CEO SUMMARY: From the launch in 2013 of a big accountable care organization in Wisconsin, the North Shore Pathologists at Columbia-St. Mary’s Hospital have been involved. Among the lessons learned are the importance of structuring the pathology contract with the hospital to anticipate value-based reimbursement and having full access to the ACO’s data. The pathologists are using this data to develop test utilization programs that help physicians order the right lab test for the right patient.
IN RECENT YEARS, progressive pathologists and lab directors have recognized the importance of being included in the accountable care organizations (ACOs) being organized in their communities.
Too often, pathologists have found themselves without a place at the table as hospital administrators and physicians in the region came together to organize and operate an ACO.
For pathologist Guillermo G. Martinez-Torres, M.D., President of North Shore Pathologists in Milwaukee, Wisconsin, it was a case of “preparation meeting opportunity” that, in 2012, enabled him to participate in the formation of a large Wisconsin integrated delivery network and its ACO.
He met with the CEO of the hospital where he worked and the CEO told him he should be involved from that day forward. It helped, of course, that Martinez-Torres is also president of the medical staff at 300-bed Columbia-St. Mary’s Hospital in Milwaukee and Chair of Pathology and Laboratory Services there.
“At that time, I was included in the original discussions with the system leadership because I was preparing for a national pathology meeting about ACOs,” stated Martinez-Torres. “As part of that process, I walked into our hospital president’s office and asked, ‘What are we doing with regard to ACOs?’
“On that day in 2012, he happened to have plans for a new ACO on his desk,” recalled Martinez-Torres. “At the time, few people knew about this proposed integrated care network and ACO. So, for me, it was an opportunity to get involved at an early stage.
“It was serendipity that I happened to walk into his office at that time, but I knew from my work with the College of American Pathologists that it was vitally important to have a laboratory representative at the table when discussing the formation of an ACO,” he explained. “I simply needed to take advantage of the opportunity.”
Lab had a place in the ACO
As a result of being well prepared even for such a chance encounter, Martinez-Torres earned a place for the lab in the formation of the ACO. “The next year, 2013, ColumbiaSt. Mary’s became a participant in this ACO, now called the Integrated Health Network of Wisconsin,” he said. “Even though we participate in this ACO, technically we are all competitive entities and still compete against each other, while at the same time looking for ways to collaborate.”
As a pathologist involved in the organization and operation of one of the nation’s first large integrated care networks and ACOs, Martinez-Torres identified several lessons as most significant for other pathologists wanting to engage with ACOs in their own communities.
First, lab directors have a unique value proposition to offer to ACOs: the ability to collect and interpret lab data for population health management. Second is that when the lab is prepared to engage in value-based contracting, it will have a stronger hand in negotiations over how pathologists will be paid. And third, labs should be prepared for payment that is not based on test volume.
Data as Bargaining Chip
“Before the ACO was officially launched, I made the case that laboratory data would likely make up a major proportion of the vast amounts of data that the ACO will gather from all the hospitals and health systems in the ACO,” noted Martinez-Torres. “I advised them they will need to have someone who understands that data; someone who can interpret that data; and someone who can analyze that data. Calling attention to this need and the role that pathologists could play in improving patient outcomes was one key to being allowed to participate in all the early conversations about the ACO.
“The fourth lesson from our success with the ACO is that pathologists should take steps to identify future trends and prepare for them,” advised Martinez-Torres. “About 10 years ago, our pathology group put language into our contracts with the hospital that would allow the hospital to easily contract for outreach services whenever necessary.
“Our six-member pathology group is a private practice entity and we knew that putting this language into the contract might help us at some future date,” he said. “At the very least, it allowed us to work into our contract the potential for global and bundled billing with the health system.
Meeting Hospital’s Needs
“We incorporated this language into our contract because we anticipated the coming shift to integrated care and new payment models,” he said. “At the same time, our pathology group did not want to tie the hands of the hospital in ways that would complicate its ability to pursue more outreach work because we pathologists did not have the right pricing structure.
“Ten years ago, our pathology group developed a payment formula that we could use if we were engaged in global billing with other entities outside of this health system,” he added. “We determined how global billing would work, including the percentage of the fees that would go to the hospital and the percentage that would go to the pathologists. This arrangement is in place and has been used by the hospital system.
“Further, our pathology group updates this formula regularly,” he stated. “Recently, when we believed we were getting closer to contracting for bundled payments, we assigned dollars to it. Now we have a fee schedule in place for any bundled billing arrangement that might come our way. This preparation makes it possible for the lab to transition away from fee-for-service reimbursement. Understanding this reimbursement shift was probably the biggest lesson for all the pathologists in our group.
Key to Success for ACOs: Collecting, Storing, and Sharing Patient Data
ONE STRENGTH OF AN ACCOUNTABLE CARE ORGANIZATION is the ability to collect and manage vast amounts of data on all the patients the ACO serves.
