Where there was once one code, under ICD-10 there may be 300 or 400. "As we continue to evolve, individual preferences could impact revenues, reports, and other data," says a health information sciences researcher.
The transition to the ICD-10 diagnostic code set on Oct. 1 will complicate financial and clinical forecasting and analyses that also rely upon data compiled under the outmoded ICD-9 code, researchers say.
Andrew Boyd
Assistant Professor of Biomedical
and Health Information Sciences,
University of Illinois, Chicago
"Everything from staffing levels to payment and even protecting margins, all of this is based on the ICD-9 codes. All of these reports have to be changed," says Andrew Boyd, assistant professor of biomedical and health information sciences at the University of Illinois, Chicago.
"It's not just learning the new system, it's learning how to interpret the new system."
Boyd, the lead author of a recent online study in the Journal of the American Medical Informatics Association, says the new, more granular data made available under ICD-10 will be very valuable for a healthcare delivery system that's evolving towards value-based care and population health. In the short term, however, the transition could prove to be problematic.
"The increased fidelity is going to be great, but increased fidelity of the codes does not necessarily reflect the increased fidelity of the actual information," he says.
Boyd says the uncertainty around translating back and forth between ICD-9 and ICD-10 codes could prompt some clinicians "to become closer to artists with all the different ways of describing disease than historically with ICD-9."
"We have all these codes and one person moving from institution to institution might increase or decrease reimbursements because of individual preferences," he says. "Literally where we might have one code now there will be 300 or 400 under ICD-10. As we continue to evolve, individual preferences could impact revenues, reports and other data."
Sue Bowman, senior director, coding policy and compliance, at the American Health Information Management Association, concedes that the transition to ICD-10 will come with some bumps.
"It makes sense that it would be somewhat difficult because if the two codes sets were a simple one-to-one map-and-compare there wouldn't be much point in going to a new system," Bowman says. "Whenever you go to a new coding system there are going to be challenges trying to compare data collected under the old system with data collected under the new system."
Bowman says coders, clinicians and researchers have to understand that the transition to ICD-10 will also create a new granularity of data that now does not exist.
"Obviously you can't produce things out of the ICD-9 data that didn't exist in the ICD-9 codes," Bowman says. "You can't look at laterality and specificity that only exists in ICD-10. Another thing is that the changes in understanding medicine and medical practice have changed so the 10 data is more reflective of modern understanding of medicine."
"When people are looking at data they have to keep in mind that if there appear to be significant changes in instances of clinical conditions and other factors they have to look at whether it could be a change in the coding system rather than a real change in clinical practices or circumstances," she says.
Boyd and other UIC researchers in 2013 created a free web portal tool and translation tables that facilitate transitions and cross referencing from ICD-9 to ICD-10, and back.
"The method we propose will give you mapping backwards to 99% of the ICD-9 and 10 codes. It is a complete mapping, as much as you can do from government data," Boyd says. "If you use other types of tools you will miss either 30% of the ICD-9 or 75% of the ICD-10 data."
Boyd says the transition can be a little smoother with training and preparation.
"You need to train and understand and know what information is needed for you to function as a health facility," Boyd says. "It's not just learning the new information, it's what information do you need to run your business. Some hospitals have 1,500 reports with ICD-9 codes buried in them. Do you need to recode all of them? Are they all critical? Which are important?"
"The 'A' in M&A no longer stands for 'acquisition,'" says PwC's US health industry deals leader. "It stands for affiliations, associations, ACOs, [and] all sorts of complex types of partnerships."
Deal activity around mergers, acquisitions, and other consolidation in the healthcare sector increased 18.4% in 2014 when compared with the previous year, and totaled $61 billion, according to a report from PwC.
Brett Hickman, PwC's US health industry deals leader, says the long-term care/post-acute space led the way with a record 288 deals worth $29.2 billion in 2014. Hickman says grabbing a piece of the post-acute market makes sense for providers shifting towards value-based care, continuity of care, and population health.
"About 40% of the premium is spent on post-acute—everything from skilled nursing facilities to long-term and palliative care and to some extent, the medical homes," Hickman says. "You have this huge piece of business that nobody is managing and in many markets it is still a mom-and-pop industry. The consolidation of that subsector is happening."
"More importantly, the traditional provider community is saying, 'if we are going to be at risk we have to align or integrate post-acute into our continuum of care and control that 40% of the spend."
Hickman says long-term care facilities have become "the last bastion" in healthcare consolidation, and acquiring SNFs and other post-acute facilities provides hospitals with the means to better control and monitor patients once they are discharged from an acute setting.
"The biggest issue with post-acute is the lack of communication and coordination of those clinicians with the caregivers who are managing the overall premium dollar risk—the primary care physician, the specialists who are managing the disease," Hickman says. "Historically it's been a passing of the baton, and when the patient shows up back at the hospital or the ER we don't know about that. That is not population health. That has to be fixed."
