Revenue cycle teams boost their effort to engage patients financially.
This article first appeared in the December 2016 issue of HealthLeaders magazine.
Laurie Hurwitz is on a mission to revolutionize revenue cycle operations at Gundersen Health System and encourage other healthcare providers to align the bill collection process with a patient-centric approach to medicine.
Over the past three years, Hurwitz, the executive director of revenue cycle at the La Crosse, Wisconsin-based health system, has helped several initiatives that are designed to improve the nonprofit organization's financial engagement capabilities with patients, including the creation of a 17-member financial counseling staff. These initiatives have increased the up-front collection bill payments from patients, but that gain for Gundersen pales in significance compared to achieving fundamental change in the financial relationship between patients and the healthcare system, Hurwitz says.
"The fact that we weren't asking for money before is far less troubling than the fact that we weren't telling patients that something was going to cost them."
"To me, this isn't about increasing point-of-service collections. This is about making sure our patients are fully informed with all of the information that they need to make critical decisions. The fact that we weren't asking for money before is far less troubling than the fact that we weren't telling patients that something was going to cost them before they had it done. That's a very uncomfortable thing for people in healthcare to think about because we say that we don't want a patient deciding against having care because of what something costs; but the truth is, patients have the right to make that decision, and it is our responsibility to see to it that they have the information to make the decision that is right for them and right for their families."
Gundersen's financial counselors are playing a crucial role for patients, she says. "It is also incumbent on us to make sure patients understand there are resources out there that we can help them find. Everything from Medicaid to our own internal financial assistance program. It's not fair for patients to go through some of the very challenging medical treatments that they have to go through and their journey to get well while being worried about what it's going to cost when the bill shows up. And that's what everybody does."
The practice of hiring staff members to play a financial engagement role with patients is so new that health systems and hospitals are trying to figure out the best title for the position. "We have gone back and forth on what the right term is. We call them financial counselors now, but we have talked about whether that is the right title or financial advocate is better," Hurwitz says.
As the Consumer Age dawns in the healthcare industry, revenue cycle teams at health systems and hospitals across the country are employing staff members to play a financial engagement role for patients who struggle to pay their bills, particularly for inpatient hospital services.
"Our best practice is to meet with all patients who have a financial responsibility, so that we can take a payment or establish a financial assistance plan as early as possible."
At St. Francis Hospital in Columbus, Georgia, hospital registration staff have been providing financial counseling services for years, says Linda Glass, director of patient access services. However, the 376-licensed-bed acute care facility created and staffed a full-time "benefits advisor" position in July to help patients navigate their financial obligations at any time during their hospital stay, she says.
"We train all registration staff in all areas except ER on what all the processes are, so they can assist patients at all times," Glass says of financial counseling at St. Francis. "We have one employee called a benefits advisor who goes to the floors to discuss more in-depth with inpatients, especially those coming from the ER. We do not feel like doing this in the ER is of much benefit due to the situation, timing, and flow of patients. We are set to see 70,000 patients through the ER this year, and 65% of admissions come from this area. The benefits advisor goes to the floors and can spend more time with patients in a less stressful area or situation like in the ER."
At St. Francis, revenue cycle staff members who provide financial counseling to patients need to know the financial resources that are available and the procedures to access those resources, but that is not the most important capability to succeed in the role, Glass says. "A good financial advisor is someone who understands and can explain insurance benefits and all the different programs the hospital has from financial assistance, payment plans, and the company we use to apply for Medicaid assistance. The most important piece is they must have good customer service skills and not get easily upset. To go in and discuss with patient or family while someone is in the hospital how much money they owe is not always a good experience. Some patients and family members will be upset that you are going to ask for money while their loved one is sick. … The advisors need to have the ability to explain that they are there to assist the patient so we can get any type of programs or assistance started early and not when all the bills start arriving after they get home."
Starting the financial-engagement process with patients as early as possible is a top priority for the St. Francis revenue cycle team because timeliness benefits both the patients and the hospital, Glass says. "A lot of patients want to hear what they might owe and are willing to work with us. Our best practice is to meet with all patients who have a financial responsibility, so that we can take a payment or establish a financial assistance plan as early as possible. If not, we will be months down the road before this is set up and payments start coming in."
At Gundersen, the best practices of financial counselors are focused on informing patients about the resources that are available to help pay for medical bills, Hurwitz says. "We do not provide financial advice to patients. We help explain insurance benefits to patients because most people do not understand them—we see that as our responsibility to educate them. We provide patients with information about resources that can help them with their financial obligations. We provide them with estimates, both the total charges and their out-of-pocket responsibility. So, we're providing them with resources and information; we are not providing them with advice."
The Gundersen financial counselors are expected to possess or develop a relatively advanced skill set, says Shannon Carey, manager of revenue cycle at the health system, which is centered on 325-licensed-bed Gundersen Lutheran Medical Center in La Crosse. "One of the most important things I look for is outstanding communication skills, verbally and in writing. I also look for good deescalation skills. ... After patients get their bills, the financial counselors need to be able to deescalate situations and give information to the patients to make sure they understand. We try to do more behavioral interviewing to get people with these kinds of exceptional skills."
The financial counselors also need specialized business skills to function effectively, Carey says. "They have to have good computer skills, too. We have multiple systems that they have to be fluent in for giving good service here. Mostly, they're in an office without a group around them, so they need to have a strong independent work ethic and be able to be independent thinkers. There's a lot of attention to detail and follow-up work. We can't always give answers to questions at the time the patient is present—we may have to wait for information from an insurance company or the county. They have to have a basic knowledge of coding and medical terminology; especially when they are trying to give patients estimates, they need to understand if there are missing codes or what might be entailed in a procedure that a patient could be billed for. When patients run into denials, the financial counselors have to have an understanding of insurance rules and coding rules. We don't require them to be coders, but they have to have a general understanding. And they have to be able to handle money and balance cash drawers because they are taking payments."
