Longtime health care executive and former corporate health care attorney Joseph L. Caruncho, Sr., currently CEO of Genuine Health Group in Coral Gables, Fla., is one of the experts who talk about how providers catch the pay for performance wave in our current issue of Part B News. In that story he expessed skepticism that smaller practices had the resources to fulfill value-based contracts. We asked him whether practices couldn't outsource the population health analytics and other requirements and succeed that way; his answer, we thought, called for a post of its own.
Analytics platforms are expensive to implement and maintain on an ongoing basis. In fact, the implementation costs are typically paid up front and can cost hundreds of thousands of dollars; and the ongoing licensing fees are usually priced on a per-member-per-month basis (usually subject to a minimum fee to make it worthwhile for the analytics company.) Also, most of the algorithms that underpin analytics systems require a critical mass of patients to ensure conclusions are valid.
Even if the practice could afford an analytics platform, even on an outsourced basis, that’s only half the battle. Success requires more than good data. It requires careful use of financial resources deployed toward initiatives aimed at improved outcomes. So, an independent practice would need also engage a team to interpret the data, formulate action plans, and then implement those plans. And the return on investment is not there unless you have enough scale to spread out the cost of the infrastructure.
Also, it would be tough for a sole provider or small provider group to forge a risk agreement with an insurance company or CMS. Taking on risk requires a sufficient number of patients to spread the risk from an actuarial standpoint. Without the required number of patients, one or two catastrophic cases could trigger a deficit and resulting liability to the health plan. Also the competencies required to manage a risk agreement include the knowledge to negotiate the agreement, and the resources, knowledge and experience to reconcile membership and capitation reports, interpret utilization data, cover care gaps to meet HEDIS/Stars/ and MRA risk score initiatives, etc. Finally, health plans are reluctant to give direct risk agreements to small providers, and when they do, they impose oppressive re-insurance coverage requirements to comply with CMS PIP rules governing physician incentives.
Bottom line, it’s an uphill battle to say the least.