"Hospitals are asking, 'how do we get them from a traditional inpatient setting into a SNF at the appropriate time because we are fully at risk now? We want to do it based on clinical decisions and manage the best outcome with a high quality organization that we have integrated outcomes and medical management with."
Behavioral Health
Behavioral health acquisitions and consolidations are also on the rise. The sector saw a 24% increase in deal volume in 2014. Hickman says that also meshes with the population health, value-driven model.
"If you think about certain diseases, diabetes for example, one of the big factors in patients becoming insulin-depending is depression," he says. "They don't take their medications or take care of themselves, so they end up becoming insulin-dependent. Clinicians have to treat the mental and emotional side as well as the physical side to ensure that the patient doesn't become insulin-dependent."
In the overall healthcare sector, Hickman says the consolidation trends with hospitals, health systems, physician groups, and even payers will continue, although they will morph into new and more complex configurations than traditional M&As.
"The 'A' in M&A no longer stands for 'acquisition,'" Hickman says. "It stands for affiliations, associations, ACOs, [and] all sorts of complex types of partnerships."
With hospital consolidation, Hickman says "we are at the tilting point."
"Over the past decade hospitals have built up an efficient delivery system and they have started to build capabilities around taking risk," he says. "The inflection point is around two things: One is truly moving into population health, from loosely managed sections of the population that could be by geography and disease, to wellness management. We are in the loosely managed environment now and moving into a more well-managed space, and how we control utilization as the right point of service. Hospitals are recognizing that they cannot measure average daily census or heads in beds."
"The other inflection point is that they are making the tough decisions around rationalizing the infrastructure," Hickman says.
Divestures, Regional Consolidations
"We are now finally seeing management in some of the consolidation, instead of us doing a normal synergy analysis where we looked at shared services, like back office, and billing and collection and certain service lines, people are now saying 'look at the market and show me where to put every program. And if we need to shut down places or beds or reconvert them, we are willing to do it.'"
Consolidation is expected to continue in the near term, but Hickman says there may come a time in the next five years or so when the movement will be toward divestiture.
"A lot of people have done deals for the wrong reasons or structured them inappropriately," he says. "You are going to see lots of divestitures of certain assets that may not be good core fits or [are] underperforming. We are going to see a lot of pickup in divestitures."
Once that is sorted out, Hickman says the healthcare sector could gravitate toward "massive regional consolidations."
"Right now we are seeing health systems becoming truly regional. We will see multistate large systems start moving into more regional hubs where quaternary care and community-based care is more appropriately coordinated, managed, and steered into much smaller narrow networks."
It's staggering to think of the challenges that CAHs face. Now OIG is calling for a re-examination of a program that it says has overpaid CAHs billions of dollars to provide skilled nursing services using hospital swing beds.
They're called "Critical Access Hospitals" for a reason. These tiny healthcare outposts provide "critical access" to people who live in remote areas.
That was the intent of the legislation that created CAHs in 1997 at a time when rural hospitals were shuttering at an alarming rate. Congress understood that rural America needed extra Medicare dollars to keep the doors open at hospitals that serve an older, sicker and poorer patient mix.
It's staggering to think of the challenges that CAHs face:
Because of their location and size, CAHs have few economies of scale, little leverage with vendors or payers, or a sufficiently large patient mix or volume of commercial payers to help cover costs.
CAHs are often limited in their ability to provide some of the more lucrative services that are cash cows for larger hospitals in urban areas.
Recruiting clinicians to rural areas is a slog.
And because of all those challenges, it's also more difficult to merge or collaborate with other healthcare providers from such an isolated perch. It's surprising to learn that only 40% of CAHs operate in the red.
Unfortunately, some people in Washington, DC have short institutional memories.
For the past couple of years, reports from the Office of the Inspector General at the Department of Health and Human Services have made it clear that they believe the CAH designation and funding scheme should be overhauled.
In its latest shot across the bow, OIG this week called for a re-examination of the swing bed program that allows CAHs to provide long-term care. The OIG audit claimed that the federal government has overpaid CAHs $4.1 billion over the past six years for services that could have cost less in relatively nearby skilled nursing and long-term care facilities.
Tavenner Pushes Back
Rural healthcare advocates rallied around the reply to the OIG recommendations from former Centers for Medicare & Medicaid Services Administrator Marilyn Tavenner, who challenged the OIG findings and recommendations in her formal response, and suggested that auditors don't understand healthcare delivery in rural areas.
In that same response to OIG, however, Tavenner said the Obama 2016 budget has called for reducing the Medicare reimbursement that CAHs receive from 101% to 100% of allowable costs, and reassessing and eliminating CAH status for hospitals that are within 10 miles each other.
While Tavenner's rebuff of OIG was heartening for rural providers, she no longer runs CMS. Regardless, the Obama budget proposal puts CAHs in the crosshairs, and it's not clear if Tavenner's replacement, Acting Administrator Andy Slavitt, understands the special challenges posed by rural healthcare.
