Lynn Barr, CEO of the National Rural ACO, says her organization has developed a program that allows rural health clinics, federally qualified health centers, and hospitals to join an ACO regardless of size and with no downside risk under a bonus program. But time to get that money is running out.
Rural providers have only until May 1 to apply for a share of the $114 million in one-time federal grants to help the transition to accountable care organizations.
Lynn Barr
CEO, National Rural ACO
Lynn Barr, CEO of the National Rural ACO, which is administering the program, says that even though the deadline is one week away, it's not too late to file a letter of intent to join NRACO.
"Oh my gosh! You'd be amazed how many people don't know about this," Barr says. "This opportunity has flown under the radar. We're trying to get the story out."
"The LOI is a form on our website. That's five minutes and it is non-binding. It gets you into the process, and then you've got 60 days to review and complete the application," she says. "The application is not like an essay test. It's 'give us your tax ID numbers and review and sign the contracts that were mandated by (the Centers for Medicare & Medicaid Services).' People can totally do this."
Once a provider is inside the 60-day window, the process becomes freighted.
"There is a $25,000 deposit they have to put down with the application, which is earnest money," Barr says. "CMS wants to make sure people are serious and that they don't send in an application without board approval or whatever. But it is fully refundable. They get the money back."
Barr expects that about 150 rural providers will apply for the grant money, which provides between $1.4 million and $2.5 million per ACO, depending upon the size of the patient population it hopes to serve. To qualify, 65% of the providers in the ACO have to practice in an area with a (Rural-Urban Commuting Area)code above 4.0.
On Monday, 12 providers submitted LOIs to NRACO and Barr says "there are a lot of people who've told us they are going to get us letters, but they haven't done so yet. People tend to wait until the deadline, but we've gotten a lot already."
Barr says the grants are large enough to incentivize fence-sitters who might otherwise wait a year or two and allow more adventuresome providers to make the potentially costly rookie mistakes. There is also no guarantee that the funding will be re-allocated beyond 2016.
On Cash as a Barrier to Entry
"It's a one-time grant," Barr says. "For people who sign up with us, that is worth almost $400,000 for each site [within an ACO]. That's been the biggest barrier for people to join, the cash. CMS will fully fund their participation, so why not take advantage of it?"
The recent permanent repeal of the sustainable growth rate formula reemphasized that future Medicare payments are going to be based in large part on cost and quality. "You have to get into a program that will work on that," Barr says. "This will help identify cost issues, work on quality, develop networks and be ready for the new payment model."
Meet NRACO
If you're in rural health and you're not familiar with NRACO, consider this an introduction.
The group was formed in 2013 by nine rural hospital CEOs from California, Michigan, and Indiana who got tired of waiting for someone else to address the challenges that rural providers face transforming away from fee-for-service and toward population health and value-based care.
The consortium has grown in the last two years and now includes six ACOs comprised of 30 community health systems in nine states, with more expected to join in 2016.
NRACO acknowledges that size, location, and funding are definitely challenges for rural providers who want to transition to ACOs. However, Barr says NRACO has developed a program that allows rural health clinics, federally qualified health centers, and hospitals to join an ACO regardless of size and with no downside risk under a bonus program only that does not affect fee-for-service payments or cost-based reimbursement.
Barr is persuasive. Talking to her reminds me of the old Dale Carnegie technique of methodically "removing the objections" to make the sale. It's imperative that rural providers take on the ACO challenge because payment models are changing, she says, and the challenges surrounding this transformation will only become more daunting for providers who delay. So, why delay?
Talking to Barr also reminds me of another old saying: If you're not at the table you're on the menu.
"Rural providers have to engage with CMS to figure out now we are going to get paid," Barr says. "These payment models aren't perfect, but if we work with CMS we will help develop a program that will work for us. But we have to be in it to win it."
Savings were similar in accountable care organizations with "financial integration" between hospitals and doctors, and those without, which suggests that this form of provider consolidation is not necessary for ACOs to reduce Medicare spending, research shows.
Medicare's 32 Pioneer Accountable Care Organizations saw modest improvements in quality at a marginally lower cost in their first year of operation, a new study shows.
The report, published in The New England Journal of Medicine, estimates that the Pioneer program saved Medicare about $116 per beneficiary each year, or about $118 million in 2012, its first year of operations.
J. Michael McWilliams, MD
"Contributing to these estimated savings were reductions in spending on acute and post-acute care as well as an apparent substitution of care in lower-priced office settings for care in higher-priced hospital outpatient departments," the study found.
"The first year of the Pioneer program was not associated with significant changes in the rates of readmissions, hospitalizations for ACSCs, or screening mammography, but was associated with slight increases in the rates of use of preventive services in diabetes care. Together with a recent study examining the experiences of patients in ACOs, our findings suggest that Pioneer ACO contracts have been associated with some early savings and either unchanged or improved performance on quality measures."
The savings report comes after large defections from the Pioneer ACO program. Of the original 32 participants, 13 had left the program by fall of 2014, citing inconsistent results and financial losses. Three of the Pioneers had to pay back CMS between $1.61 million and $2.89 million, and six other organizations received no shared savings.
Lead author J. Michael McWilliams, MD, an associate professor in the Department of Health Care Policy at Harvard Medical School, says there are indications that these savings are not a one-year phenomenon of ACOs plucking the low-hanging fruit.
"There are both conceptual reasons and empirical evidence suggesting that one would expect growing savings with experience under alternative payment models," McWilliams said in an email exchange.
"As payment changes from fee-for-service to incentives rewarding value, the delivery system will need time to restructure to respond effectively to those new payment incentives. Organizations will need time to learn what works and what does not. Changing physician practices to support more cost-effective care may also take time. Finally, as risk-contracting becomes common across multiple payers, providers will have stronger incentives to control spending."
Future Savings 'Will be Harder to Come By'
McWilliams says separate research on the Alternative Quality Contract in Massachusetts, a commercial ACO, showed growing savings each year from the first to fourth years.
