Virginia Care Partners, an integrated network and commercial ACO, has doled out $2.5 million in badly needed funds to about 300 primary-care doctors over the course of the pandemic so far. The funds come from care-coordination fees and shared savings collected from the physicians’ performance in value-based contracts last year.
The doctors in the network still make most of their income through fee-for-service models, but the funds from the value-based contracts gave them “at least something that helps keep the lights on,” said Gerard Filicko, the network’s vice president.
“Through a mixture of payments we were able to make a conversion of face-to-face visits to telehealth so they don’t have all of their volume dry up, and through some of the federal relief programs … they’ve been able to keep their cash flow going,” he said. “I think if it wasn’t for those things, we’d see a lot of practices just shutting their doors.”
Capitated per-member, per-month payments also benefited OptumHealth, UnitedHealth Group’s care delivery business that employs, manages or contracts with 50,000 doctors. Two-thirds of OptumHealth’s revenue is risk-based, which some industry analysts noted would help protect the business from decreases in patient volume.
Healthcare providers that have entered contracts in which they are responsible for the cost of care and patients’ outcomes are also more likely to have built defined provider networks and invested in technology and care management strategies, said Dennis Butts, a partner at Guidehouse. Those providers were able to pivot from using the investments to win value-based contracts to using them to reach patients at risk for infection or complications during the pandemic, he said.
“Organizations that have built a value-based infrastructure and have real networks have done a better job pivoting also from a clinical management and operational perspective,” he said.
That’s been the case at MediSys Health Network, where a steady stream of revenue from its capitated payment arrangements allowed it to focus on keeping patients healthy during the crisis. Bruce Flanz, CEO of the New York-based not-for-profit system, said its care managers have been in constant communication with patients, reaching out to ensure they had access to food, to screen for depression, and to help them avoid infection.
MediSys is responsible for the outcomes of 148,000 capitated patients who have insurance through HealthFirst and has shared-savings or shared-risk arrangements for another 15,000 patients enrolled in other insurance plans. More than half of MediSys’ revenue flows through value-based payment arrangements.
“I imagine many of the providers that rely on fee-for-service were very focused on elective procedures and how much lost revenue they had, but since 50% of our revenue comes from value-based payments, we were fortunate to have a constant stream, so our focus really was on care management,” Flanz said.
Yet, there are many different forms of value-based payment arrangements and not all of them provide a predictable income stream. Most clinicians participating in value-based contracts still receive the majority of their income based on the number of patients they can get in and out the door. Even those with most of their income in a capitated contract may operate on such thin margins that any drop in fee-for-service revenue necessitates cost-cutting measures.
Sheriff of Amherst Medical Associates said despite having 60% of revenue in capitated payment arrangements, his practice still was forced to furlough some staff members a month into the pandemic.
New York-based Caremount Medical’s ACO takes on full risk for 30,000 Medicare patients. About 5% of Caremount’s revenue comes from value-based payments. While the medical group anticipates that it will reap a large amount of savings from the sharp decline in emergency department visits, surgeries and hospitalizations, those potential savings wouldn’t arrive until October 2021, said Dr. Richard Morel, Caremount’s chief physician executive.
“It’s not like you’re getting monthly cash to take care of these patients and you can operate that way,” he said.
Wojtek Nowak, CEO of Meritage Medical Network, an independent physician association of 700 doctors in California’s North Bay area, said that “there’s no question” that doctors in value-based contracts have fared better in the short term than those paid exclusively on a fee-for-service basis. The network sped up $2 million in payments to help its physicians and encouraged them to switch to telemedicine by reimbursing them for virtual visits even before insurers began doing so.
But Nowak said it’s hard to quantify because the network, which receives 80% of its revenue on a fully capitated basis, represents only 20%-30% of the physicians’ business. “The lion’s share of their revenue is fee-for-service business. They were helped somewhat in what I would call smoothing the revenue stream, but there’s no question that all the physicians have seen a significant reduction in their patient volume,” Nowak said.