Tim Putnam
President and CEO,
Margaret Mary Community Hospital
Tim Putnam, president and CEO of Margaret Mary Community Hospital in Batesville, IN, expresses the concerns of many rural providers who feel that there is a disconnection in the federal government when it comes to rural healthcare.
"If you grew up in an urban area or trained in an urban area or work in an urban area, it takes effort to understand the specific challenges that exist in a rural community," Putnam says. "That is one thing where you see a lot of organizations trying to educate legislators and policy makers and groups like HHS about the specific challenges for rural areas."
A Disconnect
The OIG call to re-examine the CAH swing bed program is a great example of that disconnect, Putnam says. It makes sense from a bottom line perspective, but the bottom line doesn't tell the whole story.
"You can pick one program and say 'Aha! It' seems like they are paid more than they should be,'" he says. "But there are also 99 programs that aren't paid at all or paid very poorly that critical access hospitals have to run 24/7 that are not reimbursed anywhere near what it costs to provide those services."
"Having a swing bed program allows for staffing to exist in these low-volume facilities 24/7," Putnam says. "The swing bed volume is not very heavy in some communities, but you have [to have the] staff for it because you have to be ready for patients all the time. It helps to have staff available for acute care. A lot of times the hospitals will cross-train staff to work in swing beds and acute care. It really helps form the foundation of having an availability to serve a community need any time day or night."
Putnam says the proposed cuts to CAH funding and a reappraisal of their special status in the Obama budget also send a troubling message at a time when rural hospitals are trying to make the transition from volume to value.
"Because of sequester and because 'allowable costs' eliminate a lot of things that are necessary costs, nobody in the CAH world is making money on Medicare," he says.
"Why should you make money on the government? Well, I can understand that mindset, but really for a hospital to remain viable, they need to make in that 3%–4% range to replace equipment and update facilities and add services. If you are just breaking even you are going to fall behind."
The National Rural Health Association says that more than 40 rural hospitals have closed since 2010. Putnam says most CAHs already lose about 5%–7% on Medicare.
"If the president's budget is to reduce 101% of allowable to 100% you will see we will lose 6% to 8%," Putnam says. "We face an impending clear threat to an income stream that doesn't allow us to help make a smooth transition to that value piece. There is no plan you could put forward that says, 'this is where we will make it.'"
We should not fault the Obama administration or the OIG too greatly for trying to reduce inefficiencies in healthcare delivery. Any entity that takes taxpayer dollars should be required to account for how they spend it. Too often, however, the cost cuts we're seeing reflect only the bottom line for a particular service, examined in isolation.
Before anyone proposes additional cuts to critical access hospitals, it is not unreasonable to ask that they understand what these hospital do, the challenges they face, and why they were granted "critical access" designation in the first place.
"They view rural as simply a small version of urban. They don't recognize that it is a different healthcare delivery system," says Alan Morgan, CEO of the National Rural Health Association.
A federal audit that recommends cutting payments to rural hospitals for skilled nursing swing beds is being panned by hospital advocates and the federal government.
Priya Bathija
Sr. Associate Director, Policy
AHA
The Department of Health and Human Services' Office of the Inspector General released a report on Monday that estimates that the federal government overpaid critical access hospitals about $4.1 billion over six years to provide skilled nursing services using hospital swing beds.
Among its recommendations, OIG's report called for the Centers for Medicare & Medicaid Services to push for legislation that will adjust CAH swing-bed reimbursement rates to match the lower rates paid to skilled nursing facilities.
Former CMS Administration Marilyn Tavenner, in a Nov. 13, 2014 response published with the OIG report, agreed that swing bed use was on the rise, and that new efficiencies and cost savings must be identified for rural care delivery.
She sharply disagreed with the OIG recommendations, however, faulted the study methodology, and suggested that OIG doesn't understand rural healthcare.
"The report does not take into account the burden on patients on being treated farther from home and family, and being transferred in an ambulance to a new facility," Tavenner said. "The OIG's cost estimations exclude transportation costs of moving a patient to an alternative facility, as opposed to using a CAH swing bed, which would decrease the savings from using an alternative facility."
Tavenner's comments were echoed by Priya Bathija, senior associate director, policy, at the American Hospital Association.
"The report demonstrates an unfortunate lack of understanding of how healthcare is delivered in rural communities," Bathija said by email:
"It inappropriately focuses on [the] potential savings Medicare could realize, rather than the needs of individuals living in rural America. The OIG's analysis is clearly flawed – a conclusion that CMS reached as well. OIG failed to account for many important factors that come into play in rural areas, such as the level of care needed by swing bed patients, transportation fees to alternative facilities, and the use of point-to-point mileage distances instead of road miles. The AHA continues to strongly advocate for maintaining the CAH program as it is currently structured in order to help ensure that all patients in rural communities have access to healthcare."
