Does Clinical Integration Reduce Risk, Lower Cost of Care?
September 13, 2016
by
matray
One of the priorities driving the Patient Protection & Affordable Care Act of 2010 is the need to rein in the exorbitant costs associated with the world’s most expensive healthcare system. One of the ways in which the reform legislation aims to achieve this goal is by incentivizing disparate physicians, hospitals and other ancillary healthcare entities to work together to provide better medical outcomes at a lower cost by reshaping the reimbursement model away from one rooted in fee-for-service and toward one based on bundled payments for demonstrating value to a population of patients. This requires clinical integration across the continuum of care.
Clinical integration refers to the coordination of care across a chain of services, including preventive, outpatient and inpatient acute hospital care as well as post-acute assistance such as skilled nursing, rehabilitation, home health and palliative care, to improve the overall value of the healthcare provided. Proponents say an improved coordination of care can curtail adverse medical outcomes, improve the health of a population, reduce per capita costs and improve the overall patient experience, but this requires relevant ongoing patient data being documented in a longitudinal health record accessible by providers at the point of care.
Under the Affordable Care Act, both the federal government and commercial payors have started to move toward value-based reimbursement. Those entities able to demonstrate effective clinical integration are rewarded by the Centers for Medicare & Medicaid Services (CMS) with a share of the cost savings generated by increased efficiency. Evidence of effective clinical integration has also been used as a compelling tool for groups and health systems when negotiating contracts with commercial payors. Critical to realizing reimbursement incentives or negotiating more favorable contracts is the collection of even more data necessary to track quality measures as well as account for and manage shared financial incentives.
Not only are CMS and private payors rewarding integration, a number of medical professional liability insurers are offering premium credits for clinically integrated physicians on the assumption that the improved coordination of care will equate to a lower risk profile. To date, there is no empirical data indicating clinical integration alone leads to overall improvement in quality of care or reduced liability risk, and there exists evidence indicating that some of the requirements of clinical integration could actually increase liability risk.
Data Collection, Physician Burnout and Dangerous EHR Workarounds
To support the new reimbursement models, a clinically integrated healthcare system must manage a vast network of public and private information used by various entities in order to monitor quality and cost.
On the clinical end, physicians are responsible for entering patient data into an electronic health record (EHR) repository, making it available to all healthcare providers in the network via a health information exchange that encourages communication along the continuum of care. This exchange of information should eliminate the duplication of services, allow for the automation of trends in vital signs and lab results, and help mine for gaps in care, such as an overdue colonoscopy or mammogram, allowing for a medical team intervention.
The upside of collecting more data is evident, but a number of studies have indicated that the increased clerical burden this places upon healthcare providers is contributing to increased physician burnout and the use of dangerous EHR workarounds, such as copy-and-paste practices where previous EHR entries are cloned and inserted into a new progress note as well as disabling or overriding burdensome safety alerts, to save time and increase efficiency.
A Mayo Clinic survey of 6,375 physicians, published in May, found that those physicians who employ EHRs and are responsible for computerized physician order entry experienced 33-percent-lower professional satisfaction and a 29-percent-higher risk of burnout. A recent Rand Corp. study of physician satisfaction, conducted on behalf of the American Medical Association, determined the current state of EHR technology and its requisite time-consuming data entry “significantly worsened professional satisfaction in multiple ways.”
The correlation between physician burnout and medical error has been well established, and an uptick in liability claims related to EHR issues is beginning to appear in medical malpractice claims data.
According to a recent survey of medical professional liability insurers about EHR-related medical liability claims, conducted by the medical malpractice insurance industry trade association PIAA, 53 percent of respondents reported they had seen EHR-related claims. Seventy-one percent of respondents cited copy-and-paste workarounds as the most common source of a claim allegation.
While, in theory, the information-sharing benefits of EHR-based clinical integration should improve care continuity and reduce the risk of medical errors, a 2015 study by the National Academy of Social Insurance (“Integrated Delivery Networks: In Search of Benefits and Market Effects”) found “little evidence that integrating hospital and physician care has helped to promote quality or reduce costs.”
Other Liability Issues
In addition to the risks associated with a heightened clerical burden and physician burnout, clinical integration presents other potential avenues for increased liability.
- Because CMS and private payors are incentivizing cost containment with shared savings and higher reimbursement, physicians participating in a clinically integrated healthcare system open themselves to claims of profit-motivated negligence. In other words, in the event of a negative outcome, a plaintiff attorney could make the charge that when the clinically integrated physician refused to order a test or provide a service, he or she was negligently prioritizing cost savings over patient safety, contributing to the adverse outcome.
- When a patient suffers an adverse medical outcome in a clinically integrated health system, it is reasonable to assume the medical liability claim will use the shotgun technique—where any physician, employer or related entity remotely connected to the adverse event gets named in the claim. This effectively increases the risk profile for each member of a clinically integrated healthcare delivery team. Sorting out who is responsible for the negligence is often a murky endeavor. This will be especially problematic in states that have not reformed joint and several liability.
- Because the Affordable Care Act’s Medicare Shared Savings Program requires clinically integrated systems have in place procedures and processes to promote evidence-based medicine, it could be argued by a plaintiff attorney that clinical integration creates a higher standard of care than exists for non-integrated physicians.