Convincing a health system's leadership team to embrace creating a financial counselor job title and finding suitable candidates to fill the role can be daunting, some financial leaders say.
"It's challenging, that's for sure," Hurwitz says. "Health systems have a lot of layers and processes. Whenever you try to do something new and different, it's very difficult to find out where the new thing fits into the old scheme. We're still trying to work our way through that. We've made progress; not as much as we would like. It's an enormous challenge—Shannon's description of a financial counselor is a superhero."
Not surprisingly, there are precious few healthcare financial-counseling superheroes looking for work in the job market, Carey says. "We have to train them when they come here. In addition to good computer knowledge, the skill that we look at mostly is the communication piece. Are they going to be a good face-to-face representative who is able to comfort people and get them through difficult times? That's something that we can't train necessarily. Other things, like being able to quote insurance, can be trained once a new financial counselor gets here."
Pinpointing the financial impact of Gundersen's financial counselors and the other patient financial-engagement initiatives that the health system has launched over the past three years is difficult, but Carey and Hurwitz are convinced the efforts are having a positive effect on the bottom line.
Part of the difficulty of gauging the bill-collection impact of Gundersen's financial counselors is the absence of a historical baseline because the health system only began asking patients for money up front when the counselor roles were filled three years ago, Carey says. "Part of what our counselors do is preregister all of our surgical patients, and they give patients an estimate of what the entire procedure will cost and the out-of-pocket costs; then we ask for that up front. Prior to having the financial counselor role, we didn't ask for that money up front at all, so any payments we are collecting before the service is provided are new and a benefit to the organization."
A key measure of the financial impact of the counselors and other patient financial-engagement initiatives at Gundersen is the cost to collect medical bills, Hurwitz says. "While we have added these services, we have not increased our cost to collect. We've done a lot of things that are patient-facing, but we have not increased our cost to collect; we have actually reduced it a little bit. It's not a whole lot different from what's been going on in manufacturing for years. If you can do things right from the beginning, you have a whole lot less work on the back end, and the work on the back end is more expensive. It's much harder to fix something than it is to prevent something."
Taking a page from Maryland's all-payer model, the Green Mountain State sets its sights on value-based transformation for all healthcare providers in the state.
The state of Vermont has received the regulatory green light from the Centers for Medicare & Medicaid Services (CMS) and state officials for its unprecedented Vermont All-Payer ACO Model.
With that go-ahead, the state will design and implement an all-payer accountable care organization that will serve the vast majority of residents in the Green Mountain State and include nearly every healthcare provider statewide.
With six performance years set to start January 1, the statewide initiative has lofty goals. The CMS webpage for the Vermont All-Payer ACO Model states:
By 2022, the "ACO scale targets" for the initiative are 70% of all insured residents in Vermont and 90% of all Medicare beneficiaries in the state receiving medical services through an ACO.
Under the initiative, annual per capita healthcare spending growth in Vermont is not supposed to exceed 3.5% for all major payers. For Medicare beneficiaries, spending growth is supposed to be held to 0.1% to 0.2% below the level of national Medicare spending growth.
The initiative is designed to take a leap forward from the Maryland All-Payer Model, which since 2014 has focused on shifting hospitals to a value-based care model. "[The Vermont model] will provide valuable insight for other opportunities for CMS to participate in state-driven all-payer payment and care delivery transformation efforts," the CMS webpage for the Vermont initiative states.
"[The Vermont model] will provide valuable insight for other opportunities for CMS to participate in state-driven all-payer payment and care delivery transformation efforts," the CMS webpage for the Vermont initiative states.
The Vermont Care Organization (VCO) will take the leading role in implementing the initiative.
In an op-ed piece that The Barre Montpelier Times Argus published Nov. 16, VCO Chair of the Board Thomas Huebner set the bar high for the Vermont All-Payer ACO Model:
"The speed at which things have moved reflects the commitment of CMS and the medical community to change [the] way healthcare is provided," he wrote. "The Vermont Care Organization (VCO) has been created to be… an ACO. In fact, we hope to be the single Accountable Care Organization for Vermont."
"As we talk with folks, we are being asked for some very basic information, often starting with the key question: Who are you guys? Who's really running your organization?
"The answer is—we are, your local healthcare providers. Our statewide network—in every Vermont county—is comprised of: doctors, nurses, primary care clinics, hospitals; agencies working in home health, mental healthcare and substance use treatment, and rehabilitation; plus community-based human service organizations and much more."
In addition to his VCO role, Huebner is president and CEO of Rutland Regional Medical Center, a 126-bed acute-care hospital based in Rutland, VT.
For physician practices, a potentially crucial element of the Vermont All-Payer ACO is that participation in the initiative qualifies physicians for a Medicare financial bonus under the Advanced Alternative Payment Model provision of MACRA, which is set for full implementation in 2018.
The timeline for implementation of the Vermont All-Payer ACO is similar to the MACRA implementation timeline.
Next year, the primary focus of MACRA implementation is prodding physicians to adopt the reporting requirements of Medicare's new payment system, which is replacing the widely reviled Sustainable Growth Rate formula.
For the Vermont All-Payer ACO model, 2017 has been designated "Performance Year 0" of the initiative, the CMS webpage says.