Alan Morgan, CEO at the National Rural Health Association, says the landscape in rural healthcare has shifted greatly since OIG began its study several years ago.
Alan Morgan, CEO
National Rural Health Association
"Timing is everything, and so I don't think this report is going to get much traction," Morgan says. "When they started looking at this three or four years ago the talk was all about efficiencies and saving money in Medicare. Now, we have a rural hospital closure crisis. Congress is trying to find ways to keep hospital doors open but the administration is still trying to find ways to save money. I don't think they have caught up with the reality of what is happening now."
The problem at OIG, Morgan says, is that they apply an urban mindset to rural healthcare. "You see this time and again. They view rural as simply a small version of urban. They don't recognize that it is a different healthcare delivery system."
"While I don't see this report gaining any traction, it is something we are taking seriously. We're talking to policymakers and our members. This is bad medicine. It's bad for the hospitals and it's horrible for the patients. That is the kicker. CMS's response is that this is terrible for rural population."
Morgan says Tavenner's comments were illuminating.
"I can't stop laughing about that," he says. "CMS is never one to shy away from saving a buck when it comes to Medicare, but even CMS called them out on the findings and the methodology."
Doctors' shift in focus away from trying to delay ICD-10 again and toward addressing any hiccups with the inevitable transition is seen as a positive sign by AHIMA executives.
The call by 100 physicians' societies across the nation for a backup plan if snafus snarl the scheduled ICD-10 rollout in eight months suggests that doctors are reconciled to the Oct. 1 start for the diagnostic coding set, the leader of one health information technology trade group says.
Lynne Thomas Gordon
CEO of AHIMA
The American Medical Association and 99 state and specialty societies, in a March 4 letter to Centers for Medicare & Medicaid Services Acting Administrator Andrew Slavitt, express concerns that no contingency plans are in place to avoid failures that could result "in a significant, multi-billion dollar disruption for physicians and serious access-to-care issues for Medicare patients."
Lynne Thomas Gordon, CEO of the American Health Information Management Association (AHIMA), says the fears are understandable, but unfounded, and she calls the letter "encouraging" because it shows that physicians are willing to go forward with the twice-delayed Oct. 1 start up.
"It shows me that they are saying 'We know we are going live Oct. 1. Now, what do we need to worry about?' In that respect, the letter is positive," Thomas Gordon says.
Sue Bowman, AHIMA's senior director for Coding, Policy and Compliance, says physicians' focus has turned from delaying the ICD-10 start to addressing any hiccups with the inevitable transition.
"The risks of any major problems are pretty small," Bowman says. "Granted, the risk of something is never at zero, but I am not sure if they are mostly worried about physicians not being ready or CMS not being ready."
Concerns Over Claims
In their letter to Slavitt, the physicians' societies raised concerns that recent end-to-end testing conducted by CMS on ICD-10 showed that claims acceptance rates would fall from 97% to 81% if the code set launched today. The societies said such a drop represents a backlog of millions of dollars in unpaid Medicare claims that could badly strain the finances of physician practices that are already contending with a "regulatory tsunami."
"The likelihood that Medicare will reject nearly one in five of the millions of claims that go through our complex healthcare system each day represents an intolerable and unnecessary disruption to physician practices," AMA President Robert M. Wah, MD, said in a media release accompanying the letter.
"Robust contingency plans must be ready on day one of the ICD-10 switchover to save precious healthcare dollars and reduce unnecessary administrative tasks that take valuable time and resources away from patient care."
Contingency Plans
Bowman says that end-to-end testing that CMS conducted in January demonstrates that the government is "definitely ready."
"The letter talks about only 81% were accepted and processed and were not rejected in the January testing," Bowman says. "What is not said is that if you read the testing results the vast majority of the erroneous claims had nothing to do with ICD-10. They were the wrong codes or NPI information. Only 3% of the rejected claims had anything to do with ICD-10. That makes it more like 97% if you are looking solely at the ICC-10 risk issues."
As for contingency plans, Bowman says AHIMA doesn't object as long as those plans "are not used as an excuse not to get ready for ICD-10."
"There are plenty of resources and training out there for all physicians to get up to speed in time for Oct. 1," Bowman says. "That said, we have no objections to the idea of advanced payments as a last-ditch safety net in case there are particular issues with the transition, either the provider end or CMS's end."
Bowman says Medicare already provides for accelerated payments "when a provider has incurred a temporary delay in the billing process, causing financial difficulties for the provider."
"That sounds like exactly what we are talking about," she says. "I am not sure they need to do anything special for ICD-10."
Chief Justice John G. Roberts and Justice Anthony M. Kennedy are seen by many court watchers as the two potential swing votes in the case.
The U.S. Supreme Court on Wednesday heard arguments in a second challenge to the Patient Protection and Affordable Care Act that, if affirmed, could disqualify millions of Americans from receiving billions of dollars in federal subsidies to buy health insurance.
