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TIERS OF CONFUSION…LIMITED UNDERSTANDABILITY…NETWORK PLANS

As part of the health industry’s movement toward greater cost-consciousness, tiered and limited network health plans are on the rise and confusing patients and physicians alike.

These plans known as tiered or limited network plans, require a deductible if a member wishes to be treated at these designated high cost facilities. The purpose of the plans is to drive members to the lower cost facilities; however, members can choose the higher cost facilities if they agree to pay the associated deductible amount for these providers.

Typically, the deductibles for these plans can range from $500 to $2,000 per visit. These plans are different from the high deductible plans that have been available for a number of years. The high deductible plans affect all covered members and impose an upfront deductible amount before co-payment amounts kick-on. Such plans have lower premium amounts as compared to typical lower co-pay plans; however, they do not provide the consumer with a choice of reducing their out-of-pocket cost by choosing a lower cost provider.

With the implementation of National Healthcare Reform, there is increased pressure on the insurance companies to help reduce the costs. These tiered and limited network plans are designed to put the employers and employees in the game with the insurance companies – to help lower costs. We will most likely see an increased participation in these types of plans in the coming years as a means to help control costs. (Source)

In Massachusetts, tiered and limited network plans now make up 15 percent of the health insurance market, a figure industry leaders expect to grow during the next two years, The Boston Globe reported.  As part of a recent amendment to the state’s 2006 health reform law, insurers are required to offer the plans—which either restrict a patient’s network of doctors or assign providers varying copayments based on cost and quality rankings—with premiums that are 12 percent below their standard plans. (Source)

Although this option offers patients substantial premium savings upfront, Massachusetts physician Sarah Bechta told National Public Radio’s WBUR that even she can’t determine whether a tiered plan would cost her family more in copayments and deductibles in the long run. For example, most insurers rate Boston’s Children’s Hospital as a tier 3, or high-cost hospital, to which one visit would wipe out Bechta’s $1,400 in premium savings.

“That was the thing that was really hard to predict. I could not figure it out,” Bechta said, even though, as a doctor, Bechta believes that she’s “as capable, or more capable, than everybody else who’s looking at this information.”

Even more frustrating, she said, is that every insurer uses different cost and quality measures to rank physicians, making it commonplace for physicians (herself included) to find themselves in different tiers for different health plans. Furthermore, Bechta said patients don’t understand whether they pay higher copayments for some doctors because they are better physicians or less cost-efficient.

Confusion Continues…

Massachusetts’ top three insurers say they are concerned about confusion as members get used to their new type of insurance.

“One of the things we’ve been trying to do is to make sure members know that doctors and hospitals are tiered based on quality and the efficiency of their care,” said Jonathan Chines, the director of commercial provider engagement at Tufts Health Plan.

“All of the health plans need to create easier-to-understand products with easier-to-use support tools, so that a consumer can find the knowledge we want to make available to them and use that knowledge to make health care decisions,” said Richard Weisblatt, senior vice president for provider network and product development at Harvard Pilgrim Health Care.

“Will members prefer tiered plans where there is some work on their part to figure out what their cost share is going to be for certain providers or would they rather something very simple but more limited, where the network doesn’t include every provider in the state?” asked Dana Safran, senior vice president for performance measurement and improvement at Blue Cross Blue Shield of Massachusetts.

Insurers say a growing number of employers are offering tiered insurance plans because they are the best way to lower premiums while still giving consumers some choice in where they go for care. Limited network plans that restrict where patients go for care in exchange for lower premiums are the other option many employers are considering as they try to hold down rising health care costs. Insurers are watching the consumer response to these plans with great interest.

If the physicians and the insurance companies agree that the plans are extremely difficult to understand…just what response do they believe they are going to get from patients?
(Source)

Accountable Care Organizations - Expensive Experiments?

For all the analysis and opinion on ACOs, the fact remains that provider organizations looking to start or join this type of organization are looking at significant expenses. Management consultants, counsel, and of course the IT systems that are required to collect, report and analyze the required savings and outcomes data.  The burning question is,“Will all the expense bring savings and increased quality of care”?  Recent information and expert analysis seem to suggest perhaps these organizations are not the meaningful model of cost savings and outcomes many had hoped for.

The Wall Street Journal asked the following experts to comment on the topic: Donald Berwick, former head of CMS (resigned 12/2/11), Jeff Goldsmith, president of Health Futures, Inc., and Tom Scully, former head of CMS (2001-2004) and former chief executive of the Federation of American Hospitals.

Berwick contends that the formula for ACO success is simple: “keep quality high, save money by improving - not restricting care”. Goldsmith sees the model differently. “The ACO is more like asking the hungry horse to guard the granary. The major savings for Medicare are to be found by keeping people out of the hospital, and reducing the incomes of the specialists who dominate hospital politics”.

Goldsmith also shares my opinion that the ACO has a sure fire potential for costing millions in start-up costs and reducing the income of the particating providers. As Goldsmith called it, “Tom Sawyer’s fence painting project”. In addition, for all the talk of patient-centric care, providers are making the choice to be in an ACO, not the patients.

Berwick contends that patients can certainly choose any care provider; however, if patients are changing doctors and seeing some outside the ACO on a regular basis, it seems to me this actually defeats the purpose of better coordinated and monitored care.

Tom Scully contends that docs are human and like all humans, they follow financial incentives. Scully states the system would be better under a capitated systems (see bundled payments concept) in which care-management groups pay docs a comprehensive fee depending on the level of care provided for each patient. “ACOs are baby steps in the right direction - but they come with a big danger”. In this model hospitals, not doctors are driving the bus - one level removed from the level of care that is actually treating and monitoring the patient.

Interesting that capitation is mentioned (hey I remember that model! Total, partial, carve-out cap rates). WSJ asks “Does capitation work”? Berwick doesn’t go so far to say that capitation is the only approach and ACOs are a move in the direction of more consolidated payment schemes. Scully sees ACOs as a move in the right direction - however, Medicare fees are fixed regardless of quality levels and “...price fixing has never worked in any society ever”.

My question - are providers really ready to accept the risk of care coordination and savings that are inherent with Medicare’s ACO model? Those of us that watched the Physician Hospital Organization (PHO) model of the 1990s fizzle out when PHOs ran out of cash reserves have to wonder if this time things really will be different.

Patient Engagement Starts with Making Appointments

ZocDoc is a free online service for patients to book doctor and dentist appointments instantly – and we wish more doc offices used it!

ZocDoc’s mission is to improve access to healthcare.  The service currently offers patients the ability to book appointments with clinicians in Atlanta, Baltimore, Boston, Chicago, Dallas-Fort Worth, Houston, Los Angeles, Miami, New York, Philadelphia, Phoenix, San Francisco and Washington DC.

Patients benefit because they can avoid the hassle of waiting on hold, or wondering whether a doctor takes a particular insurance.  Participating doctors and dentists benefit by attracting new patients, and alleviating the productivity lost from last minute cancellations by filling those available appointments with ZocDoc patients. (Source)

ZocDoc, a New York-based four-year-old start-up raised $50 million from DST Global last week. DST Global is the investment vehicle of Russian billionaire Yuri Milner, who had made early bets in Facebook, Zynga and Groupon. ZocDoc is its first health-related investment. Milner joins another billionaire investor who’s become a mini-expert, Peter Thiel.  His Founders Fund put up $15 million last summer.  Others include venture capitalist Vinod Khosla, Amazon’s Jeff Bezos, Salesforce.com’s Marc Benioff, and SV Angel’s Ron Conway.  This brings the amount of money ZocDoc has raised to $70 million, one of the largest in health IT.

ZocDoc’s business is refreshingly simple.  Patients can schedule doctor appointments online for free.  Doctors pay $250 a month for the service.  The key is creating more revenue for the physician; Massoumi says his automated scheduling software is more efficient than a receptionist and most of his clients add at least two new patients per month which makes up for the monthly fee. 

“We’re the fastest growing health technology company,” says Massoumi. He won’t disclose the number of doctors signing up, but 700,000 unique patients per month use ZocDoc in 10 cities so far. 

Massoumi, a 35-year-old former McKinsey & Co. consultant,  co-founded ZocDoc in 2007 with Oliver Kharraz, a neurologist who also worked at McKinsey.  Massoumi had flown from Seattle to New York with a bad sinus infection which punctured his ear drum upon landing.  It took him four days to find a Ear Nose & Throat doctor through his health insurance web site.  He found out that it typically takes 20.5 days to see a new doctor, and that physicians had a 10% to 20% cancellation rate. “I thought there had to be a better way,” he says.  If restaurants and airlines could automate booking, why couldn’t doctors?  (Source)

Bundled Payment Pilot Project Results, and New CMS Pilots

This article looks at the results of the PROMETHEUS Payment pilot project, which one of several bundled payment pilot projects.  The project is discussed in the November 2011 edition of Health Affairs.

