In our October 2014 Intelligence Report, healthcare leaders described a variety of investments in IT infrastructure capabilities that are directed toward population health management. Members of the HealthLeaders Media Council discuss such investments.
This article first appeared in the April 2015 issue of HealthLeaders magazine.
Laura Pryor, RN, MSN
Chief Quality Officer
Windrose Health Network, Inc.
Trafalgar, IN
We have put our own system together. We have a calendar of specific chronic conditions that we are monitoring and also some preventive health factors such as well-child visits, immunizations, colorectal examinations, and cervical cancer screenings. For diabetes we may be running a report out of our own medical records system as a registry. We can run a report for people who have a specific condition, and it lets us do more sorting where we can narrow it down to people who did not have a hemoglobin A1C in the last 90 days and we might want to do some intervention.
You have to have the ability to collect data that is current. You also have to have a dedicated stakeholder who is the main person responsible for running the reports and getting the word out to patients. We created a new position for the care coordinator.
Levi Scheppers
Chief Administrative Officer
Nebraska Medicine
Omaha, NE
We know that we have key data gaps to understand performance risk for population health. We are trying to assess specific competencies and data gaps that we don't have currently.
Using payer claims data: That was a clear gap when we formed the Nebraska Health Network with our Methodist Health partners. We don't have a sense for total costs across the continuum for any cohort of patients, let alone the patients that we take care of within our primary care offices or inpatient facilities. We knew we had to close that gap. We found a good partner that could do that, we could get experience with it, but as we started to close that gap, we knew there were other types of data gaps.
The University of Nebraska Medical Center has a college of public health, and they analyzed population health data. We are trying to understand how we can use that university-based competency in our clinical delivery competency because we know that if we want to produce value and mitigate performance risk, we are going to have to understand that data.
Looking with the end in mind, we have to bring this together in a comprehensive data analytics and warehouse package; but we are starting with trying to close the immediate gaps in the competencies we have to have, and over time we will bring them together.
Michael Kanter, MD
Regional Medical Director of Quality and Clinical Analysis
Southern California Permanente Medical Group
Los Angeles, CA
We approach it from the patient and population point of view first. We define what problem we are trying to solve, what population we are trying to help, and IT is typically one component of a multifaceted approach.
Our data comes in the form of information from our electronic medical records system. It's better data in that it is clinical data that is more granular than one gets from claims data. There is no lag in claims processing.
The fact that we are an integrated delivery system means we have all the medical records so we can use them instead of claims data. Other organizations will need to get to the point where they are using medical record information. It is feasible to do once you are set up to do so. The barrier is going to be getting compatible systems in place in every delivery system that can talk to each other.
We have over 80 patient registries in Southern California that are all connected electronically. So, inpatient, outpatient, lab, radiology, everything feeds into a large data warehouse that we can go into and abstract data from. The key is integrating all of that with the medical groups and the delivery systems so it's not just information standing alone somewhere and not being acted upon.
Ronald A. Paulus, MD
President and CEO
Mission Health, Asheville, NC
On infrastructure: One area is core electronic health records and connectivity infrastructure components. Cerner is our partner and our core platform vendor in that realm. We have several joint development products that we are working on together, most specifically an integration of a wellness platform (that is looking at lifestyle and behavior modification, weight maintenance, and exercise, and those kind of things) into the traditional patient portal for looking up lab results and communicating securely with your provider or scheduling appointments.
On patient interaction: Another investment area would be around more novel tools or devices. We have a partnership with a company called Livongo Health. They have a different form of the traditional diabetic meter. It's wireless. It uploads to the cloud. It has a GPS. It has interactive capability back and forth between the physicians and the patient. We are piloting that in a group of our patients here trying to enhance the patient engagement factor, which the literature and my own experience would suggest are critical elements of engaging in population health. We're looking at a variety of smartphone-based apps that allow different forms of interaction between providers and patients, whether it is a virtual visit or just a text-based communication or text-based behavioral health modification. We link that into our wellness platform, where we integrate with a couple of different biometric devices—the Fitbit and the Pebble are two examples—and we try to incorporate coaching and behavioral health reminders around those activities.
It won't take a Supreme Court ruling for Congress to act on refunding. For all their collective faults, the people elected to Congress keenly understand their districts, and all of their districts have community health centers.
When someone says, "our tax dollars at work," the reference is almost always sarcastic.
You would be hard pressed, however, to find a more cost-effective use of federal tax dollars—or any dollars for that matter—than the $11 billion that Congress and the Obama administration earmarked for community health centers back in 2010.
Subsequent cuts have chipped about $3 billion from the fund since 2011. Still, by the end of this year, it's projected that the funding will have allowed 1,300 community health centers to provide access to care for about 28 million people in more than 9,000 community sites across the nation.