"Eventually, yes, savings will be harder to come by as organizations achieve greater levels of efficiency," he said. "This is consistent with our findings and suggests the need for incentives to maintain high levels of efficiency in addition to achieving them."
The study found the savings were similar in ACOs with "financial integration" between hospitals and doctors, and those without, which suggests that this form of provider consolidation is not necessary for ACOs to reduce Medicare spending.
"Our findings also suggest that ACOs with higher baseline spending, whether it was due to less-efficient practices or unobserved differences in case mix, were able to reduce spending more easily, at least initially, than ACOs with lower baseline spending," the study said.
"In addition, we found that savings occurred among the 13 ACOs that subsequently withdrew from the Pioneer program, whereas CMS had calculated minimal savings or losses for 12 of these ACOs in comparisons with benchmarks."
What the study did not find was a relationship between estimated savings and continued participation in the Pioneer program, which they suggest means that "sustaining or expanding participation in a Pioneer-like ACO program will probably require greater and more reliable rewards for ACOs that reduce spending than those currently in place."
Greater access to healthcare services for residents living outside metro New Orleans is one of the aims of a proposed collaboration between Louisiana's largest not-for-profit, academic health system and a not-for-profit community hospital.
Louisiana's Ochsner Health System and Slidell Memorial Hospital are negotiating a "strategic partnership" that both sides believe will better position them to meet the demands of value-based, population health.
Bill Davis
CEO, Slidell Memorial Hospital
SMH CEO Bill Davis says the letter of intent to negotiate the partnership that was signed last week signals neither an acquisition nor a purchase of one hospital by the other.
"We are just trying to create a structure where in this environment we are able to improve access to care, quality of care, and lower the cost of care," Davis says. "If that means two organizations have to collaborate rather than duplicate services, we feel comfortable with that, in this particular marketplace, if that is the best opportunity for achieving those three goals."
SMH is a 229-bed acute care not-for-profit community hospital in a service area of about 90,000 people, located 33 miles northeast of New Orleans. Gretna-based Ochsner is Louisiana's largest not-for-profit, academic health system and includes 13 hospitals, 50 health centers, more than 15,000 employees and nearly 1,000 physicians.
If the deal is finalized as expected sometime this summer, SMH will become part of the newly formed Ochsner Health Network and will work within an oversight committee that will include equal representation from both SMH and Ochsner.
SMH, however, will remain an independent community hospital with its current board governing the hospital. Each organization will retain its name and assets.
"The challenges we currently face as healthcare providers are unprecedented. There is no doubt the future of healthcare will be about partnership and collaboration," Ochsner President and CEO Warner L. Thomas said in a media statement.
"Partnerships like this one are crucial for stand-alone community hospitals and individual providers as well as for larger systems. We are lucky to have two organizations with common cultures partnering together to improve the delivery of healthcare and to continue to make our communities stronger and healthier."
Davis says a strategic partnership has the potential to bring "the best of both worlds" to SMH and Ochsner.
"We are the leading hospital in our region," he says. "The community is invested in us to make sure we focus on delivering comprehensive services and a high level of quality locally. As a result, we felt pretty strongly that the local community wanted to be in partnership or control over the delivery of medicine locally."
The realities of the evolving healthcare delivery landscape and the advantages of consolidation make it difficult to go it alone to leverage better prices from suppliers and payers, and to eliminate redundant and expensive administrative and support systems, Davis says.
Warner L. Thomas
President and CEO,
Ochsner Health System
"We knew that ultimately we needed to partner with somebody, but not necessarily for a lot of the things that we do very well locally," he says. "The biggest deficit we've had, because we are a small, local community hospital, is intellectual capital. All the capabilities to be able to manage population health, to improve population health status, there is no way that a small player like us can deploy numerous layers of electronic medical records and other data capabilities."
Davis says he does not foresee the strategic alliance evolving into "a total sellout."
"The fact of the matter is that having local control and input with these systems of delivery really adds value, more than ever, in the new era of healthcare where you are talking about population health status improvement and population management," he says.
"You need to know that culture and be immersed in that culture because it's not necessarily going to be a cookie cutter that is going to solve the problem. You have to know your local community and the region's culture, demographics, their socio-economic challenges, to be able to come up with solutions that solve better quality, lower cost, and improved population health status."
Baptist (FL), MD Anderson Create Cancer Center
Jacksonville-based Baptist Health and the University of Texas MD Anderson Cancer Center have finalized a partnership to create a joint cancer programserving northeast Florida and southeast Georgia.
The program will be housed in the Baptist Outpatient center but will eventually move to a new building in 2017.
"The final approval of this agreement brings us one step closer toward the realization of our partnership with an international leader in cancer care," Baptist President/CEO Hugh Greene said in prepared remarks.
The two health systems are recruiting a dedicated care team of medical oncologists and other medical and surgical experts to join the existing cancer care staff. The goal is to replicate the MD Anderson care model.
Under the deal, Baptist Health will become a partner member of MD Anderson Cancer Network, which means that the Baptist cancer program will be operationally and clinically integrated with MD Anderson, so that patients at Baptist MD Anderson can access multidisciplinary care options, including access to ongoing cancer research and select clinical trials.
Baptist Health includes five hospitals with 1,129-licensed beds, 1,644 medical staff and more than 250 outpatient facilities throughout North Florida and South Georgia.
In our November 2014 Intelligence Report, 82% of healthcare leaders said that their organization needed to enhance its executive compensation structure to attract, retain, and engage leaders. HealthLeaders Media Council members discuss the factors involved.
This article first appeared in the May 2015 issue of HealthLeaders magazine.
Michael D. Williams
President and CEO
Community Hospital Corp.
Plano, TX
One of the challenges that we face is finding individuals who possess the experience and the business acumen that are necessary to lead in this complex environment. Historically in healthcare, relational skills sometimes were enough to create opportunities for success. Now the mandate is the combination of relational skills with business skills to be able to lead organizations in such a fashion that they can be competitive and continue to be successful.
