Quality Can Pay - If You Can Prove It
By John Latsko One of the most common criticisms heard from
providers, payers, and patients alike is that our healthcare
delivery system is paid for solely on the basis of how much was
done for or to a patient, and not on how well it was done or
whether something better for the patient should have been done. In
other words, our payment system is designed to pay for the
quantity, not the quality and appropriateness of services
rendered.
 Virtually everyone agrees that this has resulted
in a delivery system that rewards over-utilization of unnecessary
high-cost services and devices. On the other hand, managed care in
some instances rewards under-utilization of necessary services.
Sometimes certain services or devices actually harm patients. The
literature is replete with stories about how inadequate,
inappropriate, or harmful medical care or failure to provide
necessary services have resulted in thousands of hospital deaths
annually. These stories are supported by actual findings by the
Institute of Medicine in its landmark report on hospital deaths
resulting from medical errors and its 2001 study, Crossing the
Quality Chasm, which recommends a new healthcare system and a
change in fundamental values to reflect a system that is safe,
efficient, effective, equitable, timely, and patient-centered.
Payers are taking heed as they develop programs to create a new
payment system that rewards providers who achieve these values.
In orthotics and prosthetics, just as in medicine, practitioners
include individuals with significant differences in education,
training, experience, and competence. And, just as in medicine,
practitioners' attitudes range from wanting to do everything
possible for a patient regardless of cost to doing for the patient
what is reasonable, necessary, safe, and cost-effective.
Pay-for-Performance (P4P)
Both Medicare and commercial payers are addressing over- and
under-utilization of services in a very serious way through the use
of new and innovative pay-for-performance (P4P) initiatives. In
summary form, P4P focuses on leveraging payment methodologies and
dollars to change provider behavior. The intent of P4P is to reward
providers who implement solutions in patient care management with
safe, timely, efficient, effective, equitable, patient-centered
care.
Concurrent patient management rather than post-payment review is
the standard. The emphasis is on disease and injury prevention,
reduction of complications and severity, and achievement of desired
outcomes. Payers are beginning to recognize that providing devices
and services that may not be "medically necessary" now could
eliminate the need for more costly devices and services that will
be "medically necessary" later.
Several large employers such as General Motors and General
Electric have developed value-added programs to their health
benefits plan that promote efficient healthcare delivery with
financial incentives paid to practitioners who can demonstrate
high-quality service delivered in an efficient manner. This does
not mean that the least costly care is to be provided. It does mean
that preventive medicine is encouraged so that the risk of serious
disease is reduced, unnecessary complications are eliminated, and
the additional costs associated with treating poor outcomes are
avoided. Medical conditions such as diabetes, congestive heart
failure, cardiovascular disease, and hypertension are being studied
to evaluate the success of treatments associated with disease
management and prevention of complications.
Reducing Costs Via Good Outcomes
The ultimate result of this process for providers will be that
payers offer fewer choices of providers to patients, with an
emphasis on steering patients to practitioners who demonstrate the
best documented performance. It may look and sound like managed
care, but the difference is that it is not designed to reduce
services and service reimbursement. It is designed to reduce the
overall cost of healthcare by financially recognizing practitioners
who achieve desirable outcomes, reduce serious disease
complications, or keep their patients healthy through improved
preventive medicine care.
Medicare Demonstration
At this same time Medicare is also taking a very serious look at
tying quality and prevention into its reimbursement system. The
Physician Practice Group (PPG) Demonstration announced recently by
Medicare will test a new payment methodology for paying physicians
that is a combination of Medicare fee for service plus a bonus paid
from a revenue pool derived from savings obtained from improved
patient care management.
This three-year demonstration includes ten large medical groups
across the country who will be paid by Medicare bonus incentives
for achieving annual performance targets that include both
objective quality goals based on improved health outcome and cost
savings through investment in administrative structure and process.
Fee-for-services payments will also be a part of the, total
compensation system. Utilization of orthopedic appliances will
become involved in this pilot in those markets where these groups
practice.
Managed Care Failures
Managed care payment methodologies were successful at changing
provider behavior using financial incentives designed to influence
utilization patterns. Predictably, though, incentives to reduce the
quantity of services too often resulted in poor quality of care for
patients who later needed more intense care because of
complications resulting from the poor care earlier. Payment to
providers for achieving cost savings sometimes resulted in
under-utilization of desirable diagnostic procedures and care.
Every orthotist and prosthetist has a story to tell about how
managed care failed the patient in some way.
Capitation and coverage limits are examples of this phenomenon.
While payers would deny this to be the case, both capitation and
coverage limits were designed to reduce the amount of care provided
patients. It worked. Many physicians claimed to be pressured by
managed-care companies to see too many patients and to limit their
specialist referrals which compromised quality patient care.
Managed-care incentives were based on standards designed to control
costs rather than enhance the quality of service rendered or
enhance preventive measures taken.
Quality Incentives
Physicians have indicated that financial incentives based on
quality will result in higher patient satisfaction as well as
higher provider satisfaction, and will result in more
cost-effective care. Many foreseeable medical problems and
conditions can be avoided with early diagnosis, effective disease
control and treatment or, better yet, disease prevention or
cure.
What It Means to O&P
So what does all of this have to do with orthotists and
prosthetists? For one thing, it should be an eye opener to some in
the industry that quality can matter and that efforts to deliver
and measure that quality can be rewarded at a time when traditional
reimbursement continues to decline. Do orthotists and prosthetists
have any impact on disease management, prevention, and clinically
desirable outcomes on their patients? Most practitioners believe
they do, and they should feel that way.
