The Milken Institute School of Public Health at the George Washington University and The Commonwealth Fund offer some troubling projections if Congress repeals just two key provisions of the Affordable Care Act.
Repealing the Patient Protection and Affordable Care Act without first providing at least some inkling of what will replace it could threaten one of the most dynamic job creation machines in the U.S. economy, a report suggests.
The U.S. economy created more than 2.1 million jobs in 2016, of which 421,700 were within the healthcare sector, according to preliminary figures from the Bureau of Labor Statistics.
That means that the healthcare sector accounted for 20% of all new jobs in 2016. That includes about 260,000 new jobs in ambulatory services, and 139,000 new jobs in hospitals; a little more than 35,000 new jobs per month, a pace down slightly from the 471,600 healthcare jobs created in 2015, BLS data show.
Since 2010, the year that the "job-killing" Affordable Care Act was signed into law, BLS data show that the economy created 15.2 million jobs, of which 2 million were in healthcare, representing nearly 13% of all jobs created in a six-year span of sluggish job growth in the slow emergence from the Great Recession.
Generally speaking, healthcare jobs are good jobs, particularly in economically depressed areas where decent jobs are scarce and it's not uncommon for the local hospital to be one of the largest employers in the region.
Healthcare jobs provide a clean and safe working environment and they pay better than other sectors, particularly for skilled clinicians and administrators.
They tend to offer decent benefits, including health insurance, which means that the public doesn't have to subsidize labor costs (at least not directly) as it often does in the service industry for low-end retail and fast food workers
About 60 cents or more of each healthcare dollar goes toward employee compensation. That's money that is often immediately circulated back into local economies in the form of car payments, groceries, durable goods, movie tickets, restaurant tabs, and property and sales taxes.
Of course, there are downsides to high job growth in healthcare. The United States spends far more on healthcare than any other advanced nation on earth. The approximately $3.2 trillion in healthcare expenditures each year accounts for nearly 18% of the gross domestic product. Every dollar spent on healthcare is one dollar that is not spent on education, or infrastructure, or public safety or other vital needs.
Projected Consequences of Repeal
President-elect Donald Trump and the Republican-controlled Congress have vowed to repeal the ACA as soon as possible, even though they have no plans for how to replace it.
With that in mind, a study from the Milken Institute School of Public Health at the George Washington University and The Commonwealth Fund offers some troubling projections if Congress repeals two key provisions of the ACA: Medicaid expansion; and the premium tax credits used to subsidize health insurance premiums for low- and middle-income people.
According to the study, if just those two provisions are eliminated:
About 2.6 million jobs will be lost across all 50 states and the District of Columbia in 2019. Job losses would affect every state, but 10 would suffer the biggest hits: California (334,000 jobs), Florida (181,000), Texas (175,000), Pennsylvania (137,000), New York (131,000), Ohio (126,000), Illinois (114,000), Michigan (102,000), New Jersey (86,000), and North Carolina (76,000).
One-third (912,000) of the total 2.6 million job losses would be concentrated in healthcare; nurses, health technicians, and other medical personnel would likely be laid off in 2019. The remaining two-thirds of losses would be in other industries, including construction, real estate, retail trade, finance, and insurance.
Gross state product, the state equivalent of national gross domestic product, could fall by $256 billion in 2019 alone. From 2019 to 2023 that same economic indicator could drop by $1.5 trillion.
The resulting economic disruption could trigger reductions in state and local tax revenues, amounting to $48 billion lost over five years.
State and local governments would get hit with shrinking tax revenues at the same time they are facing increased demand for healthcare services from the millions of people losing their health insurance. States could be juggling painful choices about what services to cut or whether to raise tax rates to maintain a safety net for their residents.
All states could suffer economic distress if the Medicaid expansions are cancelled—even the 19 states that have not expanded the program. That's because the economic benefits of Medicaid expansion flow across state lines: businesses and individuals who benefit from the economic growth buy goods and services not only in their own states but also in other expansion and non-expansion states.
By all means, let's have a debate on the Affordable Care Act. Congress and the Trump Administration should try to find a workable alternative, or improve upon what's already out there. Vice President-elect Mike Pence, for example, implemented a market-based Medicaid expansion in Indiana when he was governor there. We can debate the merits of the plan, but at least it appears to be a legitimate attempt to find a solution.
It is ridiculous to argue, however, that it's sound, responsible public policy to repeal the massive, sweeping, complicated ACA without an inkling of how you'll replace it.
In the coming weeks, expect to see more studies and projections about the potential for disaster if the ACA is taken out with nothing to replace it.
As Republicans in Congress prepare to make good on their promise to repeal Obamacare, new data provides a snapshot of the nearly 20 million people who gained health insurance under the landmark legislation.
Sometimes, numbers speak louder than words.
A report from the Robert Wood Johnson Foundation and the Urban Institute provides a granular look at the 19.2 million people who've gained health insurance coverage from 2010-2015 under the Patient Protection and Affordable Care Act.
For all its warts and pimples, Obamacare has reduced the number of uninsured Americans to historic lows, even in the 21 states that refused to expand their Medicaid programs, and which often did little or nothing to support health insurance marketplaces selling commercial plans within their jurisdictions.
The Urban Institute census comes just as a Republican-controlled Congress is preparing to repeal the ACA and replace it with some vaguely worded alternative that will take effect at some as-yet undetermined date.
The timing is not by accident.
"This is something that we began after the elections," says Anuj Gangopadhyaya, a research associate at the Urban Institute and a co-author of the study.
"We thought this would be a great moment to re-assess and talk about where the ACA coverage gains have been realized throughout this country. There isn't any spinning going here. These are the numbers. We just wanted to lay them out and see what the data tells us, and the data speaks for itself."