But after three years of efforts, not a single bundled payment had been made, or a contract even entered into. All three projects lagged “months or years behind their planned milestones,” said the study published in the most recent edition of Health Affairs, notes the Wall Street Journal blog.

The primary culprits were determining payment rates—a process hobbled by issues analyzing claims databases—and getting those rates to interface with the insurers’ claims processing systems. According to recent study of the Prometheus system by Washington-based RAND Corp., the primary reason the organization was unable to achieve its goal of making bundled payments to providers despite three years of work was “the complexity of the model and the fact that it builds on existing complex health care systems.”

However, researchers have suggested that the efforts have helped better coordinate care at all three systems, and that advances in technology could make future bundling efforts progress more smoothly.

Interesting to note is the article by Uwe Reinhardt recommending an industry-wide switch to an “all-payer system”, similar to what Maryland does with hospital payments. Under such a scenario, the prices for health care services and products are subject to uniform price schedules that are either set by government or negotiated on a regional basis between associations of health insurers and associations of providers of health care. (Source) 

CMS’ Center for Innovation is currently accepting applications for the Bundled Payments for Care Improvement Models 2-4. For more information on the bundled payments pilot projects CMS is conducting, visit this page.

The Supreme Court Hears Health Reform Arguments March 26 – 28

And we are launching our “Verdict Pool” in February on our Facebook page! More information about the contest and cool prizes coming in early February!

The Supreme Court has finalized its schedule for oral arguments on the constitutionality of the Affordable Care Act, setting 5.5 hours of presentations during March 26-28.

CNN reports the court on March 26 will consider whether challenges to the law can be made before the individual mandate goes into effect in 2014. The individual mandate will be argued on March 27, with severability of the mandate from the rest of the law scheduled on March 28. The court on the 28th also will hear arguments on whether the government can force states to expand their share of Medicaid costs and lose federal funds if they don’t.

A ruling is expected in late June.

A Two Month “Doc Fix” for Reimbursements

It’s become ‘business as usual’ for doctors who see patients with Medicare.

Every so often, they are threatened with a cut to their Medicare reimbursements mandated by a rate-setting formula that leaders of both parties agree is flawed but would cost nearly $300 billion to permanently repeal.

On December 23rd, Congress passed the latest “doc fix,” delaying a looming 27.4% cut for two months as part of a larger deal to extend the payroll tax cut and unemployment benefits.

In an interview hours before congressional leaders announced the deal, Medicare’s deputy administrator, Jonathan Blum, observed that although the previous doc fix — a 13-month postponement finalized in December 2010 — also was enacted dangerously close to a deadline, “there were strong signals [beforehand] that Congress was coming together, and we were able to plan for that. But this, really to me, is a different scenario, where we don’t have clarity about what the timing of the ultimate policy will be”.

Hmmmnnn…apparently neither does Congress…

“Physicians still think that the people in Congress are too intelligent to let [the pay cut] happen,” said Alan Wasserman, president of George Washington University Medical Faculty Associates, one of the largest practices in Washington. “But we are concerned that as the rhetoric keeps getting turned up… areas of compromise just aren’t there anymore. Sooner or later, there is going to be an impasse”.

This latest fix expires on February 29.

“Congress now has to enact a real and fiscally responsible solution to this sorry cycle of scheduled cuts and short-term patches that compromises access to care for patients and drives up costs for taxpayers,” said Peter Carmel, president of the American Medical Association.

Doctors experienced a harrowing run of short-term fixes in 2010 — when Congress enacted five separate postponements.  Both times CMS administrators were able to protect doctors by retroactively processing claims until Congress enacted the next fix. Based on past experience, Blum said, Medicare officials have determined that if Congress were to miss another deadline, the longest the program would hold off on processing physician payments would be 10 business days. After that, Medicare would begin paying claims at the lower rate with the expectation that officials could retroactively compensate doctors for the difference if a fix is passed.

With concern that the teeth-clenching nature of recent negotiations could prompt some doctors to stop seeing Medicare patients, Blum said the program is extending the usual Dec. 31 deadline by which doctors must notify Medicare of their plans to participate in the coming year. Doctors now will have until Feb. 14.

Let’s hope ‘Three Times the Charm’ this Valentine’s Day…

(Source) 

The Professional Patient Perspective

(This is a new, periodic column that discusses views on the healthcare system from the perspective of an industry professional who happens to be a patient with a chronic condition.)

Perhaps the biggest source of problems in this industry is the sheer number of different interests involved (i.e., patients, clinicians, hospitals, diagnostics, payers), and the differences in their perspectives. In other words, there are so many processes, experiences and stakeholders involved in providing care to one patient that we often can’t see the “big picture” from a different point of view.

One example from my own recent experience involves a chronic, severe sinus infection, my long-time ENT, and my high deductible/HSA health plan (offered by a large, extremely profitable payer). After three months of drugs and outpatient visits, my doc recommended an outpatient surgery procedure at a nearby surgery center to help clean out the problem. I thought this was a great idea, and the only other facility option for this doc besides this surgery center is a nearby hospital. (I have not had good outpatient experiences with that hospital so to me, it is not an attractive option.)

There are plenty of other people with health insurance similar to mine, and expectations are that many more will have this option as employers try to manage health insurance premium costs. Enrollment in high-deductible health plans paired with health savings accounts continued to grow between January 2010 and January 2011, from 10 million to 11.4 million members, according to the most recent census (June 2011) by AHIP.

I soon learned not all providers are willing to contract with this type of benefit plan, and in fact, the surgery center my doc suggested (and other similar facilities near me) will not contract with this benefit product. The reason they told me is that the high deductible amount sets up the provider, especially in the beginning of a benefit year, for a higher incidence of late or non-payment. And even if I wanted to come to their facility with a big bag of cash, their contracts with other plans from this same insurer prohibit them from treating me at all (unless I was to suddenly stop being a covered member in my plan).

I can totally understand where providers are coming from. Most HSA funding is deposited as wages are earned, up to the yearly total amount selected by the member. So in other words, you may have selected an annual HSA amount of $3,000, but on January 31st you will only have a fraction of that amount deposited in your account. And of course if I don’t have enough HSA dollars available to pay a bill, then I am looking for funds elsewhere.

Needless to say, this arrangement is not very beneficial to consumers who live in metropolitan areas where there are plenty of specialists and facilities. In such populated areas providers more often than not have the luxury of refusing to contract with whole carriers, and/or being highly selective of the types of plans they do accept. From my perspective my health plan isn’t very attractive, yet I am sure from the employer’s perspective it saves them a lot of premium dollars each year.

From the insurer’s perspective it is good business for their banking division, which holds and manages the HSA funds. Most of my docs do participate with this plan but are completely confused as to how to collect a co-pay, and I don’t blame them. Most of the time we are negotiating on what we think sounds good, as I regularly check my online account to see when the high deductible is met.

So what about the overall quality of care as perceived from the patient, doctor, and payer perspectives? In my case, I am rather miffed about not being able to receive the most timely care at a facility with a fairly open surgical schedule. But thankfully my issue is not urgent enough to require immediate surgical intervention. But if it was? Hey I have insurance – I should get the care that I need when I want it, right? It is easy for most insured patients to believe this and demand their choice of care. Perhaps if I didn’t work in the industry I would be more upset.

I found the following fact relevant and interesting:

A national mail survey of 627 doctors randomly selected from the American Medical Association Physician Masterfile showed that 42 percent believe patients in their own practice get too much medical care, while 52 percent think the amount of care is just right. (The study is published Sept. 26 in the Archives of Internal Medicine.)

But only 6 percent believe their patients receive too little care, the survey found. Many health care epidemiologists and economists have suggested that much U.S. health care is actually unnecessary, the study authors said.

Almost all said they believed that primary care physicians vary in patient testing and treatment, and three-quarters were interested in learning how their own practice compared to others.

Malpractice concerns drive many decisions to treat aggressively, the doctors said. More than 80 percent felt they could easily be sued for failing to order a test that was indicated, while 21 percent felt they could be sued for ordering a test that wasn’t. Having too little time with patients was cited by 40 percent as another reason for aggressive treatment.