Performance Year 0 features $9.5 million in "start-up investment" from CMS to help the state's healthcare providers boost care coordination and collaboration, according to the webpage.
Next year's start-up funding will help physicians achieve "practice transformation in order to help Vermont achieve the statewide health outcomes, financial, and ACO scale targets" from Performance Year 1 through Performance Year 5, the CMS webpage states.
The current system could remain in place for 'a couple more years' as Republicans decide what to keep—possibly shared savings models and Medicare demonstration projects—and what to shed.
With ACA-averse Republican lawmakers in control of Congress, President-elect Trump's ability to honor his pledge to repeal President Obama's most ambitious domestic-policy initiative appears beyond doubt.
The scant details Trump has offered about his plans to replace the healthcare reform law, however, portend many suspenseful weeks ahead for healthcare industry leaders.
The president-elect's "Healthcare Reform" position paper features seven concrete proposals, five of which are directly related to the ACA:
"Eliminate the individual mandate. No person should be required to buy insurance unless he or she wants to."
"As long as the plan purchased complies with state requirements, any vendor ought to be able to offer insurance in any state."
"Allow individuals to fully deduct health insurance premium payments from their tax returns under the current tax system."
"Allow individuals to use Health Savings Accounts. Contributions into HSAs should be tax-free and should be allowed to accumulate."
"Block-grant Medicaid to the states. Nearly every state already offers benefits beyond what is required in the current Medicaid structure. The state governments know their people best and can manage the administration of Medicaid far better without federal overhead."
Devon Herrick, PhD, senior fellow at the Dallas-based National Center for Policy Analysis, gave his opinions on Trump's proposals to replace portions of the ACA. The transcript below has been lightly edited.
Herrick: Taken together, the Trump health proposal is a good start. But he needs to fill in the details on how to transition from where we are now to where we need to go.
The transition will take time. I expect the current system will be in place for a couple more years; since it would be very difficult to tell people—the 85% who get subsidies—in February that they are going to lose their subsidy but hopefully get a cheaper premium.
What might those details look like? Conservative health policy analysts will likely push for a tax credit to assist individuals purchasing their own coverage in a manner similar to how employees get tax exclusions. States will likely reinstate "guaranteed renewal" in place of "guaranteed issue."
Currently, some people are gaming the exchange system: Signing up after they have a health concern—say, a pregnancy—then dropping coverage after they are treated. That has to stop.
Guaranteed renewability would force people to maintain continuous coverage if they were to have coverage that is not underwritten. I [also] expect states will want to create high-risk pools.
HLM:Gauge the likely financial impact of Trump's proposals for health systems, hospitals, and physician practices.
Herrick: It is not yet clear to me how a Trump presidency will impact doctors and hospitals. Currently, doctors and especially hospitals are struggling in a market where many of their patients have high-deductible plans and are essentially paying much of their medical bills out of pocket.
One potential difference is that some patients who would otherwise have high-deductible coverage could be uninsured. But except for catastrophic care, it is hard to see how a doctor or hospital would be better off or worse off under those conditions.
HLM: The ACA is much more than the public insurance exchanges and Medicaid expansion. What would be the likely impact of repealing the ACA in total without making accommodations to replace elements of the law that underpin reforms such as accountable care organization models and bundled-payments programs?
Herrick: The shared savings models and demonstration projects under Medicare will likely remain one way or another. ACOs are an experiment that is bearing fruit, and I cannot imagine these going away.
New billing-code rules for primary care physicians who treat Medicare patients will increase payments for medical services that are rendered outside of face-to-face office visits.
New Medicare payment rules for physicians set to start on Jan. 1 are a positive development for primary care practices, the American Osteopathic Association says.
Several provisions of the 2017 Physician Fee Schedule final rule are designed to boost payments to primary care practices for non-face-to-face care management, care coordination and cognitive impairment services, according to a Centers for Medicare & Medicaid Services fact sheet released last week.
CMS released details about the 2017 PFS final rule on November 2.
"CMS is finalizing several revisions to the PFS billing code set to more accurately recognize the evolving work of primary care and other cognitive specialties to accommodate the changing needs of the Medicare patient population," the fact sheet says.
"Historically, care management and cognitive work has been 'bundled' into the evaluation and management visit codes used by all specialties. This has meant that payment for these services has been distributed equally among all specialties that report the visit codes, instead of being targeted toward practitioners who manage care and/or primarily provide cognitive services."
Laura Wooster, MPH, interim senior vice president for public policy at the AOA, told HealthLeaders last week that her organization is cautiously optimistic about the billing code changes in the 2017 PFS final rule.
"In terms of what they have done previously, this does feel a little different. We are pretty optimistic that this will be a step forward. The devil will still be in the details though. Some of these codes will be complicated to educate our members on so that they can take full advantage of them," she says.
Allowing primary care physicians to bill for more medical care services that are conducted outside of face-to-face visits with patients is a significant improvement of the PFS, Wooster says.
"What had happened previously was that by having services bundled into an evaluation and management visit code, it made those codes available to all specialties, which was a good thing when physicians had to do additional specialty work. But it also made it harder for primary care, which has a certain level of care beyond [face-to-face interactions with patients]."
She gave a hypothetical example of how the new codes will work. "With one of the codes for the non-face-to-face time, the physician will have to document an hour of time in order to be paid for that code. In practice, that hour could be reconciling the 20 different medications a patient is on to make sure two of them are not conflicting with each other and making the patient worse."
"That takes time. Some of it could be care coordination in terms of reaching out to other physicians and specialists that the patient is seeing, then doing follow-up and getting care plans to see whether there is any reconciling that needs to be done there. A lot of that back-end work is not part of the usual visit code."
