“Laissez Les Bons Temps Rouler!”

That’s a Cajun French saying that means “let the good times roll.” It’s become a mantra of Mardi Gras throughout the years. I had the opportunity to be in New Orleans for Mardi Gras this week, presenting at the Physicians and Hospitals Law Institute of the American Health Lawyers Association in New Orleans.

Although the good times were rolling on Bourbon Street and in the Garden District, I can’t say good times are rolling in healthcare.  I had the opportunity to give two 1-hour talks with Detroit attorney Mark Kopson called “Strange Bedfellows.” It addressed the latest trend in healthcare consolidation: physicians becoming employees of payers (or insurance companies) in payer-owned clinics.

The last 10 years of physician law has been dominated by physician-hospital integration issues: health systems buying physician practices or otherwise employing physicians directly.  Now we are seeing the next step in the evolutionary cycle responding to pay-for-performance Medicare initiatives: insurers opening their own clinics and treating their insured directly. Kind of like HMOs in the 1990s, but with a twist.

This trend is especially fascinating amid recent studies indicating that physician/hospital consolidation has increased costs for ancillary services.  To put it simply: physicians employed by hospitals tend to (or are required to under their contracts) refer patients within the system that employs them. Indeed, one large national system had in its Jacksonville physician employment agreements that physicians could earn a 5 percent bonus if they referred patients to imaging and diagnostic locations owned by the system.   Physicians received monthly reports on how many images, labs and other services they referred their patients two within the employer system.  Someone has to pay for that.

Physicians are incentivized to work for payers because the payers have control of the data required to treat patients within certain payment reform models. There’s no finagling over payments per CPT code.  Payers are incentivized to employ physicians because reimbursement for services becomes a known quantity in the form of salary.  The payers control the volume of providers, as well as the price.

Working for a physician group or a hospital is very different than working for an insurer.  Here are some tips I gave in my talk for physicians to consider when a payer is recruiting them to be its employee:

Will the clinic treat only certain plan patients?

Will your current patients have to go to another practice?

Does it matter if you lose patients if your salary is guaranteed?

Will working for the payer allow you to be a better physician?

Will the employer provide you information that will promote your ability to assess your care and provide better quality?

Have you seen models of the types of reports the payer will give you?

What panel management work do you have to do?

Do you anticipate that the employer/payer would try to limit care that you provide to avoid having to pay for it?

Will the payer task you with administrative care management work without compensating you for that?

Is there a c-suite medical director physician who is involved in the payers’ physician clinics?

Are you free to send patients to any diagnostic center or other ancillary providers?

The service model is typically limited to a certain product (like a Medicare Advantage product) or a patient population (elderly with chronic care issues who are admitted to the hospital through the ER frequently). It will be interesting to watch whether direct employment by payers of physicians will keep health care costs down.