So if there is this much variation in primary care treatment and testing, what will happen under Patient-Care Medical Home (PCMH) and ACO models? How to balance fear of lawsuit (and overtesting) versus being more accountable for treatment costs and outcomes? My sympathies for the primary care physician.

And what about physician views on payers? I read this Medscape article, “How Doctors Get More From Insurers (Despite Anger and Frustration)”.  More than 10,000 physicians across the nation participated in Medscape’s Insurer Ratings Report 2011. Feelings of outrage, resignation, and powerlessness dominated the comments that we received. A noted theory by participants: If the companies can wear physicians down with repeated denials and paperwork demands, a high percentage of doctors will give up trying to secure their deserved reimbursement.

The highlights of the survey include:

• 28% of physicians say a Blue plan (Blue Cross, Blue Shield) is their best insurer, followed by Aetna, United Healthcare, and Cigna.
• 14% of physicians say United Healthcare is the worst insurer, followed by Blue plans, Aetna, Cigna, and Humana.
• Three in 10 doctors say they don’t know which insurer is their best payer.

Wow. Can’t we all just get along? The survey also discovered that many docs have no idea what the highest reimbursement is on their highest CPT code. So despite the fact that docs are clinicians and may not want to be involved at all with the business side of a practice, they really need to know a little more than they already do. There is a lot of industry talk about engaging patients on care options and costs. Maybe we can engage some other parties while we are at it.

 

THE SEQUESTER FESTER

Federal budget cuts triggered by the failure of the congressional “supercommittee” have state officials concerned.

Across-the-board cuts of about $1 trillion in domestic and social programs and Pentagon spending are supposed to take place in FY13, which begins Oct. 1 2012.

State budgets taking effect next year will overlap with the federal budget.

The Federal Budget Control Act that was activated by the supercommittee’s failure to cut spending or hike taxes will impose $1.2 trillion in cuts over 10 years in non-entitlement domestic programs. Among those cuts will be some payments to hospitals and other health care providers. (Source)

Under orders to cut the Pentagon budget by more than $450 billion over the next decade, Defense Secretary Leon E. Panetta is considering reductions in spending categories once thought sacrosanct, especially in medical and retirement benefits, as well as reductions in troop numbers and new weapons purchases.

In what he described as the most sensitive of the potential cuts facing an all-volunteer force, Mr. Panetta said the Pentagon was considering raising fees for the military’s health insurance program, TRICARE. Today, military retirees and families, who are guaranteed TRICARE for life, pay only $460 a year in fees — far below what they would pay if they worked for a private employer — although a modest increase for new enrollees began last month.

The White House and Pentagon have made clear that TRICARE fee increases would be phased in over a few years and would affect current retirees and troops serving today when they retire. (Source)

Read the specifics of the President’s plan to cut military health benefits.

The failure of the congressional “super committee” to reach a deal triggers a two percent across-the-board cut to Medicare, the government program that provides coverage to millions of older and disabled Americans.

That translates into about $123 billion over the next decade—far lighter than the $500 billion to $700 billion in cuts that could have hit hospitals, doctors and beneficiaries, as well as insurers, drugmakers and nursing homes, if the panel had reached a deal.

HOSPITALS, DOCTORS HIT BY CUTS

As stipulated, automatic cuts are likely to hit hardest among hospitals, which are the biggest recipients of Medicare payments and account for nearly 50 percent of program spending.

Doctors suffer a double whammy from the collapse of the super committee. Physicians and clinics receive about 25 percent of Medicare spending.

Further, the breakdown in negotiations quashed hopes among doctors that the panel would eliminate an almost 30 percent cut in Medicare payments scheduled to go into effect in January under a 1997 balanced budget law.

A so-called permanent “doc fix” would have cost nearly $300 billion in lost savings, making it unlikely at a time of deficit reduction.

Analysts said the best healthcare providers can hope for is another short-term fix to stave off the payment reductions.

The automatic cuts would also reduce funding for insurers that participate in Medicare Advantage, a program segment that allows senior citizens to purchase private insurance.
(Source) 

The sequester would also hamper the government’s ability to implement the Affordable Care Act by reducing the amount of money that’s needed to enact some programs.

Entitlement programs such as Medicaid and Social Security, however, would remain sheltered, as would funding for veterans programs, income tax credits and food stamps. Funding for these safety net programs is considered mandatory and would not be affected by the sequester. (Source) 

Congressional SuperCommittee – Brink of Failure and Implications for Healthcare

As of the Wednesday afternoon, Nov. 16, political analysts and reporters say the Congressional SuperCommittee is not even close to a Federal budget deal. Politico reports that a “modest deal” is still possible, but all signs to date indicate that nothing tangible has been agreed upon.

Congress has received a truckload of lobbying pressure from health industry groups: 

AARP: “To prevent cuts to Medicare and Medicaid benefits, and the increased cost-shifting that would affect beneficiaries’ access to care.”

American Diabetes Association: “To prevent cuts to Medicare, Medicaid, the Centers for Disease Control and Prevention’s diabetic surveillance programs and the National Institute of Diabetes and Digestive and Kidney Diseases”.

American Medical Association: “To prevent an estimated 30 percent cut from taking effect Dec. 31st by repealing Medicare’s physician payment formula.”

According to Politico, “Adding to pressure to the supercommittee are liberals in Congress who fear Democrats may take a huge whack out of cherished entitlement programs — as well as a bipartisan group of lawmakers who will continue to demand Wednesday that the panel “go big” in its deficit goals and take money out of Medicare while raising tax revenues. Any bipartisan deal would split both parties”.

If the automatic cuts take place, many health programs will face sharp cuts, which could negatively impact services available to the public.

1) Reduced CDC funding can mean less dollars for catastrophic event response and inspections for potential food-borne illnesses. The CDC also subsidizes the costs of vaccines for un- and underinsured children.
2) Reductions in the Ryan White HIV/AIDS Program could be devastating to the 500,000 infected people currently receiving assistance with expensive care and medication. The program also helps states provide free or low-cost HIV testing.
3) The disease prevention fund created by the health law provides funding for programs aimed at reducing obesity and tobacco use. The fund is already facing a reduced federal budget.
4) A recent study concluded that deficit-reduction proposals to change the structure of Medicare would increase costs for most current beneficiaries. (Source) Several committees have suggested changing Medicare rules to combine the hospital- and doctor-services deductibles that are currently paid separately. In this system, seniors could have a $550 annual deductible, and be required to pay 20% toward all services up to a $5,550 annual limit. Such a change would mean that approximately 75% of beneficiaries would pay more — on average around $180 a year more — according to models created by the nonpartisan Kaiser Family Foundation. About 5% of current beneficiaries who use hospital services most frequently would see a significant decrease in the amount they have to pay — around $1,570 a year. The rest of the beneficiaries wouldn’t experience any change, the study found.

We will continue to follow Congressional developments and post information on the health industry implications in the coming weeks.

The Next “Big Thing” In Care Coordination & Reimbursement – Bundled Payments (1st of a series)

CMS’ Center for Medicare and Medicaid Innovation (CMMI) recently released an initiative on bundled payments. The Bundled Payments for Care Improvement initiative seeks to improve patient care through payment innovation that fosters improved coordination and quality through a patient-centered approach.  CMMI is seeking applications for four broadly defined models of care. 

Specifically the models as defined as:

1. Model One: a retrospective bundle that covers only the acute care hospital stay (all acute patients, all DRGs – or “episodes of care”); All Medicare Part A DRG-based payments are included.
2. Model Two: retrospective payment for the acute care hospital stay plus post-acute care associated with the stay, for a period to be defined by providers (select DRGs in a post-acute period are included); All Part A and B services and readmissions are included.
3. Model Three: post-acute care only, beginning with the initiation of post-acute care after discharge from an acute inpatient stay, which will be paid retrospectively (post-acute only for select DRGs); All Part A and B services and readmissions included.
4. Model Four: prospective payment for all services provided during the inpatient stay (Select DRGs); All Part A and B services and readmissions.

Unlike the recent ACO rules, CMMI is giving providers the flexibility to determine which model of bundled payments works best for them, have made it easier for providers of different sizes and readiness to participate in this initiative. And a new development is allowing post-acute providers (skilled nursing facilities, home health, hospice) to participate in the initiative.

