By Paul Keckley

Late last Friday after the financial markets closed, the Centers for Medicare and Medicaid Services (CMS) issued its annual notice of 2015 payments to private insurers who sell Medicare Advantage plans to seniors. Its determination that a 3.55% cut is in order was spelled out in a complicated 148-page explanation of its methodology.

The net impact of changes to “coding intensity” adjusted for geographic variation essentially means insurance companies would see a 1.9% cut in their payments per Avalere’s calculations.

But there’s more to the story than the Medicare Advantage payment adjustment. The difference between last year’s Round One rate negotiation and this year’s Round Two is significant.

Background

Medicare Advantage (MA) plans enroll 28% of seniors. It is popular: enrollment increased from 5.3 million in 20104 to 16 million today—a 9% increase last year alone.  MA plans are required to offer a benefit “package” at least equal to Medicare’s covering everything Medicare allows, but not necessarily in the same way.

Continue reading “Medicare Advantage Round Two: Negotiation Will Not Be the Same”

By Dan Diamond

Since CMS’s Center for Medicare and Medicaid Innovation launched three years ago, its staff have been frequently hailed for undertaking an ambitious research agenda.

But a New York Times story this week was eye-catching for a different reason: author Gina Kolata mostly assailed Medicare’s researchers for how they’re choosing to do that research.

“Experts say the center is now squandering a crucial opportunity,” Kolata wrote in a front-page article. ”Many researchers and economists are disturbed that [CMMI] is not using randomized clinical trials, the rigorous method that is widely considered the gold standard in medical and social science research.”

But many researchers and economists that I talked to at this week’s Academy Health conference say that’s not the case at all. (And some were disturbed to learn that they were supposed to be disturbed.)

“RCTs are helpful in answering narrowly tailored questions,” Harvard’s Ashish Jha told me. “Something like—does aspirin reduce 30-day mortality rates for heart attack patients.”

“However, for many interventions, RCTs may be either not feasible or practical.”

“While RCTs may be the gold standard for testing some hypotheses, it is not necessarily the most effective or desirable model for testing all hypotheses,” agrees Piper Su, the Advisory Board’s vice president of health policy.

CMMI’s ambitious goals

On its surface, Kolata’s article is built around a reasonable conclusion: RCTs offer plenty of value in health care, and we’d benefit from more of them.

• As Jha alludes to, think of a double-blinded pharmaceutical study where half the participants randomly get a new drug and the other half get a placebo; that’s an RCT.
• The famous RAND study that found having health insurance changes patients’ behavior: An RCT.
• The ongoing Oregon Health Insurance Experiment: Also, an RCT.

And it’s fair to examine how CMMI is pursuing its research, too.

Continue reading “What the New York Times Got Wrong about Medicare’s Innovation Center”

By Leah Binder

President Obama rarely shies away from an opportunity to tout successes in U.S. health care, but in last night’s State of the Union oddly omitted any mention of the new and optimistic report about U.S. health spending from actuaries at the Centers for Medicare and Medicaid Services (CMS).

The finding: from 2009 through 2012, health care spending in the U.S. grew at the slowest rate since the government started collecting this data in the 1960s.

The actuaries found that in 2012 spending “stabilized,” growing by 3.7 percent in 2012, and health care accounted for a slightly smaller percent of GDP than the prior year, 17.2 percent versus 17.3 percent in 2011.

Perhaps an actuarial report proclaiming stable growth doesn’t make for much of an applause line for a State of the Union speech. But for confessed policy wonks like me, it’s as good as a Hollywood blockbuster.

So get out your popcorn, here are five Hollywood moments in the report.

1. Ninja Combat

When the report came out in early January, the Obama administration quickly ascribed the good news to Obamacare. But, lo and behold, the actuaries wielded their slide rules like weapons.

They respectfully disagreed with their president, pointing out that few of the provisions in the health reform law were actually in place during the slow-growth years in question. The actuaries conclude that most of the cost stability results from the economic recovery process.

Given the silence in the State of the Union, they may have been given the last word on the subject.

Continue reading “Why Didn’t the President Mention the Latest Good News on Health Costs?”

By John Halamka, MD

Karen DeSalvo started as the new National Coordinator for Healthcare Information Technology on January 13, 2014.   After my brief discussion with her last week, I can already tell she’s a good listener, aware of the issues, and is passionate about using healthcare IT as a tool to improve population health.

She is a cheerleader for IT, not an informatics expert.  She’ll rely on others to help with the IT details, and that’s appropriate.

What advice would I give her, given the current state of healthcare IT stakeholders?

1.  Rethink the Certification Program - With a new National Coordinator, we have an opportunity to redesign certification. As I’ve written about previously some of the 2014 Certification test procedures have negatively impacted the healthcare IT industry by being overly prescriptive and by requiring functionality/workflows that are unlikely to be used in the real world.

