Reimbursement rates paid by government and commercial payors to providers and professionals alike are being compacted. Health care providers and professionals are burdened with simultaneously delivering quality health care and adjusting to the increasing complex reimbursement system. Add the regulatory strictures of the Anti-trust, Stark Law, Anti-Kickback and Civil Monetary Penalties Act into the dynamic and you have a perfect witch’s brew that is hampering the delivery of quality health care in this country.
Commonly the health care industry’s response to the decreasing rates has been to take actions that have further complicated the situation. Attempts to organize competitors into managed care organizations such as physician/hospital organizations and IPAs (together "Networks") has drawn price-fixing enforcement actions from the Federal Trade Commission. These investigations are costly and usually result in the organization entering into a Consent Decree with the FTC that contains significant restrictions on the joint-pricing of the competing participants’ services. Whether one agrees or disagrees with the legal interpretations of the FTC concerning anti-trust laws related to health care services it must be obeyed.
Many Networks have attempted to price their participants’ services through the messenger model as prescribed by the FTC. The messenger model is difficult to appropriately implement and many of the enforcement actions of the FTC have resulted from a Network’s ineffective attempts to implement the model. It is important to understand that the health care industry has operated as a cottage industry in the U.S. Even though the percentage of the U.S. GNP related to health care is enormous the health care industry has operated on essentially a piece work basis. The lack of collaboration between providers and professionals has made the industry easy pickings for the insurance industry. So long as the providers and professionals are fragmented they cannot effectively negotiate with the payors in a meaningful way.
The rapidly developing Pay for Performance model may be an answer to the problems related to the messenger model. It is time for providers and professionals to consider developing Networks the use of P4P to achieve the clinical integration. Clinical integration has been held out by the FTC as an acceptable method for competing providers to create a vehicle to joint-price its participants’ services. (Please see the April __and __editions of Health Industry Online for a more complete discussion of P4P and the FTC issues related to clinical integration)
The development of a P4P Network in neither simple nor inexpensive. The expenses related to the development of a clinically integrated Network are a necessary by-product of the move of the industry from fragmentation that leaves it vulnerable to the payors. The financing of the development of clinical indicator programs by Networks can have regulatory implications if hospitals are the primary participant that provides financing. Careful structuring of the financing of the P4P Network must be accomplished or Stark law/anti-kickback issues can arise that can make FTC investigations look mild.
So what to do? Avoiding as much unnecessary whining as possible about low reimbursement rates is a necessity. P4P is coming and those providers and physicians that involve themselves in the process now will have the best chances of succeeding in the P4P evidence-based medicine model.
There is a natural inclination for busy health care professionals to avoid involvement in the development or understanding of reimbursement methodologies. There is no one better however to take the lead in creation of quality indicators required for P4P programs. The health care industry should avoid allowing the payors to control the development of the P4P in a vacuum. Where possible health care professionals should be on the front line of the development of P4P programs. That is not what most health care professionals want to hear, but P4P will change the way health care is delivered and reimbursed. The abdication of the process to the payors will result in more of the same problems for health care providers and professionals in a payor controlled world.
Creation of a P4P network is costly and time-consuming. P4P represents a dramatic change for most health care providers and professionals. Clinical integration does however answer the question—"how can we have some control over our destiny as it relates to pricing by commercial payors without violating anti-trust laws?" The answer to that question is available—albeit at a price. Hospitals and physicians must be willing to pay that price as an investment in controlling the future of health care delivery.