So is an episode-based payment methodology the latest, greatest, new “new thing”? Deloitte defines an episode-based payment (EBP) system as a method that, “…bundles all costs of care across a clinical condition for a defined period of time and for all settings involved in direct and indirect care to the patient”. This “episode” can include many levels and types of providers across many care settings (i.e., outpatient, inpatient, home health, pharmacy, etc.). “A key feature of EBP is its alignment with evidence-based best practices, including clinical guidelines and quality measures…In EBP, the provider organization is responsible for managing a process of adherence to evidence-based practices based on what is done rather than ‘who does it’”.

I think a key consideration will first be getting providers and payers to understand and agree upon an EBP methodology, CMS’ demonstration pilots not withstanding. How care services are grouped into episodes is a key first step to implementing any EBP system. Providers and payers will have to find common ground on this, particularly in an environment where providers may not always trust payers to calculate and manage their clinical data.

Key questions providers and payers will need to ask include:

How will payors contract with providers re: the delivery of care over a defined “episode”?

Will a payor contract directly with a large group practice or other provider organization, or will they contract by episode across all related providers?

How will the contracted method be supported and managed by IT applications so that reimbursements are accurate and timely?  Since this is much more complicated than capitated or even pay-for-performance methods, a critical success factor is the IT application that supports the episode method and process.

In our forthcoming articles on Episode-Based Payment, we will discuss the following topics: IT applications to support payer contracts on EBP; opportunities and challenges for providers, payers, patients; and a review of industry experts’ opinions on EBP.

Medicaid Freezes and Cuts…Medicare Next on the Chopping Block…

MEDICAID FREEZES AND SAFTEY-NET CUTS…

With virtually every state cutting costs in anticipation of increased Medicaid spending, a new Kaiser Commission on Medicaid and the Uninsured report finds that 28 states cut or froze hospital Medicaid payment rates in fiscal year 2011, and 40 states plan to in 2012, reports AHA News Now.

According to the report, state Medicaid spending is estimated to increase 28.7 percent this fiscal year to make up for the loss of federal funds, even with the temporary relief under the American Recovery and Reinvestment Act.

Thirty-nine states restricted provider rates in 2011, and 46 states plan to next year. Almost all states cited making changes to Medicaid pharmacy programs. And five states this year increased copayments or imposed new ones, with 14 states planning to do so in 2012.  (Source)

The healthcare cuts proposed in Washington are even steeper: at least $664 million, part of an effort to close a $2 billion deficit. Rural hospitals are facing Medicaid cuts as high as 50 percent, according to AHA News Now. (Source)

ON THE MEDICARE FRONT LINES…

Without congressional intervention, physicians will face a 27.4 percent Medicare pay cut on Jan. 1 2012. This reduction is slightly smaller than the earlier estimate of 29.5 percent. (Source)

Is there any way out of the Medicare bind?  There is, but it requires careful thinking about the short-term pressures and a comprehensive strategy to respond to the long-term problem posed by growing costs.

No matter how Congress resolves the immediate budget issue, the long-term problem will remain. Medicare’s share of the federal budget, which rose from 8.5 percent in 1990 to 15.1 percent in 2010, is projected to hit 17.4 percent in 2020—a percentage that will almost certainly increase because of implausible cuts in doctors’ fees written into current law and will rise higher still if budget cuts fall disproportionately on other programs. The way out of the Medicare bind cannot involve changes only to Medicare itself; the cost of caring for seniors reflects the overall costs of the health-care system, and spending on Medicare will become manageable only through measures that bring total costs under control.  (Source)

Advances in Mobile eHealth; Coming to a Car, Home, Person Near You…

Four out of five practicing physicians use smartphones, computer tablets, various mobile devices and numerous apps in their medical practice, according to a new report from Jackson & Coker.

The report, titled “Apps, Doctors and Digital Devices,” presented the results of several recent studies that investigated the use of smartphones, mobile computing devices and a wide variety of software apps by physicians in different specialties.

The report cites recent studies that pointed out the practical value of integrating the latest digital hardware and software into healthcare delivery. It’s not surprising that so many practitioners are relying on iPhones, iPads and other computer tablets – as well as downloading a myriad of apps – given the growing movement toward “digitizing as much of the health care process as possible,” the report notes.

The study also addresses security and privacy concerns associated with honoring HITECH and HIPAA protocols. As a crucial preventative measure, some hospitals require medical staff to limit software use to read-only access to patient information while prohibiting storing such information.

As digital devices put more critical information in the hands of physicians, “the potential applications are virtually limitless,” it concludes.

(Source)

Consider The Following Studies Concerning The Increasingly Rapid Move Toward Mobile Health:

• The U.S. mobile health industry is expected to grow to $4.6 billion in 2014, more than triple its value just five years earlier, according to a 2010 report from consulting firm CSMG, a Boston-based consulting firm.
• According to Manhattan Research, the number of physicians who own smartphones will increase from 64% in 2009 to 81% in 2012.  As a result, software vendors that want health care providers’ business will increasingly need to offer their services on mobile platforms such as phones and tablets.
• More than 500 million smartphone users will be utilizing mobile health applications by the year 2014, according to the Global Mobile Health Market Report 2010-2015, a study from research2guidance, a Berlin, Germany-based market research firm that focuses on the mobile marketplace.

(Source)

Does E-Health Stand a Remote Chance?

Advancing technology—the availability of faster and more reliable networks, wireless devices, high-definition digital images and video, and the ubiquity of mobile devices—is creating a foundation for a system of virtual healthcare where neither patient nor caregiver need be in the same place—or even in a clinical setting at all. And the programs are rising in popularity: In the 2011 HealthLeaders Media Industry Survey of technology leaders, 46% of respondents said they have one or more telemedicine programs in place. Another 41% say they’ll have one in place in one to five years.

Call it telemedicine, telehealth, e-health, mobile health, m-health, or remote healthcare, some predict that using technology to deliver care over a distance will improve access, ease physician shortages, create new revenue streams and increase volume for healthcare organizations by expanding market reach, and improve quality of care.

(Source)

On The Mental Health Horizon…

The Substance Abuse and Mental Health Services Administration (SAMHSA) announced it is awarding up to 29 new grants, totaling up to $25 million over three years, to expand use of health information technology to increase access to behavioral health services.
This program will leverage technology to improve access and coordination of the treatment of mental and substance use disorders especially for Americans in remote areas or in underserved populations. Web-based services, smart phones, and behavioral health electronic applications (e-apps) will enhance communication between patients and health care providers to improve discussions about treatment options and decisions, and better manage health.
(Source)

Not All Mobile Devices Are Driving Distractions…

Ford Motor Company is ready to demonstrate its new in-car health monitoring systems at this week’s Wireless Health 2011 conference in California.

Researchers said in a statement that they’ve created the glucose monitoring, allergy notification, and diabetes and asthma coaching apps they promised earlier this spring. The systems are integrated in the company’s Sync vehicle.

The systems use Bluetooth to connect drivers to cloud-based Internet services, and to allow voice-activation and control for drivers.

Time Ticking Away for the Congressional “SuperCommittee” and Federal Cuts

The supercommittee has less than a month to the Nov. 23 deadline when it must present its deficit-cutting recommendations to Congress. The Congressional Budget Office has said it’ll need the plan much earlier to give its staff enough time to score the proposals.

The high-profile panel has been working mostly in secret on the contours of a deal that would cut at least $1.2 trillion from the federal deficit. (Source)

House Minority Whip Steny Hoyer on Tuesday said he’s not entirely confident the panel will succeed in reaching a bipartisan agreement before the clock expires. (Source)

Whatever happens, cuts to the Medicare program are all but guaranteed. The Congressional Budget Office’s current baseline projections for federal spending over the next decade has Medicare spending $7.4 trillion out of a total of $44 trillion. That’s 16.8% of ALL federal spending (defense, Social Security, discretionary domestic programs, you name it).

By the November 23 deadline, the entire Congress must come up with an additional $300 billion for Medicare over the next decade to avoid sharp cuts in physician reimbursement — the so-called “doc fix.” (Source)

Political strategists are leaning towards the inability of the SuperCommittee to successfully negotiate a budget. When that happens, Medicare will be cut 2 percent across the board.

Accountable Care Organizations (ACOs)-Roundtable Discussion with CMS and more…

On October 20, we attended the National Capital Area HIMSS education event focusing on ACOs from the perspective of physician leaders from CMS and other provider organizations. The speakers included the following:

Dr. Mandy Cohen, Director of Stakeholder Engagement and Outreach, Innovation Center at CMS

Dr. Ryan Bosch, CMIO, INOVA Health System

Dr. John Batterly, Executive Vice President for Medical Affairs, Dartmouth-Hitchcock Medical Center

Dr. Stephen Morgan, Vice President and CMIO, Carilion Clinic

Dr. Ferdinand Velasco, CMIO, Texas Health Resources.

