The proposal involves a five-year bundled payment model across 75 geographic areas whereby hospitals would be eligible for a bonus if their costs and outcomes were optimal or be penalized if not based on results 90 days post-discharge. The agency noted that in 2013, it spent more than $7 billion on hospitalization for these procedures with the payments for hospitalization and recovery ranging widely from 16,500 to $33,000. Comments about the proposal will be received by CMS through September 8, 2015, aiming for implementation January 1, 2016.
Their rationale, according to Secretary of Health and Human Services Sylvia Burwell, in the HHS statement announcing the proposal: “By focusing on episodes of care, rather than a piecemeal system, hospitals and physicians have an incentive to work together to deliver more effective and efficient care. This model will incentivize providing patients with the right care the first time and finding better ways to help them recover successfully. It will reward providers and doctors for helping patients get and stay healthy.”Continue reading…
Michael Lewis’ 2003 best seller Moneyball recounts how Oakland Athletics’ manager Billy Beane beat the big-payroll odds in major league baseball by using analytics to field a competitive team. The dynamic between Beane and his Yale-trained geek, Peter Brand is the central theme: together they fought off naysayers using Brand’s sabermetrics model later credited with the Red Sox World Series win the next season.
This week, thousands of financial officers from across multiple sectors in healthcare will descend on Orlando for the Healthcare Financial Management Association Annual Institute (ANI), a four day potpourri of knowledge-sharing sessions punctuated by keynotes from industry luminaries and an active exhibit floor.
The growing complexity of healthcare financial administrative issues is daunting. Case in Point: ANI organizes its 80 sessions in 8 tracks titled Business Intelligence and Analytics, Clinical Integration, Collaboration for Decision-Making, Cost Management-Margin Transformation, Finance-Capital Markets, Payment Trends and Delivery Models, Regulatory and Compliance Updates, and Revenue Cycle and the Patient Experience. There’s something there for everyone—from the rookie in internal audit to the CFO in the C-Suite.
The headlines and their storylines that you’re not likely to read in 2015:
Physicians optimistic about their future. They’re wildly enthusiastic about the mandate to use electronic medical records to coordinate patient care more effectively, and see the shift away from volume to value as positive trend for the industry. Increased penalties about unnecessary care and report cards about their clinical performance are welcomed as physicians embrace transparency. NOT!
Facts: Trust in physicians remains high but has slipped in recent years. Their compensation remains high relative to overall population at 5.8:1, but physician discontent is palpable. And the visibility given their business dealings vis a vis the Physician Sunshine Act and Medicare Physician database is unwelcome and discomforting.
The Affordable Care Act repealed. Overcoming a President veto, the Senate and House approved repeal. The newly insured in Medicaid and health exchanges will be easily absorbed into the current insurance system so the ranks of the uninsured will not swell. NOT!Continue reading…
Last Wednesday, President Obama called the much-publicized problems in the Veterans Affairs health system “disgraceful” as delays in care in at least 26 facilities grabbed media attention. In testimony before Senate and House Congressional committees, VA officials disclosed systemic misrepresentations about the timeliness of treatments in VA primary care clinics: rather than getting care within 14 days of request, many veterans appear to have waited 6-12 months to see a doctor, and some are alleged to have died while waiting.
In referencing a special report due this week that assesses the scope of the problem in the Department of Veterans Affairs, the President’s commitment to fix the problem was unequivocal: “I want to see what the results of these reports are and there is going to be accountability.”
As I have watched the VA storyline play out over the course of the past few weeks, I found myself asking questions the reporters weren’t:
Why do we need to operate a separate system of 820 clinics and 151 hospitals for Veterans?
Might the system of care for the 21 million it currently serves not be better coordinated through the U.S. health care system of 5200 public and private hospitals, 820,000 physicians, 1200 federally qualified health centers, 2000 community mental health clinics, 56,000 pharmacies and 1700 retail clinics? In most communities, there’s a surplus of beds.
In most communities, those with insurance can get doctors’ appointments and receive treatment. Veterans who lack private coverage, like those who are uninsured, have fewer choices. It is not a capacity issue: it is an economic issue.