Executive compensation is but one component of the fit. It is what I would call the threshold component. Once that interest is created, we find that if we are competitive in executive compensation, then it's all about culture.
Finding the right metrics for value-based compensation is a fairly straightforward process. Historically the gatekeepers for incentive compensation have been quantitative in nature from the standpoint of EBITDA earnings or financial focus. What many organizations, including ours, are now doing is having clinical outcome gatekeepers in place, as well, before incentive compensation can be paid. That is a great opportunity to say externally that the bottom line is important but outcomes are just as important, if not more so.
Joseph Pepe, MD
President and CEO
Catholic Medical Center Health System
Manchester, NH
Over the past few years we have aligned executive compensation incentives with value-based metrics, which have driven executive performance and engagement already. Now we have embarked on a major development and succession planning program, which we believe will be very important toward recruiting, retention, and addressing the problems of executive turnover.
Our biggest business expense is on people—their education, salary, benefits. So it's important that we take a look at this and don't treat them like one size fits all. We are revamping our evaluation forms and processes throughout the entire hospital. We are trying to align our culture of compliance and respect and service into these evaluation forms and goals.
With some executives, it's about the senior executive retirement plans. With others, it's about contracts. Not all executives want the same things. We need to be flexible. We look at individualizing when we can but also keep in mind equality throughout the senior leadership team. We're trying to get them to be more efficient at the things they do well, and we're trying to take off their plate the things that are not up to their license, giving them more support so that they can be more efficient in doing the things that they were hired to do.
If I am going to preach that the market is paying for value-based healthcare, then I cannot be giving them incentive bonuses based on volume. I have to start paying them for performance, just like the market.
Kenneth S. Lewis, MD, JD
President and CEO
Union Hospital
Elkton, MD
On aligning with goals: The compensation process for hospitals needs to be aligned with the overall organizational objectives. It's the whole transition from volume to value. That has occurred within this state and that has significant implications from a compensation perspective.
On population health: You are not going to be able to achieve population health or some of the quality initiatives on your own. The incentive/goal piece of compensation is becoming increasingly important, and it is starting to move away from individual goals to executive team goals. There clearly is a greater focus now on tying compensation to performance, quality, population health, and cost containment—less on a direct connection with operating margins, because the reality is that unless we achieve the objectives for quality, population health, and cost containment, there will not be an operating margin to reward.
On compensation and the long view: There was a time when the goals were not only individually focused but they were short-term, too. Not only are we seeing the transition to group goals but also multiyear goals. These changes take time, and to do a "one-and-done" approach toward incentive goals no longer seems rational in this environment.
On compensation and the long view: There was a time when the goals were not only individually focused but they were short-term too. Not only are we seeing the transition to group goals but also multiyear goals. These changes take time, and to do a "one-and-done" approach toward incentive goals no longer seems rational in this environment.
Hamlin J. Wilson
Senior Vice President for Human Resources
Wellmont Health System
Kingsport, TN
Our organization would be among the 82% in the survey who are working to enhance executive compensation. We have to remain competitive in our market, and our market at the executive level is very broad. We want to be able to recruit from all over the country for our vacancies.
More and more there is a push toward ensuring that executive compensation is structured around performance, specifically clinical outcomes. A lot of organizations have not yet fully leveraged clinical outcomes and quality in designing the executive compensation plan, specifically around variable-based pay.
In our organization, for the past 10 years we have structured executive compensation and variable pay around patient satisfaction and financial outcomes. The one area that has been on the table that we may be poised to go after this year is the matter of clinical quality outcomes. We are investigating the degree to which we need to restructure our program to address the quality aspect of the work we do.
I am not sure there is a "right way" to do this. You have to look at each organization to make it right for that organization. But there are some things we have to make sure we do correctly when we move toward quality. We have to make sure we pick the right outcome measures. That can be a bit of an art.
Virtually every member of Congress who voted for H.R.2 can tell his or her constituents, in all honesty, that the bill keeps the doors open for critical healthcare programs in their districts.
After more than a decade of teeth gnashing, hand wringing, and ululating, the nation's physicians and other frontline providers can take comfort in knowing that Medicare's hated Sustainable Growth Rate funding formula has been euthanized, with a DNR attached for good measured. The President's signature is assured.
In the morning afterglow it's time to sweep up the various flotsam and commentary surrounding H.R.2, which does a lot more than simply kill the SGR. In fact, this bill is the most sweeping and costly piece of healthcare legislation since the Patient Protection and Affordable Care Act of 2010.
Here are a few morning-after tidbits I've collected.
AMA Priorities Shift
American Medical Association CEO James L. Madara, MD, held a telephone press conference with reporters this morning and said the AMA's efforts now shift from lobbying for the permanent repeal of the SGR, toward ensuring that the payment reforms replacing it are properly implemented.
"We will have our finger on the pulse of the implementation and [will be] working with the federal government to make sure that this tracks in a correct way," Madara says.
H.R.2 has been called a "permanent fix" for the SGR, even though the chief actuary for the Centers for Medicare & Medicaid Services says Congress will have to revisit the issue in 10 years. Madara says that even if that is the case, H.R.2 better than the status quo it replaces.
"We will be working with federal government not 10 years from now, but tomorrow, the day after that, and every day from now until the end of the next 10 years," he says.
Besides, he says, the actuary's concerns cannot take into considerations the potential for tremendous change in the healthcare landscape over the next decade.
"Projections are useful when one gets into an area that is so complex and starts thinking of nothing changing for a period of 10 years and in the second instance longer than that, about a quarter century," he says.
"That's interesting to know. It's input. But one does not make linear trajectories over periods of a decade or more and assume that is where we are going to end up. That assumption is that nothing happens in the interim, and as we all know that is simply not the way life works."
