
New Medicare organizations boost demand for D.C.-area firm’s expertise
Medicare’s efforts to reduce costs with “accountable care organizations” could increase the revenue of Health Prime International, a medical practice management company led by Parag Shah.
Eventually Medicare hopes to save the government money with its new “accountable care organizations,” but the cost-cutting experiment is already a huge new business opportunity for little-known Health Prime International Inc.
The 9-year-old medical office support company, headquartered at National Harbor, will nearly double its 20-person domestic workforce to prepare for a new role managing the novel medical practice businesses in Maryland and possibly elsewhere, President Parag Shah said.
Health Prime is partnering with MedChi, the Medical Society of Maryland, to help run two ACOs in the region approved by the federal government on July 9 and is making 10 additional bids nationwide for Medicare approval by January. The two already-approved versions cover rural areas in western Maryland and the state’s Eastern Shore.
The ACOs, Shah said, provide a rare opportunity for the company: a chance to market its entire menu of products and services at once.
Health Prime grew by providing a bevy of disparate services to doctors’ groups — electronic medical record-keeping support, revenue-cycle management, transcription and customer service, often through its outsourced call centers in India.
But an ACO, essentially a limited purpose joint venture among independent physicians, needs most of those services at once to best compete for the risk-based revenue available under the Medicare program.
Each year, Medicare will kick back part of any savings generated if the patients seen by the doctors cost the government less than projected.
The new model starkly changes the old doctor-payment structure, where doctors were rewarded based on volume instead of quality. Under that model, Health Prime’s customers often had little incentive or wherewithal to buy the company’s efficiency-promising services. But doctors now need higher-end support tools and management services.
“Even when we offered a solution, we had to offer it piecemeal,” said Shah, a Health Prime co-owner. “By allowing the accountable care organizations, you can actually offer an end-to-end solution.”
MedChi selected Health Prime to support its ACOs because the doctors knew the company’s reputation for technological prowess and health care expertise, said Craig Behm, executive director of MedChi Network Services. The MedChi subsidiary and Health Prime co-own the ACOs, which consist of 15 doctors on the Eastern Shore and 23 doctors in western Maryland.
The partnership hopes to set up an ACO soon in Prince George’s County, and Health Prime is also working with a medical society near Fort Lauderdale, Fla., to seek Medicare approval for an ACO there, Shah said.
The ACOs that serve rural areas qualify for upfront grants of at least $430,000 to spur development. Urban and suburban ones do not.
Like the doctors, Health Prime’s expected revenue from the Medicare program is partially risk-based.
Health Prime is using the rural payments to build a practice infrastructure, but won’t profit unless the ACO is successful in saving Medicare money, at which point it would share the savings. Under the Medicare rules, the partnership can’t actually lose money if it doesn’t cut costs; it can only gain.
For now, Health Prime, which declined to disclose revenue, expects to hire 15 additional workers to support the ACO, mostly patient case managers who track patients’ chronic conditions. But if the ACO management model succeeds, Shah believes up to 50 will be necessary. Today, the company employs about 450 people, with more than 400 of them in India.
Dr. Harry Ajrawat, a Greenbelt urologist and president of MedChi, helped shepherd the new models to launch and enthusiastically endorses the shared-savings approach. He sees it as a way to return real authority to doctors, who will be able to strategize to provide more effective — rather than just more — services.
Initially, doctors and hospitals blanched at participating, because the original rules put too much risk on doctors, Ajrawat said. But the Obama administration changed its tone in 2011 and opened the floodgates. Medicare approved 89 new accountable care groups in the batch announced July 9.
“It’s giving your profession back to you,” Ajrawat said. “It’s making you the decision maker instead of having the insurance company be the decision maker.”
About ACOs
Accountable care organizations, known colloquially as ACOs, are essentially limited-purpose joint ventures among independent physicians that enjoy exemptions from antitrust and anti-kickback laws. With more freedom to communicate, policy experts believe, they could bill Medicare less by avoiding duplicative or unnecessary care and staying ahead of patients’ health problems.
Doctors continue to individually bill Medicare on a fee-for-service basis. If the Medicare beneficiaries who are assigned to the ACO collectively use less government money than projected on claims for the year, however, the ACO and Medicare will split the difference.
One less popular, high-risk/high-reward version gives the ACO 60 percent of the savings, but also would penalize the doctors if they exceed projections.
Health Prime co-owns two ACOs with MedChi, and the new venture would split the savings with individual doctors.
Ben Fischer covers health care and law.