Quality Can Pay &#8211; If You Can Prove It

One of the most common criticisms heard from providers, payers, and patients alike is that our healthcare delivery system is paid for solely on the basis of how much was done for or to a patient, and not on how well it was done or whether something better for the patient should have been done. In other words, our payment system is designed to pay for the quantity, not the quality and appropriateness of services rendered. Virtually everyone agrees that this has resulted in a delivery system that rewards over-utilization of unnecessary high-cost services and devices. On the other hand, managed care in some instances rewards under-utilization of necessary services. Sometimes certain services or devices actually harm patients. The literature is replete with stories about how inadequate, inappropriate, or harmful medical care or failure to provide necessary services have resulted in thousands of hospital deaths annually. These stories are supported by actual findings by the Institute of Medicine in its landmark report on hospital deaths resulting from medical errors and its 2001 study, Crossing the Quality Chasm , which recommends a new healthcare system and a change in fundamental values to reflect a system that is safe, efficient, effective, equitable, timely, and patient-centered. Payers are taking heed as they develop programs to create a new payment system that rewards providers who achieve these values. In orthotics and prosthetics, just as in medicine, practitioners include individuals with significant differences in education, training, experience, and competence. And, just as in medicine, practitioners' attitudes range from wanting to do everything possible for a patient regardless of cost to doing for the patient what is reasonable, necessary, safe, and cost-effective. Pay-for-Performance (P4P) Both Medicare and commercial payers are addressing over- and under-utilization of services in a very serious way through the use of new and innovative pay-for-performance (P4P) initiatives. In summary form, P4P focuses on leveraging payment methodologies and dollars to change provider behavior. The intent of P4P is to reward providers who implement solutions in patient care management with safe, timely, efficient, effective, equitable, patient-centered care. Concurrent patient management rather than post-payment review is the standard. The emphasis is on disease and injury prevention, reduction of complications and severity, and achievement of desired outcomes. Payers are beginning to recognize that providing devices and services that may not be "medically necessary" now could eliminate the need for more costly devices and services that will be "medically necessary" later. Several large employers such as General Motors and General Electric have developed value-added programs to their health benefits plan that promote efficient healthcare delivery with financial incentives paid to practitioners who can demonstrate high-quality service delivered in an efficient manner. This does not mean that the least costly care is to be provided. It does mean that preventive medicine is encouraged so that the risk of serious disease is reduced, unnecessary complications are eliminated, and the additional costs associated with treating poor outcomes are avoided. Medical conditions such as diabetes, congestive heart failure, cardiovascular disease, and hypertension are being studied to evaluate the success of treatments associated with disease management and prevention of complications. Reducing Costs Via Good Outcomes The ultimate result of this process for providers will be that payers offer fewer choices of providers to patients, with an emphasis on steering patients to practitioners who demonstrate the best documented performance. It may look and sound like managed care, but the difference is that it is not designed to reduce services and service reimbursement. It is designed to reduce the overall cost of healthcare by financially recognizing practitioners who achieve desirable outcomes, reduce serious disease complications, or keep their patients healthy through improved preventive medicine care. Medicare Demonstration At this same time Medicare is also taking a very serious look at tying quality and prevention into its reimbursement system. The Physician Practice Group (PPG) Demonstration announced recently by Medicare will test a new payment methodology for paying physicians that is a combination of Medicare fee for service plus a bonus paid from a revenue pool derived from savings obtained from improved patient care management. This three-year demonstration includes ten large medical groups across the country who will be paid by Medicare bonus incentives for achieving annual performance targets that include both objective quality goals based on improved health outcome and cost savings through investment in administrative structure and process. Fee-for-services payments will also be a part of the, total compensation system. Utilization of orthopedic appliances will become involved in this pilot in those markets where these groups practice. Managed Care Failures Managed care payment methodologies were successful at changing provider behavior using financial incentives designed to influence utilization patterns. Predictably, though, incentives to reduce the quantity of services too often resulted in poor quality of care for patients who later needed more intense care because of complications resulting from the poor care earlier. Payment to providers for achieving cost savings sometimes resulted in under-utilization of desirable diagnostic procedures and care. Every orthotist and prosthetist has a story to tell about how managed care failed the patient in some way. Capitation and coverage limits are examples of this phenomenon. While payers would deny this to be the case, both capitation and coverage limits were designed to reduce the amount of care provided patients. It worked. Many physicians claimed to be pressured by managed-care companies to see too many patients and to limit their specialist referrals which compromised quality patient care. Managed-care incentives were based on standards designed to control costs rather than enhance the quality of service rendered or enhance preventive measures taken. Quality Incentives Physicians have indicated that financial incentives based on quality will result in higher patient satisfaction as well as higher provider satisfaction, and will result in more cost-effective care. Many foreseeable medical problems and conditions can be avoided with early diagnosis, effective disease control and treatment or, better yet, disease prevention or cure. What It Means to O&P So what does all of this have to do with orthotists and prosthetists? For one thing, it should be an eye opener to some in the industry that quality can matter and that efforts to deliver and measure that quality can be rewarded at a time when traditional reimbursement continues to decline. Do orthotists and prosthetists have any impact on disease management, prevention, and clinically desirable outcomes on their patients? Most practitioners believe they do, and they