That five-year funding window ends on Sept. 30. And unless Congress acts before then to provide an additional $5.1 billion, these community health centers will lose about 70% of their funding, says Dan Hawkins, senior vice president for public policy and research at the National Association of Community Health Centers.
The Department of Health and Human Services estimates that more than 2,000 clinic sites could close if the funding drops over the cliff.
Unfortunately, like so many programs that rely on federal tax dollars, community health centers are now playing a wait-and-see game. NACHC wants Congress to include the funding in the larger, $175 billion-to-$200 billion healthcare compromise package designed to permanently fix the discredited Sustainable Growth Rate formula.
The SGR situation is fluid right now, and it's expected that something will surface this week, maybe today. No bill has been made public, but the permanent fix has been the subject of widespread speculation in the past few days. That makes Hawkins anxious.
"Nobody knows exactly what is going to be in there. We have been told it looks good, but that and a quarter gets you a cup of coffee. I'll believe it when I see it," he says. "It's more worrisome as time goes on that they haven't unveiled the package."
The SGR goes into effect on March 31, which leaves doctors facing a 21% reduction in Medicare payments if Congress can't reach a compromise. The situation is not so dire for community health centers, which have a few more months before the funding drops. Still, Hawkins says, it's easier to attach the funding to the larger spending bill.
"It's always better to be the ornament than the tree," he says. "It's a lot easier if you've got a big freight train pulling this thing along. It may be one of the last, if not the last big health bill to move through. There is lots of talk about the Children's Health Insurance Program extension being included, and I am sure there are extenders and other things being considered. We want to be near the front of the line on this train before they stop taking tickets."
The sooner that Congress provides the funding, the earlier that community health centers can craft budgets for the coming year.
"These are small businesses that have budgets, staff to recruit, clinicians need some security. They have facilities to rent," he says. "It is tough to plan when you don't know beyond six months from now."
The uncertain future for community health centers comes as advocates gather this week in Washington, DC to mark the 50th anniversary of the legislation that created community health centers during the Johnson administration. Hawkins says many of the out-of-town advocates are spending the week visiting their representatives in Congress to make the case for additional funding.
Fortunately for these advocates, community health centers are one of the few interest groups in Congress that can claim bipartisan support. Their mission resonates.
"Each member has their own reason for supporting health centers, especially when they visit the centers in their district and see what is going on," Hawkins says. "We have dozens of peer review studies over the years that show that health centers deliver on the Triple Aim; better health and better access to care at a lower cost. They save money. It's the whole shooting match."
In an unforeseen twist, community health center funding could be buoyed if the latest legal challenge to Obamacare is successful. Lawmakers would be reluctant to cut community health center funding while the U.S. Supreme Court considers King vs. Burwell. If the federal subsidies for health insurance in 34 states are voided by the court, an estimated nine million people could lose coverage, leaving the Republican-controlled Congress scrambling to provide healthcare access alternatives.
"Nobody wants to see nine million people lose their subsidies and most of them would have to lose their coverage, but we have been told by some folks on that side of the aisle that health centers have to be part of it," Hawkins says. "I do think that depending upon where this thing goes, I suspect you'll hear health centers mentioned in any replacement package."
When it comes to federal funding, nothing should ever be taken for granted. That said, community health centers have a long history of demonstrating care delivery and value to vulnerable people.
It won't take a Supreme Court ruling for Congress to act on refunding. For all their collective faults, the people elected to Congress keenly understand their districts, and all of their districts have community health centers.
Where there was once one code, under ICD-10 there may be 300 or 400. "As we continue to evolve, individual preferences could impact revenues, reports, and other data," says a health information sciences researcher.
The transition to the ICD-10 diagnostic code set on Oct. 1 will complicate financial and clinical forecasting and analyses that also rely upon data compiled under the outmoded ICD-9 code, researchers say.
Andrew Boyd
Assistant Professor of Biomedical
and Health Information Sciences,
University of Illinois, Chicago
"Everything from staffing levels to payment and even protecting margins, all of this is based on the ICD-9 codes. All of these reports have to be changed," says Andrew Boyd, assistant professor of biomedical and health information sciences at the University of Illinois, Chicago.
"It's not just learning the new system, it's learning how to interpret the new system."
Boyd, the lead author of a recent online study in the Journal of the American Medical Informatics Association, says the new, more granular data made available under ICD-10 will be very valuable for a healthcare delivery system that's evolving towards value-based care and population health. In the short term, however, the transition could prove to be problematic.
"The increased fidelity is going to be great, but increased fidelity of the codes does not necessarily reflect the increased fidelity of the actual information," he says.
Boyd says the uncertainty around translating back and forth between ICD-9 and ICD-10 codes could prompt some clinicians "to become closer to artists with all the different ways of describing disease than historically with ICD-9."