One of the most negative aspects of 2014 certification is the concept of “certification only”. No actual clinical use or attestation is required but software must be engineered to incorporate standards/processes which are not yet mature.   An example is the “transmit” portion of the view/download/transmit patient/family engagement requirements.

There is not yet an ecosystem for patients to ‘transmit’ using CCDA and Direct, yet vendors are required to implement complex functionality that few will use. Another example is the use of QRDA I and QRDA III for quality reporting.

CMS cannot yet receive such files but EHRs must send them in order to be certified.   The result of this certification burden is a delay in 2014 certified product availability.

Continue reading “A Little Advice for Karen DeSalvo”

By John Halamka, MD

Over the next few months, Jacob Reider will serve as the interim National Coordinator for Healthcare IT while the search continues for Farzad Mostashari’s permanent replacement.

What advice would I give to the next national coordinator?

David Blumenthal led ONC during a period of remarkable regulatory change and expanding budgets. He was the right person for the “regulatory era.”

Farzad Mostashari led ONC during a period of implementation when resources peaked, grants were spent, and the industry ran marathons every day to keep up with the pace of change. He was the right person for the “implementation era”

The next coordinator will preside over the “consolidate our gains” era. Grants largely run out in January 2014. Budgets are likely to shrink because of sequestration and the impact of fiscal pressures (when the Federal government starts operating again). Many regulatory deadlines converge in the next coordinator’s term.

The right person for this next phase must listen to stakeholder challenges, adjust timelines, polish existing regulations, ensure the combined burden of regulations from many agencies in HHS do not break the camel’s back, and keep Congress informed every step of the way. I did not include parting the Red Sea, so maybe there is a mere human who could do this.

What tools does the coordinator have in an era of shrinking budgets?

At present, Meaningful Use Stage 2, ICD-10, the Affordable Care Act, HIPAA Omnibus Rule, and numerous CMS imperatives have overlapping timelines, making it nearly impossible for provider organizations to maintain operations while complying with all the new requirements.

Can resources be expanded?

Continue reading “A Little Advice for the Next National Coordinator”

By Ashish Jha, MD & Thomas Tsai, MD

Why readmission penalties are controversial

Penalizing hospitals for high readmission rates has been pretty controversial.  Critics of the program have argued that readmissions have little to do with what happens while the patient is in the hospital and are driven primarily by how sick or how poor the patient is.  Advocates of the readmissions program increasingly acknowledge that while readmissions may not reflect the quality of care that occurred within the hospital, someone should be accountable for what happens to patients after discharge, and hospitals are the logical choice.  While the controversy continues, there is little doubt that the metric is here to stay.  This October, the CMS Hospital Readmissions Reduction Program (HRRP) will increase its penalty on excess readmissions from 1% to 2% of total hospital reimbursement.

So far, CMS has focused on readmissions that occur after patients are discharged with one of three medical conditions—acute myocardial infarction, pneumonia, and congestive heart failure.  The data on the impact of the program are mixed:  while readmission rates appear to be dropping, the penalties seem to be targeted towards hospitals that care for some of the sickest patients (academic medical centers), poorest patients (safety-net hospitals) and for heart failure, some of the best hospitals (those with the lowest mortality rates).  No wonder the program has been controversial.

Why surgery may be different

In 2015, CMS extends the program to focus on surgical conditions, which provides an opportunity to think again about what readmissions measure, and what it might take to reduce preventable ones.  And if you think about it, surgery may be different.  Most patients who are admitted for Acute MI, CHF, and pneumonia are chronically ill and bounce in and out of the hospital, with any one hospitalization likely just an exacerbation of underlying chronic illness (especially true for pneumonia and heart failure).  Not so for surgery—at least not for the major surgeries.

Continue reading “Finally Some Good News on Readmission Rates”

By Anonymous HIT Insider

In the wake of the National Coordinator’s announcement that he is departing, there has been a flurry of tweets, blog posts, impromptu online polls, and conjecture about the most likely successor.  To date, none of these conversations has resulted in a thoughtful assessment of the set of characteristics that would represent the ideal candidate, nor has there been any thorough review of the most likely candidates in the context of these attributes.  The need for a rapid transition to a successor is well understood by all – yet there has been no indication that the Obama administration is in a hurry.  Let’s hope that we can evolve them toward a greater sense of urgency. The fragility of ONC – and the importance of its health – can’t be overlooked.

Let’s consider some history:

The first two National Coordinators, David Brailer and Rob Kolodner, were appointed before ARRA.  The agency was small, focused largely on certification (through CCHIT), standards (through HITSP) and policy.  When ARRA arrived, David Blumenthal, a thoughtful, deliberate, policy-savvy internal medicine physician from Boston was brought in to lead the rapid expansion of health IT that was facilitated by the HITECH Act.