Before Obamacare is repealed, let's look at some of the key findings taken from the Urban Institute study:
An estimated 19.2 million nonelderly people gained health insurance coverage from 2010 to 2015.
Coverage gains were broad-based; the number of uninsured fell substantially among all Americans under age 65, for both men and women, and across subgroups based on race/ethnicity, levels of educational attainment, and states.
An estimated 2.8 million children from birth to age 18 gained coverage, suggesting that coverage expansions under the ACA and other policy changes for children's coverage implemented from 2010 to 2015 reached children in families above the progress made by prior expansions targeting low-income children.
The number of uninsured adults ages 19 to 34 declined by 8.7 million (42%), and the number of uninsured adults ages 35 to 54 declined by 5.6 million (33%). More than 2 million adults ages 55 to 64, who are at or approaching typical retirement ages, gained coverage from 2010 to 2015. Approximately 5 million women of childbearing age (19 to 44 years old) gained coverage from 2010 to 2015.
Among those gaining coverage from 2010 to 2015, 8.2 million (43%) were non-Hispanic white, 2.8 million (15%) were non-Hispanic black, 6.2 million (32%) were Hispanic, and 2.0 million (10%) were other non-Hispanics.
Americans in every state gained health insurance coverage. States that expanded Medicaid under the ACA saw larger percentage reductions in their number of uninsured residents than did states that chose to not expand Medicaid (45% compared with 29%). Nonetheless, 6.9 million people living in states that did not expand Medicaid gained health insurance.
California's uninsured rate fell 53.4%, translating into 3.8 million people gaining coverage. More than 2.3 million people gaining coverage from 2010 to 2015 lived in the Midwestern states of Illinois, Michigan, Ohio, and Wisconsin, with uninsured rates declining between 38% and 49%.
Florida and Texas, two non-expansion states, saw about 3.3 million people gain coverage as statewide uninsured rates fell 36% and 27%, respectively.
A particularly ironic statistic finds that 87% of adults who gained coverage did not have a college degree, and that includes 6.2 million non-Hispanic whites, a demographic that soundly voted for Donald Trump, who made repealing Obamacare a central pillar of his campaign.
Repercussions of Low-Information Voters
"This is a low-educated group. That's across races and states but that was definitely something that stood out in terms of describing exactly who we are talking about here," Gangopadhyaya says.
The numbers of insured could have been even higher if more states had shown a willingness to compromise. "I don't think it's too much of a stretch to conclude from this that we would have seen even more improvements if the states were more in lockstep for the Medicaid provisions," Gangopadhyaya says.
"We saw nearly 3 million children getting coverage throughout the five years," he says. "That's amazing because most of the ACA provisions were targeted not for children but for non-elderly adults. It means there was some reach in the ACA beyond the Medicaid and CHIP programs that were already in place."
What's going to happen to these 19.2 million newly insured Americans when the ACA is repealed? Nobody really knows because it's not clear what would follow the ACA.
"If some of these provisions are lifted without adequate replacement provisions, it's fair to say, you are going to see a drop in coverage and an increase in non-insurance rates following such an action," Gangopadhyaya says.
Hospitals with the highest incidences of readmissions (low performers) saw the highest reductions in readmissions when the financial penalties started kicking in.
A new study suggests that financial penalties provide an effective incentive to reduce avoidable readmissions, particularly at low-performing hospitals.
Researchers at Harvard and Beth Israel Deaconess Medical Center in Bostonexamined Medicare fee-for-service hospitalization data from more than 2,800 hospitals across the country between 2000 and 2013.
Based on 30-day readmission rates after initial hospitalization for acute myocardial infarction, congestive heart failure or pneumonia, researchers found that hospitals with the highest incidences of readmissions also saw the highest reductions in readmissions when the financial penalties started kicking in.
Study co-senior author Robert W. Yeh, MD, director of the Smith Center for Outcomes Research in Cardiology at BIDMC and associate professor of Medicine at Harvard Medical School, spoke with HealthLeaders Media about the study. The following is a lightly edited transcript.
HLM: What did your study find?
Yeh: Our initial goal was to examine whether or not the implementation of the HRRP [Medicare Hospital Readmissions Reduction Program] was followed by subsequent declines in readmission rates. We did confirm that.
It did look like there was an inflection point right about at the time of the passage of the ACA that looked like readmissions rates started to take a downturn.
Our second question was about whether some of these hospitals are penalized more than others. The way that the legislation probably was designed, you would hope to see that the hospitals that were penalized the most were the ones that had the worst readmissions rates and were the most highly incentivized to improve and hopefully the ones that improved the most.
That is what we observed. We observed that when we separated hospitals into four penalty groups, maximum, high, low and none, the hospitals that received the highest penalties did have the most rapid decline in their 30-day readmissions for those penalized conditions.
HLM: So, "skin in the game" works?
Yeh: I think so. It's a quite clear example that when hospitals are reimbursed, not just for how much they do but how well they do it, it makes an impact on their behavior.
That is what you would expect from an individual and this seems to incentivize organizations to act collectively to move in the same direction.
We are always careful about what is cause and effect. We know that readmissions penalties were followed by declines in readmissions, and they did so in a dose-dependent fashion; the more penalties you got the more you declined.
If I take off my epidemiologist hat, it does look like they work. The data is consistent with readmissions penalties working.
HLM: Were patients' socio-demographics factored into your findings?
Yeh: We did find that those hospitals that had the worst readmission rates and incurred the highest penalties were the hospitals that treated a higher percentage of minority of patients, a higher percentage of dual-eligible patients, a higher percentage of women, and the patient characteristics did look like they had more co-morbidities.