The new PFS billing-code rule for cognitive-assessment reimbursement should help patients and give primary care practices a financial boost, Wooster says.
"One of the other codes that we were happy to see lets physicians to be paid for cognitive assessments. So, if physicians have elderly patients, they can take the time needed to do cognitive assessments to see whether patients have the early stages of senility or Alzheimer's or dementia, then physicians can get paid for taking the time to do those assessments.
"There is limited time in most visits—about 14 minutes—so the cognitive assessment code allows physicians to take the extra time and still stay in business."
The billing-code changes and other provisions of the 2017 PFS final rule are expected to increase Medicare payments to primary care practices about $140 million next year.
The shift to value-based care adds new investments, including outpatient facilities.
This article first appeared in the November 2016 issue of HealthLeaders magazine.
The shift to value-based delivery of medical services has boosted investment in outpatient capabilities, which has added a new element to the capital-project mix at health systems and hospitals.
"The ways of paying for capital projects are not changing all that much, but what we are buying is changing. There's a movement toward a different model, so we are investing in new capabilities, like patient-centered medical homes," says David Smith, senior vice president and CFO at Hollywood, Florida–based Memorial Healthcare System.
Two of the biggest capital projects underway at MHS are construction of outpatient facilities, Smith says. "We are expanding our geographic footprint. Our board has approved the building of two urgent care centers, on the east side and the west side of our district."
Operating in a state-chartered district, MHS features six acute-care safety-net hospitals. The health system posted patient service revenue at $1.8 billion for the fiscal year ending April 30, 2016.
MHS will wholly own the new urgent care centers, which will both be located in new buildings. However, the health system is only constructing one of the new structures. "The one we're building from the ground up is about 5,000 square feet, and the cost is $2.5 million, which includes equipping it," Smith says. "What drives up costs a lot in South Florida is we are in Hurricane Alley, and we have different codes here. You have to construct the buildings to be hurricane-resistant, which makes them a much more expensive proposition."
In addition to growing its market footprint, MHS recognizes the need to invest in outpatient facilities, he says. "There's already retail clinics. Urgent care centers are popping up all over the place in this market, and there are ambulatory care facilities, so the future of healthcare will include these shorter-stay patients who are no longer going to be in the hospital. That means hospitals will become at least somewhat more capital-intensive because they will be the place where the high-tech care is rendered. What we're seeing is not necessarily a lessening of the hospital side of capital projects, but more of an overall growth in capital investment because we need to account for the outpatient world as well."
Consumerism in value-based healthcare puts a premium on convenience, Smith says. "The whole idea is to make it easier on the patient. One of our affiliates has a partial ownership in a couple of ambulatory surgical facilities, and we see in the future where those will also become recovery care centers, where patients we need to have stay one night or even two nights can come in and not have to receive care in a hospital."
Local market conditions can dictate that a health system embrace a more traditional approach to capital projects, says Ben Spence, CFO of Lee Health, based in Fort Myers, Florida.
"Our investment in acute care is heavily weighted on the age of one of our facilities and the growth in our population. Lee Health serves Lee County, Florida, an area of rapid growth that also is twice the national average for population over age 65. Seniors have higher use rates for inpatient care and often have multiple chronic conditions. We also have an aging 400-plus-bed facility that was built in the 1960s and 1970s that needs to be replaced. We do feel that our efforts to improve health in our population will reduce inpatient use rates that will result in less demand for new beds, but we will still require hospital-bed expansion to replace and allow for modest inpatient growth," Spence says. "Other areas with slower growth, newer facilities, and younger populations are better situated to avoid future bed expansion."
Lee Health has a total of 1,426 licensed beds distributed across four acute-care hospitals, a rehabilitation hospital, and a children's hospital. In 2015, the health system posted patient service revenue of $1.4 billion.
While Lee Health is forecasting an ongoing need for capital projects on its hospital campuses, the health system has been increasing investment in outpatient facilities, Spence says. "During the past 10 years, we have allocated a growing share of our capital spending to outpatient services and will continue to do so going forward. We believe that expanding outpatient services will help keep patients out of the hospital and reduce our future capital needs for new bed towers."
For capital projects, planning is paramount
Growth in capital projects at health systems and hospitals makes planning for capital investments as important as ever, says R. Edward Howell, professor of public health sciences at the University of Virginia School of Medicine and former CEO of University of Virginia Medical Center in Charlottesville.
"Taking the longer-term approach creates the opportunity to make sure you are giving enough attention to infrastructure—electrical, plumbing, and HVAC—because healthcare institutions put a lot of drain on infrastructure," Howell says. "It's all too easy to say that we will spend on initiatives that make our physicians and board happy, or that add a lot of glitz to our patients, and forget the infrastructure. But the infrastructure is important. It doesn't take too many days of having your operating rooms closed because your HVAC crashed, or your imaging center closed because your electrical system failed, to realize just how important your infrastructure is to your organization."
For the fiscal year ending June 30, 2015, University of Virginia Medical Center posted patient services revenue of $1.4 billion. The teaching hospital has 584 licensed beds.
Howell says he prefers planning for capital projects over a span of 10–15 years, with a three-pronged approach. "First is taking an inventory of your physical plant; you should do it all the time. You get some sense of the age of your facilities. Second is the demand on your facilities—the percentage of utilization of your operating rooms. For example, if you have 80% utilization, you have operating capacity; if you have 95%, you don't have capacity.
