With more people able to purchase health insurance under the healthcare reform law, a Health Affairs study projects that hospital emergency departments could generate an additional 4.4% in profits in the coming years.
Emergency departments will likely become money makers for hospitals as the Patient Protection and Affordable Care Act gins up and more insured patients walk through the doors, a study in Health Affairs suggests.
Michael Wilson, MD, an emergency physician at Boston's Brigham and Women's Hospital, and a healthcare economist, says the study he coauthored with Harvard economist David M. Cutler estimated that hospital emergency department revenues exceeded costs by $6.1 billion in 2009, representing a profit margin of nearly 8%.
The black ink was due largely to the $17 billion in profits EDs made from privately insured patients that covered underpayments for money-losing Medicare, Medicaid, uninsured and unreimbursed care.
The uninsured represent about 18% of patient volume in EDs and Wilson says that about 25% of those uninsured patients will gain coverage either through the health insurance exchanges or the Medicaid expansion. With more people insured under the PPACA, Wilson's study projects that hospital EDs could generate an additional 4.4% in profits in the coming years.
"Emergency departments have historically been part of the safety net for the American healthcare system," Wilson says. "People without insurance because of EMTALA and because of the history of hospitals know that if they show up in an emergency department they are going to receive care. If you take a look at the people who are uninsured and give them either private insurance or Medicaid then you would expect the revenue to hospitals to increase."
Wilson spoke with HealthLeaders Media about his study. The following is an edited transcript.
HLM: There seems to be confusion about whether or not EDs are profit centers. Why?
MW: Part of it is getting at costs. Getting at revenues is relatively straight forward. You can get Medicare revenue nationally pretty easily. Getting at revenue from private insurance companies you can do in some states. But getting national numbers is a little more difficult for revenue.
The larger problem has to do with costs and both how we use the Medicare cost reports, which I think is the most common way that you would approach a problem like this when you are trying to be nationally representative. But there are intricacies in this in terms of, for instance, when you look at the ED charges for admitted patients.
Hospitals don't get paid separately for the ED care versus the rest of the inpatient care. So, for those visits it becomes difficult to figure out how to disaggregate the revenue that the hospital received for the ED portion of the care versus the remainder of the hospital care.
HLM: Why did you choose 2009 as your primary metric?
MW: We had data from Medicare from 2011, but at the time we started the project, the national emergency department sample data set from 2009 was the latest data we had. HLM: It seems counter-intuitive that ED visits would increase under the PPACA because of its emphasis on population health and proactive care management.
MW: We assumed that patients who would go from being uninsured to having private insurance behaved similarly to current patients with private insurance in terms of utilization of the emergency department. There is a misunderstanding that the emergency department is primarily being used by the uninsured for low or moderate acuity visits.
In fact, people with all kinds of insurance will sometimes chose the ED for a low- or moderate-acuity ED visit despite having a primary care provider. Sometimes that is because it's afterhours, weekends, evenings, and the primary care provider is not available.
Sometimes these are visits that when you look at administrative records they appear to be low-acuity visits because the final diagnosis is gastritis. But at the time the patient was making the decision about where to go, he was thinking 'I am a 60-year-old man with diabetes and I'm having chest pains. I should probably be in the ED.'
Or they will call their primary care physician who will tell them to go to the ED.
HLM: Won't high-deductible plans discourage ED use?
MW: I don't know if the high-deductible plans include ED care or not. Let's say there is no carve out for ED. Then I think it will have an impact on utilization. But again, I am concerned about those types of attempts at controlling demand for ED care. It is difficult for the patient's physician sometimes to make a decision about if this is something the patient should go to the ED [for] or wait to be seen by [the primary care provider] the following day.
And now we will be asking patients to make these decisions for themselves. For the absolute lowest acuity, say for an ankle sprain, yes you could safely decide to wait until the following morning. But I'd be surprised if that had a very large impact on overall ED utilization.
HLM: Based on your study, what will the ED look like in five years?
MW: In general, ED visitation rates will continue to increase as they have in the past as patients get insurance. There seems to be more of a consensus now that ED utilization in the short term will increase. In the five-year timeframe if you take people who had no insurance and give them insurance then both ED and inpatient utilization will increase.
HLM: Did anything in your findings surprise you?
MW: How dependent the overall profitability of the emergency department is on the privately insured patients.
The purchase of Health Management Associates by Community Health Systems for $7.6 billion and the sale of Vanguard Health Systems to Tenet Healthcare for $4.3 billion were healthcare's two largest deals last year.
Hospital mergers and acquisitions in the United States declined in 2013, but the number of hospitals and hospital beds involved in those transactions hit a five-year high, according to the 2014 Health Care Services Acquisition Report.
M&A activity in 2013 was paced by the acquisition of Health Management Associates by Community Health Systems for $7.6 billion and the sale of Vanguard Health Systems to Tenet Healthcare for $4.3 billion, the year's two largest Hospital sector deals.
"Those two acquisitions alone accounted for more than one-third of the hospitals sold in the U.S. in 2013," said Lisa E. Phillips, an editor at Norwalk, CT-based Irving Levin Associates, which compiles the annual report.
Usually, Phillips said, beds owned by not-for-profits dominate the hospital M&A market, but because of those two billion-dollar deals last year, 78% of the target hospitals in 2013 were for-profit, compared with between 25% and 30% in a more typical year.
Globally, the dollar value of M&A activity across nine healthcare industry service sectors, including managed care and pharmaceuticals, increased by 1.8% to $52.7 billion in 2013. However, the number of transactions declined by 5.8% to 598 publicly announced healthcare services mergers and acquisitions in 2013.
In terms of number of M&A transactions, all but the long-term care and home health/hospice sectors posted declines in 2013 compared with 2012. The hospital sector declined 21.5% in deal volume to 84 announced acquisitions, which includes one large transaction in Germany, the report said.