Plaintiffs in King vs. Burwell told the justices that the wording of PPACA prohibits the federal government from offering subsidies for people in 34 states that used a federal healthcare exchange. [View transcript.]
As in 2012's landmark National Federation of Independent Business vs. Sebelius ruling that saw a sharply divided court uphold the constitutionality of the individual mandate on a 5–4 ruling, King is also expected to swing on one vote.
"The only provision in the Act which either authorizes or limits subsidies says, in plain English, that the subsidies are only available through an exchange established by the state," plaintiff's attorney Michael Carvin told justices on Wednesday, the second time in three years that Carvin has argued against PPACA before the high court.
Solicitor General Donald B. Verrilli, who successfully argued for the federal government in NFIB, argued on Wednesday that the intent of the PPACA is clear. Without the subsidies, he argued, health insurance would become unaffordable.
"It is really the only way to make sense of Section 36B and the rest of the act," Verrilli told the court, citing the passage in question. "Textually, [the plaintiff's] reading produces an incoherent statute that doesn't work."
"Our reading is compelled by the act's structure and design. Their reading forces [the Department of Health and Human Services] to establish rump exchanges that are doomed to fail. It makes a mockery of the statute's expressed textual promise of state flexibility."
Chief Justice John G. Roberts, seen by many court watchers as one of two potential swing votes in the case, remained silent for most of the arguments, which he extended for 20 minutes beyond the allotted hour.
Justice Anthony M. Kennedy, however, who is seen as the other potential swing vote, set off a flurry of speculation when he told Carvin that the plaintiff's argument "raises a serious constitutional question."
"Let me say that from the standpoint of the dynamics of Federalism, it does seem to me that there is something very powerful to the point that if your argument is accepted, the states are being told either 'create your own exchanges, or we'll send your insurance market into a death spiral,'" Kennedy said. "We'll have people pay mandated taxes which will not get any credit on the subsidies. The cost of insurance will be sky high, but this is not coercion."
To give a sense of the close scrutiny this case is getting, BloombergBusiness reported that for-profit hospital stocks surged immediately after Kennedy's comments.
Although the arguments were tense and polarized, the day was not without comic relief. When Verrilli warned of the dire consequences of removing the subsidies, he was challenged by Scalia about other remedies.
"What about Congress? You really think Congress is just going to sit there while all of these disastrous consequences ensue," Scalia asked the solicitor general.
"Well, this Congress, your honor, I, I," Verrilli stammered, as the chamber erupted in laughter.
"You know, I mean, of course, theoretically, of course, theoretically they could."
The high court is expected to issue a ruling by late June.
Even as healthcare reform has expanded insurance rolls, high-deductible health plans have rendered care unaffordable for many. The Surgery on Sunday program, created for uninsured patients, is retooling for the underinsured.
For all its problems, the Patient Protection and Affordable Care Act has made health insurance accessible for millions of Americans, and that is a good thing.
Andrew Moore, MD
To make that coverage affordable, however, many bare-bones plans have very high deductibles. A family of four earning $30,000 will likely pay deductibles of several thousand dollars before coverage kicks in. The result has been the creation of a new class of patients that one observer has aptly called the "functionally un-insured."
With that in mind, it would not be unreasonable to suggest that these high-deductible plans are designed more to protect the healthcare sector than patients. If a family of four making $30,000 accrues a $10,000 medical debt, it might as well be $100,000 for them. They'll never pay it off.
These newly underinsured have forced some charity care organizations to change the way they do business.
For the last 10 years, Lexington, KY-based Surgery on Sunday has provided about $10 million worth of free outpatient surgeries for more than 7,500 uninsured people who were too poor to pay for their own care. When the PPACA/Obamacare expanded insurance to thousands of working poor people in Kentucky, they became ineligible for charity care under the SOS criteria, even though their need persisted.
"It's really created a mess for us," says Andrew Moore, MD, a Lexington-based plastic surgeon who is the founder of SOS. "Prior to this, looking back maybe a year and a half or two years ago, we had a waiting list of about 1,500 people. We thought that was dangerous. People were waiting too long. So we expanded the program and got two other hospitals involved so we could do it twice a month instead of once a month so we could whittle down the numbers."
"When Obamacare came on the scene, our criteria for taking care of people was you could not have insurance and you had to be at the poverty level. So, by early last fall we had no or very few people on the waiting list. They all had insurance and didn't meet our criteria."
The backlog of 1,500 patients all but disappeared. Moore says that only about 40 people are on the waiting list. Until recently, SOS was considering expanding to other ambulatory surgery sites and recruiting more volunteers to meet the demand. Now, the program will cut back services to once every other month.
"There is no sense in having people open the doors with 80 volunteers to take care of three or four patients," Moore says. "We'll do it every other month until we can get the numbers back up."
Unintended consequences
Shouldn't we celebrate the fact that fewer people need charity care? That's just the problem. The need is still there, but the PPACA made these underinsured people ineligible for charity care, even though they can't afford to meet the deductible. So they go untreated.