"We have all these codes and one person moving from institution to institution might increase or decrease reimbursements because of individual preferences," he says. "Literally where we might have one code now there will be 300 or 400 under ICD-10. As we continue to evolve, individual preferences could impact revenues, reports and other data."
Sue Bowman, senior director, coding policy and compliance, at the American Health Information Management Association, concedes that the transition to ICD-10 will come with some bumps.
"It makes sense that it would be somewhat difficult because if the two codes sets were a simple one-to-one map-and-compare there wouldn't be much point in going to a new system," Bowman says. "Whenever you go to a new coding system there are going to be challenges trying to compare data collected under the old system with data collected under the new system."
Bowman says coders, clinicians and researchers have to understand that the transition to ICD-10 will also create a new granularity of data that now does not exist.
"Obviously you can't produce things out of the ICD-9 data that didn't exist in the ICD-9 codes," Bowman says. "You can't look at laterality and specificity that only exists in ICD-10. Another thing is that the changes in understanding medicine and medical practice have changed so the 10 data is more reflective of modern understanding of medicine."
"When people are looking at data they have to keep in mind that if there appear to be significant changes in instances of clinical conditions and other factors they have to look at whether it could be a change in the coding system rather than a real change in clinical practices or circumstances," she says.
Boyd and other UIC researchers in 2013 created a free web portal tool and translation tables that facilitate transitions and cross referencing from ICD-9 to ICD-10, and back.
"The method we propose will give you mapping backwards to 99% of the ICD-9 and 10 codes. It is a complete mapping, as much as you can do from government data," Boyd says. "If you use other types of tools you will miss either 30% of the ICD-9 or 75% of the ICD-10 data."
Boyd says the transition can be a little smoother with training and preparation.
"You need to train and understand and know what information is needed for you to function as a health facility," Boyd says. "It's not just learning the new information, it's what information do you need to run your business. Some hospitals have 1,500 reports with ICD-9 codes buried in them. Do you need to recode all of them? Are they all critical? Which are important?"
"The 'A' in M&A no longer stands for 'acquisition,'" says PwC's US health industry deals leader. "It stands for affiliations, associations, ACOs, [and] all sorts of complex types of partnerships."
Deal activity around mergers, acquisitions, and other consolidation in the healthcare sector increased 18.4% in 2014 when compared with the previous year, and totaled $61 billion, according to a report from PwC.
Brett Hickman, PwC's US health industry deals leader, says the long-term care/post-acute space led the way with a record 288 deals worth $29.2 billion in 2014. Hickman says grabbing a piece of the post-acute market makes sense for providers shifting towards value-based care, continuity of care, and population health.
"About 40% of the premium is spent on post-acute—everything from skilled nursing facilities to long-term and palliative care and to some extent, the medical homes," Hickman says. "You have this huge piece of business that nobody is managing and in many markets it is still a mom-and-pop industry. The consolidation of that subsector is happening."
"More importantly, the traditional provider community is saying, 'if we are going to be at risk we have to align or integrate post-acute into our continuum of care and control that 40% of the spend."
Hickman says long-term care facilities have become "the last bastion" in healthcare consolidation, and acquiring SNFs and other post-acute facilities provides hospitals with the means to better control and monitor patients once they are discharged from an acute setting.
"The biggest issue with post-acute is the lack of communication and coordination of those clinicians with the caregivers who are managing the overall premium dollar risk—the primary care physician, the specialists who are managing the disease," Hickman says. "Historically it's been a passing of the baton, and when the patient shows up back at the hospital or the ER we don't know about that. That is not population health. That has to be fixed."
"Hospitals are asking, 'how do we get them from a traditional inpatient setting into a SNF at the appropriate time because we are fully at risk now? We want to do it based on clinical decisions and manage the best outcome with a high quality organization that we have integrated outcomes and medical management with."
Behavioral Health
Behavioral health acquisitions and consolidations are also on the rise. The sector saw a 24% increase in deal volume in 2014. Hickman says that also meshes with the population health, value-driven model.
"If you think about certain diseases, diabetes for example, one of the big factors in patients becoming insulin-depending is depression," he says. "They don't take their medications or take care of themselves, so they end up becoming insulin-dependent. Clinicians have to treat the mental and emotional side as well as the physical side to ensure that the patient doesn't become insulin-dependent."
In the overall healthcare sector, Hickman says the consolidation trends with hospitals, health systems, physician groups, and even payers will continue, although they will morph into new and more complex configurations than traditional M&As.
"The 'A' in M&A no longer stands for 'acquisition,'" Hickman says. "It stands for affiliations, associations, ACOs, [and] all sorts of complex types of partnerships."
With hospital consolidation, Hickman says "we are at the tilting point."
"Over the past decade hospitals have built up an efficient delivery system and they have started to build capabilities around taking risk," he says. "The inflection point is around two things: One is truly moving into population health, from loosely managed sections of the population that could be by geography and disease, to wellness management. We are in the loosely managed environment now and moving into a more well-managed space, and how we control utilization as the right point of service. Hospitals are recognizing that they cannot measure average daily census or heads in beds."
