Most large private payers cover testing for a genetic marker indicating inherited breast cancer risk and will pay for prophylactic surgery. But Medicare has no national coverage decision for the test or for preventive mastectomy.
Last week 37-year-old Angelina Jolie, the actress, film director, and activist, kicked interest in genetic testing into overdrive when she announced that based on testing and her history of cancer, she had undergone a preventive double mastectomy.
A blood test showed that Jolie carries an inherited genetic mutation known as BRCA1, which increases her risk of developing breast and ovarian cancer. In a New York Times op-ed piece, Jolie wrote that the death of her mother at age 56 after a 10-year battle with cancer, combined with the BRCA results put her at an 87% risk of breast cancer and a 50% risk of ovarian cancer.
With the surgery she says her breast cancer risk factor is now less than 5%. She has opted to start with breast surgery, "as my risk of breast cancer is higher than my risk of ovarian cancer, and the surgery is more complex."
Among my first thoughts after reading Jolie's column was how fortunate the mega-star was to be able to self-fund the testing as well as the procedure. A spate of news articles grumbled that BRCA testing, which carries a $3,000 price tag, is not typically covered by insurers.
A 2011 study of the public and private coverage policies for BRCA testing published by the National Center for Biotechnology Information, however, offers some evidence to the contrary: Private payers are doing a pretty good job of providing coverage.
Even signing up for a Medicare Advantage plan from a private payer could be an option for Medicare-eligible women to gain BRCA coverage. Many commercial insurers apply their BRCA and prophylactic mastectomy criteria to their Medicare Advantage plans as well despite the lack of a definitive CMS policy.
The weak link is Medicare.
As for large private payers, most not only cover BRCA and prophylactic mastectomies, they are explicit about their coverage criteria. (A word of caution: Just because coverage is offered by payers does not mean that every employer will elect to include it.)
Aetna's approach is typical. A 23-page clinical policy bulletin details the high-risk indicators that must be met to deem that testing, and then the procedure itself are medically necessary.
To develop their coverage criteria, insurers have turned to guidelines from the American College of Obstetricians and Gynecologists, the American College of Medical Genetics, and the U.S. Preventive Services Task Force among other groups and organizations. Among the high-risk indicators:
Women diagnosed with breast cancer at 45 years of age or younger
Two members of family diagnosed with breast cancer under age 50 or ovarian cancer at any age
Close male blood relative with breast cancer
Women without a personal history of breast cancer with three or more close blood relatives on the same side of the family with breast cancer.
The Medicare Way
While the guidelines under private coverage may be solid, the same can not be said of Medicare or Medicaid.
Medicare does not have a local or national coverage decision for BRCA testing and instead relies on a patchwork of policies that may be implemented at the discretion of local contractors, according to a spokesperson for the Centers for Medicare & Medicaid Services. I was told, "…as for BRCA tests, they really are not local options for screening. Local contractors may cover them for diagnosis or to guide treatment only."
The prophylactic mastectomy is classified as a preventive surgery and is "generally not covered whether at the local or national level," the CMS spokesperson explained.
But isn't healthcare reform supposed to be largely about prevention? The Patient Protection and Affordable Care Act includes a list of preventive services that it expects private insurers to cover without a co-pay or deductible. According to FORCE, an advocacy group for cancer patients, HHS has clarified that genetic counseling for inherited breast and ovarian cancer risk and BRCA testing fall under this policy.
Granted, the PPACA applies to private insurers and not to Medicare, but the clarification seems to confirm the importance of BRCA testing. Still, CMS tells me that the agency is not contemplating a national coverage decision for BRCA tests for screening or mastectomies for prevention.
Medicaid coverage of BRCA screening and counseling is a hodgepodge of state policies. A 2012 report from the Kaiser Family Foundation concluded that BRCA is not typically covered [PDF]. It identifies 24 states, including Indiana and New York that cover both screening and counseling; 18 states cover one service or the other; 14 states charge copays for one or both of these services. Six states, including Florida, Alabama, and Louisiana, cover neither service.
Grace Wang, PhD, senior researcher with the American Institutes for Research and an author of the NCBI study, says Medicare tends to be conservative around policies on preventive service and perhaps with good reason. "National coverage decisions receive a lot of scrutiny and criticism. There isn't much flexibility to change once a decision is made."
Still, Medicare's lack of consistent and explicit guidelines for BRCA means a patient's geographic location may play more of a role in approval for testing than the need for that testing. "The requirements can be very narrow is some areas," notes Wang.
If she were dependent on Medicare to pay for her healthcare, Jolie would likely not have been in a position to write these words in the New York Times: "I feel empowered that I made a strong choice… Life comes with many challenges. The ones that should not scare us are the ones we can take on and take control of."
The role of navigators, expected to help millions of uninsured make their way through the health insurance market, came under fire Tuesday by members of Congress who raised questions about oversight and the role of the IRS in the implementation of healthcare reform.
A meeting of the House Committee on Government Oversight and Reform called ostensibly to discuss the role that navigators and assistors will play in the enrollment process for new health insurance marketplaces included statements and questions about role the IRS is expected to play in the implementation of healthcare reform.
The meeting veered further off topic into concerns over the fundraising efforts of Kathleen Sebelius, the secretary of the Department of Health and Human Services.
Rep. Jim Jordan (R-OH), chair of the Subcommittee on Economic Growth, Job Creation, and Regulatory Affairs, set the Republican tone in his opening comments. "In light of the revelations of the IRS targeting conservative groups… it is crucial for the American people to understand that Obamacare tasks the IRS with enforcing nearly 20 new tax laws. That's amazing to me. The very organization charged with enforcing Obamacare was systematically targeting conservative groups that came into existence because they oppose Obamacare."
