Medicare Advantage is facing financial firestorms on two fronts, with insurers resisting a 2016 payment cut and beneficiary advocates fighting risk-adjustment of star ratings for socio-economic status.
Where you stand depends on where you sit.
That maxim of bureaucratic politics, known as Miles' Law, covers a lot of ground in deciphering the proposed 2016 Medicare Advantage payment rate for insurance carriers.
The perspective of the Centers for Medicare & Medicaid Services represents the rosiest payment rate scenario. Upon release of the MA proposed payment rate and rule changes Feb. 20, Sean Cavanaugh, director of CMS's Center for Medicare, declared that CMS had set "stable rate policies" for the value-based alternative to traditional fee-for-service Medicare.
CMS is forecasting a -0.95% cut in next year's MA payment rate. With a relatively complicated formula applied county-to-county nationwide, MA payment rates can vary widely plan to plan and geographically. Built-in variables include a "growth rate" reflecting expected expenditures on MA beneficiary services and funding cuts mandated under the Patient Protection and Affordable Care Act.
CMS has added a positive spin to the proposed 2016 MA payment rate, contending that most insurance carriers should post 2016 revenue in the black after their beneficiaries are risk-adjusted for chronic illnesses. Cavanaugh says risk-adjustment "coding" of beneficiaries should boost 2016 MA health plan revenue 2% next year, resulting in a 1.05% total revenue impact from the proposed MA payment rate and rules.
The view from insurance carrier boardrooms is dark.
In a Form 8-K filing with the Security and Exchange Commission on Feb. 20, Lexington, KY-based Humana Inc. pegs its expected revenue impact from the proposed 2016 MA payment rate at -2.45%. Humana reports that the insurance carrier's gloomier forecast is "primarily driven" by proposed changes in CMS risk modeling, which would result in a "larger-than-average decline… given the company's geographic and member diagnosis mix."
America's Health Insurance Plans, the industry's trade association, is making dire MA predictions. AHIP commissioned an actuarial report on the proposed 2016 MA payment rate that was released Feb. 25. Prepared by New York-based Oliver Wyman, it pegs the expected revenue impact of the proposed MA payment rate at -1.2% and includes a warning about the cumulative impact of revenue declines at MA health plans, which took a -4.0% hit in 2014 and -5.2% haircut this year, according to the management consultancy.
The cutbacks "could result in a high degree of disruption in the MA market," the report states. "This includes the potential for plan exits, reductions in service areas, reduced benefits, provider network changes, and MA plan disenrollment due to declines in plan value from 2014 to 2016."
The view from Wall Street is neither as positive as the CMS perspective nor as negative as the health plan vantage point.
"Overall, when you look at the Medicare Advantage numbers, they're very good," says Stephen Zaharuk, senior vice president at Moody's Investors Service. He notes that MA premiums have been stable for several years, with enrollment growing steadily to more than 16 million seniors this year, accounting for about one-third of the total Medicare beneficiary population.
Zaharuk estimates the revenue impact of the proposed 2016 MA payment rate at -1.45%. He arrived at this figure by subtracting a 0.5% revenue increase CMS is anticipating from payment bonuses linked to MA quality-star ratings. The five-star program gives insurance carriers financial bonuses for crossing the four-star threshold. Zaharuk says he tried to set a "pure rate" forecast: "Let's just look at it without all the bells and whistles."
Consecutive years of MA payment rate cuts are forcing insurance carriers to perform "a balancing act," he says, which pits continued growth in beneficiary enrollment against unpopular changes in plan design such as reduced benefits or increased premiums. "It's been a series of cuts year after year after year."
Price inflation for medical services has also been cutting MA health plan bottom lines, Zaharuk says. "Insurance carriers are getting more conservative in how they price their plans… There's a constant erosion of reimbursement that's going to be hard to maintain."
In a "credit outlook" report published by Moody's Investors Service Feb. 26, Zaharuk wrote that the MA payment rate squeeze has reached a pivotal phase.
"Although the proposed [2016] reduction is less than the 3%–5% reduction that companies had to absorb this year, the proposed rate decrease will challenge insurers to provide products that continue to attract seniors. Over the past several years, MA membership has grown despite the decline in rates to the insurers. However, we believe that at some point continued reimbursement cuts will reverse this trend. The proposed reduction for 2016 may not tip the scales, but every cut makes it more difficult for insurers to maintain the level of benefits they have provided to their members.
In 2015, insurers used a combination of increased premiums, lower benefits and narrower provider networks to compensate for lower reimbursement rates. Although overall MA membership increased, insurers have exited some markets and some have recorded decreases in their membership."
Accounting for Socio-Economic Status in Star Ratings
Miles' Law also applies to the simmering controversy over risk-adjusting MA star ratings to reflect the impact of beneficiary socio-economic status (SES).
Under the proposed 2016 MA payment rate and rules, CMS plans to down-weight six MA star ratings to account for the impact of SES.
MA health plans with many economically disadvantaged beneficiaries, particularly members who are dual-eligible for Medicare and Medicaid, have been pressing CMS to risk-adjust MA star ratings to reflect downward pressures on quality performance that insurers attribute to SES.
"Multiple MA organizations and [Medicare Prescription Drug Plan] sponsors believe that plans with a high percentage of dual-eligible (Dual) and/or low-income subsidy (LIS) enrollees are disadvantaged in the current Star Ratings Program. Similar claims have been made about other Medicare quality measurement programs such as readmission rates," according to the MA 2016 Draft Call Letter released on Feb. 20.
CMS is conducting an ongoing research effort to determine the impact of beneficiary SES on MA star ratings performance. The early results of the research prompted the agency to act, according to the letter.
The Willimantic, CT-based Center for Medicare Advocacy (CMA), a non-profit group that provides education, advocacy, and legal services for beneficiaries, has a negative view of risk-adjusting MA star ratings for SES.
Kata Kertesz, a CMA attorney who has authored a multi-pronged critique of risk-adjusting quality stars for SES, says the change to the ratings program is misguided. "Decreasing the weight of measures that CMS has found to disproportionately impact dual-eligible beneficiaries will in essence increase the star ratings for plans, without actually improving care for dual-eligible beneficiaries in these areas."
She believes the rule change risks institutionalizing disparities in care. "We are concerned that risk adjustment will mask these disparities and disincentivize healthcare [organizations] from making the changes that could equalize care, making quality analysis and quality ratings useless. The root of the disparities in care is not likely to be addressed if the differences are concealed through the automatic and inaccurate inflation of performance scores, and will only perpetuate these real differences in care."
Sooner rather than later, political and economic pressure appears destined to break the decade-long gridlock over fixing Medicare's broken formula for physician payment.
This could be the year.
With the beginning of spring training in Florida and Arizona, hope is swelling the hearts of baseball fans across the country.
