Lewin Group - Consultant Report Methodology
Research and Methodology
Future of Family Medicine Task Force Six:
Report on Financing the New Model of Family Medicine
The Lewin Consulting Group
It was determined that an outside consultant with expertise in health economics, health care finance, health policy, and practice management would be needed to assist the task force with developing the micro-economic (practice-level), and macro-economic (societal-level), financial models necessary to achieve its goals. After a competitive bid process, the Lewin Group was selected to serve as consultants to the task force. The goal of the Task Force Six research was to investigate and model selected aspects of the New Model to determine their impact (in terms of both expenses and revenue) on a family medicine practice.
The consultants worked closely with the task force in the development of the financial models, and the task force incorporated the consultants’ findings in this report. Two types of analysis were conducted by the consultant. First, the impact of the New Model on a family medicine practice was simulated within the current fee-for-service reimbursement environment. This exercise illustrated the "micro" perspective, because it related to individual physician practices. Second, alternative reimbursement mechanisms for the New Model were analyzed and presented. This broader perspective captures the "macro" implications of the New Model. The macro set of analyses built on the micro-level analysis to estimate the impact of different reimbursement systems on family physicians. To assist in developing assumptions, the consultants reviewed existing literature on medical practices and conducted a series of interviews with industry experts. A total of eight telephone interviews were completed with physicians and others involved in implementing aspects of the New Model. Many of the participants were using or assisted in implementing more than one of the features of the NewModel, although none was experienced with all features.
Lewin Group Methodology:
The Lewin Group provided this information as the source of its methodology for research conducted in support of the Task Force Six Report.
First, the Lewin Group considered key drivers of the micro-level financial model:
- Physician productivity changes
- How are productivity changes used by physicians?
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- To increase volume of services
- To reduce hours worked
- If volume is assumed to change
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- Revenue is assumed to increase in proportion to physician time
- Volume changes only affect direct medical costs
- Findings are sensitive to assumptions
Next, the Lewin Group translated New Model principles into tangible services:
- Lewin worked with the Task Force Chair and staff to translate the principles of the NewModel into features that could be modeled
- The Task Force Chair and staff identified a "market basket" of services to be provided by family medicine practices under the New Model
- Lewin conducted a series of interviews with physicians and others who have implemented features of the New Model
Ten features of the New Model were selected for modeling purposes:
- Open access scheduling;
- On-line appointments;
- Electronic health records;
- Group visits;
- E-visits;
- Care management;
- Web based information;
- Team approach, where clinical staff are more involved in providing care;
- Use of medical protocol software; and
- Outcomes analyses.
Is this an exhaustive list of features from the New Model?
- No - these are the 10 features of the New Model that are most frequently cited and most amenable to modeling
- There are other features that are frequently mentioned in discussions of the New Model such as patient education, preventive medicine and support for self-care
- However, these features are not expressed in financial terms as are the 10 featuresabove
The Lewin Group developed assumptions for modeling purposes by:
- Reviewing existing literature on medical practices
- Conducting eight telephone interviews with physicians involved in implementing aspects of the New Model
- Creating initial assumptions and having them reviewed by Task Force Chair and staff
- Providing the final assumptions for review by Task Force Six members
The final assumptions related to the impact of the New Model were:
- Up-front training requirements for implementation
- Short-term demand for physician services
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- Number of patient visits
- Not a measure of capacity; productivity affects capacity
- Practice productivity
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- Service intensity (i.e., Relative Value Units per service)
- Physician time per service
- Clinical staff time per service
- Overhead costs
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- Office expenses (e.g., IT, office rent, furniture, computers, etc.)
- Administrative staff costs
To estimate the impact of the New Model, Lewin developed a model of an "average" practice:
- The outcomes for an average practice served as a benchmark for analysis
- The micro-level financial model depends on:
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- Physician productivity
- Practice expenses
- Physician work hours
- Service mix
- Payer mix
- Practice size
Simulated impact of New Model on average practice:
- Modeled changes in physician and clinical staff time per procedure
- Reductions in physician time could be used to increase volume of services or reduce hours worked
- If increased work hours, assumed proportionate increase in revenues
- Costs increased by fixed factor for training, office expenses, and administrative overhead
- Medical costs generally increased in proportion to increase in physician time devoted to patient care
Assimilated medical revenues and costs by asking the following questions:
- What services does a typical family physician provide?
- How many services does a family physician provide in a year?
- How much does it costs to provide these services, in terms of clinical staff, medical supply, medical equipment?
- What are a family physician’s costs for non-medical related expenses, such as administrative staff and office expenses?
- How much is the family physician reimbursed for these services?
Assessing services provided by family physicians:
- Obtained the distribution of services and supplies for family physicians from Physcape
- Received Physcape data from MGMA for the 24 month period from January1, 2001 to December 31, 2002.
- The database covers approximately 3,071 family physicians
How many services does a family physician provide in a year?
- Estimated the volume of services provided by a family physician using:
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- Distribution of services (Physcape)
- Physician time per service (CMS)
- Average patient care hours per physician (AAFP)
- Based on AAFP data, assumed family physicians work 47 weeks/year, 40 hours/week in patient care, 11 hours/week in other professional activities
- Volume of services = Patient care hours/average time per service
How much does it cost for clinical staff, medical supplies, and medical equipment?
- Obtained direct clinical expenses for services from the Clinical Practice Expense Panel (CPEP) data from CMS
- CPEP data provide estimates of costs for medical equipment and medical supplies and clinical labor time at the service level
- Scaled the CPEP values using CMS adjustment to account for over- and under-estimation of expenses inherent in the CPEP data
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- Clinical labor costs = 0.72
- Equipment =1.33
- Supply = 1.59
Special handling for clinical staff
- Used clinical staff time at the service level and service mix & volume information to derive clinical staff needs
- Assumed clinical staff work 40 hours/week and 48 weeks/year
- Assumed that 78 percent of clinical staff time is devoted to patient care
- Clinical staff needs = hours of clinical staff patient care required to meet volume/hours worked per clinical staff
Assessment of non-medical expenses, such as administrative staff and office expenses:
- Costs for non-medical expenses were obtained from:
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- Physician Socioeconomic Status: 2000-2002 Edition, AMA, Center for Health Policy Research, 2001
- AAFP 2003 Practice Profile Survey - I
- Cost Survey: 2003 Report Based on 2002 Data, MGMA, 2003
- Salaries obtained from Bureau of Labor Statistics
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- Occupation and Employment Statistics, May 2003
- Assumed that non-wage benefits were 10 percent of wages
- MGMA data based on medians. Approximated means using ratio of mean to median expenses as reported by AMA (1.43)
Non-medical expense categories: administrative labor expenses
- According to AMA, General/family physicians had 2.3 administrative staff per physician
- Estimated a ratio of 1.7 administrative staff FTEs per physician
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- According to AMA, General/family physicians had a total of 4.1 non-physician employees/per physician with 3.1 FTEs
- Used this ratio (3.1/4.1) to adjust administrative staff/physicians
Other non-medical expense categories are assumed to vary with number of physicians
How much is the family physician reimbursed for these services?
- Mark-up for commercial payers is based on study by Direct Research, LLC for MedPAC, Medicare Physician Payment Rates Compared to Rates Paid by the Average Private Insurer, 199-2001. Used 2001 rate of 0.83 Medicare to commercial pay
- Payer mix is from Physician Socioeconomic Status: 2000-2002 Edition, AMA