Jordan stated that the IRS role in enforcing Obamacare is tied to the navigator and assistor program through the premium subsidies that will be available to qualified individuals. "If [they] incorrectly fill out a person's health insurance application, and that person receives subsidies to which they are not entitled, then the IRS will go after the individual."
He went on to note that as part of "Obamacare, the IRS is building the largest personal information data hub that the federal government has ever attempted."
On the Democratic side reaction was swift and pointed. "Until recently I thought that the difference between us and a Banana Republic was that in this country once a law is passed or the Supreme Court has spoken, the law was the law even when our side lost," said Rep. Eleanor Holmes Norton (D-DC).
"Republicans are still fighting the Affordable Care Act as if it is not the law of the land… Today's hearing is merely an effort to continue to obstruct the law and the right of citizens to health insurance."
Amid the posturing on both sides of the aisle, the sole witness, Gary Cohen, deputy administrator and director for the Center of Consumer Information and Insurance Oversight for the Centers for Medicare & Medicaid, soldiered on. His five-minute statement focused entirely on how navigators are expected to help millions of uninsured make their way through the complicated health insurance market.
While the marketplaces hold the promise of being places where consumers will be able to easily compare costs, benefits, and cost-sharing to select a plan that is right for them, Cohen stated that "ensuring that consumers and businesses participate in the marketplaces requires that they learn about the benefits that these marketplaces have to offer and that they get the help they need to take advantage of those benefits. This is a significant undertaking. We know quite a bit about the uninsured American we need to reach: many have never had health insurance, so the transaction of selecting, applying, and enrolling in healthcare coverage will be unfamiliar…20% have not completed high school. To effectively reach these populations…information must be provided by people connected to the community in an appropriate manner."
He noted that navigators and assistors will operate much like insurance brokers and agents and agents already do today—educating consumers about the marketplaces and insurance affordability programs, comparing plans, helping consumers receive eligibility determinations, and enrolling in coverage.
Felons as navigators?
Rep. James Lankford (R-OK), chair of the Subcommittee on Energy Policy, Healthcare, and Entitlements, asked about basic requirements to become a navigator. "Has HHS mandated criteria for individuals who would be navigators? Could felons, individuals convicted of identity theft, or high school dropouts become navigators and handle sensitive and personal information? Is there an expectation that a navigator will have any prior knowledge of the health insurance market? Is there an oversight plan?"
In his statement, Cohen noted that HHS has extensive experience providing outreach and enrollment assistance in Medicaid, the Children's Health Insurance Program (CHIP), and Medicare. "CMS designed navigator and in-person assistance grant programs that will allow qualified and well-trained individuals and organizations help consumers find and enroll in healthcare coverage, while adhering to standards and requirements designed to ensure that taxpayer money is used appropriately."
HHS has earmarked about $54 million to fund navigator in federal or state marketplaces. Cohen said the opportunity is open to the self-employed as well as community and consumer-focused non-profits. Trade, industry, and professional associations, commercial fishing industry organizations, ranching and farming organizations, chambers of commerce, unions, and licensed insurance agents and brokers may also apply.
The CMS Office of Acquisitions and Grants Management will oversee the review and evaluation of the grant applications. Grantees must also complete a 20-30 hour training program and pass an exam.
"I'm a dentist and I don't see how 20 hours of training will get this done. That's inadequate. What are the checks and balances on the education component?" asked Rep. Paul Gosar (R-AZ). "Is someone visiting with that navigator or is [the training] all online? What stops a convicted felon from becoming a navigator?"
"It's online just as it is in many states for insurance agents and brokers," responded Cohen. "If you look at the type of organizations that will apply for these grants I don't think felons will be a problem."
In his final comment Rep. Jim Jordan again turned his attention to the IRS. "The American people want to know what role the IRS will play in their healthcare and the implementation of the Affordable Care Act. As an American, does the IRS role in this scandal trouble you?
"The IRS has a significant role in enforcing tax provisions of the Affordable Care Act, but there's more to the ACA than just tax questions" noted Cohen. He added that he didn't see a connection between the navigator programs and the IRS monitoring conservative groups.
Concerns about Sebelius's fundraising Rep. Lankford (R-OK) then turned to media reports that Secretary Sebelius is soliciting funding for the assistor program from health plans, hospitals and pharmaceutical companies to donate to nonprofits responsible for outreach efforts. "These actions unduly pressure private companies to financially support implementation and promotion efforts. Fearing HHS retribution if they don't contribute. The secretary must stop using unethical methods to fund the law's implementation."
"I have no knowledge of her calls," responded Cohen. He added that public-private partnerships are often used to help fund projects.
The Patient Protection and Affordable Care Act is having little effect on workforce strategies, employer survey data shows. More than two-thirds of employers say they will continue to provide healthcare coverage when health insurance exchanges begin operation in 2014.
Despite ominous predictions that employers would drop healthcare coverage en masse in response to the strictures of the healthcare reform law that has not come to pass.
Instead, employers are largely are planning to keep offering health plans to their workers and the Patient Protection and Affordable Care Act is having little effect on workforce strategies, employer survey data shows.
Still, look for employees to continue to pay a larger portion of their healthcare premiums as well as the medical care they receive.
More than two-thirds of employers (69%) say they will continue to provide healthcare coverage when health insurance exchanges begin operation in 2014. That's up from 46% in 2012 according to the 2013 Employer-Sponsored Health Care: ACA's Impact (PDF), a survey by theInternationalFoundation of Employee Benefit Plans.