Barbara L. McAneny, MD
And as the March 31 deadline approaches to avoid a Draconian 21% cut to physician payments under Medicare's widely despised Sustainable Growth Rate formula, a glimmer of hope is flickering in the hearts of healthcare industry stakeholders.
If willpower is an ingredient of success, then the tipping point is nearing in the ongoing struggle to repeal and replace SGR.
"As long as SGR is in place, we will continue to dig a hole," Barbara McAneny, MD, chairperson of the American Medical Association Board of Trustees, told me recently. "We are going to spend money on healthcare, and why do we keep pretending we're not?"
The New Mexico-based oncologist is hoping Congress will act decisively and judiciously to end the SGR saga once and for all. "If my major payer underpays me for medical services and threatens to cut my payment by 21% on April Fool's Day, how can I invest in my practice?" she says.
And she cautions against a radical shift at Medicare that could harm physicians in resource-poor areas of the country. "I don't think fee-for-service will ever go away. It will be a part of what we do in the future in some way."
Still, McAneny is hopeful: "I am optimistic they will get it done. There are people in Congress who want to do it."
A strong measure of political will to scrap SGR was displayed last month, during a two-day SGR hearing before the House Energy & Commerce Committee's health panel. Democratic and Republican members of the subcommittee were unanimous in their animus toward SGR, and broad support was voiced to build upon last winter's repeal-and-replace deal. The title for the hearing was hopeful: "A Permanent Solution to the SGR: The Time is Now."
Rather than rating the intensity of the rhetoric, the testimony of former US Sen. Joseph Lieberman (I-CT) was the most instructive in gauging the political appetite for slaying SGR.
Lieberman testified about one his hallmark issues: the national debt. His most astute political observations were interspersed between repeated calls for "Doc Fix" prescriptions with "pay-fors." He called last winter's repeal-and-replace deal an "extraordinary achievement," declaring during a question-and-answer portion of the hearing that "It would be a tragedy of will not to find the money to fund this bipartisan agreement you've made."
Last winter's deal was one of the few instances of major legislation to gain bipartisan support in both houses of Congress in 2014. "What you've done is worth supporting," the former senator reassured the House members in the closing minutes of Day 1 of the subcommittee hearing. "It's a bipartisan, bicameral improvement, and Lord knows it might just start a cycle of virtue here [in Washington]."
Healthcare reform advocates are clamoring for federal officials to step up to the plate and take a homerun swing at value-based payment models as an essential element to crafting a long-term SGR fix.
Harold Miller, CEO and president of the Pittsburgh-based Center for Healthcare Quality and Payment Reform, was a keen observer of last month's SGR hearing in the House. He is advocating a long-term SGR fix that would be financed largely with cost-efficiency gains generated from implementation of value-based payment models such as bundled payments.
After the House hearing, Miller said McAneny had shown lawmakers the light with her testimony, if they wanted to see it.
McAneny told the subcommittee that many providers are ready to forge ahead with value-based payment reforms including her colleagues in New Mexico, where she has pioneered demonstration projects with federal grant funding to boost patient engagement and care coordination.
Her written testimony includes an impassioned plea: "[Demonstration] projects have dramatically reduced the rate at which their patients have had to go to an emergency room or be hospitalized for complications, saving Medicare far more than the cost of the services supported by the grants. But in most cases, the improvements in care and the savings achieved in the demonstration projects end when the demonstration ends, because there is no way to sustain the projects under the current payment system."
Miller says McAneny and innovative healthcare providers like her are offering lawmakers a golden opportunity to fix SGR and move Medicare away from its expensive fee-for-service payment model. "She's already doing it, but she can't sustain it."
Paying for a Doc Fix
Patrick Dunham, chief executive at Smyrna, GA-based Curant Health and co-author of a 2014 study about the positive impact of medication therapy management on hospital readmissions, believes value-based payment reforms matched with value-based redesigns of healthcare services could finance an SGR fix.
"The value placed on preventative care needs to increase. By value, we mean outcomes divided by costs. Metrics and payment models for improving outcomes (increasing the numerator in that equation) should include greater reimbursement for services like medication management that drive higher levels of adherence," Dunham told me recently.
"Simultaneously, rewarding providers that demonstrate measurable cost reductions, especially before patients 'go acute,' and driven by an improvement in outcomes should be included in any new legislation that intends to shift from fee-for-service to value-based care. Our demonstrated ability to reduce readmissions in the Medicare population is a perfect example."
As they ponder the fate of SGR over the next month, Dunham urged lawmakers to embrace a mindset that is not fixated on cost.
"Our healthcare system exists in an environment with a 50-year-old model and stakeholders who don't want to see change. While too many of the stakeholders are continuing to fight over the bottom line of their balance sheets and the bottom line of the value equation (cost), we will continue working with our colleagues like Sharon Dudley-Brown at Johns Hopkins and to prove that collaborative care, inclusive of enhanced medication therapy management, has a major positive effect on the top line of the value equation, outcomes, to the benefit of all stakeholders."
In its proposed rules and payment rates, federal officials double down on efforts to wring value out of the Medicare Advantage program.
It's all part of the plan.
Proposed Medicare Advantage payment rates and rules for 2016 released Friday feature an average proposed revenue impact on health plans pegged at -0.95%. When risk-adjusted to reflect costs associated with treating elderly populations, such as chronically ill patients, MA health plans should post modest 1.05% revenue growth in 2016, federal officials say.
In a conference call with reporters Friday afternoon, Sean Cavanaugh, director of the Center for Medicare, said the proposed payment level and rule changes for 2016 represent "stable rate policies" that embrace a drive started last month to boost value-based contracting in Medicare.
He said the proposed payment rates and rules, which include down-weighting six MA quality star ratings to reflect the impact of socio-economic status (SES), exemplify the shift to value-based payment models in Medicare. "The principles and goals [of value-based contracting] apply to Medicare Advantage and Part D as well," Cavanaugh said, referring to Medicare's prescription drug program.
Calculations resulting in the proposed average payment rate cut of -0.95% were based on a number of assumptions:
MA Growth Rate: +1.7%. The ranks of MA beneficiaries have grown 42% since the passage of the Patient Protection and Affordable Care Act in 2010, according to the Centers for Medicare & Medicaid Services. More growth is forecast in MA enrollment, which CMS tallied at 16 million last year, or about one third of all Medicare enrollees.
Quality star rating changes: +0.5%. This figure includes anticipated revenue gains from the positive trend in the MA quality star ratings program combined with proposed rule changes such as down-weighting several MA star ratings measures to reflect SES impact.
