Big changes ahead in 1997

Integration, capitation, and legislation. What do these three words have in common?

They represent some of the massive changes on the horizon for EDs facing managed care, say many ED experts, and emergency physicians can expect big changes in 1997 as providers, payers, and government officials all try to iron out the rough spots in health care reform.

"I think there will be legislation in each state and possibly at the federal level," predicts Gregory L. Henry, MD, FACEP, immediate past president of the American College of Emergency Physicians (ACEP) and Clinical Professor in the Department of Emergency Medicine at the University of Michigan. "Managed care has handled care in the ED very badly, and I think people are realizing that."

The Cardin-Roukema "Access to Emergency Services Act of 1995" bill will almost definitely be re-introduced, Henry predicts. That legislation, modeled after a Maryland state law, would adopt the "prudent layperson" definition of an emergency, and would apply to all health plans, including Medicare, Medicaid, and managed care organizations.

"Doctors are very upset about this constant calling and getting authorizations for everything," says Henry. "There is no proof it is saving anyone money. It’s just more junk in the way of providing effective medical care."

Former ACEP president Richard Aghababian, MD, FACEP, Chief of Emergency Medicine at the University of Massachusetts Medical Center in Worcester, says he supports the MCOs’ effort to control the cost of care, but feels they should be required to take more responsibility for the restrictions they place on providers.

"I have no problem with managed care—it’s fine for people to say they have to verify authorizations," he states. "But, they have to be part of the process. [They] can’t be unaccountable for the decisions that are made."

Stung by the widespread perception that they will sacrifice quality care to save money, "smarter" MCOs are moving to develop new relationships and contractual arrangements with providers of emergency services, Henry says.

"I think there has been a backlash in this country against managed care," he states. "People are upset at the way it has been handled. If you pick any one service that most people want provided, emergency care is it."

Henry predicts MCOs will move to integrate more services, offer bulk provision of services, and look for capitation arrangements with emergency physician practice groups.

"You will see a move to more bulk provision of services because it’s more cost-efficient for them. Twenty-two percent of the managed care dollar is spent on accounting," Henry claims. "They want to get away from that. I think you will see more of them saying, ‘You provide our emergency services, here’s a check. If your volume goes up more than 5%, give us a call.’"

Integrated services: The wave of the future?

Some areas of the country are already on the verge of developing comprehensive integrated service systems that will drastically alter the delivery of unscheduled care, agrees James Augustine, MD, FACEP chief executive officer of Premier Health Services in Dayton, OH.

It involves cooperative arrangements between the ED, the transportation industry (ambulance service, etc.), and the demand management industry (telephone and computer scheduling), Augustine explains.

"These three fields are coming together to form a good product to take care of unscheduled care," he says.

For example, a patient with an asthma exacerbation presents to the ED. The program would work between the ED and EMS to provide care every six hours, evaluation, and treatment.

With the first exacerbation, the patient would be seen in the ED’s rapid treatment center. The physician then tells the patient before discharge that in six hours someone will be sent to visit you.

EMS then goes out to the patient at his or her home, Augustine says. The next morning at 6 a.m., they get a phone evaluation. If they are feeling better, they are informed that they have an appointment for 9 a.m. at their PCP’s office. If they are not doing better, EMS returns to their home and can administer IV treatment.

It’s relatively easy for practitioners to develop such care pathways for certain types of complaints, and it is relatively easy to price—an attribute that makes it attractive to managed care, he says.

"You have good evaluation and treatment of the patient," Augustine states. "Those are the kinds of innovative things we can do."

But, the development of these kinds of cooperative agreements may have unexpected consequences, cautions Wes Fields, MD, FACEP, a member of the board of California Emergency Physicians and chairman of ACEP’s section on managed care.

"Managed care doesn’t pay for EMS; taxpayers pay in their individual jurisdictions," he notes. "There is almost a total disconnect between EMS and the management of care once you get to the hospital."

MCOs are trying to resolve the "disconnects" by forming their own integrated delivery systems that may take their patients out of the 911 jurisdiction in situations that don’t involve serious situations like multiple trauma or cardiac arrest, Fields explains.

