Editor’s note: This article was adapted from a paper submitted toward fulfillment of the requirements of Fellowship in the American College of Medical Practice Executives. Learn more about ACMPE certification: mgma.com/acmpe.
Patients First Medical Clinic, PA is an independent, physician-owned medical practice, dedicated to providing its community and surrounding counties with experienced, dependable, and patient-focused medical leadership and primary care services. Through its knowledge and expertise, PFMC offers a team approach in delivering quality primary care services to its community. It employs six physician shareholders and five advanced practice providers (APPs). The practice’s mission is to provide the highest quality, cost-effective care to patients, with a focus on whole-person care.
Private medical practices are facing increasing demands by payers to achieve quality benchmark scores. Annually, the Centers for Medicare & Medicaid Services (CMS) releases Healthcare Effectiveness Data and Information Set (HEDIS), which include more than 90 performance quality measures across six domains of care. Medicare and Medicare Advantage plans use HEDIS measures to set quality care opportunities for each provider to complete to earn incentives and bonuses. The objective of quality measurement by all payer programs is to pay providers based on quality, not just quantity of patient encounters. The addition of population health would allow dedicated staff to manage the at-risk/target patient population by providing more time to research and prep patients’ charts for their upcoming office visits. Having a dedicated department that focuses on the additional documentation and research needed to successfully complete the quality program’s requirements would allow providers and other medical staff to focus on interacting with patients during their visit.
Population health will be co-managed by PFMC’s APPs and the information technology manager. The department’s supervision team will offer clinical support and guidance as well as manage any technological needs for retrieving data and data reporting. The administrative team will manage all onboarding for the department, including but not limited to benefit packages, payroll, and applicable policies and procedures.
The addition of population health will allow designated staff to meticulously sort through the individual payer’s requirements, identify care opportunities and properly complete needed documentation. The stability of PFMC as an established practice offers large patient panels eligible for the additional services. Patients would benefit from extended visit times, reducing the need to come in for additional appointments by having their annual wellness visits (AWVs) and follow-up visits addressed at the same time. The medical staff would have the opportunity to focus on other tasks such as patient call backs and contacting patients who missed their appointments.
The capital needed to implement population health will be provided internally by PFMC for the first year of business. PFMC will cover all employee benefits, salaries, computer equipment, rent, furniture and office supplies for implementation, as population health will have no cash flow on day one. Capital needed for the first year of business is $142,990. The addition of population health will yield a projected increase in incremental revenue of $230,620 with an ROI of $87,630 in the first year. PFMC will have a greater ROI in year two ($345,077) and year three ($390,496). The revenue potential will increase as the department expands and adds additional services and employees.
Summary description of the existing business
As healthcare reimbursement requirements change, PFMC continues to search for growth opportunities and ways to maximize revenue. While many private practices are joining larger hospital-owned networks, PFMC prides itself on its ability to remain independent by optimizing payer contracts and controlling operating costs. PFMC is accredited by the National Committee for Quality Assurance (NCQA) as a Patient-centered Medical Home (PCMH), which shows PFMC has demonstrated a commitment to a patient-centered approach to care and commitment to continuous quality improvement. PFMC was founded in 1955, predating the limited liability company (LLC) designation and is incorporated as a professional association (PA). As a PA, net profits are distributed to the shareholders at year end.
PFMC is in a rural community with a county population of 142,000 and serves 9,000 patients for their primary care needs. PFMC’s patient panel includes patients 18 years and older. Half of the patient population is enrolled with Medicare and Medicare Advantage plans (See Figure 1).
PFMC has established a long-term objective to be well respected, sought after by patients and known for the compassionate way it treats patients. Physicians who practice at PFMC are board certified in internal medicine and work closely with APPs to provide services to patients with a broad spectrum of medical needs. PFMC is focused on cost effectiveness and wants to increase revenue. An internal audit revealed that current Medicare and Medicare Advantage incentive programs were underutilized. Annual wellness visits, transition of care visits, HCC coding opportunity forms and quality care gap opportunities could provide increased revenue for the practice. Data reflected an overall disconnect with incentive opportunities due to the extensive time burden these programs require. PFMC established a short-term objective to identify incentive program requirements for Medicare and Medicare Advantage opportunities. Expanding value-based patient programs aligns with the core values of the company — to focus on patients first.
Strategic relationships/Key stakeholders
Evolution of payer reimbursements for value-based care often lead to burdensome paperwork and significant time needed to comply with the program demands. As an independent practice, PFMC gives its physicians the opportunity to be company shareholders. Hence, the key stakeholders are aware of the increasing demands payers are placing on PFMC. The shareholders will financially benefit from higher bonuses and incentive payments, with the company’s participation in value-based care.
PFMC SWOT analysis
- Privately owned and operated, making it easier to implement new programs.