Risk model revision: -1.7%. In an ongoing effort to scrap fee-for-service payment models, CMS is moving away from risk modeling the MA beneficiary population based on medical diagnoses, favoring actual-cost measures such as episodes of care. "In recent years, CMS began collecting encounter data from MA plans to develop more accurate payment models. In 2015, CMS added encounter data as an additional source of diagnostic data used to calculate risk scores," according to a fact sheet released with the proposed MA payment rate and rule changes.
Transition to PPACA rules: -0.8%. This figure includes services required for MA health plans being phased in over several years.
Cavanaugh said a "coding trend," which reflects the percentage of beneficiaries with risk-adjusted health coverage factors such as affliction with chronic illness, should put most MA health plans in the black for 2016. "The industry has historically been able to achieve a 2% increase," he said, noting that most MA plans should anticipate a 1.05% revenue impact from the proposed payment rate and rule changes.
The 2016 MA payment rate and rules are set to be finalized April 6. The public may submit comments to CMS until March 6.
Chilly Response from Health Plan Association
Mirroring its criticism of MA payment rate cuts last winter, the industry group America's Health Insurance Plans says CMS is putting a valuable value-based program at risk.
"There's wide recognition that providing stability to the Medicare Advantage program is critically important for the more than 16 million seniors enrolled," AHIP President and CEO Karen Ignagni said in a statement released by her office Friday. "CMS is now proposing additional cuts to Medicare Advantage at a time when healthcare costs are projected to increase. Protecting the millions who rely on this program should mean no further cuts. "
On Monday, AHIP circulated a letter signed by more than three dozen business groups. "Annual cuts to the MA program continue to jeopardize employers, employees, providers, and patients' choices in coverage under Medicare," the letter states. It was sent to CMS on Feb. 18.
In the proposed MA star ratings rules released last week, CMS officials say there is enough evidence showing the impact of SES on MA star ratings performance to start reforms. "Our preliminary analyses have revealed both practical and statistically significant evidence of differential outcomes for [low-income] beneficiaries," the proposed 2016 rules state.
Six MA quality star ratings are slated for down-weighting under the proposed 2016 rules:
Breast cancer screening
Colorectal cancer screening
Blood-sugar-controlled diabetes care
Osteoporosis management in women who had a fracture
Rheumatoid arthritis management
Reducing fall risks
CMS proposes reducing the weight of these star ratings measures by 50%.
In its review of MA star ratings for SES impact, CMS focused on 19 of the 46 star measures in the MA and Part D programs, according to the proposed 2016 rules. Several of the excluded star-rating measures are already risk-adjusted for SES, the proposed rules state.
Research on the impact of SES on MA quality star ratings suggests that several SES characteristics affect star rating performance, CMS says, including educational attainment, dual eligibility for Medicare and Medicaid, self-rated general health status, and age.
'It Could Have Been Worse'
Ashraf Shehata, US advisory leader for health plans at KPMG, says the annual ritualistic pushing and pulling over the MA payment rate is off to a relatively mild start.
"It could have been worse," he said Monday, noting the down-weighting of some MA star ratings for SES impact is a significant concession to health plans. "They're trying to encourage plans to welcome all beneficiaries… CMS wants to see the Medicare Advantage program continue."
Shehata says KPMG industry polling shows commercial insurance carriers have reached an MA plateau, with participation in the value-base program falling from 35% of carriers polled in 2012 to 24% in 2013.
"This is really for the plans with good care management and strong provider networks," he said, noting that the MA market includes payers ranging from well-established "Blues" to innovative healthcare providers. "Even some hospitals are opening MA plans because that's what their patients are asking for."
The proposed 2016 MA payment rate and rules reflect an "underlying theme" guiding Medicare officials, he says.
A pledge from CMS to enforce MA provider directory rules that are designed to boost transparency for patients indicates that the agency "is going to be much more watchful over risk-based payments. They're tightening up on areas that haven't been too tight," Shehata says.
In the second year of open enrollment, signups in the public health insurance exceeded 10 million—an increase of 40%—despite a last-minute rush and computer glitch. But a health insurer leader gives the exchange performance mixed marks.
For the operators of the fledgling public health insurance exchanges, no news was good news—until a computer glitch and call center anguish struck over the Valentine's Day weekend.
Compared to the chaotic inaugural open enrollment season for the Patient Protection and Affordable Care Act–spawned exchanges, the second open enrollment period that was set to close Feb. 15 had been relatively serene.
As of Feb. 11, at least 10.1 million Americans had either renewed a health plan or purchased a new one on the exchanges, federal officials said last week during a conference call with reporters. If all of those health plans are effectuated, including payment of the first month's premium, year-over-year enrollment in the exchanges would spike more than 40%.
Unlike the first open enrollment that nearly collapsed in the fall of 2013, the past three months slipped by with few dire headlines about the functionality of HealthCare.gov, the federally operated website that drives exchanges in three dozen states. New features on the website such as a window-shopping tool and a more adequately staffed call center had eased the enrollment process, federal exchange CEO Kevin Counihan said during last week's call.
"You talk to folks and the difference in the enrollment experience between this year and last year is pretty dramatic," the HIX czar said. "When it's easier for people to enroll, they also tell their friends that it's easier to enroll. It's the second year. It's getting just a bit more established."
This weekend, though, the HIXes hit Heartbreak Hill.
In a sprint-to-the-finish call center crush that started Friday, would-be HIX health plan beneficiaries faced long wait times that were experienced through Sunday's midnight enrollment deadline. On Valentine's Day, a data-verification feature failure on HealthCare.gov prompted a special enrollment extension through Feb. 22. The data verification glitch reportedly stopped about 500,000 people from enrolling.
Barring more last-minute shopper woes this week, the "front-end" of the federally operated exchanges appears to be moving in the right direction, however.
"Our call center reps have taken more than 12.1 million calls, and more than 8.2 million users have accessed the window-shopping tool on HealthCare.gov," Andy Slavitt, principal deputy administrator of the Centers for Medicare & Medicaid Services, said during last week's conference call. Call center traffic had increased 37% from Feb. 4 to Feb. 11 and callers were experiencing "minimal wait times," he said.
"That data tells me that our approach of making things more accessible, simpler, and easier for consumers was the right approach, and these are lessons we will take into the coming year."
Slavitt also reported an enrollment spike in the South, where several states such as Texas have high numbers of uninsured and underinsured residents. After cautioning reporters about the "apples to oranges comparison" of pre-effectuated health plan applications during open enrollment to the effectuated number of health plans at the end of last year, he said several Southern states had experience explosive HIX growth. "Texas has 85% more sign-ups. Louisiana 88%. South Carolina 94%. Mississippi has 97% more folks signing up for coverage," he said.
Chris Johnston
Associate VP of New Business
and Consumer Solutions,
Health Alliance Plan
Chris Johnston, associate vice president for new business at Detroit-based Health Alliance Plan, which is part of Henry Ford Health System, says the federally operated exchanges have improved but are still a work in progress.