And common sense suggests we might redeploy some the VA health administration’s $60.3B budget for better coordination with the private systems that already operate in our communities while reducing duplication of services and their associated costs.
Why don’t we get serious and fix the problem of access to primary care shortage once and for all? It’s not just a veterans’ problem. Those who live in poorer neighborhoods lack access.
Public trust matters. It’s hard to build and easy to lose.
Of late, subpar performance has drawn public attention to a wide variety of industry notables:
General Motors agreed to a fine for malfunctions resulting in 24 recalls in recent years including 2.6M most recently with faulty ignition switches.
Security breaches in customer information at Target, Michaels and other retailers hurt sales and cost at least one CEO his job.
The Department of Veterans’ Affairs has been exposed to questions about its safety record, notably delays in treating veterans in its hospitals in 9 states.
Entire industries have seen their public trust erode as a result of misdeeds or self-inflicted wounds—the investment banking industry’s mortgage loan debacle, venerable news organizations from lack of objectivity, industrial food manufacturers from unhealthy supply chain management and so on. And industries like higher education and others face tough questions about their value proposition, as if decades of good will no longer matter.
In most cases, leaders of the most prominent organizations in these industries accept responsibility, appoint task forces to investigate and address their issues with the media and investors head-on. Their trade groups, likewise, announce new initiatives to restore public confidence. They hire professionals to bolster their influence. and in some cases, rebuild their reputation.
Public trust in industries matters as much as confidence in the individual companies and organizations themselves. An industry’s reputation and good will is always buoyed by the reputation of the companies that are its marque market leaders, and always at risk as a result of the misdeeds of any member, known or unknown.
By and large, excepting occasional drug manufacturing scares or recent well-publicized safety issues in a few of the 3000U.S. compounding pharmacies, our industry has remained virtually unscathed from the ever-more-skeptical public’s thirst for muckraking. The U.S. health system enjoys the confidence of the majority, especially older adults for whom it is always top of mind.
But the reality is this: the US health industry is susceptible to erosion of its public trust, not as a result of the Affordable Care Act nor political in fighting in Congress.
A study by Stanford researchers in the current issue of Health Affairs is likely to intensify growing tension between health insurers and hospitals.
At issue: the impact of physician-hospital consolidation, or vertical integration as some academics prefer to call the trend.
The researchers analyzed 2 million claims submitted to insurers by hospitals from 2001 to 2007, evaluating the impact on hospital prices, volumes (admissions), and spending for privately insured, non-elderly patients. Using data from Truven Analytics MarketScan.
They constructed county-level indices of prices, volumes, and spending and adjusted for enrollees’ age and sex. “We measured hospital-physician integration using information from the American Hospital Association on the types of relationships hospitals have with physicians.”
What they found is not surprising: vertical integration involving physician-hospital consolidation results in better care and higher costs. They found hospital prices increased 2%-3% each time physician-employing hospitals’ market share increased by one standard deviation. And overall spending on services at the hospitals that employed physicians increased while the utilization of services (volume) at those hospitals didn’t change.
They concluded the following:
“We found that an increase in the market share of hospitals with the tightest vertically integrated relationship with physicians—ownership of physician practices—was associated with higher hospital prices and spending.
We found that an increase in contractual integration reduced the frequency of hospital admissions, but this effect was relatively small. Taken together, our results provide a mixed, although somewhat negative, picture of vertical integration from the perspective of the privately insured.”
What’s the significance of the study?
1-Hospitals and physicians will bolster their position that vertical integration is necessary to improved outcomes. The shift from volume to value via accountable care organizations, bundled payments, medical homes, and value based purchasing require closer collaboration between physicians and hospitals.
“Clinical integration” is central to each, and payers– Medicare and private insurers– are promoting these risk-based contracting efforts energetically while cutting reimbursement rates for services aggressively. So the provider position is this: ‘We get better results. We built what you said you wanted.
It’s costly to make the change, especially while since Medicare and Medicaid don’t cover our costs, demand is soaring and our bad debt from the uninsured increasing. You told us to build it, but you don’t want to cover our costs.’