Those hospitals tended to be large, academic urban hospitals.
One of our concerns going in was that perhaps those hospitals that have high readmission rates were being penalized for things they can't control, but that is not support by the data.
If those hospitals had no control over their readmission rates, we would not have expected them to lower their readmission rates more dramatically than any other group. But it was quite clear that it was especially those hospitals that reacted the most favorably to the readmission penalties by dropping their readmission rates most significantly.
They dropped at about a 25% faster clip than hospitals that were not penalized.
HLM: Should socio-demographics be a factor in readmissions metrics?
Yeh: It's a broader debate than what we were able to look at in this study, but personally, I do think there are important socioeconomic factors that influence readmission rates that have nothing to do with the care those hospitals provide. They have to do with community resources and cultural influences on healthcare practices and outpatient medical care provided.
I sit on both sides. I see it as important to factor in. At the same time, these are exactly the types of hospitals that you want to see improve. In some ways by giving those hospitals a cushion for taking care of these patients, do you disincentivize them from improving? That is a two-edged sword and that is why there is such a fierce debate. The truth lies somewhere in the middle.
Yeh: If readmissions correlated precisely 100% with mortality, then we would not need it as a metric, because we have mortality as a metric.
The fact that those are not correlated does not mean to me that readmissions are not a useful metric. It is true that there are many readmissions that are for reasons that probably have very little to do with hospital quality. It's a blunt instrument, no doubt.
As clinicians in hospitals, we can't say, 'we're doing everything right and there is no waste in the system.' There are preventable readmissions. We know that.
Readmission rates should not be zero, but the fraction of those readmissions that are preventable with better communication and care redesign should be prevented and that's what these readmissions measures are trying to target.
HLM: What can be tweaked to make readmissions a more effective measure?
Yeh: The main question is what are the actual interventions that are reducing readmissions? One of the challenges when we use administrative claims data is that they lack granularity; precise reasons for why patients get readmitted.
If you don't know the precise reasons for readmissions, it's hard to design rational approaches to prevent them. You need to go into your own health system and get detailed electronic medical record data or chart review and understand who are these patients who are coming back, not at the 1,000-foot level like we have done here, but on the individual patient level and understand what are the things that may have prevented that individual patient from getting readmitted.
It's not sexy, splashy research, but when we aggregate and understand those reasons we can design appropriate interventions.
Healthcare construction spending could double in 2017. Where will those dollars be targeted as healthcare consumers become more sophisticated and demanding?
Healthcare is in the midst of another construction boom.
The American Institute of Architects this summer forecast that healthcare sector construction in 2017 is expected to double from the $19.6 billion spent in 2016, a year that also saw robust growth.
"The demographics are incredibly favorable on the long run for healthcare," AIA Chief Economist Kermit Baker said in an August conference call. "Seniors consume a lot of healthcare services, and as baby boomers are moving into their late 60s and 70s, we expect to see a lot of construction in the healthcare sector."
It will be fascinating to observe the speculating and strategizing—and guessing—on where the industry is headed as hospital boards and C-suites float bonds, pour slab, and grid rebar in a $1.7 trillion sector that could change healthcare delivery models before the concrete dries.
Partners at E4H, the architectural firm that specializes in healthcare projects, have identified five design trends that they believe will grow in the coming year. E4H Partner Rod Booze says the trends are aligned with what increasingly sophisticated and demanding consumers say they want and have come to expect.
1. Microhospitals
These mini hospitals are 24/7, small-scale inpatient facilities, anywhere from 15,000 to 50,000 square feet, with five-to-15 inpatient beds for observation and short stays.
They offer services similar to larger hospitals, including ER, pharmacy, lab, radiology and surgery. They also provide easy access for patients and cost-effective market growth opportunities for providers.
There are about 50 of these hospitals in the United States, mostly in mid-western and southern states, but Booze expects their numbers to grow, rapidly.
Booze says microhospitals haven't caught on in rural areas because there's no money in it. "They can go into urban areas and get select ZIP codes where the payer mix is strong and where the insurance contracts are plentiful," he says.
"If they go out in the middle of nowhere where it's an underserved medical community, the projected caseloads are not as appetizing and the return on investment is a little riskier. They wouldn't be doing this if it didn't offer them a market share advantage or a chance for profitability."
2. ED Modernization
Many EDs have yet to adapt to higher volumes, and thus risk bottlenecks. To fix this, EDs will be configured to provide more immediate access to alternative settings, such as "rapid treatment" areas where patients are seen and often diagnosed, treated, and discharged without entering the main ED.
There will also more partnerships with nearby primary care settings for non-acute patients. EDs will also be better equipped for a wider range of medical problems, including universal, acuity-adaptable, same-handed treatment rooms.
3. Infection Control
Design innovations will become more ubiquitous, such as adapting single patient rooms' bathroom showers to include offset drains and sloping sides to minimize the spread of infection and contamination, as well as accommodation for new plumbing fixtures such as specialty sinks for hand-washing, shaped to reduce splash and the spread of dirty water.
Additional innovations will include specialized light fixtures that spin high-intensity, visible, indigo-colored light, which kill bacteria but do not harm human cells, and infection-resistant materials such as copper alloy surfaces.
4. The Medical Village
This next generation treatment model has a central family medicine practice surrounded by selected specialists that offer one-of-a-kind patient access and share improved processes, outcomes, and data for quality.
This model offers more outpatient services, including some surgical and invasive procedures that require only an overnight stay. E4H says this will lead to the design of more elaborate outpatient facilities, with observation beds and partial hospital stays.
5. Behavioral Health
Facility upgrades will balance safety and regulatory concerns with therapeutic environments.
