Researchers find a weak association between physician practice prices and quality of care for Medicare patients.
High-price physician practices generate little added value compared to low-price physician practices, an analysis of Medicare and commercial-insurance claims data shows.
"We found that higher prices were associated with higher patient ratings of care
coordination and management and slightly higher vaccination rates.
Higher prices, however, were not associated with higher overall patient ratings of care or physicians, improved access, better performance on other process measures of quality, fewer hospitalizations, or lower Medicare spending," wrote the authors of a study published in Health Affairs.
The study shows a weak link between the commercial price for office visits at physician practices and the quality and utilization of care for Medicare fee-for-service patients.
The average price for an office visit at a high-price physician practice was $84. The average price for an office visit at a low-price physician practice was $62.
The primary sources of data include the FAIR Health commercial-claims database and Medicare's Consumer Assessment of Healthcare Providers and Systems (CAHPS) survey. There were 31,267 CAHPS survey respondents, with 17,130 attributed to 4,972 high-price physician practices and 14,137 attributed to 6,697 low-price practices.
High-price practices were defined as those with prices above the mean for all practices in a Primary Care Service Area, a ZIP-code based measure of Medicare-beneficiary population density developed at The Dartmouth Institute for Health Policy and Practice.
The researchers made two key findings about high-price physician practices:
They were much larger than low-price practices
They set prices at rates 36% higher than low-price practices
"Our findings suggest that the benefits to patients from large-scale provider consolidation may be small relative to the price increases that occur when consolidating providers gain market power," wrote the study co-authors, who are based at Harvard Medical School in Boston.
The researchers drew their conclusions from several key data points:
For high-price practices compared to low-price practices, Medicare patients did not report different care experiences in three of the four metrics in the study: overall ratings of care and physicians, timely access to care, and primary-physician interactions.
For the metric coordination and management, high-price practices reported better performance in four of the six measures examined.
High-price practices attained slightly higher immunization rates for flu and pneumonia, but there was no difference compared to low-price practices for mammography screening, diabetes services, acute care utilization, and total Medicare spending.
When weighing the impact of practice size, large practices were substantially bigger that those the researchers categorized as small, with large practices averaging 155 clinicians compared to 11 at small practices.
Conclusions
In addition to concluding that high-price physician practices do little to generate more value than their low-price regional competitors, the study's co-authors identified a weak point in the shift to value-based care: transparency.
"The generally weak association that we found between practices' prices and quality of care deviates from the positive relationship that exists in markets for most other goods and services."
"This underscores long-standing information problems in healthcare markets, arising in particular from the inability of patients and payers to reliably discern differences in provider quality."
As a wave of consolidation continues to inundate healthcare providers and payers, M&A transactions among healthcare vendors and suppliers also are moving at a brisk pace.
For many of the companies that offer goods and services to healthcare providers and payers, bigger is better.
Both the volume and the value of healthcare M&A transactions increased in the first quarter of this year compared to the last quarter of 2016, according to HealthCareMandA.com. Volume increased 7%, to 395 deals. Value increased 56%, rising from $37.8 billion in Q4 2016 to $58.7 billion in the first quarter of 2017.
Information technology was among the hottest healthcare sectors for M&A activity to open the year, with a 57% increase in transactions compared to the last quarter of 2016. Only physician medical groups posted a higher increase in M&A activity, with a 78% increase in transactions.
Vendor and supplier consolidation activity is already off to a hot start in the second quarter. On April 18, Cardinal Health announced the $6.1 billion cash acquisition of the patient care, deep vein thrombosis, and nutritional insufficiency divisions of Minneapolis-based Medtronic.
The primary drivers of consolidation among healthcare suppliers and vendors are tied to their provider customers, including the industry's shift to value-based care models, Russell Davis, managing director at The Advisory Board Company, said last week.
"Strategically, it is a fundamental shift. Some of this is being driven by economies of scale—that is the obvious stuff. But increasingly, what we have been seeing is that some of the acquisitions are being driven by a supplier needing to add broader capabilities to its portfolio, so it can more holistically serve customers in the value-based world."
The uncertainty associated with the shift to value-based care models and other major healthcare reforms has helped spur supplier and vendor M&A transactions, he says. "As a supplier, you never want to be without a tool in your toolbox that your customer needs… Generally speaking, the more capabilities you have, the better."