Meanwhile, only 2% of employers are considering terminating their healthcare coverage as a result of the healthcare reform law, the survey reports.
It also provides some relief from consistent concerns that the PPACA will contribute to higher unemployment. Few organizations report that they are changing their workforce hiring or reduction strategies as a result of healthcare reform. Only 16% have adjusted or plan to adjust hours so fewer employees qualify as full-time.
The IFEBP survey results demonstrate that employers have developed some level of comfort with the healthcare reform law. In the 2012 survey, 31% of respondents were still taking a "wait and see" approach to the PPACA. By 2013 only 10% were still sitting on the fence.
In a telephone interview, Julie Stich, research director for the Milwaukee-based International Foundation of Employee Benefit Plans, credited the Supreme Court decision affirming the healthcare law and the end of the election season with putting employers in a "move on" frame of mind. "There's more certainty now among employers regarding how employee healthcare coverage will be affected," she adds.
Employers are now taking a more proactive approach to incorporate PPACA rules and regulations into their business models. The actions most frequently mentioned by survey respondents:
Developing tactics to deal with the implications of healthcare reform (52%)
implementing changes to make their health plans compliant (39%)
Developing multiyear approaches to reform (38%)
Modeling the financial impact of the ACA on their organization (37%)
Cost containment is critical as "employers across the country… deal with the impact of implementing the PPACA while still being able to provide competitive benefits for their employees," says Stich.
More employers are planning to make changes in 2014 to their current benefit plans that will affect employees and plan participants as a result of current and upcoming PPACA regulations:
Almost one in five employers (18%) has already increased the participant share of plan premiums and 25% expect to take that step in 2014.
Some 14% have increased in-network deductibles and 18% will take that step next year.
Only 10% have already taken the step of increasing the employee contribution to dependent coverage costs but 24% expect to jump on that bandwagon in 2014.
Some 14% have already increased out-of-pocket costs and 18% will take that step next year.
One surprise, says Stich, is that employers are already taking steps to avoid the nondeductible excise tax on their high-cost health plans, which are defined as healthcare premiums that exceed $10,200 for single coverage, or $27,500 for family coverage. The tax goes into effect in 2018, but 17% have already begun redesigning their primary health plan to avoid the tax and 40% are considering action.
Among other findings:
Some 25% are increasing their emphasis on high-deductible health plans with health savings accounts (HSAs,) while 14% are assessing the feasibility of adding a plan.
Almost one-third of respondents (31%) named extending coverage of adult children to age 26 as the ACA provision producing the most significant cost increase.
One quarter of respondents (25%) plan to expand the use of financial incentives to encourage healthier lifestyles in the next year.
The online survey was conducted in March 2013. The 966 respondents include benefit and human resources professionals as well as financial managers.
Marilyn Tavenner, a former nurse, hospital executive, and state health official, is the first Centers for Medicare & Medicaid Services head to gain congressional approval since 2004. The full Senate confirmed her nomination with a 91-7 vote.
Marilyn Tavenner is no longer the acting administrator of the Centers for Medicare & Medicaid Services. On Wednesday the full Senate confirmed Tavenner as the administrator in an overwhelming 91-7 vote. Seven Republicans, including Senate Minority Leader Mitch McConnell (R-KY), voted against the nomination although no one spoke in opposition.
Tavenner is the first CMS head to gain congressional approval since 2004 when Mark McClellan, nominated by then-president George W. Bush, was confirmed.
Sen. Tim Kaine (D-VA) introduced the Tavenner nomination to the full Senate. Noting that she served as his secretary of health and human services when he was the governor of Virginia, Kaine asked his fellow senators to support the nomination.
"If you care about patients, then Marilyn is your person. Through all of her work, whether as a nurse or hospital administrator or a regional healthcare executive or cabinet secretary or CMS administrator has never forgotten that it is fundamentally about patients." Kaine added, "she's an expert at finding healthcare cost savings."
Before assuming the role of HHS secretary in Virginia, Tavenner worked for more than two decades as a nurse and as an executive at the Hospital Corporation of America (HCA).
Orrin Hatch (R-UT) a ranking member of the Senate Finance Committee, also praised Tavenner's "willingness to work with both parties." Noting that she has been the acting administrator since Dec. 2011, Hatch observed that "she has the ability to be a real leader; she has already exemplified that." Still, he cautioned that the CMS administrator is not a job for the faint of heart. "I will be keeping a close eye."
For a time there was concern that Tavenner's nomination might meet the same fate as that of her predecessor, acting administratorDon Berwick, MD. His nomination to head CMS was derailed by members of Congress who were stinging from the passage of the Patient Protection and Affordable Care Act. PresidentObama's decision to name Berwick to the CMS post during a Congressional recess further exacerbated the alienation.
Tavennerjoined CMS in 2010 as principal deputy administrator. In December 2011 she was named acting administrator following Berwick's resignation. Months later Sen. Max Baucus (D-MT) declined to schedule a nomination hearing with the Senate Finance Committee over concern that Tavenner couldn't attract the required 60 votes in the full Senate.
But what a difference a year makes. With President Obama re-elected and a new Congress in place, Tavenner's nomination was heard by the Senate Finance Committee in April. She received unanimous voice approval. It helped that she had the support of fellow Virginian, Rep. Eric Cantor (R-VA) who described Tavenner as "eminently qualified. If there is anyone that I trust to try to navigate [CMS] challenges, it is Marilyn Tavenner." Although he couldn't vote in the hearing, Cantor's appearance was widely considered as a signal to Senate Republicans that Tavenner was to be confirmed.