"It was evident from the first open enrollment that CMS grossly underestimated what they were getting into and how to manage the entire process. The technology was inadequate, many of the rules and guidance from CMS were changing throughout the open enrollment period, and general public confusion was very evident," he told me. "For 2015, their change in technical expertise certainly helped, with fewer instances of the website going down. Many of the rules also had greater clarity. I would certainly have to credit the National Association of Health Underwriters (NAHU) for playing a huge part in educating the government on how this industry works, which helped CMS fix many of the issues."
Johnston says federal officials face several HIX market maturation challenges, particularly development of the Small Business Health Options Program (SHOP) exchanges. "There is still a great deal of room for improvement for not only how CMS corresponds with insurance carriers through technology, but also how their call center disseminates information to the general public. Also, the SHOP exchange has yet to prove its viability due to technology issues and for its complex and unrealistic regulations surrounding tax credits."
Uncertainty clearly remains an X factor on the exchanges.
From my perspective, the most important number in the HIX equation is 10 million, which is the rough estimate of individuals who will have healthcare coverage through the exchanges this year. Before the launch of the public exchanges in 2013, the ranks of uninsured and underinsured individuals swelled into the tens of millions. Many of these Americans relied on the emergency room, where they received episodic care in the most costly of settings.
For the sake of these millions and the ability of this country to improve healthcare in communities from coast to coast, I'm hoping the next HIX open enrollment is smoother from start to finish.
Lawmakers across the country are formally considering legislation that would streamline the process for physicians who seek to practice medicine in multiple states.
Despite sniping from critics, a proposal for an interstate licensure scheme for healthcare professionals, the Interstate Medical Licensure Compact, is advancing in several state legislatures.
Humayun Chaudhry, DO
President and CEO of the FSMB
"Since the model Compact legislation was finalized by state medical board representatives and released to the states for their consideration at the end of 2014, it has been introduced in 12 state legislatures and endorsed by 26 state medical and osteopathic boards. We expect both counts to continue to grow," Humayun Chaudhry, DO, president and CEO of the Federation of State Medical Boards, said last week.
The Compact is making steady progress in state capitals across the country. It was recently passed by the South Dakota Senate. The Utah House Health and Human Services Committee passed it out of committee by a vote of 11 to zero. And in the other states it is being considered and reviewed by committees of jurisdiction. "We expect a number of state legislatures to begin adopting the Compact this year," Chaudhry says.
A draft of the Compact, which aims to help ease staffing shortages at rural hospitals and break down barriers to expansion of telemedicine, was crafted last summer. It describes a scenario under which healthcare professionals would designate a "state of principal license" and register for licensure through state authorities participating in the Compact. The draft legislation calls for a commission to administer the Compact, with two voting members from each participating state serving as commissioners.
So far, the draft has been introduced at statehouses in Iowa, Maryland, Minnesota, Montana, Nebraska, Oklahoma, South Dakota, Texas, Utah, Vermont, West Virginia and Wyoming. The FSMB is tracking the legislation's progress on the organization's website.
Chaudhry says the Compact has garnered widespread support among healthcare providers and political leaders. "Sixteen US senators wrote to the FSMB last year to express their support for the legislation. The Compact also has the support of the American Medical Association, the Council of Medical Specialty Societies, the Society of Hospital Medicine, and many other national and state provider, hospital, and specialty organizations. Consumer and patient advocacy organizations like the South Dakota AARP chapter have also been very supportive of the Compact and its potential for improving access to care."
'False and Misleading Attacks'
The FSMB has lashed out at critics of the Compact, among them Independent Physicians for Patient Independence (IP4PI) and the Association of American Physicians and Surgeons (AAPS). In a letter to the US Senate dated Jan. 26, AAPS called the Compact "little more than a pretext for transferring state sovereignty to out-of-state, private, wealthy organizations" and called for "an investigation of the FSMB to "[evaluate] the very reason for their existence on top of state licensure boards and specialty boards."
In a statement released last month, the FSMB accused Compact critics of "false and misleading attacks."
"The FSMB became aware of a number of false and misleading public statements made by individuals and organizations opposing the Interstate Medical Licensure Compact that were creating confusion in several states," Chaudhry says. "The FSMB subsequently released a document debunking this misinformation so that legislators and the broader medical community have accurate information on which to make informed decisions."
Those so-called myths include erroneous contentions such as "the definition of a physician in the Compact is at variance with the definition of a physician by all other state medical boards" and "the Compact would supersede a state's authority and control over the practice of medicine."
An AAPS spokesperson called the Compact a "private, quasi-governmental power grab."
"Many physicians maintain licenses in several states. There is already a lot of reciprocity, which states could expand without any help from FSMB," AAPS spokesperson Jane Orient, MD, says.
"The Compact clearly undermines physicians' due process rights. It could be very coercive indeed. If a physician faces loss of licensure in one state, say if it passes a law requiring participation in Medicaid, he could be delicensed in all Compact states. And if he loses certification, perhaps someday for political reasons, say for declining to do abortions … he would lose his Compact licenses, for starters."
Orient says licensure reforms should be made at the state level rather than through an interstate initiative such as the Compact. "States could do a lot to streamline their own application process. When did an added layer of bureaucracy ever streamline anything?"
The American Legislative Exchange Council, an Arlington, VA-based non-profit organization that favors limited government, free markets, and federalism and is engaged in impacting legislation across the country, is also critical of the Compact. Sean Riley, director of the ALEC Task Force on Health and Human Services, said Friday that the Compact is well intended but has significant flaws.
"ALEC supports the goals of the Compact to increase access to telemedicine and help provide new opportunities for doctors to deliver care in today's highly mobile workforce. However, ALEC members are concerned with language in the draft that excludes qualified physicians who do not maintain specialty certification, particularly if the shared goal of the Compact is to expand access to the underserved," Riley says.
Critical Mass of States Needed to Launch Compact
Several states will have to enact laws codifying the model legislation before the Compact can seat commissioners and launch.
"The model Compact sets a minimum of at least seven states to enact the legislation in order to enable functionality and the creation of an interstate commission. The commission would be charged with the administrative functions of the Compact and be led exclusively by members of participating state medical boards," Chaudhry says.
Healthcare providers say proposed changes to Medicare's most popular accountable-care payment program are financially underwhelming and accelerate the initiative to an overly aggressive pace.
In public comment letters filed on proposed changes to the Medicare Shared Savings Program, many providers say MSSP faces an existential threat if the rule changes are not revised.
A joint comment letter signed by nearly three dozen healthcare provider organizations, including the American Medical Association, the American Academy of Pediatrics, the Medical Group Management Association, the Association of American Medical Colleges and the National Association of ACOs, is highly critical of the proposed changes.