"Without the strong performance of the long-term care sector, which had a 20% increase in transaction volume in 2013, health care services would have had a less robust year," Phillips said.
Here's a look at some more recent deals:
St. Tammany Parish Hospital Partners with Ochsner Health
St. Tammany Parish Hospital and New Orleans-based Ochsner Health System will form a strategic partnership to bolster healthcare access in the Northshore area of Lake Pontchartrain, the two providers have announced jointly.
"We looked at a variety of different models and really felt like the partnership, which is more like a Joint Operating Agreement, was the right structure," Warner Thomas, president/CEO of the 10-hospital Ochsner Health System, said this week.
"It allows flexibility for St. Tammany and Ochsner, yet we are committed to working together in that marketplace, expanding services, and we are going to be exploring opportunities for reducing costs, and growth initiatives. There will be a lot of coordination between our organizations."
"St. Tammany is not in a situation where they need to be acquired or merged with a larger entity. They are in a strong position," Thomas says. "We have a significant physician base in that market. They have a very successful hospital in that market. It really is synergistic from that perspective."
No money will change hands with the deal, but Thomas says there will be "financial integration going forward."
STPH is a service district hospital under local governance. The partnership agreement does not change the governance, employees or medical staff relationships of St. Tammany Parish Hospital Service District #1 or of Ochsner Health System. Each organization will retain its name, assets and staff.
Michigan's Ascension Health, CHE-Trinity Launch Integrated Network
Physicians with Ascension Health and CHE-Trinity Health have created a statewide clinically integrated network of healthcare providers. This new company, called Together Health Network, will include 27 hospitals and hundreds of ambulatory centers and physician offices.
"We believe this one-of-a-kind collaboration between two of the state's largest healthcare organizations will set a new standard for providing value-based healthcare in Michigan," Patricia Maryland, president of Health Care Operations and COO of Ascension Health, said in prepared remarks.
"Both Ascension and CHE Trinity Health have been performing at benchmark levels in terms of quality, while at the same time delivering care at cost levels well below the state average. This collaboration will allow us to combine our outstanding performances in terms of cost and quality into one, state-wide product unlike any other."
Together Health Network is a Michigan LLC that will work with payers to develop health plan products, including those purchased on the Health Insurance Marketplace and private exchanges. Together Health Network is designed to achieve a state-wide presence with numerous access points and advanced care coordination services without merging assets.
Together, the Michigan footprint of CHE Trinity Health and Ascension Health Michigan creates a geographic provider network that spans a majority of the state – it is estimated that 75% of Michiganders will be within 20 minutes of a Together Health Network provider. Together Health Network will have a physician-majority board, a physician CEO, and physician led committees.
Lawrence (MA) General Joins Beth Israel Deaconess Care Organization
Lawrence General Hospital has joined Boston-based Beth Israel Deaconess Care Organization as part of a risk-sharing agreement aimed at improving population health, the two providers have jointly announced.
Dianne J. Anderson, RN, president/CEO of LGH, said the affiliation will strengthen and expand medical services available for the Merrimack Valley and Southern New Hampshire.
"Patients will see expanded and strengthened medical services, keeping more care local and coordinated from the doctor's office, to Lawrence General, and, if necessary, to an academic medical center," Anderson said in prepared remarks.
With BIDCO support, LGH can provide population health management and access to specialty care at BIDMC. LGH and its affiliated physicians also accept some of the financial risk for keeping patients as healthy as possible. The arrangement is subject to review by the Massachusetts Health Policy Commission.
Tenet, Texas Tech to Establish New Teaching Hospital
Dallas-basedTenet Healthcare Corporation and Texas Tech University Health Sciences Center at El Paso will develop a new teaching hospital and an 110,000 square foot medical office building in west El Paso, the providers have jointly announced.
The new 140-bed hospital will operate as a part of the Sierra Providence Health Network, Tenet's system of hospitals and outpatient centers in El Paso. It will be a teaching hospital for medical students, nursing students, resident physicians and faculty from TTUHSC's Paul L. Foster School of Medicine, eventually offering training for approximately 75 medical residents across a multi-year program.
Construction is scheduled to begin in 2014 and be completed in the fall of 2016.
"With today's announcement, Tenet's recently completed and planned investments in the community will exceed $550 million over a 10 year period, and we are pleased to continue our commitment to the health and wellbeing of this important region," Tenet President/CEO Trevor Fetter said in prepared remarks.
Last year, Sierra Medical Center and Providence Memorial Hospital announced a $120 million investment in upgraded technology, expanded service lines and aesthetic remodeling, in addition to a $67 million expansion at Sierra Providence East Medical Center that was announced in 2012.
Port Huron (MI) Hospital joins McLaren Health Care
Port Huron Hospital has finalized a deal that makes it the twelfth hospital in Michigan's McLaren Health Care system.
Under the agreement, the 186-bed Port Huron Hospital will be renamed McLaren Port Huron. The hospital will retain its local board of trustees and leadership, and will remain locally governed.
The agreement also provides capital funding for the construction of a new cancer center and a new inpatient tower. The hospital expects to break ground for the cancer center early in 2015 with construction of the inpatient tower beginning later in 2015. Financial terms of the acquisition were not disclosed.
Civil tone notwithstanding, several Republican senators say they will demand more transparency about the successes and failures of Obamacare from Sylvia Mathews Burwell than from her predecessor, Kathleen Sebelius.
Thursday's U.S. Senate confirmation hearings for Sylvia Mathews Burwell had all the makings for a donnybrook.
Instead, it was more like a love fest as several Republicans joined every Democrat on the Senate Health, Education, Labor, and Pensions Committee in voicing support for President Obama's nominee to lead the Department of Health and Human Services.
The two-hour hearing came as Republicans and Democrats fight to establish their campaign narratives on the success or failure of the Patient Protection & Affordable Care Act in the months before November's mid-term elections.