"Third, look at capital from a financial perspective over the long term. You need to make some determinations on how much you are going to be spending on equipment and spend that amount consistently. For 12 years here, we spent between 8% and 9% of our operating budget on capital equipment and related renovations for capital equipment every year, just like clockwork. That gives you a nice steady stream of funded depreciation," Howell says.
Smith says MHS plans on a shorter time horizon for most capital projects, but the health system's five-year plan is updated on an annual basis. "We look out at a five-year horizon that includes what projects we feel we're going to need to do, either expansion of services, product lines that need to be enhanced, or major equipment purchases."
Financing recipes for capital projects
When health systems and hospitals are determining the form of financing for a capital project, size definitely matters.
MHS is financing the health system's two new urgent care centers with internal sources of funding, including operating revenue, Smith says, noting larger projects require at least some external financing. "We financed the urgent care centers through internal funds. We are very lucky that we are financially able to do that. For projects that are $3 million to $5 million, we would typically just finance those through operations. If we have a very large capital purchase, like when we built our children's hospital in 2011, we float a bond issue," he says. "There was also fundraising for the children's hospital—we had a huge capital campaign." The children's hospital cost more than $100 million to build, says Smith.
Howell says a wide range of options should be considered when selecting the optimal mix of financing for capital projects.
"You need to fund capital with all of the options available. First is operating margin. Most people believe that you need a minimum of 3% just to maintain your capital position. You should have as much as 5% operating margin in order to have adequate capital capacity," he says. "Combine that with funded depreciation: Make sure you fully fund your capital items—each and every one of them that qualifies for funded depreciation—and make sure you don't confiscate your funded depreciation for operating needs. You adequately invest both your reserves from operations and your funded depreciation, then maximize your interest revenue stream. You combine all of that with debt."
Nonprofit health systems and hospitals have multiple financing options for capital projects, according to Spence. "New hospitals or large-scale projects are often funded with bond issues that provide low-cost financing to health systems with good credit ratings and can spread the debt payments over 30 to 40 years at a variable or fixed rate. Smaller-scale projects can be funded through direct bank loans that also offer very attractive interest rates and terms for providers that are viewed as low-risk due to their long-term financial results and stability. Cash flow from operations is also a great source of funding for providers that have a strong balance sheet and cash position," he says.
For-profit healthcare providers have a keen sense of the financing market, Howell says. "The for-profits are acutely aware of capital markets, especially rates, and tend to go to the bond market when the rates are the best."
Nonprofit and for-profit organizations each have strengths and weaknesses in securing financing for capital projects, Smith says. "From a financing perspective, the for-profits have somewhat similar vehicles. They can't do tax-exempt debt like we can, but they have the opportunity to do equity financing that we do not have the ability to do. They can just sell common stock and raise funds that way to finance their capital needs."
It may be tempting for some healthcare executives to allow a large capital project to develop into a crisis that can serve as a rallying point for fundraising, but preparedness is a far safer strategy, Howell says. "The quick and easy is facing a capital crisis and turning to debt financing. But I have seen numerous hospitals that over-borrow. They are the ones that become the 'mergees' in a lot of mergers because they find they had little or very limited debt capacity."
Patient data informatics can improve clinical outcomes, but stakeholders will have to build a seamless flow of information and win over skeptical patients.
The digital revolution in the healthcare industry is spreading far beyond the boundaries of the hospital walls.
"People are using smart phones and they are using their Fitbits and other wearables such as the Apple Watch. So people are tracking the basics—how many calories they burn in a day and so forth," says Sanket Shah, a University of Illinois at Chicago adjunct professor in the school's Department of Health Informatics and Health Information Management.
"That activity has exploded over the past five or six years. We are seeing from these examples that there is a market for this technology, and people are willing to engage and interact in generating information that is critical to their health," Shah says.
Health systems, hospitals, physician practices, and healthcare payers are already seizing opportunities to realize the potential of home-based data collection technology, he says. Shah lists weight scales, pedometers, blood pressure cuffs, and glucose monitors as tools for targeting obesity, hypertension and other chronic conditions.
"Better clinical outcomes also generate better financial outcomes. You are avoiding unnecessary hospital admissions and visits to the ER because you have a pulse on the patient population."
Data collection through home-based technology is destined to become a key component of the financial mechanisms that support value-based care, Shah says.
"A lot of measures are tracked and leveraged to distribute incentives for not only health systems and other providers but also for patients. Common measures, such as diabetics' a1c levels, will be monitored across all government programs, all ACOs, and all pay-for-performance contracts.
"So if you are leveraging these [home-based] devices that are targeted at core chronic conditions, and the majority of financial measures are tied to these chronic conditions, there is opportunity," Shah says. "You can get a step ahead."
Deploying home-based data collection technology has tremendous potential to boost clinical outcomes and generate financial opportunities. However, there also are tremendous challenges, he says.
Having the proper strategic plan in place—across multiple areas—is crucial.
"First and foremost, you have to pilot programs. You have to identify a particular patient population and start small to see how your patient population is reacting to these medical tracking devices and what you are receiving in terms of data," he says.
"Ultimately, you learn, adapt and evolve to roll out to a larger scale and gain more efficiency and profits."
The adage that you have to spend money to make money applies to securing a return on investment from home-based data collection, Shah says.
"You have to have the right infrastructure. These devices have to be integrated not only to your own analytic environment—your claims warehouse and your [electronic medical record]—but also integrated with your online patient portals.
"That seamless flow of data is critical. If you connect those dots properly and lay out a plan, there are opportunities for financial gains."
However, building the robust analytics capabilities to harness the home-based data is a challenge.
"We are getting all this information from these devices, and it is going to take a lot of expertise to sift through it and to identify the salient information so you can make use of it," Shah says.
