341
REVIEW ARTICLE
Managed Care and the Infectious Diseases Specialist
Alan D. Tice, Thomas G. Slama, Steve Berman,
Peter Braun, John P. Burke, Alison Cherney,
Peter A. Gross, Peter Harris, Melinda Reid-Hatton,
Robert Hoffman, Patrick Joseph, Stephan Lawton,
R. Michael Massanari, Zachary I. Miller,
William J. Osheroff, Donald Peretz, Mervin Shalowitz,
Bryan Simmons, James P. Turner, Barbara Wade, and
Barbara R. Nolet
From Infections Limited, P.s., University of Washington, Tacoma,
Washington; Infectious Diseases of Indianapolis, Indiana University,
Indianapolis, Indiana; Infectious Diseases Consultant, Honolulu, Hawaii:
Department o] Health Policyand Management, HarvardSchool ol Public
Health, Cambridge, Massachusetts; Infectious Diseases Division, Latter Dar
SaintsHospital, University of Utah, Salt Lake City, Utah: Cherney and
Associates, Rancho Palos Verdes, California: Hackensack Medical Center,
New Jersey Medical School, Hackensack, New Jersey: Hogan and Hartson,
Washington, DC; Hogan and Hartson, Washington, DC: Springfield Medical
Association, Springfield, Massachusetts; Infectious Diseases Medical Group,
University of California, San Francisco, San Francisco, California: Hogan
and Hartson, Washington, DC; Wayne State University School of Medicine,
Detroit, Michigan: Infectious Diseases/Pediatrics, Group Health Cooperative,
Seattle, Washington; PacifiCare of California, Cypress, California; Infectious
Diseases Physicians, Annandale, Virginia; United Healthcare of Illinois,
Rush Medical College, Chicago, Illinois; Methodist Health Systems,
Memphis, Tennessee: Milliman & Robertson, lnc., San Francisco, California:
Infectious Diseases Consultant, Pensacola, Florida; and Northwest
Management Associates, Gig Harbor, Washington
There is growing demand to contain health care costs and to reassess the value of medical services.
The traditional hospital, academic, and research roles of the infectious disease (ID) specialist are
threatened, yet there is an increasing need for expertise because of growing antimicrobial resistance and
emerging pathogens. Opportunities exist to develop and expand services for the care of patients infected
with human immunodeficiency virus and in infection control, epidemiology, outcomes research, outpatient intravenous therapy, and resource management. It is important for ID physicians to appreciate
the principles involved in managed care and the areas in which ID services can be valuable. To be
effective, physicians need to know about tools such as practice guidelines, physician profiling, outcomes
monitoring, computerized information management, risk sharing, networking, and marketing, as well
as related legal issues. With a positive attitude toward learning, application, and leadership, ID physicians can redefine their role and expand their services through managed care.
Table of Contents
Introduction
I. Government: Intervention and Impact-Peter
Braun
344
344
Received 22 December 1995; revised 19 April 1996.
Much of the information for this article was gathered from a conference
entitled Managed Care in Infectious Diseases, held in June 1995 in Chicago.
That information was consolidated, updated, and expanded for this article.
Resources indicated in each section of the text are those offered by participants in the conference on the basis of their own experience or knowledge.
They are not intended to be complete or comprehensive listings of all available
resources.
Financial support: Sources for the conference and this publication include:
Abbott, Amgen, Bayer, Glaxo, Hoechst-Roussel, Merck, Ortho-McNeil, Pfizer,
Pharmacia, Physician's Quality Care, Hoffmann-La Roche, SmithK1ine, and
Upjohn.
Reprints or correspondence: Dr. Alan D. Tice, Infections Limited, P.S., 1624
South I Street, Suite 402, Tacoma, Washington 98405.
Clinical Infectious Diseases 1996;23:341-68
© 1996 by The University of Chicago. All rights reserved.
1058--4838/96/2302-0020$02.00
II. The Private Sector: Response and Impact- Bain
Farris
345
III. Infectious Disease Physicians and the Staff Model
HMO-Zachary Miller
346
IV. The Response of the Market: PacifiCare of
California as an Example of a Network Model
HMO- William Oshero.ff
347
V. Capitated Reimbursement: A Risk-Sharing
Methodology -r-James Turner
349
VI. Information Management: Computerization
Required in a Cost-Based Environment-John
Burke
351
VII. Practice Guidelines-Peter Gross
352
VIII. Networks-Alison Cherney
353
IX. Understanding Legal Issues: Antitrust LawMelinda Reid-Hatton
355
X. Infectious Disease Services: Practical ElementsAlan Tice
,
356
XI. New Approaches to Patient Care Services-Alan
Tice, Thomas Slama, Mark Bresnik, Patrick Joseph,
Laura Loeb, Robert Hoffman; and Alison Cherney . . 35R
Tiee et al.
342
XII. HIV-Related Care: An Example of Infectious
Disease Risk Sharing-Patrick Joseph, Donald
Poretz, Mervin Shalowitz, and Peter Harris
XIII. Expansion of Infection Control, Quality
Assurance, and Epidemiology-Michael
Massanari, Bryan Simmons, Robert Weinstein,
Michael Parry, and Michael Williams
XIV. Outpatient Intravenous Antibiotic Therapy:
Opportunities-Steve Berman, Barbara Wade,
Hewitt Goodpasture, Barbara Nolet, Stephan
Lawton, Robert Tallon, and Joseph Romano
Conclusion -Alan Tice
Case management:
360
362
363
365
Abbreviations
AMA
CDC
DME
DRG
DOJ
FFS
FTC
HCFA
HMO
ID
IDSA
IPA
MCO
MSO
OPAT
PHO
PMPM
POS
PPO
RBRVS
SHEA
American Medical Association
Centers for Disease Control and Prevention
Durable medical equipment
Diagnosis-related group
United States Department of Justice
Fee for service
Federal Trade Commission
Health Care Financing Administration
Health maintenance organization
Infectious disease
Infectious Diseases Society of America
Independent practice association
Managed-care organization
Managed-services organization
Outpatient parenteral antibiotic therapy
Physician-hospital organization
Per member, per month
Point of service
Preferred-provider organization
Resource-based relative value scale
Society for Healthcare Epidemiology of America
Glossary
Some abbreviations used in the text also appear in this
glossary. Please refer to the list above for their definitions.
Capitation:
A method of payment for health care services
in which the provider accepts a fixed amount of payment
per subscriber per period of time, in return for providing
specified services over a specified time period.
em 1996;23 (August)
Third-party-payor supervision and authorization of a given patient's or group of patients' utilization of services. The supervision typically is performed
by a nurse and often is indicated in cases of catastrophic
or chronic disease.
Coinsurance: The percentage of the costs of medical services that is paid by the patient. A characteristic of indemnity and PPO plans. Under Medicare Part B, the beneficiary pays 20% of allowed charges after the deductible is
met.
Competitive medical plan: A type of MCO created by the
1982 Tax Equity and Fiscal Responsibility Act to facilitate
the enrollment of Medicare beneficiaries into managed
care plans. Competitive medical plans are organized and
financed much like HMOs but are not bound by all the
regulatory requirements facing HMOs.
Copayment (Copay): An amount of money that the member
or insured pays directly to a provider at the time services
are rendered; meant to offset administrative costs.
Credentialing: The process of reviewing a practitioner's eredentials-i.e., training, experience, or demonstrated ability- for the purpose of determining whether criteria for
clinical privileges are met.
Deductible: A specified amount of covered medical expenses
that a beneficiary must pay before receiving benefits.
Diagnosis-related group (DRG): System involving classification of medical cases and payment to hospitals on the
basis of diagnosis. Used under Medicare's prospective
payment system to reimburse inpatient hospitals, regardless of the cost to the hospital to provide services.
Discounted fee for service (FFS): A financial reimbursement system whereby a provider agrees to supply services
on an FFS basis, but with the fees discounted by a certain
percentage from the physician's usual charges.
Durable medical equipment (DME): Nondisposable patient
care equipment (e.g., infusion pumps and wheelchairs).
Medicare reimbursement for these items is currently managed through four regional carriers, commonly referred to
as DMERCs.
Fee for service (FFS): Refers to payment of providers for
individual services rendered, as opposed to payment with
salaries or under capitation.
Gatekeeping: The process by which a primary care physician
directly provides primary care and coordinates all diagnostic testing and specialty referrals required for a patient's
medical care. Referrals must often be preauthorized by
the gatekeeper unless there is an emergency.
Group or network model HMO: An HMO that contracts
with one or more independent group practices to provide
services in one or more locations, in which physicians are
prepaid on a capitation basis.
Health Care Financing Administration (HCFA): The federal agency responsible for administering Medicare and
for overseeing the states' management of Medicaid.
em 1996;23
(August)
Managed Care in Infectious Diseases
Health insurance purchasing cooperative: Under the proposed Managed Competition Act, all individuals (except
employees of very large businesses) would join health
insurance purchasing cooperatives. These would be statechartered, not-for-profit organizations with exclusive geographic territory. A menu of health plans would be offered
with clear, standardized information. The cooperatives
would collect all individual and small business premiums
and distribute them to the accountable health plans.
Health maintenance organization (HMO): A form of
health insurance in which members prepay a premium for
the HMO's health services. There are different models:
staff, group, IPA, hybrid, network, and POS.
Hold harmless: A clause frequently found in managed care
contracts, whereby the HMO and the physician hold each
other not liable for malpractice or corporate malfeasance
if either of the parties is found to be liable. This language
does not preclude a managed-care company from being
sued if one of its physicians is sued. It also may prohibit
the provider from billing patients if the managed care
company becomes insolvent.
Incurred but not reported: Refers to a financial accounting
of all services that have been performed but, as a result of
a short period of time, have not been invoiced or recorded.
Indemnify: To make good a loss.
Independent practice association (IP A): A delivery model
in which the HMO contracts with a physician organization, which in tum contracts with individual physicians.
The IPA physicians practice in their own offices and continue to also see their FFS patients. The HMO reimburses
the IPA on a capitated basis; however, the IPA may reimburse the physicians on an FFS or capitated basis.
Knox-Keene: A piece of California legislation that governs
HMO operations.
Managed-services organization: A generic term that includes all forms of managed health care services.
Outcomes management: A clinical outcome is the result
of medical or surgical intervention or nonintervention.
Managed services organizations are now attempting to
better manage clinical outcomes for their enrollees to increase the satisfaction of patients and payors while holding
down costs.
343
Per diem: A form of payment for services in which the
provider is paid a daily fee for specific services or outcomes, regardless of the cost of provision.
Physician-hospital organization (PHO): An entity that
merges hospital and physician services into a single organizational unit focused around a hospital or hospital system, which then contracts with employers or MCOs.
Physician Payment Review Commission: Established by
Congress in 1986 to advise it on reforms of Medicare
policies for paying physicians. Submits a report to Congress annually.
Physicians for Quality Outpatient Infusion Therapy: A
political action committee established in 1994 to represent
the views of physicians involved in management of outpatient infusion therapy.
Point-of-service (POS) plan: Sometimes referred to as an
open-ended HMO; a plan in which the patient can receive
care either from physicians contracting with the HMO or
from those who do not.
Preferred-provider organization (PPO): A competitive response to the HMO, in which beneficiaries are motivated
to utilize providers who have agreed to a discounted fee
for service but are still covered when using a non-PPO
provider.
Risk pool: A pool of money that is at risk for being used
for defined expenses. Commonly, if the pool money that
is put at risk is not expended by the end of the year, some
or all of it is returned to those managing the risk.
Staff model HMO: An HMO in which the physicians are
salaried employees of the HMO.
Third-party administrator: An external organization that
handles administrative duties and sometimes utilization
reviews. Third-party administrators are used by organizations that actually fund the health benefits but do not find
it cost-effective to administer the plan themselves.
Withhold: The portion of the monthly capitation or FFS payment to physicians that is withheld by an HMO until the
end of the year (or other time period) to create an incentive
for efficient care. The withhold is "at risk": physicians (or
groups of physicians) who exceed utilization norms do not
receive it. Thus, it serves as a financial incentive for lower
utilization. The withhold can cover all services or be specific
to hospital care, laboratory use, or specialty referrals.
344
rice et al.
Introduction
Employers, taxpayers, and consumers have demanded action to
curb continued increases in the cost of health care in the United
States. Federal and state governments have intervened through
changes in Medicare and Medicaid reimbursement and attempts at
health care reform. The private sector has also responded with a
variety of ideas and methods to bring accountability and cost efficiency to medicine. These "managed care" efforts have begun to
change the system of medical care as we have known it and will
have an increasing influence on patient care and all physicians
[1]. The Managed Care in Infectious Diseases conference, held in
Chicago in June of 1995, was organized by the Clinical Affairs
Committee of the Infectious Diseases Society of America (IDSA)
to bring together infectious disease (ID) specialists to share their
knowledge about and experiences with managed care. Additional
presentations were included in the conference in the related areas
of administration, accounting, and law.
The role of the physician is being reevaluated in managed
care. The traditional role of ID specialists is threatened, as they
do not perform any unique procedures and their specialty has
been based on the cost centers of hospitals, academics, and
research. Nevertheless, there is a growing need for expertise in
ID, in the face of increasing antibiotic resistance and emerging
pathogens such as HIV. ID specialists can provide a variety of
expanded services in the new health care environment, which
should become increasingly valuable as provider and payor
paradigms shift. The need for ID specialists is great; the challenge is in applying their expertise and in helping others understand, appreciate, and reward its value.
The organizers of the managed-care conference believe opportunities exist for ID physicians in consultative patient care
services, HIV-related care, infection control, formulary management, physician education, quality assurance, and resource
management, especially in the outpatient arena. ID specialists
can contribute to growth and management in these areas, or
they will be managed by others.
Physicians have the opportunity to become leaders in the
process of changing the way health care is purchased and provided. In the past, specialists have looked to other physicians
for referrals; now they need to document their value and market
their services to insurers and administrators as well as to other
doctors. ID doctors must be proactive in redefining their role
in this time of change and uncertainty, rather than waiting for
it to be defined by others.
