Anti-kickback laws

Ceci ConnollyIn Washington, sometimes the most significant developments quietly creep up on you. No epic debate or triumphant bill-signing ceremony, but rather a collection of seemingly small events begin to tip the scales.

That’s what is happening today with telehealth. Almost under the radar, federal and state officials have been giving a much-needed push in support of virtual care. Though the technology has long existed, until recently the money had not followed. And sadly in our current fee-for-service healthcare system, little gets done without a payment code, even if it makes eminent medical and economic sense.

Consider some of the recent action. In November, the Department of Agriculture released more than $8.5 million in health-related grants to 31 recipients in rural communities. Many are using the money to purchase telehealth equipment such as high-quality cameras and broadband Internet.

The previous month the federal government issued rules expanding Medicare payment for a range of telehealth services. Caregivers can earn about $42 per month for chronic care management under the new regulations. Seven new procedure codes were also added, covering such services as annual wellness visits and psychotherapy.

And the end-of-year spending bill approved by Congress designates more than $26 million for telemedicine programs largely in rural communities and through the Veteran’s Administration. Continue reading “Tele Taking Off”

Screen Shot 2014-05-14 at 8.03.26 AMI WAS NOW the CEO of a rising medical data company.We built automated systems to handle the administrative chores for thousands of medical practices. They didn’t buy anything from us. Instead, they subscribed to a service on the Internet.

This was what would later be called a cloud-based service, but in these early days of Internet era, we were still searching for a name for it. My partner Todd used to say in speeches that he would give Polynesian fruit baskets for life to anyone who came up with a single name for the combination of software, knowledge and work that we were selling. We had moved back east and had a new headquarters in a historic brick armory building along the Charles River near Boston.

Our future looked fabulous, except for one problem: My cousin, the 43rd president of the United States, was about to sign a bill that could destroy us.

This bill, like so many governments initiatives, stemmed from the best of intentions. The idea was to encourage the migration of the health care industry from cumbersome binders full of paper to electronic records. How was this to be accomplished? Well, hospitals and doctors were forbidden by so-called anti-kickback laws from exchanging services, information or products of value with each other. (It’s a law that infuriates me, for reasons I’ll go into later.) The bill before Congress in 2004 offered a regulatory safe harbor for hospitals to provide doctors with all the digital technology the bureaucrats could think of: servers, software licences, and training. That was absolutely the right answer . . . for 1982. The long and short was that hospitals could buy all the old stuff from our competitors, but none of the new still-to-be-named services from us. As often happens, the technology was advancing much faster than the law.

I caught the shuttle down to Washington and commenced lobbying with the fervor of a man with a gun to his head. I raced up and down the marble halls Congress, looking for someone, anyone, who would take the time to learn why this bill was so very wrong, so backward, so devastating, so lethal—at least to athenahealth.

But let me tell you, if you walk into Congressional offices sputtering about a clause in a bill that practically no one has read, something that has to do with hardware and software and online services, people tend to hurry away, or point you toward the door. I could find no one to pay attention. And as I grew more frantic, I started talking louder and faster. That didn’t help things.

Some might find my frustration strange, considering that during this drama my cousin was sitting a mile away, in the Oval Office. Wouldn’t a Bush, facing legislative trouble in Washington, contact someone in the White House entourage? The answer is no. Placing a call to him was not even a remote possibility. For starters, it’s unethical. It is also politically foolish. It would place him, me, and my company in scandal and bring shame upon our family. I would be much more willing to climb the steeple of the tallest church and bungee jump naked in the middle of the night than to call my cousin. And even if I were dumb enough to make the call, I trust George would have the good sense to tell me to get lost.

Continue reading “Government (Or, How My Cousin the President Nearly Killed My Company)”

I have been absent from the blogosphere for about two months. The fact is, there just isn’t all that much new to write about. Healthcare spending growth continues to moderate, but not by enough to stave off forecasts of doom for Medicare and Medicaid. Nor can employers begin to shift money from health benefits back into wages. But wheels are turning. Health networks are expanding as providers prepare to offer ACOs and/or increase their bargaining clout. A handful of states are poised to start up exchanges with the feds ready to take the reins in the laggard states. Aon/Hewitt is about ready to launch a private sector exchange. We will start to learn whether exchanges save or destroy private health insurance.

The Affordable Care Act has had many detractors but at least it has disrupted the status quo. We needed to see fundamental changes in how we pay for and deliver healthcare services and the ACA has delivered. But ACA has brought us a very particular set of changes. Time will tell if we have chosen the right path.

Even as the industry changes the way it does business, one critical aspect of change is missing. The faces are all the same. The same large systems that dominated the fee for service world seem poised to dominate the shared savings world, and the same insurers that dominated the traditional employer-based insurance market stand ready to dominate exchanges. Value might be created when old businesses play by new rules, but even more value is created when new players are free to enter and perhaps even break the rules.

Entry is the engine that drives economic progress. Entrants bring new technologies to manufacturing and new service models to sales. Threatened by entry, incumbents strive to innovate and improve customer service. This is as true in high tech industries as it is in the service economy. Research confirms that entry is ubiquitous – in a typical manufacturing industry, fully one third of established firms are replaced by entrants within five years. Though the data is not as readily available, turnover in the service sector is likely even higher.

Continue reading “Unleashing the Innovation Monster”

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