Updated December 9, 2011 to correctly identify certain conditions dropped from value-based purchasing incentive payment metrics for 2014.
If ever there was a year in which "anything could happen" in healthcare, 2012 just might be it. Numerous major decisions, regulations, and policy rollouts loom, including how severely physicians' pay will be cut and whether the Affordable Care Act itself is a constitutional document. We look at a dozen potential game changers.
Get ready for 2012. It's going to be a wild ride, for sure.
1.The Joint Select Committee on Deficit Reduction, a.k.a. the Super Committee
This bipartisan panel has just hours – by Wednesday Nov. 23 – to come up with a plan to reduce all federal spending by $1.2 trillion over 10 years to avoid the "sequester," which would mean an automatic 2% across the board cut in payments to Medicare providers starting in 2013.
As of this morning, reports indicated they were at an impasse defined by party lines. For some health leaders, this may be a good thing, as some proposals being aired behind the Super Committee's closed doors would target Medicare spending even more than the 2%.
Congress, of course, makes the rules, and Congress could decide to change the rules, as some elected officials hope.
2.The Sustainable Growth Rate
No story about healthcare in 2012 is complete without a mention of the 27.5% guillotine hovering over physician Medicare fees effective Jan. 1. The Medicare Payment Advisory Commission backs a plan to repeal the SGR at a cost of $200 billion. It would freeze pay for primary care physicians for 10 years. It would cut by 5.9% pay for specialists for three years, and freeze their pay for the remaining seven.
This of course pours more gas on the flames of tension that already exist between primary care providers and their specialist partners, even as they attempt to form integrated delivery systems that streamline care and avoid unnecessary services. Many healthcare leaders suggest that if the Super Committee comes up with some plan, imbedded within it will be a remedy for the SGR.
3. The Supreme Court on the PPACA
The constitutionality of the Patient Protection and Affordable Care Act is up for argument with five and a half hours of set aside for debate in March, and a decision expected in June, right in the middle of the presidential campaign. Justices are expected to consider a number of aspects of the 2010 law, not just the legality of the individual mandate, which requires most Americans purchase health insurance by 2014.
For starters, they're expected to decide four other key issues
• Whether the law is valid without the individual mandate.
• Whether other parts of the law, such as the one prohibiting health insurers from rejecting applicants based on pre-existing conditions, are valid.
• Whether the court is legally empowered to rule on the mandate before it takes effect in 2014 or must wait until after.
• Whether the new law's tremendous expansion of the Medicaid program to more beneficiaries – in which states must pay a gradually increasing portion of the cost of these enrollees – meets constitutional muster.
4. Hospital Readmissions
Hospital providers are anxiously awaiting several key decisions from the Centers for Medicare & Medicaid Services over how the agency intends to interpret and apply penalties against hospitals that have higher than expected rates of 30-day readmissions in three disease categories: heart failure, heart attack and pneumonia.
Several providers and analysts we spoke with said the agency has failed to adequately address two issues: how it will deal with scheduled readmissions, which some hospitals have many more of than others (such as certain elective cardiovascular procedures), and how they will determine a formula to adjust for variation in risk in diverse patient populations across the country.
Several leaders we spoke with said they expect numerous refinements in coming months.
"Our concern is that they're not excluding planned scheduled readmissions," said Don May, Vice President for Policy at the American Hospital Association.
"The readmissions issue is a very messy area," says Paul Keckley, Executive Director of the Deloitte Center for Health Solutions. CMS has contracted with a team at Yale's Center for Outcomes Research and Evaluation to come up with risk adjustment formula. Keckley expects CMS will roll out some measure for applying these penalties sometime before March 30, probably for comment.
Hospital executives, however, fear two other ramifications from the readmissions penalty. One is that their emergency departments will be the subject of greater scrutiny from auditors to assure patients who need to be readmitted within 30 days are not put into observation categories or sent home simply to avoid a penalty. The second concern is how they will react to negative publicity if their hospital shows up as one with higher rates of avoidable 30-day readmissions on the federal website, HospitalCompare.
5. More Civil and Criminal Penalties
The Department of Justice is gearing up in an unprecedented way to punish and curtail fraud, waste, and abuse, which means imposing much more scrutiny on providers.
Armed with more new legal tools, hundreds more investigators, task force operations in more cities, and $350 million more to spend over the next 10 years, HHS is poised to broaden its pursuit of healthcare crooks, holding those it catches as a example of this enhanced national priority.
Concurrent with this, look to the Office of Inspector General to be more involved in quality issues, perhaps stemming from the agency's November, 2010 report that found that of nearly one million Medicare beneficiaries discharged from hospitals in just one month – October of 2008 – one in seven experienced an adverse event and nearly half of those were preventable medical errors, substandard care and inadequate patient monitoring and assessment.
Senators Tom Coburn and Tom Carper have been pushing their bill, called the FAST Act, (Fighting Fraud and Abuse to Save Taxpayer Dollars) which if passed, would strengthen and add new ammunition to fight fraud. For example, FAST would increase penalties, curb theft of physician identities that gives way to abuse, and establish more strategies to prevent the federal government from paying for suspected fraudulent claims when it has so much difficulty recovering the money later.
6. More Aggressive Health Plan Premium Rate Review
In 2011, the federal government gave away $100 million to help states develop expertise and oversight over health plan premium increases. And while some states are moving forward with such programs, even creating special new agencies, others have held back. HHS Secretary Kathleen Sebelius says her agency is "committed to fighting unreasonable premium increases," such as the 39% requested by Anthem Blue Cross of California last year for 800,000 customers.
The ACA, her agency says, requires health insurers that want to increase their rates by 10% or more in the individual and small group markets as of Sept. 1, 2011 "to submit their request to experts to determine whether the rates are unreasonable."
