. Favorite activity outside of medicine? Travel.
“The Compact has the potential to increase the number of sorely needed practicing physicians in Arizona,” he said. “Currently, obtaining a medical license in Arizona is expensive, time consuming and arduous to the extent that the latest Arizona Medical Board report reported Arizona licensed 9% fewer new physicians at FYE June 2014 than in the preceding year.”
In addition to the benefit of attracting more physicians, Carland explained that Arizona residents need The Compact, or something similar, to facilitate access to the benefits of telemedicine. Because the ability to access a wider range of specialists and subspecialists across differing states would provide multiple advantages, Carland favors Arizona working to remove the geographic and service restrictions currently in place.
One advantage of telemedicine might come through a major difference in resolving liability issues, Carland explained. While geographic restrictions, other than jurisdictional issues, would be irrelevant from a medical liability perspective, the creation and implementation of a real-time audio-visual recording of all patient encounters would cut through a lot of the barriers currently inherent in many cases.
“With telemedicine, ‘he-said-shesaid’ disagreements are likely to be replaced with actual recordings of an encounter,” Carland said. “Captured data might also include data transmitted from an activity tracking device like “Fitbit,” an EKG or close up image of a skin lesion.”
Round-up Magazine • September/October 2015 • 29
member profile
Dr. Carland and his wife, Jane.
However, while such information could prove invaluable, the quality of the communication equipment used at both ends of the patient counter will have to be carefully considered.
Another element to telemedicine, of course, is the question of insurance coverage and the venue to resolve disputes: the state in which the physician resides or the state in which the patient is located. The Telemedicine for Medicare Act of 2015 is an alternative to the Compact recently introduced in Congress. It is a form of Federal licensure that would allow the use of telemedicine to diagnose and treat Medicare patients across state lines without the need for separate state licensure.
While some states are loosening their restrictions on telemedicine, others are taking a restrictive stance against its rapid expansion. However, with pressure from the Affordable Care Act (ACA) to increase accessibility to convenient medical care, telemedicine appears to be an attractive patient alternative.
While telemedicine has the potential to expand access to care, Carland notes a few health insurance companies have gotten creative with products such as “narrow networks” and high firstdollar deductibles that limit access to care. “By limiting choice and access, particularly access to tertiary care, “narrow networks” may turn out to have an adverse affect on physicians and their patients,” Carland said.
30 • Round-up Magazine • September/October 2015
“Based on MPL allegations made in the 1980s and 1990s when capitation payment systems were initiated, I am very concerned that a physician might be alleged to have compromised a workup or treatment plan based on the patient’s inability to pay the first-dollar deductible, or worse, to lower network costs.” These and similar challenges contribute to the patient’s mindset and can create an environment where healthcare is less likely to live up to patient expectations. At the bottom line, continual research shows that unhappy, dissatisfied patients are more likely to file malpractice claims. And, as Carland points out, few things are more apt to lead to dissatisfaction then un-met expectations. ru
You’re Invited to Maricopa County Medical Society’s 2015 Annual Event
Celebrating Our Roots October 23, 2015 Cocktail Attire
RSVP BY
6-9 pm
October 19, 2015
El Chorro Restaurant 5550 East Lincoln Dr. Paradise Valley, AZ
602-252-2015 mcms@mcmsonline.com or www.mcmsonline.com
Keynote Speaker: Representative Randall Friese, MD, Legislative District 9 Presidential Message – State of MCMS: Ryan Stratford, MD, MBA, MCMS 2015 President
Sponsored by:
medicare
Reproduced with permission form the American College of Physicians Crosswalk of the Medicare Access and CHIP Reauthorization Act of 2015 (H.R.2). April 21, 2015 32 â&#x20AC;˘ Round-up Magazine â&#x20AC;˘ September/October 2015
medicare
MACRA & MIPS: AN ANALYSIS By Darren E. Wethers, MD
O
n April 16, 2015, President Obama signed into law the Medicare Access and Children’s Health Insurance Program Reauthorization Act (MACRA), launching a new era in healthcare payment. MACRA is noteworthy both for the penalties it removes and for the opportunities it offers.
MACRA permanently repeals the Sustainable Growth Rate (SGR) formula. SGR prohibited annual Medicare payment increases from exceeding the growth of the per capita Gross Domestic Product (GDP). It was created by Congress in 1977 with the intent of curbing healthcare expenditure. However, problems with the SGR arose in years when the GDP fell, which subjected providers to reduction in Medicare payments. Congress overrode the scheduled cuts each year starting in 2002, but the threat of a substantial payment reduction still loomed. With MACRA, providers avoid the scheduled 21% payment reduction which would have taken effect on April 21, 2015.
MACRA also reauthorizes the Children’s Health Insurance Program (CHIP) through September 2017. CHIP, or KidsCare as it is known in Arizona, provides health insurance for low-income families with children 18 years old or younger.
In addition to repealing SGA and re-instating KidsCare, MACRA also introduces the Merit-Based Incentive Payment System (MIPS), which gives providers year-to-year stability in Medicare payment rates. Through MIPS, providers will receive annual rate increases of 0.5% beginning July 1, 2015 until December 31, 2019. Rates will then hold steady from 2020-2025, and the rate adjustment for 2026 and subsequent years will be 0.25%.