Discuss your organization’s current involvement, plans with ACOs, and the supporting role for health

Morgan: Carilion participated in the Brookings Institute pilot for ACOs. We have
collaboration to some extent with Aetna and ActiveHealth. Some HIE with UVA; but need more info exchange. Physicians have asked for data at point of care. Physicians want to be accountable to patients, want to know cost, but not so much that patients know the cost of every little thing (i.e., Band-Aids, lab supplies, etc.)

Bosch: Physicians are looking for a trusted advisor re: HIT, 5010, their legacy vendor. Inova is offering hosted EPIC practice mgmt, billing and EHR applications. However, physicians are confused as to “why are you doing this”. What is in it for you? Physicians are in the IT staff at a different level, and not at the “macro” level, but at the billing level. They are more concerned with issues such as, “Well with this change…can I still print at the printer down the hall”?

Cohen:  What actionable Point of Care data are physicians looking for? CMS is just starting to understand how to share data. They realize that claims data isn’t exactly clinical, meaningful - they need analytics and a “data dump”. Will CMS get into the analytics business? The Innovation Center is currently working with pioneer organizations and trying to figure out what the data analytics needs are. “This is just the beginning”.

Morgan: We started openly producing quality data on our legacy system four years ago, and it was not well received by the physicians. Now this data is starting to get better reception and has changed culture on a limited number of quality metrics. It will take more culture change on the new CMS measures. This will be another leap.

Butterly: We are comparing individual physicians to peers in same practices, and have found this to be a strong motivator for change. “Rising tide lifts all ships”. The question is, “Who owns the data”? We don’t want to rely on a second or third party to give the data, especially if they are at risk (such as in an ACO arrangement).

Bosch: The main data cannot come from claims, this is useless.

Velasco: There needs to be more investment, governance around what has to be put in place. EPIC’s “CareEverywhere” provides HIE with other EPIC customers. This is a challenge in terms of conforming to data standards. So this organization acquired another HIE product but not yet live. In the interim, they have a free portal for our community doctors to access EHR data for respective patients.

Question: “So how do you explain the concept of an ACO to physicians? What is your elevator speech”?

Cohen: The response differs with who you are talking to, for example, an internist vs. a specialist. There is a current piece by Don Berwick in the NEJM today, and it discusses that primary care physicians have to think differently about how to act within the rest of the system.

Bosch: “I’ve been accountable for a long time. This is a new model, no capitation…no rationing…more power to providers”.

Morgan: We are bringing patients into the mix…empowering patients….coordination of care and patient empowerment are important concepts.

Butterly: In accountable care…truly capitated arrangements, although an unpopular word. This matters…it makes the primary care physician more important in the system…they have more attention and empowerment now.

Velasco: Patient engagement is important, and there is an emphasis on health IT to support this, as included in the final rule. This is very important to improve the user experience. Remote monitoring, house calls…all of this can be documented through health IT.

Overall it seems that provider organizations want some degree of consultant guidance on the selection and implementation of health IT applications and supporting processes to support their ACO initiatives. However, it is interesting to note that across the board, physician organization executives want to own and control their data and related analytics and processes, and are very committed to making that happen.

U.S. Health System - Keeping Score…

Evidence from the new 2011 edition of the National Scorecard on U.S. Health System Performance shows substantial erosion in access to such care in the period leading up to health reform, along with rising costs that are stressing families, businesses, and all levels of government. Across 42 performance indicators, the U.S. achieves a total score of 64 out of a possible 100, when comparing national rates with domestic and international benchmarks. Overall, the U.S. failed to improve relative to these benchmarks, which in many cases rose. Costs were up sharply, access to care deteriorated, health system efficiency remained low, disparities persisted, and health outcomes failed to keep pace with benchmarks.

The authors notes that contributing factors to the U.S. low score are variations in care across the entire U.S., which often results in missed opportunities for disease and/or disability prevention, and increased mortality. The U.S. ranks last out of 16 industrialized countries on a measure of mortality amenable to medical care (deaths that might have been prevented with timely and effective care), with premature death rates that are 68 percent higher than in the best-performing countries. As many as 91,000 fewer people would die prematurely if the U.S. could achieve the leading country rate.

Although the Scorecard draws on the latest available data, primarily from the period 2007 to 2009, the results do not fully reflect the effects of the recent economic recession on access to and use of care.

The study’s authors contend that The Affordable Care Act targets many of the gaps identified by the Scorecard.

AHIP Study on Early Lessons from Accountable Care Models in the Private Sector

An AHIP-sponsored study on the delivery and payment models in the private health insurance sector appears in the September issue of Health Affairs.  The study examines the accountable care models being used in eight health plans, which represent two-thirds of such models being tracked by AHIP.

What makes this study unique is that it focused on a payer perspective from multiple health plans, and focused on a mix of national and large regional organizations across diverse geographic areas including a range of benefit designs. The plans included: Aetna, Anthem/WellPoint, Blue Shield of California, BCBS of Illinois, BCBS of Minnesota, CIGNA, HealthPartners, and Horizon BCBS.

Highlights of the study’s findings include the following points:

1) Program Scope. The scope of accountable care models was very different among the plans. Some plans implemented accountable care arrangements with specific employer accounts (fewer than 100,000 members), and other worked with providers in multiple geographic areas that included most of the commercial population. In one health plan participants in the accountable care model arrangement came together “virtually” and established a governing board.

2) Provider Selection. Providers’ ability to be successful in these new care arrangements will depend on their capacity to organize their delivery of care to achieve performance and accountability requirements. The plan managers agreed that an assessment of this capacity is needed to ensure providers are ready to commit to this type of arrangement. Plan managers are also using a list of provider selection criteria to assess provider eligibility, including organizational leadership, investments in health IT, and the size of patient population.

3) Role of Patients. There is growing recognition on the patient’s role in attaining better health outcomes and reducing cost. The $50,000 question is, “What types of incentives might be used to support patient roles”? The study asked plan managers to list the characteristics of the covered member population, as well as any incentives or changes to benefit design that were instituted as part of these models.

In six of the eight plans, patients had open-access benefit designs such as PPOs. Most plan managers reported that they did not change their benefit designs or offer patient incentives specific to accountable care model arrangements. Because of the open types of benefit designs, managers stated concerns regarding the challenges of coordinating care for patients seeing non-accountable care model providers. However, a few plans incorporated designs or incentives to help address the issue:

• Reduced Premiums (derived from reductions in cost of care).
• Stand-Along Product (offered as an option together with plan’s traditional benefit design offerings).
• Tiered Networks (different co-payments around higher performing providers in the accountable care arrangements).

4) Patient Attribution. A key element is determining the patient group for which a provider is held accountable (attribution). Plans have different rules for this process using a number of criteria including: a) site of most frequent visits, and b) timing (prospective attribution using historical claims data vs. retrospective attribution using claims data from a defined performance period).

5) Performance Measures and Targets. Two key processes: the first is the selection and implementation of measures, and the second involves establishing quality and cost targets for participating providers. Measure selection was typically driven by commonly used criteria, including specific measure evidence base, NQF-endorsed measures, and/or use of a measure in other incentive programs. A list of the types of performance measures implemented by the eight health plans studies can be found here.

6) Payment Methods. All models involved changes to payment methods representing a shift away from fee-for-service (FFS) models, but short of an immediate change to global payment methods. Plans generally built on their existing reimbursement models, which was either FFS or a combination of FFS for hospitals and capitation for physicians.

The authors provide a list of specific payment elements the plan managers incorporated.

7) Technical Assistance. Different types of assistance may be needed by providers at various implementation stages, based on provider needs and capabilities. The authors provide a table listing the key areas of technical assistance provided.

Conclusion

The plans studied reported an approximate 10 percent improvement in quality, a 15 percent reduction in readmissions and total patient days in the hospital, as well as annual savings of $336 per patient.

AHIP is sponsoring an October 18 Summit on Shared Accountability and Payment Reform in Washington, D.C.

 

DEBT CEILING…TO CUT OR NOT TO CUT?

As discussed in our previous article on the consequences of federal debt reduction legislation, the bi-partisan “supercommittee” is beginning to develop recommendations for cutting $1.5 trillion over the course of 10 years. The recommendations are due by Thanksgiving. If the committee’s legislation falls short of the $1.2 trillion goal, or fails to pass in both the House and Senate and be signed into law by the President, across-the-board spending reductions will be automatically triggered.