"The problem is the insurance they are selling in our state," Moore says. "They are selling policies that are pretty hard to afford even at a discounted rate. These folks are paying $300 a month and they are at poverty level. That is a lot of money. The second thing is they have huge deductibles. The individual deductible will be $6,000 and for a family that is $13,000. That is no insurance. You are never going to use that because you can't meet the deductible."
SOS is adjusting its eligibility criteria to see if that will alleviate the problem.
"When we looked at that, we were doing 200% of poverty so we went to 250%," Moore says. "This is our first attempt. We may adjust it more. Then we said if their deductible was 10% of their income, we would treat them for free. We just started that and we are spreading word across the state that this is the new criteria. We will probably take a look at this in two or three months and see how that's affected it, and if we need to lower that even further to capture people who need our help."
"I hope somebody puts us out of business, but I don't think that Obamacare does it," Moore says. "In our state it has changed from an uninsured population to an underinsured population. I read that by a wide margin most bankruptcies are healthcare-related, either for people who have no insurance or who are underinsured. That tells you it's fairly expensive, and somehow we have to get ahold of the cost to make it more affordable for people."
Societal good and bad
Let's be clear: Expanding health insurance coverage to millions of people is a net positive for society. The PPACA should not be too harshly criticized for creating a new class of underinsured people, because that is still preferable to what we had before.
That doesn't mean that improvements can't be made that will make access to healthcare more affordable to these underinsured. After all, underinsured people, like the uninsured, will delay seeking care until it becomes too critical—and expensive—to ignore. That defeats one of the oft-stated goals of the PPACA and the wellness movement: to treat people early and in the least-expensive, most efficient environment.
Can society respond? Healthcare "really is out of the reach for a lot of our population," Moore says, "and if we can't do this as a nation, we have to do this as individuals to help these people along."
The Association of American Medical Colleges is calling on Congress to immediately fund an additional 3,000 medical residency slots each year in addition to the 27,000 to 29,000 residency slots already in place.
Under a best case scenario, the nation's graying and growing population will contend with a shortage of at least 46,000 physicians within 10 years, Association of American Medical Colleges projections show.
That shortfall could hit 90,000 by 2025 if the healthcare sector fails to aggressively embrace and promote the use of non-physician clinicians, and adopt more efficient care and payment models such as patient-centered medical homes and accountable care organizations, AAMC said.
In addition, AAMC wants Congress to immediately fund an additional 3,000 residency slots each year, in addition to the 27,000 to 29,000 residency slots already in place. Graduate Medical Education has been capped for the past two decades. What was a supposed to be a temporary cap has become permanent.
"What we are suggesting is a modest increase in that cap right now," AAMC Chief Health Officer Janis M. Orlowski, MD, told reporters Tuesday. The estimated cost of the bill is $10 billion over 10 years. "This does not alleviate the physician shortage in any of the different scenarios that we are looking at. We see it as a multipronged approach," she said.
The AAMC projections include a shortfall of 12,500 to 31,100 primary care physicians, and between 28,200 and 63,700 subspecialists.
Orlowski says it's a simple case of supply and demand.
"Although physicians supply in the US is projected to increase modestly between 2013 and 2025 demand will grow more steeply," she says. "Specifically, total demand for physician services is projected to grow as much as 17%."
"The bottom line is that the physician shortage is real; it is significant. It's particularly serious for the kind of medical care our aging population will need, and it must be addressed today, in 2015, if patients are going to be able to get the care they need in 2025. The good news it is not too late to fix this. Congress needs to act now."
Residency training costs about $16 billion nationally, of which Medicare provides about $3 billion. It costs about $152,000 a year to train a physician, of which Medicaid pays $40,000. The average student debt after graduating from medical school is about $176,000 AAMC says.
AAMC President/CEO Darrell G. Kirch, MD, told reporters "the onus is on Congress to lift the artificial cap that has been in place since the 1990s and do its share of contributing to the training."
"A large portion of the funding for residencies is already borne by teaching hospitals. Students already carry massive amounts of debt," Kirch says. "We need to make sure the federal support is aligned with those efforts."
Who Gets the New Residency Slots?
Kirch says AAMC is not in a position to recommend which states receive the new residency slots, or if existing slots should be moved to other states to account for demographic shifts.
"It is not the role of the AAMC to tell which areas that they should start or stop individual residency programs," Kirch says. "That is a local decision that each hospital, each potential training site needs to make. Whether Congress would want to go in that direction is an issue for policy makers. The purpose of this analysis is to show the overall national landscape."
An AAMC study from 2013 shows that Northeastern states such as Massachusetts, New York, Connecticut and Pennsylvania have the highest ratios of residency slots per 100,000 population. These states also have the highest ratios of physicians per 100,000 population. For example, Massachusetts had 421 active physicians and 87 residency slots per 100,000 in 2011, while Florida had no more than 265 active physicians and fewer than 20 residency slots per 100,000.
