Even as participation in ACOs grows, providers are hesitant to advance to models with more risk. CMS has now extended the least risky ACO track for three more years.
The Centers for Medicare & Medicaid Services can point to growing numbers of accountable care organizations as an indicator that healthcare providers are using ACOs to shift from volume- to value-based care.
In reality, though, there are many different flavors of ACO, bearing varying levels of risk. The great majority of providers remain in the least risky track, and CMS has now extended this track for another three years to give providers more time to adapt to at-risk contracting. Progression to higher-risk ACO models has been slow.
Over the past three years, CMS has operated a pair of ACO models: the Medicare Shared Savings Program and Pioneer ACO. MSSP lays out multiple pathways for providers to assume varying levels of risk in care delivery: Track 1 has upside risk only, with providers garnering a share of cost savings achieved above spending benchmarks; Track 2 has upside and downside risk, with a higher shared savings rate than Track 1; and Track 3, which is slated for rollout next year, mirrors Medicare's most ambitious ACO model to date, Pioneer ACO.
With double-sided risk and a high bar for banking shared savings, participation in Pioneer ACO has lagged far behind MSSP participation, according to CMS. As of January, the MSSP roster stood at 405 ACOs. Pioneer ACO has 19 participating organizations this year, well down from the original 32 entrants.
"I see them as a continuum," Melissa Jackson, senior associate director of policy at the American Hospital Association, says of Medicare's ACO models.
In March, CMS introduced a new flavor to the agency's Medicare ACO menu: Next Generation ACO. While Next Generation ACO entails the highest level of risk yet for healthcare providers who serve Medicare patients, it also contains several attractions for provider organizations, including expanded coverage of telemedicine-based services and direct rewards to beneficiaries to encourage them to seek healthcare services from ACO caregivers. "Next Generation is definitely more advanced," Jackson told me recently.
She says the vast majority of healthcare providers participating in MSSP are still on Track 1 because they need time to adapt to at-risk contracting and to make the investments necessary to achieve ACO success, such as building robust electronic medical record systems. She adds that the vagaries of local patient populations and local market dynamics can also create roadblocks to value-based care adoption.
The recently released Final Rulefor MSSP that goes in effect Aug. 3 includes a second round of three-year Track 1 contracts, reflecting the importance of Track 1 as a learning tool, Jackson says. "We're happy that ACOs that choose to do so will have more time to experiment."
But provider progression to Track 2 has been halting.
According to data on the first performance year of MSSP, which ended Dec. 31, 2013, only five of the 220 participating ACOs opted to participate in Track 2, which has two-sided risk. In an acknowledgment that very few healthcare providers are ready to assume the relatively high level of risk required to participate in Next Generation ACO, CMS officials have forecast the number of inaugural participants in the new program at no more than 20.
Last week, a CMS spokesperson told me the new Final Rule for MSSP shows that the agency is committed to growing participation in MSSP, including Track 1, while simultaneously encouraging healthcare providers to participate in Medicare ACO models with two-sided risk.
"The Final Rule includes numerous provisions that will assist ACOs in Track 1 in improving care and reducing growth in Medicare expenditures. These include provisions that extend the time ACOs can remain in Track 1 while they develop their population health management capabilities, streamline data sharing with ACOs to facilitate care coordination, place even greater emphasis on primary care in our assignment methodology, and refine the rebasing methodology to ensure ACOs have a viable business model over the long-term," the spokesperson said. "CMS will now allow ACOs a second agreement in Track 1 for the express purpose of allowing ACOs to develop their population health management capabilities. In addition, the changes we made to Track 1 will help ACOs be successful in improving care for Medicare beneficiaries while reducing growth in program expenditures."
He says MSSP participation is trending upward and sustainable. "There are over 400 ACOs in the Medicare Shared Savings Program providing care to 7.3 million beneficiaries. With the changes announced [in the Final Rule], CMS expects continued robust participation in the program. The deadline for new ACOs to submit a Notice of Intent to apply for the program for 2016 was May 29, and CMS was pleased by the strong response, including strong interest among existing ACOs to renew their agreements for a second agreement period."
Harold Miller, head of the Pittsburgh-based Center for Healthcare Quality and Payment Reform, is urging Medicare to boost the number and reach of value-based payment models.
"The solution is for Medicare to offer multiple alternative payment models … but it needs to offer more models that are based on what physicians and hospitals say they need in order to improve care and reduce costs in ways that don't harm patients and don't give the providers excessive financial risk," he told me this week. "Although you might think it's impractical for CMS to offer a lot of different payment models, they're already doing it; they're just not doing it in enough areas, and the options they have defined are structured in ways that are unnecessarily problematic for providers. As a result, they're getting less participation and lower impact than they could."
Harold Miller
Miller, who is skeptical of shared savings programs as a long-term model for value-based payments in the healthcare industry, says CMS needs to increase the accountable care contracting options available to providers.
&"The Affordable Care Act specifically authorized CMS to implement payment models other than shared savings as part of the ACO program, but all it has implemented so far is the shared savings approach, and it's done that in ways that cause severe problems for the ACOs."
Miller also calls on CMS to operate value-based payment models outside the hospital setting, particularly for physician practices.
"The CMS Bundled Payments for Care Improvement initiative has four different bundled payment model options, and within three of those options, providers can select which of 48 different procedure/diagnosis categories they want to receive the bundled payments for. That's 145 different payment models. However, none of the options can be used unless the patient was first hospitalized, so there's nothing available for all of the physicians who deliver services outside of the hospital and for patients who don't need to be hospitalized. There's actually a disincentive for providers to use non-hospital-based treatments for a patient's problem, since they lose the entire bundled payment if the patient doesn't go to the hospital."
Federal officials are making a high-stakes gamble with Medicare's popular shared savings program designed to encourage health systems, hospitals, and physician groups to assume more financial risk in treating patients, healthcare providers say.
Providers are bracing for a bumpy ride in the drive to quicken adoption of value-based payment at Medicare.
The least risky accountable care option available on the Centers for Medicare & Medicaid Services value-based payment palette was released last week with the Final Rule for the Medicare Shared Savings Program.
