As the Affordable Care Act continues to mature, we are seeing new efforts by the Obama administration to incentivize care coordination across a spectrum of services provided to Medicare Fee-for-Service (FFS) patients.  A New York Times article posted on August 16, 2014 reports that starting in January of 2015 Medicare will begin making monthly payments to physicians who manage care for patients with two or more chronic conditions like heart disease, diabetes and depression.  The Times reports that approximately two-thirds of Medicare patients suffer from two or more chronic conditions.  The program aims to incentivize physicians to improve medical outcomes, reduce hospital visits and readmissions and engage in preventative care.  Physicians will assess patients’ medical, psychological and social needs; monitor adherence to medication prescriptions and care provided by other doctors; and make arrangements to ensure a smooth transition when patients move from a hospital to post-acute care facilities or home-care.

These payments will certainly be a welcome change to physicians and hospitals who have often taken the initiative to coordinate care for their Medicare FFS patients without any additional reimbursement.  Physicians participating in the program will receive approximately $42 a month for managing the care of each Medicare patient with two or more chronic conditions. The aggregate annual payments under this program could have a significant impact on a physician’s total revenue.  If a physician works in a large hospital or group with care coordination infrastructure, then these extra sums would fall to the entity’s bottom line or help reduce coordinated care expenses.

Despite the financial gains to providers and potentially better outcomes for patients as doctors are incentivized to coordinate care, both stakeholders are likely to experience some growing pains as the policy roles out at the beginning of 2015.

From the patient side, individuals will need to reach into their own pockets for the program.  Care management services can be provided only if patients agree in writing and patients will be required to pay approximately 20 percent of fee, the same proportion of patient responsibility as for many other medical services provided under Medicare.  This patient copay could lead to slow adoption of the program from Medicare FFS beneficiaries who want to avoid the additional expense.

From the provider side, treating physicians will be required to develop comprehensive care coordination plans for participating patients and it remains to be seen how burdensome a task that will be.  Additionally, in a nod to the continued focus on improving patient-physician communication, physicians will be required to provide patients with 24/7 access to deal with “urgent chronic care needs.”  Treating physicians will be permitted to utilize assistance from nurse practitioners, physician assistants and certain other health professionals in providing such coordinated care.  Physicians should carefully monitor requirements imposed by CMS for care coordination plans and determine how they need to modify their current “on-call” procedures and relationships to comply with the 24/7 access requirement.

The institution of Medicare care coordination payments could also impact care coordination payments by private insurers.  Physicians may demand care coordination payments from Medicare Advantage plans and other managed care entities.  The $42 rate could be beneficial to both plans and providers depending on the circumstances.  A plan that currently pays more than that rate for care coordination could try to negotiate their rate downward while a physician that is receiving less than $42 per month could attempt to negotiate an increased payment.

Despite the costs associated with the program, this initiative is likely to play a big role moving forward.  While we have seen a major focus on care coordination by physicians, hospitals and insurance companies under the Affordable Care Act with programs such as Accountable Care Organizations continuing to draw attention from large multi-specialty practices and other physician organizations, this program creates a direct link between individual physicians and patients requiring buy-in from providers and patients alike.  It will be vital for physicians to engage their patients in dialogue regarding this option and to provide them with education on the benefits of such coordinated care programs.