Nashville, TN-based Intermedix Corporation acquired a machine-learning company this spring mainly to expand the data-analytics firm's capabilities and service offerings for healthcare providers, according to Joel Portice, the company's CEO.
"When I look at our business and the WPC Healthcare acquisition, we have strong data-analytics capabilities, and a strong understanding of data and the action-ability of data to help our customers make good decisions. What we wanted to do was adjacently expand from our core capabilities, and machine-learning functionality within WPC was not a capability that we had developed internally."
Portice declined to disclose the terms of the WPC acquisition, but said the deal reflects Intermedix's financial strength and hefty scale. "Intermedix has about 2,500 employees. We do business in 29 countries. We have large scale and growth. Our year-over-year bookings trend above market averages."
From the perspective of healthcare providers, Davis says there are advantages and disadvantages associated with supplier and vendor consolidation.
"The suppliers who get this right should be able to offer a much better product at a competitive price. They should be able to offer a better value to their customers than they have in the past. In some cases, it will be lower prices. In other cases, prices may be similar or higher, but the value delivered will be greater."
There are two primary risks, he says.
"One is in the M&A transaction itself. Relationships ultimately exist between people. When a company is acquired, that transaction is typically followed by a reorganization and existing business relationships get disrupted."
"The other risk on the provider side is too much concentration can leave you beholden to an individual supplier. Some organizations fear that; some organizations embrace that."
The electronic medical record (EMR) business is a prime example of a highly concentrated vendor marketplace and the associated risks, Davis says.
"By definition, every provider had to make a bet on one and only one EMR vendor. So, you have seen tremendous concentration of market share among EMR vendors."
"Once you get to that place, you better trust the people you are working with. Plan B is always expensive."
Research examines the financial effect of readmissions penalties and value-based purchasing incentives on safety-net hospitals compared to other hospitals.
Safety-net hospitals have risen to a potentially existential challenge from a pair of Medicare's value-based payment reforms, a study published in the Journal of the American Medical Association indicates.
"Comparative Trends in Payment Adjustments Between Safety-Net and Other Hospitals Since the Introduction of the Hospital Readmission Reduction Program and Value-Based Purchasing," sheds light on how Medicare's Hospital Readmissions Reduction Program (HRRP)and its HospitalValue-Based Purchasing program (HVBP) have affected safety-net hospitals, says the study's lead author.
"The study confirms that safety-net hospitals have faced disproportionate penalties in both the HRRP and VBP, but also suggests that they have improved on the metrics used in these programs," says Nathan Favini, MD.
He says the research provides fodder for both supporters and opponents of HRRP and VBP, two major initiatives launched by the Centers for Medicare & Medicaid Services to prod and incentivize hospitals to deliver higher value for patients.
"This should ease concerns that safety-net hospitals can't effectively respond to penalties and incentives from CMS."
"For proponents of the programs," Favini says, "the improvements at safety-net hospitals, particularly in pneumonia and congestive heart failure readmissions, are a big success. Critics might note that the reductions in revenue at safety-net hospitals were big enough to impact margins and worry about the opportunity cost of focusing on these metrics in resource-limited settings."
HRRP imposes a Medicare payment penalty on hospitals that report relatively high 30-readmission rates for a bevy of medical conditions and procedures:
Acute myocardial infarction,
Chronic obstructive pulmonary disease,
Coronary artery bypass graft surgery,
Elective total hip and total knee arthroplasty,
Heart failure
Pneumonia
VBP tweaks the Medicare payment rate for hospitals based on a weighted set of quality metrics: clinical process of care, patient experience, clinical outcomes, and efficiency.
The JAMA study compares HRRP penalties and VBP payment adjustments based on safety-net hospital status from federal fiscal years 2013 to 2016. The research reflects CMS data collected from 3,016 hospitals, with 776 of the facilities designated as safety-net hospitals.
Under HRRP and VBP, a hospital's payment adjustments are reflected as a percentage of total payments from Medicare.
In FY 2013, Favini and his study co-authors found safety-net hospitals were assessed higher mean HRRP penalties than other hospitals, at -0.37% of total Medicare payments compared -0.28% at other hospitals. However, safety-net hospitals were able to close this gap to zero by FY 2016, the researchers show.
Safety-net hospitals also improved their VBP performance from FY 2013 to FY 2016, but they did not keep pace with improved VBP performance at other hospitals, the JAMA study found.