"The other inflection point is that they are making the tough decisions around rationalizing the infrastructure," Hickman says.
Divestures, Regional Consolidations
"We are now finally seeing management in some of the consolidation, instead of us doing a normal synergy analysis where we looked at shared services, like back office, and billing and collection and certain service lines, people are now saying 'look at the market and show me where to put every program. And if we need to shut down places or beds or reconvert them, we are willing to do it.'"
Consolidation is expected to continue in the near term, but Hickman says there may come a time in the next five years or so when the movement will be toward divestiture.
"A lot of people have done deals for the wrong reasons or structured them inappropriately," he says. "You are going to see lots of divestitures of certain assets that may not be good core fits or [are] underperforming. We are going to see a lot of pickup in divestitures."
Once that is sorted out, Hickman says the healthcare sector could gravitate toward "massive regional consolidations."
"Right now we are seeing health systems becoming truly regional. We will see multistate large systems start moving into more regional hubs where quaternary care and community-based care is more appropriately coordinated, managed, and steered into much smaller narrow networks."
It's staggering to think of the challenges that CAHs face. Now OIG is calling for a re-examination of a program that it says has overpaid CAHs billions of dollars to provide skilled nursing services using hospital swing beds.
They're called "Critical Access Hospitals" for a reason. These tiny healthcare outposts provide "critical access" to people who live in remote areas.
That was the intent of the legislation that created CAHs in 1997 at a time when rural hospitals were shuttering at an alarming rate. Congress understood that rural America needed extra Medicare dollars to keep the doors open at hospitals that serve an older, sicker and poorer patient mix.
It's staggering to think of the challenges that CAHs face:
Because of their location and size, CAHs have few economies of scale, little leverage with vendors or payers, or a sufficiently large patient mix or volume of commercial payers to help cover costs.
CAHs are often limited in their ability to provide some of the more lucrative services that are cash cows for larger hospitals in urban areas.
Recruiting clinicians to rural areas is a slog.
And because of all those challenges, it's also more difficult to merge or collaborate with other healthcare providers from such an isolated perch. It's surprising to learn that only 40% of CAHs operate in the red.
Unfortunately, some people in Washington, DC have short institutional memories.
For the past couple of years, reports from the Office of the Inspector General at the Department of Health and Human Services have made it clear that they believe the CAH designation and funding scheme should be overhauled.
In its latest shot across the bow, OIG this week called for a re-examination of the swing bed program that allows CAHs to provide long-term care. The OIG audit claimed that the federal government has overpaid CAHs $4.1 billion over the past six years for services that could have cost less in relatively nearby skilled nursing and long-term care facilities.
Tavenner Pushes Back
Rural healthcare advocates rallied around the reply to the OIG recommendations from former Centers for Medicare & Medicaid Services Administrator Marilyn Tavenner, who challenged the OIG findings and recommendations in her formal response, and suggested that auditors don't understand healthcare delivery in rural areas.
In that same response to OIG, however, Tavenner said the Obama 2016 budget has called for reducing the Medicare reimbursement that CAHs receive from 101% to 100% of allowable costs, and reassessing and eliminating CAH status for hospitals that are within 10 miles each other.
While Tavenner's rebuff of OIG was heartening for rural providers, she no longer runs CMS. Regardless, the Obama budget proposal puts CAHs in the crosshairs, and it's not clear if Tavenner's replacement, Acting Administrator Andy Slavitt, understands the special challenges posed by rural healthcare.
Tim Putnam
President and CEO,
Margaret Mary Community Hospital
Tim Putnam, president and CEO of Margaret Mary Community Hospital in Batesville, IN, expresses the concerns of many rural providers who feel that there is a disconnection in the federal government when it comes to rural healthcare.
"If you grew up in an urban area or trained in an urban area or work in an urban area, it takes effort to understand the specific challenges that exist in a rural community," Putnam says. "That is one thing where you see a lot of organizations trying to educate legislators and policy makers and groups like HHS about the specific challenges for rural areas."
A Disconnect
The OIG call to re-examine the CAH swing bed program is a great example of that disconnect, Putnam says. It makes sense from a bottom line perspective, but the bottom line doesn't tell the whole story.
"You can pick one program and say 'Aha! It' seems like they are paid more than they should be,'" he says. "But there are also 99 programs that aren't paid at all or paid very poorly that critical access hospitals have to run 24/7 that are not reimbursed anywhere near what it costs to provide those services."
"Having a swing bed program allows for staffing to exist in these low-volume facilities 24/7," Putnam says. "The swing bed volume is not very heavy in some communities, but you have [to have the] staff for it because you have to be ready for patients all the time. It helps to have staff available for acute care. A lot of times the hospitals will cross-train staff to work in swing beds and acute care. It really helps form the foundation of having an availability to serve a community need any time day or night."
