Nonprofit hospitals predict risk-based payment switch

There are columns of smoke rising from the large hospital systems that signal discussion and opinion that risk-based contracting is on the horizon. The consensus is that in the next two years the revenue percentage from risk-based contracting will markedly increase. This a predictable reality. As major healthcare systems have both financial depth and large ranks of employed physicians, the competition for volume, i.e., throughput, will drive risk contracting.

PDA, the IPA for independent physicians, sees the sea change of risk-reward contracting coming. The advance signals for this message are the large insurers’ new commercial contract reimbursement proposals. One major insurer is reportedly seeking 102% of Medicare while reports are available that another is pushing for 98% of Medicare. There also is a diminished interest in a third party contracting utility such as a group practice or IPA. At this time, PDA has successfully held its reimbursement levels. Such a positive statement has to be related to the unfortunate limitations of “messenger model contracting.”

If the power of big insurance even comes close to those reimbursement levels, the independent physician may well consider the merit of risk-reward contracting. PDA management has successfully performed in the risk-reward environment for years. Such a change may not be welcomed, but it will be confronted, studied, and pro-actively managed. It is for sure that less than Medicare standard compensation is with little if any margin for a business reward.

The other news of a positive manner is that The Flagship Physician Network (FPN), has been engaged to serve one hundred and forty self-funded lives this week alone. The pipeline of qualified prospects has 2,500 workers, dependents and management. With population management and motivated physicians as the marque points, FPN is competing with the large insurers and providing reimbursement at attractive levels. The Flagship now has a national reach to providers who are enthusiastic about both compensation and plan design. At this time, the PDA & FPN has only up-side incentive agreements. There is no doubt that in time the clinically integrated expertise will have to be deployed with the confidence to reach for risk-reward contracting.

Change is here. It is at times confusing and over-reaching, but PDA is in the street and engaged to protect our members’ interest. PDA is gearing up to succeed in the evolving business environment.

Campaigning For A New Grass Roots Movement…A New Thread

The value in your weekly message is intended to be a timely, insightful minute of material useful to an independent physician. It is encouraging if the product does give cause to stop and reflect. Perhaps, there is a motive to call the PDA or Flagship number and ask a follow-up question or seek more definition. That is what the intention is… being an added value minute in the practitioners’ day. That is how it was originally developed when the famous JVE partnership was in operation…BMG (Before morphing to Genesis) and with the first generation of Southwest Physicians (SPA). It must be said that the second generation of SPA still does a great work in a similar format. So, the concept, whether called “The Monday Morning FAX”, “The Blog”, or “FLASH”, has been active since 1987 under different battle flags, changing politics, and in different business times.

The limit of a minute or so reading one page is its strength, i.e., brevity. So, an additional bandwidth and more content is obviously needed to complement the current effort. The plan is to begin (1) expanding the content of the web site, (2) producing pod casts, (3) reaching out to office managers, and (4) starting small group meetings, (5) possibly re-capitalizing to gain resource depth. The electronic messaging is a “probably should have done this sooner.” And, within a humble budget, it will be done. The other plans fall into the same comment area.

But, one suggestion is special. The small meetings have huge potential. That is potentially like a caucus. There is a need to gather motivated physicians, physicians’ assistants, and nurse practitioners in small groups to find new leaders and common approaches to determine how to stay independent, avoid speculation or capitulation, grow the practice profitability, and not have to work any harder. Whether this happens in a medical office, a church, tabernacle, library, a business incubator, venture capital site, or a private school gym, –the purpose is hear enough from objective resourceful people that are in the real marketplace. Then, to discuss ideas that have potential to become profitable strategies. Also, the process can determine candidates for leadership and pick positions that are potentially attractive to those physicians who are independent, but not very involved in any group endeavors. Conducting such meetings would absolutely be succinct, brief in duration, and linked to the broad principles of independent practitioners. In other words, there will be no “Montessori” school wandering for purpose or meaningless griping about the state of either national or local healthcare politics/regulation.

The main message here is that after a decade of service PDA is changing in significant ways. The repositioning and reloading of PDA is totally positive and based on the broad principles of:
• Will it make the member more money?
• Is the $$$ generation as free from over-head and regulation as possible?
• Can the strategy be implemented without calling for more work by the member practitioner?


The healthcare world is re-cycling for the fall season and the fourth quarter of 2014. It is the start of school, the new NFL season, and so many personal life demands. Plus, the world is a turbulent place. All of the challenges do not lessen the PDA practitioners’ responsibility to take care of sick people. So much fills the daily personal and work schedule. Still it is important to be aware of the never-ending processes of the federal Patient Protection Affordable Care Act (PPACA). For small business operators and practitioners, big initiatives are underway from the government.

Many small business owners have put the PPACA out of their minds. It is tough enough to make payrolls and cover other expenses. Plus, there have been so many changes and exemptions to the law that even those who are “certified” to explain the Act are not sure what is applicable.

The truth is that federal agencies are beginning to lay the groundwork for enforcing compliance. At a recent hearing in Florida, health insurance executives heard that federal teams are already auditing compliance with the minimum medical loss ratio (MLR) provisions. According to a written version of the meeting (reported by publisher/LifeHealthPro), this provision requires carriers to spend at least 85% of large group revenue and 80% of individual and small group revenue on what is determined to be healthcare and quality improvements. This is the law and there is no tolerance for missing the targets.

Also regulators are starting to conduct PPACA “Market Conduct Audits” of how carriers are treating customers, providers, and other market participants. This is rolling out in five states. What in practicality this means remains to be seen?

In states where U.S. Health & Human Service (HHS) is operating insurance exchanges, the adequacy of exchange plan networks is being reviewed. The criteria for “adequacy” is not known to the Flagship, PDA management, or anyone else.

In parallel, the other silos of regulatory compliance have never been slowed down. Be aware that the Wage & Hour Commission, The Federal Trade Commission, Equal Employment Opportunity Commission, Occupational Health Commission, etc. are staffed and aggressively operational at this time. Plus the Internal Revenue Service has a job to do for PPACA enforcement.

Small business without a Human Resources staff and an informed financial function is in a period of perhaps unexpected risk. To assist these businesses, the Flagship and its independent practitioners are working hard to provide support and solutions. (More to come)

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