Preferred Provider Network
by Dr. Jon Hart
Throughout this series of articles, we’ve discussed value-based care (VBC) drivers of gross income – attribution, risk coding and activities-based bonuses – and spent a good amount of time on drivers of net income, those that lower medical expense. Of these, we have looked at access, Annual Wellness Visits, and managing patient care. These six levers get pulled by most all organizations and practices to some degree regardless of their position on the VBC spectrum.
This installment deals with a driver of net revenue that is a path less traveled – a preferred provider network (PPN) for specialty care. This will be a 30,000-foot flyover with a more detailed article (or series) on PPN in the future.
There is no argument that US healthcare spends more money than anywhere else in the world, despite less than stellar outcomes. Since most of the spend in healthcare comes from outside of the PCP’s office (about 95%), engaging with specialists and other care providers who are aligned with the principles of value-based care is extremely important.
When thinking of physician networks, many of us think in terms of an insurance payer’s network where time-distance measures and geo-density are the primary parameters. A payer signs up anybody and everybody who will accept their terms. The creation of a narrow network generally occurs when only a few docs will agree to the payer’s terms (less money). This approach won’t meet the needs of a practice or organization looking to decrease medical costs.
If a PCP is planning to go at risk for shared savings, premium risk, or capitation, they need to have more influence on the cost of care than simply 4-5% of the total cost of care. An important element of that is the downstream costs associated with specialist physician care rendered to the PCP’s patients. From this comes the concept of a high value preferred provider network.
A high value network is based on which specialist physicians can create the most value with the PCP based on better access, improved outcomes, proper prevention/screening, appropriate charges, thoughtful use of diagnostics and procedures, and an excellent experience for both the patient and the referring physician (aka communication!).
What’s the difference between a high value network and a narrow network? When payers narrow their network to docs who will take a lower fee for services in exchange for potentially higher volume, both the patients and the specialists tend to lose out.
The “narrowing” that occurs in building a high value network doesn’t impact the specialists’ income unless they’re billing and ordering inappropriately to begin with. The network is open to all specialists willing to provide excellent care and be in a bidirectional communication stream with the PCP. Patients benefit from this type of network.
Four main components are important in a high value network:
Access and communication
Quality
Downstream costs
Experience
Access and communication go hand in hand. A specialist needs to have the ability to see a patient within a reasonable amount of time based on diagnosis. This availability can be enhanced by PCP-specialist communication before, during, and after engaging the specialist. This communication can include conversation (imagine that!), record sharing portals, asynchronous communications (e-mail, secure messaging, etc.), and e-consults. Importantly, it needs to be active, not just a reliance on the thought (hope, dream) of “they’ll have access to the records.”
Quality refers to both outcomes (based on risk-adjusted cost and use metrics) and contribution to HEDIS measure completion. This is where you’ll need to engage in data analysis. If you have a good data lake and the ability to swim around in it, you can check on risk-adjusted outcomes of your patients based on specialists.
There is so much overlap of HEDIS measures for which a PCP is held accountable with certain specialties (cardiology, endocrinology, and GI). They can lend a hand in meeting those measures. Part of the engagement of these specialists might include sharing some of the revenue generated from pay-for-quality with those specialists, especially if it can be documented that they’re the ones closing the measure. Other specialties’ quality can still be assessed with HEDIS-type measures; they just need to be specialty specific and easily measurable.
If a key component to building one’s network is appropriately controlling costs, medical spend by a specialist needs to be assessed – especially the downstream spend of diagnostic testing and procedures. We’ll save the details of this for the PPN-specific article series but suffice it to say downstream spend can be assessed by proxy in a few ways.
This goes beyond the E&M codes billed by a specialist’s office and paid in Medicare Part B. That only gives a sliver of the picture. What is not accounted for in that case is outpatient testing and procedures (duplication, redundancy, site of service, etc.) and the contribution of facilities and services like Skilled Nursing and therapies. Specialty care, pharmacy spend, outpatient procedures and testing, skilled nursing, and other services can be greatly driven by specialists, outside of the control of the PCP.
The numbers of diagnostic tests and procedures done can be compared within a specialty. Also, based on ICD and CPT codes, medical spend can be divvied up based on specialty with a specific specialist assigned specialty attribution for patients. More details later.
As mentioned in previous articles, an important factor in the value equation is experience. In building a high value PPN the experience of the patient and of the referring PCP need to be accounted for. Beneficial experience can be facilitated by focusing on access and communication above, but it also includes how the doc’s office interacts with the patient. Numerous ways exist to measure this and incentivize based on positive experience.
Based on their level of participation and outcomes, specialists can be placed in different tier levels. This concept will be discussed more in the detailed article.
Other networks to consider when trying to control costs include Skilled Nursing (facilities and home health), therapies (PT/OT/ST/RT), and mental health. The first two can break the back of an at-risk practice or organization when expenses and outcomes are left to run free, so having trusted partners that will treat your patients appropriately and well is imperative. Mental health partners may add some expense in the short run, but their impact on the management and control of chronic medical conditions (like diabetes, heart failure, and COPD) is substantial.
Building a high value network helps ensure your patients are getting specialty care by physicians and providers committed to the same concepts of outcomes-based, high quality, appropriate cost care. Look forward to some article installments in the future digging into this concept in more detail, including more details on what to look for in your specialist partners, ways to effectively communicate, and how to engage and incentivize specialists. Mental health will be covered in detail in its own article.
Read more articles from our VBC Drivers series