When the rule goes into effect, on August 3, MSSP participants will be allowed to bank a share of cost-effectiveness gains. The vast majority of participating providers have signed up for MSSP Track 1, where they avoid downside risk if performance benchmarks are not met.
Janis Orlowski, MD, chief healthcare officer at the Washington, DC-based American Association of Medical Colleges, notes that CMS has dropped some proposed changes to MSSP that had alarmed providers, but she says the agency missed opportunities to ensure the program's success as a driver of value-based payment change.
"The MSSP has garnered a lot of interest and initial participation, including many academic medical centers among the 400-plus current ACOs. The key question is less about breadth of adoption, but about longevity of participation. CMS has taken some steps to help ensure continued participation, including the option for Track 1 [participants] to stay in the program with their current savings rates. But we hoped to see more tools to support ACOs—[tools that might have made] significant investments in care managers, data systems, and quality improvement endeavors," she says.
As of January, the MSSP roster stood at 405 ACOs employing more than 15,700 physicians. Medicare's highest-risk accountable care model to date, Pioneer ACO, which features upside and downside risk, has 19 participating organizations this year.
Orlowski and other providers applaud CMS for launching a second round of three-year contracts for MSSP Track 1 and rejecting a proposed cut to the shared savings rate for MSSP Track 1 from 50% to 40%.
"Track 1 has been an essential testing ground for ACOs as they build infrastructure, develop new community partnerships, and change their patterns of care. AAMC strongly urged CMS to maintain Track 1 as a continuing option for those ACOs already in the program, and to maintain the current shared savings opportunities. We commend CMS on finalizing a policy to allow Track 1 ACOs to sign an additional three-year agreement, and appreciate that the agency did not further diminish the savings rates as were first proposed," Orlowski says.
Melissa Jackson, senior associate director of policy at the Chicago-based American Hospital Association, says maintaining and improving MSSP Track 1 is essential to help give healthcare providers more time to make the transition from Medicare's longstanding, volume-based, fee-for-service payment model to value-based payment models.
"About 99% of MSSP participants are in Track 1. We're skeptical there are a lot of people ready to advance past Track 1. One would hope that as CMS learns from the other ACO programs, they will work improvements into the Medicare Shared Savings Program. We're still on a learning track. We know from talking with our members that they are all over the place [in readiness for assuming more risk and adopting value-based payment models]," Jackson says.
CMS officials were queried for this report, but they could not provide comments before the publication deadline.
CMS Introduces Track 3
In addition to maintaining Track 1 as an MSSP enrollment option, other highlights of the 2016 Final Rule include:
The creation of Track 3, a two-sided risk option that features a higher shared savings rate and prospective assignment of patients to ACOs
Streamlined data sharing between CMS and ACOs
For MSSP participants who posted shared savings gains and are seeking to renew their contracts, CMS plans to adjust the financial benchmark to preserve the sweetness of the pot.
In a prepared statement issued with Thursday's release of the 2016 Final Rule, CMS officials said more adjustments to the MSSP financial benchmark calculation will be made later this year:
"[The Final Rule] refines the policies for resetting ACO benchmarks to help ensure that the program continues to provide strong incentives for ACOs to improve patient care and generate cost savings, and announces CMS' intent to propose further improvements to the benchmarking methodology later this year."
Healthcare providers are urging CMS to make several other improvements to MSSP Track 1, including waivers for Medicare's three-day inpatient-stay trigger for payment of skilled nursing facility (SNF) costs and limiting payment for telemedicine services to rural areas. Pioneer ACO and MSSP Track 3 have waivers for the SNF three-day rule.
"Pioneer ACO providers have benefited from having the SNF exemption and CMS has saved more money," Jackson said.
Orlowski says the MSSP Track 1 waivers would help program participants to redesign care in ways that are oriented toward generating value for patients.
"Providers that form ACOs have new financial incentives to provide the right care, at the right time, and in the right setting," Orlowski said. "The waivers of a three-day inpatient stay requirement for SNF eligibility and the rural geography requirement for telemedicine would allow ACOs to treat patients in lower-cost settings and prevent unnecessary hospitalizations. This is better for patients, and helps ACOs earn shared savings. We are encouraged to see CMS include the SNF waiver in the Final Rule, but are disappointed that it is limited to only Track 3 ACOs and that the proposed telemedicine waiver wasn't finalized. "
Against the 3-Day Rule
Barbara McAneny, MD, chairperson of the Chicago-based American Medical Association Board of Trustees, says the SNF three-day rule is an inefficient, one-size-fits-all restriction on ACO physicians.
"Physicians participating in ACOs should be able to place patients in whatever care setting is most appropriate for the services that they need. In addition, because determinations about shared savings, and shared losses for Track 2 ACOs are driven by growth in the total cost of care for the patients assigned to the ACO, all ACOs have an incentive to keep patients out of high-cost settings like hospitals and SNFs if they do not require inpatient care. The AMA does not think this waiver should have been limited only to MSSP Track 3 ACOs," McAneny says.
Barbara L. McAneny, MD
Accounting for nearly a quarter of national healthcare spending, Medicare is widely acknowledged as a powerful engine for change in the healthcare industry. However, McAneny says CMS has to allow for diversity of circumstance, readiness, specialty variation, and local market nuances in the creation of value-based payment models.
"The real question is not how big will the MSSP get, but how far will delivery reform get?" the New Mexico oncologist says. "Physicians in many different practice arrangements and specialties have ideas about how to improve care for their patients while also reducing healthcare spending for conditions like heart disease, stroke, cancer, and osteoarthritis. Currently, neither the Medicare fee schedule nor the MSSP give physicians the flexibility or predictability that they need to really change the delivery of patient care."
"For example," McAneny says, "if a family physician consults with an endocrinologist about managing their patients with diabetes or consults with a neurologist about their patients who have Alzheimer's, there is still no coverage in either regular Medicare or an ACO for this joint treatment planning, and the physicians involved will lose revenue they could have earned from face-to-face services."
Clif Gaus, president and CEO of the Washington, DC-based National Association of ACOs, says CMS should adopt several more improvements for MSSP, particularly in Track 1, such as prospective patient assignment and the waivers for the SNF three-day rule and telemedicine coverage. "There still is a lot of interest in forming new ACOs and the private payers are committed, [but] we are many years away from large-scale, two-sided risk ACO implementation," he says.