The MIPS program will also eliminate penalties currently associated with the following: • Meaningful use of Electronic Health Records • Physician Quality Reporting System • Value-Based Modifier
Round-up Magazine • September/October 2015 • 33
medicare
About the author: Dr. Darren E. Wethers is Chief Medical Officer for the Blue Cross Blue Shield Advantage Plan. He is board-certified in internal medicine, and practiced for 20 years in St. Louis, Missouri. Prior to moving to Phoenix, Dr. Wethers was a Medical Director for Coventry and Aetna. He joined MCMS in 2015. Contact Information: Darren.Wethers@azbluemedicare.com p: 480-684-7437
These programs will fade out after 2018, and incentive payments for meeting certain merit-based targets will begin in 2019. Merit targets will be based in the four components of MIPS: • Quality
• Meaningful use • Resource use
• Clinical practice improvement
Providers can select which of the measures they would like to complete, and will receive a composite score of 0-100, based on achievement. Merit awards will be granted to those who have achieved the highest scores (up to 4%).
The MIPS components are not equally weighted. It is anticipated that quality and resource use will each receive 30% weighting, meaningful use 25%, and practice improvement 15%. Participants can earn credit for yearover-year improvement in all categories except meaningful use. This
means that even low-scoring providers may qualify for incentive payments by demonstrating improved performance on a measure.
Congress has allocated $500 million/year for the bonus payments that are earned in 2019-2024. High-scoring Providers can earn additional upward adjustments in their payment rates (up to 10%).
Conversely, sub-par performance on these measures could also subject providers to reductions in payment of 4% beginning in 2018, and rising as high as 9% in 2022.
Reductions will be applied in a graduated fashion, so that providers who dramatically underperform will suffer the greatest penalty.
However, even the maximum reductions applied under MIPS will be lower than those associated with current reporting programs. Congress intends the payment reductions to fund the incentive payments made under
34 • Round-up Magazine • September/October 2015
MIPS. Eligible providers for MIPS include: • Physicians
• Physician assistants • Nurse practitioners
• Clinical nurse specialists (such as certified registered nurse anesthetists)
• Advanced practice nurses, whether employed or private practice • Dentists
• Podiatrists
• Optometrists
• Chiropractors
Those providers who participate in an Alternative Payment Model (APM) will not be eligible for the MIPS performance bonuses. APMs involve the provider assuming some degree of financial risk for the care of the patient, and sharing in any savings created by efficient care provision.
Providers who participate in APMs will receive annual baseline payment increases of 5% from 2019-2024, and will be eligible for annual increases of 0.75% in 2026 and subsequent years. In light of such pay increases, it seems that Congress is trying to steer providers toward APMs, and away from fee-for-service payments. Realizing that solo providers and those working in resource-limited areas may be at a disadvantage in meeting the law’s requirements, MACRA allots $20 million annually for technical assistance for providers with fewer than 15 eligible providers. Priority will be given to those providers who work in
medicare rural and underserved areas.
As with any new compensation model and strategy, especially one on the scale of MACRA, there are bound to be concerns and questions. To help address these CMS has created the Care Payment Learning and Action Network (Care PLAN). Care PLAN will work with providers, state agencies and Medicaid plans to help answer questions and resolve issues.
What does this mean for today’s practicing physician? As a primary care doctor, my first reaction would have been, “What now?” followed by a few choice expletives! If your response is similar, I understand. Making it through a busy day in practice was hard enough
before these requirements were imposed; MACRA will not make that better, but by improving payment, may make the effort worthwhile.
I believe that most physicians have adopted some form of EHR, and will not find the incentives associated with that aspect of MIPS too challenging to meet. The areas which may prove challenging to satisfy are the quality, clinical practice improvement and resource use programs; meeting the requirements of those elements will require additional resources that many practices may not have (such as data analysts, clerks and program managers).
Large medical groups and practice consortia will be better suited to adapt
to the additional reporting burden and cost, based on economies of scale – it is simply easier for a group of 10 providers to afford a data analyst than for a solo practitioner. I anticipate the medical specialty societies will develop technical assistance programs to help their members achieve MIPS bonus status.
MACRA’s passage ushers in a care payment structure that will have an impact for the next ten years and beyond. From assuring care coverage for families with children and repealing massive pay cuts, to creating a merit-based compensation system, it is clear why MACRA is considered to be such a game-changing piece of legislation. ru
Round-up Magazine • September/October 2015 • 35
“A properly drafted buy-sell agreement establishing how ownership shares should be transferred when certain events occur can help make the business side of an otherwise stressful transition much smoother.“
36 • Round-up Magazine • September/October 2015
The information in this article is not intended as tax or legal advice, and it may not be relied on for the purpose of avoiding any federal tax penalties. You are encouraged to seek tax or legal advice from an independent professional advisor. The content is derived from sources believed to be accurate. Neither the information presented nor any opinion expressed constitutes a solicitation for the purchase or sale of any security. This material was written and prepared by Emerald. Copyright 2015 Emerald Connect, LLC.
business
Funding a Succession Plan with Insurance: Two Ways to Go
W
By Bruce Weinstein
hat would become of your life’s work if you decided to retire or had to leave suddenly for another reason? Death, disability, divorce, and bankruptcy are just a few of the events that can threaten the future of a once-thriving business. In the midst of an emotional transition, it may be difficult or even impossible for surviving family members and/or co-owners to come to terms.
