Home > Health Law Reform -- General, Physician Practices > Evolving Physician Practice Structures – Why?

Evolving Physician Practice Structures – Why?

Health care reform, economic and business uncertainty, increased regulatory burdens and scrutiny, and declining reimbursement from Medicare and other managed care payers are pushing a realignment of physician practices and providing new incentives for integration, consolidation, and other practice structures.

In a recent Medical Economics poll, 4 out of 5 physicians found it challenging to maintain their dual roles as doctor and businessperson, and 76% thought it was only going to get worse.

New and Complicated Regulations, like the following:

  • New enrollment, disclosure , and compliance requirements under the Affordable Care Act
  • Transition to ICD-10 Coding and version 5010 HIPAA transaction standards
  • Regulatory and Advisory Organizations are expected to impact care and reimbursement –
    • Patient-Centered Outcomes Research Institute (identifies research priorities and conducts research on the clinical effectiveness of medical treatments)
    • Independent Payment Advisory Board (makes recommendations to reduce the per capita rate of growth in Medicare spending)
    • Physician Quality Reporting Initiative

Increased Regulatory Oversight, like the following:

  • Stark, Anti-kickback, HIPAA, False Claims Act, and similar Florida laws are being vigorously enforced (e.g., HEAT)
  • The Affordable Care Act has made health care fraud much more dangerous –
    • A physician no longer must have direct knowledge that his or her actions constituted a violation to be prosecuted.
    • Activities of staff may be more easily attributed to the physician
    • There is new liability for making a false statement or material error on provider applications
    • Keeping an overpayment for longer than 60 days after discovery is now a violation of the False Claims Act
    • Physicians providing diagnostic services like MRI, PET and CT scans must provide information to patients in writing about the other area providers
  • Whistleblower and Qui Tam actions by former employees
  • Increased scrutiny of valuations

Reimbursement issues, like the following:

  • Decrease in government reimbursement – slower, less reliable
  • Increase in number of Medicaid funded patients with lower payments (an average Medicaid payment is 56% of private payment, Medicare is 81%)
  • Affordable Care Act raises the Medicaid rate for primary care physicians to 100% of Medicare in 2013 and 2014, but no guarantee long term
  • Payment is shifting from traditional fee for service to “results delivered,” and segmented approaches to care are being replaced by accountability and responsibility for a patient’s health
  • Thus, changes in payment methodologies — bundled payments (combined payments across multiple sectors), and new delivery models (e.g., Accountable Care Organizations and Medical Homes)
“Market and economic forces over the past 20 years have led physicians and hospitals to engage in a variety of approaches to achieve greater integration, with varying degrees of success.  Physician-hospital integration has increased during periods when patterns of reimbursement align physician and hospital incentives, competition intensifies,  or other economic or demographic changes require collaboration.” — California  Healthcare Foundation, Physician-Hospital Integration in an Era of Health Reform (December  2010)
 As a result, there is greater interest on the part of physicians and health systems in “partnering” with each other.



In subsequent posts, I will outline the following and discuss how they fit into evolving physician practice structures: 

  • Different Physician-Health System Integration Models
  • ACOs, IPAs, and PHOs
  • MSOs
  • Physician Practice Consolidations
  • Changing Levels of Medicare Participation
  • Concierge Practice.
  1. communication22
    April 17, 2012 at 2:15 pm

    Another option that physicians have to increase their leverage is practice consolidation either to a large out of system group practice or an integrated solution. We are seeing more and more doctors merge with other physician practices as a response to pressures from healthcare reform law. Armanino McKenna, a top accounting and consulting firm in the bay area, has great insights on this new trend. They’ve outlined the 3 major upsides: Negotiating Power, Economies of Scale and Operational Efficiencies. As well, they go on to describe the opening steps you need to take when bringing together the partners considering the merger.



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