Is Clinical Integration Bending the Cost Curve of American Healthcare?
In a June 13 article published by
The New York Times (“The Downside of Merging Doctors and Hospitals”), health economist and researcher Austin Frakt questions whether clinical integration lives up to the cost-saving promises made by champions of the Affordable Care Act.
Frakt acknowledged that some clinically integrated healthcare delivery systems—for example, Kaiser Permanente, Intermountain Healthcare and the Mayo Clinic, among others—have a reputation for high quality and low cost, but that available evidence suggests clinical integration does not always lead to cost savings and improved care.
In his article, Frakt cites the “Integrated Delivery Networks” study, which analyzed data from 15 of the largest hospital-physician integrated delivery networks in the country and discovered that their clinical integration actually raised physician costs, hospital prices and per capita medical care spending when compared to their main competitors. The authors of “Integrated Delivery Systems” found that clinical integration incentives have led to hospital market consolidation, which—in turn—has enabled “dominant actors to demand and receive quasi-monopoly prices for their services from local and national [healthcare] insurers.”
A 2016 study by Glenn Melnick, PhD, and Katya Fonkych, PhD, published in
The Journal of Health Care Organization, Provision and Financing (“Hospital Prices Increase in California, Especially Among Hospitals in the Largest Multi-hospital Systems”), supports the allegation that large clinically integrated hospital systems are receiving the quasi-monopoly pricing that the “Integrated Delivery Systems” study found.
Melnick and Fonkych looked at data regarding the actual amounts paid by Blue Shield of California, the state’s third-largest healthcare insurer, not billed charges or list prices. When comparing the amount paid by Blue Shield to the state’s two largest clinically integrated healthcare systems (comprising nearly 60 hospitals) to that paid to about 175 other California hospitals, their study concluded the amount paid to the two largest systems jumped 113 percent between 2004 and 2013, while the other hospitals’ reimbursement increased 70 percent. At the beginning of that period, prices were similar at all of the hospitals studied, but by 2013 the average payment per admission was $19,606 for the two largest systems and $15,642 for the rest. According to Melnick and Fonkych, the substantial difference in reimbursement suggests that larger systems are using the size of their clinically integrated system as leverage when negotiating contracts with health plans on an “all-or-none” basis, requiring the plan to include all system member hospitals in the plan’s preferred networks, regardless of their prices or quality relative to other healthcare systems in the market.
Conclusion
Increased clinical integration of the healthcare system holds potential to improve medical outcomes, reduce redundant testing, decrease medical error and trim the overall cost of care in the United States. As with any systemic change, clinical integration will also present risk challenges as it ingrains itself into the overall American healthcare delivery system. It is important to recognize the magnitude of the changes occurring and anticipate the negative externalities likely to arise.
When medical liability insurers contemplate offering discounts to physicians for participating in a clinical integration program, they should consider if the discount is warranted based on the actual underlying risk. Insurers could be open to questions of whether this pricing is biased against (and at the same time alienates) their physician insureds with a comparable-or-lower risk profile but who pay a higher premium because they do not participate in a clinical integration program that carries a discount.
Mr. Gallant has more than 20 years of experience in the insurance industry. Most recently, he served as Senior Vice President of MMG Insurance Company, a property and casualty carrier headquartered in Maine. Additionally, he had also worked for MMG Insurance Company as the Vice President of Marketing and Assistant Vice President of Accounting. Mr. Gallant received his B.S. in Business Administration and M.S. in Business from Husson College in Bangor, Maine. He also completed Executive Development Programs at Dartmouth College, Tuck Business School in Hanover, N.H.
“Stephen brings a long, successful history of managing a variety of departments to CMIC Group,” said Denise Funk, Chief Executive Officer of CMIC Group. “His proven track record of growth and expansion will prove to be an asset to the company as we continue to enhance our services to our current membership and expand our services to cover new regions and policyholders.”
CMIC Group includes both CMIC and its member affiliate, CMIC Risk Retention Group (CMIC RRG). CMIC Group is a leader in developing innovative insurance programs, services, and solutions for physicians, doctors, healthcare providers, hospitals, and facilities dating back to the origins of CMIC in 1984. For more information, visit the CMIC Group website at 
Mr. Conneely has more than 25 years of business and accounting experience, including 17 years in the insurance industry. He spent the most recent 14 years in financial roles supporting several distinct business lines at Travelers Insurance. Prior to that, he worked in a variety of financial roles in the insurance industry, including roles with a prominent reinsurer as well as seven years with Deloitte & Touche. Mr. Conneely received his B.S. cum laude in Accounting from the University of Connecticut.“Michael brings an impressive and in-depth financial background to CMIC Group,” said Denise Funk, Chief Executive Officer of CMIC Group. “His vast experience in the financial sector and across various facets of the insurance industry will further enhance CMIC’s long history of financial diligence and stability.”
CMIC Group includes both CMIC and its member affiliate, CMIC Risk Retention Group (CMIC RRG). CMIC Group is a leader in developing innovative insurance programs, services, and solutions for physicians, doctors, healthcare providers, hospitals, and facilities dating back to the origins of CMIC in 1984. For more information, visit the CMIC Group website at 