PM JAN 2009 12/30/08 1:44 PM Page 1 PRST STD US Postage Paid Permit No. 397 Bellmawr, NJ PHILADELPHIA METRO EDITION Vol. XXII, No. 4 January, 2009 $3.50 PhysiciansNews.com Bundled Payment Reform By Christopher Guadagnino, Ph.D. and hospitals, and focusing on select model represents the natural evolution of orthopedic and cardiovascular inpatient pay-for-performance, in that it integrates services. In the private sector, the Robert evidence-informed clinical science with entral to the nation’s health care Wood Johnson Foundation has granted aligned incentives that address the frag- reform agenda is the principle of $6.4 million to pilot a bundled payment mentation of care delivery under the cur- Cvalue-based reform – restructur- model known as Prometheus Payment, rent, siloed fee-for-service reimbursement ing provider payment incentives to con- which will focus initially on five proce- model, according to Alice Gosfield, J.D., trol volume growth and to optimize effi- dural diagnoses – hip/knee replacement, first chairman of the board of Prometheus ciency, quality and access. Four value- coronary artery bypass graft (CABG) Payment Inc., and principal of Alice G. based payment methodologies are cur- surgery, cardiac catheterization, bariatric Gosfield and Associates P.C. in Philadel- rently receiving considerable attention from the Centers for Medicare & Medic- aid Services (CMS) and the Medicare The approach features evidence-based guidelines, Payment Advisory Commission (Med- PAC), and may shape physician reim- benchmarked performance incentives and a degree of bursement in the near future: bundled risk-sharing among a constellation of providers. payments, gainsharing, the use of the medical home to coordinate care, and Alice Gosfield, J.D. pay-for-performance arrangements. surgery, and hernias; and five chronic ill- phia. This month, bundled payment pilots nesses – congestive heart failure, chronic “Pay-for-performance models offer concerns can be addressed satisfactorily. are being launched around the country. obstructive pulmonary disorder, asthma, small drips of money on top of an exist- The American Medical Association The concept features a single payment coronary artery disease, and hyperten- ing payment system that doesn’t give us (AMA) notes that the concept is already made for an array of health care services sion. Two pilot sites are launching the the quality we want. It is not sustainable used by Medicare to pay inpatient ser- by multiple providers to care for a patient model this month – in Illinois and Min- as a business model, and is transitional, at vices and some global surgical services, diagnosed with a specific condition neapolis – while Aetna and Independence best,” Gosfield argues. Gainsharing is that it could provide incentives for reduc- across a defined episode of care. Such a Blue Cross are evaluating the Prometheus more about cost containment than quality ing the costs of patient care and, if the “global case rate reimbursement” Payment model for possible piloting with and has a short shelf life: a one-year bundle includes both hospital and physi- includes services provided by a hospital, the Crozer Keystone Health System in waiver structure and an eventual uncom- cian services, it could permit physicians physicians, laboratories, imaging centers, southeastern Pa. pensable moment when waste is reduced to share in any savings produced by pharmacies and outpatient care. The These payment pilots are designed to and no more savings can be squeezed out changes in patient management. The approach features evidence-based guide- stimulate greater collaboration among of the arrangement, she says. The medical AMA is concerned, however, that the lines, benchmarked performance incen- hospitals, physicians and other health home model may be dying on the vine as concept is not yet well-developed for use tives and a degree of risk-sharing among care providers, who will share the finan- payment might never be sufficient for the among multiple independent providers, that constellation of providers. cial incentive to reduce potentially avoid- infrastructure physicians need to produce while key unanswered questions remain CMS is launching an Acute Care able complications and share in cost sav- the promised quality improvements, Gos- regarding the contents of the bundle, how Episode (ACE) demonstration featuring ings. The bundled case rate reimburse- field maintains. to allocate the bundled payment amounts, global payments within Medicare fee-for- ment model also accommodates bench- The bundled payment approach may Continued on page 4 service, to be shared among physicians marked performance incentives. The be attractive to some physicians, if certain Peter Lund, M.D. Promoting the Tenets of INSIDE Medical Professionalism FEATURES Federal Audits ....................p.6 members of the medical society, were concerned that in our advocacy related to doctors and patients, we didn’t Employment Contracts .......p.11 Peter Lund, M.D., is immedi- have some kind of compass that would allow us to know Insurance Arbitrage...........p.12 ate