In FY 2013, safety-net hospitals were assessed a -0.05% mean penalty under VBP compared to a 0.02% VPB mean bonus paid to other hospitals. In FY 2016, safety-net hospitals earned a 0.05% mean bonus compared to a 0.19% mean bonus received at other hospitals.
In the JAMA study, Favini and his co-authors say the improved performance of safety-net hospitals in the HRRP program appears to be linked to better readmissions rates for heart failure and pneumonia. They ascribe the improved VBP numbers at safety-net hospitals to improved performance and adjustments to the way CMS weights the VBP measures.
CMS established a different weighted set of VBP measures for every year examined in the JAMA study:
2013: Clinical process of care 70%, patient experience 30%
2014: Process of care 45%, experience 30%, clinical outcome 25%
2015: Process of care 20%, experience 30%, outcome 30%, efficiency 20%
2016: Process of care 10%, experience 25%, outcome 40%, efficiency 25%
The yearly VBP measure adjustments make it difficult to determine exactly how safety-net hospitals improved their VBP performance, but Favini provides an explanation:
"We know that safety-net hospitals tend to perform worse on clinical process of care and patient experience measures, so the fact that these had less weight in 2015 and 2016 and that outcome and efficiency measures have taken on more importance could explain why safety-net hospitals are faring better in the program."
Next year's proposed rule for Medicare hospital-inpatient payments is expected to increase the federal government's spending on services and capital by $3.1 billion.
For the 2018 fiscal year, the Centers for Medicare & Medicaid Services is projecting a 2.9% increase in spending on hospital-inpatient services and capital.
The spending forecast is a highlight of the 2018 Inpatient Prospective Payment System proposed rule filed by CMS last week. The anticipated 2.9% spending increase has two elements:
A 1.7% increase linked to proposed payment rate and policy changes
A 1.2% increase linked to proposed changes to uncompensated care payments
The 2.9% hike would increase Medicare spending $3.1 billion, according to a CMS fact sheet For the 2017 fiscal year, which began with hospital discharges on Oct. 1, 2016, the IPPS final rule projected $746 million in increased Medicare spending on hospital inpatient services and capital.
The IPPS sets Medicare's payment framework for 3,330 acute care hospitals and 420 long-term care hospitals across the country.
For the 2018 fiscal year, the proposed 1.7% spending increase linked to payment rate and policy changes is based mainly on several adjustments to next year's projected increase in the IPPS hospital "market basket," which is coincidentally, also calculated to be 2.9%.
The market basket figure, which is calculated annually, reflects changes in the costs of inpatient goods and services provided at acute care hospitals.
Three of the four primary adjustments to the 2018 IPPS proposed rule's market basket figure have a negative impact on the payment rate:
-0.75% adjustment under the Patient Protection and Affordable Care Act
-0.6% adjustment to offset costs tied to the "two midnights" admissions policy
-0.4 adjustment for productivity
+0.46% adjustment under the 21st Century Cures Act
Under the 2018 IPPS proposed rule, CMS is set to spend $7 billion on uncompensated care for inpatient services, which would be a $1 billion increase over this year's projected spending.
Other highlights of the 2018 IPPS proposed rule:
For long-term care hospitals (LTCHs), the proposed rule projects a 3.75% decrease in Medicare payments in the 2018 fiscal year, with the $173 million payment reduction linked mainly to the introduction of a new dual payment rate system.
Changes to the "meaningful use" electronic health records policy such as shortening the 2018 reporting year to 90 days and creating exemptions for healthcare providers who offer "substantially all" of their services at ambulatory surgery centers.
Four changes to the Inpatient Psychiatric Facility Quality Reporting program, including the addition of a measure based on claims data for "medication continuation following inpatient psychiatric discharge."
Easing enforcement of the Critical Access Hospital (CAH) 96-hour certification requirement, which mandates physicians to certify that patients will be discharged or transferred to a larger hospital within 96 hours of admission to a CAH. CMS is proposing that the 96-hour certification requirement should become a low priority in medical-record reviews conducted on or after Oct. 1.
Extension of the Rural Community Hospital Demonstration (RCHD) program for an additional five-year period. The RCHD program is designed to develop a cost-based Medicare payment methodology for inpatient services provided at rural hospitals with less than 51 acute-care beds that do not have the CAH designation.
The deadline to file public comments on the 2018 IPPS proposed rule is June 13.
A Massachusetts nonprofit is building a data-supported financial case to demonstrate that nutrition-intervention services are beneficial to patients and payers.