And while Republicans on the 22-member committee frequently criticized the PPACA, President Obama, and departing HHS Secretary Kathleen Sebelius, they lobbed no direct shots at Burwell, who is well known to members of Congress through her most recent work as director of the Office of Management and Budget.
"Many of in this room… disagree about the merits of Obamacare and what the path forward should be to reform our healthcare system," Sen. John McCain (R-AZ), told the committee during his introduction of Burwell. "I know of no one who does not have but the highest praise for her work as director of OMB [which makes] her well qualified to be secretary of HHS."
The committee did not vote on the nomination. That is the task of the Senate Finance Committee later this month, and there is no indication that the nomination is in trouble.
Sen. Richard Burr (R-NC), praised Burwell's experience leading both the Global Development Program for the Bill and Melinda Gates Foundation, and the Walmart Foundation, along with her service as deputy chief of staff in the Clinton White House, and her service on OMB.
"I support her nomination and I will vote for it in the Finance Committee," Burr told the committee. "And it is for one primary reason. It's because she doesn't come with a single experience that would make her a good secretary. She comes with a portfolio of experience that would make her a tremendous asset at addressing some of the challenges that that agency specifically and uniquely has. I look forward to her confirmation being quick."
Even with the civil tone that surrounded the questioning, several Republicans said they will demand more clarity and transparency about the successes and failures of Obamacare from Burwell than from her predecessor.
Sen. Tim Scott (R-SC), told Burwell that he voted for her as director of OMB and that he respects her integrity and intellect, but he wanted assurances that as HHS secretary she would not become a shill for the Obama administration.
"I'd ask you simply, as secretary of HHS," Scott said, "would you in fact be the Health and Human Services secretary for the American people or will you be, as your predecessor has been, the ambassador of Obamacare?"
"I am here to serve the American people," Burwell replied. "I am part of the President's administration and I am honored to be appointed. But first and foremost I serve the American people. I believe the president and his policies are aligned with that, but I am here to serve the American people."
On the Issues
The Senators used their allotted time to assess Burwell on key issues before HHS. A career bureaucrat, Burwell ably avoided specifics.
HIX and the Single Payer
Sen. Pat Roberts (R-KS), asked Burwell if she supports expanding the PPACA beyond the exchanges and to a single-payer system.
"If I am confirmed, I will implement the law and the law is a system that has a market-based system and that is why the exchanges are up and running and putting people in systems that are private insurance systems," Burwell replied.
Interstate Commerce and Medicaid
Sen. Lamar Alexander (R-TN), the ranking Republican on the committee, asked Burwell if HHS would support allowing consumers to purchase health insurance across state lines.
"If I am confirmed, that is something I want to look into and understand," Burwell replied. "When one looks into that question what you have to consider is can the markets work in each of the states. When you go across states can you still keep the system up and working and care being provided?"
Alexander also asked about giving states more flexibility to design their Medicaid programs.
"There have been a number of examples where flexibility has been granted," Burwell replied. "Flexibility is important. Principles are important. Where you meet in that space, having enough standardization that meets the principles, but flexibility to meet the varying needs of states is something that I think is important in how I would think about it."
Resistance to Reform
Sen. Chris Murphy (D-CT), asked Burwell how she would work with states that are less than enthusiastic or even hostile toward the PPACA.
"Flexibility is one of the points. What is important is to send a signal that folks are willing to have the conversations," she replied, adding that states that have rejected Medicaid expansion money may warm to the idea when they see success stories from other states that have embraced the reforms.
Technology
Sen. Kay Hagen (D-NC), asked Burwell what lessons could be learned from the technical failures in the Obamacare rollout. Burwell stressed a need for individual ownership and accountability for IT projects, improved communication between stakeholders and their IT teams, and a new model for building IT systems.
"Generally, in procurement, we have had a waterfall approach, a building approach," she said. "When one is doing information technology, a more iterative approach where one tests in small pieces and moves and learns is a better approach to [the way of] doing procurement. We are not set up to do that in terms of how we set standards and do expectations."
Bundled Payments
Sen. Elizabeth Warren (D-MA), asked Burwell if she would exercise her statutory authority under the PPACA to expand the use of bundled payment models that have been shown to reduce costs and improve quality.
"You want to find the models which are the most successful and which are the most likely to scale, because that is what we need across the nation," Burwell replied.
"You have to consider both questions when considering what you would scale because you want to get the largest impact you can. That impact is a combination of both what the measures are of success, but it is also your ability to make it go broadly across the nation."
The interim CEO of a small Mississippi hospital survived a devastating tornado, but his hospital did not. Though he mourns the loss of life and property, his outlook is strategic: "Let's make the best of it and come out of it better."
It's been 10 days since an EF4 tornado corkscrewed down from the black skies over Winston County, MS, and changed everything on the ground for the people who live there.
The storm's 160-mph winds cut a swath of death and destruction across Winston County, located about 90 miles northeast of Jackson. It killed nine people and wreaked millions of dollars in property damage as part of violent weather front that claimed 34 lives in six states on April 28.
Winston Medical Center in Louisville, pop. 6,600, the county seat, was in the path of the funnel cloud. The 27-bed hospital sustained heavy interior damage and has since closed its doors.
One patient suffered a laceration to the back of his head, but otherwise none of the 11 patients or staff huddled inside the hospital hallways were seriously injured when the twister blew out windows, ripped down ceiling tiles, and tossed debris throughout the interior.
Interim CEO Paul Black, on the job for less than one week, was in the hospital emergency room that afternoon monitoring the storm on local media and hoping for the best. Right about then things took a turn for the worst.
"It was a direct hit, or we were on the outer edge of the funnel but we were in the funnel. When you've got cars turned upside down on top of each other in the parking lot, it was a real hairy situation," Black said in a telephone interview.
"We had enough warning to where we had all of the patients up on the floors in the hallways in safe places. Then we were sitting there on hold, watching where it was going. It was going along a path that looked like it was going to miss us. It was almost like it got to a road sign on one of the highways and then it turned left and headed right at us. And minutes later it was right on us. It was hairy at that point. When it turned, we knew we were in trouble."