"You need to create algorithms and predictive modeling based on all of this data that is being collected."
There also is the challenge of helping more older patients to embrace new technology. "It is a challenge, but it is not an excuse… You have to have a willingness to work with the individual patient and to establish family support to get our older population more connected," he says.
"If you can show that there is a real benefit, then there is an opportunity to overcome the generational barrier."
A proposal to create a new track in the Medicare Shared Savings Program (MSSP) with limited downside risk is drawing guarded optimism from a pair of healthcare-provider trade associations.
As part of the 2017 final rule announced earlier this month for the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA), federal officials signaled their intention to create MSSP Track 1+.
Under current regulations, MSSP Track 1 bears no downside risk for accountable care organizations (ACOs); MSSP Track 2 and Track 3 feature both upside and downside risk.
"It is a pretty big jump in terms of downside risk to Track 2; so it would be helpful, particularly to retain ACOs that are already in the program, to give them something in between Track 1 and Track 2," says Melissa Myers, JD, MPA, senior associate director of policy for the Chicago-based American Hospital Association.
CMS provided few details about MSSP Track 1+ in the 2017 MACRA final rule, with only one paragraph on one page devoted to the proposal in the 1,746-page document.
That paragraph indicates CMS is considering "developing and testing a "'Medicare ACO Track 1+ 'Model" starting for the 2018 performance year".
The Track 1+ Model would test a payment model that incorporates more limited downside risk than in Tracks 2 or 3. CMS envisions Track 1+ as an on-ramp to Tracks 2 or 3. The model could be open to:
Track 1 ACOs that are within their current agreement period
Initial applicants to the Shared Savings Program
Track 1 ACOs renewing their agreement that meet model-eligible criteria
However, until CMS provides more details about MSSP Track 1+, physicians, hospitals, and other ACO stakeholders will have to look to current rules for MSSP and the 2017 MACRA final rule for possible guidance, says Laura Wooster, MPH, interim senior vice president of public policy for the Chicago-based American Osteopathic Association (AOA).
In the 2017 MACRA final rule, CMS pegs the downside-risk cap associated with most Advanced Alternative Payment Models such as MSSP Track 2 and Track 3 at 3% of total-cost-of-care spending benchmarks.
"If the losses are staggering, you don't owe CMS all the money. It's capped. They don't want to put you out of business," Wooster says. "Reading between the lines, I am going to speculate that the Track 1+ ACO will have a total risk of 3%."
If CMS moves ahead with creating MSSP Track 1+, federal officials should do more than just make the downside risk lower than the levels set in Track 2 and Track 3, say Wooster and Myers.
"If they have any additional adjustments for physician ACOs or additional assistance, that would really help get this going and get more practices interested in getting involved, says Wooster.
"Right now, a lot of ACOs are viewed by physicians as big hospital things that are out of reach or unattainable"."
CMS has put several adjustments and assistance measures in place for shared-savings programs with downside risk, and MSSP Track 1+ should include similar measures, says Myers.
"CMS has made tools available for higher-risk tracks, such as waivers for Medicare payment rules, the geographic limitations on telehealth, and three-day inpatient stay requirement for skilled nursing facility coverage.
"We strongly urge CMS to make those tools available to all ACOs, not just ACOs that have a high level of downside risk"," Myers says.
The most popular track of Medicare's largest accountable care organization program should be included under MACRA, the just-finalized payment system for physicians, a healthcare policy researcher says.
Net savings generated through the Medicare Shared Savings Program in 2014 were understated by at least $398 million, a researcher at the Harvard Medical School Department of Health Care Policy says.
"It is a pretty good guess and certainly not a wild overestimate," J. Michael McWilliams, MD, PhD, told HealthLeaders last week. He penned an opinion piece which was published last week in the Annals of Internal Medicine.
Launched in 2012, MSSP has drawn more healthcare provider participation than any other ACO program created by the Centers for Medicare & Medicaid Services. This year, 434 ACOs are participating in the payment program, providing care to more than 7.7 million Medicare beneficiaries, according to CMS.
On an annual basis, CMS sets a total spending benchmark for each MSSP ACO's attributed patient population. An ACO can earn a shared-saving bonus payment from CMS if total spending is significantly below the organization's benchmark. The bonus payments are reduced if an MSSP ACO falls short on the program's three dozen quality measures.
For 2014, MSSP generated $287 million in net savings for Medicare, according to a research paper McWilliams published last month in the Journal of the American Medical Association.
In last week's Annals of Internal Medicine opinion piece, the Harvard Medical School researcher wrote that the CMS data understates the net savings that MSSP generates for three reasons:
It is likely that MSSP ACO contracts not only reduce healthcare spending on Medicare patients attributed to the ACO, but also on other patients who are treated by the ACO. "Such spillovers would have added upward of $126 million in savings to Medicare in 2014."
In the year-to-year benchmarking process, CMS understates actual savings that MSSP ACOs generate. "ACO spending reductions—regardless of offsetting bonuses—reduce ACO benchmarks because they lower the spending growth rates used to update benchmarks each year."
MSSP is designed to promote reduced fee-for-service spending by giving ACO's a bonus payment if they beat their spending benchmark. As a result, MSSP drives down spending rates for Medicare Advantage patients because Medicare Advantage payment rates are linked to local fee-for-service spending levels. In 2014, he estimates this indirect financial impact of MSSP cut Medicare Advantage spending about $272 million.
On Friday, CMS released the MACRA final rule (Medicare Access & CHIP Reauthorization Act of 2015).