For frail patients with multiple chronic medical conditions, eating is a crucial part of their treatment.
"In America, a third of patients enter hospitals malnourished. The stay for those patients is three times longer and three times as costly. If you could address patient malnutrition at home, you could have a significant impact on re-hospitalization rates, on ER visits, on healthcare costs, and on clinical outcomes," says David Waters, CEO of Boston-based Community Servings.
The organization, which was founded 28 years ago to provide medically tailored meals for AIDS patients, today prepares about 2,500 meals per day for patients with any of about three dozen illnesses.
"Much like a pharmaceutical prescription, it is a food prescription. We can take our 17 medical diets, and we can customize them in up to three different ways; so, you are getting exactly the kinds of foods your doctor wants you to eat."
About three years ago, the leadership of Community Servings realized demand for nutritional-intervention services in New England could not be met through the organization's philanthropically based business model, Waters says.
Gathering Data
"We are a $6.5 million organization. About $4 million of that comes from philanthropy, but we can't raise the money fast enough to meet the demand. We are based in Boston and feed about 1,800 people a year in 20 cities across Massachusetts. We are the only medically tailored meals program in the six New England states."
To develop a more robust business model that includes financial support from healthcare payers, Community Servings is gathering data to show the significant return on investment from boosting patient nutrition.
"As we build this data-driven outcome model and the financial argument, then you can replicate what we do all across the country," Waters says.
Community Servings is conducting three research studies with Seth Berkowitz, MD, MPH, a researcher at Massachusetts General Hospital.
"We actually don't know much yet about the benefits for a medically tailored meal program like Community Servings. We know that programs like Meals on Wheels, which generally serve an older and socially isolated but otherwise healthier population, do show benefits in terms of keeping people out of the hospital and out of nursing homes," Berkowitz says.
The research challenge is quantifying the impact of nutrition on frail and complex patients, who are often resource-strapped, he says.
"The very sick type of patients that Community Servings works with often have much more complicated dietary needs, and need to follow a stricter diet than the kinds of patients the Meals on Wheels results were seen in. We think the potential for benefit is there. We know that following a medically appropriate diet keeps you healthier."
Two Goals
Berkowitz says his research work on medically tailored meals has two goals:
To help people follow a healthier, more medially-appropriate diet.
To improve use of healthcare services.
The results from a diabetes-nutrition pilot study involving Community Servings patients should be ready for publication this summer. Manna, a medical-nutrition organization based in Philadelphia, has already collected impressive ROI data, Waters says.
Claims Data Shows Reduced readmissions
At last year's annual Food Is Medicine symposium held at Harvard Law School's Center for Health Law & Policy Innovation, Manna presented payer-claims data for 1,000 medically complex patients who received nutrition-intervention services similar to the Community Servings program.
"They saw a 20% decrease in medical costs for patients who received the nutrition intervention. They also saw a 32% drop in hospital admissions and an 8% drop in ER visits," Waters says.
As Community Servings gathers data with Berkowitz, it also is collecting healthcare-payer support. "We have been able to secure four insurance contracts that are helping us to pay for feeding people. They are some of the first contracts of their kind in the country."
As merger and acquisition activity consumes independent physician practices, medical doctors need to weigh their options, says Nicholas Grosso, MD, president of The Centers for Advanced Orthopaedics in Bethesda, MD.
In addition to leading the orthopedics practice, which has more than 170 physicians, Grosso is a practicing orthopedic surgeon.
He recently shared his perspectives with HealthLeaders on the wave of M&A activity inundating independent physician practices across the country. The transcript below has been lightly edited.
HL: For independent physician practices, what is the minimum scale and set of capabilities needed to maintain financial sustainability?
Grosso: It's hard to give a minimum, because the biggest challenge facing small practices today is the increasing burden of regulatory compliance.
There's no question that practices with less than 15 physicians will have difficulties with the costs associated with MACRA and MIPS compliance. For example, a Government Accountability Office report found the cost to be close to $40,000 per doctor.
Physicians will need to decide whether these expenses are sustainable or whether they need to join a health system or larger private-practice organization, as many practices are doing.
HL: For independent practices with at least a dozen physicians, what are the primary factors to consider when joining a large physician organization?
Grosso: As with any business venture, you have to look at increased revenue and decreased costs. How would joining a larger organization benefit you?
