Managing costs of care integral to practice improvement
Susan J.Kressly, M.D., FAAP and Julie P.Katkin, M.D., FAAP
Editor’s note:This is the third of four articles looking at The Quadruple Aim and how pediatricians should be working on practice transformation from the primary
care and specialist perspectives. This article discusses how to reduce cost. It is
important to keep in mind that implementing small, sustainable changes over time is
what leads to true practice transformation.
Primary care perspective
In many areas of the country, primary care pediatricians are being held responsible
for the total cost of their patients’ care.
Some practices receive a bonus for performing well, and in some regions, this bonus
can account for up to 20% of a practice’s total revenue. In some areas, patients in
better-performing practices have lower co-pays, and poor-performing practices may
find themselves suddenly carved out of the network.
What is a practice to do?
You can’t fix what you don’t know. Therefore, you need to ask your major payers for
data on the big cost drivers for your patients. In general, avoidable emergency department
(ED) visits and hospitalizations as well as pharmaceuticals are the biggest drivers
Are providers in your practice writing prescriptions for brand name medications when
there are acceptable generic or even over-the-counter equivalents? Does your practice
use formulary and cost data as protocol when you prescribe medications? Do you know
how to find out what your high-cost medication profile looks like?
Does your care team follow up with patients seen in the ED and coordinate their care?
If an ED visit was unnecessary, does your team educate the patient and make sure your
practice is accessible?
Many payers hold the primary care provider (PCP) responsible for the total cost of care, which includes what the specialists you refer to do for your patients.
Do you know how these specialists view total cost of care? Are they ordering unnecessary
high-cost labs, procedures or medications? Do your referral patterns reflect knowledge
about the value of care for the specialists in your referral network? (Remember value
is defined as quality/cost.)
Since patients usually come by referral, subspecialists may not be aware of the payment
models that affect their care. Patients who come through Medicaid-sponsored plans
are easier to understand. It is harder to recognize the impact of your care on the
referring physician in areas where the primary care payment models are based on performance
or limited by payment caps.
Those based in children’s hospitals may have another layer of complexity to manage,
as these entities often are more expensive than community-based subspecialty practices.
The additional costs usually derive from facility overhead, pharmacy handling fees,
medication administration fees, additional surveillance required by The Joint Commission
and a plethora of other charges.
Conversations with the major practices in your area can help you understand how the
cost of care affects PCP referral patterns. You also should advocate for greater transparency
regarding the costs that your sponsoring institutions charge your patients.
You can help limit costs by being selective about the tests you order and the medications
and therapies you prescribe. Think about the cumulative cost of diagnostic procedures.
Is there a single test that can eliminate the need for several alternative procedures
that will cumulatively cost a lot more?
You also should think critically about adopting new therapies, delaying use of more
expensive agents and procedures for patients who are well-managed with less expensive
Many practices and institutions are starting to collect data on the cost of subspecialty
care, and specialists should be looking for recommendations on cost management.
Finally, subspecialists should work with PCPs who refer patients to improve the PCPs’
management of chronic conditions that don’t necessarily require frequent subspecialty
care. Specialists should try to function as consultants, returning patients to the
PCP for continuing care whenever it is safe and appropriate to do so. Communicate
the treatment plan and the rationale for it clearly, remaining available for new concerns.
For children who require ongoing complex care (e.g., those with malignancies, cystic
fibrosis, irritable bowel disease, etc.), it may be more cost-effective for you to
function as the medical home, consulting the PCP for routine preventive care.
As payment models evolve, we all need to remain vigilant, think critically about our
practices and communicate effectively with each other to manage the costs of our care.
Drs. Kressly and Katkin are members of the AAP Task Force on Pediatric Practice Change.