Safety systems being advanced include: top of door alarm systems; interior, high-impact, polycarbonate security windows; wearable fob-type staff alarm systems; and securing furniture to walls and floors.
The upgrades will improve therapeutic environments by incorporating open nursing stations resembling hotel reception areas, more family involvement in daily care which requires furniture and program space, and more patient control of their immediate environment with dimmable lighting systems and patient-adjustable environmental controls.
The Common Theme?
"All of these pieces drive themselves towards consumers," Booze says. "Big or small, fancy or not, the boutique hospitals, the micros, the traditional models in healthcare, the public is getting more sophisticated in terms of how they execute their healthcare, where they go to get it, how they spend their healthcare dollar, and who is healthy and who is not."
For example, five years ago conversations about hospital-acquired infections were reserved for healthcare policy wonks. "Now, people external to the industry are using healthcare and they are starting to pay attention to those trends," Booze says.
These trends also underscore the notion that traditional healthcare is no longer calling the shots.
"If it were up to traditional healthcare, they'd still be trying to force everyone into their behemoth 200-, 400-, 500-bed facilities," Booze says.
"We are looking for convenience. Who is serving me? How do I get access to my healthcare? I don't care if it's fragmented. I want to go to my community hospital or my cardiologist, and I don't want to go to the mothership if I don't have to."
"More of the major hospitals will become a haven for critical care and critical disease," Booze says, "whereas the balance of it that is more consumer driven will be on an outpatient basis and in smaller microhospitals."
Seema Verma, the presumptive next administrator of the Centers for Medicare & Medicaid Services, is the architect of Indiana's free market-based Medicaid waiver program. Hospital executives in the Hoosier State believe it could be easily adopted elsewhere.
This is part of a series covering the Shaping of Healthcare's Future in the Trump era.
It is no small irony that the Medicaid expansion envisioned under the Affordable Care Act may come to fruition in many of the remaining 19 non-expansion states only after the man who's pledged to repeal Obamacare takes office.
Elected leaders in these 19 Medicaid non-expansion states have refused billions of dollars in federal funding to expand the program because of ideological and political reasons.
They object to what they see as the government's increasingly intrusive role in providing and paying for healthcare under a program that they believe is unsustainable, and they don't want to help Democrats enable Obamacare.
Those objections could evaporate when President-elect Donald Trump's nominee Seema Verma becomes administrator of the Centers for Medicare & Medicaid Services.
Verma, a private sector consultant from Indianapolis, has built a strong resume as a conservative policy wonk, primarily because of her use of free-market principles to craft the Healthy Indiana Program 2.0, or HIP 2.0, a three-year Medicaid demonstration project, at the behest of Republican Gov. Mike Pence, the vice president-elect.
"In a sense HIP 2.0 is not much different from any commercial plan with high deductibles and requirements for patient participation," says Doug Leonard, president of the Indiana Hospital Association.
Leonard says Indiana hospitals were surprised and pleased that Pence, an avowed opponent of the ACA, came to support Medicaid expansion, but only on his terms.
"Being a very conservative governor, he stated frequently his opposition to the ACA. We didn't anticipate his willingness to consider the coverage expansion," Leonard says.
"It wasn't until about 18 months into his administration that he told us he would consider Medicaid expansion, but it would have to occur through the HIP model because he felt that Medicaid was broken and he was unwilling to see traditional Medicaid expanded."
Key provisions of HIP 2.0 include copays for enrollees, who are also required to establish health savings accounts. As the federal match declines in the coming years, Indiana's hospitals will face an enhanced assessment to pay for the state's portion of the expansion costs, thus keeping the program budget neutral for the state's general fund.
No one in Indiana argues that the program isn't needed. The American Public Health Association and the United Health Foundation placed Indiana at No. 39 on their 2016 state rankings of population health, with a high prevalence of obesity, smoking and cardiovascular disease.
More than 407,000 Indianans were enrolled in the plan in June, 2016, which represents about 70% of the eligible enrollees in the state. About 60% of enrollees had no coverage prior to HIP 2.0, and the plan pays doctors at Medicare rates, or 130% of the Medicaid rate, according to data from Indiana's Families and Social Services Administration.
"There were characteristics of HIP that the governor felt would resonate with conservatives on certain issues and would provide a benefit to many uninsured in Indiana," Leonard says. "Enrollees must adhere to personal accountability and being at-risk for making good choices, such as not overusing an emergency department, and paying a premium."
Hospitals Back HIP 2.0
From the hospital perspective, Leonard says HIP 2.0 has been a success.
"Hospitals received zero from these patients before and now there is insurance available," he says. "If there are headaches along the way, they are relatively minimal compared to the fact that hospitals are getting paid now for a service that they weren't getting paid for before."
Tim Putnam, CEO of Margaret Mary Health in Batesville, IN, says HIP 2.0 came on line as the state's healthcare delivery system was undergoing a dramatic change.
"We've been transitioning from volume to value and trying to keep people healthy without having access to care. That was always difficult because their fallback when they become seriously ill was the emergency department, which was counter to what our real goal was," Putnam says.
"Once HIP 2.0 became available we started seeing people getting primary care physicians, vaccines, early treatment, before it became an emergency department issue. It definitely had a positive financial impact but I can't tell you exactly what that number is. We looked at it more from people having access to care."
Putnam says HIP 2.0 allowed Margaret Mary to find health insurance coverage for people who'd never before need covered.
"We saw it was the working poor; a childless adult with a minimum wage job, or working part-time; a young family where two people are working, one may be part-time, or low income with young children and they qualify for HIP, which we saw as better coverage than Medicaid," he says.
"It gave options for people who really didn't have options before, or where health insurance wasn't affordable this was a great option. We had a lot of people who before had fallen through the cracks, who needed health insurance, now have it."