- EHR allows real-time input of patient data at the point of care.
- A drive for pursuing ways to lower cost and increase patient care.
- Patient volume prohibits additional program opportunities.
- Lean staffing models limit additional programs.
- Seasoned doctors often are resistant to change.
- Thriving primary/family care panels.
- Increase income to the practice.
- Better patient management.
- Insurance payer contracts change.
- Physician and patient buy in.
- Patient population changes.
Description of new business
The addition of population health creates a centralized department to address the numerous requirements needed to be successful with the Medicare and Medicare Advantage plans. The new department would be a valuable addition to the practice’s vision. The current staffing model does not allow capacity to expand services required under the existing incentive program’s structure. A dedicated department would be able to navigate the incentive programs, particularly Medicare and Medicare Advantage. These programs include annual wellness visits (AWVs), transitional care management services (TCMS), hierarchical condition category (HCC) coding opportunity forms, and quality care opportunities. The addition of population health requires very little upfront cost to PFMC. The potential increase in revenue would surpass the cost related to the implementation of the new department as well as increase PFMC’s overall profitability. The analysis below shows the positive and negative factors related to the addition of a new population health department.
New business strategy
Population health would establish a short-term objective to achieve success in each Medicare and Medicare Advantage plan by setting goals to increase current utilization and establish actionable plans to meet the requirements of the incentive plans. Target patients are identified through the utilization of PFMC’s EHR and the payers’ applicable secure payer portals. Population health staff will actively research qualifying patients’ records to identify care gaps, absent AWV visits and HCC coding opportunity sheets. HCC coding opportunity sheets will be collected from each incentive payer and distributed to the applicable providers for completion on the day of the patient’s office appointment. Hospital discharges will be monitored and applicable TCMS visits will be scheduled for each patient. Long term, population health objectives are to increase a higher level of success in each program annually and to expand services to include additional incentive programs for new Medicare Advantage plans and commercial payers. Growth of the department will be tied to revenue opportunities and financial success of targeted programs.
Strategic relationships/key decision-makers for new business
Because population health will be an extension of primary care services currently offered at PFMC, its shareholders will make any final decisions. They will work diligently with the department leaders to stay apprised of any recommendations or future needs the department encounters.
Products or services
In the first year, population health will focus on four primary programs:
- Annual wellness visits (AWVs)
- Allowed once a year by Medicare with no charge to the patient. The purpose of this visit is to create a prevention plan that focuses on gaps in care by answering questions about medical history and updating the medical record for other providers and prescriptions.
- Transitional care management services (TCMS)
- A visit encouraged by Medicare to be done after a patient is discharged from a hospital.
- Combats hospital readmissions.
- Hierarchical condition category coding (HCC)
- Coding methodology used to determine the severity and health risk of each patient.
- Quality care gap opportunities
- A care gap identifies the difference between best practices and actual care provided and documented.
- Success is measured through a scoring methodology, which rates the national benchmarks and compares them to a practice’s performance. Greater financial incentive is paid for higher scores.
Population health will address vital health-related information that gets easily overlooked with the current workflow. To ease the complexity of the different incentive programs, a care gap matrix has been compiled to identify the different quality care opportunity requirements of each payer and the payers in which overlapping measures occur. The quality care matrix will be updated annually to ensure that the information remains accurate and up to date for each program’s specifications. The current EHR has a reporting component that allows data to be extracted by each insurance type and the assigned patients to those panels.
An audit of current program participation revealed that the payers’ rosters and PFMC’s roster are often different. A comparison will be made between the payers’ and PFMC’s data to identify discrepancies. Population health will initially focus on the incentive plans with the largest patient panels and the highest possible reimbursements. The matrix clearly identifies the specific quality measure and which insurance plans monitor and focus on those measures. This will assist the population health team to quickly identify the need for each patient based on their payer. (See Table 1 for an example of the quality care measures matrix.)
PFMC’s organizational chart with the addition of the population health department is outlined in Figure 2.
PFMC employees work cohesively to address patient needs. Population health would incur the cost of two FTE medical assistants (MAs). The new team’s responsibilities include retrieving and assessing data to meet the identified quality measures. Departmental staff will become experts in quality measures requirements, so that they can identify if any outliers exist that would qualify for measure exclusions. Table 2 provides a description of their job duties and titles.
Table 3 is an excerpt from a completed workbook created for the population health specialist, which identifies the appropriate way to clear each quality measure. It compiles information from several different quality measure programs, creating a protocol that offers step-by-step instructions for care gap completion.
Three-year operational plan
The population health department will be located at the main PFMC campus on the third floor. Currently, there is a vacant 400-square-foot space that will be outfitted with cubicles for the new department.