The Integrated Health Network of Wisconsin, a statewide ACO, recognizes the value of its de-identified patient data and shares that data with all of the participating hospitals in the ACO, said Guillermo G. Martinez-Torres, M.D., Chair, Pathology and Laboratory Services at Columbia-St. Mary’s Hospital. In October, Martinez-Torres made a presentation about the clinical laboratory’s role in the ACO during a webinar sponsored by McKesson Corporation, “The Role of Pathology and Laboratory Medicine in Accountable Care Models.” (See TDR, March 9, 2015.)
During the presentation, Martinez-Torres explained that the organization is a commercial multi-payer ACO that operates under a shared savings or shared risk model. “That means that if the cost to provide care is less than the amount of money we were paid, then we share in the revenue,” he said. “But if the cost is more, then we pay more into the system.
“Data from all the participating hospitals in the system are assembled in a common database, which gives us the ability to know how much services or tests cost across the entire system,” continued Martinez-Torres. “We can thus calculate the cost of care for identical diagnostics or procedure codes at each of the sites. That is a benefit. But to some providers, it can also be a risk because they are sharing internal information with other members of the network.
“Having all of this information has allowed our pathologists to create best practices, guidelines, and protocols because now we not only have the information for our individual healthcare system, but also we have the information for the entire network,” he explained.
“During the first two years of operation, we developed blood and blood product utilization protocols that helped to reduce the number of red cell transfusions and the costs associated with these products and this type of care,” noted Martinez-Torres. “Our pathology group has also developed protocols for managing patients with chronic and costly conditions.”
Right Test at the Right Time
“Pathologists know that a component of our income will not come from doing more tests, but from doing the right test even if that means doing fewer tests,” he observed. “Thus, one element of compensation for pathologists will be based on appropriate utilization of lab tests. That’s a paradigm shift away from the current model of where the more tests a lab performs, the more it gets paid.
“In an ACO, the goal is to keep patients healthy so that they don’t have to come into the hospital,” said Martinez-Torres. “But then how do pathologists get paid? Does the hospital share the savings with pathology? Many pathologists are asking these questions.
“These are the reasons why we prepared for this day by adding language into our contract with the hospital that ties a portion of our reimbursement to our ability to manage test utilization,” he explained. “We did that on purpose so that we would have some skin in the game.
“To deliver this value to the hospital, our pathologists needed to be involved in test utilization,” noted Martinez-Torres. “Thus, we formed a test utilization committee, which I chair.
“Our goal is to decrease the number of unnecessary tests,” he added. “This is where it gets difficult because each physician has his or her favorite lab test menu.
“Additionally, most of these menus are built into the electronic health record systems, making it easy for physicians to order them,” he said. “Some physicians order the same test menu over and over. Theoretically, it is possible for a patient to have six CBCs, six comprehensive metabolic panels, six hemoglobin A1Cs-all ordered and performed on the same day!
“To address these ordering patterns, we put a system in place where, if the physician orders, say, a hemoglobin A1C, he or she is allowed one per hospitalization or every 30 days,” stated Martinez-Torres. “When one physician orders one hemoglobin A1C, the order will go through and the test gets done. But the next doctor who puts in an order for hemoglobin A1C to check for diabetes, for example, would get a warning screen that says: ‘Hemoglobin A1C has already been performed on this date; here are the results.’
Protocol for Test orders
“Going forward, we want to expand the menu of lab tests that require utilization management,” noted Martinez-Torres. “I recently presented our utilization management program to the board of directors of the hospital system. They loved it. Also, in my capacity as medical staff president, the program was presented to the entire medical staff leadership and received unanimous support to continue.
“Our pathologists are introducing the concept of value, which means we’re changing the paradigm and the culture,” he noted. “That means we have to explain our rationale behind it and then ask the medical staff to go along with it, because it is the right thing to do.
“Every pathologist knows that there is a level of overutilization and a significant level of underutilization,” said Martinez-Torres. “In the ACO and the integrated care environment, the opportunity for pathologists to add value comes from helping physicians order the right test for each patient every time. That is a powerful way to contribute to improved patient outcomes while controlling costs.”
Pathologist Explains the Risk of Not Participating in ACOs
CONSIDER THE RISK OF NOT PARTICIPATING in an accountable care organization, suggested Guillermo G. Martinez-Torres, M.D., Chair, Pathology and Laboratory Services at Columbia-St. Mary’s Hospital. The risk is high, he added.
“The risk of not participating in the development of an ACO is that you may be seen as someone who is not a member of the care team,” he advised. “The problem with being seen in this way is that other physicians will be in a position to determine what your value is as a pathologist.
“If we don’t do this for ourselves, then we’re basically allowing a pediatrician, a psychiatrist, a cardiologist, a surgeon, or whoever happens to be on the team to determine what the value of pathology is,” stated Martinez-Torres. “No one can speak better on behalf of pathologists than pathologists themselves! But to do this, pathologists need to participate and be part of the process.
“If pathologists don’t participate, they will face an additional risk because the next phase of reimbursement will involve bundled payment or reimbursement for episodes of care,” he added. “If a pathology group is not participating in an ACO, it may be deemed that the pathologists have no role and thus no value in that ACO. Should that occur, no dollars will be allocated for pathology services. It’s as simple as that,” he concluded.
Contact Guillermo G. Martinez-Torres, M.D., at firstname.lastname@example.org or 414-585-1448.