Putnam says the proposed cuts to CAH funding and a reappraisal of their special status in the Obama budget also send a troubling message at a time when rural hospitals are trying to make the transition from volume to value.
"Because of sequester and because 'allowable costs' eliminate a lot of things that are necessary costs, nobody in the CAH world is making money on Medicare," he says.
"Why should you make money on the government? Well, I can understand that mindset, but really for a hospital to remain viable, they need to make in that 3%–4% range to replace equipment and update facilities and add services. If you are just breaking even you are going to fall behind."
The National Rural Health Association says that more than 40 rural hospitals have closed since 2010. Putnam says most CAHs already lose about 5%–7% on Medicare.
"If the president's budget is to reduce 101% of allowable to 100% you will see we will lose 6% to 8%," Putnam says. "We face an impending clear threat to an income stream that doesn't allow us to help make a smooth transition to that value piece. There is no plan you could put forward that says, 'this is where we will make it.'"
We should not fault the Obama administration or the OIG too greatly for trying to reduce inefficiencies in healthcare delivery. Any entity that takes taxpayer dollars should be required to account for how they spend it. Too often, however, the cost cuts we're seeing reflect only the bottom line for a particular service, examined in isolation.
Before anyone proposes additional cuts to critical access hospitals, it is not unreasonable to ask that they understand what these hospital do, the challenges they face, and why they were granted "critical access" designation in the first place.
"They view rural as simply a small version of urban. They don't recognize that it is a different healthcare delivery system," says Alan Morgan, CEO of the National Rural Health Association.
A federal audit that recommends cutting payments to rural hospitals for skilled nursing swing beds is being panned by hospital advocates and the federal government.
Priya Bathija
Sr. Associate Director, Policy
AHA
The Department of Health and Human Services' Office of the Inspector General released a report on Monday that estimates that the federal government overpaid critical access hospitals about $4.1 billion over six years to provide skilled nursing services using hospital swing beds.
Among its recommendations, OIG's report called for the Centers for Medicare & Medicaid Services to push for legislation that will adjust CAH swing-bed reimbursement rates to match the lower rates paid to skilled nursing facilities.
Former CMS Administration Marilyn Tavenner, in a Nov. 13, 2014 response published with the OIG report, agreed that swing bed use was on the rise, and that new efficiencies and cost savings must be identified for rural care delivery.
She sharply disagreed with the OIG recommendations, however, faulted the study methodology, and suggested that OIG doesn't understand rural healthcare.
"The report does not take into account the burden on patients on being treated farther from home and family, and being transferred in an ambulance to a new facility," Tavenner said. "The OIG's cost estimations exclude transportation costs of moving a patient to an alternative facility, as opposed to using a CAH swing bed, which would decrease the savings from using an alternative facility."
Tavenner's comments were echoed by Priya Bathija, senior associate director, policy, at the American Hospital Association.
"The report demonstrates an unfortunate lack of understanding of how healthcare is delivered in rural communities," Bathija said by email:
"It inappropriately focuses on [the] potential savings Medicare could realize, rather than the needs of individuals living in rural America. The OIG's analysis is clearly flawed – a conclusion that CMS reached as well. OIG failed to account for many important factors that come into play in rural areas, such as the level of care needed by swing bed patients, transportation fees to alternative facilities, and the use of point-to-point mileage distances instead of road miles. The AHA continues to strongly advocate for maintaining the CAH program as it is currently structured in order to help ensure that all patients in rural communities have access to healthcare."
Alan Morgan, CEO at the National Rural Health Association, says the landscape in rural healthcare has shifted greatly since OIG began its study several years ago.
Alan Morgan, CEO
National Rural Health Association
"Timing is everything, and so I don't think this report is going to get much traction," Morgan says. "When they started looking at this three or four years ago the talk was all about efficiencies and saving money in Medicare. Now, we have a rural hospital closure crisis. Congress is trying to find ways to keep hospital doors open but the administration is still trying to find ways to save money. I don't think they have caught up with the reality of what is happening now."
The problem at OIG, Morgan says, is that they apply an urban mindset to rural healthcare. "You see this time and again. They view rural as simply a small version of urban. They don't recognize that it is a different healthcare delivery system."
"While I don't see this report gaining any traction, it is something we are taking seriously. We're talking to policymakers and our members. This is bad medicine. It's bad for the hospitals and it's horrible for the patients. That is the kicker. CMS's response is that this is terrible for rural population."
Morgan says Tavenner's comments were illuminating.
"I can't stop laughing about that," he says. "CMS is never one to shy away from saving a buck when it comes to Medicare, but even CMS called them out on the findings and the methodology."