This report will review the historical development of managed care, the perspective of nonphysicians, and some of the
tools necessary to navigate and be a productive participant in
the coming changes. Sections X-XIV will then outline an
integrated approach to expanding ID services in the areas of
clinical consultation, HIV-related care, infection controll
epidemiology, and outpatient infusion therapy.
I. Government: Intervention and Impact
In 1983 the United States government responded to a growing demand for reductions in health care expenditures by intro-
em 1996;23 (August)
ducing the Medicare diagnosis-related group (DRG) prospective payment system for hospitals. The goals of the program,
developed by the Health Care Financing Administration
(HCFA), were to stop spiraling costs and to weed out inefficient
hospitals. Supporters expected that these goals would be met
without a corresponding decrease in access for beneficiaries.
The new payment system forced a dramatic, paradigmatic shift
for hospitals, with incentives to do less for patients instead of
more. This is similar to what is now occurring with physicians
under capitated payment.
At the same time, physicians' professional fees also came
under the scrutiny of legislators. A DRG system for physician
payment was considered but thought to be too complex and
cumbersome to design and implement. Capitation was also
considered for Medicare, but it was believed that the best alternative was to reevaluate and redesign the existing fee-for-service (FFS) system. Congress mandated a study of alternatives,
and the HCFA contracted with Harvard University to develop
what has come to be known as the resource-based relative
value scale, or RBRVS [2-5]. Subsequently, the Physician
Payment Review Commission, chaired by Philip Lee, M.D.,
evaluated the system and recommended its use in the development of the Medicare fee schedule.
The original intent of the RBRVS was to measure the resource inputs involved in physicians' services. The resource
inputs most important to medical services are the work of
the physician, practice costs, the costs of professional liability
insurance, and the opportunity cost of specialty training. The
operational definition of work included the time, mental effort,
judgment, technical skill, physical effort, and stress due to risk
involved in the delivery of physician services. A survey of
practicing physicians regarding their work demonstrated
agreement within specialty areas at a high level of statistical
reliability. The resulting recommended fees differed substantially from prevailing charges for medical services, with an
increase in payment for evaluation and management services
and a corresponding reduction for surgical and other invasive
procedures [6].
In 1992 the Medicare Physician Payment Reform legislation
established a new Medicare fee schedule based on the RBRVS
findings, as well as limitations on balance billing and control
of aggregate cost of physician payments [7, 8]. However, the
current Medicare fee schedule is a flawed compromise of the
initial RBRVS recommendations.
The current fee schedule bases a portion of payments to
physicians on the original Harvard RBRVS study values, but
practice costs are based on historical charges rather than on
actual costs. In fact, the overhead costs of services associated
with the lowest historical charges, such as office visits, are
relatively high, while those of services associated with the
highest charges, such as hospital surgical procedures, are relatively low for the physician. In addition, the system incorporated the Medicare volume performance standard to essentially
cap total payments at the 1991 level, plus annual increments
for growth in numbers of beneficiaries, age of beneficiaries, and
cm
1996;23 (August)
Managed Care in Infectious Diseases
other factors. Surgeons' organizations managed to negotiate a
separate volume performance standard, which has resulted in
a higher conversion factor and increases for their payments for
surgery, at a higher rate than for other physician services.
These changes to the RBRVS essentially reduced the
changes in physician payment by one-half-that is, the increases in Medicare revenues for physicians providing primary
care and other medical services (including ID consulting services) were cut in half, while reductions in income for surgeons,
radiologists, and procedural subspecialists were limited. Because of the effect of the geographic redistributive effort and
of the practice cost formula, many internists and medical subspecialists in large metropolitan areas experienced no gain in
Medicare income at all under the reform, and some have lost
mcome.
The Medicare fee schedule reform has succeeded in its original goal of controlling the growth of spending for physician
payment (Medicare Part B) without reduction in access. It has
also resulted in some reallocation of payments from procedurebased specialists to primary care physicians and from large
metropolitan areas to smaller and rural locales. Now, because
of ongoing pressure from physicians' groups regarding the system's flaws, Congress has directed HCFA to produce a new
fee schedule that should be much closer to the original Harvard
RBRVS, to be implemented by January 1998. More important,
the practice-cost portion of the Medicare payment for each
current-procedural-terminology code is to be based on resource
costs. Studies of practice costs are currently in progress, but
whether these studies will be completed satisfactorily and
whether the Medicare fee schedule will be corrected by that
deadline are not clear.
It is essential that flaws in the application of RBRVS be
corrected, for reasons that extend beyond Medicare payments.
The Medicare fee schedule increasingly serves as a basis for
payment by payors in the private sector as well as the state
Medicaid programs. It is even being considered for adoption
internationally. As managed care grows, capitation rates will
be based on how the premium dollar is allocated under FFS
conditions. Physicians can and must become involved in order
to influence appropriate reform and shape the future direction
of their compensation.
There are a variety of vehicles for involvement in this effort.
It will be important to work with representatives in Washington, D.C., as well as in the state legislatures. In addition to the
IDSA, the most effective medical organization for ID specialists at this time is probably the American Society of Internal
Medicine. The American Academy of Family Physicians and
the American College of Physicians are also potential partners.
Additional alternatives include donating time and money for
proactive, timely efforts, as well as keeping up with current
developments.
It will always be important to communicate with individual
congressional representatives to educate, inform, and relay physicians' opinions. The primary message to HCFA needs to be
to produce a single Medicare fee schedule conversion factor
345
for the relative work of all physicians and to pay for practice
costs on the basis of actual expenses rather than historical
charges.
Resource
• Physician Payment Review Commission, 2120 L Street
NW, Suite 510, Washington, D.C. 20037 (telephone, 202653-7220; has made annual reports to Congress every
April since 1987).
II. The Private Sector: Response and Impact
The demand for cost reduction over the past 10 years has
been the driving force in what is essentially a process of rebirth
for the health care system. The result has been a paradigmatic
shift, not just for hospitals but also for primary care physicians,
specialists, payors, and patients.
In the past, the entire indemnity system and all its players
were quite successful. Seemingly limitless funds were available
to providers. The more providers could do, the more they were
paid. This financial success allowed a surplus of funding and
cost-shifting that supported a mission of equality in levels of
care and service, regardless of individual resources. It was
relatively easy to be generous, and "curbside" consultations
with specialists were expected without question or compensation. Everyone participating in the system was in favor of
the status quo, and those who threatened it were perceived as
enemies.
In the past, borders were rigid between players and defenses
were strong. Groups worked to maintain their territory and turf
in a variety of ways. Physicians generally aligned with their
individual professional societies as well as the American Medical Association (AMA). Among doctors, primary care physicians were possibly the only "underdogs" as they did not
add many new tests or procedures to their practices. Hospitals
maintained their power and kept physicians at a distance
through their knowledge of the mysteries of licensure, accreditation, cost shifting, and payor contracts. The payors maintained their territories and strength through the threats of utilization review and audits, as well as their knowledge of the
puzzles of actuarial data and underwriting.
Defined roles and functions were maintained in the indemnity system: hospitals were at the center, promoting technology,
specialists, their image in the community, and often alliances
with other hospitals. The specialist was a customer they wanted
to attract.
Primary care physicians, with office-based practices, faced
increasing regulations and overhead, as well as eroding incomes because of credential battles with specialists and hospitals. Their image was generally less prestigious than that of
specialists, who maintained a more elite role, charged more,
and were hospital- and procedure-oriented. Payors selected and
took their risks alone, attempting to control hospitals and physicians from the outside. They gathered a lot of data but with
Tice et al.
346
Table 1. Stages in the rebirth of the health care system.
Stage of health
care system
Past: success
Present:
Threat
Control
Redesign
Future: realignment
Payment system(s)
Indemnity
Indemnity, PHO, PPO
Shared risk, HMO, POS
Capitation, new HMO, MSO
Global capitation
NOTE. HMO = health maintenance organization; MSO = managedservices organization; PHO = physician-hospital organization; POS = point
of service; PPO = preferred-provider organization.
little understanding, and they were more oriented to procedures
than to cognitive activities with regard to services for payment.
Recent developments have posed a threat to the status quo.
Table 1 illustrates the process of market realignment. The federal government's Medicare DRG payment system created incentives for hospitals to decrease costs. A mix of payment
systems has emerged, which includes indemnity, physicianhospital organizations (PHOs), and preferred-provider organizations (PPOs). An overall decrease in utilization and reimbursement due to changes in local markets and economies has
resulted in increased financial pressures for all providers. President Clinton's health care reform package produced no real
outcomes but has raised legitimate questions and concerns.
Legislation that allows any physician to participate ("any willing provider") adds to external cost pressures.
The initial response of the participants in the system to these
threats has been an attempt to control the situation through
alliances and purchases. Health maintenance organizations
(HMOs) and point-of-service (POS) plans are examples of
structures that present the appearance of shared risk between
providers and payors. Purchases of practices, joint ventures,
group practices, hospital mergers, and restricted and exclusive
networks have all emerged in the struggle for power. In many
cases, survival clearly supersedes the mission of patient care.
The system is currently entering the next phase of response
to the threat of reform: redesign. Capitation has made an appearance. The new HMOs, managed-services organizations,
and managed-care organizations (MCOs) have focused on the
patients as the customers and made their satisfaction the goal
of care. This has resulted in the integration of physicians into
the governance and management of hospitals, as well as the
development of strategic partnerships among doctors, hospitals,
payors, and employers. Primary care physicians are organizing
and taking risks with the payors, while specialists try to relate
to the new systems. The new framework requires flexible relationships with incentives aligned for all. Personal and corporate
ego issues must become secondary.
In moving toward a new, realigned system in which global
capitation is a reality, a challenge to all specialists becomes
apparent. They must be part of the redesign, adjust to the
paradigmatic shifts, and maintain flexibility in order to survive.
em 1996;23 (August)
It is essential to break down historical borders and work with
new partners. Strategic partnerships can be created by understanding where potential partners are on the continuum of
change. The physician should play the key role in this process
and should remain the leader in defining and providing quality
care for the amount of money available [9].
Physicians will succeed in this newly redesigned system by
demonstrating diagnostic elegance and therapeutic parsimony.
The physician's commitment as the patient's advocate has always been to provide just the right degree of economy of means
in diagnosis and just those treatments that are demonstrably
beneficial and effective [10]. Physicians' skills, training, experience, and judgment make them uniquely qualified to be leaders in the system redesigning that is under way.
III. Infectious Disease Physicians and the Staff Model
HMO
The staff model HMO is essentially an insurance plan that
has its own medical staff and often owns its hospital and clinics.
One such HMO is Group Health Cooperative (GHC) of Puget
Sound, Washington, which has >450,000 members. Unlike
other HMOs, the basis of the staff model is a core of salaried
physicians who see only those patients enrolled in the HMO
plan. These physicians are responsible for the medical care of
the entire enrollee population. Therefore, logically they become
involved in designing programs and guidelines to prevent illnesses and improve clinical care while controlling costs.
In a staff model HMO, nonstaff physicians (both primary
care physicians and specialists) may be contracted to provide
care when deemed appropriate by the medical staff. In general,
nonstaff physicians are contracted to provide care for HMO
patients because of the lack of HMO staff physicians in a
specific geographic location or of specific services available
from the HMO staff.
HMO staff physicians are paid salaries, but as a group they
may receive year-end bonuses based on the HMO's financial
performance. Patients usually pay a fixed premium and have
limited out-of-pocket costs. Their care is provided by the HMO
staff or contracted staff, but they may see outside providers
with HMO-approved referrals. In spite of the changes in health
care, this design is consistent with the original and current
mission of this model: to provide access to quality care at low
cost. The staff HMO is the prototype of managed-care plans
and has been the model for a broad range of other plans, such
as PPOs, POS plans, and managed indemnity insurance.
GHC serves as an example of what can be achieved in terms
of the role and perceived value of the ID specialist in the staff
model HMO. In addition to clinical consultative services, the
benefits provided to an HMO lie in the development of programs serving a managed-care population. At GHC, ID physicians initiated, developed, and currently run several programs.
The ID department-in partnership with a pharmacy-initiated and runs a hospital antibiotic review team, manages a
pretravel advisory and immunization service, and directs the
cro 1996;23
(August)
Managed Care in Infectious Diseases
infection control program. ID physicians are consulted about
and manage all outpatient iv antibiotic therapy for patients
who have geographic access to their care. In addition, the ID
specialists lead immunization policy formation and are the primary resource for employee health services. Ongoing input
about all antimicrobial agents is provided to the Pharmacy
and Therapeutics Committee via a specific pharmacy- and ID
physician -led subcommittee to which this function has been
delegated.
In spite of the proven success of this approach, it remains
an ongoing challenge to convince designers and managers of
HMOs that ID specialists' involvement can increase quality and
decrease overall cost of care. ID specialists must continually
advocate these services internally. This must be an ongoing
effort, even after an HMO includes them and administrators
have been convinced of their contribution. The ID specialists
must also demonstrate their value to the other physicians in
their own organization.
Value implies improved quality in addition to reduced costs.
However, quality is difficult to measure, and there is no clear
consensus as to its definition. ID physicians must use their
skills and expertise to teach others how to measure quality.
Clinical practice quality may be measured by looking at basics
such as cure rates, compliance, follow-up, and outcomes for
common diagnoses. Measuring the quality of complex patient
care is likely to be difficult. However, the satisfaction of patients is one important component of quality clinical care that
may be easily measured; do the patients believe they receive
what they need and desire?
As there is less differentiation among health care providers
in terms of costs and measurable clinical outcomes, the key
factor in determining how patients and insurers choose a provider may become patients' satisfaction [11]. This may be
because it is well understood and measurable. Patients' satisfaction and education of the population about the roles of ID
physicians in quality care can serve to appropriately increase
the demand for these ID services.
While aspects of high-quality care provided by specialists
may be difficult to measure, cost is more clear-cut. Decreases
in costs by involving ID physicians in systems and in program
innovations can be measured. There has been a demonstrable
cost reduction at GHC that is due to the contributions of ID
specialists. In outpatient and inpatient antibiotic-use-management programs, surgical prophylaxis, pretravel advice and immunization, and routine child and adult immunization programs, significant savings have been realized.