"It's also true that we have to compare this bill with the trajectory that we were on under what was previously law and this bill in our view is a tremendous improvement over the disconnected environment with competing and non-harmonized measures that we were facing in what until yesterday was current law," he says.
The 8 'No' Votes
H.R.2 passed the Senate 92-8 on Tuesday night, less than three hours before a 21% cut in Medicare reimbursements would have kicked in.
Eight Republicans voted against the bill. They are: Sens. Ted Cruz, Mike Lee, David Perdue, Marco Rubio, Ben Sasse, Tim Scott, Jeff Sessions, and Richard Shelby.
The primary objection raised by these senators was that there were no offsetting "pay-for" provisions in the bill, which adds about $141 billion to the deficit.
Supporters of the bill, which included the Republican leadership, didn't argue, but said doing nothingwould cost $900 million more over the next decade, according to the nonpartisan Congressional Budget Office.
Also, Sens. Rubio and Cruz are running for president in 2016 and they couldn't vote for anything that could be perceived as supporting Obamacare.
"I cannot support the Boehner-Pelosi bill, which institutionalizes and expands Obamacare policies that harm patients and their doctors while adding roughly half a trillion dollars to our long-term debt within two decades," Cruz said in prepared remarks.
"The so-called 'SGR' is a flawed approach that needs to be eliminated, but doing so should be a catalyst for real entitlement reform. Any deal should be fully paid for and include significant and structural reforms to Medicare that provide seniors more power and control over their healthcare."
NP Join the Celebration
Physicians aren't the only ones cheering. Nurse practitioners also scored a major victory in H.R.2. The American Association of Nurse Practitioners points out that the bill:
Authorizes NPs to document evaluations for durable medical equipment
Ensures that NP-led Patient Centered Medical Homes are eligible for incentive payments for chronic disease management
Reauthorizes the Children's Health Insurance Program, which will ensure access to for millions of children, including those who receive needed services from NPs
"The national nurse practitioner community is grateful to the U.S. Senate and House of Representatives for preserving the health services our seniors need, and further recognizing that seniors increasingly rely on the expert care of nurse practitioners who have become the providers of choice for diverse patient populations," AANP CEO David Hebert said in prepared remarks.
Health Centers Re-funded
The best news for people living in underserved communities is that H.R.2 also includes a two-year funding extension for Community Health Centers, the National Health Service Corps, and the Teaching Health Centers Graduate Medical Education Program.
"America's Health Centers and the more than 23 million patients they serve are extremely grateful that this bipartisan legislation recognizes and invests in the health center system of care," Tom Van Coverden, president/CEO of the National Association of Community Health Centers, said in prepared remarks.
"Health centers have been living under the uncertainty of the Primary Care Cliff, and, now that this legislation has passed, our dedicated clinicians and staff can get back to the daily work of providing high quality primary and preventive care to underserved patients and communities."
HLM Journalist in Shock!
I'm still trying to get used to the liberating notion that I will no longer write about the SGR in the present tense.
I wasn't covering healthcare back in 1997 when Congress passed the SGR, so I wasn't really sure what they were trying to accomplish beyond applying a sledge hammer to stem the growth in Medicare spending. Clearly, it did not work.
Every spring for the past several years, I've camped out in front of CSPAN and watched the endless bloviating around a dumb policy that was never enforced, and which should have been repealed years ago.
It was particularly frustrating because everyone agreed that SGR was dumb policy, but year after year nobody acted to repeal it. And with every Band-Aid patch—there were 17 "Doc fixes" since 2003— and the debt kept growing, making the eventual day of reckoning costlier.
I am not a Congress watcher, so I can only guess as to why lawmakers decided to act this year. I think Congress was as sick of the SGR as everyone else. They just wanted it done with, and the CBO gave fiscal hawks just enough cover to vote for it.
Attaching funding for popular and critical healthcare programs, such as community health centers, was smart. Virtually every member of Congress who voted for H.R.2 can tell his or her constituents, in all honesty, that the bill kept the doors open for critical healthcare programs in their districts.
Maybe the CMS actuary is correct. Maybe Congress will have to revisit the "permanent fix" at the end of the decade and throw more money at it. After reporting on temporary fixes for the better part of a decade myself, however, I'm OK with a 10-year reprieve.
Hours before physicians would have seen a sharp pay cut go into effect, lawmakers voted to "retire the outdated, inefficiency-rewarding, commonsense-defying Medicare reimbursement system," as one senator put it.
A bipartisan U.S. Senate late Tuesday overwhelmingly approved a sweeping $145 billion healthcare reforms package that centers on a permanent repeal of Medicare's reviled Sustainable Growth Rate physician payment formula.
The 92-8 vote was recorded at 9:47 PM Tuesday, less than three hours before a 21% "negative update" in Medicare payments to doctors would have gone on the books.
President Obama has said he would sign H.R.2 as soon as the Senate passes it. The bill cleared the House in late March on a 392-37 vote.
"This bill represents two years of hard work on both sides of the Capitol and it represents a real step forward for bipartisan healthcare policy," Senate Finance Committee Chairman Orrin Hatch, (R-UT), told colleagues just before the vote.
"It's a monumental achievement. It is something that has been long in the offing, and I want to thank everybody on both sides for the cooperation we've had."
Sen. Ron Wyden, (D-OR), called the bill "a milestone for the Medicare program, a lifeline for millions of older people….Tonight the Senate is voting to retire the outdated, inefficiency-rewarding, commonsense-defying Medicare reimbursement system."
The SGR was enacted by Congress in 1997 to control Medicare cost growth, but lawmakers stepped in to delay the cuts as they accrued each year. Rather than permanently fix the problem, Congress instead spent $150 billion in 17 short-term fixes since 2003 in an annual sideshow derisively referred to as the "doc fix."
Technically, the 21% cut in Medicare payments went into effect on April 1, one day after the Senate balked on an earlier opportunity to vote on the House bill before a two-week recess. The Centers for Medicare & Medicaid Services said in the interim, however, that there would be a two-week lag to process the claims, which effectively pushed the deadline to April 14.
