Early ACO Experience Has Lessons for Pathologists

Five-pathologist group wins ACO contract, learns importance of managing patient data

CEO SUMMARY: To date, many of the nation’s 500 accountable care organizations have launched with little involvement by independent pathology groups and clinical laboratories. That was not the case with an ACO in Alabama, however. From its inception in 2012, the ACO has contracted with CytoPath, P.C., a five-pathologist group in Alabaster, Alabama. CytoPath’s pathologists are currently paid on a fee-for-service basis and must provide detailed and timely data to the ACO.

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 ACO 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 ACOs. 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,” stated 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, sharedsavings 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.

ACO 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,” stated Warren. “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,” stated 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.

“The PQRS system allowed us to demonstrate the quality of care delivered by our pathologists,” noted Warren. “To improve the accuracy and completeness of this data, we actually slowed our billing timeline a bit to ensure that every bill we submitted contained all the necessary PQRS data. The billing department we use is McKesson Business Performance Services, which sends our bills directly to the payers.

“In order to use the PQRS reporting system as a source of data for the ACO, there was a reason why we slowed all billing related to those quality metrics,” he continued. “Take the example of patients with breast cancer.If those claimswere submitted without any information on special stains, for example, then the PQRS coding on those bills would be incomplete.

Billing Adjustments Needed

“We worked closely with McKesson to hold those claims until we collected all the data needed for a complete bill,” added Warren. “That was probably the single biggest change we needed to make to help ensure that we were submitting all of the PQRS codes prior to billing the case and getting credit in the PQRS system.”

CytoPath pathologists also engaged the ACO’s physicians to improve lab test utilization.“To save money for the physicians, we recommended that the physicians switch from one reference lab to another,” he said.“Once we were part of the ACO, we saw that the physicians and hospitals were spending too much on reference lab work. Switching the esoteric testing from one national reference lab to another produced substantialsavingswithout any loss of quality. This contribution of the pathologists was recognized by the ACO.

Alabama Pathology Group Needed to Retain Its Corporate Structure in Newly-formed ACO

ONE OF THE FIRST accountable care organizations in Central Alabama was the 400- member Baptist Physician Alliance (BPA), which was formed in 2011.

In 2012, BPA began contracting with four hospitals, which have a combined number of 885 beds. Those hospitals serve a region with a population of 1.2 million people.

BPA and its four hospitals contracted to serve approximately 6,000 people. One contract was with Medicare to serve about 1,000 members of a local Medicare Advantage plan in Birmingham. The second contract was to serve about 5,000 employees and their family members from the four hospitals. Being selfinsured, the hospital contracted with Blue Cross Blue Shield of Alabama to administer the health insurance program to the employees and their family members.

During the formation of this ACO, the five pathologists of CytoPath P.C. in Alabaster, Alabama, saw the opportunity to gain experience in working with a multi-payer ACO.

“Initially, BPA wanted to contract with the individual pathologists,” explained CytoPath Administrator Bill Warren. “But we are a fiveman group and if you want to contract with these five pathologists, we believed it would be best to contract with CytoPath rather than the individual pathologists.

“There were tax implications to consider during the contract negotiations with the ACO,” he explained. “One issue is associated with the employment agreements we have with our pathologists. BPA wanted to set up the ACO so that they could run all the revenue back to the individual providers rather than to CytoPath, PC, which is our corporate entity.

“Our corporate documents require that all revenue flows to the corporation and not to the individuals,” emphasized Warren. “Thus, if a pathologist contracts with an individual hospital, any revenue paid to that pathologist must go back into the group.

“So, when BPA came along, CytoPath needed to negotiate terms in the contract that would not violate the employment agreements it has with the pathologists,” he observed. “There was another benefit to this contracting approach with the ACO. Under our current agreement with BPA, CytoPath can have all five pathologists deliver care whenever and wherever it is needed.”

Sharing the Savings

“Activities during those first two years were designed to collect the data needed to show that the ACO could deliver quality care and cut costs for those 6,000 members of the ACO,” Warren concluded. “After two years, the ACO was able to show substantial savings and some of those savings were passed along to us. “CytoPath’s share of the savings was just under $20,000,” he recalled. “This was like found money because we had already been paid for doing this work under the ACO’s fee-for-service arrangement.

“The other reward is to see the quality of patient care, as documented by the ACO data,” said Warren. “CytoPath’s experience shows how an independent pathology group can make worthwhile contributions as part of an ACO.”

Contact Bill Warren at 205-664-9797 or bwarren@cytopathpc.com.

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