Doctors' shift in focus away from trying to delay ICD-10 again and toward addressing any hiccups with the inevitable transition is seen as a positive sign by AHIMA executives.
The call by 100 physicians' societies across the nation for a backup plan if snafus snarl the scheduled ICD-10 rollout in eight months suggests that doctors are reconciled to the Oct. 1 start for the diagnostic coding set, the leader of one health information technology trade group says.
Lynne Thomas Gordon
CEO of AHIMA
The American Medical Association and 99 state and specialty societies, in a March 4 letter to Centers for Medicare & Medicaid Services Acting Administrator Andrew Slavitt, express concerns that no contingency plans are in place to avoid failures that could result "in a significant, multi-billion dollar disruption for physicians and serious access-to-care issues for Medicare patients."
Lynne Thomas Gordon, CEO of the American Health Information Management Association (AHIMA), says the fears are understandable, but unfounded, and she calls the letter "encouraging" because it shows that physicians are willing to go forward with the twice-delayed Oct. 1 start up.
"It shows me that they are saying 'We know we are going live Oct. 1. Now, what do we need to worry about?' In that respect, the letter is positive," Thomas Gordon says.
Sue Bowman, AHIMA's senior director for Coding, Policy and Compliance, says physicians' focus has turned from delaying the ICD-10 start to addressing any hiccups with the inevitable transition.
"The risks of any major problems are pretty small," Bowman says. "Granted, the risk of something is never at zero, but I am not sure if they are mostly worried about physicians not being ready or CMS not being ready."
Concerns Over Claims
In their letter to Slavitt, the physicians' societies raised concerns that recent end-to-end testing conducted by CMS on ICD-10 showed that claims acceptance rates would fall from 97% to 81% if the code set launched today. The societies said such a drop represents a backlog of millions of dollars in unpaid Medicare claims that could badly strain the finances of physician practices that are already contending with a "regulatory tsunami."
"The likelihood that Medicare will reject nearly one in five of the millions of claims that go through our complex healthcare system each day represents an intolerable and unnecessary disruption to physician practices," AMA President Robert M. Wah, MD, said in a media release accompanying the letter.
"Robust contingency plans must be ready on day one of the ICD-10 switchover to save precious healthcare dollars and reduce unnecessary administrative tasks that take valuable time and resources away from patient care."
Contingency Plans
Bowman says that end-to-end testing that CMS conducted in January demonstrates that the government is "definitely ready."
"The letter talks about only 81% were accepted and processed and were not rejected in the January testing," Bowman says. "What is not said is that if you read the testing results the vast majority of the erroneous claims had nothing to do with ICD-10. They were the wrong codes or NPI information. Only 3% of the rejected claims had anything to do with ICD-10. That makes it more like 97% if you are looking solely at the ICC-10 risk issues."
As for contingency plans, Bowman says AHIMA doesn't object as long as those plans "are not used as an excuse not to get ready for ICD-10."
"There are plenty of resources and training out there for all physicians to get up to speed in time for Oct. 1," Bowman says. "That said, we have no objections to the idea of advanced payments as a last-ditch safety net in case there are particular issues with the transition, either the provider end or CMS's end."
Bowman says Medicare already provides for accelerated payments "when a provider has incurred a temporary delay in the billing process, causing financial difficulties for the provider."
"That sounds like exactly what we are talking about," she says. "I am not sure they need to do anything special for ICD-10."
Chief Justice John G. Roberts and Justice Anthony M. Kennedy are seen by many court watchers as the two potential swing votes in the case.
The U.S. Supreme Court on Wednesday heard arguments in a second challenge to the Patient Protection and Affordable Care Act that, if affirmed, could disqualify millions of Americans from receiving billions of dollars in federal subsidies to buy health insurance.
Plaintiffs in King vs. Burwell told the justices that the wording of PPACA prohibits the federal government from offering subsidies for people in 34 states that used a federal healthcare exchange. [View transcript.]
As in 2012's landmark National Federation of Independent Business vs. Sebelius ruling that saw a sharply divided court uphold the constitutionality of the individual mandate on a 5–4 ruling, King is also expected to swing on one vote.
"The only provision in the Act which either authorizes or limits subsidies says, in plain English, that the subsidies are only available through an exchange established by the state," plaintiff's attorney Michael Carvin told justices on Wednesday, the second time in three years that Carvin has argued against PPACA before the high court.
Solicitor General Donald B. Verrilli, who successfully argued for the federal government in NFIB, argued on Wednesday that the intent of the PPACA is clear. Without the subsidies, he argued, health insurance would become unaffordable.
"It is really the only way to make sense of Section 36B and the rest of the act," Verrilli told the court, citing the passage in question. "Textually, [the plaintiff's] reading produces an incoherent statute that doesn't work."
"Our reading is compelled by the act's structure and design. Their reading forces [the Department of Health and Human Services] to establish rump exchanges that are doomed to fail. It makes a mockery of the statute's expressed textual promise of state flexibility."