In an article by Weiner in 1994 [12], it was reported that
only one half-time ID specialist is needed per 100,000 HMO
members. This datum was from a survey of HMOs but is
outdated. In addition, the survey was flawed in data collection
and scope. Of the 16 HMOs included in Weiner's HMOspecialty analysis, 3 reflect 1981 staffing levels, 7 reflect 1983
levels, and 6 reflect 1992 levels. With regard to these data, no
attempt was made to define the scope of ID practice or the
magnitude of contracted or purchased nonstaff ID physician
347
services. The potential for expansion of ID services in areas
such as infection control, management of antibiotic use, employee health, microbiology, infection control, and outpatient
iv antibiotic therapy also was not considered.
In order to determine current ID-specialist-staffing levels
and the scope of practice within staff model HMOs, a written
survey was conducted in 1995. The initial response rate was
36% (eight of 22), and more data are needed. Not all initial
responses adequately answered questions relating to the scope
of practice, so telephone surveys have also been performed.
Responses indicated an average of 1.15 full-time-equivalent ID
specialists (range, 0.2-2.2) per 100,000 patients enrolled in
the HMO.
It is interesting that this survey, as summarized in table 2,
demonstrates a positive correlation between the number of ID
specialists and the breadth of services that they provide. ID
physicians arguably offer the broadest services of all specialists. The potential for direct patient-care involvement across
almost all medical disciplines and for involvement in programs
that improve quality of care and decrease cost in a managedcare population clearly explains the wide variation in staffing.
The case can be made, legitimately, that in terms of the
number of ID physicians to employ, more is both better and
cheaper. The experience at GHC strongly supports this contention, as did OHC's informal survey of other staff model
HMOs. Further study is needed and would be expected to
confirm the value of the services of ID physicians in managedcare populations.
IV. The Response of the Market: PacifiCare of
California as an Example of a Network Model HMO
Managed-care-market penetration is increasing in the United
States at a rate of 13% per year [13]. In 1980 there were fewer
than 10 million HMO members nationally; enrollment was
predicted to exceed 45 million in 1995 [14]. In addition, there
are currently 40-50 million more people in the United States
who belong to some form of MCO [15]. The growth of HMOs
has fueled a price war that is predicted to continue to reduce
premiums in all types of coverage plans [16].
Very few markets are actually in the vertical integration or
realignment phase yet. California, however, is clearly the leader
in terms of HMO enrollment, with> 10 million members and
a 38% market share [13]. Close behind in market-share percentage are Oregon, Maryland, Arizona, and Massachusetts
(table 3).
In every major California metropolitan area, the majority of
residents with commercial health insurance belong to HMOs.
Though Kaiser Permanente remains by far the state's biggest
HMO, others that operate as networks of providers rather than
as centralized staff models are the fastest growing [14,17,18].
Almost three-quarters of insured Californians and more than
one-half of its residents belong to some kind of managed-care
plan that limits their access to services or providers in exchange
for lower costs. These plans have largely replaced traditional
Table 2.
ern 1996;23 (August)
Tice et al.
348
ID specialists' activities in eight staff model HMOs.
Data per staff model HMO
Characteristics ofHMO and
activities ofits ID specialists
No. ofenrollees (thousands)
No. ofPTE ID specialists
Per 100,000 enrollees
ID consultations
Adult inpatients
Adult outpatients
Pediatric inpatients and outpatients
Infection control
Travel advice
Inpatient antibiotic review
HIV-related care
Primary
Consultation
Guideline development
Immunization
OPAT*
ID-specialist supervised"
24-Hour consultation availability
2
3
4
5
6
7
8
1,000
2.0
0.20
375
2.5
0.66
185
1.0
0.80
285
3.0
1.05
170
2.0
1.18
245
3.0
1.20
385
5.0
1.30
180
4.0
2.20
65%
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
+
Adults
+
+
+
+
85%
100%
100%
+
+
+
+
+
10%
10%
+
+
Adults
+
+
+
+
+
+
+
+
+
30%
50%
+
+
+
+
+
+
+
+
+
100%
+
+
NOTE. PTE = full-time-equivalent; OPAT = outpatient parenteral antibiotic therapy; + = an ID-specialist activity; - = not an ID-specialist activity. Data
are from written and verbal surveys conducted in 1995 by ID physicians at Group Health Cooperative of Puget Sound, Washington.
*Existing within the HMO, rather than contracted out to another provider.
t Percentage ofOPAT patients receiving ongoing supervision from an ID specialist.
FFS plans. Other countries are very interested in what is happening in California. It is likely that the concept of managed
care will dominate world health care delivery systems in the
future.
The impact ofthis managed-care revolution has taken different forms. An excess in capacity of hospitals is evident throughout the country. For example, 3 years ago Minneapolis had
9,200 hospital beds; today there are but 5,300, and only 70%
are filled [19]. Some predict an excess of 100,000 medical
specialists in the near future [12], although many challenge
the assumption of a surplus [20, 21]. Physicians' cooperation,
consolidation, and sophistication have increased as managed
care grows. For example, three nephrology independent-practice associations (IPAs) are currently under development in
California.
Managed care has brought about changes in the practice of
medicine. The physician-patient relationship was a paternal
Table 3. The top five HMO-enrollment states.
State
California
Oregon
Maryland
Arizona
Massachusetts
HMO market share (%)
38.3
37.5
36.2
35.8
35.2
NOTE. Source ofdata: Group Health Association ofAmerica.
one but now is one of shared decision-making. "Medically
necessary" is no longer defined as "anything the doctor says."
Traditional physician roles are being redefined, with the primary care physician becoming the navigator, negotiator, and
decision-maker. The specialist is the expert diagnostician and
periodic reviewer. Outcomes data become critical in order to
justify cost and provide criteria for decision-making. Cost accounting is required, and patients' perspectives about what
constitutes a good outcome become important. Expert, multimedia, on-line, real-time information delivery systems become
increasingly valuable. There are more than 300 new biotechnological products in the pipeline. Anyone of these could have
an enormous impact on the medical delivery system.
PacifiCare, which is a network model HMO, is the third
largest HMO in California. Licensed in 1978 as a for-profit
entity, PacifiCare serves 1.2 million California subscribers. By
comparison, the Kaiser Foundation Health Plan has 4.6 million
members. PacifiCare is the largest plan in the country in terms
of Medicare risk, with 360,000 Medicare risk subscribers. The
organization contracts primarily with medical groups and IPAs
that range from primary care to multispecialty groups. There
are also some contracts and shared-risk arrangements with
PHOs.
Payment to PacifiCare providers is typically by capitation.
This empowers doctors and groups to manage and compete in
terms of cost, quality, access, and patients' satisfaction. It also
provides consistent cash flow and incentives to reengineer.
Usually payments to the medical group are capitated, while
those to individual doctors are via salary and/or FFS, with
CID 1996;23 (August)
Managed Care in Infectious Diseases
additional financial incentives based on outcome and performance. In large HMO markets, capitation-reimbursed primary
care physicians serve 68% of the members, and specialists
serve 52%. Specialists with capitation arrangements are becoming more dominant in PacifiCare, in which 23% of radiologists,
40% of psychiatrists, 22% of dermatologists, and 22% of
cardiologists participate in risk sharing. Agreements with ophthalmologists and orthopedists are increasing, but as yet there
is minimal experience with ID specialists.
Per-member, per-month (PMPM) payment to medical groups
or IPAs generally includes payment for physicians' professional services and ambulatory diagnostic testing. In some cases
a partial risk agreement is reached between hospitals and doctors, who take responsibility for different services and have
separate capitation agreements for them [22]. Accounting adjustments allow some flexibility between hospitals and doctors.
The only complete-risk situation is with Knox-Keene (see
Glossary) HMO license arrangements, such as those of Kaiser
Permanente or other large integrated systems (e.g., Sharp
Reese-Stealy).
There are basically two methods of dollar determination utilized
in forming capitation agreements with physicians. One involves
a fixed-rate cap based on the age and gender of subscribers. The
other is a "percent of premiums" arrangement, which may be
more efficient in long-term partnerships because there is no need
for annual renegotiation of line-item capitation rates.
PacifiCare provides data periodically to all providers regarding their performance. Clinical and nonclinical databases are
used in the performance-measurement system. Specific performance measures include member-satisfaction data, utilizationmanagement data, and quality assurance information.
There are a number of positive aspects for the physician in
systems like PacifiCare that integrate providers with the payor.
A predictable, guaranteed income can be attractive. Participation in a group can improve a physician's quality oflife. Quality
and patients' satisfaction, rather than costs, become key differentiators in the choice of providers. Joint accountability fosters
team work and collegiality rather than adversarial relationships.
Collection and analysis of large databases and the use of clinical guidelines can improve care and provide some defense
against litigation.
There are, of course, issues and concerns regarding this kind
of system [22]. Many doctors perceive that insurance company
profits increase with this model, while doctors' salaries decrease. This is not the case with PacifiCare, in which most
physicians are receiving 105% of their prior collected FFS
revenues. Most of the cost decrease has occurred in hospitals.
Another issue is the potential incentive for primary care
physicians not to refer; there are some who argue that a negative
incentive system for physicians interferes with the doctor's
commitment as the patients' advocate [10, 22-24]. Physicians
who are new to managed care are likely to feel this way.
Furthermore, until there is a certain degree of trust among the
parties, utilization-management processes of the plan may
cause physicians to feel a loss of control.
349
When evaluating payors as partners, doctors should look for
evidence of specific characteristics. Of primary importance is
whether the organization delivers good benefits to patients.
Also key is the level of service to patients and doctors, as
demonstrated by easy telephone access, a reasonable problemresolution time, as well as flexible design and administration.
Patients' access to a good physician/provider panel and competitive rates will contribute to future market success. Proven
ability to capture market share should be assessed. In 1990
there were 30 HMOs in California; in 1995 there were 18.
Other potential strengths to look for include access to capital,
a strong infrastructure, competitive rates, a full product range,
and access to the regional and/or national marketplace.
Some physicians perceive the insurance company as a cost
center and question why providers need a third party. Recent
information indicates that when physicians are responsible for
managing costs and quality, they utilize many of the same
methods now used by payors [25]. A payor organization like
PacifiCare can offer management support that may be of help
to providers in increasing their effectiveness and demonstrating
their value through data. They can also offer the practitioner
experience as well as assistance with regard to technology
assessment, capital, and bioethics. These may be advantages
to consider when making decisions regarding affiliation with
an HMO.
V. Capitated Reimbursement: A Risk-Sharing
Methodology
One of the objectives of capitation in provider reimbursement is to control health care costs by managing the demand
for care. Milliman & Robertson, Inc. (an accounting firm in
San Francisco) estimates that the change from indemnity to
capitation produces a 31% reduction in utilization, primarily
of hospitals (20%) and specialists ('"-'8%). When capitation is
utilized, thus providing financial incentives for cost efficiency,
the system should have mechanisms to increase providers' accountability for practice behavior and patient outcomes, with
use of clinically appropriate practice guidelines and qualitymeasurement tools.
One way to convey the basic concept of capitation is to
demonstrate that total payment for all services to be provided.
divided by the number of covered members, is the PMPM
reimbursement figure. This is done by summarizing historical
annual utilization of services per member (e.g., admissions,
bed days, length of stay, outpatient visits), calculating an average charge per unit of service (e.g., per bed day, per admission,
or per outpatient visit), and deriving a PMPM figure.
Factors that affect the demand for care in any given area
include demographic characteristics such as age, gender, and
socioeconomic status. In addition, the percentage of persons
with employer-based insurance, Medicare, Medicaid, insufficient insurance, or no insurance will have an impact on demand
by the payor for care. The geographic location and characteristics of providers and subscribers, as well as the severity and
350
acuity of disease states among the covered population, will
affect demand for a particular provider. Finally, benefit levels
and cost-sharing arrangements of the insurance plan affect demand by type of plan.
There are a number of important considerations to make
when apportioning risk. The provider's financial responsibility
should correspond to the resources that that provider can control. If more than one provider contributes to the savings, all
should be included in the risk-sharing. Covered members
should be defined in specific contract terms. The contract
should identify accountability for information systems to monitor feedback on experience, outcomes, and results. Individual
and aggregate stop-loss insurance should be considered to control risk.
Capital requirements should cover the maximum sustainable
loss as well as clinically relevant actuarial, appropriate stoploss attachment points. The contract should define all services
to be included and make provision for catastrophic coverage
for new and changing therapies. The contract should include
incurred-but-not-reported claims in calculations of historical
charges.
The health care pie is getting smaller, but the pieces of pie
are decreasing in size at different rates. The ID specialty is a
relatively small portion of the health care dollar. The Milliman & Robertson research example illustrated in table 4, based
on review of one client's data, suggests what utilization rates
might look like in an unmanaged setting.
The same kind of research data from Milliman & Robertson
suggest that in a managed care setting, the PMPM cost for ID
services may vary from $0.04 for commercial (non-Medicare)
patients to $0.35 for Medicare patients. Given these figures, at
the lowest commercial rate in a well-managed environment,
1,050,000 members would be required in order to achieve an
annual practice revenue income of $500,000 (total revenue, not
net after overhead expenses). Comparable income for an allMedicare enrollment would require only 120,000 members,
although expenses might be a higher percentage of revenue.
The value of the ID specialist and hence the PMPM rate obviously depend on the spectrum and number of services provided.
Table 4. Costs associated with the services of ID specialists and
other practitioners, as a percentage of the costs for services of all
physicians and of specialist (non-primary-care) physicians.
Cost of services, as % of cost
for services of:
Type of practitioners
Primary care physicians
All specialists
ID specialists
em
rice et al.
All physicians
27
73
.06
1996; 23 (August)
Table 5. PMPM costs (by type of service) for a population of
asymptomatic and symptomatic HIV-infected patients in unmanaged
vs. well-managed healthcare delivery systems in California in 1993.
Type of service
Hospital inpatient
Hospital outpatient
Physician
Home health
Drugs
Other
Total
Indemnity cost
($) PMPM*
HMO cost
($) PMPMt
1,456
102
312
35
191
130
2,226
473
197
386
377
214
14
1,661
NOTE. Data are for patients at all stages of disease. PMPM = per member,
per month.
* Source: Hellinger study [26], with adjustments.
t Source: Milliman & Robertson, Inc. (San Francisco).
