More than 500 accountable care organizations now operate nationwide. To date, however, few independent pathology groups and clinical labs have successfully negotiated lab testing contracts with these ACOs.
This often happens because, for many reasons, independent pathologists and clinical laboratories have not been part of the initial mix of primary care, specialty physician groups, and hospitals that launched these new contracting entities.
In fact, independent laboratories and pathology groups were often left off of ACO planning committees altogether. Frequently, hospitals participating in an accountable care organization contracted with their in-house laboratories, freezing out independent labs and pathology groups.
Today, however, more independent pathology groups and clinical labs are participating in the development and operation of accountable care organizations. Their early experiences in these entities offer lessons for other labs and pathology groups seeking to contract with ACOs.
One such pathology group that has been part of an ACO since 2012 is CytoPath, P.C., a five-physician group in Alabaster, Alabama, just south of Birmingham.
About 60% of CytoPath’s volume comes from its contracts with hospitals in the Birmingham area, and about 40% comes from its outreach efforts to physicians’ offices.
The group offers histology and cytology in house and has been operating in central Alabama since 1989. CytoPath also has a lab in Selma.
Big Demand for Big Data
In 2012, CytoPath had an opportunity to negotiate a contract for pathology services with the Baptist Physician Alliance (BPA), an ACO that the Baptist Health System formed a year earlier. “In 2011, the health system formed the ACO and began contracting with about 400 physicians the following year,” explained Bill Warren, CytoPath’s administrator. “The aim of the ACO was to improve the quality of care and to control costs as well.
“In some parts of the country, shared-savings and shared-risk ACO models are developing, but after surveying its 400 physicians, BPA found the doctors had an aversion to financial risk,” he said. “Therefore, BPA formed an ACO in which payment was based on fee for service. If there were any savings, then BPA would share those savings with the providers.
Accountable Care Organization Puts Demands on IT
“But before any savings were possible, BPA spent those first two years—meaning 2012 and 2013—setting up the infrastructure of an ACO, including the IT systems needed to collect the data on patient care,” he noted.
“In fact, BPA controls all the data generated by the ACO,” he added. “As a pathology group, we pass the data to them. That is part of the agreement with the ACO.
“The importance of data was one of the first lessons we learned,” he continued. “All ACO arrangements are driven by the data collected by participating medical groups.
“That is why, before a lab or pathology group signs a contract with an ACO, it should recognize that the IT team will be closely involved in the relationship with the ACO.
“IT is needed to collect and report patient data to the ACO. The ACO then takes that data to the insurers to show how it improved quality or reduced the costs.
“Initially, we were not sure how to deliver that data to BPA,” he recalled. “We discovered that we could not extract the necessary data from our existing electronic billing system as it was configured.
“Our solution was simple,” said Warren. “We could collect the necessary data through our billing system via its Medicare Physician Quality Reporting System (PQRS). As long as we coded every bill using PQRS, we would have the data the insurers needed to manage patient care appropriately.
“During those first two years, this approach allowed us to collect and transmit the necessary data to the ACO through the PQRS system,” said Warren. “This was a critical time for the ACO because it wanted to assemble the data required to demonstrate both the quality and savings it was delivering before it went out to negotiate with other private payers.”
This strategy has apparently worked for Baptist Physician Alliance. “We’ve been told that a lot of payers are now interested in contracting with this ACO,” he said. “Later this year some payers are expected to offer contracts to BPA and its participating physicians, clinical labs, and to pathology groups like ours.”