"While the MSSP program has generated strong interest, sustained and increased participation hinges on the potential financial opportunities being adequate to support the investments needed to improve care and, ultimately, create a program that is sustainable for the long term," the providers say in their joint comment letter.
"First-year MSSP performance data from November 2014 showed that slightly more than half of participating ACOs (118/220) reduced costs enough to generate savings to the Medicare program. However, only about half of these (58) were able to meet the minimum savings threshold required to actually share in the savings. Thus, overall, only 26% of MSSP ACOs received a shared savings payment from Medicare. As currently designed, the MSSP program places too much risk and burden on providers with too little opportunity for reward in the form of shared savings."
In his comment letter, David Gross, the executive director of Morristown, NJ-based Atlantic ACO, laments proposed changes to Track 1 of MSSP, which features gain sharing with no downside risk. He says two of the proposed rule changes are particularly onerous: barring MSSP Track 1 participation to providers that have not reached the minimum saving threshold for at least one year and reducing the shared saving rate from 50% to 40%.
"The proposed requirement that continued participation by existing ACO participants in Track One of the MSSP must have achieved shared savings within the [Minimum Savings Rate] corridor in one or both [of the first two 'performance years'] would prohibit an ACO such as ours from participation despite a positive trend on many measurable performance criteria," Gross wrote.
While Atlantic ACO has yet to cross the minimum savings threshold to qualify for gain sharing payments, the organization has met MSSP quality standards set by the Centers for Medicare & Medicaid Services. "Our quality indicators as measured by CMS have consistently been at or better than national MSSP performance averages across most categories of performance. Quality trend improvement in the attributed population should be an alternative to the MSR savings threshold of performance."
Atlantic ACO officials "strongly urge" CMS to reinstate the 50% shared savings level for Track 1 MSSP participants, Gross wrote. "This erosion of the opportunity to achieve a 50% shared savings will erode the opportunity of the ACO to recoup development and operating costs and impair the ACO's ability to appropriately reward member physicians. It is a significant disincentive in moving our physician members to a value-based system of care delivery."
Gross says Atlantic ACO and its hospital partners are at risk of squandering $10 million of MSSP-related investments, and says that that softening the proposed changes to Track 1 of MSSP is "critical to our continued participation in the 2016 Medicare Shared Savings Program."
The comment letter from Rick Pollack, executive VP of the American Hospital Association, scolds CMS for crafting MSSP in a way that "applies too many 'sticks' and offers too few 'carrots' to participating providers" in the program.
"While some of CMS' proposed improvements are welcome and could make the program more attractive to new applicants and existing ACOs, we question whether other proposals go far enough to correct misguided design elements that emphasize penalties rather than rewards," Pollack wrote.
CMS, AHA contends, is moving too quickly in tightening standards for providers in MSSP Track 1, asking federal official to "balance the risk versus reward equation in a way that encourages ACOs to take on additional risk but does not penalize ACOs that need additional time and experience with the MSSP before they are able to do so."
'The Risk of Driving Providers out of the Program'
In separate recent interviews, AAMC and AMA officials said CMS needs to be more responsive to providers' concerns over MSSP to help ensure the success of Medicare's drive to accelerate value-based payment reforms.
"If ACOs are going to continue, we have sought improvements, including maintaining Track 1 and not diminishing the business case to continue participation in it," said Janis Orlowski, MD, chief healthcare officer at AAMC.
Orlowski says CMS is pushing providers too quickly toward participating in the proposed Track 3 for MSSP, which features both upside and downside risk. "Under the proposed rules, providers need to move into two-sided risk in Track 3 or lose money," she said. "CMS is pushing to diminish the attractiveness of Track 1, but they run the risk of driving providers out of the program."
Providers are willing to work with CMS to develop MSSP and other payment reforms that help move Medicare away from the fee-for-service payment model, but many are fearful of the financial consequences of moving too quickly, Orlowski says. "We want to play, but we don't want to take on a downside risk before we know exactly how the program works."
Barbara McAneny, MD, a New Mexico-based oncologist and chair of the AMA Board of Trustees, says the vast majority of physician practices operate as small businesses that are wary of fundamental changes to payment models.
"With any of these new payment programs, more flexibility is a good thing. If you've seen one physician practice, you've seen one. Physician practices are as unique as the communities they serve," she said. "We also need to make sure that small practices with four or five physicians have a safety net, so they can continue to do their core business and start trying the new services associated with value-based care."
MSSP Concerns Stretch Further Than Financial Sweetening
The joint comment letter signed by nearly three dozen healthcare provider organizations raises several concerns about the proposed MSSP rules beyond clear-cut financial incentives to participate in the program.
"The Department of Health and Human Services (HHS) recently stated a goal of tying 30% of fee-for-service Medicare payments to alternative payment models, such as ACOs, by the end of 2016, and tying 50 percent of such payments to alternative payment models by 2018," the providers wrote.
"In order for HHS to meet its goals and ensure continued and enhanced participation in the MSSP, we urge CMS to strengthen the assignment of Medicare beneficiaries, establish a more appropriate balance between risk and reward, adopt payment waivers to eliminate barriers to care coordination, modify the current benchmark methodology, and provide better and timelier data."
The window for the public to file comments on the proposed MSSP rule changes closed Feb. 6.
Broad, hospital-led opposition plays a crucial role in a court battle over the latest healthcare mega-merger in Massachusetts.
The battle lines have been firmly drawn in one of the country's most contentious clashes of healthcare consolidation titans.
When I moved to Boston fresh out of college in 1988, Eastern Massachusetts was peppered with independent community hospitals. Now, South Shore Hospital in South Weymouth is one of the last independent community hospitals in the entire region, and about a half dozen large health systems are vying for the winner's circle in the consolidation end game.
Boston-based Partners Healthcare, The Bay State's largest private employer with about 60,000 workers, has coveted South Shore Hospital for two decades. Two weeks ago, Partners' latestattempt to acquire the South Weymouth facility along with two hospitals north of Boston suffered a dramatic setback.
The Ruling
In her Jan. 29 ruling, Sanders cited two reasons for her decision.
"First, it is not in the 'public interest' as that has been defined by the case law," the judge wrote in her ruling. "By permitting the acquisitions, the settlement, if adopted by this Court, would cement Partners' already strong position in the healthcare market and give it the ability, because of this market muscle, to exact higher prices from insurers for the services its providers render.
These Partners-driven increases in costs are estimated by an independent state agency, the Massachusetts Health Policy Commission (HPC), to amount to tens of millions of dollars a year. Those costs will ultimately be borne by consumers and employers in the form of higher insurance premiums and higher deductibles on their insurance plans.