A properly drafted buy-sell agreement establishing how ownership shares should be transferred when certain events occur can help make the business side of an otherwise stressful transition much smoother.
from the owner’s estate, with the monies passing through to heirs. Alternatively, the cash value that the policy has accrued could help fund the purchase of the business when the owner retires. Cross-purchase agreement
A cross-purchase agreement is for a business with multiple owners. It stipulates that the remaining owners will purchase the interest of the departing owner. Each owner could purchase insurance on the lives of the others and would be responsible for premiums on these cross-owned policies.
The guaranteed liquidity provided by insurance can help prevent surviving family members and/or co-owners from being forced to sell assets or borrow money.
The cost and availability of life insurance depend on factors such as age, health, and the type and amount of insurance purchased. Before implementing an insurance strategy, it would be prudent to make sure that you are insurable. Any guarantees are contingent on the financial strength and claims-paying ability of the issuing insurance company. ru
A buy-sell agreement can be structured to fit the business’s unique circumstances. A sale price is set in the agreement, or a formula is agreed upon for calculating the price at the time of the purchase to account for any changes in the value of the business.
But, while pre-negotiating who will buy out a departing owner is a good idea, the sale could ultimately prove impossible if the timing is unexpected or the buyers don’t have the money to close a transaction. In instances like this, life and/or disability insurance can prove invaluable. Only one in five small businesses has life or disability insurance. There are two ways to go when crafting a buy-sell agreement with life and/or disability insurance.
One-way agreement
A one-way agreement states that a specific person will buy the business in the event the owner retires, becomes permanently disabled, or dies. Permanent life insurance can be purchased on the owner’s life, with the successor as owner and beneficiary of the policy. The successor can then use the proceeds from the policy’s death benefit to buy the company
About the author: Bruce Weinstein, is part owner, managing member and founder of Premier Southwest Planning Group, LLC, a local independent planning firm and a Registered Investment Advisory firm established in 2004. Bruce joined the MCMS Preferred Partner Program in 2014. He graduated in 1987 from Arizona State University in Tempe, Arizona with B.S. in Real Estate and a minor in Finance. Bruce holds his life and health insurance license. He is also a Registered Representative through The O.N. Equity Sales Company and an Independent Registered Investment Advisor. Contact information: www.premierswplanning.com p: 480-636-8620
Round-up Magazine • September/October 2015 • 37
personal
How much life insurance should you have and what type? By Ronald DeGregorio
W
hen I was in college many years ago, the definitive text book on life insurance was Dr. Solomon Huebner’s “Life Insurance.” In it Dr. Huebner discusses how life insurance works as well as its purposes both socially and economically. He speaks about the “human life value.” In economic terms, productive men and women are like golden geese that lay golden eggs from the work they do and the money they earn. If we had a golden goose, doesn’t it make sense to insure the goose against its loss to the family’s income?
Unfortunately, the fact is that most Americans do not insure their “human life value” or even a reasonable portion of it. The risks of death and chronic disability can devastate plans and dreams as well as the lifestyle for a family and/or a business. Fact is that Americans are less insured as a percentage of income than they were decades ago.
So, if we are not insured for our remaining human life value, what income replacement amount are we providing for our family? Most families do not know. Financial planners can quantify the gap between current liquid capital and what the family may need to maintain an acceptable life style. Basic personal life insurance bridges the gap and reduces the income loss risks. Unfortunately, the plans often use assets that were to be used for retirement or other special needs such as education. It may be better to use a different approach to manage the income loss risk at death.
38 • Round-up Magazine • September/October 2015
Lifestyle needs include adequate income to maintain current lifestyle for the family including paying the bills for college, mortgages, last expenses, and other special needs. For most young families, reducing the “loss of income risk” due to a breadwinner’s death should be a high priority. It avoids adding economic stress with emotional and social distress.
So, how do we quantify lifestyle and special needs? There are several templates and calculators available to complete the quantitative analysis, but I generally like to look at the risk as an income replacement risk. If alive and healthy, income will come in and the plans and dreams along with a reasonable lifestyle will continue. Replacing the after tax income lost at death or disability is a key. Some commentators have used a “rule of thumb” for having life insurance between 5 to 10 times current income. So, this rule generally provides income replacement for approximately 5 to 10 years. But is that sufficient or is it too much to continue the family’s plans and dreams as well as its lifestyle? Rather than a rule of thumb, I prefer calculating how much capital is needed to replace the lost after tax income provided by the breadwinner. So, if the breadwinner is earning $200,000 annually and the family is in the 35% state and federal tax bracket, the current annual take home spendable family income that is lost is $130,000 ($200,000 less the $70,000 in taxes).
personal
HOW MUCH INCOME CAN YOUR CURRENT LIFE INSURANCE PROVIDE? The chart below shows how much annual income a death benefit can produce. The income comes from investing the life insurance proceeds and paying out the after tax growth and income earned on the proceeds. The chart assumes annual increases in income. The annual increase is equal to “cost of living annual increase percentage” shown in “Assumptions.” The “after tax earnings on death benefit proceeds” is illustrative only and is not guaranteed. It can be higher or lower than illustrated.