H.R.2 removes the threat of draconian cuts and replaces the SGR with an annual automatic payment update of 0.5% each year over the next five years.
Although repeal of the SGR is the centerpiece of H.R.2, the bill is the largest package of healthcare legislation before Congress since the passage of the Affordable Care Act in 2010. In addition to repealing the SGR, the bill also:
Delays disproportionate share payment cuts to safety net hospitals until 2018 and extends the DSH policy through 2025.
Delays until Sept. 30 changes in the two-midnight rule on inpatient billing that were set to take effect at the end of this month.
Fully funds the Children's Health Insurance program through Sept. 30, 2017.
Preserves all extenders included in 2014's temporary SGR patch, including addition to funding for Community Health Centers through 2017.
Provides incentive bonuses to providers who receive a significant portion of their revenue from an alternative payment model or patient centered medical home.
Permanently extend Medicare's Qualifying Individual program for low-income seniors, and the Transitional Medical Assistance program that helps families on Medicaid keep their coverage as they transition from welfare to work.
Physicians Euphoric
The Senate vote was met with unabashed glee from the American Medical Association and other physicians' societies that have made the permanent repeal of the SGR a top legislative priority for more than a decade.
"Passage of this historic legislation finally brings an end to an era of uncertainty for Medicare beneficiaries and their physicians—facilitating the implementation of innovative care models that will improve care quality and lower costs," AMA CEO James L. Madara, MD, said in prepared remarks.
"In addition to eliminating the flawed Sustainable Growth Rate formula, we applaud our policymakers for ensuring access to care for children, low-income individuals and families by extending funds for the Children's Health Insurance Program and community health centers."
Halee Fischer-Wright, MD, president and CEO of the Medical Group Management Association, called the vote "historic."
"The dark cloud over physician group practices has been lifted," Fisher-Wright said in prepared remarks. "The Senate vote to permanently repeal the SGR returns stability to physicians and Medicare patients alike."
Amendments Fail
The bill survived six amendment attempts by Republicans and Democrats on issues ranging from the repeal of the Patient Protection and Affordable Care Act's individual mandate, to a four-year funding extension for CHIP.
Had any of the amendments passed, the bill would have been sent back to the House for prickly reconsideration and the deadline for the pay cuts would have kicked in.
Hatch, who ushered the bill through the Senate, reminded colleagues throughout the debate about the looming deadline. He acknowledged that the bill "isn't perfect, but it's a good bill and it's coming at the right time."
"As I see it, we have two options," Hatch said. "We can hold out for a better bill, one that satisfies every demand and subject ourselves to many more years of the last-minute time-consuming SGR patches that are loathed by everyone in Congress and everyone in the healthcare industry. Or, we can pass a bipartisan bicameral bill we have before us now, fixing the SGR problem once and for all, and setting the stage for future entitlement reform."
H.R.2 offsets target means testing for Medicare recipients that could generate savings. For example, starting in 2018, the premiums would increase from 50% to 65% for Part B and D beneficiaries who earn between $133,500 and $160,000 ($267,000 − $320,000 for a couple). For those in higher income brackets, the premiums would increase from 65% to 75%.
The plan also calls for limits on first-dollar coverage for some Medigap plans, starting in 2020. The IRS would also be authorized to impose levies of up to 100% on tax delinquent Medicare providers. Currently, the maximum levy is 30%. In addition, Medicare reimbursements would be increased by no more than 1% in 2018 for post-acute care providers.
H.R.2 increases direct spending by $145 billion from 2015–2025, according to the Congressional Budget Office. The bill would also generate about $4 billion in offsetting revenues over the period. The bill represents the largest expenditure on healthcare since the passing of the Affordable Care Act in 2010. And though the price is steep, CBO says it's cheaper than doing nothing, because the status quo would cost $900 million more than the proposed reforms over the next 10 years.
A Permanent Fix?
CMS Chief Actuary Paul Spitalnic caused a stir this week after he reported that H.R.2 is not the "permanent fix," as its supporters claim, and that lawmakers will be back to address funding shortfalls in another 10 years.
"While H.R.2 avoids the significant short-range physician payment issues resulting from the current SGR system approach, it nevertheless raises important long-range concerns that would almost certainly need to be addressed by future legislation," Spitalnic wrote.
"In particular, additional updates totaling $500 million per year and a 5% annual bonus are scheduled to expire in 2025, resulting in a payment reduction for most physicians. In addition, this bill specifies the physician payment update amounts for all years in the future, and these amounts do not vary based on underlying economic conditions, nor are they expected to keep pace with the average rate of physician cost increases."
Spitalnic said the specified rate updates would not cover years when inflation is higher, nor would it keep pace with the "cumulative effect of price updates not keeping up with physician costs becomes too large."
"We anticipate that physician payment rates under H.R.2 would be lower than scheduled under the current SGR formula by 2048 and would continue to worsen thereafter. Absent a change in the method or level of update by subsequent legislation, we expect access to Medicare-participating physicians to become a significant issue in the long term under HR2."
Spitalnic's report brought down the ire of AMA President Robert M. Wah, MD, who said the actuary's estimate "presents an argument for maintaining the status quo that is illogical, flawed and dangerous for patient access to high quality healthcare."
"The OACT report assumes that under current law, which requires an immediate 21% Medicare payment cut, physicians will receive upwards adjustments annually for decades to come, which is simply unbelievable given our long history with the flawed SGR formula," Wah said in a written statement. "Fluctuations in just two of the factors that affect SGR calculations—GDP growth and Medicare spending growth—are far too unpredictable to make this a reasonable assumption.
"The report also fails to take into account the long-range negative impact such a drastic payment cut would have on quality and access for Medicare beneficiaries, or the many options H.R. 2 will make available to physicians for avoiding onerous penalties under current law and the significant positive updates that high performers can earn," Wah said.