Long-time friend Tom Scully, who headed CMS from 2001 to 2004, isn't surprised by the broad Tavenner support on both sides of the aisle. "She's done a good job. She responded to requests and concerns. She personally defanged the opposition. They may not like Obama or his healthcare policy, but they like her," Scully told HealthLeaders Media in a telephone interview Wednesday.
The only blip in the process came in late April when Sen. Tom Harkin (D-IA) placed a hold on Tavenner's nomination in response to a White House plan to strip $332 million in funding from the prevention and public health fund and redirect the money to other aspects of the PPACA.
Harkin withdrew the hold in early May. In a speech before the Senate, he stated that the "White House has made it clear that it will not reverse its course with regard to its raid on the prevention fund…I believe Ms. Tavenner is strongly qualified to be the next CMA administrator…"
In his final comments before the Senate vote, Sen. Max Baucus (D-MT) noted that CMS has operated without a confirmed administrator for several years. "We need a confirmed administrator at CMS to properly implement the important programs we created in the Affordable Care Act…In just a few months, the healthcare marketplaces will be open for enrollment, and tax credits and subsidies will be available to help families and small businesses pay for healthcare. This is a critical time to have someone with Ms. Tavenner's experience confirmed and in charge at CMS. As administrator, she will have to make sure these programs are ready to go on day one. She will need to ensure the healthcare law's programs work for the people they are intended to serve. I believe she can, and I believe she will."
The sustainable growth rate formula's days may be numbered, but the SGR won't be repealed until an alternative system for making Medicare payments to physicians is found.
Media reports that the IRS targeted conservative political groups prompted leaders of the Senate Finance Committee Tuesday to call for an investigation, but did not prevent the committee from holding its scheduled hearing on thematter of Medicare payments to physicians.
While the sustainable growth rate formula has long been discounted as a flawed system for calculating payments to doctors and there have been regular calls for its repeal, Congress and other stakeholders have been unable to agree on what should replace the formula.
On May 10, Sen. Max Baucus (D-MT), the committee chairman and ranking member Sen. Orrin Hatch (R-UT) appealed to healthcare providers to proffer solutions for improving Medicare's physician reimbursement system.
In his opening statement, Baucus emphasized a window of opportunity to act created by a significantly lower estimate of what it would cost to real the SGR. In a recent report the Congressional Budget Office report lowered from $245 million to $138 million the estimated cost of repeal over 10 years.
Agreement from across the aisle was swift. "The CBO score has a tendency to fluctuate," said Sen. Orrin Hatch (R-UT), ranking member. "We must act now."
"We should not simply repeal the SGR. We must also change the underlying fee-for-service system," Baucus added. He underscored the need for "concrete policies that can be implemented now to replace the SGR" and called on three experts "to help us identify short-term, ready-to-go solutions."
The three were Mark E. Miller, Ph.D., executive director of the Medicare Payment Advisory Commission, A. Bruce Steinwald, a consultant who formerly worked for the General Accounting Office, and Kavita K. Patel, MD, fellow and managing director of the Engleberg Center for Healthcare Reform at the Brookings Institute and a practicing physician.
The trio didn't precisely meet the chairman's directive, but each described potential SGR replacements−or at least concepts−that address some of the issues that have emerged during a series of Congressional hearings on the topic.
MedPAC to overseelegislated fee-schedule updates? Increases in the Medicare population, the number of physicians reaching retirement age, and physician frustration with the annual doc fix could combine to strain beneficiary access in some markets. MedPAC's Miller suggested that it could be necessary to replace SGR with a 10-year schedule of low, legislated fee-schedule updates with MedPAC conducting an annual review of the payment rates and recommending changes.
The updates wouldn't be based on an expenditure- or volume-control formula. Instead, Miller explained, the updates "would allow total Medicare expenditures for fee-schedule services to increase annually—roughly doubling over the next 10 years."
About two-thirds of the increase would be attributable to increased beneficiary enrollment and one-third would be attributable an increase in per beneficiary service use, he said. The proposed updates would reduce fees for most services, he added, but the reductions would be less than under the SGR. Primary care should be exempt from the reductions because "the most recent data show that access risks are concentrated in primary care."
Moving beyond bundling "For many years the medical profession has been staunchly in favor of SGR repeal without being willing, in my view, to offer a quid pro quo. This appears to be changing as many medical organizations have shown leadership in encouraging physicians to adopt value-based criteria,"A. Bruce Steinwald told the committee. A former GAO employee, he is familiar with controlling spending on physician services under Medicare Part B.
With the SGR out of the way, Steinwald would expect Medicare to have "greater opportunity to use its extensive data to make distinctions between high-value and low-value care." Bundling of services and profiling physician utilization patterns could be put in place today, but other steps may require new legislation, such as requiring prior authorization for expensive diagnostic procedures or tiering beneficiary copayments according to service value. He noted that both "are used extensively in the private sector."
Baucus lamented that although physicians are eager to move to a new system with new payment models such as accountable care organizations, payment bundles, and medical homes, the models being developed by the Innovation Center at the Centers for Medicare & Medicaid Services "are not ready to replace the fee-for-service system."
Better collaboration between doctors, specialists
With the growing complexity ofcaring for Medicare beneficiaries, Kavita K. Patel, MD, of the Brookings Institute, stated that new payment models should encourage collaboration between specialists and primary care physicians.
Patel, a practicing primary care internist at Johns Hopkins Medicine, suggested a care coordination pathway be developed for the care of a patient with chronic disease. The pathway would consolidate potential bonus payments from several quality initiatives?such as PQRS, value-based modifers, meaningful use, and electronic prescribing?into one lump sum payment.