"What you would end up with is 3-5 integrated delivery systems, each responsible for a segment of the population," he says. "The only people left in 911 are the indigent, and, really, there is no way to pay for that."

That’s not to say it can’t be done, he states. One public safety organization in Alameda County (CA) is undertaking a study of developing its own expanded service to discourage any MCO from opting out of the public system.

"What they are doing up there is proposing a scenario that would allow a higher degree of integration," he says. "They are looking to take a more consolidated approach and resolve some of those disconnects between emergency medical services and public safety."

Consolidation: 500 fewer hospitals?

Along with integration, the next few years will bring consolidation of services as health care networks try to compete for managed care dollars.

"I think we will see a contraction of about 500 hospitals in the entire U.S. in the next two or two-and-a-half years," says Henry. "We will have 500 fewer hospitals nationwide."

Smaller, rural EDs will be the ones most affected by this shift, he says. Some may be operated more like 24-hour urgent care centers, sending out the higher-acuity patients to another facility, he predicts.

The remaining EDs will be more efficient, Aghababian predicts.

"The ones that are left will be better equipped to handle emergencies," he says. "They will hopefully be better staffed, and the quality of care should improve."

The reductions will definitely be a problem in isolated areas left without a facility, and expansions in EMS and other transportation services will be challenged to make up for this, he adds.

To survive, EDs are already finding new ways to market themselves to managed care and to the public, and this trend will continue, notes Augustine.

"You will see a lot of advertising [along the lines of] ‘Our ED is cleaner, our ED is safer,’" he claims. "Many will give discounts during fast-track times, etc.

"EDs must define their place in the community. They don’t want to invite the development of (competing) urgent care centers."

Getting paid

Remedying the disparity between actual costs for care and traditionally high ED charges will become even more important.

Because hospitals traditionally shifted costs for indigent care to the ED, these same departments are finding it difficult to compete now that they are being asked to justify every dollar spent, Aghababian claims.

"The cost for care in an ED is the same or better than that received in a doctor’s office, but we were just paying for everybody."

For those ED groups trying to maintain a fee-for-service operation in a managed care market, negotiating for appropriate reimbursement for high-acuity care will be a high priority, says Augustine.

"I think we will see a change in the nature of reimbursement," he says. "Our group is now going through negotiations with our payers. We want a level of reimbursement that will enable us to maintain our level of service to managed care patients."

Obtaining higher reimbursement for the higher-acuity care will enable EDs to discount lower-acuity services, he explains.

"We want reimbursements based on our ability to break out our high-acuity from our low-acuity patients. We have as a given that we are going to provide high-acuity care; what is up for grabs is the low-acuity patient."

With this arrangement, the MCO is saved a costly re-education program (i.e., training its members not to go to the ED), Augustine adds. "Other groups have to be seeing the same thing."

For EDs negotiating capitated contracts, the most cost-efficient department will win, says Henry.

"I think you will see a move toward more preferred providers (in the future)," Henry says. "We have to look at our processes and the cost of services and figure out what we actually can do it for, and the most efficient providers will prevail."

Henry warns that such arrangements have a "huge" potential for abuse by unethical organizations.

"COBRA squeezes," where some MCOs reimburse emergency services at a very low rate because they know the law requires EDs to treat everyone, are not unheard of, he says.

"Some organizations are doing a good job," he notes, pointing to the recent agreement reached between Kaiser Permanente, Inc. and ACEP. "Lots of state legislatures are going to have to address this issue."

Keeping a community focus

As providers are forced to focus on the cost of the care they give, some worry that some of the intangible aspects of the profession will be overlooked.

"As it becomes a business, I worry about the need for a definition of charity," notes Aghababian. "We do a lot of work in our communities. We work with people on accident prevention. We go into schools and work with kids who play sports and make sure they are properly taken care of, make sure kids get inoculated. We don’t get paid for that—it’s part of our responsibility. I hope we don’t become such businesspeople that we lose sight of that."