An issue often raised by many in the orthotic and prosthetic
industry is that exceptional practitioners are not financially
recognized for the quality of professional service they provide in
making and fitting appropriate customized orthopedic devices. This
does not mean cosmetically pleasing devices. It means devices that
help to prevent other more serious problems and lead to a good
clinical outcome for the patient.
The DME Inconsistency
The usual reason given by payers is that orthotic and prosthetic
devices are durable medical equipment (DME) and supplying orthotic
and prosthetic devices to patients is DME. Medicare views orthotics
and prosthetics in a manner similar to supplying a patient with a
hospital bed, wheelchair, or oxygen. Interestingly, however, is
that physicians may supply their patients with orthotics and even
prosthetics under current law and be paid as a Medicare supplier,
but may not legally supply other DME or home health supplies
because of the Stark law prohibition on self-referrals by
physicians. Orthotics and prosthetics is not treated as DME for all
purposes.
O&P: Carpe Diem
This might be the time for those who specialize in custom
fabricating orthotics and prosthetics to consider trying to have
custom orthotics and prosthetics recognized as a separate and
distinct discipline comprising a relatively small, select group of
health care professionals. Joining the trend to P4P is the ideal
time to address a movement away from DME and even away from the
orthotics supplier who only supplies prefabricated over-thecounter
type devices.
The movement must by necessity be limited to those devices and
services that do require significant custom fabrication and/ or
custom fitting, and it must be shown through objective data that
the device and its related service offers safety to the patient, is
appropriate for the patient's needs, and is cost-effective in the
sense that less expensive prefabricated devices are not available
to achieve the desired results. It is important to be able to show
through this data that there is significant value in
custom-fabricated and custom-fitted devices that supports P4P
methodology that does, through proven quality and complication
prevention, reduce future healthcare costs and provide the patient
a better outcome.
It is here where a practitioner's credentials and competence
become very important. While it may sound like a monumental hurdle,
it really is not, once payers understand what quality orthotic and
prosthetic service really is, and who can and does provide it. It
is also an opportunity for a practitioner's credentials to make a
critical difference in what is paid. Medical specialists are paid
more than generalists because of their specialized skills. Why not
orthotics and prosthetics?
A recent article in this publication asked the question:
"Licensure: is it progress or elitism?" Licensure does not create
an unfair playing field. It sets a minimum standard for performing
within a defined scope of practice. Licensure protects the public;
it doesn't exclude competition. The general rule where there is
licensure is that licensure allows qualified practitioners to
provide custom-fabricated and/or custom-fitted devices. This is one
way to delineate the orthotists and prosthetists from others who do
supply prefabricated devices to patients.
Will Medicare or commercial payers address this by their own
initiative? Clearly not, as their current concerns are on hospitals
and physicians, and O&P is not large enough for them to
consider making major changes in its payment methodology unless
pressured. Payers have reduced reimbursement by lowering fee
schedules from perhaps more than 100 percent of Medicare to 80
percent, 70 percent, and even 60 percent, and it continues to drop.
Payers also do not try to make the very important distinction
between prefabricated off-the-shelf devices and the
custom-fabricated, complicated devices required by many disabled
patients. Pay-for-performance is a growing trend, and taking
advantage of this opportunity now will have many benefits long
term.
Recognizing Custom Work
The O&P industry is seldom on the cutting edge of things
going on in other parts of the healthcare delivery system. This is
an opportunity for those practitioners who truly do produce and
provide a unique high-quality product and service to be properly
recognized for what they do. While many devices currently custom
fabricated for certain medical conditions are being moved into the
prefabricated category by payers, those who will still deliver
necessary custom-fabricated devices can be rewarded for their
training and talent if, but only if, efforts are made now to
establish their value to the payers, both commercial and
governmental.
Similar to licensure efforts, when payers and the public
actually see and understand what custom fabrication and fitting is
all about, few will argue its value and benefits. The problem is
that payers all too often put orthotics and prosthetics under the
DME umbrella, and do not take the time to evaluate how truly
customized quality devices can reduce future costs and prevent
future complications.
P4P: Opportunity Knocks
P4P is new and growing. It will be several years before it is
fully accepted as a payment methodology, mainly because of the time
needed to gather the required data to demonstrate the quality of
the service and the benefits being derived. In orthotics and
prosthetics it will only happen if there is a unified movement
within the industry to support the concept similar to what
hospitals and physicians have done. It will not come from those who
exclusively provide prefabricated devices such as hospitals,
physicians, therapists, pharmacies, podiatrists, chiropractors, DME
companies, and manufacturers. The initiative must come from those
directly involved in custom fabricating devices for individual
patients who truly benefit from the choice of device and the
quality of its construction, fitting and training in its use.
The orthotic and prosthetic industry is changing very quickly
because of the new players involved, the transition to use of more
prefabrication, and the overall reduction in reimbursement for both
prefabricated devices and custom-fabricated devices. P4P
reimbursement methodologies can work for custom-fabricated devices,
but only if those providing the devices and the related services
take the lead in demonstrating the true value of what they do.
Without success in this new, evolving approach to reimbursement,
practitioners can anticipate continued cuts in their fee schedules
as Medicare freezes automatic escalators and managed-care companies
keep taking larger and larger discounts in their contracts.
John Latsko is a partner in the health law practice area of
Schottenstein, Zox & Dunn, Columbus, Ohio. He is the past
editor of the Ohio Health Law Update. Before joining the firm, he
was general counsel to a large teaching hospital and healthcare
system, chief operating officer to a 500-bed not-for-profit
hospital, and CEO of a physician practice management company. He
can be contacted at 614.462.2329; jlatsko@szd.com 
Table Of Contents - May 2005
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