Technology vendors, hospitals, and health systems restrict data access under the guise of security and confidentiality, but it can be challenging to identify and differentiate information-blocking from more benign impediments, says an ONC report.
The federal government's $28 billion investment in health information technology interoperability is undermined by vendors and providers who don't want to share data with perceived competitors, a new study says.
In a report requested by Congress, the Office of the National Coordinator for Health Information Technology said that "information blocking" is a significant problem that is likely to get worse as expectations and the capabilities for HIT mature and improve.
Because of gray areas that include contract restrictions on the disclosure of relevant evidence, and unavoidable technology glitches and snafus, ONC said it can be challenging to identify and differentiate information blocking from more benign impediments.
"However, based on the evidence and knowledge available, it is apparent that some healthcare providers and health IT developers are knowingly interfering with the exchange or use of electronic health information in ways that limit its availability and use to improve health and health care," ONC said.
"This conduct may be economically rational for some actors in light of current market realities, but it presents a serious obstacle to achieving the goals of the HITECH (Health Information Technology for Economic and Clinical Health) Act and of healthcare reform."
Most complaints about information blocking target HIT developers, ONC said.
"Many of these complaints allege that developers charge fees that make it cost-prohibitive for most customers to send, receive, or export electronic health information stored in EHRs, or to establish interfaces that enable such information to be exchanged with other providers, persons, or entities," the report says.
"Some EHR developers allegedly charge a substantial per-transaction fee each time a user sends, receives, or searches for (or "queries") a patient's electronic health information. EHR developers may also charge comparatively high prices to establish certain common types of interfaces—such as connections to local labs and hospitals. Many providers also complain about the costs of extracting data from their EHR systems for their own use or to move to a different EHR technology."
Providers were not exempt from criticism, particularly hospitals and health systems that ONC said were blocking data access under the guise of security and confidentiality to control referrals and enhance market dominance.
"Such constraints are not information blocking insofar as they are consistent with the requirements and policies established by federal and state law that protect patients' electronic health information," ONC said. "But it has been reported to ONC that privacy and security laws are cited in circumstances in which they do not in fact impose restrictions."
For example, ONC said providers cite HIPAA privacy rules when denying the exchange of electronic protected health information for treatment purposes, even though HIPPA specifically permits such disclosures.
ONC said it has also received complaints and anecdotes about some providers and vendors in cahoots to block information exchanges with unaffiliated providers.
"A developer may have the requisite trust relationships and technological capabilities to exchange secure messages using the federal Direct standard with a large network of providers," ONC said.
"But the developer and provider may implement this capability so as to restrict the exchange of information to physicians who are members of the provider's care network (e.g., by preventing users from entering a recipient's Direct email address and requiring instead that users select recipients from a pre-populated drop-down list)."
Who Owns the Data?
Chris Van Gorder, president/CEO of San Diego-based Scripps Health, says the healthcare sector has mostly come to understand that health records belong to the patient.
"I'm sure a few providers are concerned about patients getting access and not understanding the information in the record, but I suspect there are people in the world that get access to their financial information from banks and don't completely understand that data either. It is still readily available to them," Van Gorder says.
The only legitimate concern providers have with patient data exchanges is confidentiality, Van Gorder says, because providers are liable for any release of confidential patient data to anyone other than the patient.
He says a bigger obstacle than information blocking is the lack of interoperability of the data.
"We have no standards and requirements for interoperability and that is a huge problem," he says. "We are at the point now where we are connecting medical devices to electronic patient records, except that the makers of medical devices have not yet done what the makers of USB sticks have done."
"Each of our thousands of medical devices that can move patient information straight to the patients' electronic medical record has to be done through a unique connection. This results in a very expensive and complex system. Keep in mind that medical decisions are based on that information so we have to get it right."
Van Gorder, who last week was named to the board of directors at the Center for Medical Interoperability, says the nation's healthcare grid needs to develop "a plug-and-play system of medical interoperability that will feed timely and accurate patient information into the EHR. We can improve quality and lower costs at the same time. This effort will need to be adopted and supported by the major EHR vendors as well."
A perverse formula encourages critical access hospitals to dump obstetrics, even though there is ample evidence of the physical and psychological risks associated with eliminating this vital link in the population health chain.
Pick any issue adversely affecting urban hospitals and that issue is almost always more difficult for rural hospitals. There are fewer economies of scale to provide an offset.
Obstetrics, for example, is expensive and difficult for rural providers, to the point where many smaller hospitals have abandoned those services and referred patients to larger providers in more-urban settings.
In Tennessee, only one of the state's 16 critical access hospitals provides "active" obstetric services. "From a rural perspective, it is an ongoing challenge," says Joe Burchfield, spokesman for the Tennessee Hospital Association. "Many hospitals are looking at eliminating it because, while it is definitely a community benefit, it is costly. That's the reality that we are seeing here."
A recent study in the Journal of Rural Health surveyed 306 rural hospitals in nine states and found that hospitals with fewer than 240 births per year had to flex their staff and have family physicians and general surgeons attending births, while higher-volume hospitals were more likely to have obstetricians and midwives at the delivery.
"We saw in small rural hospitals a lot more clinicians for whom obstetrics was only a part of the services they provided, as well as using facilities for which obstetrics was only part of the services that were provided," says study author Katy Kozhimannil, an assistant professor in the division of health policy and management at the University of Minnesota School of Public Health.
"For example, many small rural hospitals had one operating room, or it was shared between obstetrics and other service lines. Does that affect care? Sure it does."
"They're flexing those resources, but there are the trade-offs. If you are a family physicians who does eight deliveries a year and there is a volume/outcome relationship. You are not going to be as tuned in as someone doing eight deliveries a day. Problems may be more difficult to detect."
Still, Kozhimannil is sympathetic to the challenges that rural hospital face keeping these services available.
'In the Business of Staying in Business'
"We need to recognize that hospitals and hospital administrators are in the business of staying in business, so of course they are going to look at where they can be efficient with their use of resources," she says.