The storm damage forced the closure of the hospital, and an abutting 120-bed nursing home. Black and his team spent most of their time in the immediate aftermath finding new housing for the hospital patients and the nursing home residents while providing triage medical services for the many injured people in the shattered community.
Temporary Hospital Imminent
"If your staff is well trained then you will go off of instincts and trust the staff to do the right thing but you can never really prepare," he says. "Everybody knows what to do when you get the tornado warning. You get them in the hallways and wait for things to ride out. And maybe the lights will go off or something like that. But you don't expect the windows to go out and stuff to start flying everywhere."
Winston County got immediate help from an emergency response team from the University of Mississippi Medical Center, and in days immediately after the storm, crews and aid have arrived from the Mississippi National Guard, other state emergency responders, and the Federal Emergency Management Agency.
A modular hospital, on loan from FEMA, was shipped down from North Carolina and is now under construction. It is expected to be operational within two weeks. "When that is done we should have a functioning hospital," Black says. "We are excited about that. A functioning modular temporary hospital that at least gives us the opportunity to start providing care for the people of Winston County again."
"We will have an emergency area, X-ray, lab pharmacy, about 10 to 12 acute care beds where we can house patients overnight. It is going to be on-site and offering 24-7 [care] just like normal."
Once the temporary hospital is open and healthcare access is stabilized, the people of Winston County will have to make a decision about their hospital. Black says stakeholders are looking at their options and "we are leaning real heavily toward tearing it down and building new."
"We are getting close to a decision. There are some variables we have to figure out. A lot of the facility is old, some of it is 50 years old. It's at the end of its useful life anyway," he says.
"The fact that we have a three-story tower and there is structural damage to it makes it real difficult to decide if it is safe or not, or if we're even able to renovate and make it useful. It might be more economical to tear that building down and build something new and make it more modern and a lot more useable."
From a Makeshift Office, an Eye Toward 'Triumph'
Black had been CFO at Winston Medical Center for several years. He was named Interim CEO on April 22, but the job description changed abruptly six days later. His new office is the front seat of a loaner pick-up truck. His personal car was destroyed by the tornado in the hospital parking lot. He conducted this interview on his cell phone.
"It's been hectic, to say the least," he says. "You get up every morning and you just start doing. You start talking to people. I am relying on a lot of people. I have learned real quick that I can't do everything. I have a good group of people and I lean on them. As far as how the staff handled this situation, I don't think anybody could have done a better job."
And now Black finds himself torn with conflicting emotions. On the one hand, he mourns the loss of life and the destruction sown by the tornado. On the other hand, as a professional hospital administrator, he is excited about his critical role in helping to reformulate how healthcare will be delivered in Winston County for the next 50 years or longer.
"It's one of those things that you are excited about what could be in the future and at the same time you want to temper that with thinking about how you got there," he says.
"You don't like how we've gotten into this situation but now that we have been dealt this hand let's make the best of it and come out of it better. Let's have state-of-the-art hospital for all the citizens so we can say we took a tragedy and turned it into a triumph. It sounds corny, but that is about all I can think of right now."
Under the proposed prospective payment scheme, Medicare will pay Federally Qualified Health Centers a single encounter rate per beneficiary per day for all services provided, with some exceptions.
Community health advocates are applauding the federal government's newly announced plan to boost Medicare payments to Federally Qualified Health Centers by as much as 32%.
"Generally we are very pleased with it," says Dan Hawkins, senior vice president of policy at the National Association of Community Health Centers.
"CMS clearly sees this as a fair payment for the comprehensive services that health centers provide to Medicare beneficiaries and they are aware that this new PPS system they are proposing is very similar to the PPS under which health centers are paid under Medicaid."
The Centers for Medicare & Medicaid Services recently issued the final rule for the new Medicare prospective payment scheme that was outlined under the Patient Protection and Affordable Care Act, which mandates consideration of factors such as the type, intensity, and duration of services provided in these settings. The new payment system will be implemented on Oct. 1, and FQHCs will transition to it throughout 2015, CMS said.
"The new payment system helps increase the ability and capacity of federally qualified health centers to provide essential and affordable services for even more patients who need care," CMS Administrator Marilyn Tavenner said in prepared remarks. "These FQHCs are essential to countless patients in local communities who depend on them for getting their primary and preventive care."
Health centers provide care to more than 22 million people, of whom 1.7 million are Medicare beneficiaries. By law no one can be denied care based on an inability to pay. A 2010 report from the Government Accountability Office found that most FQHCs health centers lose money on Medicare patients.
"Under the old payment system, health centers were subject to restrictions and an overall payment cap that reduced the Medicare payment to about 60% of their costs. They were losing 40 cents on the dollar every time they saw a Medicare beneficiary," Hawkins says.
Under the new PPS, Medicare will pay FQHCs a single encounter rate per beneficiary per day for all services provided, with some exceptions.
The rate will be adjusted for geographic variation in costs, for higher costs associated with furnishing care to new patients at FQHCs, and when FQHCs furnishes an initial preventive physical examination or an annual wellness visit to a Medicare beneficiary. Services paid for by Medicare in the past will continue to be covered under the new system, CMS said.
The initial proposal floated by CMS last September raises concerns among community health center advocates, but Hawkins says many of those concerns have been addressed.
"They eliminated the payment cap," Hawkins said.
"Yes, this will put it on a prospective payment system and the payment adjuster will be limited because the Medicare Economic Index is only about 2% or 3% annually increased. So it is not going to keep up with healthcare costs. But at the start, it is going to get close to 80% of costs and from the old 60% and in that context it is a much more fair payment rate and will allow health centers not to have to dip into the grants and other funding they get to serve their uninsured patients in order to subsidize Medicare underpayments. So in that sense it is a very good rule."
The feds also struck out a provision that would allow only one visit per day of any kind.
