Tony Chen, associate director of government pricing, Alliance Life Sciences, and Robert Fellman, senior health consultant, discuss the impact of accountable care organizations on device and pharmaceutical companies.
1. More outcome data needed in pay-for-performance contracts. As the industry moves away from fee-for-service compensation models to pay-for-performance, the contract for payors will be based more on outcomes than the quantity of procedures performed. If certain devices, such as an artificial disc, don't show a good outcome for patients, insurance companies may not reimburse for the procedure, says Mr. Chen. "Companies will need to measure outcomes that show the devices are as wonderful as they say they are," says Mr. Chen.
Surgeons must also work with the companies to provide data that tracks patients' long-term progress and develop benchmarks measuring the value and efficacy of surgical intervention. "Until studies are amassed and completed, payors will be able to question surgical intervention because it comes at a high cost and can be considered riskier than medication management," says Mr. Fellman.
2. ACO primary care focus. Orthopedic, spine and pain management specialists will most likely see a diminished referral strain of Medicare patients from primary care physicians, says Mr. Fellman. "Payors are going to question the value of surgeries performed for lower back pain, especially if the literature says they have mediocre outcomes," he says. "For the device industry, where those services are their bread and butter, this trend is concerning."
In the future, orthopedic device and pharmaceutical companies may begin engaging with insurance companies for the best reimbursement values because their hospital customers will be feeling the push to lower costs. Beyond producing clinical effectiveness data, companies may make their products more attractive to hospitals by reducing the price in partnership with their ACO entities.
3. Surgeon involvement in ACOs. Surgeons and specialists are able to become part of one or multiple ACOs, an opportunity that could give them an advantage heading into the future. "I think it would be in the best interest of surgeons and pain management physicians to seek an active role in the development of clinical pathways for ACOs to make sure the committees don't inadvertently restrict access to surgeries and procedures," says Mr. Fellman. "Spine surgeons will need to be proactive to make sure the value they deliver is understood by the primary care physicians."
Ultimately, the ACOs will be looking for the most cost-effective method for achieving excellent patient care, and involvement in developing these clinical pathways ensures the appropriate patients will benefit from surgical intervention. "Despite the politics and immediate reactions to the ACO rules, the Centers for Medicare and Medicaid Services' intent for this was finding a way to provide physicians and care providers with a better way to deliver care to patients without any specific punishment for not following them," says Mr. Chen. "From my perspective, there is really an upside for physicians who work with ACOs, but it's important to take the time to learn the regulation, structures and contracts available to them for the biggest benefit."
4. How device companies can stay on the cutting-edge. One way device manufactures will be able to meet the challenges of the changing healthcare environment is by providing a pre-contract and post-contract award. "During the process of demonstrating a product, the device representative must show or provide literature showing the evidence about what the clinical trials have been for the products they are pushing," says Mr. Fellman. "They must amass as much evidence that the product is favorable for treating the disease."
In terms of pharmaceutical products, the drugs with the fewest side effects and least chance of addiction will be the most successful. The terms of the contract between the contractor and ACO entity will focus on delivery of care and measure outcomes according to the specific healthcare measurements put forth by the CMS rules. Shared savings between the manufacturer and physician will provide further incentive to make sure patients are recovering or managing their condition well, he says.
5. Offering the continuum of care. Orthopedic and spine surgeons who are primarily focused on providing a greater continuum of care are interested in partnering with pain management physicians to fulfill that goal. Surgeons or physicians may also be interested in becoming involved in the ACO framework, in which case they must ensure their treatments can be measured by the CMS healthcare outcomes. Device companies must be aware of these regulations as they market their products to providers who are acutely familiar with what they need to achieve ACO goals.
Surgeons will also be looking for the ability to work on a contractual basis with ACOs, and they must ensure the appropriate treatments are part of the ACO, says Mr. Fellman. "The connections should be made between the government regulations and the ACO framework where the physicians can derive the most benefit for themselves and their patients," he says. "The ACO framework should balance the incremental costs with incremental benefits. In the past, physicians who were trying to measure the outcomes with their patients often went through several diagnoses and procedures to achieve the desired outcomes. Now, we are looking at the incremental value for the treatment versus the cost. The cost for the treatment is based on the outcomes."