Tim Putnam, CEO of Margaret Mary Health, a critical access hospital in Batesville, IN, says his hospital delivers about 450 to 500 babies a year, even though it's a money loser.
"Almost every hospital administrator I've talked to says their biggest payer in obstetrics is Medicaid, which doesn't pay anywhere near the costs. That's the start of the issue," Putnam says. "The other thing is that there are a lot of fixed costs to obstetrics because of the requirement to have anesthesia on-call. You have your obstetrics team be able to do a C-section at a moment's notice."
OB's Fixed Costs a Drag on Bottom Line
Putnam says there is a perverse formula in place that encourages critical access hospitals to dump obstetrics.
"Let's say you're cost-based on Medicare and your biggest payer on obstetrics is Medicaid. If you eliminate your obstetrics service, you have eliminated a high volume of low-paying insured space and by definition your percentage of Medicare patients goes up, your fixed costs have gone down tremendously, and your Medicare percentage of cost has gone up," he says.
When a small hospital eliminates obstetrics, it's likely cutting a considerable chunk of fixed costs and thus, increasing net revenues. "Eliminating obstetrics service is one of the single most effective things to improving low-volume, critical access hospitals' bottom line," Putnam says.
Margaret Mary Health is able to offer obstetrics, in part, because it has a built a good reputation for delivering babies, and it is located in a growing area with a younger population than most critical access hospitals.
"Doing it well helps us keep the volume up," Putnam says. "A lot of critical access hospitals, when you look at their volumes, it's below 200. When you're below 200 and you look at a 10% to 20% C-section rate, do the math. That's less than one a week. And one of the challenges that critical access and rural hospitals have is maintaining competency in complex deliveries."
But even with a good reputation and healthier delivery volumes, obstetrics is a money-loser at Margaret Mary. Still, Putnam says they'll continue to provide the service because it is vital to the community here and now, and for the future.
Impact on Pediatric Services
"I wish obstetrics services were covered from a cost-based standpoint for critical access hospitals because once you lose obstetrics services, your ability to keep solid pediatric services is limited and your young families have to go someplace else to deliver," he says. "It seems to start the ball rolling of having limited resources for young children in a community."
From a practical standpoint, when hospitals cut obstetrics, they put the health of the women and infants at greater risk.
"We have piles of evidence showing that the further women have to travel for maternity care, specifically labor and delivery, the higher the rates of maternal and infant morbidity and mortality," Kozhimannil says. "The farther women have to go, the riskier it is, in part because labor is inherently unpredictable."
From a psychological standpoint, Putnam says cutting obstetrics "can be one of those things that is really difficult for a community recover from, and it is something that community is emotionally connected to. Saying 'I was born at that hospital' means a lot."
Mark W. Tribbett, president of Socius Health Solutions, the NC shared services organization formed by Vidant Health, Wake Forest Baptist Medical Center, and WakeMed Health & Hospitals, talks about agility, efficiency, and creating a platform for innovation.
After months of planning, three of North Carolina's largest health systems have launched a shared services organization that they hope will leverage buying power to generate savings, consolidate redundant services, and improve quality and clinical outcomes.
Mark W. Tribbett
President, Socius Health Solutions
Senior leaders at Vidant Health in Greenville, Wake Forest Baptist Medical Center in Winston-Salem, and WakeMed Health & Hospitals in Raleigh have named Mark W. Tribbett president of this new shared-services organization, which they're calling Socius Health Solutions.
Tribbett spoke recently with HealthLeaders Media about how he'll be spending the next few months as the first—and so far, only—employee at Socius. The following is an edited transcript.
HLM: The publicity around Socius refers to it as a shared services organization, but it sounds like you're trying to do more than simply leverage group buying power.
Tribbett: Shared services is a part of what we are trying to accomplish, but we are steps beyond that because there is such a strong focus on quality and clinical redesign as well, beyond leveraging and getting the economies of scale. I don't know if there is really a term for it, but I am sure we will come up with one. It's much more than a shared services organization. It is also establishing a platform for population health at some point.
HLM: What is the organizational status of Socius?
Tribbett: It's an LLC jointly owned by the originating members.
HLM: How many employees are there at Socius?
Tribbett: Right now there is one. We are extraordinarily lean at this point. We really do not want to create a lot of infrastructure within Socius itself. I would like to leverage existing capabilities whenever possible. When we think about the Socius staff itself and what it will attain, it will be lean and the purpose of it will be initially around helping to assess opportunities as far as what the core staff would be focused on, helping to identify the opportunities and help with the implementation, provide some ongoing measurement of success.
Beyond that, it is going to be determined by what makes the most sense. We want to be extraordinarily agile, so if it makes sense to congregate a service or a capability under the Socius banner, if that is going to drive the most value, that is what we will do.
If it makes more sense to keep it where it is and share best practices and let Socius be that conduit, that's great as well. If it is something where we look at a third party that can do it at a higher value, then that is another route. As it relates to staffing, it's hard to say exactly how many bodies will be under the Socius umbrella.
HLM: What is your operating budget?
Tribbett: That is one of my first charges, to establish a budget for Socius going forward. Obviously that will be related to the budgets that are established in each of the three organizations. There is a modest initial investment that seeded the company and as we get the model finalized, the structure in place, and the operating budget established, the investment level and support will be calibrated according to that.
HLM: What will Socius look like in a year from now?
Tribbett: I would hope that we are seen as the instigator driving the value equation amongst the organizations; that we would be very focused on the clinical redesign driving the quality part of that equation, as well as the cost side. The economies of scale as it relates to the supply chain and those types of things will come into play and we will be front and center that first year.
I'm focused on taking advantage of the intellectual capital that we have amongst the three health systems and finding ways to leverage that. If you look at the number of employees and the physicians associated with the three systems, we have well over 35,000 minds out there. I'd like to find a way to leverage that intellectual capital to help establish that platform for innovation.