"We noted that there are a good number of folks who have a comorbidity such as depression associated with their medical condition. In this final rule they changed that and would allow health centers to bill for more than one visit in a single day," he says.
"You can appreciate, for seniors especially, asking them to come back on a separate day when they are there for care for one condition. It not only inconveniences them, but also increases the chances that they may not come back for that second service."
The final rule was published in the Federal Register on Friday, May 1 and CMS has asked for public comments on modifications of proposals including:
A simplified method for calculating coinsurance when a preventive and non-preventive service is on the same claim;
The establishment of Medicare-specific payment codes to be used for Medicare encounter-based payment under the new PPS; and
Ways in which payment for chronic care management services could be adapted for FQHCs and rural health clinics.
The comment period closes on July 1, with the final rule to be issued later in the year.
The Department of Health and Human Services "expects to release an interim final rule in the near future that will include a new compliance date that would require the use of ICD-10 beginning October 1, 2015. The rule will also require HIPAA-covered entities to continue to use ICD-9-CM through September 30, 2015."
After one month of silence, the federal government has announced that it will reset ICD-10 implementation for Oct. 1, 2015, the earliest date allowed by law.
"We are so happy about this," Lynne Gordon Thomas, CEO of the American Health Information Management Association said in a telephone interview Thursday evening.
"It gets the momentum back. Our fear was that people are going to say 'we don't know when it's going to be. We have so much going on in healthcare right now that you can only concentrate on so many things at one time.' We wanted to make sure this didn't get lost in the shuffle."
The ICD-10 delay was slipped into a larger bill that also delayed implementation of the Sustainable Growth Rate funding formula. The Protecting Access to Medicare Act of 2014 was hustled through Congress just before the SGR cuts were to take effect, and it was quietly signed into law by President Obama.
Since then, frustrated advocates for ICD-10 have been hounding the Department of Health and Human Services and the Centers for Medicare & Medicaid Services for specifics on when they planned to reset a new implementation date for the coding set.
On Thursday afternoon advocates got their answer when CMS issued the following statement:
"On April 1, 2014, the Protecting Access to Medicare Act of 2014 (PAMA) (Pub. L. No. 113-93) was enacted, which said that the Secretary may not adopt ICD-10 prior to October 1, 2015. Accordingly, the U.S. Department of Health and Human Services expects to release an interim final rule in the near future that will include a new compliance date that would require the use of ICD-10 beginning October 1, 2015. The rule will also require HIPAA covered entities to continue to use ICD-9-CM through September 30, 2015."
The fickle action by Congress to stuff the delay into a larger bill with no advance warning, and the federal bureaucracy's unwillingness to communicate on a reset date prompted the Commission on Certification for Health Informatics and Information Management to announce that it would hold off on testing for ICD-10 accreditation until the new coding set is "officially implemented."
The new implementation date provides a target for providers, many of them were left in limbo after planning for the Oct. 1, 2014 startup, which had already been delayed by one year in 2013. Gordon Thomas says many providers have been restless with the delay.
"What we are hearing is everybody wants to move on," she says. "It's been frustrating to the healthcare community because we want to move on and it's tough on people when there is indecision. So, I think people will be very pleased."
Because CMS plans to issue an interim final rule, Gordon Thomas says, it's not clear if it will ask for public comments or what other regulatory steps will be taken before the new implementation date becomes final.
The ICD-10 delay had been sought by specialty physician associations that have long questioned the value and cost of the coding set. Gordon Thomas says ICD-10 backers should spend the next year addressing the concerns of physicians and other skeptics.
"We are really developing a strategy," she says. "We've talked to CMS about working with small physician practices. We want to make sure they understand why it's important, and empathize with them and help them."
"They've been a little scared from what they are hearing, so we are going to be putting out 'mythbusters' literature telling them 'this is what you are hearing, but here are the facts.' It is a change. They are asked to do more documentation but they need to do that whether we go to ICD-10 or something else like value-based purchasing."
Otherwise, Gordon Thomas says providers should use the additional 12-months to provide.
"We want people to take advantage of this extra time," she says. "They need to continue to work on their clinical documentation improvement programs. The need to train their staff and stakeholders, whoever that may be, and at the appropriate level of training depending upon what they need. They should continue working with dual coding, and they should work with their vendors to make sure that they are ready, ready, ready."
Part of the integrated health system's strategy is to complement "clinical prevention work with environmental strategies that increase access to healthy, affordable food and safe physical activity," says the executive leading the effort.
Loel S. Solomon, PhD
Vice President for Community Health for Kaiser Permanente
The term "food desert" is not new. It's been around for a couple of decades and it succinctly describes patches in urban and rural settings where people don't have access to healthy foods.
In the past few years the term has gained usage in the United States as we come to recognize that access to healthy food is a critical component of population health management, which itself will also become a key metric for provider reimbursements.
Kaiser Permanente already supports a network of farmers markets outside many of its medical centers and clinics. So it's not surprising that executives from the giant California health system were in the crowd earlier this month to mark the grand opening of a new 40,000-square-foot, full service supermarket in a South Los Angeles neighborhood that is served by the integrated health system.
Loel S. Solomon, PhD, KP's vice president for community health, says providers can no longer improve population health without looking beyond their own walls.
"Good clinical prevention is necessary, but insufficient to help our members eat better, which is critical to addressing obesity and diabetes and all sorts of chronic diseases," Solomon says. "We know we have to make the healthy choice the easy choice and that means we have to address the lack of access to healthy food in too many of our communities. So, it's part of our strategy to complement our clinical prevention work with environmental strategies that increase access to healthy, affordable food and safe physical activity."
The April 14 opening of the Northgate Gonzalez Market was 17 years in the making and was facilitated by a $50,000 workforce development grant from the California FreshWorks Fund, which describes itself as "a $272-million impact investing fund that provides loans and grants to grocers and other food enterprises to improve access to healthy food, spur economic development, and foster innovation in healthy food retailing."