ONC expanded under Blumenthal from a team of ~ 30 people to a team of >100 in the two years that he was at the helm, and the agency published the 2011 certification criteria regulations, and collaborated with CMS to publish the regulations that defined stage 1 of the Meaningful Use incentive program.  The policy foundation was that the three-stage program – to be implemented over six years – would evolve the nation’s care delivery system by causing adoption of EHR technology (stage 1) and then exchange of clinical information electronically (stage 2) and finally improved clinical outcomes (stage 3).

Farzad Mostashari, who joined Blumenthal as the Deputy National Coordinator early in Dr Blumenthal’s tenure, was quickly named as Blumenthal’s successor when Blumenthal announced his resignation in the Spring of 2011.  Both Mostashari and Blumenthal pushed hard for Mostashari’s appointment – so that the consistency, focus and forward momentum of the organization could be maintained.

And so it was.  Under ARRA, adoption of EHRs has skyrocketed.  The CMS MU Stage 2 regulations and the ONC 2014 certification regulations were published, and the size of the agency has doubled to over 150 people.  Recognizing the need for experienced partners to assist him in leading a larger agency – and growing national reliance on health IT and an essential component of the care delivery ecosystem – Mostashari hired David Muntz as the “Principal Deputy” (essentially the COO of the agency), Jacob Reider as Chief Medical Officer (leading a team of clinicians focused on quality and safety) and Judy Murphy as the Deputy National Coordinator for Programs and Policy (adding internal coordination support for ONC programs).

Continue reading “Replacing Farzad”

By Adrian Gropper, MD

Three juicy lemons came through my inbox this week. The NY Times published an expose of why hip replacement surgery costs 5-10 times as much in the US as in Belgium even though it’s the same implant. JAMA published research and a superb editorial on the Views of US Physicians About Controlling Health Care Costs and CMS put out a request for public comment on whether physicians’ Medicare pay should be made public. Bear with me while I try to make lemonade, locally, from these three sour economic perspectives.

Here’s a super-concentrated summary of the three articles: The hip surgery is more expensive because, in the US, as many as 10 intermediaries mark-up the price of that same hip prosthesis. Then, Tilburt et al said in JAMA that “physicians report that almost everyone but physicians bears responsibility for controlling health care costs.” The physicians reported that lawyers (60%), insurance companies (59%), drug and device manufacturers (56%), even hospitals (56%) and patients (52%) bear a major responsibility to control health care costs. Finally, CMS is trying to balance the privacy interests of physicians with the market failure that my other two lemons illustrate.

Can we apply local movement principles to health reform? How much of our money can we keep with our neighbors? What policies and technologies would enable the health care locavore? The locavore health system couldn’t possibly be more expensive than what we have now and, as with food and crafts, more of the money we spend would benefit our neighbors and improve our community.

Continue reading “Enabling the Health Care Locavore”

By Bob Wachter, MD

There are tens of thousands of policies in Medicare’s policy manual, which makes for stiff competition for the “Most Maddening” award. But my vote goes to the policy around “observation status,” which is crazy-making for patients, administrators, and physicians.

“Obs status” began life as Medicare’s way of characterizing those patients who needed a little more time after their ED stay to sort out whether they truly needed admission. In many hospitals, “obs units” sprung up to care for such patients – a few beds in a room adjacent to the ED where the patients could get another nebulizer treatment or bag of saline to see if they might be able to go home. Giving the hospital a full DRG payment for an inpatient admission seemed wrong, and yet these patients really weren’t outpatients either. The Center for Medicare & Medicaid Services’ (CMS’s) original definition of obs status spoke to the specific needs of these just-a-few-more-hours patients: a “well-defined set of specific, clinically appropriate services,” usually lasting less than 24 hours. Only in “rare and exceptional cases,” they continued, should it last more than 48 hours.

A recent article in JAMA Internal Medicine, written by a team from the University of Wisconsin, vividly illustrates how far the policy has veered from its sensible origins. Chronicling all admissions over an 18-month period, Ann Sheehy and colleagues found that observation status was anything but rare, well defined, or brief. Fully one in ten hospital stays were characterized as observation. The mean length of these stays was 33 hours; 17 percent of them were for more than 48 hours. And “well defined?” Not with 1,141 distinct observation codes.

To underscore just how arbitrary the rules regarding observation are, an investigation by the Inspector General of the U.S. Department of Health and Human Services released today found that “obs patients” and “inpatients” were clinically indistinguishable. Their major difference: which hospital they happened to be admitted to.

Continue reading “Medicare’s Observation Status-and Why Attempts to Make Things Better May Make Them Worse”