Data on proton beam therapy shows increasing promise, but high equipment costs mean that provider adoption and payer coverage remain iffy.
The pace is closer to baby steps than the speed of light, but proton beam therapy (PBT) appears to be gaining ground as an alternative to more conventional photon-based radiation oncology treatments.
PBT facility operators are well aware, however, that adoption of the technology will continue to lag as long as equipment costs remain prohibitively high. The American Society for Radiation Oncology (ASTRO) has embraced PBT, but costs have placed a limit on the warmth of that clinch. Meanwhile, insurers such as Aetna say there are financial bounds for medical technology that should not be exceeded lightly.
Carl Rossi, MD, medical director of the Scripps Proton Therapy Center in San Diego, is confident that proton beam devices will eventually gain a significant share of the radiation oncology market.
Rossi says PBT has a fundamental physical edge over comparable photon-based radiation treatment with X-rays and gamma rays. "We have a beam that stops, and they don't," he told me last week after presenting data from the new pencil-beam PBT devices that Scripps fired up early last year. "We will always have a better beam."
Carl Rossi, MD
Despite having physics on their side, he says PBT advocates have faced two daunting obstacles in their quest to match photon-based technology: astronomical equipment costs and the paucity of clinical studies on PBT in the United States. But the results achieved in the first 15 months of operating pencil-beam PBT devices at Scripps indicate those obstacles are eroding.
The facility that houses the pencil-beam PBT devices at Scripps is owned by San Diego, CA-based Advanced Particle Therapy, which spent about $220 million to develop the site. Even with that jaw-dropping price tag, Scripps has managed to achieve cost-competitiveness with photon-based treatments for some tumors, including early-stage breast cancer, Rossi told me.
"We can treat patients in two weeks compared to as many as seven weeks with other forms of radiation therapy. … We're able to treat them in a faster manner, with the same toxicology and the same side effects. It also cuts the costs of treatment dramatically."
Although Rossi declined to name names, he says two commercial payers have concluded that pencil-beam PBT at Scripps is delivering more cost-effective treatment for early-stage breast cancer than comparable photon-based radiation treatment. "Insurers have looked at this and said we are cheaper and contracted on that basis."
The cost of producing PBT equipment also is falling, he says, noting that several companies have entered the proton cyclotron construction market over the past decade.
"There has been an increase in proton beam therapy center construction world-wide," says Rossi, who worked earlier in his career at the country's first PBT facility, which the federal government built at Loma Linda (CA) University Medical Center. "Part of that construction boom is you can go out and get these things. You no longer have to go to a national lab to build a cyclotron."
Scripps has joined several other PBT facilities across the country to gather clinical data that will help determine the efficacy of treating tumors with proton radiation.
In conjunction with researchers at Oakland-based UC Health, Scripps is set to start a clinical trial for lung cancer treatment that will compare patients who receive proton-based radiation against patients who receive photon-based radiation. "It will answer these questions about how much better proton beam therapy is for patients," Rossi says.
In addition to participating in other clinical trials for specific types of tumors, Scripps has enrolled 150 of its pencil-beam PBT patients into a clinical data registry with other PBT facilities across the country. "We are doing this deliberately to see how much of a gain is realized from not treating normal tissue with radiation. In the long run, we know we need to get the data," Rossi says.
Cost remains a crucial challenge
As noted in last week's column, cost is king in the health plan world. "If the cost to the insurers of delivering proton beam therapy was the same as [photon-based therapy], these viability discussions would stop," Rossi says.
Sameer Keole, MD, the medical director of Mayo Clinic's PBT facility in Arizona, also serves as a board member of the society of radiation oncologists, ASTRO. He says ASTRO is aware of both the costs and benefits of PBT.
"The issue is the cost differential," Keole told me yesterday. "At ASTRO, we acknowledge this has higher costs, but it has tremendous potential for some classes of patients. In pediatrics, proton beam therapy is already emerging as the superior treatment. In adults, because there is a high cost and the benefits are not as clear, we have to prove the efficacy. But we are talking about an FDA-approved technology. ASTRO does not feel it is investigational or experimental. We do acknowledge, at this time, that it is more expensive."
With cost reigning supreme among payers, a chicken-and-egg conundrum is constraining PBT: Clinical trials are required to convince commercial payers to cover PBT treatment for a wide swath of tumors, but it is difficult to generate the patient volumes necessary to conduct clinical trials without PBT treatment coverage from payers.
"ASTRO doesn't take sides with vendors or different technologies. The only side we're on is the patient's. There is going to be a certain number of patients that are going to benefit. We want to see proton therapy get a fair shake," Keole says. "We can't get the data we need until we can conduct clinical trials, and to do that we need the help of everybody; from radiation oncologists, who actually do the work, to payers, who are needed to fund the work."
The Hartford, CT-based commercial payer offers coverage for PBT treatment of tumors that have been proven effective in clinical trials conducted in the United States. Aetna's list of tumors eligible for PBT coverage is limited to pediatric malignancies, chordomas or chondrosarcomas at the base of the skull or cervical spine, and uveal melanomas confined to the globe of the eye.
Particularly with the recent introduction of pencil-beam technology, PBT facilities are treating a far wider variety of tumors. At the Scripps pencil-beam PBT facility, Rossi told me, doctors have treated a dozen types of tumors such as cancer in breast, lung, and digestive system tissue.
Despite the potential of PBT, Andrew Baskin, MD,vice president and national medical director for quality performance at Aetna, says cost and effectiveness must be balanced.
"We want the right treatments to be available to members who need them," Baskin told me yesterday. "At the same time, we, like many others, are concerned about the nation's ability to sustain continued escalating costs of new therapies. Several studies have attempted to analyze the simple cost and cost-effectiveness of proton beam therapy, as noted in Aetna's clinical policy bulletin, but more studies are needed. The U.S. must address how the healthcare system can reward clinical innovation while also ensuring access to affordable treatments and services."
A longtime standard-bearer of medical underwriting calls it quits and puts itself on the block. Its fatal flaw? Being out of sync with post-PPACA market realities.
When revolutionary change comes to an industry, the fittest thrive and the frailest wither.