In addition to providing individual-patient-care consultation
services, an ID specialist within a risk-sharing plan may serve
as case manager for chronically ill patients (e.g., provide primary care for HIV-infected patients). The data as summarized
in table 5 represent the cost savings possible in the care of
HIV-infected patients when an HMO/primary care model is
utilized. The overall estimated impact is the net result of a
two-thirds reduction in inpatient hospital costs, offset by an
almost doubling of the outpatient expense. Physician costs
would increase by one-fourth and drug costs would remain
stable; the overall costs would be reduced by 25%.
Other opportunities for ID specialists include developing
home health programs or relationships with home health agencies, establishing risk-sharing HIV-related programs, managing
infection control and quality assurance programs, and serving
as physician reviewers or medical directors.
Capitation as a risk-sharing payment system affords the physician an opportunity for creativity and relative freedom in
patient care management. Capitation may encourage physician
behaviors that result in more cost-efficient utilization of services without a reduction in quality. However, prior to entering
into a capitation agreement, physicians must carefully evaluate
the potential impact on their practice and the proposed payment
terms and member population [22, 27]. Physicians must be
aware that capitation contracts give increased responsibility to
the provider in terms of operational and financial controls that
may not have been in place in an FFS environment. To best
assess risk and implications, consultation with an actuary firm
may be worthwhile.
Specialists
100
.08
NOTE. Source of data: Milliman & Robertson, Inc. (San Francisco). These
figures are not averages or necessarily representative of those in your local
area, but the magnitude of differences would probably be similar everywhere.
Resource
• Milliman & Robertson, Inc., 595 Market Street, Suite
1100, San Francisco, California 94105-2818 (telephone,
415-777-1400; facsimile, 415-546-5670).
em 1996;23
(August)
Managed Care in Infectious Diseases
VI. Information Management: Computerization
Required in a Cost-Based Environment
Changes in health care payment systems have increased the
demand for new ways to capture and use information to support
clinical decisions. Physicians are required to be highly productive to survive, and their clinical decisions must now take into
account cost efficiency as well as treatment options that will
produce the optimal outcomes. The traditional model of information-sharing has been based on investigation followed by
reporting in the literature, often requiring a lengthy time frame.
This process is being replaced with real-time collection, summary, and analysis of outcome data that can be shared electronically and that would be outdated by the time it was published
via the usual route.
The Internet is also playing an increasingly important role
in medicine with its special on-line services available to physicians. Examples include Physicians On Line, supported by
pharmaceutical firms, and support services made available
through the American College of Physicians in partnership
with Compuserve. These services offer electronic mail, bulletin
boards, professional association and conference communications, drug information, and ready access to MEDLINE and
AIDSline for literature searches.
There is also a growing number of medical World Wide
Web pages and even journals on line. The Centers for Disease
Control and Prevention (CDC) has on-line travel information
and updates on emerging pathogens. The potential for information-sharing and rapid communication is so great on the Internet
that some are concerned that the established peer review process will be bypassed and the quality of research reports will
suffer [28].
There are a number of different types of bedside-decision
support available to clinicians today. These include alerting
(e.g., about drug incompatibilities), interpretation (e.g., of arterial blood gas determinations and electrocardiograms), assisting, critiquing, diagnosing, and managing. Access to centralized real-time medical record data affords the physician
more time for clinical judgment. For instance, time-motion
studies demonstrate that 80% of physicians' time on the hospital unit is spent gathering data rather than on cognitive activities
[29], a statistic that can change dramatically when computerized information is readily available at the bedside.
Unfortunately, most strategies for managing care with use
of information systems involve limiting the choices of physicians and patients in order to control cost. Databases profiling
cost, utilization, and practice patterns are enhancing peer review. ID physicians can add their clinical and epidemiologic
skills to the process of gathering and analyzing the data to
ensure validity and reliability in these kinds of decisions. With
appropriate data gathering and analysis, it may become clear
that some decisions that restrict the choices of physicians actually cost more in the long run. For example, limitation of drug
formularies may decrease direct pharmacy costs but may be
offset by consequently increased costs in other areas of patient
351
care [30]. ID specialists' input can provide decision-making
support to improve antibiotic use and selection rather than
simply restricting choices.
Physicians need to see computerization as a tool rather than
an enemy, regardless of the potential misuse of information.
Decision-support systems can help control costs. In order to
maximize their usefulness, they should be unobtrusive, nonthreatening, and available at the bedside or other places where
decisions are made. Whenever possible, systems should provide real-time advice, be embedded in the patient care process,
and make it easier to make decisions, rather than just requiring
extra work.
A good system educates, reminds, and offers choices to the
clinician rather than dictating the answers. General guidelines
for disease management will not be as useful as patient-specific
information in supporting decisions about quality and cost.
A well-designed system will likely increase the need for 10
consultations and enhance the role of the specialist rather than
replacing it.
To be most effective, information management requires computerization of the patient record. Different mechanisms for
data entry include bedside terminals, voice transcription systems, and notepads, some of which can even automatically
translate from doctors' script. A computerized patient record
can decrease cost while improving quality in managing information; 35% to 39% of the total operating cost of most hospitals
is for information management. Physicians spend 38% of their
time-and nurses, 50%-documenting in patients' medical
records. Despite the time spent on these activities, an estimated
70% of hospital patients' records are incomplete [31]. The
General Accounting Office of Congress reported that automated patient medical records reduced costs by $600 per patient
admission in a Veterans Administration hospital because of
increased efficiency [32]. Despite evidence to support computerization of patient records, most hospitals and physician practices have not implemented such a system.
In the past 10 years several hospitals have developed integrated computer systems that go beyond simple documentation
of patients' medical records [33-37]. These systems are used
for data retrieval and to assist physicians in making clinical
decisions [38-48]. The HELP system at the Latter Day Saints
Hospital in Salt Lake City is an example of such a decisionsupport program.
Developed over the past 30 years, the HELP system integrates data from numerous sources, including the laboratory,
admission records, nursing units, pharmacy records, dictated
reports, and consultations. Clinicians can retrieve current patient-specific information in different formats to assist with
their plan of treatment. The system does not offer computerized
diagnosis, nor does it replace the analytic component or clinical
judgment that only the physician can provide.
Features of the program that have been designed by ID specialists include automated antibiotic monographs and advice, as well
as antibiograms. Examples of supportive information that the attending physician can access include patient-specificcost per daily
352
Tice et al.
dose and suggestions for empirical antibiotic selection. Specific
criteria have been built into the system that suggest the need for
an ID consultation in some situations.
Before clinicians accept any computerized suggestions, they
can consult a screen that lists the reasons for the suggestions,
with supportive data. If they override the recommendation, they
are then asked to code their reasons. The database of these reasons,
combined with clinical outcomes, provides an ongoing record of
actual practicepatterns and results, which are fed back to individuals and analyzed as aggregate data on a periodic basis.
Implementationof this computer system for real-time decisionmaking has improved patient care, been well accepted by physicians, and increased the number of ID consultations rather than
replaced them.
The HELP system is also used for other quality assurance
and surveillance activities and has been proved to lower the
hospital's overall cost per patient [47]. Measurable outcomes
attributed to the decision-support program include a shorter
average duration of antibiotic therapy, decreased laboratory
utilization, shorter lengths of stay, and a decreased number of
patients receiving antibiotics. A good specific example of cost
savings was a 30% decrease in the use of imipenem when
excessive dosing was corrected to the optimal level on the basis
of patients' weight and renal function.
Computerization also offers the opportunity to define the
value of ID physicians and to give them a new leadership
role in the managed-care model. The unit of analysis has now
changed from departments to processes, which increases the
necessity for clinician involvement. Physicians must be sure
the distinction is made between the provision of simple information and the provision of the knowledge, skills, clinicaljudgment, and insight of a hands-on specialist. It is essential that
the doctor be involved in how and what data are gathered,
entered, and analyzed. Physicians should also be involved in
the selection and implementation of computer systems to be
used in their own hospitals and practices.
It is clear that if physicians and health care provider organizations fail to develop computer and information management
skills, they will probably fail in the managed-care environment.
Physicians' involvement in the design and use of clinical and
administrative decision-support systems will help ensure their
value and appropriate utilization.
Resources
• American College of Physicians, Informatics section.
• National Association of Managed Care Professionals
(Journal of Managed Care Medicine), 4435 Waterfront
Drive, Suite 101, P.O. Box 4765, Glen Allen, Virginia
23058-4765 (telephone, 804-527-1905; facsimile, 804747-5316).
VII. Practice Guidelines
Guidelines for the care and treatment of patients have been
described in a variety of ways. All attempt to help health care
em 1996;23 (August)
providers manage the care of patients [42]. The verbal jargon
in this field is overwhelming, but the Institute of Medicine has
developed specific definitions of these terms. Let's try to briefly
describe some of these terms with examples.
Practice guidelines are recommendations on the process of
care for specific clinical diseases and are based on welldesigned studies and/or expert opinion. For example, guidelines
have been written that recommend how to prevent opportunistic
infections in HIV-infected persons, how to treat acute myocardial infarction, and how to manage community-acquired pneumonia.
Standards of quality are widely accepted methods of care
that often represent one small aspect of practice guidelines.
The guideline, in contrast, contains widely accepted as well as
controversial methods of care. For example, the IDSA has a
standard of care for preventing Pneumocystis carinii pneumonia in HIV-infected patients. The standard has been established
by well-designed randomized control studies. A related guideline would be broader and enumerate recommendations for
preventing all opportunistic infections in HIV-infected patients;
some ofthe recommendations would be based on well-designed
studies but others on consensus of opinions (a lower level of
evidence).
A critical pathway, or care map, takes a guideline or standard
and translates it into an algorithm for care that can be used by
health care providers to implement the guidelines or monitor
compliance with the guidelines.
Medical review criteria and performance measures, or indicators, are similar in intent. For example, an IDSA indicator
tests whether a CD4+ cell count should be determined at 6month intervals, until it is < SO/mm 3 • Another IDSA indicator
was designed to test whether prophylaxis for P. carinii pneumonia should be given, when appropriate.
Physician profiles determine the rate of compliance with
guidelines and standards and are available for physicians to
review. Since the "bad apple" is being replaced with the "bad
process," however, we should be looking at process profiles
instead.
Disease state management encompasses most of the above
and more. For example, after HIV infection is diagnosed, its
management should include monitoring of CD4+ cell counts;
screening for tuberculosis; immunization, as necessary; antiretroviral therapy, given at the right time and with the right number of drugs; administration of other appropriate drugs, for
prevention of opportunistic infections and treatment of infections and malignancies; and assessment of the patient's social
and home situation and level of satisfaction with medical care.
What are the rationale and value in the development and use
of these practice parameters [49]? The primary goal in developing
and implementing standards is to minimize practice variations
that cannot be explained by severity of illness. Greater intensity
means greater cost, but it is often difficult to show that greater
intensity of service results in better outcomes [50].
Once established, guidelines and performance measures can
be used as tools for quality assurance, as well as for clinical-
cm
1996;23 (August)
Managed Care in Infectious Diseases
decision support and facilitation of audits. Payors and providers
both may view the use of practice parameters as a method for
cost control. In addition, in some cases they may afford a
modicum of legal protection.
What are the inherent and potential problems in this growing
phenomenon? Clearly their misuse poses a concern, in that
parameters are not a substitute for clinical judgment or consultations with specialists. The necessary simplicity and, hence,
rigidity of these standards mean they do not allow consideration
of individual patients, especially when utilized out of the bedside context. The physician must often deal with multiple,
overlapping diseases [51]. This seems particularly true with ID
consultations, where the considerations are complex and often
require recommendations that potentially conflict with practice
guidelines designed for more straightforward situations.
In addition, imposing the use of these blueprints introduces
the potential for resistance and dissatisfaction of practitioners.
Inflexible standards of practice may stifle innovation as well
as pit practicing physicians against academicians if they are
not involved in the development and evaluation process at the
local level. Some would argue that practice guidelines are like
curbside consultations and discourage ID physician involvement. If they are developed appropriately, however, they may
discourage some consultations but encourage others by helping
practitioners recognize the need for expert intervention.
It is too early to know the legal implications involved. Use
of practice parameters may lower malpractice premiums because of decreased exposure to risk and may actually decrease
the need for defensive medicine. However, their role in litigation has been ambiguous [52].
The development of practice guidelines should be viewed
as an opportunity for ID specialists' leadership. The criteria
for selection of topics (with regard to disease states) will commonly be high prevalence, high burden, high cost, or association with significant outcome variance. Guidelines are currently
being written by medical societies, independent research centers, hospitals, payors, and private enterprises.
Specifically, for ID practitioners, their development has been
led by the AMA, IDSA, CDC, American College of Physicians,
American College of Cardiology, and American Thoracic Society. The IDSA is preparing guidelines in 12 areas, e.g., pneumonia, urinary tract infection, Lyme disease, and fever in the
neutropenic host. Some guidelines have already been published
by the IDSA [53-58].
The design of practice parameters involves a series of steps
familiar to ID specialists.The process must begin with formulation
of problems, in terms of practice and outcome variation with
regard to a particular disease state; review and analysis of evidence; estimates of outcomes; and establishment of a range of
uncertainty. An assessment of preferences among practitioners is
essential, although the quality of evidence and strength of support
may be at different levels [53]. Desired attributes of the final
product include credibility, validity, reproducibility, flexibility,
and clarity. Common problems with design, measurement of performance, and implementation have compromised the usefulness
and credibility of practice parameters [59].
353
Of high interest to payors and practitioners alike, cost analysis needs to be added to the development process. To date,
developed standards have been mostly ignored in the resolution
of legal and ethical issues. They are hard to apply to the patient
with multiple conditions that require conflicting treatments.
Some study data are emerging that demonstrate effectiveness
of either cost-containment or outcome-improvement measures
[60-62].
In evaluating guidelines that have already been written, the
physician should ask the following questions: Why was the
topic selected? Who wrote the guidelines? How was the information analyzed? What is the level of evidence? Where will
the guidelines be used? and When will they be revised?