For example, private practices interested in joining The Centers for Advanced Orthopaedics look closely at the efficiencies and savings we can provide with commercial payer contracts, medical malpractice insurance, data mining technology investments, purchasing contracts, and compliance management.
It's also important for practices to consider whether joining an organization such as The Centers for Advanced Orthopaedics would offer a clearer pathway to retaining their patient base or finding a new patient base.
The concern is that as hospitals buy up primary care providers, they'll create narrower networks. At The Centers, we work hard to maintain that patient funnel for our physicians.
HL: For independent practices with at least a dozen physicians, what are the primary factors to consider in a merger, acquisition or partnership (MAP) transaction with hospitals and health systems?
Grosso: It's important to look at the long-term costs of an acquisition or merger. We're seeing physician groups across the country receive financially advantageous contracts when they are first purchased by a hospital or health system.
But typically, the hospital has to cut the pay in the second contract, and there is even more pressure on physicians to perform and meet goals.
Physicians also lose a lot of independence in decision making, even when it comes to something like the total joint replacement you're allowed to use.
If that's not the lifestyle you want, it can become burdensome. In contrast, doctors at larger physician groups maintain their credentials at multiple hospitals and continue to have full control over patient care and surgery, which is just as important as the financial considerations.
HL: Is there still a financially sustainable market niche for "mom-and-pop" physician practices or is assimilation inevitable?
Grosso: It's going to be harder and harder for solo practitioners to comply with the regulatory burdens of MACRA and MIPS. They could just take the penalty for failing to comply—which is up to 9% of annual revenue—but that's a huge hit for a practice.
The risk/benefit analysis has to be done. Another option would be to join a clinically integrated network as a partnership with other private practices, joining together to manage compliance, billing, and other back office work.
But this option is hard because there are not enough small practices left to establish market weight. You have to have enough groups to make it work.
HL: Is the trend of health systems and community hospitals employing ever-increasing numbers of physicians likely to continue unabated?
NG: That employment trend is actually slowing, at least in orthopaedics, and it's because of cost. A study by the National Institute for Health Care Reform found that hospitals can charge more than double private-practice fees for the same service.
Hospital care is not going to achieve the goal of decreasing healthcare costs. As time goes on, the employment trend will swing back to independent private practices because that's where we can innovate—improving outcomes and decreasing costs.
It's important to let new physicians know that the private-practice model is not only viable, but also could soon be preferred. Most medical students are planning on hospital or health system employment because that's what they know.
With no new healthcare law in place or in sight, President Trump's efforts to recast healthcare reform are in the hands of Tom Price and Seema Verma.
Legislation to repeal, replace, or repair Obamacare has stalled in Congress, but the Trump administration has launched regulatory efforts to transform the federal government's role in the healthcare industry.
Last week, the Department of Health and Human Services published an online summary of the how the Trump administration is crafting its regulatory approach to the Patient Protection and Affordable Care Act until the law can be changed.
"This is the first shot. It may be the only shot, but they are outlining several things that they are going to do with what they consider to be their regulatory power," says Merrill Matthews, PhD, resident scholar at the Irving, TX-based Institute for Policy Innovation.
Providing more flexibility to states in the implementation of reforms and running the Medicaid program are apparently top priorities for Secretary of Health and Human Services Tom Price and Administrator of the Centers for Medicare & Medicaid Services Seema Verma, he says.
"They are going to try to be as flexible as they can possibly be under the law—even to the point where they might get challenged in court."
HHS highlights five regulatory focal points:
Backing state-driven Medicaid reforms, including increased cost-sharing for patients
Supporting state innovation such as initiatives designed to strengthen the individual insurance market
Allowing patients to keep pre-PPACA health plans without facing penalties
Easing insurer preparation for the HIX market in 2018 such as extending health-plan filing deadlines
Changing health-plan requirements on the PPACA exchanges to lower premiums such as allowing insurance carriers to offer skimpier coverage and narrower provider networks
The five points suggest that the Trump administration will have a new regulatory approach to fostering the shift from fee-for-service care models to value-based models, Matthews says.
"One of the things [the Obama administration tried] to do is put in guidelines that you have to comply with to show you are doing better care rather than more care, and you get more money if you are doing what the government says you ought to be doing, and less money if you don't."
"That creates a real problem for the medical system because most doctors feel they are providing very good care—the best care that they can provide—without the government telling them they have to do this as opposed to that," he says.