In the healthcare marketplace, frailty comes in many forms. Most weaknesses are clearly seen on balance sheets, but one of the most fatal flaws is far more fundamental than almost any set of line items bathed in red ink. When business models and corporate cultures fail to adapt to marketplace transformation, organizations tempt fate and risk a bad date with destiny.
The recent announcement that Assurant Inc. plans to "exit" the health insurance market by next year is a fateful turn for the New York-based company and its Assurant Health division, which has been in the health insurance business since 1892. Having racked up losses estimated at $85 million in the first quarter of this year, it appears that the longtime standard-bearer of medical underwriting could be headed to the dustbin of history.
Assurant Health has about 1 million covered lives, mainly in the small business and individual markets. Company officials declined to comment for this column. Who could find fault in their silence? No one wants to admit to falling behind the times.
Soon after adoption of the Patient Protection and Affordable Care Act in March 2010, Assurant Health announced the layoffs of 130 workers. Just a few weeks before that restructuring ax fell, then-CEO Robert Pollack told investors an unfortunate truth about the organization: "Our historical strength has been world-class risk management around underwriting."
In March 2010, underwriting should have been a dirty word. Certainly today, no health plan organization wants to be identified with the practice of freezing sick people out of healthcare coverage because they are sick.
The discredited practice of underwriting left its mark on Assurant Health. In 2009, the Supreme Court of South Carolina upheld a multimillion dollar jury verdict against Assurant Health, which was operating as Fortis Insurance Company when the lawsuit began. A jury had found that Fortis unlawfully rescinded a man's health coverage after he tested positive for human immunodeficiency virus. The South Carolina case also revealed that Fortis had systematically targeted HIV-positive beneficiaries for cancellation of health coverage.
Out of Sync
Uwe Reinhardt, professor of economics and public affairs at Princeton University, says Assurant Health's underwriting tradition is out of sync with post-PPACA market realities.
"It seems that Assurant's pre-Obamacare business model relied heavily on cherry picking and ex-post rescission, plus a low medical loss ratio," he told me this week, noting the "MLR" calculation that measures health plan administrative costs against premium dollars spent on healthcare services and quality improvement. "Obamacare was specifically designed to drive such firms out of business. One might say, 'Good riddance!'"
Time for Change
Successful health plans in the emerging healthcare marketplace are catering to consumers, according to Marianne Udow-Phillips, director of the Center for Healthcare Research & Transformation (CHRT) at the University of Michigan. "It's a time of change for health plans and they have to prepare," she told me this week. "Customer service has always been bad at health plans, and it has to get better. They need more technology. They need to make it easier for their members to figure out."
Based on research of Michigan's 2014 individual health coverage market, CHRT released a report this week that shows cost is the primary factor driving consumer decision-making. In the study, 92% of beneficiaries cited cost as a "very important" factor in purchasing health coverage, with only 41% citing a health plan's provider network as a "very important" factor.
Udow-Phillips, who worked for two decades at Detroit-based Blue Cross Blue Shield of Michigan, says high-deductible health plans have put consumer skin in the game, and payers have to play with a new set of rules.
"The individual market, where you see a lot of high-deductible plans, is still small; 60% of people get coverage from their employers. But even in the employer-sponsor insurance market, consumers are facing high-deductible coverage."
She says large, established commercial payers have an undeniable advantage over their smaller longtime competitors. "You have to make some bets and make some predictions. What most health plans are doing is hedging their bets. Larger organizations like Aetna are well-positioned because they have the resources to invest in new products… Health plans have to be consumer-oriented and mindful. It's moving to a retail market, and they need to understand that."
Marianne Udow-Phillips
Data Analytics a Key to Success
Katherine Hempstead, team director and senior program officer at the Robert Wood Johnson Foundation, says critical mass and the ability to manage healthcare service utilization are key considerations for payers as US medicine shifts from volume to value.
"The successful carriers are going to be able to minimize costs by managing utilization, both through network composition and incentives to providers and through plan designs that create incentives for consumers. Data analytics and real understanding of utilization costs seem like they would be essential, and size also becomes important. It is hard to influence providers when you are a very small share of their revenue. The current conditions favor larger carriers who have leverage with delivery system participants and can invest in data analysis," Hempstead told me this week.
To thrive in the new healthcare marketplace, commercial payers must strike a delicate balance, she says. "Consumers are craving simpler plan designs, lower transactions costs, and more convenience and better customer service from the healthcare system in general… The carrier that delivers on those features stands to gain market share. However, these changes must be accomplished in a very smart way that does not unintentionally facilitate additional utilization, because cost is still king."
With the launch this spring of a nationwide telemedicine-provider network, the country's largest commercial health insurer is set to offer coverage for virtual doctor visits to 20 million beneficiaries by next year.
Telemedicine is ready for takeoff, and UnitedHealth Group is banking on it.
The commercial payer Goliath, which provides healthcare benefits coverage for more than 40 million people through the company's UnitedHealthcare division, recently announced an ambitious initiative to offer coverage for telemedicine doctor visits in 47 states and the District of Columbia.
Karen Scott, senior director for product and innovation at UnitedHealthcare, says the initiative is designed to help elevate telemedicine to the mainstream of healthcare delivery options. "Choice and access are key components of our strategy," Scott told me last week. "Our strategy is to build a robust model and infrastructure comprised of multiple provider groups, which enables us to support many types of virtual visits across the country."
UnitedHealthcare's strategy is slated to unfold over the next two years.
"With this new initiative, virtual visits are covered as an in-network benefit, and are available to self-funded customers in 2015; rolling out to fully insured and individual members in 2016," Scott told me. "We see the greatest demand among our self-funded employer groups… We can quickly enter the market and offer the benefit to a significant number of members. In 2015, 1 million members will have access to virtual visits as a covered benefit. In 2016, an additional 20 million commercial members will have access to the virtual visit network."
The potential for eye-popping growth in UnitedHealthcare's new telemedicine business line reflects rapid expansion of telemedicine service offerings across the country. Last year, 12 million Americans were served in some form through telemedicine technology, and that number is expected to double this year, according to the American Telemedicine Association.