Derive efficiencies in the supply chain and other functions, focus heavily on the quality redesign and share that amongst the organizations, and set up this platform for innovation would be the broadly stated goals of that first year.
HLM: When will you see the effects of your work?
Tribbett: You'll see it very soon. Some of these things are very tangible and real when you talk about supply chain and operating efficiencies we might find. We aren't at a point yet where we can say a dollar amount associated with any of those but I think we will see some pretty significant impacts relatively quickly.
The fiscal years for all three organizations start in October so as we budget we are going to project what those impacts would be in the budget process. I can probably in the next couple of months give you a much better defined answer on that, but I think it will be fairly substantial and fairly quick.
HLM: How do you protect against anti-competitive concerns?
Tribbett: Initially that is not a factor because of the geography. If this grows and other organizations become involved, that may be a question that comes up. We have to be acutely aware of what the issues might be around that. We don't have a set philosophy at this point that says we will look at this opportunity, but not that opportunity based solely on that. But that clearly would be an impacting factor.
HLM: Do you anticipate adding additional health systems?
Tribbett: If you put yourself in the shoes of a fourth system, I think you'd want to see what this produces before you'd be interested. The reality is we need to focus with the three systems initially and if that is where it begins and ends as far as the systems involved it will still be tremendously successful.
But in doing what we are doing, especially with the focus on maintaining the independence of the organization, I personally have a strong belief if the importance of that, if we sustain that and are able to show results in terms of the value I am sure there will be other systems that will be interested.
HLM: How will you determine where to find value improvements?
Tribbett: It goes back to what I was talking about with leveraging that intellectual capital. We will look within. People who are dealing with issues or challenges or see opportunities in their day-to-day world can be the source of a lot of potential areas to dive into. That's part of the reason why it's important to find an effective way to tap into that. It will come from within.
There are a lot of external factors that drive what we do in healthcare, whether it be reimbursement, technology or any other sources. I am sure there will be some external motivation as well to dive into certain areas as we go forward. We will be tapping into that internal resources as well as being responsive to the external ones.
HLM: Will Socius lead the change or facilitate the change?
Tribbett: It's going to be both. Facilitator is a good word. Clearly there is a lot of innovation and a lot of work on things within each system right now. That's not going to stop. Socius can serve as a conduit to help with the assessment of those things. In some cases we may say 'Hey, great idea. Keep going.' And in other cases we may say 'This has some applications across the three systems. Let's come at it from that angle and develop it there.' There is going to be some facilitation and some coordination of what is already going on as well as some genesis-type thinking on some new thoughts.
HLM: You talk a lot about 'agility' at Socius. Why is that so important?
Tribbett: Being an agile organization is going to be extraordinarily critical. We should have a high degree of agility within Socius than a system would in a traditional sense. I want to make sure we fully utilize and realize that agility. That means we will be looking at a lot of different things. It doesn't mean we will chase after every idea out there. We will be strong in our assessment capabilities as far as what these opportunities might provide.
If agility is the currency of success, then the fuel is going to be data and analytics and ultimately predictive analytics and using those tools to not only identify opportunities but to assess them and ultimately to measure the success with them.
HLM: How will you measure Socius's success?
Tribbett: The ultimate measure of success will be how we've driven that value equation. A lot of this is going to be driven off the quality side with the outcomes and all the other stuff that meets the broader definition of quality with patient safety, patient service, etc. We will have metrics associated with those things. That will be a big part of it, as well as driving efficiencies and finding ways to lower that cost base.
A survey of more than 1,100 physicians, payers, and vendors from the Workgroup for Electronic Data Interchange finds that the biggest obstacle to industry readiness is the belief that there will be another delay.
For years physicians' associations have successfully lobbied the federal government to delay the implementation of the ICD-10 diagnostic coding set.
Now, with the ICD-10 implantation date looming on Oct. 1, a survey of more than 1,100 physicians, payers, and vendors from the Workgroup for Electronic Data Interchange finds that the biggest obstacle to industry readiness is the belief that there will be another delay.
Jim Daley, ICD-10 Committee chair at WEDI, is urging laggards to take heed.
"Get ready. Other than the past history, there is no strong reason to believe this will be delayed again," says Daley, who is also the IT director at BlueCross BlueShield of South Carolina.
"If you've been following some of the Congressional hearings on this, most of the people testifying recommended moving forward," he says. "The chair of the hearing indicated there was no reason not to move forward. CMS has been saying they are moving forward. So all indications are that they are going ahead with the Oct. 1 implementation date."
Barbie Hays, coding and compliance strategist for the American Association of Family Physicians and a former family practice office manager, says physicians have created a "catch-22" with the delays. They've pushed so hard for so many delays that now they're uncertain if the implementation will hold, and so they're delaying potentially costly investments in IT upgrades to accommodate the new codes.
"With it being delayed for so many years, I kept telling my physicians in my old practice that it will take an act of Congress to delay it again. Well guess what! That happened last year," she says.
Hays says the best chance to delay the Oct. 1 start slipped away when the House passed the massive SGR bill late last month. While the Senate could slip in a provision to delay the ICD-10 again when it takes up the bill at mid-month, Hays says there doesn't appear to be any enthusiasm for it.
"Technically it could happen again this year, but the normal timeframe for that has come and gone," she says. "The amendment attached to the SGR that was voted down. There was an amendment attached. That was voted down. It's going through. At this point it would need a presidential mandate for this to stop and I don't think that is going to happen."
Daley says anyone behind the curve on ICD-10 implementation could see their operations in disarray if they don't get up to speed. He says it's time to end the excuses.
"I hear a lot of people are concerned about if this person is ready or that person is ready. First and foremost, you need to take care of what you are doing in-house," he says. "If you aren't ready it doesn't much matter what the readiness is of the other parties. That is really key. Don't delay. If you finish early that isn't a problem. If you don't finish on time that is a big problem."
