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How New Practice Payment Strategies Can Help Hospitals Battle COVID-19

Making sure primary care physicians stay in business can free up hospitals to treat the most serious cases.
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Social distancing and stay-at-home orders have meant that much of the revenue earned by physicians has dried up in the past couple weeks, leaving many to wonder if their practice will survive the downturn. Even though most are now embracing telemedicine, those appointments generate much less revenue than in person visits, which have all but stopped unless the patient is very sick.

Primary care physicians are the front lines in the fight against coronavirus, seeing patients and approving them for testing, ensuring that only those who really need hospitalization end up there. If North Texas nears New York levels of the outbreak, hospitals will be overrun. Primary care physicians may divert some of those patients. In addition, continuous primary care is a proven way to keep people out of the hospitals for non-coronavirus diagnoses. If a patient isn’t able to get their lab work done or prescriptions because their physician is no longer in business, they may end up in already overburdened hospital system.

At independent primary care collaborative Catalyst Health Network, CEO Dr. Chris Crow says that 15 percent of the physicians in the network used telehealth prior to COVID-19, but now it is closer to 95 percent. He says that is an essential transition for the medical world to make even beyond coronavirus, but the payment model is still suffering.

In Texas, there is parity for telehealth visits compared to in person visits, but it is all the other services that are only available in person such as labs, vaccinations, or a physical exam that is cutting into cashflow. The loss of those billable services is what is taking around 30 percent out of many practice’s revenue. “Those are things that are the lifeblood of the business for pediatric or primary care offices,” Crow says. “And now all they have is the ability to do a televisit.”  

“This week it has been a collapse,” says Jim Walton, CEO of Genesis Physicians Group, a network of independent primary and specialty care physicians in North Texas. “Everybody is concerned about how to get paid, how to code it, whether they going to paid for it and at what rate.”

Walton says that the contracted rate will generally be paid for telehealth visits, but that may not always be the case as the companies that pay for that healthcare are also losing revenue, so he thinks they may deviate from that plan. The problem is, Walton says, that if the patients don’t get regular care, their health problems will get worse, and they become even more expensive and could require hospitalization.

 The physical exam is also very important Walton says, for confirming suspicions about the diagnosis and learning about new patients. Those can’t be done via telemedicine in the same way that EKG, sonogram, or other equipment don’t work through a screen. Walton worries that even with the addition of telehealth, the loss of appointments will take their toll. “The economics are not in our favor to survive that timeline,” he says. 

An Innovative Solution

Crow has been advocating for a way to solve the cashflow problem and keep practices open. It involves having the payers, most of which are large corporations, give practices an allotted amount per patient up front based on how much it normally costs to pay for that patient. Because of the relatively stable nature of primary care practices, the payers have the data they need to determine the average cost of each patient. “They don’t have to pay the doctors more, just pay them up front,” he says. 

This will allow practices to stay open to do the disease, mental health, and chronic care management that they need to do to keep their patients out of the hospital. This is always important to contain costs, but during COVID-19 it may be the difference between life and death. “Primary care physicians take care of the community, and now we need it more than ever—prospectively rather than reactively,” Crow says. 

He says while it is up to individual payers to make that decision to pay up front, the state of Texas can use its considerable weight to keep many physicians afloat by prospectively paying based on a monthly historical patient cost. If the state were to pay physicians that take care of the one million state employees and teachers, it would go a long way, Crow says. “We not talking about a bailout,” he says. “But ongoing prospective care.”

Despite the hurdles, both Crow and Walton are hopeful about the changes that are changing the healthcare industry. “I think it is a transformative moment for both sides of the equation,” Walton says. “Both for the provider and the patient. It is a very exciting time for medicine and healthcare once you get on the other side of this pandemic.”

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