Learn more about Alliance Life Sciences.
Related Articles on ACOs:
6 Things to Know About Spine Surgeon Involvement in ACOs
6 Questions on Whether ACOs Will Assist Pain Management
The Impact of Evidence-Based Medicine and ACOs on Orthopedics and Spine
Surgeons must also work with the companies to provide data that tracks patients' long-term progress and develop benchmarks measuring the value and efficacy of surgical intervention. "Until studies are amassed and completed, payors will be able to question surgical intervention because it comes at a high cost and can be considered riskier than medication management," says Mr. Fellman.
2. ACO primary care focus. Orthopedic, spine and pain management specialists will most likely see a diminished referral strain of Medicare patients from primary care physicians, says Mr. Fellman. "Payors are going to question the value of surgeries performed for lower back pain, especially if the literature says they have mediocre outcomes," he says. "For the device industry, where those services are their bread and butter, this trend is concerning."
In the future, orthopedic device and pharmaceutical companies may begin engaging with insurance companies for the best reimbursement values because their hospital customers will be feeling the push to lower costs. Beyond producing clinical effectiveness data, companies may make their products more attractive to hospitals by reducing the price in partnership with their ACO entities.
3. Surgeon involvement in ACOs. Surgeons and specialists are able to become part of one or multiple ACOs, an opportunity that could give them an advantage heading into the future. "I think it would be in the best interest of surgeons and pain management physicians to seek an active role in the development of clinical pathways for ACOs to make sure the committees don't inadvertently restrict access to surgeries and procedures," says Mr. Fellman. "Spine surgeons will need to be proactive to make sure the value they deliver is understood by the primary care physicians."
Ultimately, the ACOs will be looking for the most cost-effective method for achieving excellent patient care, and involvement in developing these clinical pathways ensures the appropriate patients will benefit from surgical intervention. "Despite the politics and immediate reactions to the ACO rules, the Centers for Medicare and Medicaid Services' intent for this was finding a way to provide physicians and care providers with a better way to deliver care to patients without any specific punishment for not following them," says Mr. Chen. "From my perspective, there is really an upside for physicians who work with ACOs, but it's important to take the time to learn the regulation, structures and contracts available to them for the biggest benefit."
4. How device companies can stay on the cutting-edge. One way device manufactures will be able to meet the challenges of the changing healthcare environment is by providing a pre-contract and post-contract award. "During the process of demonstrating a product, the device representative must show or provide literature showing the evidence about what the clinical trials have been for the products they are pushing," says Mr. Fellman. "They must amass as much evidence that the product is favorable for treating the disease."
In terms of pharmaceutical products, the drugs with the fewest side effects and least chance of addiction will be the most successful. The terms of the contract between the contractor and ACO entity will focus on delivery of care and measure outcomes according to the specific healthcare measurements put forth by the CMS rules. Shared savings between the manufacturer and physician will provide further incentive to make sure patients are recovering or managing their condition well, he says.
5. Offering the continuum of care. Orthopedic and spine surgeons who are primarily focused on providing a greater continuum of care are interested in partnering with pain management physicians to fulfill that goal. Surgeons or physicians may also be interested in becoming involved in the ACO framework, in which case they must ensure their treatments can be measured by the CMS healthcare outcomes. Device companies must be aware of these regulations as they market their products to providers who are acutely familiar with what they need to achieve ACO goals.
Surgeons will also be looking for the ability to work on a contractual basis with ACOs, and they must ensure the appropriate treatments are part of the ACO, says Mr. Fellman. "The connections should be made between the government regulations and the ACO framework where the physicians can derive the most benefit for themselves and their patients," he says. "The ACO framework should balance the incremental costs with incremental benefits. In the past, physicians who were trying to measure the outcomes with their patients often went through several diagnoses and procedures to achieve the desired outcomes. Now, we are looking at the incremental value for the treatment versus the cost. The cost for the treatment is based on the outcomes."
Learn more about Alliance Life Sciences.
Related Articles on ACOs:
6 Things to Know About Spine Surgeon Involvement in ACOs
6 Questions on Whether ACOs Will Assist Pain Management
The Impact of Evidence-Based Medicine and ACOs on Orthopedics and Spine