ASSUMPTIONS
How long the income replacement lasts will affect the family’s future lifestyle and stress. Based on the “human life value,” insuring loss of income to retirement against the risks of death or disability seems reasonable, if it is affordable. Remember, we save for college education, retirement income, and other post retirement goals during our working years. Losing income due to the death or disability during our working years jeopardizes these financial plans for the surviving spouse and the whole family.
A proper risk analysis considers that income generally should rise annually by inflation to cover the cost of living for expenses. Over the period replacement income is planned, annual increases equal to an assumed cost of living increase must be considered. Of course, life insurance is paid in a lump sum. Usually it is received income tax free. Also, personally owned life insurance would not be subject to estate tax as long
Death benefit amount: After tax earnings on death benefit proceeds: Tax rate assumed: Gross rate to attain after tax earnings amount: Cost of living annual increase percentage:
$ 1,000,000 4.0% 35.0% 6.15% 2.0%
REPLACEMENT ANNUAL INCOME Years to Replace 10 15 20 25
First Year Amount $108,962 $76,105 $59,754 $50,004
Final Year Amount $132,824 $102,427 $88,791 $82,038
30 35 40
$43,555 $38,992 $35,607
$78,895 $77,980 $78,621
Notes Final year amount is the last payment amount based on the annual cost of living percentage in Assumptions.
EXAMPLE So, if a person has a death benefit of: Based on having payments last until year:
$1,000,000 25
The first year after tax income projects to be: The Replacement Income increases annual by: The Final Year Payment is projected to be:
$50,004 2.0% $82,038
Round-up Magazine • September/October 2015 • 39
personal
HOW MUCH DOES A $1,000,000 LIFE INSURANCE COST FOR TEMPORARY (TERM) COVERAGE? The chart below provides a sample cost for $1,000,000 temporary (term) death benefit for a male and female preferred non-smoker at various ages and duration of coverage. Standard rates are between 50% & 68% higher depending on age and length of coverage. ASSUMPTIONS Age
Term
25 25 25 25 25 30 30 30 30 30 35 35 35 35 35 40 40 40 40 40 45 45 45 45 45 50 50 50 50 50
10 15 20 25 30 10 15 20 25 30 10 15 20 25 30 10 15 20 25 30 10 15 20 25 30 10 15 20 25 30
Male Premium $335 $432 $568 $751 $859 $335 $432 $587 $731 $915 $345 $451 $616 $844 $979 $466 $626 $830 $1,194 $1,436 $747 $1,014 $1,339 $1,980 $2,340 $1,155 $1,645 $2,096 $3,027 $3,692
Female Premium $282 $375 $422 $557 $636 $296 $385 $451 $616 $723 $296 $415 $529 $699 $823 $403 $565 $713 $994 $1,156 $660 $850 $1,014 $1,479 $1,694 $951 $1,209 $1,538 $2,245 $2,604
40 â&#x20AC;˘ Round-up Magazine â&#x20AC;˘ September/October 2015
Age
Term
Male Premium
55 55 55 55 55 60
10
$1,897 $2,717 $3,362 $5,307 $6,728 $2,900 $4,288 $5,623
60 60
15 20 25 30 10 15 20
Female Premium $1,397 $1,814 $2,377 $3,707 $4,672 $2,067 $2,773 $3,896
EXAMPLE
So, if a male in good health who is age 30 wants $1,000,000 level death benefit that lasts 20 years, the annual premium for that policy is $587.
personal as the total taxable estate in 2015 is less than $5,430,000 ($10,860,000 for a couple). So, even for larger estates, life insurance when owned by a properly prepared irrevocable life insurance trust (ILIT) is also estate tax free.
With the capital from the life insurance death benefits, prudent investments should be made that provide replacement income. With the example of the breadwinner earning $200,000 pre-taxes or $130,000 after tax, we will assume that lifestyle costs from inflation increases at 2% annually for planning. We also will assume that there will be no estate taxes on the death benefit because of either projected asset values or planning. Finally we will assume that the life insurance proceeds will be prudently invested earning around 6.15% before taxes and 4% after taxes. We will also assume that the client wants the income replacement to last 20 years. By doing the math, the amount of life insurance capital needed without disturbing other assets for the family’s future calculates to be $2,175,591. Of course, the life insurance amount can be reduced by using retirement or other liquid assets that were part of the family’s retirement plan. However, it may make better sense to transfer the total pre-retirement income risk to the life insurance option. That leaves the current assets to be used for education, retirement, and other special needs available for the future. Based on the afore mentioned assumptions, the chart on page 39 demonstrates how much after tax income will be re-
placed annually by $1,000,000. The assumptions include a 4% after tax rate of return and a 2% increasing annual income for a given number of years shown in the chart.