Exempted from the sequestration process will be several large budget items, such as, but not limited to, Social Security, Medicaid, military pay and veterans’ benefits. The exemption of these items from automatic cuts will result in even deeper cuts to the rest of the budget. In fact, under automatic cuts, provider and health plan payments from Medicare would face across-the-board reductions of up to two percent starting in 2013.

Among various industry stakeholders, there is a divide between those who think the automatic cuts are preferable to presumably deeper cuts the supercommittee would develop, and those who believe the opposite case is preferable.

SUPPORTING AUTOMATIC CUTS:

Many industry interest groups prefer the supercommittee to allow the automatic cuts to occur. Max Richtman, president and CEO of the National Committee to Preserve Social Security and Medicare, said, “sequestration (automatic cut process) is the devil you know and the supercommittee is the devil you don’t.” Mark Hayes, a health care lobbyist, said health care companies actively will support the automatic cuts. He said, “The message will be communicated to … members of Congress, through all the usual channels including letters, town hall meetings, phone calls and personal messages.”

According to Richtman, lobbyists “are talking about ways to induce stalemate” on the panel so that no agreement can be reached and the automatic cuts take effect. Lobbyists could encourage a stalemate through various means, such as pushing Republicans on the committee to stand firm against efforts to raise taxes, a deficit-reduction strategy supported by many Democrats.

AGAINST AUTOMATIC CUTS:

Some industry groups are too wary of the potential 2% cuts to Medicare reimbursements to support their implementation. Certain provider groups are warning that the cuts could trigger job losses in the industry. One group protesting the cuts is the American Hospital Association, stating that such a reduction in Medicare reimbursements for hospitals could cause up to 194,000 job losses through 2021. AHA claims automatic cuts would cause a $41 billion loss in the industry. (Source)

THIS JUST IN…

The President recently proposed a plan to cut more than $3 trillion from the nation’s deficit over a decade by ending tax breaks for the wealthy and making modest changes to Medicare and Medicaid. The president said when his plan is combined with the roughly $1 trillion in spending cuts that he signed into law this summer, the nation’s deficit could be slashed by more than $4 trillion over the next decade.  (Source)

Included in the President’s plan are a proposed $320 billion in cuts to Medicare and Medicaid, largely by changing how the federal government pays health providers, slashing payments to drug companies, and dramatically changing the way it splits the costs of Medicaid with the states, according to a fact sheet the White House released.

The biggest cut to Medicare requires pharmaceutical companies to lower their rates. The proposal would save Medicare an estimated $135 billion over 10 years starting in 2013. The change would allow the federal government to receive the same brand name and generic rebates for low-income Medicare patients as are provided to Medicaid beneficiaries.

Highlights of Proposed Changes to Medicare:

• The administration also is proposing cutting $3.5 billion from a fund created by the health law to improve disease prevention and to promote public health while keeping $13.8 billion.
• Some Medicare beneficiaries would see costs go up under the president’s plan. For the first time, beneficiaries receiving home health services would pay a $100 co-payment per treatment episode starting in 2017, which would raise $400 million over 10 years.
• The deductible Medicare Part B (physician costs) would increase by $25 in 2017, 2019 and 2021 for new beneficiaries, raising $1 billion over the next decade.
• Starting in 2017, new beneficiaries who buy a Medigap policy that leaves them with little out-of-pocket costs would pay a 15 percent surcharge on that policy. Critics have argued such Medigap plans lead to excess use of health services and raise health spending. The change would net the feds $2.5 billion over 10 years.
• Higher income Medicare beneficiaries would pay higher premiums for Medicare Part B and Medicare prescription drug plans, raising $20 billion over 10 years.
• One of the biggest changes proposed by Obama is how the federal government splits Medicaid spending with states, at a proposed savings of $14.9 billion over 10 years.

Dr. Georges C. Benjamin, executive director of the American Public Health Association, criticized the administration’s decision to cut funding to prevention and public health, saying “it could effectively put the nation’s health at risk, severely threatening ongoing efforts to reduce the burden of our nation’s most feared and deadly diseases…Long-term and potentially life-threatening consequences of a compromised public health system will far outweigh the short-term savings.”

The only major health provider group not to criticize the plan was the American Medical Association. The doctors’ group was pleased the administration’s proposal included the $300 billion needed to fix the flawed Medicare payment formula that threatens to slash fees to doctors each year. Since 2003, Congress has repeatedly stepped in at the last minute to avert the cuts from taking effect. (Source)

TO READ THE WHITE HOUSE FACT SHEET

LAUNCH OF HHS’ Campaign“Putting the ‘I’ in Health IT”

Helping Consumers Be Partners in Their Own Health

The Office of the National Coordinator for Health Information Technology (ONC) knows that patients are asking themselves, “How do I manage my health information?”  (Source)

ONC recently announced a Consumer e-Health Initiative to equip and empower individuals to be partners in their own health and health care through health IT.

The primary goal is to help patients become more involved in their medical care before they potentially experience a health crisis.

The program will focus on three major areas:

• Access, which involves patients viewing medical records, identifying any mistakes and understanding discussions about their health care;
• Action, which involves encouraging patients to interact with their health information using tools such as smartphones, cellphones and other devices; and
• Attitude, which involves encouraging patients to be more actively engaged in communicating with their physicians.

The campaign uses stories to showcase how consumers and health care providers are partnering to use health IT to improve health and health care. The campaign is being implemented by the National eHealth Collaborative (NeHC). NeHC is a public-private partnership that enables secure and interoperable nationwide health information exchange to advance health and improve health care. National eHealth Collaborative’s stakeholders include government agencies, health systems, health professionals, academic medicine, patient and consumer advocates, major payers and employers, non-profits, technology providers and others. (Source)

To access NeHC’s “Tools”:

Providers & Professionals

Patients & Families

There are many stories discussing how patients are becoming advocates in their own medical care, reaching out on the internet for information. This article illustrates how the Mayo Clinic used social media to find and engage chronically ill patients for the purposes of clinical research.…”When Patients Band Together…Using Social Networks To Spur Research for Rare Diseases; Mayo Clinic Signs On”

Thoughts On The 10th Anniversary of Sept. 11 Events

A day after the “east coast earthquake”, an article on the front page of the Washington Post summarizes my thoughts:

“In Washington, 10 years later, every day is Sept. 12. When the office ceiling shifts to and fro, and the pens and cups fall off the desk, it’s scary enough. But in a terror-scarred city, thoughts go immediately to evil attack rather than natural disaster”.

The quake yesterday rattled buildings, furniture, fixtures, and nerves mostly because we aren’t used to earthquakes here.  And after September 11, 2001, every day has the possibility of some sort of man-made attack.

“People looked up at the sky for smoke.  They listened for sirens.  They checked their colleagues for signs of that gut-level fear they had felt a decade ago.  Same clear blue sky, same blessed break from the humidity”.  I thought exactly the same.

A decade after the worst terrorist-sponsored attacks on American soil and our lives forever changed in every aspect.  It seemed a whole new industry was born in everything related to ‘homeland security”, preparedness, and disaster.

I will let the pundits, experts, and media explore the question of, “How prepared is the U.S. now to cope with man-made catastrophes and disasters”.  This topic will undoubtedly be discussed (ad nauseam) in the coming weeks.

The following is a list of upcoming events and information resources for reflecting on and honoring the anniversary of 9/11/2001.

• Voices of September 11th
• New York State Bar Association -  Initiatives on Disaster Preparedness and Response
• 9-11 Healing and Remembrance
• September 11th Day of Service and Remembrance
• CNN’s List of Anniversary TV Programming

ACO Risk Sharing Findings from The Commonwealth Fund

The Commonwealth Fund recently released a research report discussing findings on shared-risk payment models used in Accountable Care Organizations (ACOs), and what the implications might be for these models.

The paper focused on private sector payment models that meet criteria along three dimensions: provider risk, inclusion of services, and quality incentives. To describe this in more detail, the researchers examined only ACOs with models that included: a provider risk-sharing component; addressed the broad array or full continuum of patient care/services; and provided meaningful quality incentives.

One of the key findings – “Relating to accountable care organization (ACO) initiatives, providers do not currently have the infrastructure required to take on and manage risk successfully, though some payors are providing infrastructure and other support to providers”.