She noted that those payments are generally administered as either a flat percentage or are adjusted to all FFS payments. Shifting some existing FFS payments to a single care coordination payment would "give providers more support in moving toward condition-based, episodic payments, or global payments that allow for management of population health payments that would otherwise be impossible in the current payment setting."
Follow up Senate hearings on the SGR have not been scheduled. Sen. Baucus and Sen. Hatch are expected to develop legislation, but that probably not happen until summer. Last week the two co-signed a letter to physicians and other groups asking for specific input on replacing the SGR.
Leaders of the Senate Finance Committee are asking doctors to answer questions about the physician fee schedule and changes that would be necessary to accommodate alternative payment models.
In advance of a "doc fix" repeal hearing scheduled for Tuesday, the Senate Finance Committee has reached out to more than 100 healthcare providers for specific recommendations on how to improve Medicare's physician payment system.
In a co-signed letter Sen. Max Baucus (D-MT), committee chair, and Sen. Orrin Hatch (R-UT), ranking member, call for "a permanent solution that will address the SGR and physician payment reform."
Physicians face a 25% payment reduction in 2014 under the current sustainable growth rate formula. Congress has tried and failed to repeal it for years.
The senators are looking to healthcare providers for help, emphasizing that "comments containing specific suggestions will be the most valuable to the committee." Physicians and other providers are asked to respond to three questions:
What specific reforms should be made to the physician fee schedule to ensure that physician services are valued appropriately?
What specific policies should be implemented that could co-exist with the current FFS physician payment system and would identify and reduce unnecessary utilization to improve health and reduce Medicare spending growth?
Within the context of the current FFS system, how specifically can Medicare most effectively incentivize physician practices to undertake the structural, behavioral and other changes needed to participate in alternative payment models?
Stakeholders have until May 31 to provide responses. What happens after that is anyone's guess. No timetable for future action has been released.
Although there is widespread agreement that the SGR is flawed and needs to be replaced, In a longstanding delay tactic, Congress has long opted to intervene on an annual basis to prevent physician payment cuts rather than develop a permanent solution. A bipartisan-sponsored repeal bill introduced in February has the support of the AMA and the American Academy of Family Physicians among other key physicians groups.
A Congressional Budget Office analysis released in February 2013 slashed $107 billion from the cost of eliminating the SGR and is credited with resuscitating efforts to repeal the unpopular formula. Whether the seemingly significant financial incentive is enough to overturn the SGR remains to be seen.
Last week the House Ways and Means subcommittee on Health spent several hours exchanging ideas about reforming the SGR with a group of influential healthcare stakeholders. At this point it's difficult to imagine what new information remains to be discovered.
The House Ways and Means Committee sent a similar letter in April 2012 to the American Medical Association and the Medical Group Management Association. In their responses, the AMA and MGMA identified possible alternative payment models, including performance-based and bundled payments.
Baucus and Hatch hosted a number of roundtables about Medicare payments in 2012 that featured physicians, former administrators of the Centers for Medicare & Medicaid Services, and private payers. While those meetings covered a wide range of topics, including models of care, specialty reimbursements, and quality and efficiency, no magic bullets were identified.
For the first time, the federal government has made public chargemaster data for the 100 most common Medicare inpatient diagnostic related groups or DRGs. Hospital prices vary widely even within the same within the same city or region.
In an unprecedented move Wednesday, the Centers for Medicare & Medicaid Services made public extensive hospital cost data, jolting healthcare providers, payers, and consumers alike.
How much hospitals charge for the same procedures (source: The New York Times)
The massive file contains chargemaster data or what some call the "sticker price" for the 100 most common Medicare inpatient diagnostic related groups or DRGs. The data does not include physician costs. But it does provide an inside look at how average covered Medicare charges can significantly vary from hospital to hospital within the same city or geographic area.
The data is for 3,400 hospitals and represent 92% of all hospital inpatient charges in fiscal year 2011. Here's a sampling:
In Birmingham, AL, the charges for of a hospital stay to treat chronic obstructive pulmonary disease with major complications range from $23,245 at St. Vincent's Birmingham to $87,065 at Brookwood Medical Center.
In Jacksonville, FL, the charges for treating simple pneumonia and pleurisy range from $13,923 at St. Vincent's Medical Center to $41,411 at Memorial Hospital.
In Seattle, WA, average covered Medicare charges for joint replacement with major complications range from $44,328 at the University of Washington Medical Center to $92,165 at Swedish Medical Center.
The public release of the chargemaster rates, or what Health and Human Services Department Secretary Kathleen Sebelius terms "a key piece of the [healthcare] cost puzzle, is the latest federal effort to "bring more transparency" to the healthcare market as well as "empower consumers, create competition, and help hold down costs. When consumers can easily compare the price of goods and services, producers have strong incentives to keep those prices low. That's how markets work," states Sebelius.
HHS officials note that Medicare—and most private health insurers don't actually pay Swedish Medical Center more than $92,000 for joint replacement. Medicare applies a system of standardized payments based on the DRG. At Swedish the average total Medicare payment for the joint procedure was $22,824.
Sebelius stressed the value of the data to the uninsured and underinsured, who she says are often expected to pay the full chargemaster rate. For elective procedures those consumers can "easily compare average prices" at local hospitals and factor those costs into their decision on where to have a procedure performed.
Exactly why hospital costs have such a wide variance remains a mystery according to Jonathan Blum, the deputy administrator and director for the Center for Medicare at CMS. "Some speculate that the difference is driven by patient health status or the teaching status of the hospital facility or the higher capital costs of some hospitals."
But Blum says there is no relationship. "We cannot see any business reason why for so much variation." He hopes the data release will help community leaders and consumer activists engage stakeholders in a more public discussion of the variations and perhaps help identify the contributing factors.