There are a number of challenges in the implementation of
any kind of practice parameters. Resources for implementation
should match those for development. Training, dissemination,
and updating are essential. Monitoring for and identification
of problems must be ongoing. Anticipated questions regarding
implementation should include whether or not there will be a
decrease in appropriate resource utilization and, most important, whether the parameters will have a beneficial effect
on quality of care.
Perhaps the biggest problem facing effective implementation
of appropriate practice guidelines today is the lack of consensus
and unity in development and application. It is important that
physicians be the leaders in ongoing discussion, trials, and
evaluation of different methods in order to avoid the imposition
of poorly designed, impractical constraints on the practice of
medicine.
VIII. Networks
In response to their customers' demand for a reduction in
the cost of health care insurance as well as to reduce their
exposure to risk, third-party payors have systematically begun
to shift risk to providers. They have also been aggressive in
reducing the number of contracted providers and increasing
geographic service areas to reduce administrative expenses.
The impact of these plans on physicians in private practice
has been a decrease in per-patient revenue and profitability
where service levels have not been adjusted. The need for
alliances among providers has become a critical part of building
managed-care business. The term network has surfaced as a
common descriptor of alliances that have formed or are in
development.
Networks are in an early phase of development, involving
few established rules and regulations. Considerable creativity
is still possible and has led to the emergence of varied arrangements [63]. Some are formed prior to contracting with an MeO,
while others are formed by the payor or develop as part of the
contracting process. Management may be through the providers
themselves or an external organization.
Characteristics of each network vary in response to the demands of a particular market as well as the objectives of the
participants. Geographic coverage may be local, regional, or
354
Table 6.
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Tice et al.
1996;23 (August)
Stages of managed-care-market penetration.*
Stage
Unstructured
Loose MCO framework
Consolidation
Managed competition
Characteristics
Minimal managed-care market penetration;
independent hospitals and physicians;
unsophisticated purchasers
25% - 50% Managed-care-market penetration;
physicians join groups; hospitals form
alliances; traditional referral sources lose
leverage; declining hospital stays
Supply of MCOs greater than demand;
market consolidation; physician, hospital,
provider networks
Fewer MCOs in area; MCOs control referrals
Payment system( s)
Locations (examples)
FFS
Rural areas
Case managers
Discounted FFS
Per diems
Albuquerque
Las Vegas
Chicago
Capitation
Risk sharing
San Diego
Seattle
Risk sharing
Capitation
Outcomes-based
Market theoretical
Various areas
Approaching in Los Angeles and Minneapolis
NOTE. FFS = fee for service; MCO = managed-care organization.
* Source: University Hospital Consortium [63a].
national. The structure can be formal or informal, with a panel
ofproviders including specialists (such as those in the ID field),
primary care physicians, or both. There are other network options for physicians, such as PROs and fully integrated delivery
systems, which offer the payor a full spectrum of services
across the continuum of care.
The national marketplace is currently quite diverse in terms
of the penetration of managed care. In determining the necessity of alliances and a working time frame for development in
any given region, a framework for assessing need and readiness
is helpful. Networks in the United States currently range from
essentially unstructured entities to those approaching fully
managed competition. Table 6 gives an overview of the different stages of development of networks, their characteristics,
and examples of specific geographic areas at each stage.
The advantages of network membership will differ for each
physician-practice setting with regard to current or planned
scope of services and relationships with other providers. One
obvious added value might be the ability to generate new business or compete for business that is not currently available to
the practice. If other, larger networks have a presence (or will
soon) in the area, a physician network can provide a vehicle
for competition. Alliance with other providers offers the opportunity to leverage financial, marketing, and operational resources and to solidify market position for facing the inevitable
challenges ahead.
Despite the measurable and intuitive advantages of joining
or forming a network, experience so far has demonstrated some
distinct disadvantages and problems. Although a network may
appear feasible in the design phase, it may become an operational disaster.
Typical problems include a lack of agreement among providers, insufficient resources devoted to planning and implementation, lack of coordination and flexibility in the services offered,
and inadequate marketing and management. In addition, the
resulting product may not match the geographic service needs
of MCOs in the market. Affiliates may not receive equal referrals or returns on investment. Noncompetition requirements
may be unrealistic.
Careful evaluation of an existing network prior to joining is
essential. It will be of value to retain a health care attorney to
review the proposed contract in terms of legal issues and to
recognize unreasonable limitationsor requirements. Specific steps
should be followed in forming a new network. A market assessment will be important in determining design. The physician or
hislher designee can interview MCO representatives, as well as
hospitals,medical groups, and self-insuredemployers in their area.
The purpose of these interviews will be to ascertain interest
in networks, quantify expected volumes, determine required
pricing structures, and evaluate available services such as data
management. Potential provider members must also be evaluated in terms of service and geographic capabilities, demonstrated quality, standards, and credentialing. It will be important
at this time to determine other providers' expectations of a
network, as well as their ability and willingness to make resource and financial commitments to its development.
Upon completion of a reasonable market assessment as described, a business plan, pro forma financial statements, and
agreement structures should be developed. The business plan
should include requirements for personnel, resources, training
systems, billing and collection methods, and accounts receivable and payable systems, as well as an ongoing marketing and
sales strategy.
A formidable challenge at this point will be the organization
of affiliates. If the group is large, members must agree to
support a small leadership group that will handle day-to-day
decisions in making the network operational. There are typically several key processes that must be mapped out and supported in order to ensure operational success in delivering the
promised product. These include centralization of referralintake and triage, enforcement of quality and service standards,
and location and management of network operations.
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1996;23 (August)
Managed Care in Infectious Diseases
Opportunities specific to ID specialists may be to form national or regional alliances to provide patient-consultation services as well as manage infection control, inpatient antibiotic
surveillance, outpatient iv antibiotic therapy, and HIV-related
care. The product could be presented as a combination of these
services or possibly as a menu of such choices.
In setting up these relationships, ID physicians can protect
market share as well as develop new services not yet furnished.
One obstacle to successful network development of this type
might be the variations in provider and patient environments
in different areas, which may make sharing the same structure,
pricing, and operational models unreasonable.
Many more networks will form as managed care continues
to grow, and many of these will fail. As the market matures,
fully integrated systems will be more successful, as payors,
hospitals, physicians, and other providers align in the provision
of care. Fear of change and its potential for damage should not
be the only or primary reason to join a network. Forming or
joining a network should be only one tool in the physician's
effort to survive and prosper in today's health care environment.
Resources
• Cherney and Associates, Inc., 28910 Indian Valley Road,
Rancho Palos Verdes, California 90274 (telephone, 310541-6620).
• David Zacks, J.D., Kipatrick and Cody, 110 Peachtree
Street, Atlanta, Georgia 30309-4530 (telephone, 404-8156500; facsimile, 404-815-6555).
• Cherney A. The capitation and risk sharing guidebook, a
manual for physicians and alternate site providers. Irwin
Professional Publishing, 1995 (to order, call 1-800-6343966).
IX. Understanding Legal Issues: Antitrust Law
Antitrust law is a concern when health care providers begin
to develop networks and integrated delivery systems. It is also
an area of the law that is often misunderstood by health care
providers.
Antitrust law promotes robust competition. It protects consumers from high prices and a lack of choice among goods
or services. Certain offenses, such as price-fixing, are per se
violations of antitrust law. In most instances, however, conduct
is judged under a rule-of-reason standard that balances its procompetitive potential against any likely anticompetitive effects.
Antitrust law has been developed through court decisions
more than through legislation. In some instances, the federal
antitrust agencies have developed guidelines or policy statements that explain the law. There are policy statements specifically for the health care industry.
Physician network joint ventures are among the issues addressed in United States Department of Justice (DOJ) and Federal Trade Commission (FTC) policy statements. A physician
355
network joint venture is defined in the policy statements as a
"physician-controlled venture in which the member physicians
collectively agree on prices or other significant terms of competition, and jointly market their services." The policy statements
were developed in response to widespread confusion in the
health care community about how the antitrust laws applied to
mergers and joint ventures. The policy statements also establish
,'safety zones" of conduct that will not be challenged by the
federal antitrust agencies, absent extraordinary circumstances.
To qualify for a safety zone, a physician network joint venture must be substantially financially integrated. To date, the
federal antitrust agencies have determined that arrangements
involving capitation, inclusion of a substantial fee-withhold
(typically 15%-20%), or a global budget qualify an organization as substantially financially integrated. The object of this
requirement is to ensure that the joint venture has a substantial
financial incentive to act as a cohesive, cost-sensitive, single
entity, rather than as a group of price-fixing competitors.
A joint venture that is substantially financially integrated can
quality for a safety zone if it meets certain size requirements.
Groups that are exclusive (i.e., in which providers cannot negotiate with payors outside of the group) can include a maximum
of 20% of the physicians in a particular specialty who have
active hospital staff privileges and practice in the relevant geographic market, in order to qualify for the safety zone. Groups
that are nonexclusive (i.e., in which providers can negotiate
with payors outside the group) can include a maximum of 30%
of such physicians in order to qualify.
However, the antitrust agencies have approved nonexclusive
joint ventures that employed up to 44% of the physicians in a
particular specialty. However, the agencies look for evidence
that a joint venture is nonexclusive in practice, not just in name.
Definition of the' 'relevant geographic and product market"
is a key point in determining eligibility for the safety zones.
This is of particular importance when there is only one physician representing a particular specialty, such as an ID specialist
in a small town or sparsely populated area. Unless they are
shams, physician network joint ventures that do not fall within
a safety zone will be judged under a rule-of-reason standard.
Physician groups do not have to be financially integrated in
order to negotiate with third-party payors. However, if they
are not integrated, they have to deal with a payor through a
"messenger" that acts as a conduit between individual physicians and the payor. Messengers can let the payor know what
the individual physicians want in terms of price and other
contract terms. Messengers can also provide an objective comparison of various payers' proposals for the physician group.
Messengers cannot negotiate on behalf of the physicians in the
group or refuse to circulate a payor's offer on the basis of price
or other competitive reasons.
In order to determine whether a physician group joint venture
complies with the antitrust laws, groups can request a review
letter from the DOJ and the FTC. These federal antitrust agencies will issue written opinions (in the form of business review
letters from the DOJ and advisory opinions from the FTC) on
rice et al.
356
an expedited basis, within 90-120 days. Organizations and
institutions that have taken advantage of this approval process
include the National Cardiovascular Network (7 September
1993), St. Anthony's Medical Center (8 November 1993), MidSouth Physician Alliance (30 March 1995), and Oakland Physician's Network (3 May 1995).
The most important case dealing with physician group practices is the litigation between the Marshfield Clinic, with its
affiliated HMO, and Blue Cross/Blue Shield of Wisconsin and
its affiliated HMO (Blue Cross & Blue Shield of Wisconsin v.
the Marshfield Clinic 65 F.3d 1406 [7th Cir. 1995]). That litigation raised a number of troubling issues for integrated physician
joint ventures. Among the most troubling was whether an integrated physician group practice could be deemed to be an
"essential facility." The Seventh Circuit ultimately rejected
that theory.
However, if the court had ruled in favor of an essentialfacility theory in the Marshfield case, integrated group practices
might have been forced to contract with a third-party payor
trying to establish or maintain a market presence, even if there
were valid reasons for the group to refuse such a contract.
However, the Seventh Circuit's decision left open the possibility that a physician group practice that was found to have
monopoly power could be held to be an essential facility.
There are significant antitrust risks associated with physician
network joint ventures. Qualified antitrust counseling can eliminate or minimize those risks [64]. Moreover, physicians themselves can use the antitrust laws to fight unlawful concerted
conduct by their competitors or others with market power.
Resources
• Local medical society legal advisors.
• AMA Antitrust Legal Advisory Staff (telephone, 312-4645532).
• Hogan and Hartson, 555 13th Street NW, Washington,
D.C. 20004 (telephone, 202-637-5600).
• American Group Practice Association (telephone, 703548-1890).
x.
Infectious Disease Services: Practical Elements
A number of common elements and issues must be addressed
when contracting to provide different types of ID services in
a managed-care environment. The marketing and sale of physicians and their services to insurance companies, MCOs, and
provider networks is a complex process that requires planning
and preparation [65-68]. It is essential to first understand the
physician's own particular market, including the political environment, managed-care penetration by payor and provider, patient demographics, and physician relationships.
In order to spend time effectively, it is important to know
who to approach and how medical care decisions are made.
The optimal role of physicians in the process of education,
marketing, and negotiations may be different in each area. In
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1996;23 (August)
some communities decisions may be made in a social setting,
while in others they may require the doctor's involvement in
a formal business tradition. Regardless of the context, there is
a great deal of power in the presence ofa physician as compared
with that of a representative.
Collection of Data
It is never too soon to gather baseline data. If managed care
has not entered the local marketplace, there is a window of
opportunity. Types of data to gather include demographics of
members of the target MCOs; historical physician practice patterns, costs, and demographics; hospital costs and average
length of stay (overall and per diagnosis); and hospital qualityof-care outcomes and processes.
Often the data collection systems the hospital or insurer have
in place are inadequate and need to be updated or replaced.
Input from an ID specialist in this process can be valuable.
Hospitals, MCOs, and payors themselves can be rich sources
of utilization-review data, such as those pertaining to overall
costs, admissions, and readmissions. It may be possible to access data that summarizes utilization of all services (e.g., home
health, laboratory, physicians, drugs) per the top diagnosed
infections. This would allow the ID specialist an opportunity
to assess current use of services and possible cost savings and
quality improvement by specific types of infection.
Member-satisfaction data should be relatively easy to find,
although actual clinical-outcome data may not be as readily
available. When data are not available, "surrogate" data (reflecting comparable situations in other locales) may be applied.
Data-gathering methods may vary. It is important to first
determine what information has already been or is in the process of being gathered by the individual physician practice,
hospital, other providers, payors, and professional organizations. It is always preferable for physicians to collect and analyze their own internal data or to be directly responsible for or
at least involved in the process. If a physician is in control, he
or she can choose areas that affect quality as well as provide
an opportunity for cost containment.
Taking independent responsibility for the process also guarantees that the data collection and reporting methods are accurate and reflect what they say they do. In addition, the availability of immediate feedback to the doctor's practice provides
an opportunity to change behaviors-and therefore resultsbefore they are actually presented to the payor.