The Proposed Consent Judgment, which contains temporary price caps and other so-called 'conduct-based' remedies, does not reasonably or adequately address the harm that is almost certain to occur as a consequence of the anticompetitive conduct by Partners. …"
"Second, this Court has serious concerns as to the enforceability of the Proposed Consent Judgment. Where a consent decree contemplates ongoing judicial involvement, as it does here, and there are substantial questions regarding enforcement, this alone is sufficient to reject it. The Proposed Consent Judgment envisions a ten-year period during which this Court could be called upon to resolve disagreements among the parties in at least ten different areas, including on complicated issues relating to healthcare pricing.
Moreover, this lawsuit is brought at a time when the entire healthcare field is undergoing enormous change. This Court is ill-equipped to keep abreast of those changes as they unfold over the next decade or to predict at this point how such changes might affect the meaning and application of the Proposed Consent Judgment going forward."
'Extraordinary' Actions
Sanders could have cited a third factor in her decision: The effectiveness of a grand coalition formed by Partners' prime competitors, including Boston-based rivals Beth Israel Medical Center and Tufts Medical Center.
David Balto
"Usually when hospital mergers occur and there are anti-competition concerns, the other hospitals in the market sit on their hands. But in this case, the coalition's actions are really extraordinary," David Balto, a lawyer and former federal official who represented the American Antitrust Institute in Sanders' courtroom, told me this week. "They brought everybody together, from regulators, to unions, to other healthcare providers."
Balto says Partners' quest to acquire three more hospitals prompted stiff resistance from a powerful and highly competent set of opponents.
"We were reaching a level of concentration where competition was under threat, but this is Eastern Massachusetts, this is the best and the brightest," Balto says.
He says he always left his meetings with Partners' competitors impressed with their firm grasp on even the most minute issues linked to the AG's proposed consent agreement. "These people really have a vision of what the market should be like. They knew this merger would make a competitively broken system even worse."
Sanders' ruling will have repercussions beyond The Bay State, but it does not mark the death knell for conduct remedies in healthcare mergers, Balto says.
"The ruling really was groundbreaking, but it does not mean conduct remedies are always inappropriate," he says, citing a recent two-hospital merger deal in Utica, NY, which incorporates conduct remedies that Balto says are well-suited to the community's "financially fragile market."
"Regulators need to be nimble and flexible. There are tremendous challenges that hospitals face," he says. Elements of the Patient Protection and Affordable Care Act such as care coordination initiatives are one of the driving forces behind healthcare consolidation efforts across the country, he adds. "Eventually, there are compromises that regulators are going to have to make."
'Not Just a Power Grab'
In recognition of those compromises, Balto offers an olive branch to his legal adversaries at Partners. "Give them their due. There are important changes that they have in mind to coordinate care and to lower the cost of healthcare. These mergers were not just a power grab. They had legitimate goals that they were trying to accomplish."
In an interview last week, Andrea Murino, the Washington, DC-based attorney who has been representing the coalition, told me her clients welcomed Sanders' ruling warmly.
"We are delighted the judge realized that the proposed remedies didn't remedy anything. They were untested and would do very little to mitigate the market power that Partners enjoys," Murino said.
She shares Balto's views on the conduct remedies in the Partners merger deal and in healthcare merger cases generally. "Conduct remedies don't achieve long-term structural changes that restore competitive balance. In this case, they were too thin, too flimsy, and not commensurate with [the anticompetitive elements of the merger]… There are certainly lots of consolidation remedies, even in healthcare, where the remedies can improve competition. It really depends on the facts and the specifics of the organization you're dealing with. I don't see the world as black and white."
With Sanders' ruling upping the ante in the Eastern Massachusetts healthcare consolidation end game, Partners is apparently plotting its next move carefully. "We're currently evaluating all options," says Rich Copp, the health system's VP of communications.
Insurance cooperatives face daunting startup challenges, from market forces to federal and state regulations. A Co-op in Iowa has already succumbed to financial and political pressure.
Building a health insurance carrier from scratch is risky business.
The rapid financial collapse of CoOportunity Health, an Iowa-based insurance cooperative launched last year, highlights the growing pains being experienced at nearly two dozen federally financed co-ops across the country.
Iowa insurance officials say two factors unraveled CoOportunity's finances: higher-than-expected utilization costs among the cooperative's exchange beneficiaries and an accounting switch Congress initiated in December that stripped $81 million from the co-op's balance sheet.
Officials at cooperatives in Connecticut, Maine, and Tennessee say that though their finances are sound, a broad set of challenges exists. Among them: basic insurance-carrier startup steps such as hiring experienced staff and coping with explosive beneficiary growth over short timeframes.
Acting in concert with regulators on Jan. 15, Knoxville, TN-based Community Health Alliance froze enrollment in its health plans offered in Tennessee. CHA officials say they reached the bounds of the cooperative's ability to serve beneficiaries this year.
"The challenges are not unlike any organization where growth has to be managed to offer continued high-touch, consumer-focused service to members," they say. "Growth has to happen over time and within capacity."
CHA does not anticipate having to freeze enrollment again during next year's HIX open enrollment season, and said future exchange enrollment surges will be difficult to predict. "[Exchange] consumers will become more savvy as the environment matures, and there may be periodic enrollment spikes as the overall health insurance market, including employer-based health plans, evolve."
Connecticut Co-op Adapts to Market Forces
Ken Lalime, CEO of Wallingford, CT-based HealthyCT, says the Connecticut cooperative had a key staffing advantage over its counterparts in other states, but has still faced several startup obstacles.
Ken Lalime
CEO of HealthyCT
"We're very fortunate to be in Connecticut, the 'insurance capital of the world,' giving us access to a large pool of very experienced leaders and staff with the passion for driving change in our industry," Lalime says.
HealthyCT managed to overcome those early challenges while dealing with frequent and significant changes in healthcare mandates at the state and federal levels, he says.
Among the difficulties: lack of historical data for rate setting, and the extremely fast pace required to get HCT up and running for [HIX open enrollment on] October 1, 2013.
But its "greatest challenge has been breaking into a very mature market dominated by large, well-known carriers and driven largely by price," Lalime says.
"Starting out, it can be difficult to negotiate contracts in an industry favoring volume-based discounts. Because we couldn't compete on price at the outset, we built our business plan around other factors. We put more resources where we expected higher enrollments but we didn't exclude the rest of our small state. We created partnerships with high-volume brokers who welcomed a new choice for their clients, and we connected with other nonprofits and small businesses. We offered products both on and off the Connecticut exchange and, in early 2014, we expanded into the large group market, which offers the greatest opportunity for growth."
In Maine, Challenges on Multiple Fronts
Kevin Lewis, CEO of Lewiston, ME-based Maine Community Health Options, says MCHO's challenges have ranged from common startup obstacles to thorny problems that are unique to PPACA cooperatives.
"In the very early going, there were challenges in terms of staff recruitment," Lewis said of summer 2012. "We were two people in the very beginning."