The final rule does not recognize MSSP Track 1, which is the most popular track of the program because it has no downside risk, as an Advanced Alternative Payment Model. However, the final rule says CMS is considering creation of MSSP Track 1+ in 2018: "It would test a payment model that incorporates more limited downside risk than is currently present in Tracks 2 or 3 of the Shared Savings Program but sufficient financial risk in order to be an Advanced APM."
MACRA's new payment system for doctors is set to be implemented in 2019.
Before the release of the MACRA final rule, McWilliams said that CMS would miss a significant opportunity if the agency barred MSSP Track 1 ACOs from attaining Advanced APM status under MACRA.
"Downside risk will not be appealing to ACOs with unfavorable benchmarks. This will include ACOs with spending above their regional average in the MSSP and smaller organizations that may not have the financial reserves to assume downside risk. These groups of ACOs have driven the bulk of the savings so far."
"Thus," he continued, "one could certainly argue that limiting the Advanced APM bonus payments to ACOs taking downside risk may do little more than increase Medicare prices for organizations that have not consistently demonstrated the ability to lower spending and that already negotiate higher commercial rates."
With bundled payments and other lean value-based payment models spreading across the country, relationships between hospitals and post-acute-care organizations are tightening.
Market forces are driving closer collaboration between hospitals and their post-acute-care providers, says Audrey Weiner, president and CEO of The New Jewish Home.
"We have had an intensive level of collaboration for the past three years. Before that, we had a discharge planner who sent you patients. Now, it really is thinking about what is best for the patient, with feedback in both directions. The hospitals want the feedback, and the post-acute-care providers want the feedback. Everybody is stepping up their game," she says.
A pair of reports published last month reflect the daunting challenges facing the post-acute-care sector. The Journal of the American Medical Association published a research paper that concluded Medicare's bundled-payments program for hip and knee replacement has reduced spending mainly through lower spending on skilled nursing facility (SNF) services.
In a report based on data collected from 2011 to 2016, the Annapolis, MD-based National Investment Center for Seniors & Care (NIC) found patient-census levels at more than 1,400 SNFs have fallen sharply over the past five years. Patient-census levels fell from nearly 85% in 2011 to 82.2% this year, the NIC report says.
The New Jewish Home operates two SNFs in New York: a 514-bed facility with 139 post-acute-care beds in Manhattan, and a 300-bed facility with about 38 post-acute-care beds in Westchester.
With strong market fundamentals such as New York City's aging affluent community and longstanding partnerships with several tertiary hospitals, TNJH has maintained high patient-census levels, which are currently pegged at 97.95%, Weiner says. "Clearly, that is higher than national occupancy and New York state occupancy," she says.
Despite having a relatively strong market position, TNJH has embraced the necessity to boost collaboration with its hospital partners and to offer an expanded suite of services, Weiner says.
"We have always worked very closely with our hospitals. But as the world changed and the Affordable Care Act went into place and everybody was focusing on prevention of re-hospitalization, it became clear to us and clear to our hospitals that we needed to have a closer relationship."
The New Jewish Home's efforts to expand SNF-based services and launch new services have included creating advanced rehabilitation units, building a substance-abuse prevention program, and piloting an FDA-approved online physical therapy service, Weiner says.
"At our Manhattan campus over the past several years, we have created specialized rehab units in our SNF in collaboration with two hospitals. With NYU Langone, we created a cardiac rehab unit. With Mount Sinai Medical Center, we created an ortho unit."
"Having those kinds of programs not only embrace, but also continue the clinical pathways that the hospitals have put into place: weekly calls with the hospitals about the patients, warm transitions and warm handoffs. People actually talk with each other vs. it all being on paper. All of that allows us to be more responsive to the needs of the hospitals."
TNJH's substance-abuse program helps give the organization a competitive edge in the evolving post-acute-care marketplace, Weiner says.
"It allows hospitals that are thinking about how they are going to prevent re-hospitalization for a certain segment of their population who are abusing alcohol or drugs to say, 'Jewish Home is a place where not only can they address their hip fracture, but also they will attend an AA meeting. They will have special counseling; they will have follow-up with a substance-abuse counselor, and these added services will ensure to the best possible degree that patients do not end up back in the hospital."
In partnership with Seattle-based Jintronix, Jewish Home is piloting software that helps patients continue their rehabilitation at home, she says. "We are committed to working with our hospital partners in creating 'hospitals at home' to the degree that they are ready to do it."
All post-acute-care providers should be embracing change, Weiner says.
"The post-acute-care providers who are going to do well are going to be those who have well-trained clinical teams, are able to collect the data, provide feedback, and listen to the needs of their referral sources and their patients."
Embarking on a "quest for unparalleled value," YNHHS has pared down spending system-wide in four categories.
This article was originally published on May 2, 2016.
A health system associated with one of the country's most respected institutions of higher learning is learning how to adapt to leaner times in the healthcare industry.
Last week, Yale-New Haven Health System, which operates three hospital campuses in the south-central region of Connecticut, co-hosted the first annual National Symposium on Value Innovation at Yale.
During a break at the symposium, Stephen Allegretto, CPA, MPH, who serves as vice president of strategic analytics and financial planning at YNNHS, told me the health system's leadership saw reimbursement cuts coming to Medicare and Medicaid in 2012. "We looked to the future and said, 'Whoa, our revenue is going to dry up. We need to look at this and see how we are going to get money out of the organization,' " Allegretto said.
In her keynote address launching the Yale symposium, YNHHS President and CEO Marna Borgstrom, MPH, said the health system's leadership has been committed to generating value for patients as opposed to emphasizing cost-cutting alone. She described the effort as a "quest for unparalleled value."