In a statement released late Wednesday by the American Hospital Association, Rich Umbdenstock, AHA president and CEO said "there are many parts of the healthcare delivery and financing systems that urgently need updating, and the matter of 'charges' is among those at the top of the list."
The Medicare program "no longer negotiates hospital payment rates—it unilaterally sets them through annual regulations, resulting in payments that now average about 95 cents on the dollar of Medicare-allowable costs," he added.
Umbdenstock says large insurance companies "negotiate rates…based on an array of factors, including each hospital's proposed rates, scope of services…accessibility and [community] reputation within the community. It would create serious antitrust risks for hospitals to share the proposed or negotiated rates with each other. Variation in charges, therefore, is a byproduct of the marketplace so all parties must be involved in a solution, including the government."
In addition to the unprecedented data release, Sebelius announced that HHS has made $87 million available to states to enhance rate review programs and to create a more transparent health insurance markets for their residents.
States may use the monies to fund pricing data centers to collect, analyze, and publish health pricing and medical reimbursement data in their area. Sebelius pointed to New Hampshire, where the state has a website of healthcare costs for a variety of procedures. "Residents can find the cheapest CT scan or MRI in their area in less than a minute."
Bipartisan consensus for repeal of Medicare's sustainable growth rate appears solid, but there is no clear way forward. The latest meeting between lawmakers and stakeholders gives voice to the wide-ranging concerns of physicians.
The House Ways and Means subcommittee on Health spent two hours Tuesday exchanging ideas about reforming Medicare's sustainable growth rate with a group of influential healthcare stakeholders.
That the SGR needs the boot was a foregone conclusion among both the assembled panelists and the House members. In his opening comments, Rep. Kevin Brady (R-TX), committee chair, noted that participants in two previous SGR hearings held recently supported the repeal of SGR. "I couldn't agree more," he said. "The SGR is the major contributor to an unhealthy system and it needs to change this year."
While there was general agreement that a value-based system is preferable to the current volume-based system of physician reimbursement, the wide-ranging discussion among the committee members and the panelists, who included physicians as well as a health plan medical director and a representative of the National Quality Forum (NQF), demonstrated that the devil is indeed in the details.
The discussion was framed around two proposals: HR 574 (Medicare Physician Payment Innovation Act of 2013), a bipartisan effort from Rep. Allyson Schwartz (D-PA) and Rep. Joe Heck (R-NV), and a draft proposal from House Ways and Means chair, Rep. Dave Camp (R-MI) and Fred Upton (R-MI), chair of the House Energy and Commerce Committee.
The panelists and House committee members reviewed these broad concerns:
Stability David Hoyt, MD, FACS, executive director of the American College of Surgeons, recommended that as the system transitions to value, physician payment stability be maintained for five years and tied to inflation.
The effort would allow stakeholders to ensure that "payment measures and quality measures, which will serve as the backbone of the new system, are properly aligned. That will take some time."
Transition
Charles Cutler, MD, chair of the board of regents of the American College of Physicians, also supports a phased-in approach that would allow physicians reasonable time to "get on a transitional value-based purchasing pathway that works for their specialty, practice setting, and patient population."
Small practices
"Can small physician practices do well in the new value system?" Rep. Sam Johnson (R-TX) asked the panel. Patrick Courneya, MD, the medical director for Minneapolis-based Health Partners, remarked that because he is from a small community in Minnesota, he is personally interested in making sure that any SGR replacement works for both small and individual practices.
"I think those one- and two-physician practices are the ones most burdened by the current FFS payment model. The only way their business can get payment for the work they do is [to] be on the treadmill running as fast as they can."
Health Partners participates in an alternative payment model and in its market. Courneya noted that solo practitioners are among the top performers in clinical quality.
Physician burden
"I don't want to heap another round of quality indicators, paperwork, and bureaucracy on physicians," stated Rep. Brady. He asked Courneya if Health Partners focuses on key indicators or a laundry list.
"We try to [focus on key indicators]," Courneya replied. He credits providers with holding Health Partners and other payers in the market accountable to agreed upon measures and not creating "the confusion that can occur when Health Partners and the other health plans in our market each have little variations" on the same quality measures.
"We have agreed as a market on things like comprehensive diabetes measures and we're actually achieving the goals and clinical targets," Courneya added.
Quality measures
Panelist voiced their support for basing Medicare payments on quality measures.
Of course, "getting those measurements right is very important," noted Rep. Brady. The NQF made a pitch to centralize the process with one central hub of measure and review—similar to what's already in place at the NQF.
Frank G. Opelka, MD, FACS, vice chair of NQF's consensus standards approval committee, notes that NQF stakeholders, including businesses, consumers, health professionals, and health plans "are concerned that establishing a separate process will simply result in more cost and redundancy."
Physician shortage
Rep. Jim Gerlach (R-PA) noted that a physician shortage is looming. "We need to figure out how to bring the joy of medicine back into medicine… that sense of buoyancy and… instead of just check[ing] the box and feeling defensive about the whole environment." He quoted recent figures from the Association of American Medical Colleges which projects a physician shortage in 2020 of "at least 91,000 physicians and by 2025 a shortage of at least 135,000 physicians.
Despite a robust enrollment forecast, 40% of medical school deans recently surveyed by the Association of American Medical Schools have expressed "major concern" that the number of available residency training positions will fall short.
Timing
How much time will be necessary to make the transition from volume to value? Panelists seem to agree on three to five years. Can the pace be accelerated? Dr. Hoyt said investment in information systems, including data registries as well as EMR, will be necessary to move more quickly. Incentivizing physician behavior and physician collaboration will be critical.