Life insurance risks change over time. As one gets closer to retirement, the income replacement need for life insurance usually reduces. Layering temporary (term) coverage of different durations allows for some coverage to drop off as the amount of the risk decreases (see chart on page 40). Depending on budget constraints, more permanent coverage can be added for post-retirement needs that include long term care or longevity protection. For those who are making maximum contributions to qualified retirement plans that are available, life insurance can be an option to consider for a portion of retirement savings as well. The income tax free accumulations of cash values and the creditor protection benefits in many states make a properly designed life insurance policy an attractive option for supplemental retirement planning. So, if there are excess earnings above what is needed for lifestyle needs, a life insurance policy that has large parts of premiums providing living benefits including retirement, long term care, or longevity benefits should be discussed with a qualified insurance professional. In summary, there is a lot to like about making plans for the future while reducing the risks during the journey. The planning must be done before health or other issues make the timing too late. ru
About the author: Ronald DeGregorio, CLU, ChFC, CFP, CASL, Chairman of the PenFacs Group, founded PenFacs in 1977. The business focus of PenFacs is to work with Investment Advisors, Accountants, Attorneys and other financial professionals in due diligence review and selection of insurance products and derivatives to meet client risk assessment and wealth transfer goals. Insurance products such as life, long term care, disability insurances as well as annuities are offered through the New PenFacs Insurance Agency (NPIA). NPIA also works with other insurance professionals and clients on an individual, group, or association basis. Ron is a 1964 graduate of Boston Latin High School and received a BA from Middlebury College, Middlebury Vermont in 1969. He also has a Master Degree in Financial Services (MSFS) from the American College (1981).
Round-up Magazine • September/October 2015 • 41
Business Models, Innovation and Leadership:
Key Performance Factors for Every Organization By Mark Opheim
W
hen thinking about the success of our practice we often first consider factors such as patient satisfaction, quality of care, revenues, and costs of care delivery. These are all important factors that are essential to the long-term (and short-term) well-being of the organization. However, business strategists in healthcare and other industries have identified additional firm characteristics that can have significant impact on the organization.
This article identifies three critical constructs – business models, innovation, and leadership – essential to the long-term success of organizations. Examples external to and within the healthcare industry show that these factors can change the orientation of an organization from failure to success.
42 • Round-up Magazine • September/October 2015
innovation
Business Models
Just what is a business model? The term business model has gained widespread use in the past several decades. Although the term is used often to mean different things, business model researchers have converged on the primary functions of a business model. Business models express a firm’s value-proposition to their customers, how firms earn revenues, capture value, and interact with external parties. A common element of business model definitions amongst researchers is the customer value proposition. This suggests that a significant improvement in the customer value proposition implies a change in the business model. An example from the healthcare industry is useful: Electronic Health Records (EHR). EHRs have the potential to streamline processes internally and improve patient care. If EHRs are implemented in a way that results in streamlined internal processes yet the patients see no value other than an on-line data entry system then the practice’s business model has not changed. But if EHRs allow the practice to deliver additional value through better diagnoses, referrals, and treatment plans a more efficient business model has been deployed. A few examples of new business models demonstrate the potential of business models to significantly affect firm performance.
Apple, with their iPod and iPhone product lines provided not only a new value proposition to their customers, but an entirely new ecosystem for delivering value and capturing revenues through iTunes and other services. Apple’s new business model for music and phone showed how innovative new products can deliver exceptional customer value and often require radically different business models. Without key investments in marketing and business processes, Apple’s technology advances could have failed miserably. Many technology companies carefully review their R&D pipeline and compare with existing business models to determine whether new products should be spun off or launched internally.
The use of existing Internet and mobile apps has allowed ride-share companies like Uber to take market share from traditional taxi and limousine-services companies. This is an excellent example of how new business models can outperform traditional ones, without the introduction of any radical technologies. Similar business model advances are taking place in the healthcare industry, including tertiary care hospitals and community networks for specific chronic-illness care needs.
Innovation
Innovation, within the context of a firm’s business is a term that should be considered carefully and often. The success of unique business models is now so widely recognized that many business strategists differentiate between technology innovation and business model innovation. Technology innovations may only imply that procedures need updating or processes streamlined. However, business model innovation – the process of moving from one business model to another – generally implies that the firm should carefully review their products, processes, and external transactions (suppliers and customer value propositions). Business model innovation requires deliberate planning and attention-todetail execution in order to generate positive results.
One of the thought-leaders in innovation and business model design is Clayton Christensen. Christensen wrote The Innovator’s Dilemma: When New Technologies Cause Great Firm’s to Fail (1997) in which he identified a framework for innovation applied across a number of industries, and The Innovator’s Prescription: A Disruptive Solution for Healthcare (2008). Central to Christensen’s work is the idea that business model innovation leads to more efficient ways of delivering value to customers. Christensen defined three types of business models applicable to the healthcare industry: solution centers, value-adding processes, and user networks. Solution centers (aka General Practices, Hospitals), once the dominant model used for healthcare delivery are being augmented with value-adding processes focused on specific value-added healthcare services. Quality and cost of healthcare services improve when moving from solution center business models to value-adding processes and user networks1. Business model innovation can serve as a framework for improving healthcare quality, where healthcare quality implies safe, effective, efficient, timely, patient-focused delivery of healthcare services. Fieldston, Terwiesch, and Altshuler2 suggested that business model innovation allows healthcare firms to reposition healthcare solutions along the cost-quality continuum, facilitating higher quality healthcare solutions at lower costs. Examples include the movement of low to medium complexity services from high-cost delivery facilities to low-cost locations closer to patients and movement of less-complex diagnostic and treatment services to clinics located closer to customers.