The backbone of UnitedHealthcare's "virtual visit network" is a trio of telemedicine service providers: Boston-based American Well; San Francisco-based Doctor on Demand; and Now Clinic, a telemedicine platform developed at American Well and marketed at Optum, which is another division of UnitedHealth Group. Pooling telemedicine providers is enabling UnitedHealthcare to offer coverage for virtual doctor visits in every state except Alaska, Arkansas, and Louisiana.
The president and CEO of American Well Systems, Roy Schoenberg, MD, MPH, says the UnitedHealthcare telemedicine initiative has a "huge footprint."
"We don't want to force anyone into specific services," Schoenberg told me this week. In states served by multiple members of the televisit trio, he says American Well, Doctor on Demand, and Optum are content to let UnitedHealthcare beneficiaries pick their favored telemedicine provider. "The membership can decide which telehealth services to go for."
Telemedicine as Care Setting
UnitedHealthcare's telemedicine initiative is just scratching the surface of a burgeoning market, he says. "They're looking for telehealth to grow… beyond a quick CPAC prescription to one of the ways you get care from your doctor. What we've seen so far is the first generation of telehealth, mostly quick solutions for patients. What we're now seeing is the arrival of the second generation— catering to the much bigger chunk of healthcare in management of chronic illnesses—conditions like cancer, and behavioral health."
Roy Schoenberg, MD, MPH
That second generation of telemedicine will be focused on providers, Schoenberg says. "For telemedicine to become a care setting, we have to give just as much attention to the healthcare provider as the healthcare patient. We need to be equipping providers with technologies to make telehealth part of the way they treat patients."
Shifting the Financial Risk
The accelerated adoption of value-based payment models in the healthcare industry has emerged as a potent prompt for providers to embrace telemedicine. Schoenberg says that accountable care contracting and other value-based payment models are "shifting the financial risk to provider organizations," and that telemedicine is a powerful tool to help manage that risk.
"That transition is giving a clear message to the provider side: You need to find a better way to monitor and envelop patients. The delivery side of healthcare has realized that they have to start equipping themselves with technology to stay closer with their patients. Health systems now view telehealth as an imperative."
Payers have a crucial role to play in supporting provider adoption of telemedicine services, Schoenberg says. "Payers, historically, have needed to offer telehealth services because of their undeniable convenience. This year, health plans are starting to invest in bringing telehealth into their own provider networks."
In recognition that most health plan dollars are spent on treatment of chronic disease, he says payers are asking themselves a multibillion-dollar question: "How can we equip our physicians to treat their chronic disease patients more effectively?"
One of the answers to that question is telemedicine, Schoenberg says. "You can literally equip providers with technologies so they can care for their patients in a modern way. You can convert conversations from email and telephone exchanges into well-documented telehealth visits. The health plans have a huge role to play. It's all about payers working with providers to get telehealth technology into their hands."
UnitedHealthcare is banking on telemedicine, and it would be wise not to bet against them. Last year, its insurance division generated $120 billion in revenue, showing that its executives know a thing or two about banking.
Apple Inc., one of the largest corporations in the world, also is bullish on telemedicine, Schoenberg says. "We have had a long collaboration with Apple. Telehealth is more transformative than most people think. That company is putting telehealth in its sights."
He says there is a cartoon-like quality to the pace of telemedicine growth. "You start with a little wave, then you're 1,000 feet in the air. It's a thrilling, delightful and exciting experience."
Individual health insurance exchanges are moving toward sustainability, but some payers and providers still fear the future.
This article first appeared in the October 2014 issue of HealthLeaders magazine.
What a difference a year makes.
Last fall, the new public health insurance exchanges seemed imperiled by the technical misadventures of the federal government's bug-plagued enrollment website, healthcare.gov, and some of the related state exchanges.
But as the second open enrollment period approaches next month, early doubt about whether the exchanges for individual coverage would survive the winter has given way to a view that an HIX future is certain. Insurance companies operating on the new exchanges are looking forward to a more predictable business environment; increased competition among carriers is easing patient and provider angst over narrow networks; the HIX marketplace has become a hotbed for innovation; and some on the exchanges are vying to upend the large group market that has dominated the health insurance industry for decades.
With newly proposed mental health parity requirements, Medicaid is joining the decades-long payment reform effort that has sought to boost access to mental health services.
As cost-consciousness spreads throughout the healthcare industry, awareness is rising about the steep price of unmet mental health needs.
Statistics compiled at the Arlington, VA-based National Association on Mental Illness illustrate the crushing cost impact on healthcare providers and payers.
For youths and adults under the age of 45, mood disorders such as depression are the third most common cause of hospitalization.
Serious mental illness has been linked to many chronic diseases, with the life-expectancy of the seriously mentally ill 25 years lower than other Americans
About half of all chronic mental health conditions start by age 14, but years pass before care is provided at higher costs than early interventions.
For the healthcare industry, part of the solution to this daunting economic problem is mental health parity, a visionary goal for healthcare coverage that policy makers in Washington began pursuing in earnest nearly two decades ago.
The tentative first step toward parity in group insurance coverage began during the Clinton administration, with passage of the Mental Health Parity Act of 1996. The law's requirements included equating the coverage caps for physical health conditions and mental health conditions, but huge parity gaps remained, such as exempting substance abuse services from provisions of the law.
A leap forward came in 2008, when President George W. Bush signed the Mental Health Parity and Addiction Equity Act. The law embraced and extended the provisions of the 1996 legislation, including coverage parity requirements for substance abuse services.
In 2010, the Patient Protection and Affordable Care Act introduced mental health parity requirements to the individual insurance market.
The latest advancement for mental health parity came this month, with federal officials proposing mental health parity requirements for Medicaid and the Children's Health Insurance Program (CHIP). "The goal is to align as much as possible with the approach taken in the final [federal mental health parity] regulation to create consistency between the commercial and Medicaid markets, according to a Centers for Medicare & Medicaid Services fact sheet released with the proposed rules.
The proposed rules include two crucial provisions:
Plans must provide beneficiaries and providers with the criteria for medical-necessity determinations for mental health and substance abuse disorder benefits.
Plan enrollees would gain the right to know the reasons behind denials of claims for mental health or substance abuse services.