Last Thursday, HHS released the final enrollment stats for health exchange enrollment for 2014. Here’s what we learned:
8.1 million enrolled in a plan in the Health Insurance Marketplace. 3.8 million (47% of total) since the end of February including 1.2 million in the much-watched 18-34 age cohort.
54% are female; 28% are between the ages of 18-34; 63% are White, 17% Black, 11% Hispanic, 8% Asian/other.
20% chose a bronze plan, 65% chose silver, 9% gold, 5% platinum and 2% catastrophic. Note: At the silver level, individuals who earn less than 250% of the federal poverty level — ($29,175 for an individual, or $59,625 for a family of four) — are eligible for assistance for out-of-pocket costs. 85% who picked an exchange plan qualified for a subsidy: 82% in the 14 state-run exchanges and 86% in the federally-run exchange.
Young adults 18-34 were 83% of those applying for the catastrophic coverage.
The American Recovery and Reinvestment Act of 2009 (ARRA), sometimes called the Stimulus Act, was an $831 billion economic stimulus package enacted by the 111th Congress in February 2009 and signed into law on February 17, 2009 by the President.
It included $22 billion as incentives to encourage adoption of certified electronic medical records in hospitals and medical practices. The rationale behind the policy directive was clear: system-wide implementation of electronic medical records enables improvement in diagnostics and treatment coordination, fewer errors, and better coordination of patient care by teams of providers.
Almost immediately, the medical community cried foul.
Their primary beef: the cost to implement these new systems would not be recovered by the incentives.
Similarly, physicians pushed back on the conversion of the U.S. coding system from ICD-9 to ICD-10. They did not question the need for the upgrade: the increase from 19,000 to 68,000 codes is necessary to more accurately capture all relevant clinical aspects of a patient’s condition and align our data gathering with 20 other developed systems of the world where ICD-10 is already used.
That health insurers, medical groups, hospitals and others must use the same coding system that reflects advances in how we diagnose and treat seems a no brainer. But some physicians pushed back due to costs and disruption in their practices.
Last week, physicians won a battle: the Centers for Medicaid and Medicare Services (CMS) announced it was delaying the deadline for implementation of ICD-10 for a year, to October 1, 2015.
This morning, the tally of enrollees in health exchanges is between 6 and 7 million.
Many of these will not finalize their paperwork until April 15, and many more might not pay their premiums.
Nonetheless, given the underwhelming rollout of Healthcare.gov, and well-funded campaigns in some states to discourage enrollment, the number is impressive. But the rest of the story is more important.
In coming weeks, these questions will be answered:
How many of these new enrollees will actually pay their premiums next month and be insured?
Are the new enrollees healthy or sick and in need of medical attention? How will the delivery system respond to these needs?
Did the penalty induce enrollment, or were other factors more important to individuals? Was it the attractiveness of subsidies or something else?
How will employers that provide health coverage assess the viability of health exchanges in their benefits strategies? Can these exchanges serve as a viable marketplace for employee insurance purchases (and allow employers to shift purchasing responsibility to their employees)?
The most significant force for health system transformation in the United States is employer activism.
This month’s decision to delay the Affordable Care Act’s employer mandate until 2016 coupled with dramatic increases in health insurance premium costs assures employers will play a stronger role going forward.
57% of all companies provide health insurance covering 149 million in the population. But participation varies widely by industry and size of company.
Size: Smaller companies under 199 are less likely to provide health benefits than larger companies, though premiums they pay to insurers are slightly lower than their larger counterparts.
Declines in employer sponsored coverage declines are due to costs, not the Affordable Care Act. Consider: the percentage of non-elderly workers with employer-sponsored coverage decreased from 68% in 2000 to 61% in 2009 before the law passed.
Employers pay 82% of health costs for singles and 71% of costs for those in their family health plans. Over the past decade, they have shifted more financial responsibility to their employees.
Premiums for employers from 2003-2013 increased 80% but employee contributions increased 89%.
At the same time, employers have reduced coverage for retirees and dependents, and in many industries, kept wages low to offset health cost increases.