Round-up Magazine • September/October 2015 • 43
innovation header
About the author: Mark Opheim has more than two decades of experience in the process automation industry with two major multi-national engineering companies, focused on business process improvement, new technology development, and process optimization. He holds a B.S. in Chemical Engineering, a Masters in International Management from the Thunderbird School of Business, and is currently pursuing a Doctorate of Business Administration, specializing in leadership, innovation, and business model innovation within small to medium business environment, with emphasis on healthcare organizations.
Leadership
Within the context of the U.S. healthcare industry, business model innovation provides leaders with new ways to improve organizational performance by changing the value proposition to the customer and selecting business models that more efficiently deliver services. However, an important consideration within an organization seeking to innovate and improve is ‘how to foster an environment that encourages reflection and the right balance between bottom-line performance focus and continuous improvement.’ Clearly, innovation does not just happen on its own. Pisano3 suggested that successful firms develop an innovation strategy with participation from diverse parts of the organization, including customer facing resources, specialists, technicians, and senior leadership. Interestingly, business researchers have developed assessment tools to measure an organization’s ability to innovate. Lakhani and Marquard4 developed an instrument to assess a leader’s ability to help their firms to innovate. They found that leaders possessing critical leadership skills were able to more effectively lead innovation efforts and outperform rival firms by 29%. These critical leadership skills include: trust, open inquiry, honest sense of self and other, thirst for knowledge and creative dialogue with others, and ability to engage with others on multiple levels. Lakhani and 44 • Round-up Magazine • September/October 2015
Marquard have used their leadership assessment tool, iLeadership,™ to evaluate innovation leadership within organizations and give leaders specific recommendations to improve an organization’s ability to innovate. Summary
The healthcare industry faces many challenges in the years ahead. Research from other industries suggests that business model innovation can serve as a key enabler, allowing firms to improve their quality of services and coststructure. Business researchers also suggest that smaller firms are better able to adapt to changing conditions and implement business model innovation to improve performance. However, a precursor to improved performance is leadership and an innovation strategy aligned with the firm’s business strategy. Business performance tools and techniques from other industries may hold the key to achieving similar results within the healthcare community. ru
References
1. Christensen, C., & Hwang, J. (2008). “Disruptive Innovation In Health Care Delivery: A Framework For BusinessModel Innovation - ProQuest.” Health Affairs, 27(5), 1329. Retrieved from http://search.proquest.com.ezproxy.apollolibrary.com/docview/204616768/fulltextPDF/53E266FFDC4 848C0PQ/1?accountid=458
2. Fieldston, E., Terwiesch, C., & Altschuler, S. (2014). “Application of Business Model Innovation to Enhance Value in Health Care Delivery.” JAMA, 167(5), 2013–2015. doi:10.1001/jamapediatrics.2013 3. Pisano, G. P. (2015). “You Need An Innovation Strategy.” Harvard Business Review, 93(6), 44-54. 4. Lakhani, M. A., & Marquard, M. (2014). “iLeadership.” International Journal of Social, Management, Economics, and Business Engineering, 8(10).
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health insurance
HIGH DEDUCTIBLES: WHY PHYSICIANS MUST ADJUST HOW THEY PRACTICE Rising out-of-pocket costs are changing the way patients use medical services, so physicians must evolve their billing and communication practices to keep up. By Susan Kreimer
A
ccelerated by the Affordable Care Act, high-deductible health plans have emerged as a major trend in healthcare. Placing more financial responsibility on patients for medical services has a direct impact on physician practices. Operating successfully within this framework requires greater awareness of differences among insurance policies and discussions of treatment options that are sensitive to patients’ out-of-pocket expenses.
“Doctors need to understand the landscape has changed. A doctor’s primary concern used to be whether a patient had insurance. Now, it’s the type of insurance,” says Devon M. Herrick, PhD, a senior fellow at the National Center for Policy Analysis in Dallas, a nonprofit organization that promotes private alternatives to government regulation.
“Patients are more cost-conscious now. That means patients will question their physicians about costs for procedures,” he adds. “Patients will also ask uncomfortable questions like: ‘Doctor, do I really need that MRI?’ ‘What’s that going to cost?’ ‘Can that test wait?’"
The best way to approach billing issues in a physician office is to be proactive with patients by clearly detailing costs and options. “Otherwise, a disgruntled patient who believes they were treated unfairly—and gouged by a rich physician— may be less likely to pay their bill,” Herrick says.
46 • Round-up Magazine • September/October 2015
health insurance
How Costs Affect Patient Choices
Studies have shown that consumers exercise greater caution in spending when health plans require them to share more of the costs, according to The Rand Corporation, a research organization that has conducted the largest independent study of high-deductible health plans. High-deductible coverage “really does reduce people’s healthcare costs and use. About two-thirds of the reduction is in number of episodes of care, and about one-third of the reduction is in the cost per episode,” says Amelia M. Haviland, PhD, an adjunct senior statistician with Rand and an associate professor of statistics and health policy at Carnegie Mellon University in Pittsburgh.
