Medicare driving health care hookups

The scramble by local hospitals to form their physicians and facilities into “clinically integrated” networks that can do business with employers and health insurers has another huge motivating factor: Beginning January 2012, they can also do business with Medicare, the massive federal program for seniors.

The new health reform law instructs the Medicare agency to sign new “shared savings” contracts with accountable care organizations, or ACOs. Such an organization must include primary care doctors and must serve at least 5,000 Medicare patients a year.

Many believe ACOs and shared-savings contracts will become the most common way Medicare, the largest and most influential insurance program in the country, does business with hospitals and doctors.

Indianapolis-area hospitals, having recently acquired or affiliated with hundreds of physicians, are now looking to integrate them into one organization for purposes of winning one of the new contracts with Medicare. They also believe the networks can help them negotiate new contracts with employers and private health insurers that reward hospitals for keeping patients healthy, guiding them through the confusing health care system and, thereby, reducing costs.

Hospitals need bonuses to encourage such efforts because the quickest way to reduce costs in health care is to limit hospitalizations.

Community Health Network is probably furthest down this path, with more than 1,000 doctors either working for or contractually committed to working with the network to coordinate care with other providers in an effort keep patients healthy—and having part of their pay depend on it.

“We’ve believed for a very, very long time that the key is to get the physicians and all of the providers on the same page economically,” said Tom Fischer, chief financial officer of Community Health Network. “But we still have for the most part, especially here in central Indiana, a health care system that is driven by providing services, volume of services, as opposed to preventive health care.”

As of June, Clarian Health had hired 415 physicians at the Indiana Clinic, a joint venture with the Indiana University School of Medicine. But the Indiana Clinic has a long way to go to reach its goal of 1,200 to 1,500 physicians.

Meanwhile, Clarian is also trying to sign up its own and independent physicians to its Clarian Quality Partners network, which commits them to integrate their clinical care closer with other Clarian physicians and facilities.

Clarian is launching a new health insurance plan that will rent Clarian Quality Partners access to employers who fund their own health benefits plans.

Meanwhile, St. Vincent Health announced July 1 that its acquisition of Indianapolis-based The Care Group will be the first practice in a statewide network of clinically integrated physicians, similar to Clarian Quality Partners. The St. Vincent Medical Group could serve as a base for an accountable care organization that could win a shared savings contract with Medicare.

“St. Vincent Medical Group is an important entity within our overall strategic provider direction, and affords better coordination and a foundation for physicians to best address wellness for their patients,” Vincent Caponi, CEO of St. Vincent Health, said in a statement.

Physicians don’t all have to sell their practices to hospitals to join these networks; they can sign affiliation agreements that leave them independent or form a joint venture with a hospital system. But experts say the pressure is on physicians to choose a hospital system as soon as possible—even though the rules of accountable care organizations and shared savings contracts have not all been written.

“The 2010 health reform law that created the Medicare shared savings program also appears to limit each physician to participating in only one shared-savings network,” Richard Bouma, a health care attorney at Warner Norcross & Judd, wrote in a June article on the Michigan law firm’s website.

“This one-ACO rule creates an incentive on the part of an ACO network to get physician practices contractually committed to participating as soon as possible, before they join another ACO,” Bouma added. “On the other hand, practice groups likewise do not want to wait too long to join an ACO network, lest a desirable ACO network withdraw its invitation to join.”