How aggressively the states and the federal government choose to push back on those increases will be a trend that will become apparent next year. And if they are aggressive, health plans many push those costs on to the shoulders of hospitals and physicians with lower value contracts, limiting their ability of providers to continue the practice of shifting the cost of caring for the underinsured.
Nate Kaufman, of Kaufman Strategic Advisers, says the increased scrutiny states and federal agencies are giving on rate review of healthcare premiums, "is one of the biggest issues out there now."
7. Who Will Lead CMS?
With partisan politics apparently precluding the permanent appointment of Donald Berwick, MD, as CMS administrator, he is expected to leave the agency by year's end. The expected heir is his principal deputy, Marilyn B. Tavenner, former Virginia Secretary for Health and Human Services and former HCA Group President.
Also unclear are the fates of HHS Deputy Administrator Steve Larsen, CMS Chief Medical Officer Patrick Conway, MD, and acting director of the new Center for Medicare and Medicaid Innovation, Richard Gilfillan, MD, who left his post as president and CEO of Geisinger Health Plan. These men helped Berwick steer the agency through some of its most controversial program launches.
8. The Patient-Centered Outcomes Research Institute
Now well underway, this 21-member panel enabled by the Affordable Care Act and appointed by the General Accountability Office will make recommendations about the evidence of effectiveness medications, diagnostics, medical devices and even types of surgery and other "health practices." By 2014, PCORI's budget may grow to more than $500 million, according to an August commentary in the Journal of the American Medical Association.
The organization has already started the process of giving out money for research, and although it is precluded from using cost in its calculations or recommending that a treatment be covered, many health leaders are certain that will be the ultimate result. If, for example, PCORI says that a particular medication reduces symptoms only 3% of the time but causes nearly intolerable side-effects in most of those, such a conclusion will undoubtedly influence decisions about whether the drug should be covered.
Keckley says that in talking with his clients, "PCORI is a stealth player in healthcare. But they're not getting nearly as much attention as you'd think."
9. Meaningful Use
CMS is expected to issue rules defining Stage 2 of Meaningful Use for electronic medical records for hospitals and doctors wanting incentive payments in the first quarter of 2012, with a final rule several months later, to be ready for implementation by Oct. 1. However hospitals hope that implementation will be delayed one year, says the AHA's Don May.
"Meaningful use is a very big deal for hospitals," May says, because there's $4 billion in incentive payments for doctors and hospitals. The Stage 2 criteria are feared because CMS is expected to significantly increase the percentage of clinicians who, for example, are using computerized physician order entry to meet the meaningful use requirements.
Expanded criteria may include making sure, for example, that a certain percentage of a physician's patients actually see their electronic health records, rather than just making those records available to them, as well as thresholds for secure messaging between patients and physician.
Protocols for having patients sign advance directives are expected as well. All of this costs money, and hospitals as well as physician groups have expressed concerns about where they'll find the money to implement EMR, and what other needed improvements they'll have to delay.
10. Accountable Care Organizations
Regardless whether large numbers of hospitals choose one of the approved options under the Medicare Shared Savings Plan, hospitals and providers throughout the country will eagerly want to know who becomes an approved ACO, a Pioneer ACO, or an Advance Payment ACO, and what their competitors do in response. Increasingly important will be ACOs as defined by private payers, how that impacts physician integration and employment, and how these organizations are ultimately defined. Will there be shared savings?
Equally of interest will be how CMS, along with the Federal Trade Commission and the Anti-Trust Division of the Department of Justice, work together to assure that ACOs don't dominate their markets, don't skimp on services, and don't pressure enrollees to influence their choice of providers.
11. Physician Payments Sunshine Act
To limit influence of manufacturers of drugs and medical equipment and supplies on physician or hospital practice, the Affordable Care Act requires those manufacturers to report payments or "transfers of value" to physicians or academic medical centers and teaching hospitals by Jan. 1, 2012.
However, the legislation gave little guidance on what information was to be provided and how. And both providers and industry leaders are worried about how it will all be interpreted by payers and the public. To clarify the intent, CMS was required to issue regulations specifying what was needed and in what format no later than Oct. 1, but it has yet to do so.
"Everyone is eagerly awaiting these details," said Richard Bankowitz, MD, chief medical officer for Premier Inc., a quality and purchasing cooperative for hospitals and healthcare systems.
The legislation defined such transfers of value as stocks and stock options, ownership interest, dividends, profits, consulting fees, honoraria, gifts, entertainment, food, travel, education, research, charitable contributions or royalties.
The data collected is to be publicly viewable, according to the ACA by Sept. 30, 2013.
12. Value Based Purchasing Incentive Payments
Although the formula for rolling out incentive payments for hospital quality has been set through 2014, hospital providers are nervous about what CMS will add to the mix for 2015, allowing them to earn back a portion or all of the 1% that all will receive in cuts to fund the program.
"We'll be seeing the results in October," Bankowitz said.
It dropped some eight hospital acquired conditions such as falls and pressure ulcers and the Agency for Healthcare Research and Quality composite measures for 2014. But those and several other measures are expected to creep back in or be added anew, such as all-cause readmission rates and the number of patients infected with hospital-acquired Clostridium difficile.
Another important decision coming from CMS anticipated in the coming year is how incentive payments will be allocated and to whom. Under the Affordable Care Act, any hospital that received CMS immediate jeopardy citation would be precluded from earning back any of the 1% of payments that are cut to hospitals across the board.
That's 12, and that's enough for 2012. However, this is not a complete list. There are at least eight other influential rules and policies anticipated in 2012. Stay tuned.