Last month, safety net hospitals and teaching hospitals in Florida projected a shortfall of 7,000 physicians and called for a shift in residency slot allotments, which they say unfairly rewards the physician-rich Northeast.
"We just passed New York as the third most-populous state," Jim Burkhart, president and CEO of Tampa General Hospital, and vice-chair of the Teaching Hospital Council of Florida, said in a recent interview.
"The number I heard today was that Florida is growing at the rate of 800 new residents per day. But we are 42nd in the number of residency slots we have per capita. That is a formula for disaster."
Kirch said Tuesday that "where a residency spot exists does not determine where a physician actually ends up practicing. So, there is no guarantee that putting residency spots in different locations is going to move physicians to that location. We live in a country where people are given free choices and after their training residents can choose where to practice."
Instead of shuffling residency slots, Kirch says states, local areas and health systems may be better served by recruiting new physicians with job perks such as debt forgiveness.
"About 6% to 7% of physicians consider locum tenens to be their fulltime occupation and we anticipate that will grow to 11% of the workforce within the next 18 months," says the head of a healthcare temporary staffing firm.
More new physicians entering the workforce are opting for jobs as locum tenens in hospitals, physician practices, and other provider sites, an industry survey shows.
Staff Care, a healthcare temporary staffing firm based in Irving, TX, polled 2,087 locum tenens physicians and found that 21% began temp work immediately after finishing their medical training. That's up from 16% in 2013 and 14% in 2012. A separate survey by The Physicians Foundation found that 46% of doctors will change their practice styles within three years, and 9% plan to work locum tenens.
Staff Care President Sean Ebner says a growing number of physicians are gravitating toward nontraditional work models, including employment by a hospital or a large practice, part-time practice, concierge medicine, and administrative-only practice.
"The physician workforce is evolving. About 6% to 7% of physicians consider locum tenens to be their fulltime occupation and we anticipate that will grow to 11% of the workforce within the next 18 months," Ebner says.
"A lot of physicians that did locum tenens had sold their practice, they were in quasi-retirement and came back as locums. That demographic is changing significantly, where new physicians and mid-career physicians are making the choice for flexibility, working in different environments, being able to focus on the practice of medicine and not the politics of the organization, the reimbursement facilities and all of the bureaucracy around the business of medicine."
Staff Care also found that 91% of the 259 healthcare facility managers who responded to the survey said they had used a locum tenens physician at least once in the past year, and 42% said they are looking for one or more locum tenens physicians. Primary care physicians are in the most demand as locum tenens, followed by psychiatrists and other behavioral health specialists, and hospitalists.
"From a healthcare system perspective there is a recognition of leveraging physicians in a temporary contingent format to deal with peaks and valley of census and demand rather than committing to fixed costs and having to staff to a certain threshold for the whole year irrespective of the demands for those services," Ebner says. "It puts a big tax on those systems. Sometimes they have to overstaff and sometimes they stretch their community too far."
About 44,000 physicians nationwide practice as locum tenens, up from 26,000 12 years ago, Ebner says, adding that there's no timeline on when, if ever, locum tenens workers will pursue a more permanent setting. "Physicians do come in and out of locum tenens for a number of reasons," he says.
"Some physicians want to earn an income if they switch specialties from what they first signed up for out of medical school and there is a lag in between fellowship programs. More importantly it gives physicians the flexibility to kick the tires in a number of different settings, geographies and delivery systems before settling down."
The survey suggests that demand also is growing for temporary non-physician clinicians such as nurse practitioners and physician assistants.
In 2012, 4.8% of healthcare facility managers surveyed by Staff Care said they had used locum tenens NPs in the previous 12 months. In 2014, that number rose to 17.4%. The number of PAs rose from 4.7% in 2012 to 7.6% in 2013. The survey findings are consistent with those from a benchmark survey released last summer by the National Commission on Certification of Physician Assistants.
The ruling has far-ranging implications for state regulatory boards overseeing professional activities, including those of physicians, hospitals, and health systems.
The U.S. Supreme Court this week upheld an appeals court ruling that states must actively supervise private market participants sitting on state regulatory boards.
The justices were asked to decide if a state regulatory board is exempt from federal antitrust laws under the state action doctrine if its members are "market participants" elected by other market participants.
The eight-member North Carolina dental board, which includes six dentists elected by other dentists, had been the subject of a complaint by the FTC in 2010 for violations of the FTC Act after the board banned non-dentists operating in mall kiosks from performing discount teeth-whitening procedures.
A federal district court rejected the board's initial complaint. Last spring, the U.S. Court of Appeals for the Fourth Circuitsided with the FTC and noted that the dental examiners board was composed of dentists who stood to gain financially by restricting the practice.