The main problem with HIP 2.0, Putnam says, is that it can be complex and difficult to understand, especially for people who've never before had health insurance.
"People understand traditional Medicaid. Here is your coverage. You don't pay anything for it and this is what you get," he says. "HIP 2.0 had a lot of components. You had to make payments. There was a basic plan if you didn't make payments, that didn't have as robust a coverage but was some sort of coverage. There is a saving account component, all of which were good things but were a challenge to explain to people. Once they understood it they saw the value in it, but it was cumbersome."
"Gov. Pence found a way to not compromise his conservative ideology but still find a way to provide coverage," Leonard says. "That is commendable because there are many states where because of ideological concerns the governors have said absolutely not. The state has suffered from losing the opportunity for a federal match, and there are a lot of measures that have shown that states that have expanded Medicaid have derived a lot of benefits."
Putnam recalls speaking with Pence a few years back when the governor was barnstorming to promote HIP 2.0.
"He was genuine in his desire to find a solution to expanding care to these people, but not doing it through an entitlement program like Medicaid, that he felt was not an efficient and effective program," Putnam says.
"When I look at my colleagues in states that wouldn't and didn't consider options to expand Medicaid and the downstream negative effect from that, I was very pleased with what Indiana attempted to do, and put in place."
"It can be successful in other places," Putnam says.
"It's a little cumbersome. It requires people to have a financial commitment and investment, but there is enough flexibility in the program in Indiana to allow organizations such as United Way to help individuals gain access, to help them become educated on what their involvement in paying for healthcare is, so there has been that flexibility."
Putnam says HIP 2.0 is a credit to Pence and Verma, who could have played it safe and sat on their hands.
"It would have been easy to act like other states and refuse to expand Medicaid, but they worked hard to find a solution," he says.
"I saw that as we went through each iteration, that there was a genuine effort to find a way to expand care to people who needed it and do it in a way that not only was received well by the people who get the healthcare, but also by the physicians and other providers who were required to sign up for it."
An Office of Inspector General report identifies improper payments for short inpatient stays and inconsistent use of inpatient and outpatient stays.
Inpatient hospital stays have decreased since the implementation of the two-midnight rule but Medicare still paid hospitals almost $2.9 billion in 2014 for potentially inappropriate short inpatient stays, federal auditors say.
Specifically, a review of hospital claims data shows that inpatient stays in fiscal 2014 decreased by 262,794 stays, and outpatient stays increased by 259,908. These changes represent a 2.8% decrease in inpatient stays and an 8.1% increase in outpatient stays, according to a review by the Department of Health and Human Service's Office of Inspector General.
The Centers for Medicare & Medicaid Services implemented the two-midnight rule in fiscal year 2014 to address three vulnerabilities in hospitals' use of inpatient and outpatient stays:
Improper payments for short inpatient stays.
Adverse consequences for beneficiaries of long outpatient stays, including that they may not have the three inpatient nights needed to qualify for skilled nursing facility services.
Inconsistent use of inpatient and outpatient stays among hospitals.
The OIG review found, however, that "vulnerabilities still exist," including:
Hospitals are billing for many short inpatient stays that are potentially inappropriate under the policy; Medicare paid almost $2.9 billion for these stays in FY 2014.
Medicare pays more for some short inpatient stays than for short outpatient stays, although the stays are for similar reasons.
Hospitals continue to bill for a large number of long outpatient stays.
An increased number of beneficiaries in outpatient stays pay more and have limited access to SNF services than they would as inpatients.
The number of outpatient stays increased since the implementation of the two-midnight rule. Further, short inpatient stays decreased more than long outpatient stays.
Hospitals continue to vary in how they use inpatient and outpatient stays.
Under the two-midnight rule, inpatient payment is appropriate when physicians expect patients' care to last at least two midnights; otherwise, they're paid at an outpatient rate.
The OIG report found that the six most-common reasons for short inpatient stays included the four most-common reasons for short outpatient stays. Specifically:
Coronary stent insertion, with an average Medicare payment of $13,269 for inpatient and $8,364 for outpatient
Conduct routine analysis of hospital billing and target for review the hospitals with high or increasing numbers of short inpatient stays that are potentially inappropriate under the two-midnight rule.
Identify and target for review the short inpatient stays that are potentially inappropriate under the two-midnight rule.
Analyze the potential impacts of counting time spent as an outpatient toward the three-night requirement for SNF services so that beneficiaries receiving similar hospital care have similar access to these services.
Explore ways of protecting beneficiaries in outpatient stays from paying more than they would have paid as inpatients.
The OIG study was based on hospital claims and did not include a medical record review.
The nation still lacks a strategy to provide cost-effective care for complex care patients. But one physician leader has built a NJ nonprofit that is making headway.
For all the advances healthcare has made over generations, the care of patients with complex needs remains firmly unchanged. In the view of Jeffrey Brenner, MD, a primary care physician in Camden, NJ, " We're still bloodletting people."
Its mission is to find cost-effective, coordinated strategies for complex care patients that take into account medical and personal needs, such as access to safe, affordable housing. Brenner spoke with HealthLeaders Media about the state of complex care delivery. The following is a lightly edited transcript.
HLM: You say complex care delivery is in disarray. How did we get to this point?
Brenner: We have a system of misaligned incentives and incorrectly trained professionals. We can transplant hearts and lungs, and cure cancer, but we haven't caught up to all that complexity.
There is a human side to all of this that we just haven't figured out. We have a lot of implicit bias in our medical model about how we think about care, and we are missing some elements in that model.
HLM: Describe the Camden Coalition.
