CHICAGO--With a 30 percent Medicare cut looming, hospitals and radiology practices should start thinking about organizational shifts, particularly integrating accountable care organizations (ACOs) into practice, Christopher G. Ullrich, MD, a radiologist at Charlotte Radiology in Monroe, N.C., said during a presentation Nov. 30 at the annual Radiological Society of North America (RSNA) meeting.

“Quo Vadis?” or Where are we going?" asked Ullrich. Radiology consumes almost 7 percent of all healthcare costs and shifting towards different payment structures could help to better facilitate the anticipated 30 percent Medicare payment cuts Congress says will take place Jan. 1.

“At the present time radiology is being used for macro-economic redistribution of money to help finance … this change,” said Ullrich.

“If you look since 2000 at reimbursements, hospitals have gotten a 3 to 4 percent incremental payment increases over that period of time.” Currently, Centers for Medicare & Medicaid Services [CMS] pilot programs have integrated fee-for-service [FFS] payment models that actually pay radiologists and other primary care physicians [PCPs], in addition to  attempting to manage the utilization of resources.

“Payors are usually paying the direct costs of radiology benefit management (RBM) notifications, etc., but are ignoring the provider costs for compliance,” UIlrich said. But, as an isolated macro-economic strategy “continually paying less is not really a viable strategy,” he said.

“Better medical practices, efficiency, right sizing, and a variety of other strategies are the only real way to move forward.” In addition, Ullrich said that uncoupling technical payments and professional payments are absolutely necessary.

And while the frameworks for ACOs have not yet been defined by CMS, and “uncertainty” still exists, Ullrich said that hospital and practices should begin thinking of the rules and practices of the models that will begin in 2012.

Ullrich outlines the following scenarios that could be integrated into the ACO model:

• Payor offers a hospital or accepts an ACO payment per beneficiary per year: What’s radiology’s portion?
• A payor offers a bundled payment for various episodes of care: How is radiology’s portion calculated? In most cases this is FFS, said Ullrich.
• An ACO accepts a shared-risk agreement with a payor based on FFS with a 15 percent withhold. The savings are substantial: How does radiology shared that savings? Ullrich offered that many practices go broke in this arrangement
• The ACO initiates a FFS with the payor. How does radiology protect its relativity?

“Because there are no working models, radiology can also be in the forefront of creating an [ACO] model,” Ullrich said.

ACOs will most likely:

• Contract with payors for payments and episodes;
• Will offer a discounted fee-for-service for payors as a care model;
• Be totally managed by hospitals with employed physicians; or
• Be totally managed by physicians or networks of physicians.

Ullrich said that medical home is an integral part of ACOs and these patients must be cared for in an “environment where they are consistently engaged by an adequately funded, well-organized and supported primary care provider system.” In addition, managing chronic diseases should also be incorporated into the ACO model due to the fact that the management of diabetes, COPD and other such conditions can reduce the amount of ER visits and referrals, leading to lower costs.

Ullrich said that a pilot program at Community Care of North Carolina, which used a primary care economic model for PCPs that spanned 15 non-profit networks, 4,500 PCPs, 1,350 homes and 1 million Medicare beneficiaries, saved the state $950 million over a five-year period.

The model made per member per month payments to doctors and networks through Medicaid and is based on benchmarked costs given to doctors and networks, and is quality- and systems-oriented.

“If you pay PCPs more, you can actually spend less … and by managing the care of patients by using a physician-based model, you can save money.

“Healthcare is a public utility but is it the dream or the nightmare?” he said. “For healthcare reform, everyone will be covered, but your next appointment may not be until June 2011.” In addition, he said that the bill also promotes hospital and practice consolidation and reduced competition is occurring as a result.

“We need to be engaged in the discussion within the political arena, in the local arena and in the organizational arena. If you are not seated at the table, you will be on the menu,” he concluded.