Cover Story

Physician Executives Reflect on Their Roles

How the world looks depends on your point of view. Medical directors, some with experience as payers and providers, share their thoughts on prior authorization, value-based care, and quality measurement.

Lola Butcher

“Shocked” isn’t quite the right word, so he prefers “disappointed.” That’s the way Thomas Schenk, MD, senior vice president and chief medical officer at Blue Cross Blue Shield of Western New York, describes the eye-opening experience of seeing, for the first time, the way some physicians and hospitals practice medicine.

Schenk was managing partner of a large pediatric practice before he was recruited to join the health plan in Buffalo. Like many practicing physicians, he had long been frustrated with insurers’ prior authorization rules, and he saw the new job as an opportunity to reduce that burden.

And he has done so. Earlier this year, the Western New York Blues plan eliminated prior authorization for more than 200 services across 20 medical protocols, mostly in primary care.

But in the three years since he moved from provider to payer, Schenk has seen things that have changed his perspective of prior authorization. His old thinking was that insurers used prior authorization primarily to save money.

“It’s a speed bump, a barrier,” he says, recalling his point of view in his days as pediatrician. “I’ve made a decision that I think is appropriate for the patient, and I have to do this extra work to make it happen, and they just hope I’m going to go away.”

What a difference looking at thousands of insurance claims can make.

Thomas Schenk, MD

Referrals sometime result in patients not always getting the best procedure or getting procedures that result in bad outcomes, says Thomas Schenk, MD, CMO of Blue Cross Blue Shield of Western New York.

Schenk now sees prior authorization as a quality program that saves patients from potentially dangerous care. American health care is heavy on specialty care. When a patient is referred to a specialist because of symptoms or a diagnosis, the “on” button for tests and procedures gets pushed.

“You begin to realize that [some physicians] are going to do the same thing for a wide variety of patients once they enter into that channel of referral,” Schenk says. “So we end up seeing a lot of things happen that, at the end of the day, may not be the best procedure or that do not contemplate the side effects or potentially bad outcomes.”

In fact, despite his goal of reducing prior authorization requirements, Schenk found himself adding a utilization-management program for chronic pain management.

“I was looking at our community, seeing very high rates of procedures and knowing that many of those procedures were going to result in revisions, poor outcomes, and more debilitation rather than less,” he says.

Sure, most prior authorization requests are approved because they are appropriate. So all the physicians that are doing the right thing get frustrated by the time-consuming hassle of getting permission from the insurer. Schenk gets that. But until he moved to the payer side of the fence, Schenk did not realize how often the economics of health care change a physician’s view of what good care looks like.

It’s almost predictable that if a medical group adds a pathologist, the number of biopsies being ordered will increase, he says. If a cancer care group adds a radiation oncology suite, its patients start getting more radiation.

And if a group gets a CT scanner that makes it really convenient for their patients to get a CT scan, that can seem like great care, Schenk says. “But why are they doing 20% more CT scans than they were doing before on the same kind of population mix?” he asks. “That doesn’t make a lot of sense.”

Payers or providers: Who leads?

For more than a decade, Thomas Graf, MD, helped guide Geisinger Health System’s journey from a little-known health system in the middle of Pennsylvania to the nation’s exemplar of value-based care.

Among other things, Graf led the community practice, internal medicine, women’s health, hospitalist, pediatric, oncology, and care continuum service lines, including nearly 900 physicians and mid-level providers. By the time he left, he was serving as chief medical officer for population health and longitudinal care.

Earlier this year, he was named chief medical officer for Horizon Blue Cross Blue Shield of New Jersey, the state’s largest health insurer serving nearly 4 million members. That puts him in the position to use many levers—from benefit design to payment approaches—to support physicians and hospitals that seek to improve the quality and lower the cost of the care they deliver.

“This is an opportunity to take what I learned from the provider side about transforming care and really create value,” he says. “There was no way to turn that down.”

In making that move, Graf is jumping into an as-yet-unsettled debate: How much can a health plan do to improve the value of care?

Geisinger is an integrated organization. It has a built-in health plan that supported the health system’s pioneering work in bundled payments. The health system quickly rose to national prominence for that work, its health system executives became famous, and the rest of the industry has been looking to Geisinger for leadership on value-based care ever since.

By contrast, Horizon works through contractual relationships with hundreds of provider organizations.

“The goal is to maintain a level of quality and reliability of delivery; that’s something that Geisinger is exquisite at—the reliable delivery of measurably better care,” Graf says. “And the problem for an insurer for an entire state is that we need to ensure the reliability of care delivery in inner city Newark, in New Brunswick, in Princeton, and in Cape May—everywhere.”

Horizon’s approach will be to develop partnerships with provider organizations that share the insurer’s vision.

Thomas Graf, MD

Benefit designs should be used to incentivize members to choose physicians and hospitals that prove they deliver high-value care, says Thomas Graf, MD, CMO of Horizon Blue Cross Blue Shield of New Jersey. The idea is to let doctors compete on quality.

“Those that are interested and able and culturally aligned and clinically active are going to have a very different experience with us,” he says. “We will be truly partners with them, sharing risk, and interacting around patients in a very different way.”

He’s recruiting providers to develop consensus on how to define and measure quality. Graf intends to use benefit design to incentivize members to choose physicians and hospitals that prove they deliver high-value care.

“We are coming into a time where providers will have the ability to really compete on quality,” he says. “That is something we’ve never had before.”

New Jersey’s hospitals and physicians don’t like the idea that they will have to muddle along. They will still be in Horizon’s network, but they won’t be at the meetings where the insurer’s provider partners work out new payment methods—and they won’t be paid the highest rates.

“If it were me, I would want to be part of the group that’s deciding what the future looks like, not having it dictated to me,” Graf says.

The provider’s eye on quality

DENT Neurologic Institute, with some 60 providers serving more than 200,000 patients annually on three campuses in Western New York, is the largest outpatient neurology practice in the country.

Medical director Laszlo Mechtler, MD, is responsible for the quality of care DENT’s patients receive, so he understands the importance of measurement, tracking, and reporting for continuous improvement. But he worries about how data are used to evaluate physicians.

Laszlo Mechtler, MD

“Payers only seem to justify the expenses once the disorder becomes so severe you cannot help but spend money” on things like expensive ED visits, says Laszlo Mechtler, MD, medical director of DENT Neurologic Institute.

In addition to the American Academy of Neurology’s national registry, his practice submits performance data to support its participation in CMS’s Merit-based Incentive Pay System (MIPS), to an ACO, and to an insurer’s narrow network of high-performing practices. But there’s a problem. “We really do not believe these scores are co-related with physician quality, even comparing measures within our own group,” says Mechtler.

Because they rely on physicians’ notes, most payers are evaluating a physician’s documentation skills rather than his or her patient care, Mechtler says. A good subspecialist summarizes the important issues about a patient, renders good decisions, and gives clear, concise explanations that are meaningful to other providers.

“Yet a progress note that lacks certain keywords or fails to list all the byzantine ICD codes granular to the seventh digit will result in a poor quality report that has little to do with the true decision-making abilities and other important aspects of the physician’s care,” he says.

Mechtler agrees that physician-level data should be collected but mostly to advance research that will improve patient care. In his view, payers should work with specialty organizations and physician advocates to develop metrics and processes that make sense from the physician perspective—and pay for the needed infrastructure. “It is enormously disrespectful to physicians to have compensation reduced or reputations damaged by bureaucratic overhead and inaccurate representations of their work.”

Lola Butcher writes about health care policy and business topics. She lives in Springfield, Mo.