Securing enough financing to cope with beneficiary growth and federally mandated financial reserve levels has vexed cooperative officials across the country, including at MCHO and CHA in Tennessee. co-ops are federally mandated to maintain a relatively high risk-based capital ratio: 500% as compared to the 300% RBC ratio set for health insurance carriers in many state.
Lewis says accessing third-party capital for MCHO required significant effort. "We couldn't use the federal financing for marketing," he said of the first HIX open enrollment period in fall 2013. But "we were able to meet the challenge."
MCHO drew third-party financing from several sources, including a loan for office equipment purchases from the cooperative's banking partner, Cleveland, OH-based Key Bank. "It was uncollateralized except for the equipment itself," Lewis says. "They definitely took a stake in our success."
Financing is a challenge for all of the PPACA-spawned cooperatives. "The lack of significant, established capital and capital investors may possibly be the largest difference in structure [the cooperatives] face versus traditional commercial health plans," CHA officials say.
While higher-than-expected beneficiary growth last year created call center capacity challenges and prompted MCHO to secure $64.8 million in federal solvency funding to maintain regulator-mandated reserve levels in future years, Lewis says the Maine-based cooperative “has been in the black since Day One.” He also noted that having 40,000 beneficiaries in 2014 as opposed to the 15,000 the cooperative had forecast became a major strong point. "The greater membership smoothed the utilization rates across the entire [beneficiary] pool."
Casualty of PPACA Political Battle
CoOportunity is the first major casualty in the post-midterm election struggle over the PPACA in Washington, a legal analyst at New York-based Wolters Kluwer Law and Business says.
Kathryn Beard, JD, says Republican lawmakers nixed HIX risk corridor payments as an asset for exchange carriers to whittle away at the PPACA. "This provision was included in the Consolidated and Further Continuing Appropriations Act of 2015 for two reasons, to damage the Affordable Care Act, and to push back against the Obama administration's use of executive action and rulemaking."
Beard says HIX risk-corridor payments have become a political football. "Although… the [PPACA] required the establishment of a temporary risk corridor program, no funding source was specified for the program… The appropriations bill for FY 2014 contained language that would have allowed use of other funding for the risk-corridor program, but no payments were received during that year."
"President Obama's FY 2015 budget proposal included a provision to use the CMS Program Management account to make risk-corridor program payments. ACA opponents Rep. Fred Upton (R-MI) and Sen. Jeff Sessions (R-AL) accused the Obama administration of 'circumventing Congress and seeking to write its own laws' for this plan, which they referred to as an Executive attempt to make appropriations. Therefore, the FY 2015 appropriations bill contains different language from 2014, ensuring that the president's proposal would not go into effect."
Beard says the loss of risk-corridor payments as an asset has implications for any carrier operating on the exchanges that has priced health plan products too low for the market conditions. "The lack of funding for the risk-corridor program will be a problem for any co-op or carrier that, like CoOportunity, offered qualified health plans on the [exchanges] at a lower price than other insurers. The low cost of CoOportunity’s plans resulted in more enrollees, and a more costly, sicker pool of enrollees than anticipated."
Rep. Upton and Sen. Sessions did not immediately respond to requests for comment.
Healthcare providers' concerns about payment reform efforts initiated by Medicare and other payers reach further than their angst over cost-cutting zealotry.
James Weinstein, DO,
President and CEO,
Dartmouth-Hitchcock Health
"We need to create a sustainable health system, not a sustainable healthcare system," says James Weinstein, DO, president and CEO of Lebanon, NH-based Dartmouth-Hitchcock Health. "The model needs to focus on health, not healthcare."
Weinstein acknowledges the economic necessity to "cut the spend" in Medicare, noting that the program was launched 50 years ago with a blank-check financing model. "Medicare was a great big idea to help our seniors. But today, we can ask, 'Is Medicare going to break us?'"
However, payment reform alone is inadequate to the monumental task at hand, the spine surgeon says.
"We need a health and healthcare revolution in the United States," he said. "We need to redesign the healthcare landscape.… As a society, we skirt the real tragedies that are next to us every day—in our school systems and the support systems in our homes. The social underpinnings of our nation are being whittled away. We're regressing to the mean. We have to get away from just payment reform… This has to be a community partnership."
Weinstein, one of the founding members of the Hanover, NH-based High Value Healthcare Collaborative, says his concerns about payment reform efforts at Medicare and other healthcare payers extend beyond angst over cost-cutting zealotry.
"We started this journey in 2004," the spine surgeon says of value-based healthcare delivery reforms at Dartmouth-Hitchcock. The organization has been involved in initiatives at the local, regional, and national level such as population health programs and at-risk contracting. "The models keep changing, and it's difficult to keep up… It becomes a race to the bottom. Everybody is trying to save money."
Weinstein says Dartmouth-Hitchcock is among a select group of "the walking-willing"—healthcare organizations that have risen to the challenge of participating in ambitious payment reform initiatives such as Medicare's Pioneer ACO program. "If the best organizations are struggling to make these programs work, I worry about the ability of the nation to do it," he said.
Physician Practices: 'We Have a Lot to Lose'
Barbara McAneny, MD, chairperson of the American Medical Association Board of Trustees, shares many of Weinstein's concerns about Medicare payment reform.
"We welcome the idea that we are going to have more options to get paid, but I am concerned about the practices that aren't ready," she said in a recent interview.
McAneny says many physician practices are run as small businesses with narrow profit margins. As such, they lack the financial foundation to retool their practices from the fee-for-service payment model to new value-based payment models. "We run the risk of losing more medical practices," the New Mexico-based oncologist said.
"The Medicare payment reforms are moving alarmingly fast, without a clear path forward. We cannot sacrifice the doctors who aren't ready to move forward because we need every one of them seeing patients… If we do not have a program to keep physician practices functioning, we have a lot to lose."
McAneny says many physician practices fear their financial survival is at stake as officials at the Centers for Medicare & Medicaid Services forge ahead with value-based payment reforms. "It's very scary to bet your farm that CMS got it right."
From a provider perspective, McAneny says flexibility is the key to making payment reform effective without disrupting physician practices across the country.
"The payment system has to have enough flexibility in it that physician practices can adapt to reforms," she said. "Medicine is very, very complex now. Orthopedics is a specialty for a reason. Healthcare is complex, and we can't expect to fit all the specialties in medicine into one mold… If we do not have a system that provides a safety net for small practices, it will be an infrastructure that will be hard to replace."
"Change Will be Slow"
Cynthia Ambres, MD, a US lead partner and strategy consultant at KPMG, says there is wide variation among healthcare providers in their preparations for value-based payment reform.
"Some providers are much more prepared for value-based contracts than others, but the latest initiatives from CMS will create a greater sense of urgency to act," she said recently via email. "Many hospitals moving away from fee-for-service will do so very reluctantly, because of the risks associated with value-based contracts and the dependence upon fee-for-service revenue. KPMG'ssurvey of providers showed that nearly half of them expect value-based contracts to hurt profits."