Brenner: We are a membership nonprofit. With hospitals, patients, primary care, addiction, long-term care, mental health, the whole alphabet soup. We elect our board and officers every year and we make all of our decisions by consensus. We work with the adverse market share that nobody else wants more of.
We had very humble origins about 15 years ago. I was a frontline family doc in the poorest city in the country, practicing in a three-room office treating adults, children and babies.
We had a vision of better care in Camden by reimaging the system. We are a $10 million organization 15 years later. We've created a data-rich and business-oriented approach to delivering care to patients in a vulnerable area.
Camden is a place that is small enough, it's only nine square miles and 79,000 people on mostly publicly funded care, so you can get your hands around the place and move through ideas a little faster than you can in other places.
HLM: Walk us through a typical complex patient encounter.
Brenner: Let's imagine someone who has been to the ER more than 100 times a year, and admitted 11 times. [This is a person] who has four or five very complex chronic health issues, has mental health and addiction issues, and has been in and out of jail from time to time.
We run a regional health information exchange. We would see they've been admitted two or three times over the past six months. We would log into the electronic health records of the local hospitals and pull the records, do a triage.
If it has things like noncompliant, addicted, homeless, those are the people we're looking for. We have staff in all the local hospitals with badges. We go to the bedside with no paperwork and sit down and introduce ourselves and say, 'it seems like you're having a tough time right now. Let's talk about it.' We do care planning.
If they are homeless we move them into a brand new apartment. We have Section 8 vouchers as part of a pilot project. They get moved to the 'burbs. They pick the apartment they like.
We wrap mental health and addiction services around them. They do not have to be sober or in treatment to get an apartment. What we have found is that they need safety first. As soon as they feel safe and have a doorknob and lock, they tend to calm down and are more open to treatment and engagement.
We do a lot of coaching and mentoring. We try not to rescue them. It is critically important not to 'do' for them because you will disable them, and we hope to graduate them.
We can't fix their whole lives. They've had tough lives, but we can nudge them forward in key areas doing root cause and finding the triggers that keep them going back to the hospital.
Perhaps we can displace that need to go to the hospital and point them in another direction.
We've found that the hospital is a teachable moment. You're a little more vulnerable. You're questioning your mortality. You've got time on your hands lying there. You feel disempowered in that hospital gown.
HLM: Have you done a cost analysis?
Brenner: We are an R&D lab. The first iteration of these types of models are going to be more expensive than the end stage.
But, let's do the math. If you're admitted twice in six months, that's $10,000 admission and $20,000 in six months. The Section 8 voucher is $700 a month.
We use community health workers who are about $30,000 a year. We use licensed clinical social workers who are about $50,000 a year. That team can care for about 40 of these folks. You don't have to do incredible math to just break even on this stuff.
HLM: What is the role of the physician in these complex care models?
Brenner: There is absolutely nothing about a doctor's training that make them need to be the head of the care team. In fact, they are poorly trained to lead a team. They have a small piece of technical knowledge.
It would be like taking a structural engineer and putting them in charge of our national transportation system. It makes no sense. I would put a social worker in charge, and that is what I have been doing in my organization, and frankly they are far better calibrated to be leaders than doctors.
HLM: Do you think that could be problematic for doctors?
Brenner: We have some narcissistic clinical bullies who are going to have to learn new ways of ceding space to other professionals. I stand firmly with the nurses and the social workers, and the doctors' professional societies need to cut it out. It's obnoxious.
The newly formed National Center for Complex Health and Social Needs identifies best practices for improving care and lowering costs for patients facing myriad medical, behavioral, and social challenges.
Health systems, medical professionals and payers looking for effective ways to treat high-utilization patients that have complex medical and social needs have a new online resource.
Drafted at the Institute for Healthcare Improvement, The Playbook: Better Care for People with Complex Needs compiles and shares examples of successful approaches to care, guidance on making the business case for these models, and opportunities for policy and payment reform.
The playbook was unveiled Friday at the inaugural meeting of the National Center for Complex Health and Social Needs, led by Jeffrey Brenner, MD, of the Camden Coalition of Healthcare Providers.
"The care of complex patients is still in its infancy. We're still bloodletting people," says Brenner, a 2013 recipient of a MacArthur Foundation "genius grant," who has developed care models that address non-medical needs such as addiction, housing, hunger, and mental health.
"We have a system of misaligned incentives and incorrectly trained professionals," Brenner says. "We can transplant hearts and lungs, and cure cancer, but we haven't caught up to all that complexity. There is a human side to all of this that we just haven't figured out. We have a lot of implicit bias in our medical model about how we think about care, and we are missing some elements in that model."
Big Backers
The playbook has the backing of five national healthcare foundations—The John A. Hartford Foundation, the Peterson Center on Healthcare, the Robert Wood Johnson Foundation, The SCAN Foundation, and The Commonwealth Fund.
In a joint media release, the foundation leaders said that improved access to care that coordinates patients' medical, behavioral, and social needs means that high-needs complex patients will be less likely to delay care, or go to the emergency room for non-urgent care.
Patients with complex needs include older adults, people with major complex chronic conditions, and younger people with disabilities. Since many are older than 65, addressing this issue will become more urgent as the nation's population ages.
By some estimates, complex care patients represent just 5% of the population but account for 50% of national healthcare spending.
"Our research shows that when people with complex needs require medical help, they encounter a healthcare system that's expensive, inefficient, and poorly coordinated," says David Blumenthal, president of The Commonwealth Fund.
"We want to better understand what works for effectively treating these patients, so we can identify gaps, reduce duplication, and accelerate what works."
Survey Data
In conjunction with the release of the playbook, The Commonwealth Fund released a survey on Friday of 3,009 adults (1,805 of whom are high-need) and found that:
Nearly half (47%) visited the emergency department multiple times in the past two years.