This week, Vikki Wachino, director of the Center for Medicaid and CHIP Services, told me the proposed rules reflect a continued commitment at the federal level to push for mental health parity reforms.
"Improving quality and access to care impacts the health of our nation. Whether private insurance, Medicaid, or CHIP, all Americans deserve access to quality mental health services and substance use disorder services… The proposed rule is a way to advance equity in the delivery of mental health and substance use disorder services. The proposal will support federal and state efforts to promote access to mental health and substance use services as part of broader delivery system reform through the Affordable Care Act."
Kimberly DiBella-Farber, COO of the Child Guidance Center of Southern Connecticut Inc., says the proposed mental health parity rules for Medicaid and CHIP are another step in the right direction, particularly for states with tight-fisted Medicaid benefits that limit access to services. However, the mental health parity journey is far from over, she says.
'Still a Lot of Work to Do' Many steps must be taken before it is as easy to seek treatment for a broken bone as a broken spirit, DiBella-Farber told me. Payment reform has strengthened the legal and regulatory framework for requiring coverage of mental health services, but there are gaping holes in the continuum of care that providers can offer people with mental health conditions, she says. "There's still a lot of work to do."
For starters, there are not enough mental health providers to meet the demand for mental health services, particularly for the Medicaid-eligible population, DiBella-Farber says. "New graduates are not looking to become Medicaid providers. In some areas of Connecticut and New York, you can put up a shingle and work in the insurance realm. For clinics, it's hard to compete for staff when private practice salaries range from $150 per hour to $200 per hour."
Mental health providers also face an intractable infrastructure investment shortage, she says. "We have clinics, we have emergency rooms, and we have hospitals. We don't have any in-between levels of care. Not only do we need staff, we need programs."
Across the country, transitional housing facilities for people with mental health conditions are either woefully inadequate or nonexistent, DiBella-Farber says. "There are a lot of people who can't live on their own or hold down a job for 12 months a year because of their condition. It makes a huge difference to their health when they know they're not going to be kicked out onto the streets because they experience a difficult episode."
She says there are several other vitally important programs missing or underfunded in the mental health continuum of care, including intensive outpatient programs, home therapy visits, and case management for "concrete needs" such as groceries and employment services.
The mass shooting at Sandy Hook Elementary School in Newtown, CT, has prompted discussions about beefing up mental health programs in The Constitution State, but progress has been painfully slow, DiBella-Farber says.
"We're two-and-a-half years later, and really nothing has changed. Now we're looking at a state budget deficit. … It's definitely worth the investment, but it's a hard sell when there's no guarantee where the money is going to come from."
High Stakes and Untapped Opportunities
Katherine Hempstead, health insurance program director at the Princeton, NJ-based Robert Wood Johnson Foundation, says demand for mental health services is clearly outstripping supply. "There needs to be better ways to provide access to behavioral health providers at a lower cost. I believe there are untapped opportunities involving scope of practice and use of technology that can contribute to better access and care management," she told me this week.
Hempstead says the proposed mental health parity rules for Medicaid and CHIP appear well-intended, adding the stakes are high for people suffering from mental illness.
"The actual enforcement of parity provisions is challenging, and has been so in the private insurance arena as well. The requirement for more transparency about medical necessity rules is a helpful step. … A lot of mental health conditions are treatable rather than curable, but the treatment can make an enormous difference in terms of quality of life and productivity, in the Medicaid population as well as the privately insured population."
Four clinics integrated with a big St. Louis hospital have expanded their menu of services, boosting patient visits at the low-cost settings and staving off competition.
Financial payment models and shifting patient patterns are rapidly transforming the healthcare industry.
St. Anthony's Medical Center in St. Louis is banking on the urgent care center (UCC) becoming a new center of gravity in healthcare.
Charles Lewis, MSN, RN
In a HealthLeaders Mediawebcast tomorrow, a pair of St. Anthony's executives will detail how the 767-bed hospital has redesigned four wholly owned urgent care centers into more robust players in the organization's game plan for the continuum of care.
The ongoing initiative includes slashing UCC patient transfer times to the St. Anthony's emergency department and providing a "blended model" of UCC services, which features not only acute care but also occupational medicine and health and wellness programs.
Webcast presenter Charles Lewis, MSN, RN, executive director of emergency services and ambulatory care at St. Anthony's, says the four UCCs are staffed to provide a broader array of services than most standalone or business-chain urgent care centers.
"We staff our urgent care centers with board-certified physicians and midlevel providers who are supported by a mission-ready workforce. This staffing enables each urgent care center to provide care and services to a multitude of patient types: urgent illness or injury, occupational medicine and workplace injury, preventive health, outpatient lab, and imaging. The urgent care centers also serve as an alternative care site when patients cannot see their primary care physicians," Lewis told me this week.
Under St. Anthony's UCC model, each urgent care facility has a minimum of eight staff members on duty. In addition to clinical staff such as physicians and lab technicians, the roster includes an occupational medicine doctor and at least one occupational medicine technician.
St. Anthony's has been in the urgent care center business for two decades, assembling its foursome of UCC facilities through a combination of acquisitions and internal development. With dozens of rival UCCs in the St. Louis metropolitan area, competition is a major challenge. The revamped St. Anthony's UCCs have reversed a downward trend in patient visits, according to Lewis and his HealthLeaders webcast co-presenter, Beverly Bokovitz, MSN, RN, chief nursing officer at the medical center.
"Our urgent care centers provide care for almost 80,000 patients each year, and they serve a multitude of patient types," Lewis says.
The redesigned St. Anthony's UCCs, which use the same electronic health records system as the medical center’s emergency department, have also boosted the synergy between the urgent care facilities and the rest of the organization, he says. St. Anthony's main campus in St. Louis remains the heart of the organization, but the recent UCC redesign reflects a broader vision of healthcare's future that extends beyond the hospital walls.
"We recently implemented a direct-to-emergency department bed transfer after a doc-to-doc handoff for patients coming from our urgent care centers and from the primary care physicians with St. Anthony's Physician Organization. We've found this change greatly reduces duplication of testing and services, and it improves the patient experience," he told me.
The UCC redesign at St. Anthony's not only takes a step toward a less hospital-centric healthcare industry, but also embodies the mantra of delivering the right care, at the right time, in the right place.