Management of Quality and Cost
In the process of selling value-added services, it is essential
that the physician be accountable for quality. The MCO should
be reminded that the physician is best trained and prepared to
manage both the plan of care and the provider team. Emphasis
must be placed on the strength of the ID physician in tracking,
analysis, and evaluation of complex, multisystem diseases in
patients [60].
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1996;23 (August)
Managed Care in Infectious Diseases
The ID physician is also uniquely trained in areas beyond
direct patient care that affect quality, such as infection control,
microbiology, epidemiology, antibiotic management, and quality-improvement research. The ID physician, by experience and
training, confers, advises, and negotiates with other physicians
and care providers from all specialties and subspecialties on a
routine basis.
Measurable cost-savings potential, which is the bottom line
for the payor, must also be demonstrated. While the direct cost
of physicians is a small component of health care, the cost of
the studies, medications, and services they order and control
is not. Various approaches may be used, one of which might
be the' 'hard sell," in which results are guaranteed. The other
option is estimation of probable outcomes and a request for
the opportunity to prove effectiveness.
Each individual must determine his or her own comfort level
in terms of approach. It may be valuable for the physician to
offer to participate in a cost trial with the MCO, much like
couples getting to know each other when dating before marriage. Once some experience has been gained, the 10 physician
can expand their own services to the MCO by offering to set
up models for other subspecialties.
Contract Development
At the contract-development stage, it may be more effective
to first take data to a medical director or utilization-review
manager, who can understand the value of physician involvement. These individuals may be able to open doors to the
contracting manager. Legal issues should be considered prior
to, during, and after the contracting process. The most common
concern is antitrust regulations (see section IX).
Self-referral may be another issue to consider, especially
when home infusion therapy or laboratory services are involved
in the contract. In 1989 there were aggressive attempts by the
Office of the Inspector General to identify physician kickbacks
involving Medicare/Medicaid payments for home infusion therapy, laboratory services, and other services. Subsequent pieces
oflegislation sponsored by Representative Pete Stark (D-CA),
commonly known as Stark I and II, have been attempts to
control costs through reduction in excessive physician referrals.
The assumption has been that any ownership interests as
well as kickbacks are inducements for overutilization as well as
conflicts of interest in terms of physicians' ability to represent
patients and judge quality. The actual data documenting abuse
are limited, but the theory has been a boon to for-profit companies. The Stark regulations apply to Medicare and Medicaid
patients only, although there has been discussion regarding
expansion to private payors.
Stark I (OBRA 1989, Public Law 101-239, 103 Stat 2106
[1989]) affects only financial arrangements between physicians
and clinical laboratories. Stark I took effect in 1989, but regulations for enforcement were not finalized until July 1995 (60
Fed. Reg. 41914 [14 August 1995], to be codified at 42 C.F.R.
357
Part 411). Even those regulations have been opened for further
comment, which is unusual.
The Stark II legislation (OBRA 1993, Public Law 103-66,
107 Stat 312 [1993]) extended restrictions to other services,
including radiology and home infusion therapy. Regulations
and interpretations of this legislation are still not complete,
although it took effect in January 1995. The Stark regulations
allow for revenues to the physician for home infusion therapy
services if they are a true extension of the practice.
Because of Republican control of the Congress, both the
Stark rules may be cut back considerably if new bills are
passed. Some predict that most of the Stark regulations will
be repealed over the next year. Continued input from practicing
physicians is needed to help legislators understand the consequences of their decisions. Physicians for Quality Outpatient
Infusion Therapy is a lobbying organization (with representation in Washington, D.C.) for ID specialists involved in outpatient parenteral antibiotic therapy (OPAT).
The Speier Bill in California (California Assembly Bill No.
919, Physician Ownership and Referral Act) extends Stark-like
regulations to all payments to physicians. Interpretation and
enforcement guidelines are still in the process of being developed. The bill's biggest effect has been on financial arrangements between physicians and home infusion companies. However, it does allow OPAT as an extension of the physician's
office practice and actually encourages it as a clear exception.
As global capitation becomes more common, restrictions
on self-referral and conflict-of-interest issues will become less
important. There is already more concern about underutilization
of services than overutilization [9, 25, 28, 69, 70].
Physician Payment
There are a variety of physician payment options available
in a managed-care environment. The lowest risk is that of fixed
payments based on specific responsibilities, actual time spent,
and expected outcomes. An hourly rate is the most conservative
method of payment. In order to determine a physician's hourly
rate, it is important to differentiate among the types of services
to be provided. Fees paid for general ID patient care (e.g.,
consultation and patient-care management) may not necessarily
reflect the fair market value of more global management responsibilities.
The amount of payment could be as low as that for Medicare
ID physician services, which on average is $60 per hour
($120,000 annually). This is low for most physicians but certainly could not be construed as above fair market value for
an ID specialist, should there be any question of kickbacks.
One may consider using hourly fees comparable to those paid
to attorneys or to those paid to physicians for providing expert
testimony in legal cases.
These fees are usually accepted in the community as a useful
frame of reference or benchmark. Most people would understand the logic of paying a physician as much as a lawyer.
Practitioners who receive a salary or are paid by an hourly rate
Tice et a1.
358
Table 7. Example of rates for primary care provided by an ID
practice in cases of HIV infection.
Payment ($)
per method
Clinical stage
Initial visit ($325)
Asymptomatic or mildly
symptomatic
Occurrence of any
AIDS-defining
illness* (or
lymphocyte count as
indicated at right)
PCPM
Annual
basis
>500
300-499
100-299
45
60
100
540
720
1,200
<100
335
4,020
CD4 lymphocyte
count (mrrr')
Any
NOTE. This is an example of a capitated-payment system for HIV care
that includes physician services (exception for counseling and vaccinations
provided at the initial visit). Financial figures vary considerably from community to community and according to the specific services provided. PCPM =
per case, per month.
* According to the 1987 CDC surveillance criteria.
for non-patient-care activities should keep a log of the time
spent and a clear audit trail.
Another method of payment is by a discounted FFS or per
diem rate. This may be the first stage in contracting for reimbursement in a managed-care situation. Accepting across-theboard percentage fee cuts for services is a long-term threat,
especially as further reductions are often requested annually.
In such a situation, it is better to go to the payor with a
more creative counterproposal that expands services, eliminates
middlemen, and may include risk sharing. Bundled charges are
a useful option whenever the physician can provide and control
them (e.g., including doctor visits, laboratory services, drugs,
supplies, and nursing in one per-diem charge, by diagnosis, or
for all OPAT patients).
Risk Sharing
Risk-sharing pools are a more highly evolved managed-care
alternative. There are varied arrangements possible, with capitation being the most common. It may be possible to contract
for inclusion in a general ID pool or to develop "carve-out"
agreements by disease state, age group, or service type. There
are data regarding carve-outs for HIV-related care (see table
7), but most of the other diagnoses or disease states identified
at this time are more relevant to other medical subspecialties.
Agreeing to be paid a percentage of cost savings is another
alternative. In such an arrangement, savings that result from a
variety of contributions made by the ID specialist are retained,
at least in part. When one is contracting as part of a group of
providers, it is essential to align incentives wherever possible.
This can be accomplished with guidelines based on clinical
outcomes and cost efficiency.
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1996;23 (August)
There are different models or formulas used to calculate
capitated rates or estimate costs in order to bid on any risksharing agreement [71, 72]. The key to success is to know and
document specific information about the number and type of
services to be provided, patients to be included, and administrative accountability. There are other important elements to
consider in development of a contract, such as reinsurance, a
hold-harmless clause, and financial disclosure. Clearly, legal
counsel is a necessary aspect of entering into an agreement of
this type. Expertise in the complex and changing field of health
care law may be particularly valuable.
It is important to participate in a negotiation process rather
than simply accepting the payor's terms. The physician should
start high when requesting payment but know the limits in
terms of the cost of providing the care included in the contract.
The worst-case scenario will be that the physician is unable to
sell the package. If upon reevaluation the payor's terms still
cannot be met, it may be best to live through it, keep gathering
data, and try again later or with another payor.
Once a contract is in place, delivery of what has been promised and follow-up become essential parts of the process to
ensure continually successful relationships and financial viability [73]. It is important to continue gathering data and working
to improve internal processes. Regardless of the type and number of services provided, a constant goal should be to build
alliances. In a managed-care environment, success is more
likely through cooperation than through competition.
Physicians need to carefully and repeatedly explain to payors
and administrators how they can contribute to the success of
the organization. Expert help may be needed from consultants,
attorneys, and business managers to support the physicians'
efforts. Commitment of time and money will usually be needed
to survive intact from this paradigmatic shift, but the rewards
should be worthwhile.
Medical contracts and proposals have been developed in
Oregon and Tennessee for expanded ID services in the hospital,
laboratory, pharmacy, outpatient care program, and administration. A variety of expanded services may be offered, but each
community will be different in terms of which services are
appropriate and other administrative details. Contracts will
need to be adapted to individual situations.
XI. New Approaches to Patient Care Services
The traditional role of the ID specialist has been to provide
patient care consultations and follow-ups at the request of another physician. This role will likely continue to be of value
because of the excellent reputation of ID physicians, considered
by many to be "the doctor's doctor." ID specialists' expertise
with diseases they see often and others see rarely, such as
endocarditis and diskitis, will continue to contribute to the need
for their services.
This well-established role may also be at risk, however, as
managed care dominates the marketplace. This threat exists
primarily because ID physicians do not exclusively provide
cm
Managed Care in Infectious Diseases
1996;23 (August)
any procedures or services; there
virtually everything they do.
IS
overlap with others in
Expansion of the Traditional Role
There are opportunities for growth and expansion beyond
the traditional scope of patient care services if the value of the
ID specialist's contribution can be articulated and demonstrated
to payors. In the acute care environment, it may prove to be
cost-effective to mandate consultations for the more complex
or life-threatening ID cases, such as those involving AIDS,
endocarditis, osteomyelitis, meningitis, and fever with neutropenia or sepsis.
As the treatment of HIV-infected patients becomes more
complex, generalists may be more than willing to tum over
the care of these patients to specialists. The emergence of new
IDs and increasing resistance to known antimicrobials stress
the need for the expertise of the ID physician consultant. Additional services that the ID specialist may manage or provide
in the hospital include employee health and immunization programs and travel advice.
Outpatient Care
Another way to expand the ID specialists' services is through
outpatient care. Hospitalization can often be shortened or
avoided entirely with the education of referring physicians and
an efficient office or outpatient clinic program. Many ID physicians have seen a shift in their practices from 100% hospital
care to > 50% in-office care. Other outpatient settings, such as
skilled nursing facilities, homes, surgicenters, infusion centers,
and prisons are in great need of ID physician services and
leadership. Note that consulting services for primary and secondary institutions (e.g., emergency departments, infection
control offices, and pharmacies) usually are provided by phone
and not paid for like face-to-face consultations.
Telephone and "curbside" consultations with emergency
room physicians, surgeons, orthopedists, and family practice
doctors have long been expected of ID specialists, but they
rarely are compensated for them. At minimum, these services
should be limited to those physicians who generally refer the
patients for a paid consultation. While this may be a particularly
difficult area in an FFS system, it takes on new meaning in a
managed-care environment.
The value of discussing diagnostic and treatment options
and potentially avoiding problems early in the care of a patient
should be recognized and should result in the inclusion and
appropriate compensation of ID specialists. On the other hand,
under a capitation system, telephone consultations may be quite
cost-effective and may prevent later problems. Guidelines for
appropriate "curbside" consultations have been proposed [74].
Education Services
ID specialists are known for their skills in education and
training. Teaching nurses, pharmacists, and other physicians
359
about IDs and infection control may have a major impact on
the quality of medical care and the financial bottom line in
many institutions and organizations. Compensation for such
educational activities should be obtained from MCOs and other
beneficiaries such as hospitals, home care agencies, and skilled
nursing facilities.
Payment can take the form of wages for time actually spent
or a percentage of cost savings that can be attributed to behavior
changes. Some specialists have expressed concern that they
may educate themselves out of work by teaching others. There
are those, however, who believe that helping others treat disease should be their obligation. Fortunately, the specialty of
ID is constantly changing so that the advice of last year may
not be the same as this year's. In the experience of most ID
specialists, educational efforts generate an increase in formal
consultations when it is made clear how complex and important
appropriate decision-making is in difficult cases of ID.
Academic institutions historically have focused on patient
care services and the education of residents and fellows. Many
academic centers evolved with a priority for research funded by
the government and industry. With research monies dwindling,
however, patient care may again become a priority. Academic
centers are increasingly involved in the care of patients with
AIDS; they have a greater percentage of HIV-infected patients
than do their clinical-practice counterparts (1994 IDSA Manpower Survey). The potential remains for teaching institutions
to increase their emphasis on patient care and be a resource to
the community for education as well as provision of direct
patient care services.
Supportive Data
There are few objective data linking outcomes and expertise
[75], but a recent study by Kitahata et al. [76] makes some
striking correlations between AIDS patients' survival and the
experience of the physicians managing their care in a staff
model HMO. More studies such as these are needed in the ID
field.
Information in the literature supporting the value of ID services is scant and will likely remain so. Much of the information is not scientific, and some may be considered proprietary.
However, a great deal of information can be gathered from
colleagues in terms of their successful experiences. As more
ID specialists gain experience and gather data in this area, it
will be important to share the information in a timely fashion,
so that others may articulate their value on the basis of experience.
The information presented at the conference on managed
care in June 1995 included the following reports involving ID
specialists.
• The average length of hospital stay for patients with osteomyelitis was reduced from 2 weeks to 1.5 days.
• One insurance company has discovered the cost savings
associated with ID consultations for several IDs and plans
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Tice et al.
to require them for hospitalized patients with these diseases.
• One HMO pays a capitated rate of $0.15 PMPM for ID
specialists' consultative services. This is a small piece of
the pie compared with the $1.30 PMPM the plan pays for
infusion therapy services.
• The state of New Jersey would like to pay a fixed amount
for ID specialists to care for HIV-infected patients. This
would include all services as well as hospitalization, and
medications would be paid for as a lump sum for lifetime
care.
