Outcomes based incomes: Macro-trends and the move to imaging value

Over the past 20 years, the radiology specialty has adapted well to increasing volumes, while maintaining a high caliber of service.  However, certain macro-trends are bringing change: the move to fee-for-value vs. fee-for-volume means radiologists must navigate a new and radically different healthcare payment environment, says Brian Baker, founder and CEO of Franklin, Tenn.-based health care research firm Carealytics.

Baker cites as an example of such trends the significant impact of the Affordable Care Act on the health care payments landscape. “The Affordable Care Act mandated the development of a mechanism to allow Medicare to make differential payment to fee-for-service physicians based on the relative quality and cost of the care they provide,” he explains. “Therefore, we are moving in a direction in which incomes will be based on outcomes.”

Meanwhile, total healthcare expenditures are on an unsustainable track. Citing figures from the CMS, Baker pegs the total U.S. healthcare spend by all payors at nearly $3 trillion per year. A 2014 MedPac report indicates that total spend per patient for all payors has reached $8,915 annually. Per-capita health care expenditures by U.S. payors, Baker states, are nearly double those of all other nations, with no correlation to quality or patient age, and healthcare expenditures consume more than 50 percent of government receipts. Healthcare outlays by U.S. private businesses are also far greater than those of businesses elsewhere in the world.

“Imaging is unquestionably the most effective diagnostic tool ever developed,” Baker says. “But because it's a major portion of the government spend on health care, it’s vigorously targeted for reimbursement reductions, utilization management and provider risk assumption as part of reform. MedPac's compensation modeling implies that even if radiologists were paid 100 percent of Medicare rates, their compensation would remain higher than any other specialty. This translates into imaging being a target for continued payment reductions.”

Moreover, the Accountable Care Organization (ACO) model is taking hold. A total of 400 such organizations now exist in the U.S. and can be found in all 50 states; of these, more than 50 percent are Medicare-contracted. Benefits management companies are creating ACO-focused units, while employers are collaborating and negotiating with providers on rates as well as mandating the providers from which employees obtain services.

Moving to Value

With and in part from these trends comes radiology’s most significant current challenge: commoditization. Baker says a sharp focus on value is necessary to reverse course and flourish despite the transition away from the fee-for-service payment model. He defines value by expressing it as a figure in which outcomes sit above costs. Outcomes encompass appropriateness, safety, efficiency, satisfaction, and financial toxicity; costs include those associated with the provider, facility, patient, employer, physician, and society.

Standardizing reports—the “products” that can differentiate one radiology practice from another—constitutes a key step on the path to value, Baker points out. “Referring physicians’ loyalty to radiologists is largely tied to the reports prepared by these practitioners, but maybe those reports aren’t the best reports the radiologists can produce,” he states. “Perhaps there are missed items and inadvertent omissions,” which have a negative impact on quality and hence, the perception of value.

Setting standards for reports and programming report-generation software to not only compel radiologists to follow a standard reporting template, but also to “check all the boxes” to ensure the presence of required information, would lead to a higher incidence of appropriate report completion.  Just as significantly, Baker says, it would enable referring physicians to better understand what to expect from the reports they receive, and to plan accordingly.

Additionally, Baker advises that reports should be neither indeterminate, nor overzealous, nor delayed, but rather, definitive. Otherwise, they are of no value. “Each report must, along with radiologist involvement, serve as a guide for the referring physician,” he says. “That’s where its value lies. An overzealous report—for instance, one full of false positives—or one that delays the diagnosis—brings no value to the table.” Baker adds that a radiology practice can have the best board-certified clinicians, imaging technology, technologists and facilities, yet be of lesser value to customers because of the caliber and timeliness of its reports.

Applying a data model

The application of data and analytics to all aspects of radiology practice constitutes another critical catalyst for divesting imaging of its commodity status. Baker characterizes today’s healthcare process as a “poorly functioning feedback loop for learning and improvement.” Turning the tide, he says, entails harnessing myriad data elements and turning them into actionable information. The list of elements includes clinical learning and test results, technology-generated information, predictive analytics, professional opinions, regulations, utilization statistics, numeric values, disease trends, birth and death rates, weather, the economy, birth rates, death rates and more.

“Translating data from treatment and results, and combining it with analytics to empirically direct clinical intervention—or not—minimizes waste and improves outcomes,” Baker explains. “Achieving this will move imaging and healthcare to the ‘value’ payment model, demonstrating differentiated quality and costs.”

Cooperation and communication between radiologists, referring physicians and referring physicians’ teams is yet another value imperative, Baker continues “Referring physicians want radiologists’ input,” whether for assessing the appropriateness of proposed imaging procedures, additional insight into findings, or other matters, he says. They perceive little value in practitioners who “sit in a dark room and hope the phone doesn’t ring.”

Finally, Baker believes there remains a need for transparency in order for imaging to fall under the value umbrella. He notes that while consumers can use the Internet and other resources to investigate the price and quality of “everything from lotions to electronics,” they cannot do the same with imaging services and imaging service providers.

“We can create all that—and more,” Baker concludes. “And in short, those who follow a value model in which they make themselves the least replaceable players, become the owners of quality, follow the customer, manage the growth story, and incentivize” customers to generate business, position themselves to buck the trends moving forward.