Writing for the majority, Justice Anthony Kennedy said the Sherman Antitrust Act protects competition and respect federalism. "It does not authorize the states to abandon markets to the unsupervised control of active market participants, whether trade association or hybrid agencies. If a state wants to rely on active market participants as regulators, it must provide active supervision if state-action immunity under Parker is to be invoked."
The high court's three most-conservative judges sided with the dental board. Writing in dissent, Justice Samuel Alito noted that the majority's ruling "will create practice problems and is likely to have far-reaching effects on the states' regulation of professions."
"As a result of today's decision, states may find it necessary to change the composition of medical, dental, and other boards, but it is not clear what sort of changes are needed to satisfy the test that the Court now adopts," Alito wrote.
Alito was joined in dissent by Justices Antonin Scalia and Clarence Thomas.
Reaction
Reaction to the ruling was mixed.
Bobby D. White, COO for the North Carolina Board of Dental Examiners, said in an email exchange with HealthLeaders Media that the court ruling "fundamentally misconstrues the purpose of state-action doctrine."
"The point of the doctrine is to respect federalism, in that there's no indication in the Sherman Act that Congress intended to displace state regulatory activity. That's especially true in this context: professional regulatory boards have always been structured this way, and yet no one until this case ever argued that the Sherman Act subjected them to liability for this reason. That's the elephant in the room that Alito's dissent emphasized and that Kennedy's majority ignored."
As a result of the ruling, White says virtually every professional regulatory board in the nation will have to change its structure and supervision or the activities it performs.
"And since all of those changes will take time (and often legislative activity), the opinion threatens to massively disrupt professional regulation," White said.
The American Medical Association had filed an amicus brief supporting the dental board's antitrust immunity. Citing Alito's dissent, AMA President Robert M. Wah, MD, in a statement this week said the ruling "'will spawn confusion' by creating far reaching-effects on the jurisdiction of states to regulate medicine and protect patient safety. The AMA will work with other physician groups to secure policy changes to reinforce long held antitrust protections for activities conducted under state authority to protect patients."
Federal Trade Commission Chairwoman Edith Ramirez applauded the ruling.
"We are pleased with the Supreme Court's recognition that the antitrust laws limit the ability of market incumbents to suppress competition through state professional boards," Ramirez said in prepared remarks. "We will remain vigilant through our enforcement initiatives and advocacy to safeguard competition and ensure that American consumers benefit from entrepreneurial initiative."
The Practical Effects
Three antitrust experts reached for comment about the practical effects of the ruling all said that states should take note of the ruling, but none said the ruling would create regulatory chaos, nor was it was particularly burdensome.
Deborah Gersh, the Chicago-based co-chair of Ropes & Gray's health care practice, says the ruling has prompted an unfounded and "alarmist mindset with respect to the implications to boards and how no doctors, dentist or lawyers will almost ever serve on a board again."
"On this board, you had independent dentists in a majority making the decision. It's a little bit like the foxes guarding the henhouse from a competitive standpoint. That is the basis for the ruling," Gersh says.
"As a practical matter, the opinion is really focusing on individuals who are sitting on a board where there is no active state supervision. The state really isn't telling them what the parameters are, or their roles and responsibilities. So there is the risk with competitors monitoring other competitors, individuals monitoring their competitors, and what they are saying is we are not going to give you immunity if this is how the state chooses to have this board set up."
"There are certainly alternatives that the state can do. They can impose more guidelines and supervisory requirements so that there are limitations on where the state provides them with specific thing they are to regulate."
Jay L. Levine, a Washington, D.C.-based partner at Porter Wright Morris & Arthur LLP, says states may likely have to examine how they establish and supervise boards, but they're supposed to do that anyway.
"All it says is that a state board that is comprised of private actors who are competitors, even when they act under the cover of state law, need active state supervision," Levine says.
"The legislature, when they create the paradigm for enforcing their policy, need to include some mechanisms to actively supervise people acting under their legislative guidance. Obviously that requires a little bit more of an infrastructure than if that wasn't required, but at the same time, it's not as if states don't know how to do that and can't do that if they are so inclined."
Levine says the ruling likely will not prompt widespread litigation in other states.
"If it is not a board composed of private actors who are competitors, I don't know that you are going to have the same kind of arguments they did in North Carolina," he says. "There are probably boards across the country that are similar in composition, but I don't think that they are so ubiquitous that we need to fear that the floodgates are open and the courts are going to be inundated with antitrust lawsuits against state boards."
Michael L. Sibarium, a Washington, DC-based litigator and partner with Pillsbury, says the ruling should prompt introspection.
"If you're sitting on one of these boards the first question you should ask is 'how is our board structured under legislative authority and who is on it?' The next question is 'if you are structured in a way as to require active supervision to get to state action immunity do you have it?' Those are the questions you should be asking," Sibarium says.
The question left unanswered in the dental board ruling, Sibarium says, is whether or not individual members of these regulatory boards can be held liable for their decisions.
"They point out a number of options where states can grant immunity," he says, "but they leave that question for another day, whether people would have individual liability."