Rep. Brady expects to schedule additional hearings to explore alternatives to the SGR. In a prepared statement he said, "while the timing is ripe for action, we need to be sure we get the policy right. My hope is that we can put the days of kicking the SGR can down the road behind us."
A civil suit involving allegedly unnecessary stent procedures at St. Joseph Medical Center in Towson, MD has taken a significant step toward final resolution.
Last week 247 former patients agreed to an undisclosed settlement with the medical center, Mark Midei, MD, the cardiologist accused of performing the procedures, and Colorado-based Catholic Health Initiatives, the medical center's former owner.
The announcement in Baltimore County Circuit Court ended three weeks of testimony in a case that was expected to last three months. Efforts to reach Jay D. Miller, the Towson attorney representing the 247 former patients involved in the settlement, were unsuccessful.
The Baltimore Sun reports that about 45 civil suits remain. Plaintiffs in the civil suits contended that Midei overstated the seriousness of their conditions to "justify use of the stents, a procedure that increased his pay," according to the Sun.
The case involves stents put in place by Midei in 2008 and 2009. At that time Midei was employed by the 263-bed medical center as an interventional cardiologist. The allegations surfaced in 2009 as part of a whistleblower suit, which alleged that St. Joseph violated the Anti-Kickback Act, Stark Law and False Claims Act by paying illegal remuneration to Midei's former cardiology practice to induce referrals.
In 2010 St. Joseph notified about 600 patients treated by Midei that their stent surgeries may have been unnecessary. That same year the medical center agreed to pay $22 million to settle the kickback accusations, as well as for allowing Midei to place medically unnecessary stents in patients covered by federal health benefit programs.
Midei resigned from St. Joseph in November 2009. The Maryland Board of Physicians revoked his state medical license in 2011. His 2012 effort to overturn that revocation was denied.
Midei denies any wrongdoing and has long contended that he is a scapegoat in the kickback scandal. He filed a defamation lawsuit against St. Joseph and CHI in 2011 seeking $60 million in compensation. The Baltimore County Circuit Court dismissed the case in 2012.
HealthLeaders Media was unable Monday to reach Stephen L. Snyder, who is Midei's attorney, to confirm that the defamation suit opinion is under appeal.
The University of Maryland Medical System, a 12-hospital system, acquired St. Joseph Medical Center in December 2012. UMMS formed the University of Maryland St. Joseph Medical Center LLC to take over all hospital operations. In a press release announcing the acquisition, UMMS officials noted that under the asset purchase agreement, UMMS would not assume any of St. Joseph liabilities "arising from events occurring prior to December 1, 2012. These liabilities will remain with SJMC and CHI."
After UMMS acquired St. Joseph, the system applied for a new Medicare provider agreement for the facility, but the hospital failed an inspection by the Centers for Medicare & Medicaid Services.
In April, UMMS and CMS reached an agreement to restore some of the estimated $25 million UMMS lost on unbilled Medicare services between mid-December 2012 and February 2013 while the new federal agreement was in limbo, according to a report in the Baltimore Business Journal.
In February, the Department of Justice announced that St. Joseph's Medical Center agreed to pay $4.9 million "in connection with its submission of false claims to Medicare, Medicaid and other federal healthcare programs."
This article first appeared in the January/February 2013 issue of HealthLeaders magazine.
The overall state of the healthcare industry continues to confound and captivate healthcare leaders. Despite several years of preparing for healthcare reform standards such as care coordination, meaningful use, and value-based purchasing, leaders are still in a quandary: unhappy about the healthcare industry as a whole but convinced that their own organizations are moving in the right direction.
For the third consecutive year healthcare leaders view the industry as being on the wrong track, according to the 2013 HealthLeaders Media Industry Survey. If there is solace to be gained from these findings, it is that the tide appears to be turning—albeit slowly.
The percent of respondents who think the industry is on the right track increased from 25% to 32% from 2012 to 2013. Meanwhile, the percentage of naysayers dropped from 46% to 39% during the comparable time period.
At the same time, respondents continue to view their own organizations as being on the right track by a significant share (71%). For the most part they have confidence in their leadership and staff, and in their organization's prospects for growth. From process improvement to population management and care coordination, survey respondents are aware of the opportunities (and threats) posed by the shifting healthcare landscape, and they are taking the steps necessary to capitalize on the changes.
But Intelligence Report advisors and others note that the healthcare industry must approach all of these changes within an environment of reduced reimbursements and shifting payment models. Healthcare leaders must balance the pace of change to maintain an adequate revenue stream.
"Our concern is, can we reduce our costs fast enough, as fast as reimbursements are coming down and as fast as volumes are coming down, and still have a positive bottom line?" asks Dennis Vonderfecht, president and CEO of Mountain States Health Alliance, a Johnson City, Tenn.–based health system that serves 29 counties in Tennessee, Virginia, Kentucky, and North Carolina.
Most healthcare leaders seem to be optimistic that such a transition can be successfully navigated; indeed, 64% consider value-based purchasing their organization's greatest opportunity, just behind health information exchanges (78%).
Strategic planning
Vonderfecht says his organization began three years ago to prepare for population health management and the potential that MSHA could lose 30% of its inpatient volume with the change. The organization's 10-year strategic plan shifts the patient treatment focus away from expensive episodic care in hospitals and emergency departments to more reliance on disease management protocols and frequent patient contact with primary care physicians.
"It is common sense that you are trying to keep people healthy instead of trying to treat sick people," says Vonderfecht. He adds that MSHA is more focused on ambulatory outpatient and retail medicine "than we have ever been in the past."
