When I read the phrase "value-based purchasing," I can't help but also think of another saying we hear frequently these days: "high-value target." Value, in both of these cases, means someone will be paying a steep price—presumably for the better of society.
For hospitals, it means CMS is tightening its purse strings on 10 hospital-acquired conditions, plus three never events starting in fiscal year 2009. While this reform has been a long time coming, it is the first time that nonpayment could occur for thousands of hospitals across the United States.
A recent report by consulting firm CSC, called Value-Based Purchasing: Non-Payment for Hospital-Acquired Conditions, estimates that for eight of the 10 current HACs, this translates to about $26.7 million in reduced Medicare claims payments for fiscal year 2009, or when you break it down across the 5,000 affected hospitals, $5,340 per facility.
That doesn't seem so bad. However, the report's authors also acknowledge that CMS has predicted a much bigger hit on hospitals of $9.3 billion total per year, due to 2.4 million fewer billable days for hospital-acquired conditions. That's close to $2 million a year per hospital. And it will get worse fast as other payers begin to adopt similar policies. I spoke to Walt Zywiak, principal researcher with CSC, and co-author of the report, who says hospitals seem to be prepared in terms of developing work flow protocols, for example. But leaders should also be taking a closer look at their staffing plan and shoring up documentation policies so they are better equipped to diagnose a patient's state of health on admission, and especially be able to identify pre-existing conditions.
Documentation is a big challenge, says Zywiak. "In order to be considered present on admission, these conditions have to be well documented in the patient record." Doing so requires good coordination between the nurses, who are doing the exams on admission for conditions such as pressure ulcers, and the physicians who are legally required to assign a diagnosis. Zywiak points out that while organizations are focused right now on big-ticket items like electronic health records and computerized physician order entry, physician documentation is often last on the list.
Without automated documentation, a nurse, coder, or a case manager has to make sure the physician is documenting a condition present on admission. "A lot of organizations are still using dictation and transcription that gets loaded online and is entered as the notes as opposed to being integrated with the nursing documentation," notes Zywiak. Therefore, helping physicians rethink their documentation practices has to happen now.
Meanwhile, the work duties of certain staff members will have to be rethought. For example, according to the report, the roles of coders, case managers, clinical documentation specialists, and quality nurses are starting to change to incorporate more point-of-care documentation. Zywiak says some hospitals are bringing in case managers to review the documentation at the start of the visit, which has not been done before.
"People have to deal with the fact that those people are here to stay in order to manage these things," he says.
With this latest rollout in value-based purchasing, the bottom-line impact is that organizations must become more adept at managing additional processes at the point of care and managing them well. Many preparations have been made for value-based purchasing, but with the immediacy of reduced payments for HACs pressing down on hospitals, now is the time for agility. The ability to move quickly now and make point of care adjustments in staffing and documentation could make a big difference a year from now.
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The federal government will pay private insurers $11.4 billion more for Medicare Advantage plans this year than what the same beneficiaries would cost traditional Medicare, according to a new report from The Commonwealth Fund. The report adds more ammunition for critics, including the Obama administration and Democrats, who think the private Medicare program is too expensive.
Brian Biles, professor of health policy at George Washington University, and his co-authors reported in the analysis that private insurers have received $43 billion in "extra payments" since 2004. The extra Medicare Advantage payments this year will amount to an average of $1,138 or 13% over the fee-for-service costs for the 10 million Medicare beneficiaries enrolled in Medicare Advantage.
The $11.4 billion figure is a 34% increase over 2008 payments, which totaled $8.5 billion. The increase was because of payment rate and plan enrollment increases, the authors wrote.
Medicare Advantage, which was created in the Medicare Modernization Act of 2003, was an attempt by the Republican-controlled White House and Congress to privatize Medicare. Medicare Advantage has seen its enrollment more than double since 2004. In fact, Health Affairs and the Robert Wood Johnson Foundation recently reported that one in four Medicare beneficiaries is in Medicare Advantage, including 41% of Oregon beneficiaries and 34% of California beneficiaries.