Quality Food and Jobs
Northgate Gonzalez Market will bring fresh fruits and vegetables and other healthful foods into the neighborhood and it won't sell alcohol or cigarettes. It also used the workforce development grant to recruit, hire and train people living in the neighborhood, which suffers from high unemployment.
Solomon says the market created 153 new jobs, of which 111, or 73%, were new hires. Of those new hires, 74% are from adjacent zip codes and the vast majority live within two miles of the store. The workforce is 79% Latino, and African Americans predominate the remaining 21%—ratios that reflect almost exactly the demographics of the community served by the market.
"The idea is two-fold. One, we come at it from a health perspective. If we are serious about addressing people's health issues we need to create more access to healthy food," Solomon says.
"But, a good solution solves many problems. The other major driver of health and a major social determinative of health is whether people have jobs or not. So, the healthy food financing initiative and the California Fresh Works fund is an effort to create more and better employment for people who don't have access to it. It addresses health from that factor too. It is what we call a co-benefit—improving access to quality food and increasing well-paying jobs for people who often don't have access to good jobs."
A Few Questions
There is a lot to like about this project, but it also raises questions. For example, will the Northgate Gonzalez pay a living wage for its workers, or will it copy the business model used by a certain big block retailer and many fast food chains that cover labor costs with employee canned food drives and government subsidies in the form of food stamps and Medicaid?
"For this project, every job [pays a] fulltime, living wage in accordance with LA City's Living Wage Ordinance and with benefits—health, dental, vision, 401k," Solomon says.
If the demand is so great, why is a subsidy needed? Why hasn't the free market responded?
"It's called market failure and there are countless cases of when the market left to its own devices doesn't always produce the socially desirable results," Solomon says. "How else would you explain that there are large concentrations of people who are not served by a full-service grocery store and who have money to spend."
And Solomon insists that the new market is not some pie-in-the-sky do-gooder scheme that will require a permanent subsidy or go out of business.
"The important thing to understand is that there is this workforce development grant but it is a loan they got based on an economic analysis that that loan can be replayed," he says. "Those investors in the Fresh Works Fund include banks and people who want a return on investment. That is the opportunity. How can we, with a little bit of grant money and a lot of technical assistance and communications with the market operators and the Fresh Works Fund folks, create a new economically viable model that produces health and wealth for an entire community that has been left out of the economy? It's not a free lunch."
Encouragement for Other Communities
Of course, KP is not your typical community hospital. It is a massive, deep-pocketed integrated health system with resources that most providers can only read about. Solomon says that a lack of immediate resources shouldn't stop any providers from pushing for healthy food in their communities.
"It requires partnership. Nobody can do it alone. But every single hospital is an anchor institution in their community," he says. "Every single hospital is a major employer in their community. Every single hospital has important relationships with the business community. Every single hospital CEO is a civic leader. It's not about the dollars. It's really about your civic leadership and understanding the nature of the problems we confront and be willing to roll up your sleeves and be willing to address the complexity and the bigger solutions we need to bring to bear."
Maybe your community hospital can't land a 40,000-square-foot supermarket for the people you serve. But you could probably find a way to get a weekly farmers' market trucked into your food desert.
"That is the real opportunity for every single healthcare leader and every single hospital executive," Solomon says, "to think about what is really driving health and illness and work with others to find solutions."
Many states that passed malpractice caps a decade ago should expect to see judicial review because caps aren't passing constitutional muster and aren't delivering on what they advertised, says a legal expert.
The Florida Supreme Court's ruling this spring invalidating that state's 11-year-old cap on damages in medical malpractice suits marks the latest successful challenge to state laws across the nation that critics say enrich insurance companies but deny due process to grievously injured people.
"It is unfortunately a constant battle for victims of malpractice. This seems to go on in just about every state," says Richard Levin, a medical malpractice attorney with the Chicago-based firm of Levin, Riback Law Group.
"What seems to be the overriding ethos of the insurance companies and the physicians is that the premiums are too high and doctors are leaving the state and as a result we have a malpractice crisis. But the statistics bear out the exact opposite."
The battle over malpractice caps reignited in March when on a 5–2 ruling the Florida Supreme Court struck down as unconstitutional a 2003 statute that capped at $1 million medical malpractice payouts for intangible damages such as pain and suffering.
The Florida case involved the 2006 death of a pregnant 20-year-old woman who died from complications that arose during labor. The woman's family was awarded $2 million for pain and suffering, but that award was halved to comply with the state statute, which was passed into law at a time when many states were enacting "tort reform."
Florida's high court invalidated the law and ruled that it violated the equal protection clause of the state constitution. The majority ruling also challenged the validity of the purported medical malpractice crisis that supposedly prompted the law in the early 2000s and said the crisis was "not fully supported by available data."
Instead, the court majority wrote that the effect of the law was to enrich insurance companies at the expense of plaintiffs and that the malpractice caps had done "virtually nothing" to stabilizing malpractice premiums for physicians and other providers.
Astronomical Income Increases for Insurers Citing testimony brought forward by committees in the Florida Legislature, the high court said that "it is estimated that the Florida medical malpractice line of business standing alone generated a… return on surplus of 14% in 2012… This represents the ninth consecutive year of profitability."
The court went on to say that "The profits would probably shock most concerned. Indeed between the years of 2003 and 2010, four insurance companies that offered medical malpractice insurance in Florida cumulatively reported an increase in their net income of more than 4300 percent."
Levin says many states that passed malpractice caps a decade ago should expect to see new judicial review because they aren't passing constitutional muster, and they aren't delivering on what they advertised.
"There are 19 states that have malpractice caps, and none of them have a provision in them that if the awards are capped at a certain number when the premiums are paid then the premiums will be reduced," he says.
"In fact, the opposite has been shown, that the premiums increase. And there is nothing in the statute that says when there has been a decrease and the insurance companies will reap the benefits of that they will pass the savings on to the doctors. That has not been done. They are not, in fact, paying lesser premiums."