should feel that way. An issue often raised by many in the orthotic and prosthetic industry is that exceptional practitioners are not financially recognized for the quality of professional service they provide in making and fitting appropriate customized orthopedic devices. This does not mean cosmetically pleasing devices. It means devices that help to prevent other more serious problems and lead to a good clinical outcome for the patient. The DME Inconsistency The usual reason given by payers is that orthotic and prosthetic devices are durable medical equipment (DME) and supplying orthotic and prosthetic devices to patients is DME. Medicare views orthotics and prosthetics in a manner similar to supplying a patient with a hospital bed, wheelchair, or oxygen. Interestingly, however, is that physicians may supply their patients with orthotics and even prosthetics under current law and be paid as a Medicare supplier, but may not legally supply other DME or home health supplies because of the Stark law prohibition on self-referrals by physicians. Orthotics and prosthetics is not treated as DME for all purposes. O&P: Carpe Diem This might be the time for those who specialize in custom fabricating orthotics and prosthetics to consider trying to have custom orthotics and prosthetics recognized as a separate and distinct discipline comprising a relatively small, select group of health care professionals. Joining the trend to P4P is the ideal time to address a movement away from DME and even away from the orthotics supplier who only supplies prefabricated over-thecounter type devices. The movement must by necessity be limited to those devices and services that do require significant custom fabrication and/ or custom fitting, and it must be shown through objective data that the device and its related service offers safety to the patient, is appropriate for the patient's needs, and is cost-effective in the sense that less expensive prefabricated devices are not available to achieve the desired results. It is important to be able to show through this data that there is significant value in custom-fabricated and custom-fitted devices that supports P4P methodology that does, through proven quality and complication prevention, reduce future healthcare costs and provide the patient a better outcome. It is here where a practitioner's credentials and competence become very important. While it may sound like a monumental hurdle, it really is not, once payers understand what quality orthotic and prosthetic service really is, and who can and does provide it. It is also an opportunity for a practitioner's credentials to make a critical difference in what is paid. Medical specialists are paid more than generalists because of their specialized skills. Why not orthotics and prosthetics? A recent article in this publication asked the question: "Licensure: is it progress or elitism?" Licensure does not create an unfair playing field. It sets a minimum standard for performing within a defined scope of practice. Licensure protects the public; it doesn't exclude competition. The general rule where there is licensure is that licensure allows qualified practitioners to provide custom-fabricated and/or custom-fitted devices. This is one way to delineate the orthotists and prosthetists from others who do supply prefabricated devices to patients. Will Medicare or commercial payers address this by their own initiative? Clearly not, as their current concerns are on hospitals and physicians, and O&P is not large enough for them to consider making major changes in its payment methodology unless pressured. Payers have reduced reimbursement by lowering fee schedules from perhaps more than 100 percent of Medicare to 80 percent, 70 percent, and even 60 percent, and it continues to drop. Payers also do not try to make the very important distinction between prefabricated off-the-shelf devices and the custom-fabricated, complicated devices required by many disabled patients. Pay-for-performance is a growing trend, and taking advantage of this opportunity now will have many benefits long term. Recognizing Custom Work The O&P industry is seldom on the cutting edge of things going on in other parts of the healthcare delivery system. This is an opportunity for those practitioners who truly do produce and provide a unique high-quality product and service to be properly recognized for what they do. While many devices currently custom fabricated for certain medical conditions are being moved into the prefabricated category by payers, those who will still deliver necessary custom-fabricated devices can be rewarded for their training and talent if, but only if, efforts are made now to establish their value to the payers, both commercial and governmental. Similar to licensure efforts, when payers and the public actually see and understand what custom fabrication and fitting is all about, few will argue its value and benefits. The problem is that payers all too often put orthotics and prosthetics under the DME umbrella, and do not take the time to evaluate how truly customized quality devices can reduce future costs and prevent future complications. P4P: Opportunity Knocks P4P is new and growing. It will be several years before it is fully accepted as a payment methodology, mainly because of the time needed to gather the required data to demonstrate the quality of the service and the benefits being derived. In orthotics and prosthetics it will only happen if there is a unified movement within the industry to support the concept similar to what hospitals and physicians have done. It will not come from those who exclusively provide prefabricated devices such as hospitals, physicians, therapists, pharmacies, podiatrists, chiropractors, DME companies, and manufacturers. The initiative must come from those directly involved in custom fabricating devices for individual patients who truly benefit from the choice of device and the quality of its construction, fitting and training in its use. The orthotic and prosthetic industry is changing very quickly because of the new players involved, the transition to use of more prefabrication, and the overall reduction in reimbursement for both prefabricated devices and custom-fabricated devices. P4P reimbursement methodologies can work for custom-fabricated devices, but only if those providing the devices and the related services take the lead in demonstrating the true value of what they do. Without success in this new, evolving approach to reimbursement, practitioners can anticipate continued cuts in their fee schedules as Medicare freezes automatic escalators and managed-care companies keep taking larger and larger discounts in their contracts. John Latsko is a partner in the health law practice area of Schottenstein, Zox & Dunn, Columbus, Ohio. He is the past editor of the Ohio Health Law Update. Before joining the firm, he was general counsel to a large teaching hospital and healthcare system, chief operating officer to a 500-bed not-for-profit hospital, and CEO of a physician practice management company. He can be contacted at 614.462.2329; jlatsko@szd.com

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