The Obama administration also implemented stricter terms for health insurers that offer Medicare Advantage. In the new regulations, health insurers will not be able to charge sick, low-income patients more than they would pay under traditional Medicare. The administration's move was a preemptive strike to prevent Medicare Advantage insurers from transferring costs onto the most vulnerable beneficiaries once the payment cuts went into effect.
The Commonwealth Fund President Karen Davis said Medicare Advantage payment cuts are an "excellent first step," but warned that policymakers should review whether the government could spend Medicare Advantage dollars more wisely.
The report's authors wrote that eliminating the extra payments to private insurers would provide $150 billion in savings over 10 years, which could help fund expanded health coverage to the 47 million uninsured Americans or offset the costs of Medicare policy improvements, such as reducing the Part B premiums or increasing eligibility for low-income Americans.
Given Obama's statements that private Medicare plans should be paid at the same levels as traditional fee-for-service Medicare, the authors suggested that future analysis could focus on creating a way to make the payments more comparable to Medicare fee-for-service costs.
They added that any Medicare Advantage payment reform should "provide increased incentives for private plans to better accomplish their intended role—to develop innovations in quality, efficiency, and patient service; to spur traditional Medicare to better performance; and to offer beneficiaries a choice of the best of both worlds," they wrote.
While the private Medicare program has been bashed by Democrats, Medicare Advantage supporters say the program offers benefits beyond traditional Medicare, including care coordination and vision and drug coverage. Medicare Advantage is also the home of special needs plans, which cover institutionalized beneficiaries who are dual eligibles and suffer from disabling chronic diseases.
CMS has proposed cutting 2010 payment rates for Medicare skilled nursing facilities by $390 million, or 1.2%, to "better reflect" the cost of caring for the Medicare beneficiaries living there. CMS says the reduction is an effort to rebalance an earlier adjustment to the case-mix indexes.
"CMS is once again proposing to make the parity adjustment correction factor to case-mix indices, which works to correct a budget neutrality forecasting error previously made by CMS," says Peter Gruhn, director of research at the American Health Care Association in Washington, D.C.
CMS says the proposed FY 2010 recalibration of the CMIs would result in a reduction in payments to nursing homes of more than $1 billion, or 3.3%.
"Ultimately, it works out to about a $16 reduction per patient day, which could have fairly significant implications for quality of care and could put facilities under significant financial pressure," Gruhn says.
However, this decrease would be largely offset by this fiscal year's proposed update to Medicare payments to skilled nursing facilities. The update?a proposed increase of 2.1% or $660 million for FY 2010?is based on the change in prices of a "market basket" of goods and services included in covered skilled nursing facility stays.
"There is some concern that, as part of the healthcare reform efforts, the administration may take the SNF market basket away for one or more years, potentially eliminating this update," Gruhn says.
The percentage increase in the market basket is used to compute the update factor annually. The combination of the market basket increase and the recalibration of the CMIs explain the 1.2% reduction.
CMS says the cuts are needed to offset Resource Utilization Group classification refinements initiated in 2006 that raised Medicare expenditures, because utilization under the refined case-mix system differed significantly from the projections on which the adjustment was based. CMS found that patients were being classified into one of the newly created higher paying RUG groups more than 30% of the time, as compared to 19% projected by CMS, thus triggering Medicare payments far in excess of the original projections.
The proposed RUG redistribution for FY 2011 means a dramatic decrease in overall reimbursement for SNFs because a very small percentage of residents will fall into the extensive services and extensive plus rehab RUG-IV categories," says Ron Orth, RN, NHA, RAC-CT, CPC, president of Clinical Reimbursement Solutions, LLC, in Milwaukee, WI.
CMS is now proposing to recalibrate the case-mix weights in order to restore overall payments to their intended levels on a prospective basis, starting in FY2010. The proposed rule went on display on Friday at the Office of the Federal Register's Public Inspection Desk and will be available under "Special Filings," at: www.federalregister.gov/inspection. Public comments on the proposal will be accepted until June 30.