“Providers do not have the data they need about the clinical or financial experience of their patients to manage patient care and financial risk effectively—the HIT structure necessary to coordinate care among providers is at varying levels of implementation,” wrote Suzanne F. Delbanco, PhD, executive director of the Catalyst for Payment Reform (CPR), and colleagues. “Providers also face operational and structural challenges related to the ACO model of care, which demand more coordinated, efficient processes.” (Source)

The authors also found that there are a variety of approaches to shared risk including:

• Bonus Risk Model: Provider is at risk of not receiving a bonus payment based on quality and/or efficiency performance;
• Market Share Risk: Patients are incentivized by lower copays or premiums to select certain providers so providers are at risk of losing market share;
• Risk of Baseline Revenue Loss: Providers face a financial or payment loss if they fail to meet certain cost or quality thresholds, and/or if actual costs exceed a target cost; and
• Financial Risk for Patient Population (Whole or Partial): Providers manage patient treatment costs for all or a designated set of services within a predetermined payment stream and are at risk for costs that exceed payments.

The researchers concluded that it is too early to identify which payment models best align incentives for ACOs with high-quality, value-based care.
The research was conducted by CPR and Booz Allen Hamilton.

 

ICD-10 Update: Who Will Be Prepared On 9/30/2013?

HHS will require all patient encounters and discharges on or after October 1, 2013 to be billed using ICD-10, but healthcare organizations cannot begin using the new codes sooner than that. We conducted a scan to gauge just who is working on compliance, and who might be in big trouble.

ICD-10 compliance will require upgrades to electronic health record, care/disease management, coding, billing, claims processing, and other systems. While all this may seem like just another “IT fix”, physicians and hospitals will not receive full reimbursement from payers if the diagnoses codes are not accurate and related documentation more precise.

According to a HealthLeaders Media Intelligence Report, “84% have started their ICD-10 projects. Meanwhile, less than a third (29%) has moved beyond the assessment phase into implementation. Of the organizations that have begun their assessments, 73% have completed a system/vendor readiness analysis; 64% have assessed training needs; 57% have done a documentation gap analysis; and 48% have completed a financial impact assessment”.

There is a significant potential of revenue loss if an organization is not ready. AMN Healthcare recently reported on the issue: “Ed Hock, director of revenue cycle solutions at The Advisory Board Company, a consulting and technology services firm based in Washington, D.C., estimates a 250-bed hospital could lose between $1 million and $2.5 million. He said the landscape is fraught with problems and the possibility of losing substantial money. Hospitals operate on a 1 percent to 2 percent positive margin, and the thought of losing millions of dollars related to this change is a scary one for organizations.”

Of the respondents to the HealthLeaders Media survey: 46% expect revenue losses associated with ICD-10 implementation, 28% anticipate revenue loss between 6% and 10%, with another 12% expecting revenue losses at between 11%–20%.

• Nearly a quarter (23%) of respondents expects those losses to last one to two years, another 6% think it will be more than two years, and 7% expect the losses to become permanent.

CMS recently held a national web conference, “ICD-10 Implementation Strategies for Physicians”, and ICD-10 Monitor provides a good summary of the event. The ICD-10 Watch group on LinkedIn also provides good discussions of the many issues re: ICD-10.

Payers have been taking this topic very seriously and it has been a “hot” issue for at least the last two years. As evidence of the willingness to bring in outside resources (and spend money), the Blue Cross Blue Shield Association (BCBSA) recently announced that is has hired HCL Technologies (http://www.hcltech.com/) Ltd. (HCL), an Indian-based global IT services provider, to be part of a national purchasing arrangement for the ICD-10 transition. Through this arrangement, HCL’s products and service capabilities will be available to the 39 independent Blue Cross and Blue Shield companies across the country.

 

BUDGET DEAL BEGETS LOBBYING BONANZA

President Obama last week signed the fiscal year 2012 budget and deficit reduction agreement (S 365), ensuring the U.S. will not default on its debts.  Under the agreement, federal discretionary spending will be cut by a total of about $2.4 trillion over the next decade, while the debt ceiling will be raised in two stages.

Highlights:

DEBT LIMIT—The plan would immediately increase the debt limit by $400 billion, with Obama permitted to order another $500 billion increase this fall unless both House and Senate override him by veto-proof margins; a third installment of between $1.2 and $1.5 trillion would be made available after enactment of matching levels of additional spending cuts recommended by a special joint committee of lawmakers. The full $1.5 trillion could also be available if Congress adopts and sends to the states for ratification a balanced budget amendment to the Constitution.

SPENDING CAPS—The measure would cut more than $900 billion over 10 years from the day-to-day operations of Cabinet agencies whose budgets are passed each year by Congress. While sounding harsh, the measure represents a significant $24 billion increase over even deeper cuts sought by tea party-backed Republicans controlling the House.

After a near-freeze in 2013, discretionary spending would increase by about 2 percent a year.  Both security and non-security programs would absorb outright cuts in 2012.  Defense hawks are protesting likely cuts to the Pentagon, which would have received a $17 billion, 3 percent increase under a recent House spending bill.  The Pentagon is among a group of programs that together would absorb a $4 billion cut from current levels next year. (Source: Money.MSN)

The second phase of the deal is less clear cut…

Party leaders in the House and Senate will each appoint three members to a special committee that will recommend another round of deficit reductions of between $1.2 and $1.5 trillion over 10 years. Their mandate is broad very little is off the table, but at least seven of the 12 members would have to agree on a package to force an up-or-down vote in Congress.

If the committee can’t agree on enough deficit reduction, then automatic spending cuts would ensue to reach the $1.2 trillion minimum deficit-reduction target.  One key point is that the committee’s failure to agree would not automatically “trigger” revenue increases, as the White House was insisting. Instead the automatic cuts would be divided equally between defense and nondefense.  For example, if the committee agrees to deficit reduction of only $600 billion, then another $300 billion would be cut automatically from defense and domestic accounts (excluding Medicare beneficiaries) to reach at least $1.2 trillion. (Source: WSJ)

So what do the health industry experts think this really means for Medicare?

Medicare beneficiaries escaped direct cuts in Washington’s debt deal, but the agreement could eventually hit seniors and disabled Americans who rely on the program for medical coverage.

Health industry lobbyists and policy experts say the deal between the White House and Congress effectively opens the door to another round of talks in which lawmakers are likely to weigh increasing the Medicare eligibility age and setting up a means test that might require wealthier people to pay more for the program.

To hit the $1.5 trillion in spending cuts, the congressional committee is likely to reconsider major changes to Medicare that the White House and congressional leaders put on the table during this summer’s debt-ceiling negotiations.  President Obama in earlier negotiations floated the idea of raising the Medicare eligibility age to 67 from 65 in an effort to win Republican concessions.  He also said he was open to a means test.

“All those types of issues will certainly be looked at by the committee,” said Tom Nickels, a senior vice president at the American Hospital Association.

Should the committee’s recommendations not make it into law, the backup spending-cut mechanism would include cuts to Medicare.  The agreement says the cuts would only affect health-care providers and would be capped at 2%.

Some health care provider groups contend they couldn’t absorb such payment cuts without affecting patients.  The hospital industry says the cuts could overload emergency rooms, shut down trauma units and reduce patient access to the latest treatments.

The industry is already on the hook for $155 billion in Medicare and Medicaid savings over 10 years under the health overhaul passed last year.

“Some of it may be subtle, but at the end of the day, there is a consequence to such a significant reduction in payments,” said Chip Kahn, president of the Federation of American Hospitals, which represents for-profit facilities.  (Source: WSJ)

Meanwhile, advocacy groups have begun mobilizing grassroots campaigns to lobby lawmakers on the issue.  Groups including Health Care for America Now, the Medicare Rights Center and Families USA are expected to work to shield Medicare and Medicaid from cuts.  Conservative groups looking to cut entitlement spending are using similar tactics to mobilize their supporters.  Both sides are expected to rely on partnerships, letter-writing, coordinated phone calls to congressional offices, emails and opinion pieces to rally support.  (Source: AHLAlerts)

As the plan plays out, here is something to keep in mind…

Sequesters and triggers don’t work.  Historically, they have a lousy record. Under the 1985 Gramm-Rudman-Hollings law, for example, many programs—defense, Social Security, Medicare, Medicaid, others—were originally exempted, and Congress eventually found ways around the rules to avoid across-the-board spending cuts.  (Source: Money.MSN)

CO-OP HEALTH PLANS

Consumers and small businesses are frustrated by the lack of affordable choices of health insurance options in the individual and small group insurance markets. Thanks to the recent health reform law (aka “PPACA”), consumers may soon be able to go to a state or federal insurance exchange and sign up for a new type of health plan called a Consumer Oriented and Operated Plan, or “CO-OP”. CO-OPs are private, non-profit health insurers with a board made up of plan members. CO-OP plans are designed to offer quality, affordable, consumer-friendly insurance options in every state.