"It's not about what we can do, or what we need. It's about generating value for our patients," she said.
On the quality and patient safety side of the value equation, YNHHS has adopted several initiatives over the past four years such as the development of rapid response teams and the deployment of predictive analytics in clinical settings that have contributed to significant gains in patient outcomes. At YNHHS's St. Raphael Campus, those actions have generated a 30% mortality rate reduction.
In September 2012, YNHHS spent $160 million to acquire the former Hospital of Saint Raphael, a struggling safety-net hospital in New Haven located about a quarter mile from the Yale-New Haven Hospital campus. The deal created a 1,541-bed, dual-campus hospital in the heart of the city.
Largely through consolidation of clinical services and achieving economies of scale linked to the Saint Raphael acquisition, YNHHS was able to achieve a one-time cost-savings of about $200 million from the acquisition deal, Allegretto said. According to Richard D'Aquila, executive vice president of YNHHS and president of Yale-New Haven Hospital, regulatory commitments helped drive the consolidation strategy, he told a symposium audience. "There was one hospital, one provider number, one model for clinical services."
Sustainable Cost-Cutting Initiatives
YNHHS was able to additionally reduce spending by about $150 million from 2012 to 2015, and the figure was a focal point at the symposium.
The organization had set a target for $125 million in cost savings over the four-year period, primarily in four categories:
Human resources
Clinical redesign
Non-labor
Labor
"We beat our target, and it is sustainable," Abe Lopman, senior vice president of operations at YNHHS, told an audience at the event.
Patient care accounts for about 83% of the health system's annual spending, so cost savings from clinical redesign were the biggest slice targeted for spending reductions, at $60.8 million. Actual costs savings from clinical redesign were $33.4 million, but the shortfall was not surprising, Lopman said. "This is something that has to be part of your culture. It takes time to do it. Over time, we expect it to be better."
The health system was able to exceed its cost-savings projections in three areas: human resources, labor and non-labor. The total cost savings targeted in those areas was $64.2 million, with $116 million in actual cost savings achieved.
Allegretto told me the $150 million in spending cuts were modest when calculated on an annual basis—he estimates the annual impact on YNHHS's total budget at less than 1%—but meaningful for the health system, nonetheless. "For us, it sounds like a lot of money, but we are a $3.2 billion organization," he said.
Furthermore, the spending reductions, combined with the Saint Raphael acquisition and other positive impacts on the health system's bottom line associated with value-based initiatives, has enabled YNHHS to eliminate 250 open positions and avoid laying off as many as 250 employees over the past four years, Allegretto said.
"It's going to get increasingly more difficult to avoid laying people off as [reimbursement] cuts continue; so when you look at that $150 million dollars, I look at it as an incredible achievement. And we've kept it out of the system, and that's the most important thing."
Although several initiatives have helped YNHHS get closer to achieving success in the health system's quest to provide unparalleled value for its patients, he told me a handful of factors made the launch of the effort four years ago possible, including the adoption of a Quality Variation Indicators methodology.
The QVIs feature 27 summary categories of negative clinical outcomes such as implant complication, transfusion reaction, air embolism, drug poisoning, shock, infection, and obstetric trauma. "We had this external urgency [from declining reimbursement]. We had EPIC going in, so we would have the capacity to standardize care. We had just come up with the QVI methodology. And then we were at a place where people started trusting the cost-accounting data… Those four things came up at the same time, and because the leadership saw the future, we started our cost-value initiative."
'Change is Going to be Difficult for Healthcare'
As is the case with any Herculean quest, YNHHS has faced several challenges implementing value-based initiatives over the past four years.
Convincing the health system's clinical staff about the importance of cost accounting to help secure the organization's ability to serve patients well into the future has been among the hurdles, Allegretto told me.
Teaming financial analysts with clinical staff has been an essential element in educating frontline caregivers about cost accounting, he said. At YNHHS, there are at least two financial analysts working in every service line, and they are paired with senior nursing staff. "It's a team approach to that education. There is not a sheet of paper that you give them, and say, 'Here are the concepts.' It's relationship-building. I can't point to three pieces of paper and say, 'Here are the educational materials that we gave to physicians.' "
From October 2015 to April 2017, YNHHS is hoping to generate as much as $3.5 million in cost savings from hip and knee replacement procedures in the federal Bundled Payments for Care Improvement program, Allegretto told me. But the anticipated spending reduction has come at the cost of lost volume because one orthopedic surgeon refused to give up his favorite implant when the health system reduced the number of device vendors from seven to two.
The cost savings from standardizing hip and knee implants is estimated at a minimum of $2.3 million through April 2017, according to Keith Murphy, executive director of corporate supply chain at YNHHS.
As of Jan. 1, the surgeon who bucked implant standardization has taken 90% of his cases to a competing hospital, Allegretto said. "If we hadn't done that, we wouldn't have saved the $3.5 million across the system that we are going to save over the next couple of years."
Even the loss of one orthopedic surgeon to a competitor reflects the broader difficulty of adopting value-based initiatives in the healthcare industry, he said. "This kind of change is going to be difficult for healthcare, because where is he going to go? He is going to go to another organization and they're going to give him the implant that he wants."
Mary O'Connor, MD, director of the Musculoskeletal Center at the Yale School of Medicine and Yale-New Haven Hospital, told a symposium audience that the surgeon believed he was making the best decision for his patients, but the health system had indisputable data and value calculations in hand when negotiations reached an impasse. She recounted her pivotal remarks to the doctor: "Show me the data that shows your implant is better. You don't have it. I know you don't have it. So let's talk about cost, quality, and value."