MacKenzie Kimball, an associate editor in the long-term care market at HCPro, contributed to this report. She writesPPS Alert for Long-term Careand managesMDSCentral.
Community Health Systems, Inc. has expanded its presence in the Keystone State with the acquisition Friday of Wyoming Valley Health Care System in Wilkes-Barre, PA.
The system includes Wilkes-Barre General Hospital, a 392-bed, acute-care hospital, First Hospital Wyoming Valley, a behavioral health facility in Kingston, PA, and other outpatient and ancillary services. Wilkes-Barre General Hospital becomes the tenth CHS-affiliated acute care hospital in Pennsylvania.
"We are pleased to broaden our presence in Pennsylvania and look forward to implementing our proven operating strategies to enhance healthcare services for residents of Wilkes-Barre and the surrounding communities," says Wayne T. Smith, chairman, president and CEO of CHS.
Franklin, TN-based CHS is the largest publicly-traded hospital company in the United States and operates general acute-care hospitals in non-urban and mid-size markets throughout the country. CHS owns, leases, or operates 122 hospitals in 29 states representing approximately 18,000 licensed beds.
Top health officials in the U.S. and abroad projected a cautious optimism that the new swine flu virus is not as lethal as initially feared. Genetic analysis has failed to detect in the influenza virus the "virulence factors" seen in the killer 1918 Spanish flu or the avian flu that surfaced earlier this decade, said Richard E. Besser, acting director of the Centers for Disease Control and Prevention. In addition, the new virus may have been more widespread in Mexico than originally reported, which would make the seemingly high mortality rate there a misperception, he added.
Some hospital emergency rooms have seen record-breaking numbers of patients as those with coughs, sore throats, and fevers—and sometimes no symptoms at all—have sought reassurance that they do not have the deadly H1N1 virus. The surges have been particularly heavy at children's hospitals, presumably because the young are so susceptible to respiratory diseases with comparable symptoms. Some hospitals have had to increase staffing and enact specialized triage plans. Waiting times have billowed in some emergency rooms, even for the seriously ill.
In a country where just 1.5 % of US hospitals have fully computerized records, West Virginia has created a paperless records system for its state-run hospitals and nursing homes serving the indigent elderly and mentally ill. The state did it on the cheap by using an electronic medical records system built by the Veterans Administration with taxpayer dollars, saving millions in software licensing fees charged by commercial software vendors. The VA software, known as VistA, is open-source software and it includes features such as a bar-coding system to track drug dispensations.
As the economic recession persists, people who are unemployed or worried about losing their jobs are putting off medical care and living with illnesses and conditions that aren't critical, but can be debilitating. Some are delaying having precancerous tumors removed; others are forgoing knee or shoulder surgery. While insurance often covers much of the costs associated with such procedures, there are expenses that can add up to thousands of dollars. For those lacking insurance, the price of most elective procedures is beyond their reach. And as more people forgo treatment, hospitals are suffering financially, industry specialists say.
Florida lawmakers learned that former Gov. Jeb Bush's controversial Medicaid reform plan from 2005 includes a time bomb for hospitals: A $300 million penalty. That's the amount Florida could lose in federal charity healthcare money if legislators don't reorganize Medicaid statewide within two years. This is about an experimental program designed to shift more Medicaid patients to managed-care plans and make the public health system run more like private companies. It currently operates in Broward County and the Jacksonville area.
Franklin, TN-based Health Research Insights is riding a wave of interest among self-insured employers intent on examining bills from physicians and other providers for what could be overpayment errors. For employers, it is all part of a push to control rising healthcare costs while fulfilling obligations to ensure that their health plan dollars are spent wisely. But some doctors question HRI's techniques, suggesting that the approach seems to assume wrongdoing took place after studying payment data that doesn't necessarily take into account all the details of a particular patient's case.