The department’s hours of operation will be 7:30 a.m. to 5:00 p.m., Monday through Friday, with staggered staff lunches. PFMC will allow the use of unused phones, physical space, desks, cubicles and any other startup cost to be covered by the department’s rent. Once approved by the board, implementation of the population health department will take roughly three months.
Within the first year of population health, implementation of a revised provider schedule will begin. Current schedules will be modified by designating one day a week as a power day for each provider. Power days will consist of expanded appointment times on specified days to address patients’ follow-up needs as well as completing their AWV. The internal audit revealed that patients are resistant to separate AWVs because they do not want to come in for an additional visit in which they are simply asked questions about their health. The schedule modification will allow population health staff to perform the applicable AWV questions at the beginning of each provider’s visit on their assigned power days. Each day, population health staff will be responsible for providing HCC coding opportunity sheets to the providers for patients who are scheduled for office visits. A dedicated population health staff member will monitor hospital discharges for any PFMC visits and contact the patients to schedule their TCMS visits. Population health will communicate on an individual basis with each primary care provider by flagging applicable patients’ charts with missing information needed to fulfill the quality program requirements.
The success of the department is highly influenced by patient compliance. When a patient is non-compliant, every effort will be made to aid in helping the patient become compliant. If a patient refuses care, the patient’s provider will address the importance of the recommendations to their overall health.
During the second year of population health, there will be an addition of one medical assistant to the department to help meet the projected volume increase. Continuation of the program will be paired with an expansion of the number of Medicare and Medicare Advantage plans that population health will participate in. Focus will also be placed on achieving higher completion rates of current programs to continue to increase revenue.
During the third year of operation, population health will expand revenue opportunities by including commercial insurance incentive programs as part of the program focus. This will require the addition of an MA. As incentive opportunities expand, the amount of “sweat equity” will also increase. During this year, population health will focus on obtaining the highest completion percentages and achieving maximum incentives over years one and two.
Population health will seamlessly integrate with the current business model by adding support to the providers and MA staff, easing the burden that additional incentive program work places on the current staff. Utilizing staff in population health will make the transition easier as they already have a working knowledge of the EHR and an understanding of current workflow.
Regulatory and/or accreditation bodies
PFMC is accredited as a PCMH by NCQA. Population health staff will be used as a part of a designated care team with an increased focus on management of PFMC’s targeted patient population as part of the PCMH model.
In the unlikely event that the population health program does not succeed, the department will be dissolved. Any current work would need to be reassigned to existing staff for completion.
Summary of financial needs
The addition of population health will not require outside funding. PFMC will subsidize population health’s cash flow needs in the early months. Once in the black, the population health department will be responsible for paying rent. PFMC will initially subsidize the new department as payments for services are often delayed and bonus and incentives payments are received quarterly as well as annually. The shortfall of cash in the beginning is projected to be minimal compared to the gain investment will return. In addition to the needed implementation cost for salaries and equipment, a line item has been added for administrative burden. The administrative burden will cover the additional soft cost placed on the billing department, payroll services and overall corporate management of population health.
The new department will need $3,000 for computers and $260 for furniture at startup. PFMC will allow the department to utilize current phones and cubicles. Resource costs for the addition of population health include employee salaries as well as additional line items.
Resource costs/opportunity cost
Within the first year of implementation of population health, PFMC will have invested $142,990.
If PFMC’s board decides against the proposed addition of population health, it will experience an opportunity loss of incremental revenue of $230,620 in the first year and a total of $1,378,863 over a three-year projection. The potential for increased office encounters is not quantifiable. If financial projections are met, a 5% bonus of the operating income will be distributed to the department managers.
Cost allocated from original business
PFMC will provide startup funding for the implementation of the department. Initially, there will be a delay of projected receipts and bonus payments. In addition, PFMC will pay staff salaries with the expectation that the department will show financial gain by the end of year one.
Expectations around ROI
PFMC will invest all initial costs associated with the addition of population health within the first year. Growth rate will be highest within year two as program participation expands. Projected ROI will increase every year over the three-year period.
Innovative elements and expected business outcomes
- Positive impacts. The addition of population health allows PFMC to have a dedicated team that will be able to focus on closing often-overlooked care gaps. Documentation and follow-ups for recommended care opportunities are often labor intensive, having several different payer portals and formats that each payer prefers. The addition of population health will reduce this burden to providers and medical assistants, allowing them to focus on the patient.
- Challenges encountered. During the planning phase of the addition of population health there was apprehension by older providers who felt that value-based medicine would “phase out.” The challenges that medical office administrators face every day are very fluid. Being able to improvise, adapt and overcome is imperative to the longevity of the practice.
- Project next steps. Once PFMC approves the addition of population health, training of staff will begin, as well as upfitting of the space. The next step will be to collect data for the targeted patient population and compile an action plan on how to close gaps in care. The department managers will reach out to all applicable Medicare Advantage plans to obtain current program specifications.