• One HMO would simply pay physicians 80% of the health
care premium for patients with AIDS, with the understanding that the physician would negotiate and pay for all the
patients' medical care.
• Reduced rate but guaranteed full payments for ID consultations by one IPA generated a better source of income
for a practice than did billing (associated with administrative costs and a 70% collection ratio for FFS payments).
• An antibiotic review team directed by an ID specialist
saved $400,000 in hospital pharmacy costs in 1994.
• An ID specialist in California has been successful in maintaining compensation for guaranteed cost savings in the
area of general hospital resource management.
Patrick Joseph, in California, has contracted with commercial payors for inpatient and outpatient ID patient care services,
including immunizations but not drugs or diagnostic testing.
Rates depend on age and HIV status. For those members who
are <65 years of age and not HIV-infected, rates are $.07
PMPM. For those aged 65 years and older (and non-HIVinfected), the rate is $.50 PMPM. For those members who are
HIV-positive, payment is based on a per-case, per-month rate
rather than a PMPM rate for all beneficiaries in the plan (see
table 7).
There is a great need for further exploration and documentation of the value of the involvement of ID specialists, such as
multicenter studies comparing costs of patient care and outcomes when ID consultations are utilized or not utilized. This
kind of measurable data will help to define and support growth
in use of the ID specialty as the reimbursement paradigm continues to shift.
XII. HIV-Related Care: An Example of Infectious
Disease Risk Sharing
ID specialists have become the primary care physicians for
patients with HIV infection or AIDS in many communities. The
reasons for this are varied. Some generalists lack knowledge in
HIV-related care and are unwilling to assume responsibility
for managing these patients. In addition, physicians may be
reluctant to commit themselves to the time-consuming nature
of the illness itself, as well as the increasing complexity of
treatment.
Reimbursement for HIV care is becoming generally poor as
it changes to chronic disease management, and increasingly
em 1996;23 (August)
patients are dependent on government payor sources. In addition, HIV-infected patients are often young, intelligent consumers, who demand the expertise they know an ID physician
brings to their care. At the same time, many ID specialists'
practices have shifted to include more outpatient care and thus
can accommodate patients' primary care needs.
Cost of HIV/AIDS-Related Care
The cost of care for persons with HIV infection or AIDS is
of increasing concern, although it is still a small slice of the
health care pie. In 1987 $224 million was paid out by members
of the Health Insurers of America Association in HIV-related
claims, representing 4% of the total claims paid [77]. Empire
Blue Cross estimated the lifetime cost of HIV-related care at
$60,000 per patient in 1986. This increased to $225,000 per
patient in 1994. The cost of terminal care, based on an average
of 15 months, has been estimated to be $75,000 per patient
[26, 78-80].
Even these figures may already be outdated because of rapid
changes in treatment options as well as provider charges. The
cost of early intervention, which represents primarily the use
of drugs and diagnostics, has been estimated to be $12,000 per
patient per year, although this varies from region to region
[81]. Practicing ID physicians at the Managed Care in Infectious Diseases conference reported a typical lifetime average
of 1.5- 2 admissions per year for patients with HIV infection
or AIDS, for whom the average length of hospitalization is
10-14 days.
A number of factors contribute to the growing cost of care:
the number of available treatments has increased, and useful
new drugs continue to become available. As the diagnosis is
documented earlier, the overall cost increases as life expectancy
improves. HIV disease has become a chronic and complicated
one. The costs of protease inhibitors and viral-load measurements may be significant, yet these have not been included in
any documented cost estimates for capitation rates to date.
Many payors are using case managers to decrease costs. The
John Hancock Insurance Company reported saving $56,000 in
the care of 18 HIV-infected patients over 1 year, even with
case manager salaries of $80-$115/hour [82]. Pacific Bell has
achieved one of the lowest health care costs per person with
AIDS in the country, through the use of home and hospice
care, averaging $35,000 per year [83]. Tremendous variability
exists in cost, quality, and patterns of care, but uniform indexing by severity has not been employed.
ID physicians are very well positioned to make decisions
regarding the most cost-efficient, safe, and efficacious care of
persons with HIV infection or AIDS. Treatment protocols are
complex and constantly changing. It is difficult for most physicians to keep up with the available research and literature on
HIV. Care of HIV-infected patients can also provide an excellent opportunity for community-based ID doctors to become
involved in research sponsored by pharmaceutical companies,
which may decrease costs for both the payor and the patient.
em 1996;23 (August)
Managed Care in Infectious Diseases
Risk-Sharing Payment Agreements
There are a number of options for risk sharing in the care
of HIV patients. One is to negotiate an annual per-case rate for
all inpatient and outpatient physician consultations and visiting
services provided by the ID practice. It may be best in this
case for ID specialists to assume the role of primary care
physicians for all diagnosed cases of HIV infection or AIDS.
Fees should be based on local costs of tests and procedures,
individual practice patterns, regional experience, MCO data,
and considerations of the demographic mix in the physician's
area of service.
If, for example, HIV-infected patients are primarily intravenous drug abusers, costs of their care may be higher than if
they are not. In such a scenario there are usually no additional
fees paid for the coordination of care with other services or
for patients with more complex needs. It will be in the physicians' best interest to build in an automatic monthly payment
schedule to avoid the administrative cost to the practice for
billing and collections. Given the average costs for collection
and nonpayment, net revenues may actually increase. Another
option is to include ID services as part of an IPA that contracts
with different payors.
When including physician consultation and visiting fees
only, one might stratify rates by the stage of disease, as reflected
by the CD4 lymphocyte count. Table 7 presents the approximate charges by a practice in California under a capitatedpayment system. It reflects only local circumstances but may
be useful in formatting a capitation proposal. However, these
charges are only examples, so the figures may differ in other
areas, populations, or practices. It is important to keep capitation rates for HIV-related care distinct, or "carved out,"
from those for other ID services so that no confusion or excessive liability is created.
Arrangements that yield the greatest flexibility and revenue
for the care of HIV-infected patients are those that maximize
the services included in a capitation rate [84]. The ID physician
in the primary care role can control many costs and is best
prepared to make cost-efficient decisions across the entire spectrum of care for HIV-infected patients. The more sections of
the health care pie the physician can control, the greater the
reward should be when he or she does a good job.
For example, if the ID specialist can capitate and control
consultation services, pharmacy costs, laboratory testing, and
home care, there should be a good return for work despite the
risk. Hospital care can even be included in the capitation rate,
but with significant risk.
When agreeing to assume this responsibility, one must be
aware of the potential administrative time and costs involved
with coordination of care. Physicians functioning in this role
must be prepared for criticism and concern regarding their
ability to address ethical decisions and community standards
in terms of palliative vs. aggressive treatment, when there are
incentives for cost savings. The insurance companies already
have data regarding average costs of total care, so it is possible
361
for providers to purchase reinsurance that will provide protection in the case of catastrophic charges or unexpected events.
It is far better for the doctor to be proactive rather than to
wait for the MeO to develop payment systems and contracts.
The MCO may not have accurate data prior to contracting
because of issues regarding confidentiality, underreporting, and
out-of-plan access. Surrogate data may be helpful. Several
companies have developed software and recorded considerable
patient information in a computer network. Their information
can be readily analyzed, and risk-sharing arrangements can be
drafted with the use of that data.
These computerized information systems include data about
thousands of HIV-infected patients, with figures on the costs
and utilization of tests, medication, and services. They can
easily generate data about risk sharing or capitation rates according to CD4 lymphocyte count. This type of information
management system will likely never reach the medical literature, as it is proprietary and becomes outdated quickly.
It is also important for physicians to gather, document, and
analyze outcome data such as response to therapy, number of
hospital days, and other costs for their own practices and regions. These data, along with specifics regarding what services
will be provided for which members, will be important in
determining payment rates. However, new and significant information correlating the experience of physicians with AIDSrelated care and patient survival rates has become available
and should be shared [76].
More comparative data about the value of the ID specialist
are needed [85]; MCOs may have no descriptive data that lead
to this conclusion. It may be of value to partner with local
MCOs to develop standards of care and clinical pathways and
to gather information on costs, which are highly variable in
different communities and among different primary care physicians. It may also be possible to develop a capitation system
in a stepwise fashion as data are gathered over several years.
The Payor Perspective
From the payor perspective, non-ID doctors and self-styled
AIDS specialists may present a problem. Physicians who care
for only a few HIV-infected patients may not be as effective
or efficient [76]. Self-styled HIV specialists may not be as
knowledgeable and often utilize unorthodox, expensive therapies. On the other hand, many ID physicians do not want to
be primary care physicians for patients with AIDS. Even if
they did, there would likely not be enough of them to meet
the need.
Cost analysis is difficult for payors. They may be reluctant
to "carve out" diseases and develop special case rates that
will change their global capitation rates and contracts. Many
payors and MCOs now consider HIV infection to be a chronic
disease and recognize that the ID specialist can provide expert
input regarding the continuum of care across all provider settings. He or she can also ensure early identification and use of
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Tice et al.
appropriate preventative measures that are important to costeffective care.
As life expectancy increases, physicians and payors both
need to work together to coordinate services and develop
skilled nursing facilities and home health agencies dedicated
to the growing population of patients with AIDS [84].
Physicians should be aware that payors may be fearful of creating a good program for HIV-related care that might attract more
patients with AIDS. Interests in quality of care and profitability
may be in conflict. In reality, employers usually make the decision
about health insurancecoverage for the entire group of employees,
so individualsrarely have the opportunityto choose a payor. HIVpositive applicants for an independent, nongroup policy in many
cases may be denied coverage, at the discretion of the payor.
Some states have assigned-riskpools for insurance. Despite these
fears, there are also political and marketing issues that may motivate payors to promote ID specialists as primary care physicians
or consultants, because of consumer knowledge or assumptions
that they will do a better job.
Disease-State Carve-Out Contracting Issues
Certain key contracting terms for "carve-outs" for HIVrelated care should be considered by the physician. The doctor
should take financial risk only for things that he or she can
control. Professional management and control should be clearly
explained. For example, who has the right to make referrals
within the interdisciplinary team and among institutional providers rendering service to patients? Who makes medicalnecessity determinations? Who determines which facilities and
providers will be used?
Palliative, unorthodox, and preventative services might be
difficult subjects for an MCO. How many of the MCO's quality
assurance and utilization review procedures are applicable?
These policies may be in provider manuals that often are not
presented unless requested, yet they are binding. What priorauthorization procedures are required? Are on-site inspections
performed?
Services and compensation should also be well defined. The
contract should provide a clear and complete description of the
services to be provided within the carve-out. Fee options include FFS, per diem charges, a percentage of Medicare rates,
capitation, or other risk-sharing agreements. When entering
into risk sharing, physicians should review sufficient data, as
discussed previously. Perhaps it is safer to consider limitedrisk-sharing agreements. Agreements should define responsibilities regarding copayments and deductibles and discuss how
collections are handled.
Contracts should incorporate plans for rate revisions, such
as triggers for renegotiation (e.g., anniversaries of agreement,
changes in Medicare rates, or every January) and automatic
rate adjustments. The confidentiality of records and information
should be addressed, as well as access to medical and business
records. HIV infection status is a common yet controversial
confidentiality issue about which multiple state and federal
em 1996;23 (August)
laws dictate terms. Some hot issues between payors and providers have emerged, such as how much of the practice's financial
records should be disclosed to assure the payor that the provider
has an adequate financial base for provision of care and for
taking on financial risk.
Additional considerations in the development of a carve-out
for HIV-related care would include these subjects:
• admission criteria necessary for members to receive
services;
• identification of facilities and providers for services;
• the extent to which services must be itemized (i.e., billing by the type of service provided or for each component of service);
• assessment of care by utilization-review and quality
assurance managers and the potential impact of such
review;
• relationship of the HIV-related-care provider with the
MCO in terms of grievance procedures;
• marketing obligations and restrictions;
• indemnification and insurance;
• obligations for communications with enrollees and their
families;
• terms for termination of providers, such as low performance standards, insolvency, recurrent malpractice, or
lack of licensure or certification;
• any obligations or limitations on the number of patients;
• reporting obligations and auditing rights (medical and
financial);
• credentialing obligations for subcontracted providers;
and
• procedures for resolution of disputes.
Expert assistance will be the physician's best risk-management tactic in navigating the maze of technical and legal issues
in the contracting process. However, it is still possible to be
creative and proactive in negotiating provider agreements and
ensuring attainment of a valued position with regard to management of HIV disease in an integrated system of care.
XIII. Expansion of Infection Control, Quality Assurance,
and Epidemiology
The ID physician role most familiar to hospital administrators is that of managing conventional infection-control programs. The goal of this type of program has been one of risk
management, primarily in the prevention and tracking of nosocomial infections. However, there are many additional functions that can contribute directly to cost efficiency and indirectly to the quality of patient care [86, 87].
ID specialists can offer a wide variety of additional services
that are of particular value in a managed-care environment. A
prime example is the surveillance and management of antibiotic
use. A program for ongoing review of the hospital formulary
and antibiotic use provides opportunities for improvements in
cost efficiency as well as quality of care. Other areas where
ern 1996;23
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Managed Care in Infectious Diseases
an ID physician's input and management can be of measurable
value are the microbiology laboratory, employee health, and
compliance with the standards of the Occupational Safety and
Health Administration. A broader role may include responsibilities in general risk management as well as evaluation of products or procedures.
The ID physician should consider an expanded role in the
outpatient setting as well. Examples include home health agencies, OPAT programs, surgicenters, skilled nursing facilities,
correctional systems, mental institutions, and public health and
industrial settings [88].
•
•
Measurement-Support Functions
Beyond the traditional clinical roles, the ID physician has
training and expertise in measurement-support functions. Epidemiologic skills and use of the scientific process can be valuable in meeting the need for valid, reliable data to assist in
cost-efficient management decisions. Examples of opportunities include disease profiling or disease-state management, physician profiling, technology assessment, and surveillance of
other complications apart from infections (e.g., surgical complications, catheter breakage, or new problems after admission).
These same skills can be used to support health-caremanagement functions. These responsibilities may include the
development and improvement of information systems, the
strategic planning process, and continuous quality improvement programs, as well as the education of staff in statistical
analysis.
•
•
363
meets one time per month for 4 days, with concentrated
lectures on Thursday-Sunday).