“There may be some good news in terms of bending the cost curve, but there are also some concerns—that it might have a detrimental impact on patients’ health over time,” Haviland adds, citing an already apparent decline in cancer screenings, child immunizations and recommended tests for diabetics. “The concern on a physician’s side is that patients will be less compliant, or in particular, that they will not come for appointments; they’ll reduce their interactions with their doctors.” For many patients, the decision to avoid appointments stems from not knowing that their deductible doesn’t apply to annual wellness visits, certain cancer screenings and other preventive services. Physician offices may consider countering this misunderstanding by sending explanatory postcards, e-mails or letters, Haviland says.
High-deductible health plans “certainly are continuing to gain traction in the employer-sponsored insurance world and are the dominant plan type on the individual and small group markets on the exchanges. On the employer-sponsored market, they’ve overtaken HMOs,” she adds. “It’s more and more likely that doctors will have patients who are in these plans.” A New Scenario
In many cases, high-deductible health plans are paired with tax-free individual health savings accounts (HSAs) or employer-sponsored health reimbursement arrangements (HRAs). When a high-deductible plan accompanies one of these options or some other type of tax-free savings account, the result is described as a “consumer-directed health plan.” In 2014, 48% of companies offered a consumer-directed health plan, up from 39% in 2013, according to Mercer ben-
efits consulting firm’s national survey of employers. Enrollment in these plans increased to 23% of covered employees in 2014 from 18% the previous year. Average in-network deductibles were $2,500 for an individual worker or $5,000 for a family plan.
“It’s a new scenario for a lot of patients and physicians,” says Katherine Hempstead, PhD, director of health insurance coverage at The Robert Wood Johnson Foundation. The change has created “a little bit of a learning situation for everyone.” At first, many consumers didn’t fully grasp their financial responsibilities under the high-deductible plans they had selected. Consumers who tend to be lured to lower monthly premiums often are the ones who will encounter the most difficulties paying their deductibles, Hempstead says.
Low-income enrollees in high-deductible plans were more likely to forgo emergency care due to unaffordable outof-pocket expenses, according to a study of small employers in Massachusetts. Researchers reviewed emergency department visits and hospitalizations over two years among highdeductible plan members. Those of low socioeconomic status incurred 25% to 30% declines in high-severity visits over both years. Hospitalizations decreased by 23% in the first year but increased in the second year. “Initial reductions in high-severity ED visits might have increased the need for subsequent hospitalizations,” the authors wrote in the August 2013 issue of Health Affairs. “Policy makers and employers should consider proactive strategies to educate high-deductible plan members about their benefit structures or identify members at higher risk of avoiding needed care. They should also consider implementing means-based deductibles.”
When insurance policies come up for renewal, it will be interesting to see if consumers who initially opted for highdeductible plans make different decisions for the future, Hempstead says. Meanwhile, providers will find it necessary to become more efficient in their practices and transparent about their pricing, as consumers demand more value for their healthcare dollars. In particular, the trend toward high deductibles will certainly push price transparency for services or tests that physicians may order.
“A patient may ask, ‘Where is the least expensive place to get an MRI?’” says Mark S. Williams, MD, MBA, PresRound-up Magazine • September/October 2015 • 47
health insurance ident of the Southern Medical Association and chief physician executive for Tenet Healthcare and Brookwood Medical Center in Birmingham, Alabama. Practices that have compared rates and quality among local imaging and laboratory facilities would be more prepared to answer such questions. Some physicians may experience a decline in the use of their services, while others gain a competitive advantage.
“Physician offices may be further challenged in collecting reimbursement for their services, as the patient will be paying more out of pocket, ” Williams says. One way to continue serving patients while reducing their out-of-pocket costs would be to delegate less-complex visits to a nurse practitioner or a physician assistant.
“Physicians who are best informed about these trends and changes will do very well,” says Williams. Conversely, “those physicians who may not take the time or make the effort to learn about these things are at risk. That high-deductible concept is not going to go away.” Among employer-sponsored health plans, deductibles for employees have edged steadily upward. In 2014, 80% of all covered employees had a general annual deductible averaging $1,217, according to the annual Kaiser Family Foundation/HRET survey of more than 2,000 small and large employers. The average deductible has increased 47% from $826 in 2009. Also in 2014, 41% of covered employees had a minimum annual deductible of $1,000, and 18% had deductibles of at least $2,000. Those at small companies (three to 199 employees) were even more likely to encounter large deductibles.
Wanda D. Filer, MD, MBA, FAAFP, President-elect of the American Academy of Family Physicians (AAFP), says pricing information isn’t readily available in all healthcare markets, especially in competitive areas. She manages about 90% of patients’ health concerns in her primary care practice in York, Pennsylvania, without referrals to specialists. “My role is to offer them the best services that I can,” Filer says, while acknowledging that she tries “not to incur any more costs than I need to.”