Defense Attorneys See it Differently
Jeff Scott, general counsel for the Florida Medical Association, which filed an amicus brief supporting the caps, blasted the high court's ruling.
"We had documented the premium increases prior to 2003 and in many instances we were seeing triple-digit increases. It was a full-blown crisis. The rates were skyrocketing. Physicians were dropping their coverage because they couldn't afford it," he says.
"For the (FL) Supreme Court to question whether there was a medical malpractice crisis was absurd. They were either living under a rock in 2003 or just plain ignorant. I cannot fathom how they made that determination."
Scott says tort caps "absolutely" work. "One needs only look at the states that have an effective cap in place, such as California and Texas, to see that malpractice rates are lower and the movement of physicians to those states," he says.
The reasoning behind the malpractice cap and its effect on premiums is just common sense, he says.
"It provides a measure of predictability for the insurance companies," he says. "They are the ones who have the authority on whether to settle a case or to take it to trial. If you have a predictable number as to what your non-economic damages are going to be, then you are able to settle claims at a lesser amount. If the sky's the limit then your costs of settling the claim increase."
Scott also predicts that malpractice premiums will increase in Florida now that the cap has been invalidated and more suits are filed.
"There isn't any doubt about that. We have heard word from some of the insurance companies that it is an inevitable result," he says. "They mandated back in 2003 when they passed the cap something called the 'presumed factor' by which the insurance companies were supposed to reduce their rates. If you take away the cap that provides some measure of stability for awards then I don't see there is any way that rates wouldn't go up."
More Suits Anticipated
Levin concedes that lawsuit filings will likely increase with the caps invalidated, but not for "frivolous" reasons.
"Malpractice cases of all fields of personal injury are the most expensive to pursue. The average malpractice case for a catastrophic injury with multiple defendants usually costs about $200,000 in out-of-pocket expenses that the attorney fronts on behalf of the client," he says.
"So, if that case is lost, the attorney has to pay for it. As a result, since the caps have been in place, attorneys won't take the cases where somebody has been catastrophically injured because they know the risks are too high. That is why the filings are going down."
"You hear a great rallying cry about 'frivolous lawsuits.' You hear that all the time. But insurance companies and corporations are not afraid of frivolous lawsuits. They are afraid of legitimate lawsuits." Levin says.
It's an easy thing to say that somebody has a frivolous lawsuit, but the people who are affected by the cap on damages are not people who have frivolous losses. They are people with serious losses," Levin continues.
"Tort reform is always going to be one of those issues that is always on the agenda because of insurance companies. They would like to pay less money and if you can cap risk at $1 million as opposed to an unlimited amount, wouldn't you do that? I understand why they are trying to do it. I just disagree with it."
A two-day summit organized by the American Health Information Management Association has ended, and ICD-10 stakeholders say they are still waiting to hear from federal officials on a firm implementation date.
A federal official involved in the ICD-10 launch couldn't give a room full of stakeholders a firm date on for the new implementation of the medical code set, but suggested on Wednesday that an announcement is imminent.
Denise Buenning, acting deputy director with the Centers for Medicare & Medicaid Services'Office of e-Health Standards and Services reportedly told attendees at a two-day ICD-10 summit held in Washington, DC, that a firm date for the implementation would be forthcoming.
"She said they are working on getting the word out and that the regulatory language is being drafted," said Lynne Thomas Gordon, CEO of the American Health Information Management Association, which organized the summit. "[Buenning] kept checking her cell phone to see if she would be able to make some sort of announcement but she wasn't able to. My guess is its going to be Oct. 1, 2015. That's when everything switches over for CMS."
The Protecting Access to Medicare Act of 2014, signed into law this month by President Obama, delayed implementation of the ICD-10 code set until at least Oct. 1, 2015. Stakeholders had hoped to get a firm date for the new implementation when Buenning spoke Wednesday afternoon.
The delay was made public just hours before the bill passed the House in late March, and since then, CMS has seemingly lowered a cone of silence over the process.
The only public acknowledgement of the delay came Wednesday in a brief release on the CMS website which read: "With enactment of the Protecting Access to Medicare Act of 2014, CMS is examining the implications of the ICD-10 provision and will provide guidance to providers and stakeholders soon. This provision in the statute reads as follows: "The Secretary of Health and Human Services may not, prior to October 1, 2015, adopt ICD-10 code sets as the standard for codes sets under section 1173 (c) of the Social Security Act (42 U.S.C. 1320d-2 (c)) and section 162.1002 of title 45, Code of Federal Regulations."
Risk factors that can adversely affect a patient's recovery or trigger a hospital readmission include behavioral issues. The chair of the Cedars-Sinai Department of Psychiatry discusses how screening for depression will become more widespread as hospitals adopt value-based reimbursement models.
Bysome estimates, about 18 million people in the United States, roughly 7% of the adult population, experience an episode of major depression each year. Undiagnosed and untreated, depression can have a profound effect on hospital patients who are also dealing with seemingly unrelated health issues.
>Itai Danovitch, MD, MBA
Chair of the Cedars-Sinai Department of Psychiatry
With that in mind, Cedars-Sinai Medical Center in Los Angeles, CA announced this month that it has begun screening all adult inpatients for depression along other risk factors that could adversely affect their recovery.
Itai Danovitch, MD, MBA, chair of the Cedars-Sinai Department of Psychiatry, spoke with methis week about the need for screening, and how it will become more widespread as hospitals enter value-based reimbursement models. The following is an edited transcript.
HLM: Why did you start screening all inpatient adults for depression?
ID: At Cedars Sinai Medical Hospital the psychiatry department does a lot of consultations. That means that doctors call on us when there is a problem with a patient that they think is related to mental health and is affecting their medical care.
Depression is incredibly common and one of the things we know is that often, by the time we get called for helping a patient with depression, they have already had that depression for a period of time. If we could get calls earlier, or if the depression could get recognized sooner, there [would be] opportunities to intervene and help that patient earlier on.