While the Trump administration and GOP members of Congress are unlikely to abandon value-based care models, Price will likely end mandatory participation in new value-based payment programs, says Michael Adelberg, principal at the Minneapolis-based law firm Faegre Baker Daniels.
"In general, Republicans like value-based models and most are happy to see them move forward; but the Secretary's previous comments suggest he doesn't like when providers are forced into these models," Adelberg says.
'Experimenting in Medicaid'
Until President Trump and the GOP-controlled Congress pass new healthcare legislation, Republican zeal to curb costs in the Medicaid program will be channeled through HHS and CMS.
"They will try to give the states a great deal more flexibility in seeking and receiving waivers to federal rules," says Adelberg, who served in leadership roles at CMS for 15 years, working in the Medicare, Medicaid, and PPACA Marketplace programs. The last title he held at CMS was director of insurance programs/acting director of exchange policy and operations.
"You might see changes to Medicaid benefits, you might see increased cost-sharing, you might see work requirements, you might even see deviations in the way Medicaid covers all drugs. There will be an increased interest in experimenting in Medicaid."
Adelberg expects that Price and Verma will allow states to adopt new work requirements and cost-sharing in the Medicaid program.
"Two places where they will likely allow far greater flexibilities than the previous administration are work requirements, which the previous administration was not willing to do, and greater cost-sharing," he says.
"There are a number of Medicaid programs that have nominal cost-sharing, but CMS has been adamantly opposed to more than nominal cost-sharing. You could see far more leniency with respect to cost-sharing."
Indiana's approach to Medicaid Expansion, which Verma designed while working for then-Gov. Mike Pence, should be viewed as the baseline level of Medicaid cost-sharing under the Price and Verma leadership team, Adelberg says.
"Indiana is as far as the Obama administration would go. They may have even had some buyer's remorse afterward, and would not let other states go as far as Indiana. You will likely see states go farther than Indiana under the new administration."
Giving states more flexibility in the Medicaid program is highly likely, says Ellen Meara, PhD. She is a professor and healthcare economist at The Dartmouth Institute for Health Policy and Clinical Practice in Lebanon, NH.
"I would expect them to be friendly to state Medicaid programs seeking waivers to experiment with Medicaid. This would seem especially likely for states choosing to mirror strategies tried in Indiana, where Verma helped to engineer Medicaid enrollee cost sharing for 'extra' benefits like dental benefits, and Arkansas, using Medicaid expansion dollars to purchase private insurance on exchanges," Meara says.
Obamacare at Mercy of Harsh Critics
With the shelving of the American Health Care Act, President Trump and Republicans in Congress failed to legislate Obamacare out of existence, but Price and Verma could easily undermine it.
"There are many ways an ACA demise could be triggered," Meara says.
"Evidence of this comes from the single action to stop advertising during the exchange open enrollment period—this year's enrollment was depressed after being on track compared with prior years. A simple lack of attention to inevitable challenges that can arise on exchanges, or related to enforcement of mandates, or the definition of essential health benefits are all ways to dilute the ACA."
The Trump administration could " blow up" the law's insurance exchanges with little effort, Adelberg says. "The new administration is at an interesting fork in the road."
"There are important matters that are the subject of litigation, such as whether or not HHS should pay the subsidies. There is one more year of transitional reinsurance and billions at issue in risk-corridor lawsuits. Administration decisions can drive the insurers out or they can keep the insurers in. They have not yet tipped their hand on what direction they are going to go."
"These are not slam-dunk decisions for the new administration. These are very hard decisions. They can go against positions taken by the GOP during the Obama administration and seek to preserve the exchange market; or they can go with previous GOP positions and blow up the market, and possibly get blamed."
Recommendations from the National Council for Behavioral Health include payment reform, workforce expansion, training reforms, and more widespread use of telemedicine.
Psychiatric services are in a state of crisis nationwide, and stakeholders across the healthcare industry have roles to play in fixing the multifaceted problem, the National Council for Behavioral Health (NCBH) says.
A report released this week was prepared by the nonprofit's Medical Director Institute and a 27-member expert panel drawn from providers, payers, government agencies, and psychiatric organizations.
During a conference call Tuesday with members of the media, Joseph Parks, MD, medical director of the NCBH, said there is a national shortage of psychiatrists that is threatening to spiral out of control.
In 77% of U.S. counties, healthcare officials are reporting a severe psychiatrist shortage, and the aging psychiatrist workforce also poses a daunting challenge, he said.