Chief Justice John G. Roberts, seen by many court watchers as one of two potential swing votes in the case, remained silent for most of the arguments, which he extended for 20 minutes beyond the allotted hour.
Justice Anthony M. Kennedy, however, who is seen as the other potential swing vote, set off a flurry of speculation when he told Carvin that the plaintiff's argument "raises a serious constitutional question."
"Let me say that from the standpoint of the dynamics of Federalism, it does seem to me that there is something very powerful to the point that if your argument is accepted, the states are being told either 'create your own exchanges, or we'll send your insurance market into a death spiral,'" Kennedy said. "We'll have people pay mandated taxes which will not get any credit on the subsidies. The cost of insurance will be sky high, but this is not coercion."
To give a sense of the close scrutiny this case is getting, BloombergBusiness reported that for-profit hospital stocks surged immediately after Kennedy's comments.
Although the arguments were tense and polarized, the day was not without comic relief. When Verrilli warned of the dire consequences of removing the subsidies, he was challenged by Scalia about other remedies.
"What about Congress? You really think Congress is just going to sit there while all of these disastrous consequences ensue," Scalia asked the solicitor general.
"Well, this Congress, your honor, I, I," Verrilli stammered, as the chamber erupted in laughter.
"You know, I mean, of course, theoretically, of course, theoretically they could."
The high court is expected to issue a ruling by late June.
Even as healthcare reform has expanded insurance rolls, high-deductible health plans have rendered care unaffordable for many. The Surgery on Sunday program, created for uninsured patients, is retooling for the underinsured.
For all its problems, the Patient Protection and Affordable Care Act has made health insurance accessible for millions of Americans, and that is a good thing.
Andrew Moore, MD
To make that coverage affordable, however, many bare-bones plans have very high deductibles. A family of four earning $30,000 will likely pay deductibles of several thousand dollars before coverage kicks in. The result has been the creation of a new class of patients that one observer has aptly called the "functionally un-insured."
With that in mind, it would not be unreasonable to suggest that these high-deductible plans are designed more to protect the healthcare sector than patients. If a family of four making $30,000 accrues a $10,000 medical debt, it might as well be $100,000 for them. They'll never pay it off.
These newly underinsured have forced some charity care organizations to change the way they do business.
For the last 10 years, Lexington, KY-based Surgery on Sunday has provided about $10 million worth of free outpatient surgeries for more than 7,500 uninsured people who were too poor to pay for their own care. When the PPACA/Obamacare expanded insurance to thousands of working poor people in Kentucky, they became ineligible for charity care under the SOS criteria, even though their need persisted.
"It's really created a mess for us," says Andrew Moore, MD, a Lexington-based plastic surgeon who is the founder of SOS. "Prior to this, looking back maybe a year and a half or two years ago, we had a waiting list of about 1,500 people. We thought that was dangerous. People were waiting too long. So we expanded the program and got two other hospitals involved so we could do it twice a month instead of once a month so we could whittle down the numbers."
"When Obamacare came on the scene, our criteria for taking care of people was you could not have insurance and you had to be at the poverty level. So, by early last fall we had no or very few people on the waiting list. They all had insurance and didn't meet our criteria."
The backlog of 1,500 patients all but disappeared. Moore says that only about 40 people are on the waiting list. Until recently, SOS was considering expanding to other ambulatory surgery sites and recruiting more volunteers to meet the demand. Now, the program will cut back services to once every other month.
"There is no sense in having people open the doors with 80 volunteers to take care of three or four patients," Moore says. "We'll do it every other month until we can get the numbers back up."
Unintended consequences
Shouldn't we celebrate the fact that fewer people need charity care? That's just the problem. The need is still there, but the PPACA made these underinsured people ineligible for charity care, even though they can't afford to meet the deductible. So they go untreated.
"The problem is the insurance they are selling in our state," Moore says. "They are selling policies that are pretty hard to afford even at a discounted rate. These folks are paying $300 a month and they are at poverty level. That is a lot of money. The second thing is they have huge deductibles. The individual deductible will be $6,000 and for a family that is $13,000. That is no insurance. You are never going to use that because you can't meet the deductible."
SOS is adjusting its eligibility criteria to see if that will alleviate the problem.
"When we looked at that, we were doing 200% of poverty so we went to 250%," Moore says. "This is our first attempt. We may adjust it more. Then we said if their deductible was 10% of their income, we would treat them for free. We just started that and we are spreading word across the state that this is the new criteria. We will probably take a look at this in two or three months and see how that's affected it, and if we need to lower that even further to capture people who need our help."
"I hope somebody puts us out of business, but I don't think that Obamacare does it," Moore says. "In our state it has changed from an uninsured population to an underinsured population. I read that by a wide margin most bankruptcies are healthcare-related, either for people who have no insurance or who are underinsured. That tells you it's fairly expensive, and somehow we have to get ahold of the cost to make it more affordable for people."