The co-op concept was injected into the Congressional health care debate in 2009 as an alternative to the ill-fated “public option”.

Echoing the language of the PPACA, the rule bans existing insurers from getting a cut of the grant money. It also prevents any government entities—such as counties and state agencies—from using the money to launch co-ops.

“It’s for new nonprofit plans and the funding is not available to existing insurers,” said Richard Popper, director of the Office of Insurance Programs in CCIIO, dispelling any possibility of a “public option” look-alike.

On July 18, HHS proposed standards for establishing CO-OP plans. Eligible organizations seeking to establish a CO-OP will be able to apply for a portion of the total, PPACA-mandated $3.8 billion in repayable loans to fund start-up and capitalization costs. The proposed standards reflect the recommendations of an independent advisory group that held many hours of public testimony by consumers, small businesses and providers.

A New Choice for Consumers

A CO-OP is a private, nonprofit organization that sells health insurance coverage, like a Health Maintenance Organization (HMO) or a Preferred Provider Organization (PPO), and will be subject to the same rules as other health insurers.

Unlike many existing health insurance companies, a CO-OP:

• Gives its enrollees a say in their health plan. CO-OP members elect the board of directors, a majority of whom must also be enrolled in the CO-OP health plan.
• Uses profits to benefit enrollees. CO-OPs are required to use their profits to lower premiums, improve health benefits, improve the quality of health care, expand enrollment or otherwise contribute to the stability of coverage for members.
• Educates enrollees about the plan. Because a CO-OP relies on its enrollees to help decide the direction of the plan, communication about key features of the plan will be a high priority.

A New Insurance Option for Small Businesses

A CO-OP will have the option to sell coverage to small businesses and, and theoretically, this should enable these groups to enjoy a better selection of benefits and lower costs that what is currently available. Small businesses will be able to go through a new competitive insurance marketplace known as a Small Business Health Option Program or “SHOP.” The proposed rule ensures that any CO-OP offering coverage to small businesses also participates in SHOP.

Leveling The Playing Field

CO-OPs will meet the same standards as all other health insurers in the state where they offer coverage. These standards include: mandated benefits, reserve requirements, solvency, licensing, and network adequacy standards. Starting January 1, 2014, CO-OPs and all other health insurers will have to meet a set of standards in order to sell benefits through the new exchanges. CO-OPs will also have to demonstrate that premiums and federal loan funds are being used for enrollee benefits. In addition, at least two-thirds of the CO-OP’s insurance contracts must be qualified health plans offered in the individual and small group markets in the states in which the CO-OP does business. This requirement must be continually met by the organization.  The rule also proposes that CO-OPs have a management team with expertise in health insurance, and that the board includes individuals with expertise in the business of insurance. If CO-OPs are to successfully compete with existing insurance organizations, they will require experienced and knowledgeable payer staff, a claims IT system, and quality provider networks.

HHS Funding CO-OPs

HHS officials say the department will provide two rounds of loans to help CO-OPs get off the ground.

• $600 million in loans will go to help CO-OP organizers develop business models.
• $3.2 billion will go to help existing CO-OPs with any unexpected claims.

All CO-OP loans must be repaid with interest and loans will only be made to private, nonprofit entities that demonstrate a high probability of becoming financially viable. HHS’s proposed rule on co-ops estimates a default rate of 40 percent for the planning loans and 35 percent for the solvency loans. The CO-OP program contains extensive provisions to protect against fraud, waste, and abuse. Loan recipients are subject to strict monitoring, audits, and reporting requirements for the length of the loan repayment period plus 10 years. Recipients will submit semi-annual program reports and quarterly financial statements. Additionally, CMS will conduct audits including site visits, as appropriate. CO-OPs must meet a series of milestones as laid out in their loan term agreements before drawing down any money from the program.

(Source: HeathCare.Gov)

Are CO-OPs The Answer?

The CO-OPs could “further two of the important goals of the Affordable Care Act, increasing competition and enhancing the voices of consumers in the health care market,” said Steve Larsen, the director the Center for Consumer Information and Insurance Oversight, during a call with reporters to announce the rules.

It’s no surprise however, that insurance industry experts are skeptical about the success of the program…

“Restrictions, including a requirement that the plans serve mainly individual customers and small businesses, could be the undoing of the CO-OP strategy,” say skeptics such as Robert Laszewski, an insurance industry consultant.

“They’re pointing people at the most problematic part of the market where this is the most risk, and they’re saying it can’t be people in the business who have that expertise,” Laszewski said.

Two-thirds of a CO-OP’s membership would consist of individual and small group customers. Both markets tend to be more expensive than the policies extended to workers at large employers. Larsen said HHS had concluded that small businesses pay an average of 18 percent more than their bigger counterparts to insure workers.

One goal of the new plans would be help drive those costs down. Rather than stockpiling earnings in reserves or collecting profits, insurers that accept the new grants would be required to use any extra revenue to reduce premiums, improve the quality of care or expand benefits.

Otherwise, Popper said, the CO-OP insurers would be held to the same requirements as other insurers in the state. State regulators have to license them, and, critically, make sure they have enough money on hand to cover any unexpected surge in claims, assuring their solvency.

But CO-OPs could face another hurdle as they seek approval from their state regulators, said Sabrina Corlette, a professor at the Health Policy Institute at Georgetown University. Because most regulators count repayable loans as a debt, it might not help meet state solvency requirements for health plans.

Some nonprofits that hoped to set up CO-OPs “…probably got a dose of cold water in terms of the cash they’d have to put up” when they approached regulators, she said.(Source: Kaiser Health News)

But insurance industry actuaries tell HRW this is a highly optimistic prediction since CO-OPs for individuals and small businesses face an aggressive timeline to become operational by January 2014 as planned. Also, actuaries say the challenge of lining up provider networks and managing administrative costs is especially daunting for new insurance entities setting up shop against the backdrop of newly created health insurance exchanges that start at the same time. (Source: AIS’ Health Reform Week)

ACOs – “Just Say No”?

The Centers for Medicaid and Medicaid Services’ (CMS’) deadline for comments on the Accountable Care Organization (ACO) rules closed on June 6, and since then, there have been many dynamic discussions on the topic. From the many opinions, publications, and presentations we have read and heard, the majority opinion seems to be that ACOs are definitely not for everyone; in fact, they may be only for a very small percentage of providers.

Our summary of notable comments:

1. According to Pillsbury health law practice attorneys David Main and Linda Kotis, 17 major health systems have significant concerns with the draft rules. In fact two health systems that were “inspirations” for the ACO model, Geisinger and Intermountain Health Care have said they do not plan on developing ACOs. What are main concerns of these health systems? First, they believe beneficiaries should be assigned to ACOs prospectively so that providers can know up front the patient population they will be caring for. Second, they are concerned the start-up costs are too expensive, and the shared savings rates should be adjusted so as to account for the exact number of enrollees.

   Third, the total number of proposed quality measures (currently 65) is too many. A broad industry consensus with respect to the number of quality measures (as voiced by provider, hospital, payer and think tank groups) is that 65 measures are just too many, and starting with 32 would be a better option.

 

2. A recent MedeAnalytics analysis focuses on “…leading healthcare constituencies’ recommendations on the key drivers of the ACO business model”. Key comments included: 

 

• a. AHA, AMA, and MGMA: Eliminate the CMS withhold rate (25%) applied to any earned performance payment for years 1 and 2.
• b. With respect to the shared savings rate for ACOs tracks 1 and 2 (proposed at a maximum of 50% and 60% respectively), the overwhelming industry consensus was that this should be raised to 60 - 80% (track 1) and 70 – 90% (track 2). I tend to agree – ACOs are taking on a significant risk given the estimated start-up costs. Their compensation in shared savings needs to better reflect this.  As for what the “tracks” are (from CMS’ website): “CMS is proposing to implement both a one-sided risk model (sharing of savings only for the first two years and sharing of savings and losses in the third year) and a two-sided risk model (sharing of savings and losses for all three years), allowing the ACO to opt for one or the other models”.
• c. Comments regarding the minimum savings rate (MSR). Per CMS: The MSR “…is a percentage of the benchmark that ACO expenditure savings must exceed in order for an ACO to qualify for shared savings in any given year”. There is consensus here that a standard, flat MSR of 1-2% should be established for all ACOs, rather than the sliding scale as proposed by the current CMS rules.

 

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