A majority did not have good access to services that could help them manage their conditions, such as adequate help with activities of daily living (62%) or an informed and up-to-date care coordinator (58%).
Almost two-thirds (62%) experienced stress about their ability to afford housing, utilities, or nutritious meals. This compares to just 32% of people without high-needs.
A majority (59%) worried about being a burden to family and friends. More than one-third (37%) felt lonely, left out, or isolated from others.
Brenner says the playbook is a work in progress that will adapt and adopt as new strategies and tactics are tested and proven in the field.
"We are building a field and a movement for the care of complex patients, and we are going to set up the next generation of young providers, nurses, doctors, and social workers, to succeed," he says. "We weren't set up for success. Many generations have worked on this problem, but we are going to finally get it right with this generation."
President-elect Donald Trump has promised to repeal and replace Obamacare with "something terrific." His pick to lead HHS has called for radical overhauls of Medicare and Medicaid, and the Republican-controlled Congress has the votes to get it done, or not.
For better or worse, the next 12 months could be the most unsettled period for the healthcare sector in decades. Or, not much could happen.
The only thing that's certain is uncertainty.
We could see the complete unravelling of the Affordable Care Act, or not. President-elect Donald Trump vowed throughout his campaign to repeal and replace it with "something terrific" on his first day in office.
Now that the election is over, however, there are mumblings that the repeal could go forward, on a delayed track, while the "replace" component could take years to craft, and most certainly won't occur before the mid-term elections in two years.
In large part, that's because the ACA is mind-bogglingly complex, entrenched and expansive, and Republicans have so far provided only a vague outline of a potential replacement, and they don't want to do anything to anger voters.
It's not clear what any of this will mean for the approximately 20 million people that HHS says have gained health insurance in some form through the ACA, or how trimming the ranks of the insured would affect hospital operations.
The presumption is that it would not be a good thing for hospital bottom lines.
Medicare's Fate Uncertain
Trump's pick to lead the Department of Health and Human Services, Rep. Tom Price, MD, (R-GA), an orthopedic surgeon, has called for radical transformations of Medicare and Medicaid.
Republicans control both chambers of Congress, but any such reforms are dynamite, especially with Medicare, and Democrats have promised a bruising fight to defend these safety net programs.
At this point, there's no way to project how much the Republicans will do, or if it's all just empty campaign rhetoric.
On other fronts, the American Hospital Association wasted no time and twice last week presented the president-elect with an aggressive and expansive wish list.
It's not clear how receptive the Trump administration will be to these ideas, but even if only a handful of reforms are adopted, such as RAC reforms, ditching Stage 3 Meaningful Use, factoring socio-demographics in readmissions, and protecting DSH payments, they could have a significant effect on hospital operations.
Look to the Financial Indicators
It is in these times of flux that we look to the sober analyses of the bond rating agencies. With all the potential for massive disruption, Moody's Investors Service this week projected a stable outlook in 2017 for the nation's not-for-profit and public healthcare sector, which was based on a "modestly positive pace of operating cash flow growth" in the next 12 to 18 months.
"Following two years of extraordinary growth associated with expansion under the Affordable Care Act, hospital operating cash flow has moderated to 0% to 1%," Moody's Senior Analyst Eva Bogaty writes. "Top-line revenue growth continues to be strong, but constrained increases in reimbursement rates and rising expenses will counteract that growth."
Here are some other key projections from Moody's:
Patient volume growth is stable at about 1%. Utilization will be more modest in 2017 as the uninsured population stabilizes, but revenue growth will remain favorable with hospitals pursing outpatient growth strategies.
Expenses are on the rise, compressing margins. Soaring pharmaceutical costs, employment growth and rising pension pressures are driving thinner bottom lines.
Bad debt is rising as expected. Hospitals in non-Medicaid expansion states will see continued growth in bad debt as exchange enrollment likely contracts. In Medicaid expansion states, strong declines in bad debt will moderate because the benefits of expansion have largely been realized. High deductibles and rising co-pays will also drive bad debt.
Bogaty believes the outlook could be revised to positive if operating cash flow growth rises above 4% over the next 12 to 18 months, or revised to negative if the economy flattens or there is "any major regulatory changes or disruption of current policy."
Those are a handful of big "ifs," but there's not much else we can hold on to right now.
The Association of American Physicians and Surgeons counts Tom Price, MD, the nominee for HHS Secretary, as a member. The group's agenda calls for a phase-out of Medicare.
When President-elect Donald Trump last week nominated U.S. Rep Tom Price, (R-GA,) an orthopedic surgeon, to serve as secretary of Health and Human Services, media focus turned to the Association of American Physicians and Surgeons, a self-described non-partisan group that espouses the merits of " individual liberty, personal responsibility, limited government" and calls for the phase out of Medicare and greater autonomy for physicians.
HealthLeaders Media spoke this week with Jane M. Orient, MD, executive director of Tucson, AZ-based AAPS and a general internist. The following is a lightly edited transcript.
Orient: We were founded in 1943 and we promote independent private medicine. We are opposed to socialized medicine, which means a government takeover or government intrusion into medical care dictating what you can and cannot have, what you must pay for and what you can't pay for, and that sort of thing.
We believe physicians should be working for the patients and not the government or a third party because they have the control over their paycheck.
We really believe in freedom of expression and thought. We don't believe in setting up a scientific dogma that this is what you have to believe.
You are not allowed to raise questions about certain areas, because there are so many uncertainties and so many unknowns if we try to gag people and say if you raise a suggestion that is not in the mainstream you deserve to be gagged or ostracized. We need freedom of thought.