Societal good and bad
Let's be clear: Expanding health insurance coverage to millions of people is a net positive for society. The PPACA should not be too harshly criticized for creating a new class of underinsured people, because that is still preferable to what we had before.
That doesn't mean that improvements can't be made that will make access to healthcare more affordable to these underinsured. After all, underinsured people, like the uninsured, will delay seeking care until it becomes too critical—and expensive—to ignore. That defeats one of the oft-stated goals of the PPACA and the wellness movement: to treat people early and in the least-expensive, most efficient environment.
Can society respond? Healthcare "really is out of the reach for a lot of our population," Moore says, "and if we can't do this as a nation, we have to do this as individuals to help these people along."
The Association of American Medical Colleges is calling on Congress to immediately fund an additional 3,000 medical residency slots each year in addition to the 27,000 to 29,000 residency slots already in place.
Under a best case scenario, the nation's graying and growing population will contend with a shortage of at least 46,000 physicians within 10 years, Association of American Medical Colleges projections show.
That shortfall could hit 90,000 by 2025 if the healthcare sector fails to aggressively embrace and promote the use of non-physician clinicians, and adopt more efficient care and payment models such as patient-centered medical homes and accountable care organizations, AAMC said.
In addition, AAMC wants Congress to immediately fund an additional 3,000 residency slots each year, in addition to the 27,000 to 29,000 residency slots already in place. Graduate Medical Education has been capped for the past two decades. What was a supposed to be a temporary cap has become permanent.
"What we are suggesting is a modest increase in that cap right now," AAMC Chief Health Officer Janis M. Orlowski, MD, told reporters Tuesday. The estimated cost of the bill is $10 billion over 10 years. "This does not alleviate the physician shortage in any of the different scenarios that we are looking at. We see it as a multipronged approach," she said.
The AAMC projections include a shortfall of 12,500 to 31,100 primary care physicians, and between 28,200 and 63,700 subspecialists.
Orlowski says it's a simple case of supply and demand.
"Although physicians supply in the US is projected to increase modestly between 2013 and 2025 demand will grow more steeply," she says. "Specifically, total demand for physician services is projected to grow as much as 17%."
"The bottom line is that the physician shortage is real; it is significant. It's particularly serious for the kind of medical care our aging population will need, and it must be addressed today, in 2015, if patients are going to be able to get the care they need in 2025. The good news it is not too late to fix this. Congress needs to act now."
Residency training costs about $16 billion nationally, of which Medicare provides about $3 billion. It costs about $152,000 a year to train a physician, of which Medicaid pays $40,000. The average student debt after graduating from medical school is about $176,000 AAMC says.
AAMC President/CEO Darrell G. Kirch, MD, told reporters "the onus is on Congress to lift the artificial cap that has been in place since the 1990s and do its share of contributing to the training."
"A large portion of the funding for residencies is already borne by teaching hospitals. Students already carry massive amounts of debt," Kirch says. "We need to make sure the federal support is aligned with those efforts."
Who Gets the New Residency Slots?
Kirch says AAMC is not in a position to recommend which states receive the new residency slots, or if existing slots should be moved to other states to account for demographic shifts.
"It is not the role of the AAMC to tell which areas that they should start or stop individual residency programs," Kirch says. "That is a local decision that each hospital, each potential training site needs to make. Whether Congress would want to go in that direction is an issue for policy makers. The purpose of this analysis is to show the overall national landscape."
An AAMC study from 2013 shows that Northeastern states such as Massachusetts, New York, Connecticut and Pennsylvania have the highest ratios of residency slots per 100,000 population. These states also have the highest ratios of physicians per 100,000 population. For example, Massachusetts had 421 active physicians and 87 residency slots per 100,000 in 2011, while Florida had no more than 265 active physicians and fewer than 20 residency slots per 100,000.
Last month, safety net hospitals and teaching hospitals in Florida projected a shortfall of 7,000 physicians and called for a shift in residency slot allotments, which they say unfairly rewards the physician-rich Northeast.
"We just passed New York as the third most-populous state," Jim Burkhart, president and CEO of Tampa General Hospital, and vice-chair of the Teaching Hospital Council of Florida, said in a recent interview.
"The number I heard today was that Florida is growing at the rate of 800 new residents per day. But we are 42nd in the number of residency slots we have per capita. That is a formula for disaster."
Kirch said Tuesday that "where a residency spot exists does not determine where a physician actually ends up practicing. So, there is no guarantee that putting residency spots in different locations is going to move physicians to that location. We live in a country where people are given free choices and after their training residents can choose where to practice."
Instead of shuffling residency slots, Kirch says states, local areas and health systems may be better served by recruiting new physicians with job perks such as debt forgiveness.