However, there are times when patients require procedures that fall outside the scope of her expertise. For example, she says, a male patient recently presented with problems that required consulting with a urologist but the patient couldn’t afford the out-of-pockets fees. 48 • Round-up Magazine • September/October 2015
While Filer’s clinic – Family First Health – is a federally-qualified health center, she also sees numerous patients with private insurance. “They’re a little more attuned to what time of year it is and where they are with their deductibles,” she observes. Many patients are unaware that preventive office visits and services would be covered regardless of whether they have met the annual deductible. There are also alternatives to traditional fee-for-service insurance billing. In a direct primary care (DPC) model, physicians typically charge patients a monthly, quarterly or annual fee that covers all or most primary care services, including laboratory tests, care coordination and comprehensive care management. This fee doesn’t cover some services, so practices often advise patients to acquire a high-deductible plan for emergencies, according to the AAFP. Direct primary care is not the same as concierge medicine. “I hear this confusion a lot,” Filer says. “DPC practices operate at a lower monthly fee in order to open more services and access to those who have previously been excluded financially.” Setting the Right Expectations
Physician practices walk a fine line between providing good clinical care that meets patients’ needs and limiting the burden associated with spiraling costs.
It’s important for staff members to know what a plan covers as well as a patient’s financial limitations, says Laura Palmer, FACMPE, Director of Professional Development at the Medical Group Management Association in Englewood, Colorado.
At the outset, it helps to “set the right expectations with patients and staff.” Palmer recommends having open and honest conversations about costs well before a collections problem arises and the financial aspect compounds the stress for a patient undergoing treatment. A provider may ask, for example, if a patient on a highdeductible plan would encounter a financial hardship in paying for prescription medications. Sometimes a provider may be able to offer free samples and help a patient apply for a low-cost or subsidized prescription drug program, Palmer says. In another example, if a patient experiencing back pain doesn’t have insurance coverage for physical therapy, the physician could suggest less-costly options such as home exercise or yoga classes at a community center, she says. Other
health insurance
Four Tips for Addressing Healthcare Costs with Patients 1. Start with their name. Money and health are personal subjects. Addressing patients by name, and letting them know they are valuable to the practice is the first step in showing patients that you are looking for solutions rather than blame. 2. Ask for payments the right way. Donâ&#x20AC;&#x2122;t ask patients if they will pay â&#x20AC;&#x201C; ask them how they are going to pay. Donâ&#x20AC;&#x2122;t make delaying payment an option right away, but be sure to mention payment plans if immediate payment is an issue. 3. All staff members should be prepared. Every member of the staff should be familiar with the practiceâ&#x20AC;&#x2122;s payment options and procedure costs. Patients may be more comfortable talking about finances with a nurse or physician. 4. Reminders are important. When contacting patients for appointments, remind them that a copay will be due upon arrival, and have an estimate of costs available. Be sure to remind patients about payment plans, other options, and online portals if available.
possibilities include offering prompt-pay discounts at the time of service, payment plans, and third-party credit applications. Constant Evaluation
However, some experts discourage physicians from engaging in financial conversations directly with patients. Nonmedical office personnel should convey this type of information to patients, says Evan Grossman, Vice President of Consulting Services at Athenahealth Inc. in Watertown, Massachusetts.
Practice managers and front-desk and billing staff members should be knowledgeable about various fees, insurance policies, and how to broach financial issues with patients, Grossman says. Staff members should check patientsâ&#x20AC;&#x2122; eligibility for services and ensure that a patient knows the costs that likely will be incurred during an office visit. If a physician determines a non-routine test is necessary, he or she should recommend that the patient discuss the cost with the front desk staff upon checkout.
Physician practices also can avoid losing revenue by learning how to collect payments from patients at the time of service, says Robert M. Wah, MD, President of the American Medical Association (AMA) and a reproductive endocrinologist in McLean, Virginia. They can turn to the AMAâ&#x20AC;&#x2122;s website for point-of-care pricing resources that encourage increased electronic transactions and payment transparency. Webinars and toolkits explain how to use practice management software to provide point-of-care pricing, and how to measure a practiceâ&#x20AC;&#x2122;s success at collecting payments at the time of service. There is also a sample template letter with contract language. â&#x20AC;&#x153;The AMA is a strong advocate for bringing transparency, simplicity and consistency to the medical claims system. We are urging a streamlined approach that allows medical claims to be submitted and settled in real time at the patientâ&#x20AC;&#x2122;s point of care,â&#x20AC;? Wah says. â&#x20AC;&#x153;This will cut unnecessary administrative costs in the medical office, while helping patients to know their total out-of-pocket costs prior to treatment and help give them more control over their healthcare dollars.â&#x20AC;?
It is not uncommon for physician practices to face shortfalls in cash flow at the beginning of the year unless the practice has established a methodical approach to collecting deductible payments at appointments, says James Smith, MBA, FACHE, Senior Vice President in the New York office of The Camden Group, a healthcare consulting firm. â&#x20AC;&#x153;Given the rapid increase in share and the impacts on cash flow, practices must constantly be evaluating receivables and committing resources to their collection, as well as assuring adequate lines of credit and other financial instruments are available to help mitigate short-term cash shortfalls,â&#x20AC;? Smith says. ru
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Round-up Magazine â&#x20AC;˘ September/October 2015 â&#x20AC;˘ 49
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Did you know? MICA has a Risk Management website with tools to help you reduce your risk of a cyber security breach.
Medical Professional Liability Insurance (602) 956-5276 (800) 352-0402 www.mica-insurance.com
The policyholder benefits presented here are illustrative and are not intended to create or alter any insurance coverage. They should not be relied on and may differ from actual MICA policy language. Coverage provided by MICA is always subject to the terms and conditions of your policy, and MICA strongly encourages you to read your policy in its entirety.