HLM: What is your membership?
Orient: Approximately 5,000, all over the country, all specialties.
HLM: Is Dr. Price a member of AAPS?
Orient: He's a member. He's spoken at our meeting. We in general agree with his philosophy, although not with every detail he has proposed.
HLM: Why do you support Dr. Price's nomination?
Orient: We think he is a good man. He's certainly well qualified. He has a first-hand understanding of the impact that government regulation has out in the real world. He generally has a philosophy of freedom and supports the right to practice independent medicine.
HLM: In what areas do you disagree with Dr. Price?
Orient: Republican plans have this idea of refundable tax credits, which in our opinion is the same thing as a subsidy and being deprived of a credit is the same thing as a penalty or a mandate.
It gives the federal government the power to define what constitutes an acceptable or qualified insurance plan to enable you to get the tax credit.
We can have some discussions about the details, but we would agree with him that Obamacare needs to be repealed. We don't even know yet what all is in it, but it has created a real maze of complexity and interactions and taxes and mandates and so on.
HLM: Is AAPS libertarian-leaning?
Orient: We've been called conservative. We've been called libertarian. Generally, we believe in constitutionally limited government; interpreting the constitution the way it was written, which means that Congress has certain enumerated powers and other things should be left to the states. That would include the regulation of insurance and the practice of medicine.
HLLM: Would AAPS like to see Medicare and Medicaid abolished?
Orient: We would like to see them phased out. There is no way you can abolish them suddenly because you have so many people utterly dependent upon them. But we need to rethink the whole structure of the program, which was enacted under false pretenses to fund Social Security.
Seniors believe they have paid for their care through these "contributions" they had to make while they were working, but in fact it's not a right all. There is no contractual right to get anything out of it. It's an entitlement. It's a privilege.
And all of the money we put into it is gone immediately to pay for other people's medical care or if there is a surplus to pay for whatever else the government wants to spend it on.
The Social Security trust fund is a fiction. It's just indebtedness for what the government has taken from the payroll tax to buy other things, from aircraft carriers to food stamps, or anything to reduce the size of the deficit.
HLM: Without Medicare, how could healthcare be affordable for senior citizens?
Orient: First of all, we ought to allow people who want to get out to get out. Like me, I want to get out. But, if I claim my Social Security, I have to be on Medicare Part A, so I haven't claimed it yet.
These two things should not be tied together. We need to allow people to do that without paying back any Social Security they've ever gotten or renouncing it in the future. That way, a private market for catastrophic insurance could develop.
You can turn down Medicare Part B, although there is a penalty if you want to re-enroll. My mother just got a bill. Her premium has practically doubled, it's gone up by $199 per month this year, and that is a consequence of the Affordable Care Act that people aren't aware of.
That is $6,000 a year. You [could] buy a whole lot of physician care, which is what Part B covers, if you had that $6,000.
Whereas if it is under Medicare Part B, you get only what the government decides is necessary and prudent and you can only get it at the price the government agrees to pay, which is often not enough to get you some real time with your doctor.
HLM: How would you address concerns that premiums would be unaffordable without subsidies for many seniors, who would otherwise face catastrophic medical bills?
Orient: First of all, we have to look at why that bill is that high. That bill is escalating. It doubled or tripled immediately after Medicare went into effect in 1965. Before 1965 maybe half of seniors didn't have health insurance, and medical care was maybe half as expensive.
Funneling all this through a third party introduces tremendous fraud and waste and increases prices because checks and balances are dismantled. You no longer have customers deciding whether to part with their own money.
They will take what you give them as long as it's free, but if they have to pay $20 for it they might not think it's worth it.
HLM: How long would it take to phase out Medicare?
Orient: I don't know. We need to let people get out as quickly as they want to. What is going to happen, it's just kind of the handwriting on the wall, is that Medicare truly is bankrupt. It is already spending a lot more than it is taking in, and the demographics are terrible.
We are going to have fewer than three working people supporting one retiree. How can three people who are struggling to support their own families and whose wages have been really frozen for quite a long time, or who can't get a good fulltime job, how are they supposed to support all these retired people?
Already we are curtailing what we pay to doctors and hospitals and the value-based system is really a system for rationing care. You spend too much and we aren't going to pay you. The system is like any Ponzi scheme. When you run out of new subscribers something bad is going to happen.
HLM: What other issues are important to AAPS members?
Orient: A lot of it has to do with Medicare and managed care and trying to undo the effect of Medicare on escalating costs, which is imposing a lot of practice guidelines that are intended to control costs but which dictate what physicians can and cannot do.
Of course, the guideline writers have huge conflicts of interest with the pharmaceutical industry and others. The market is so distorted by government rules and mandates and price controls that it is hard for people to imagine what freedom looks like. They don't have a memory extending back to 1950.
HLM: Do you take an issue on abortion?
Orient: We have a resolution on the record from quite a few years ago supporting the sanctity of human life from conception to natural death. We have not been active in deciding what the government should do about abortion, but the oath of Hippocrates is quite clear on that point: Doctors are healers not killers. They do not give women means to procure abortion.
That doesn't say what our members may or may not believe on whether women have the right to get an abortion. But it's clear that the Hippocratic physician doesn't do abortion.
HLM: Is it a fair criticism to say that AAPS is not in the mainstream?
Orient: I guess it depends partly on what you mean by the mainstream. The majority of people in this country are in a state of deep denial about the fiscal realities of our situation.
HLM: Will Dr. Price's membership in your group be a liability for him in the nomination process?
Orient: It's going to be a liability for him on some fronts because a lot of people don't agree with us about limited government or the desirability of independent private practice.
But it should help on other fronts. The people who do agree with us might think it's a point of pride.