The cost-effectiveness of UCC facilities is at least implied in the 2014 patient visit and gross revenue data at St. Anthony's. The UCC facilities posted 77,357 patient visits, generating $28.9 million in gross revenue. The emergency department posted fewer patient visits, 71,043, generating $71.3 million in gross revenue.
The healthcare landscape of the future is still developing, but urgent care facilities appear destined to be a key part.
A plan to down-weight Medicare Advantage star ratings to reflect the impact of beneficiary socioeconomic status has been put on hold, prompting strapped health plans to press for relief.
Federal officials are stuck at the drawing board.
Lois Simon
President, Commonwealth Care Alliance
Since last year, the Centers for Medicare & Medicaid Services has been mulling risk-adjustment of Medicare Advantage star ratings to reflect the impact of beneficiary socioeconomic status on health plan performance. In February, CMS proposed down-weighting a half-dozen Medicare Advantage star ratings, partly on the basis of statistical evidence linking disadvantaged socioeconomic status to relatively poor clinical outcomes in star-rating metrics such as hypertension control.
In the final 2016 MA payment rate and "Call Letter" rules announced Monday, CMS dropped the plan to down-weight six MA star-rating metrics. The agency "believes additional research into what is driving the differential performance on a subset of measures is necessary before any permanent changes in the Star Ratings measurements can be developed and implemented."
In a conference call Monday with reporters, CMS Deputy Administrator Sean Cavanaugh said federal officials remain committed to "adjustments in the future" to help create a level playing field for MA health plans with high percentages of disadvantaged beneficiaries.
For regulators, the key hurdle is gaining a better understanding of the causal relationships between socioeconomic status (SES) and delivery of healthcare services, Cavanaugh said. "There's not yet a consensus on what is driving the observed differences."
The differences are real and have a price that MA health plans are paying, Lois Simon, president of Boston-based Commonwealth Care Alliance (CCA), told me Tuesday. "Star ratings are lower in Medicare Advantage plans that are serving high percentages of 'dual-eligibles,'" she said, using the common designation for disadvantaged seniors who are eligible for services under both Medicare and Medicaid.
She says it takes more optimization of resources to serve these individuals. "It is harder to reach them. It can be harder to establish trust with them. You need to expend more resources to achieve good health outcomes with this population."
MA health plans garner reimbursement bonuses if they can cross the four-star threshold in MA's five-star rating program. CCA's MA health plan, which serves about 5,600 seniors with a high percentage of dual-eligible beneficiaries, has been able to achieve an overall 4.5-star rating through an expansive and expensive approach to team-based care, Simon says.
CCA assembles larges teams of caregivers around beneficiaries ranging from primary care physicians to geriatric social workers. "All of them work collaboratively on a baseline assessment. Many of those baseline issues are not medical, and we identify resources in the community that can make a difference in people's lives: finding safer housing; helping people apply for assistance programs like food stamps; arranging for mental healthcare services; and monitoring the medications for frail elders – we check to see who's going to go to the drugstore and actually pick it up," she says.
Richard Bringwatt
President, SNP Alliance
"These are the kinds of things I do as a daughter for my mother," Simon adds, "but not everyone has that kind of family support."
'Outside the Control of the Plans'
Richard Bringwatt, president of the SNP Alliance, a Washington, DC-based trade association that represents special needs plans, says CMS has to find a way to offset the costs tied to providing healthcare services to dual-eligible seniors or risk driving the payers who serve this population out of the MA market.
"By not risk-adjusting for SES, you create incentives to avoid the poor," Bringwatt says. "Before risk-adjustment [was adopted in healthcare], there was an incentive to avoid sick people and to avoid the people with complex cases."
He thinks CMS has made the right call to delay the modest proposal to risk-adjust MA star ratings for SES, but he wants federal officials to act soon.
"The stars program still disadvantages dual-eligible beneficiaries served by specialty care plans. CMS needs to keep itself on the hook for providing meaningful relief in the short term while it seeks to find a more workable solution for the long term."
Last month, the SNP Alliance and Bowie, MD-based Inovalon released a data-heavy study on the impact of beneficiary SES on Medicare Advantage star ratings. The study, which includes claims data from 2.2 million MA beneficiaries, used the largest data set available, says Christie Teigland, PhD, Inovalon's senior director of statistical research.
Inovalon researchers worked closely with CMS officials to establish that several SES factors have a demonstrable impact on MA star-rating performance. "This kind of analysis was never available before," she told me.
Bringwatt says one of the key findings of the study is that underlying factors associated with disadvantaged neighborhoods such as shortages of physicians are driving weak performance in MA star ratings for health plans with high percentages of dual-eligible beneficiaries. "The differences are outside the control of the plans [and] independent of the design of the plans."
Teigland says the Inovalon study found wide variation in the impact of SES on Medicare Advantage star ratings, including geographic variation and different blends of SES factors affecting star metrics in varying degrees. "Different factors influence different measures."
The study focused on seven MA star metrics, including breast cancer screening rates. Poverty rates were associated with performance for most, but not all, of the seven MA star metrics. Teigland says breast cancer screening rates demonstrated geographic variation due to "different standards of practice across the country."
CMS faces "a long process" establishing the mix of SES factors that are impacting star metrics and crafting an appropriate solution, Teigland adds.
"If you're going to do it right, you have to go through a process that has a lot of variables to it," she says. Time is of the essence for MA health plans that serve populations with high percentages of dual-eligible beneficiaries because "the plans can't wait that long. Plans are bleeding and losing dollars."
Alternative Approach to Level Playing Field
Teigland says the risk-adjustments to MA star ratings for SES that were proposed in February were not adequately targeted to have a significant impact.
"We ran those numbers and there was zero impact on the average star rating. The aggregate result was zero change," she says. About 15 out of 500 MA health plans her team studied would have posted star-rating gains under the CMS plan to down-weight six MA star metrics to reflect SES impact.
Simon says a better option to account for the higher costs linked to serving dual-eligible MA beneficiaries is to add an adjustment factor to the overall payment methodology that would offset the financial burden of serving a high-risk population. "It would be cleaner to make the adjustment on the payment methodology and let the stars ratings fall where they may."
