Takeaways from Accountable Physician Groups’ Annual Summit

Twice a year I get the honor of speaking to the California Association of Physician Groups’ (CAPG) annual summit and DC policy meeting.  CAPG represents accountable, capitated physician groups, and now has members in 39 states.  They’re always among my favorite speeches given how sophisticated the audiences are.  Here’s a few takeaways from my talk last week on “The Future of Government Programs”:

  • Forevermore, physician group revenues and earnings will be dominated by Medicare Advantage, Medicaid and dual eligible health plans, and the ObamaCare plans, most likely in that order.
  • Everything that Medicare Advantage (MA) does, the Medicaid, ObamaCare, and commercial markets follow 3-5 years later.  Nobody knows this better than the CAPG members from CA, which the rest of the nation lags. Want to still be attending CAPG meetings in 2020? Master Star Ratings and risk adjustment.  They’ll apply to all lines of business if they don’t already, and they are the keys to survival already in MA.
  • Value-based contracting is in its infancy but will soon define all health plan contracts with physician groups.  Fee-for-service is dead.  Performance-based capitation is the only future.  To master it a physician group needs a range of capabilities, including eligibility verification, interoperability, actionable clinical intelligence in real time, standardized care processes, and chronic care management, across all business lines.
  • Most Accountable Care Organizations (ACOs), especially the 424 in Medicare, will not see a return on their investment.  They will have spent millions to participate in these experiments and around 80% won’t see a payoff.  2016 and 2017, when Medicare Advantage benchmark rates turn into a tailwind, present the perfect opportunity for ACOs to “move up the food chain” to become health plans.
  • Dual eligibles are the biggest opportunity of our lifetimes, and there is no question that Special Needs Plans designed to serve them can be profitable.  SNPs are a principal mechanism for states to shift long-term care risk into the private sector, and will be a central product for ACOs converting into Medicare Advantage. But they require a range of capabilities most physician groups lack today, such as enabling and social services that duals must have from their insurer.
  • In all government programs, the “5/60 Rule” governs.  5% of members often account for 60% of costs.  Any physician group that aspires to bear risk must be able to identify and intervene with their 5 percenters or they won’t be risk-bearing for long.
  • The biggest vulnerabilities for MA plans are consumer protections like appeals and grievances and complaint management, and who they have selected as their pharmacy benefit manager (PBM).  Most PBMs are frankly terrible at Medicare Part D administration, and Star Ratings now count far more in Part D than in Medicare Advantage to a health plan’s overall score.  Physician groups typically have little or no experience with either PBMs or consumer protections.
  • Retail pharmacies and the home are the most underutilized sources of care to government programs beneficiaries.  Any successful physician group evolution will involve better integration of both sites for the chronically ill.
  • Most at-risk physician groups are directly involved in coding and reporting for risk adjustment.  Federal agencies are paying unprecedented attention to upcoding in Medicare Advantage with an eye to hundreds of millions of dollars in clawbacks and recoveries.  The emphasis at physician groups involved in risk adjustment must move from chart reviews and claims extracts to more holistic member evaluations, and from a culture of “what can we get?” to “how do we stay out of trouble?”

Evolution is a messy business.  Nowhere is that more the case than in physician groups evolving from fee-for-service to value-based contracting and becoming insurance companies.  If it was an easy business, we’d be out of business.


Don’t miss Gorman Health Group’s Chief Consulting Officer, with colleagues Jane Scott, Senior Vice President of Clinical Innovations and Regan Pennypacker, Vice President of Compliance Solutions, as they discuss your member experience and the factors that influence success and failure, as well as prominent compliance and service issues plaguing the industry. Register now >>

From ACO-type incentives to bundled payments and contract capitation, to full professional and global capitation — where the potential is promising, we can help design and implement these arrangements.  Let’s get started. Contact us today.

Stay connected. Subscribe to Gorman Health Group news and updates via our weekly newsletter.

No Comments Yet

Leave a Reply

Your email address will not be published.