"The average age of a practicing psychiatrist is in the mid-50s. This is compared to the average age of other medical specialists and primary-care physicians in their mid-40s. They will be aging out rapidly."
The shortage imposes a nightmare scenario on many psychiatric patients and the healthcare providers trying to serve them, said Parks, who is chairman of the NCBH Medical Director Institute.
"Two-thirds of primary care physicians report that they have trouble getting psychiatric services for their patients. So, they go to the emergency room. There has been a 42% increase in the number of patients going to the emergency room for psychiatric services in the past three years, but most of them are not staffed with psychiatrists."
"People end up stuck in emergency rooms for hours and at times days." Parks said.
"Finally, they try to get into an inpatient psychiatric bed, but hospitals have been closing their psychiatric units because they can't find psychiatrists to hire and staff to run them. It is truly becoming a crisis."
A Call for Six Reform Efforts
The NCBH report calls for healthcare providers, payers, government agencies, and psychiatric organizations to focus on six essential reform efforts:
Expansion of the psychiatric workforce, especially psychiatrists, advanced practice registered nurses, physician assistants, and board-certified psychiatric pharmacists
Greater efficiency of service delivery, including reform of regulations that block care coordination and impede access to clinical information
Adoption of care innovations such as integrated delivery of primary-care and psychiatric-care services in more settings
Training psychiatric professionals to deliver new models of care
Payment reform that adequately reimburses psychiatric services and rewards care based on patient outcomes
More options and financial incentives for psychiatric-service providers to leave cash-only practices and change care settings
Financing Needs an Overhaul
The financing of psychiatric services needs an overhaul, he said. "There is a misalignment if the commercial and governmental fees result in a loss for 75% of organizations and 40% of psychiatrists choose to go cash-only to make up for that reimbursement problem."
In addition to payment reform, the report's recommendations include training reforms, increased use of telepsychiatry, and widespread adoption of new care models.
Parks highlighted the need to redesign the way psychiatric-service providers work with other medical professionals and support staff.
"Psychologists need to be used more as expert consultants. People needing care need to be identified using data analytics as opposed to waiting for patients to complain. And staff need to be working more in teams, so psychiatrists are doing the essential things that only a psychiatrist can do, and delegating other parts of care and follow-up."
John Muir Health launched an innovation initiative, added beer, and exceeded its first-year revenue goal.
Innovation and performance-improvement initiatives were among the primary focal points at HealthLeaders' annual Revenue Cycle Exchange, which was held last week at the Omni Tucson National Resort in Arizona.
Among the highlights of the event was John Muir Health's report of significant financial gains from an innovation initiative that the Walnut Creek, CA-based health system calls "Revination."
The two-year, board-approved initiative has "top-line revenue implications as well as cost reduction components," said Joshua Welch, executive director of revenue cycle at John Muir, which includes two medical centers and a medical center affiliate.
Welch identified five elements of the initiative:
Increasing payer yield through claims-denial management
Maximizing patient payments through efforts such as point-of-service (POS) collection gains
Advocacy work to help patients secure healthcare coverage and other financial resources
Vendor utilization management
Driving cost savings through performance improvement
Another component "is just having fun," he added. "We brewed Revination Ale, and it was good. I put together some Revination survival packs for my directors and managers that had beer, pretzels, mustard, and all kinds of fun stuff. There is a lot of recognition for our employees."
First-Year Results
The initiative generated big gains in its first year, with the health system beating Revination expectations in 2016.
"We had set a Year 1 goal of about $6.8 million in top-line revenue benefit for the organization and about $1.2 million in cost reduction. We actually blew the revenue goal out of the water, with an $8.1 million increase," Welch said.
Cost savings were just $44,000 shy of the Year 1 target.
In 2016, ROI on $1.5 million in Revination costs was twice as high as forecast, with an expected net benefit to cost ratio of 2.5 and an actual ratio of 5.2. Year 1 initiative costs included a new claims-processing platform and staff-engagement spending such as gift cards that accompany Revination Certificates awarded to nine employees per month in three categories (saves, heroic effort, and quality. Staff from across the organization eligible for the recognition.
"In Year 2, the bar is raised, and we are living that right now. We are tracking a $13 million [total benefit] target, which represents about 1% of net patient revenue at John Muir—we are about a $1.3 billion organization," he said.
Generating New Revenue and Cost Savings
The health system has several vendor partners playing revenue cycle roles, which presented a cost-reduction opportunity.