This week, the Empire State is taking a bold step toward boosting consumerism in the healthcare industry, with enactment of a new transparency law that sets responsibilities for providers, payers, and patients.
New Yorkers know how to cut a deal.
Ambitious healthcare transparency legislation approved a year ago in Albany goes into force this week. The "Emergency Medical Services and Surprise Bills" law features consumer protections for out-of-network care, a pricing benchmark for healthcare services based on nearly 2 million NY insurance claims, and an independent dispute resolution process for providers and payers to arbitrate contested billings.
Robin Gelburd
FAIR Health President
FAIR Health Inc., a not-for-profit corporation founded in 2009 to build a national database of insurance claim information and serve as a resource for the healthcare industry, is providing the data for setting the new transparency law's pricing benchmark. FAIR Health President Robin Gelburd says the new law has thrust the Empire State into the healthcare transparency limelight.
"New York was successful in getting the law passed because it seeks to afford consumers tangible protections but there's breathing room in the law," Gelburd told me this week. "It's not intended to be overly intrusive on provider network design. It's a workable solution and approach."
She says the new law was adopted with widespread support, even among healthcare providers, who have been wary of transparency initiatives in other states.
"There's a balancing of a variety of different interests. In New York, the medical society was at the table, as well as the hospitals. … There was a lot of give-and-take, and there was general satisfaction in the compromises they had to make"
Fittingly with Major League Baseball returning to action this weekend, the independent dispute resolution (IDR) mechanism in the new law features "baseball arbitration." The Medical Society of the State of New York website says the IDR mechanism ensures fairness for providers and payers.
"Either the physician or insurer could bring the claim to the IDR process. To encourage reasonableness on both sides, the IDR entity would be required to choose between the plan's payment or the non?participating physician's fee ("baseball arbitration"). Only in the rare instances where the reviewer believed that a settlement is reasonably likely or both the physician fee and insurer payment represent unreasonable extremes, the reviewer can give the parties ten business days to negotiate a fee without consequence if one or neither party wished to participate in such a re?negotiation."
The pricing benchmark is a crucial component of the new transparency law because it exemplifies the initiative's attempt to "properly contextualize" healthcare information and "create a common vocabulary" to promote apples-to-apples comparisons, Gelburd says.
Under the new law, pricing of healthcare services is geared to usual and customary costs (UCC) drawn from FAIR Health's insurance claim database. The UCC pricing benchmark is 80% of the average billing for a service found in the FAIR Health database.
"Health plans have to describe how they reimburse relative to that benchmark, but they don't have to pay at that level," Gelburd says. "New York took the step of applying a standardized meaning to usual and customary cost."
She says the pricing benchmark is slated to play a pair of crucial functions. "It will serve as a point of articulation for benefits that are available to a health plan member. It will also play a role in dispute resolution. If the insurer and the provider don't agree on the bill for services … UCC becomes one of the relevant factors to look at. It gives you some structure, some guide posts to help guide the conversation."
Gelburd says the FAIR Health claims database is serving as an indispensable source of truth for healthcare stakeholders in New York and across the nation.
"Everyone needs independent data to advance decision-making. Our database has become an oasis that many people are coming to drink from," she told me, adding that the national database is helping healthcare officials to craft network adequacy regulations, develop benefit design innovations, and direct epidemiological research. "It's become a real looking-glass for the country. We feel the responsibility of the trust that people have placed in us."
New York’s new transparency law has great promise but much work lies ahead.
"Given the creativity and the good intentions that went into crafting this law, there are many more steps to take," Gelburd says. "Now, the real challenge is to make sure there's consumer awareness of the law, and all the key stakeholders have to make sure there are resources available to consumers."
For health plan members, the new transparency law provides several consumer protections related to provider networks, she says.
"Networks are the source of the river [for claims disputes]. One of the key issues that's being addressed by the law is surprise bills. To avoid surprise bills, you have to go to the source of the river and find out what's in-network and out-of-network. This law places the burden on everyone."
Under the new law, if a health plan member cannot find a particular service or doctor in-network, "there is a pathway to get that certification" and avoid out-of-network billing, Gelburd says. The law allows plan members to request access to a particular service or doctor to be considered in-network and for health plans to evaluate the requests. Patients have appeal rights.
Transparency is essential to make sure providers, payers, and patients are treated fairly, she says: "For this law to work, consumers need to go to information that's reliable, robust, and up-to-date."
Healthcare Consumerism has Far to Go
New York has taken a leap forward in achieving healthcare industry transparency; but on a national scale, the journey has just begun, according to the findings of a consumer survey that the National Health Council released last month.
The survey focused on people with chronic illnesses who purchased health coverage last year on the new public insurance exchanges. The research included six focus groups in three cities and more than 400 health plan beneficiaries polled nationwide. A significant information gap is among the top findings of the research: Only 42% of gold plan enrollees reported having enough information to select a health plan, with even worse results for silver and bronze enrollees, who reported having enough data to make an informed decision 37% and 24% of the time, respectively.
Marc Boutin, CEO of the NHC, which is a Washington, DC-based nonprofit patient advocacy group, says consumerism is establishing a tenuous hold in the healthcare industry. "The first stage of consumerism is there's a demand in the marketplace. What we're seeing in healthcare is there is consumer demand for information, and now the system needs to build up to meet that demand," he told me this week.
Boutin says the healthcare industry needs to reach three milestones before consumers can play a constructive role in the marketplace: transparency in transactions; making transaction information easily accessible, useful and uniform; and presenting information in a "machine-readable" format.
"There's been a lot of movement on the transparency side, but you need all three elements to create the tools that make consumerism work," Boutin says, adding that providing consumers with information on health service cost appears to be an obstacle nationwide. "Cost is not reported in a way that is transparent, uniform, or machine-readable yet."
While fostering consumerism in healthcare will take several more years of effort, Boutin is hopeful the country has reached a tipping point.
"We're still pretty close to the ‘hopelessly opaque’ mark on the spectrum, but we're seeing dramatic movement. Transparency and uniformity are the first two big steps you have to take. And this needs to go farther than the exchanges. It needs to go to the broader insurance industry. It's just a matter of time."
The transparency law in New York applies to all health plans that are purchased or renewed after April 1.