Johns Hopkins University, Summer Epidemiology Program.
Organizations with training programs:
Society for Healthcare Epidemiology of America
(SHEA) and Institute for Health Care Improvement, Quality Improvement and Epidemiology Course.
SHEA, American Hospital Association, and CDC.
Various training sources (meetings, courses, etc.; see
table in [87]).
Graduate programs in quality assessment (M.B.A.,
M.P.H., M.H.A):
Northwestern University, The University of Chicago,
Wharton School at University of Pennsylvania, Stanford
University, University of Michigan, University of North
Carolina, Johns Hopkins University, Harvard University,
University of Washington, and University of California at
Los Angeles.
Journals:
Clinical Performance and Quality Health Care (official
SHEA journal), Health Services Research, Infection Control and Hospital Epidemiology, International Journal on
Quality (International Society for Quality Assessment),
Journal of the American Medical Association, Medical
Care, and The New England Journal of Medicine.
Texts:
Couch JB, ed. Health care quality management. Tampa,
FL: American College of Physician Executives, 1991.
Wenzel RP, ed. Assessing quality health care. Baltimore: Williams & Wilkins, 1992.
Resource Management
General resource and service utilization management can be
enhanced by the application of scientific skills and the unique
knowledge an ID physician has to offer. Examples of possible
contributions to cost-containment efforts include the elimination of unnecessary practices (e.g., exceeding CDC standards
for iv tubing changes) and decreasing or standardizing product
use. The greatest challenge is to change work behaviors of
physicians and other professional and support staff [89].
New or refreshed skills are required to be effective in this
expanded role [87]. These include formal expertise and training
in epidemiology, management, and communication. Proficiency in these areas, in addition to the ID specialist's experience in problem identification and analysis, can result in a
valuable contribution to outcomes as managed care forces new
perspectives in all health care systems.
Resources
• Formal epidemiology courses:
University of Michigan School of Public Health, annual
Graduate Summer Epidemiology Series and the On JobOn Campus Program (designed for working professionals;
XIV. Outpatient Intravenous Antibiotic Therapy:
Opportunities
With the shift in health care from the hospitals back into the
community, OPAT has grown into a major industry in which
more than $1 billion is spent each year. With this rapid growth,
there have been many opportunities for physicians. Antibiotics
have now surpassed parenteral nutrition and chemotherapy as
the most frequent type of outpatient iv therapy. This market
share and volume will likely continue to increase [90].
There is clearly a need for the involvement of an ID physician in the direction and management of OPAT programs. ID
physicians are the most well-trained and experienced in the
use of iv antibiotics and the management of serious infections,
especially when there are multiple diagnoses and complex
problems. A directive role allows the ID physician to participate
in the management of quality and risk for their own OPAT
patients and to contribute to the quality of care provided to
other patients in the program.
The usual role for the ID doctor is to arrange for therapy
through a referral to a home infusion provider. This is a difficult
position for the physician, who is responsible for providing a
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Tice et al.
quality of patient care comparable to that in the hospital yet
may have little control over the provision of that care.
Despite the great savings that outpatient care affords the
payors, the physician is usually not compensated for the time
spent managing the patient's care or the liability it entails.
When a patient is sent home to continue OPAT, the physician
loses the daily hospital-visit fees and must make numerous
phone calls and complete paperwork for which he or she is
not paid. Physicians' home visits, even if feasible, are reimbursed for at one-halfthe rate for a nurse's visit by most payors.
This situation will only worsen if physicians do not become
involved and demand changes in the system.
There are a variety of functions the ID physician can perform
in an OPAT program. The most obvious is directing the team
in selection of patients and the plan of treatment [91-95].
The doctor's insight is necessary in identifying and evaluating
potential patients for the appropriateness of outpatient care.
Choices of drugs, venous access devices, and delivery systems
are best made with input from the informed physician.
Other contributions to an OPAT program can include staff
education and supervision, as well as surveillance for appropriate, safe, cost-effective antibiotic use. The ID physician can
offer expertise and support through participation in additional
administrative activities, such as quality assurance, infection
control, product selection, policy and procedure development,
and availability for emergencies.
Given the value of physician involvement, it is important to
evaluate the different options for participation in outpatient
infusion therapy.
OPAT as an Extension of the Physician's Office Practice
One option for physician involvement is to provide OPAT
as an extension of the physician's office practice [91, 94, 96].
This model allows the physician direct and total control over
the management of patient care but responsibility for the risks
incurred as well. A centralized, tightly integrated provider team
operated through his or her office affords increased efficiency,
coordination, and patient confidence. This may be an advantage
when competing with larger, more fragmented organizations
in terms of providing high-quality care [11].
The physician has greater flexibility, options, and confidence
in selecting patients and treatment plans through his or her own
practice. Revenues from direct provision ofOPAT products and
services gives the doctor the opportunity to be compensated
financially for the time he or she already spends in the management of these cases.
Development of OPAT as an extension of one's practice is
not without risks or challenges. There is a clear opportunity
cost involved for the physician in terms of time and money.
Competition is often intense with home infusion companies,
particularly when they have exclusive contracts with payors
and can provide extensive geographic coverage.
Education of case managers about the office-extension model
is time-consuming. There are additional regulatory and accredi-
em 1996;23 (August)
tation demands. There may be state laws and limitations with
regard to provision of pharmacy and nursing services and products. Identification of reliable, reasonably priced sources of
subcontracted services (i.e., pharmacy compounding, nursing,
billing, management, and consultation) can be time-consuming.
Misperceptions about the model in the local health care community may threaten other relationships and contracts.
Despite these challenges, there is a growing number ofphysician office programs that have been quite successful and continue to expand their services and develop positive relationships
with payors [91, 94, 96]. This model may be particularly valuable in single-specialty groups and multispecialty groups in
which size is an advantage.
The extension of a physician's office practice into OPAT is
clearly a safe harbor under Stark legislation and even under
the Speier bill in California (see section X). In this scenario,
the physician is clearly at risk financially and is involved in
the hands-on management of the patient care provided. Any
subcontracted services must be provided at reasonable market
value and only as part of the entire infusion program that is
managed by the doctor.
The Medical Director Role for Physicians in OPAT
Another viable vehicle for the physician is to function as
the medical director of an OPAT program, whether it is commercial, hospital-based, or freestanding. Usually this is a contracted position that is separate from other services performed
for the hospital or other organizations. This may be the only
option in a small community or rural area, where there are
not enough patients to support an OPAT program through the
doctor's office practice.
Medical directorship can provide a simple, clear-cut role for
the physician in terms of perceptions of conflict of interest,
and it carries less risk in terms of capital outlay. Compensation
should be based on an hourly rate and be unrelated to patient
referrals. When contracting as a medical director with a freestanding or commercial OPAT program, the physician must be
aware of legal issues in terms of self-referral, especially with
regard to Medicare and Medicaid patients.
When agreeing to perform the role of a paid medical director,
the physician must be free of any possible financial inducement
or contractual requirement to refer infusion patients to the organization. This is primarily applicable in cases involving Medicare or Medicaid, although some states have restrictions in
place that also apply to commercial reimbursement. The scope
of services provided by the doctor must be clearly defined and
reimbursed at fair market value, for time actually spent. When
the program is hospital-based, administrators may need to be
educated about the value of an OPAT program manager, who
should be compensated.
Reimbursement for OPAT
Industry resistance to involvement of physicians creates barriers to their entry into this market. Payors are often not familiar
ern 1996;23
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Managed Care in Infectious Diseases
with the actual time spent by physicians in cognitive and management activities, and they have successfully resisted payment
for them. These activities, along with the legal responsibility
carried by the doctor, are not something that can be easily
quantitated and valued. Only a few insurance companies will
pay the doctor management fees for home care patients.
The recently approved Medicare common procedure type
(CPT) code for home care management services (CPT-4 code
99375) specifically excludes infusion therapy. The in-office
infusion model is not well reimbursed by Medicare or Medicaid, but some commercial payors are interested in it and appreciate its value in preventing hospitalization.
Relationships with and education of payors are essential. It
is best to develop these relationships on an ongoing basis rather
than trying to explain or negotiate when a patient is waiting
for treatment. Direct physician involvement is best. Payors may
not judge an OPAT program on size and price alone. Geographic factors, physician experience and knowledge, patient
preference, and demonstrated quality may also be considered,
especially if the payor is local.
Reimbursement for OPAT in most markets at this time is
primarily through a discounted FFS, with either per diem or
itemized charges, and case managers approve plans and prices.
There is very little experience yet with capitation for OPAT.
Home care companies contract for $.50 to $1.00 PMPM rates
for all types of outpatient iv therapy. How reasonable that is
remains to be determined. Local providers of OPAT may remain viable as subcontractors or in affiliation with MCOs.
They may also be more efficient than the national companies,
especially if they have a doctor involved.
An accurate understanding of member demographics and
program costs is essential if OPAT is included in capitated
payment. Reinsurance for new drug development is a particularly important form of protection with capitation plans that
include OPAT. The physician's competitive edge is the ability
to bundle charges, which may include those for the antibiotics,
supplies, and nursing, doctor, and laboratory services.
Bundling of services can also be done (without regard to
diagnosis) if the physician is involved in antibiotic selection.
In addition, the physician is in the best position to facilitate
early hospital discharge or even prevent admission of OPAT
patients. This is very attractive to payors.
There are clear reimbursement limitations for OPAT for
Medicare beneficiaries [97]. If the drug is not one covered by
the benefit for durable medical equipment, there is essentially
no reimbursement for self-administration or home infusion of
drugs. Hospital administrators often do not understand the
value of home-based OPAT if they have received a DRG payment for the initial hospital care.
A recent article from Connecticut describes a model utilized
to measure these cost-savings attributed to an early release
OPAT program managed by ID physicians [98]. Their hospital
provides the antibiotic at no charge plus a per-diem payment
for OPAT supplies and services in order to reduce the costs of
continued inpatient care. Medicare patients can also be treated
365
in an office setting under the supervision of a physician. However, if the treatment plan requires more than a once-per-day
dosage schedule or the patient has a problem with transportation, this may be functionally difficult or impossible.
OPAT offers the opportunity to provide safe, cost-effective
care for patients outside the hospital. There are often other
areas of outpatient iv therapy for which a physician is needed
as well, such as HIV-related therapies, parenteral nutrition, and
chemotherapy. Physicians can make a positive and meaningful
contribution in these areas in a managed-care environment.
Participation in OPAT also affords ID physicians a viable option in managing both quality and risk in caring for their patients.
Resources
• Outpatient Intravenous Infusion Therapy Association
(OPIVITA Newsletter), 1624 South I Street, Suite 407,
Tacoma, Washington 98405 (telephone, 206-627-1850;
facsimile, 206-627-4285).
• Physicians for Quality Outpatient Infusion Therapy, 1624
South I Street, Suite 407, Tacoma, Washington 98405
(telephone, 206-627-4123).
• American Society of Health System Pharmacists, Home
Care Division (Home Care Resource Book, 1993), 7272
Wisconsin Avenue, Bethesda, Maryland 20814 (telephone, 301-657-3000).
• National Association of Vascular Access Networks (Journal of Vascular Access Devices), 30 Hillside Avenue,
Springfield, New Jersey 07081 (telephone, 201-912-9500;
facsimile, 201-912-9128).
• National Alliance for Infusion Therapy, 1001 Pennsylvania Avenue, Suite 600, Washington, D.C. 20004 (telephone, 202-624-7289).
• National Home Infusion Association (Infusion magazine),
205 Daingerfield Road, Alexandria, Virginia 22314-9584
(telephone, 703-549-3740).
• Outpatient Infusion Therapy Source Book, P.O. Box 1234,
Tacoma, Washington 98401-1234 (telephone, 206-6271072; facsimile, 206-272-8558).
• Barbara Nolet, Northwest Management Associates, 6903
76th Street Court NW, Gig Harbor, Washington 98335
(telephone, 206-851-9961; E-mail, bno1et nwm@aol
.com).
• Intravenous Nursing Society, Fresh Pond Square, 10 Fawcett Street, Cambridge, Massachusetts 02138 (telephone,
617-441-3008).
Conclusion
Health care is in transition, with new and powerful incentives
emerging for accountability and cost-effectiveness. These factors have generated new ideas and health care systems that are
bringing significant changes to the role of the physician and
the way medical care is delivered.
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To best apply their training and skills, ID specialists will
need to document and market the value of their traditional
services. As the health care system changes, there are also
opportunities to develop and expand ID services in many areas.
ID physicians' leadership can help redefine the appropriate
role and contributions of their specialty, as well as mold the
development of managed care. Physicians' leadership role as
advocates for patients is also necessary lest the interest of
shareholders dictate the practice of medicine [99]. Physicians
can be the answer rather than the problem in health care reform.
To paraphrase Peter Drucker, "the best way for physicians to
predict the future of health care is to make it."
Resources
The following organizations are resources for information
and support in many of the areas regarding managed care in
the ID field that were discussed in this article:
• American College of Physicians, AMA, American Society
of Intemal Medicine, American Academy of Family Practice, and IDSA.
Acknowledgments
The authors extend special acknowledgment to Les McCallum,
the conference manager.
In addition to the primary authors, the following individuals
were speakers at and participants in the Managed Care in Infectious
Diseases Conference that was held in June 1995. Their shared
experiences and expertise contributed to the preparation of this
manuscript.
Mark Bresnik (Alta Bates Medical Association, Berkeley, California), Bain Farris (The Associated Group, Indianapolis, Indiana),
Hewitt Goodpasture (University of Kansas School of Medicine,
Wichita, Kansas), Laura Loeb (Hogan and Hartson, Washington,
DC), Michael F. Parry (Department of Infectious Diseases and
Microbiology, Stamford Hospital, Stamford, Connecticut), Joseph
Romano (Section of Infectious Diseases, St. Francis Medical Center, Pittsburgh, Pennsylvania), Robert Tallon (Strategic Health
Care Analysts, Columbia, South Carolina), Robert Weinstein (Division of Infectious Diseases, Cook County Hospital, Rush Medical College, Chicago, Illinois), and Michael Williams (Hogan and
Hartson, Washington, DC).
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