past president of the the direction of our advocacy. We decided to fall back to Pennsylvania Medical Soci- basics, which is medical professionalism, including tenets ety (PMS) and founder of the like honesty, integrity, the adherence to the code of med- Institute for Good Medicine – ical ethics, the pursuit of medical excellence, the concept DEPARTMENTS a program within the PMS to of mentoring our younger colleagues, a self-regulatory Medicine & Law ................p.6 promote and exemplify the aspect of our profession – making sure it is behaving in tenets of medical profession- the interest of the public, and our social contract to make Medicine & Business.......p.11 alism. sure that medicine is delivered in the best possible fashion and is servicing the entire community that we practice in. Personal Finance .............p.12 PND: What are the activities and goals of the Institute The Institute of Good Medicine was launched at the Physician Recruitment....p.13 of Good Medicine? beginning of my presidency, which was in October 2007. PL: It became apparent years ago that I, and many of the Continued on page 8 PM JAN 2009 12/30/08 1:44 PM Page 2 NEWS BRIEFS Keystone Health Plan East sub- proposal before the request would by group to recommend action in three mitted a rate filing with the Pennsyl- deemed as approved, the Business areas: reducing wasteful spending, vania Department of Insurance seek- Journal added. (Philadelphia Business changing how doctors and hospitals are ing to increase the base rates of its Journal, December 12, 2008) paid, and reducing administrative HMO group product, for employers *** costs, reported the Wall Street Journal. groups with less than 100 enrolled The trade group for health insur- In 2006, health spending in the U.S. employees, by an average of 10.55 ers offered its own universal-cover- reached $2.1 trillion, consuming 16 percent. age proposal that calls for Congress percent of the nation’s gross domestic Health According to the filing, the pro- to slow the growth of health care product, according to economists at the posed increase will affect 145,046 con- costs by 30 percent in five years, federal Centers for Medicare and Med- tracts and produce additional premium envisioning a total savings of more icaid Services. The group reiterated its Insurance income for Keystone of about $80 per than $500 billion. position that insurers would be contract per month, or $140.1 million The money could be used to fund required to offer individual policies to annually, reported the Business Jour- coverage of the uninsured and to cut people with pre-existing illnesses – as nal. The requested effective date of the costs for those with insurance, said long as all Americans were required to change is April 1, while the Insurance officials from America’s Health Insur- have health insurance, the Journal Department has until Feb. 26 to take ance Plans, which called on Congress added. (Wall Street Journal, December formal administrative action on the to establish a public-private advisory 4, 2008) A Philadelphia judge said no to giving parted with Albert Einstein Healthcare effort led by southeastern Pennsylvania city parkland for an expansion of Fox Network earlier this year, is now splitting hospitals, with funding of $3 million Chase Cancer Center, saying that every with Frankford Health Care System Inc. through 2011. square foot of 69-acre Burholme Park had Frankford, which operates Frankford Hos- The funding will be provided to the Health to be protected. pital, Frankford Hospital-Torresdale and Care Improvement Foundation, a nonprofit Judge John W. Herron of Philadelphia Frankford Hospital-Bucks County, will health and safety organization that oversees Orphans Court ruled, in a contentious three- remain “closely affiliated” with Jefferson, but the partnership’s projects, while matching year-old case, that Fox Chase’s bid for a long- not as a member of the system, reported the funds are expected to be raised from the hos- term lease of 19.5 acres could not be allowed Inquirer. The two systems said they could pital community next year, reported the Busi- Health to happen, denying the petition to lease 19.4 “best serve their respective communities as ness Journal. Launched in 2006 with three- acres of Burholme Park to Fox Chase, report- independent organizations which maintain year financial support of $1.25 million from ed the Inquirer. Wrote Herron, “This rule of substantial business and clinical ties,” while IBC, the partnership initially focused on the law does not recognize any exception based the realignment needs regulatory approval and prevention of hospital-acquired infections, and Networks on the valid needs of Fox Chase to expand or is unlikely to take effect before the end of the is working on several projects, including pre- the city’s salutary goal of protecting an year, the Inquirer added. (Philadelphia venting pressure ulcers and continuing to raise increasing tax revenue obtained through the Inquirer, November 21, 2008) awareness about antibiotic-resistant staph hospital’s expansion,” the Inquirer added.