Priorities
The old adage about the squeaky wheel may apply here. Patient experience and satisfaction was included among the top three priorities by 54% of respondents, putting it at the top of the list for the second consecutive year. With the introduction of value-based purchasing and its link to HCAHPS, the federal Centers for Medicare & Medicaid Services has certainly turned up the heat to transform patient satisfaction from a marketing opportunity to a meaningful measure with clear fiscal implications.
Healthcare leaders are responding, at least in the short term. Indeed, the presence of care models (population health, medical home, etc.) registering as high as the fourth priority (27%) indicates seriousness about changing the industry's status quo. Still, two key priorities—clinical quality (48%) and cost reduction and process improvement (45%)—continue to earn prominence, capturing the second and third slots, respectively.
Tied for fourth place, also with 27%, is physician-hospital alignment. While MSHA views population health as a key strategic path and is an early adopter, others may be taking a more measured approach to care models, explains Timothy D. Ranney, MD, MBA, vice president and chief medical officer at Missouri Baptist Medical Center, a 487-bed acute care hospital in St. Louis.
"Healthcare is still in a payment model that doesn't support population health," he notes, cautioning that "as you learn the competency, it is important that you don't transition so early that your revenue stream goes away." Ranney expects care models to quickly move up the priority list over the next few years. As providers make the transition, he says they need to think about how different payment models such as bundled payments and commercial reimbursements will affect their care model, as well as how accountable care organizations might play into the mix. "How successful will some of those CMS programs become, and what will they look like? How will that impact payments?" Even within an ACO model, he says some will still be paid on a "semi-fee-for-service basis."
As Vonderfecht notes, "it gets down to how far out is your vision." Organizations that are thinking in the shorter term will have different priorities than organizations that are thinking about 2014 and beyond.
Care coordination, continuum of care
Viewed by many as the future of healthcare and the process that will enable the realization of the triple aim—improving the patient experience of care (including quality and satisfaction), improving the health of populations, and reducing the per capita cost of healthcare—care coordination/continuum of care is ranked as the single greatest challenge for clinical quality improvement by 24% of survey respondents.
Shortages
While reduced reimbursements was the near-unanimous choice as the greatest threat facing organizations (92% chose it), second on the list was physician shortage, cited by 76% of respondents.
Vonderfecht says that the shortage as a threat is only true if "our model for delivering healthcare is the same going into the future as it has been in the past." Moving to patient-centered medical homes and supporting physicians with care extenders will allow physicians to practice at the top of their license and "we may find that we actually have an adequate supply of physicians in most cases," he says.
But sometimes, finding the case managers (also known as care coordinators and nurse navigators) is part of the challenge. Demand for that skill set exceeds supply in some areas thanks to healthcare reform trends in which case managers (usually RNs supplemented by social workers) are integral to population health management efforts and reducing 30-day readmissions.
Ranney explains that as recently as two years ago staffing companies could supply case managers for temporary and permanent work. But today the temp agencies have no one available. According to him, if you have a case manager position to fill, you have to "grow your own" or find the candidates yourself.
Louise Edwards, director of planning and business development for Bon Secours Virginia Health System in Norfolk, concurs that there is big demand for nurse navigators but notes that even hiring from within is becoming more difficult. The seven-hospital system, which is part of the six-state Bon Secours Health System, uses nurse navigators for its cancer program and has been unable to fill an open position for a lung cancer nurse navigator.
Cost control
As reimbursements change, reducing costs will play a prominent role for healthcare organizations. Process improvement (80%), labor efficiencies (62%), and supply chain efficiencies (57%) were the top three areas that respondents expect to focus on in the upcoming year to reduce costs.
A number of advisors mentioned their adoption of programs like Toyota Lean, which implements processes to optimize resources, assets, and productivity while improving quality. Vonderfecht notes that according to some literature there is 40% waste in healthcare processes.
At MSHA, a consulting firm has embedded full-time workers into the system to teach the Lean process and make it part of the culture. MSHA expects to have 2,000 of its employees involved in "rapid improvement events" associated with various value streams by midyear.
The key is "involving frontline people in process improvement" and moving quickly, says Donna Poduska, vice president and chief nursing officer at Poudre Valley Hospital, a 270-licensed bed regional medical center in Fort Collins, Colo. She explains that hospital officials might agree to change staffing for a few days to see whether the change is worthwhile. "We do it really fast. It could be a bust, so we don't wait and watch for a few months. Our decisions are faster."
Fueling growth
As the delivery of acute care medical services moves beyond hospital walls, it is not surprising that survey respondents identify among their top five methods to fuel growth expanding outpatient services (first, with 57%), entering into joint ventures (fourth, with 41%), and acquiring physician practices (fifth, with 38%).
Louis Papoff, vice president and CFO of ambulatory operations in the Chicago market of Nashville-based Vanguard Health Systems, credits accountable care organizations with the interest in outpatient services. The ACO approach of improving the quality of outcomes while cutting costs is "a value proposition. The objective is a reduction in bottom-line costs for the patient pertaining to an unnecessary or avoidable hospital admission." He points to the consideration of service lines for behavioral health and nutritional counseling as "a confluence of multiple approaches that are beginning to gel into one prevailing trend."
As for joint venture and physician practice acquisition, Papoff says both actions are "tried and true" and reflect the need to get all the parties in a care continuum as closely aligned as possible.
"It's relatively straightforward to assess a practice and to assess how we could improve operations." He says the medical home, which tries to provide for most, if not all, patient medical needs at one location with one coordination team, is "the more interesting approach," but without the track record "it's harder to get your mind around it. There's a level of uncertainty."