Government Alternative Pay Strategy for Cutting Costs: Pitting Primary Care Against Specialty Care

Flow of funds will be determined on the basis of organizational structure, relative power of PCPs and specialists, specialists’ demonstration of their value, and the organization’s conception of their value.

Robert Kocher,MD and Anuraag Chigurupati.,MS,  “The Coming Battle over Shared Savings – Primary Care versus Specialits, NEJM, June 14, 2016

The ACA strategy for bending downward Medicare costs is now apparent.

·         Herd  primary care doctors and specialists into accountable care organizations   and large physicians groups  or integrated hospital organizations serving Medicare patients.

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·         Transform fee-for-service into “Alternative Payment Models” featuring pay based on the entire episode of care from  diagnosis to treatment  in physician offices to recovery in skilled nursing facilities.

·         Under the Medicare Access and CHIP Reauthorization Act of 2015,  shift FFS patients into risk –based reimbursement models, which relying on bundled bills, population  health management,  and capitation to achieve “savings.” 

·         Create benchmarks or goals to  meet to reduce expenses,  primarily through reduced hospital stays, ER visits, lengths of stay in skilled nursing facilities, referral to specialists and intensity of diagnostic tests and procedures by specialists.

The basic idea behind “shared savings” is to narrow the gap between the average income of PCPs ($195,000) and specialists $284,000 and to reward PCPs with more of the “savings” while reducing the specialists take.  Estimated “savings” will come for example, with a $35,000 reduction in radiologist pay and a $25,000 decrease in interventional cardiologist pay.   A PCP could stand to gain $80,000 by achieving the desired savings rate. 

The authors ,  from health policy organizations at the University of Southern California,  Standord,  and Harvard,  maintain that:  As health care reimbursement shifts from fee-for-service to risk-based payments,  PCPs are well positioned economically and strategically.  Their incomes are likely to grow substantially over the next decade, at the expense of hospitals and specialists .   Specialists who fail to expand their role and develop the capabilities tnd relationships to drive value improvement will face the threat to their incomes and practices.”

Or so they hope.  To date,  Accountable Care Organizations have not delivered on their promised savings.    Primary care doctors,  specialists, and PCPS are skeptical about ACOs,  APMs, and  government “savings,” which so far have  been more delusion than reality.  As some sage remarked,”Hope! Of all the ills that men endure, hope is the only cheap and universal cure.” 

History is not optimistic about government achieving savings by pitting PCPs against specialists,  given  the fact that many PCPs often practice a little specialty care and many specialists engage in primary care.