"Providers that have made the investments ahead of this shift are in a much better position than those who haven't. The investments are in technology and the ability to use data and analytics to get a true sense of costs of delivering care and what procedures deliver value. These investments really need to be made to help ensure a sensible approach to ACO strategy and entering bundled-payment agreements."
Providers need to watch their steps carefully as they move forward with matching their healthcare delivery reforms with healthcare payment reforms, Ambres says.
Hospitals are pairing with clinics and other providers to control hospital admissions "to the best of their ability," she says. "Certain chronic conditions, such as diabetes and cardiovascular disease, can be managed with a high degree of coordinated care. Even conditions that have highly personalized treatment programs, such as cancer, can be bundled, but providers need to be very astute about how they are going to price those services."
"A few costly cancer patients in the mix can lead to a contract being unprofitable. So providers should prepare themselves with data to make sure that they can enter these payment arrangements with a better understanding of the risks and opportunities to improve care and manage costs."
She says there are several areas where providers are ahead of the value-based reform curve, launching value-based care delivery initiatives without a corresponding payment model at Medicare and other payers.
"We have some examples of efficient, high-quality care that are, for many, still too new for broad, appropriate reimbursement structures to be in place." Ambres cites online care, daily and weekly patient coaching, home monitoring, and group rehabilitation programs. "The payment systems will catch up eventually; but for now, many of these opportunities remain clustered in pilots and demonstrations. Until we have true bundled payments and more providers at risk, change will be slow."
Individual hospital performance accounts for less than half of the variation in pooled readmission rates across the United States, researchers find.
County-based data collected from across the country show hospitals are far from solely responsible for readmission rates.
An analysis of the data, which is slated for publication this month in the journal Health Services Research, features information collected from 4,000 hospitals for patients with three conditions: acute myocardial infarction, heart failure, and pneumonia. The key finding of the study, "Community Factors and Hospital Readmission Rates," is that 58% of the variation in readmission rates was related to community characteristics outside a hospital's control.
Jeph Herrin, PhD, lead author, says several elements of a community's health capabilities that are not under hospital control help drive readmissions. "The health system outside the hospital, independent of any socioeconomic status characteristics, is important to understanding geographic differences in readmission rates," Herrin said in an interview.
"Our results indicate that at least some of the accountability should be shifted away from hospitals," he says.
The study comes as hospitals are facing growing financial penalties over readmissions. The Centers for Medicare & Medicaid Services' the Hospital Readmissions Reduction Program cuts a hospital's aggregate Medicare reimbursement if a facility reports higher-than-expected 30-day, risk-adjusted readmission rates for patients 65 years and older. The penalties were phased in, starting with up to a 1% Medicare reimbursement cut starting Oct. 1, 2012, and rising to up to 3%, effective Oct. 1, 2014.
Herrin and his co-authors examined county data for three types of community characteristics:
"Sociodemographic" factors such as living alone and educational levels
Access-to-care measures including general practitioners per capita
The number and quality of nursing homes in a county
More than half, "58% of the total variation in publicly reported hospital 30-day readmission rates was attributable to the county where the hospital was located. Expressed differently, the results suggest that individual hospital performance accounts for only 42% of the variation in pooled readmission rates across the United States," the study says.
While socioeconomic status (SES) factors such as educational level were associated with hospital readmission rates, nursing home density and quality were found to be more significant factors.
CMS is planning to roll out a readmissions reduction program that targets skilled nursing facilities. The Protecting Access to Medical Care Act of 2014, last year's congressional patch of Medicare's reviled Sustainable Growth Rate formula for physician reimbursement, includes a value-based purchasing (VBP) program for skilled nursing facilities.
Beginning in October 2018, under the VBP program, CMS is expected to hold skilled nursing facilities accountable for hospital readmissions through financial incentives such as linking Medicare payment rates to performance standards.
Spreading Responsibility for Hospital Readmissions
The Los Angeles-based physician who wrote an editorial to accompany Herrin's readmissions study says the analysis breaks new ground. "It's the first study that I've seen that really has done a rigorous and in-depth look at the factors happening outside the hospital," Teryl Nuckols, MD, a hospitalist and director of the Cedar-Sinai Medical Center Division of General Medicine, said in an interview.
She says the research Herrin and his team conducted shows the necessity to hold more parties accountable for hospital readmission rates. "There's definitely a need for greater coordination of care. There's a need for increased collaboration between the in-patient and out-patient settings. What the [HRRP] policy does is it makes the hospitals accountable for all of it," Nuckols says. "The readmissions penalties for hospitals are meaningful. They have created an incentive [to reduce readmissions]."
Future research on the impact of SES on readmission rates should focus on rural and inner-city areas. "It really warrants additional study," Nuckols said.
A CMS spokesman says the agency is gauging its hospital readmission reduction efforts carefully: "We are establishing a detailed plan to comprehensively analyze the impact of SES factors for Medicare payment systems and programs, and investigating data sources that would enable accurate measurement of SES."
No 'Magic Answer' to Hospital Readmission Puzzle
The lead author of another recent study on readmissions that cast doubt on the effectiveness of readmission reduction programs says the research Herrin and his team conducted accurately reflects the challenge.
"If you have a well-greased community, readmissions are a manageable problem," says Ariel Linden, DPH. "Providers are humming along; there's outpatient coordination. You don't need to be as concerned about readmissions. People are going to fall through the cracks, but not as much [as in communities with fragmented healthcare services or low socioeconomic status.]"
He says future research is likely to show a direct correlation between hospital readmission rates and the level of economic distress in a community. "In a disadvantaged community, you have Medicaid patients and the uninsured. Doctors don't want to see them because reimbursement rates are low," Linden said. "These patients are the high-fliers in the emergency room; and when they get out of the ER, there's nothing for them out in the community to keep them on track."
As Herrin's research implies, a broad and flexible approach is needed to reduce hospital readmission rates, Linden said.
"I don't think there's a magic answer here," said Linden, an adjunct associate professor at the University of Michigan's School of Public Health in Ann Arbor and president of Linden Consulting Group. "Reaching individual patients through nurses or other readmission reduction programs takes a tremendous amount of resources to make a dent at the population-health level."
To achieve significant reductions in hospital readmissions, he says the healthcare industry has to find a way to deploy a broad set of solutions.
"We need more doctors. We need to pay doctors to see patients who don't have insurance. We need to reimburse higher for Medicaid patients. We need more coordinated care. The key is doing all of it. I don't think doing any one thing is going to solve much."
Health Services Research is a publication of AcademyHealth. A grant from The Commonwealth Fund, a private foundation based in Washington, DC, financed Herrin's research.