That was our personal experience, and in reading the quite extensive literature on the prevalence of depression in patients with medical illness and also its impact on outcomes.
The rate of depression prevalence in patients who have medical disorders ranges from about 10% to 30% and in some diseases, such as cardiac disease, it is 30%. The presence of depression impacts basically every feature of a patient's medical care. It impacts their experience with care, their satisfaction with care, it impacts their adherence to care regimens. It impacts the disease outcomes from the medical diseases they are suffering from.
For cardiac patients the risk of myocardial infarction goes up substantially when someone also has a history of depression for reasons we don't fully understand. It also impacts their utilization of healthcare services. Having depression is associated with a two-fold increased risk of being readmitted to the hospital.
Essentially virtually every feature of healthcare is impacted in a negative way by depression. You can only address it and help somebody with depression if you first recognize it. The purpose of this initiative is to screen patients so that we can identify them more readily and give the patients information they need to empower them to be able to get help if they choose to.
HLM: What does the screening process involve?
ID: It is quite straightforward. There are a number of screening tools for depression. The ones we are using are called the Patient Health Questionnaire. There are two forms of it: the PHQ-2 and the PHQ-9 that screen for depression. They ask about the symptoms of depression and the purpose of the PHQ 2 is a broad screener. Are they depressed? Have they lost interest in things? That's used by the nurse to then ask the rest of the questions if the patient is positive.
If not, they move on with the rest of their assessment. It is easy to do and it is a measure that has been tested and validated in many different healthcare environments. It can be appropriately administered by many different health professionals.
The challenge of detecting depression in the medical setting is that there are many medical conditions that can cause symptoms or syndromes that can look like depression. So it is important to have a physician or an allied health professional evaluating the patient to disentangle various forms of depression and give the patient guidance on how to find treatment for it.
HLM: Are the screenings expensive or do they require significant time or resources?
ID: The screening cost in and of itself requires a little bit of extra labor on the part of nurses, but our experience here and in other locations is that nurses are readily able to integrate this.
It doesn't impact their work flows too much. Of course, more and more quality demands are placed upon nurses and we are very sensitive to that. But the nurses here really feel that this is a sufficiently important aspect of healthcare to make it a priority and to involve themselves in the screening.
The costly thing is actually referring patients and having them get treatment for their depression. That is a cost that ultimately patients and their insurers bear. What the literature shows is that it is even costlier not to address depression.
HLM: Many providers across the nation have problems accessing behavioral health services. Why bother screening patients if you can't get them the help they need?
ID: It should be the healthcare professionals' role first and foremost to determine what is wrong with a patient, to be able to diagnose them and refer them to the services that the patient needs in order to get better.
As a society we have a different problem, which is how do we finance the things that we know to be helpful to patients? What we are recognizing now is… that in the long-term some of the interventions that are simple and benign can be helpful in producing long-term gains for patients in reducing costs whereas in the short term it can be hard to recognize those values.
So, the closure of a lot of mental health services is a function of the fact that those services don't reimburse very well because our field and our society haven't done a very good job of recognizing the value of those services.
HLM: What happens if you determine a patient has depression?
ID: We notify the patient's medical doctor and the social worker that the patient has screened positive. Every patient has a social worker assigned to them and the social worker does additional assessments to determine if the patient is already in care.
Do they have a treating psychiatrist, psychologist, or therapist who is able to educate the patient? The physician for the patient is also asked to assess the patient, to advise them about the findings of the screening and their relevance to their medical care and to assist them with a referral if the patient wants that referral.
HLM: Do you see these screenings become more common as hospitals shift to population health and value-based reimbursements?
ID: Absolutely! When we talk about bending the cost curve, which really means trying to get better outcomes without spending more for them, some of the greatest opportunities to do that are in improving the behavioral and mental health of patients.
HLM: How will you know if these screenings are successful and a good return on investment?
ID: The worthiness of the screening has been established by a number of other groups besides us. The U.S. Preventive Services Task Force has adopted depression screenings as a best practice. That is a function of extensive data supporting the idea that identifying and screening depression is cost effective and valuable.
At Cedars-Sinai our measures are how well we identifying patients. Are we screening every admitted patient? Are we educating our allied health providers and nursing staff? Eventually we are going to look at other things such as how do positive scores on depression relate to other important features of care, such as patient satisfaction with care, readmissions, length of stay in the hospital, are we able to increase the referral rate for treatment services for patients who screen positive, etc.
HLM: Can these screenings be done at hospitals where resources are already stretched?
ID: An increasing number of hospitals, including community hospitals, are engaging in various alliances and partnerships with other parts of the health continuum to manage the lives of populations.
Whether it is with insurers or outpatient clinics, the first questions are 'who are the stakeholders in the patients' healthcare and what is the best point of service to screen the patient for depression? So, there is very little question that, from the patients' experience, they need to be screened for depression and they need to be offered services. Exactly who does that and where in the system that happens and how it is managed depends upon the arrangements of those particular health systems. It is hard to answer that question totally generically. A lot of health systems do this in the primary care setting.
HLM: Do you anticipate that this could be mandated at some point by the federal government?
ID: It is a good question and I don't know the answer. Some regulatory bodies like The Joint Commission and others have considered and evaluated some quality metrics that get to behavioral health outcomes and possibly depression. The Joint Commission has established suicide screening as a national patient safety goal and detecting patients at a high risk of suicide is accomplished in part through this measure.
Globally, if we look at trying to enhance value and improve outcomes for patients, this effort to improve value and outcomes is going to drive more health systems to be screening and identifying underlying behavioral health issues. That is an area where overall we haven't done a really great job of meeting patient needs and where the failure to meet patient needs costs us a lot in terms of financial costs, but also more importantly in terms of patients health outcomes.
It's an important opportunity because we can both potentially reduce utilization and improve their health outcomes.