"We had weekly calls with them to not only explain the Revination initiative, but also explain how we wanted to improve our performance across revenue cycle. They do so much of our business, it was important that we share the same goals."
Selectively adding new vendors generated most of the Year 1 cost savings, Welch said.
"Where we had one vendor previously, we put in champion-challenger models where vendors are working side-by-side on half of the inventory to create natural competition… The champion-challenger vendor model gave us a little rate arbitrage."
Improved revenue cycle team performance in front-end activities was a key element of Year 1 increased revenue. The team "spent a lot of time developing reports, identifying risky accounts, and shoring up other processes that yielded a lot of the revenue benefit."
Energizing the revenue cycle team "continues to be one of the most important elements of the initiative and achieving incremental performance improvement," Welch said.
He is confident John Muir can meet or exceed Year 2 Revination expectations.
"We know we have opportunities even though we have gotten all of the low-hanging fruit in Year 1. This is really about getting at the claim denials and optimizing organizational performance."
This year's Revination goals include boosting monthly POS collections from $500,000 to $750,000 and launching a Denials Avoidance Taskforce drawn from across the organization, including revenue cycle, contracting, case management, information technology, and compliance.
CMS has put on hold the rollout of three new cardiac episodes of care and the addition of hip fractures to the Comprehensive Care for Joint Replacement bundled-payment program.
The announcement this week that the Centers for Medicare & Medicaid Services will delay implementation of four Medicare bundled-payment initiatives is merely a pause and does not signal the demise of episode-of-care payment models, says one orthopedic surgeon.
The bundled-payment initiatives had been slated to launch on July 1. The new launch date is Oct. 1.
"The delay in the cardiac bundles and femur fracture bundles is simply related to the inability to work out the details of each bundle such that the doctors and hospitals involved can effectively manage the episodes," says Louis Levitt, MD.
Levitt is a practitioner and vice president at Washington, DC-based Centers for Advanced Orthopaedics and an assistant clinical professor at George Washington University.
In an interim final rule with comment period filed Monday, CMS put on hold the rollout of three new cardiac episodes of care and the addition of hip fractures to the Comprehensive Care for Joint Replacement bundled-payment program.
The cardiac episodes of care placed that remain pending are:
Acute myocardial infarction
Coronary artery bypass graft
Cardiac rehabilitation
Levitt says CMS needs to step up its bundled-payment game before implementing the new initiatives, which would add an acute-care episode to CJR for the first time. Currently, the CJR bundled-payment models apply only to hip and knee replacement procedures.
"When you try to create a bundle for an acute-care episode like a femur fracture, you are dealing with significantly more variables in a sicker population. The cost of care for the acute injury is going to be more unpredictable and more difficult to control, hence the higher costs," he says.
Adding hip fractures to CJR requires a more robust approach to assessing risk and patient-to-patient variability, Levitt says.
"To engage doctors in managing acute injuries through bundles, you are going to have to work out the details of the bundle well in advance to anticipate all clinical scenarios. Because of these challenges, the bundles for acute injuries are not yet effective—hence the delay in implementation."
To be financially sustainable, bundled payments for acute-care procedures require fully engaged physicians, he says. "The future for all doctors will include their managing more effectively the entire episode of clinical care. One will no longer just be a surgeon. Now, in order to truly produce the best outcomes for our patients, we must be care managers overseeing every detail of their treatments."
Current Model 'Flawed'
CJR should be retooled before hip fracture is added to the bundled-payment program, says James Caillouette, MD, chief strategy officer at the Hoag Orthopedic Institute in Irvine, CA.
"While I fully support value-based care, the lack of acknowledgment of the variance in patient risk—comorbidity—makes the current version unsustainable."
Bundled-payment models for acute-care services pose an inherent financial challenge for healthcare providers, Caillouette says.
The model works best for elective surgery, he says, "where patient health variables can be affected prior to surgery in order to reduce the risk of complications."
In cases of emergent surgery for lower extremity fractures or cardiac cases, "the current program as designed by CMS is flawed because the providers are unable to drive value to the greatest degree possible by having the opportunity to optimize patients for surgery."
The interim final rule was signed by Health and Human Services Secretary Tom Price and CMS Administrator Seema Verma.
CMS is accepting public comment on the bundled-payment initiatives through April 20. Commenters are invited to weigh in on whether implementation of the bundled-payment initiatives should be delayed further to Jan. 1, 2018.
