The transition from ICD-9 to ICD-10 coding led to significant information loss at one oncology clinic, says a researcher who found that 39 ICD-9-CM codes with information loss accounted for 2.9% of total Medicaid reimbursements and 5.3% of the organization's billing charges.
Neeta Venepalli, MD
UIC Assistant Professor of Hematology/Oncology
Healthcare providers will see clinical and billing information and financial losses during the mandated switch to ICD-10 disease classification set later this year, a new study suggests.
The University of Illinois at Chicago study, published this month in the Journal of Oncology Practice, looked at entry ambiguities for hematology-oncology diagnoses in anticipation of the challenges providers may face during the transition from ICD-9-CM to ICD-10-CM, which takes effect on Oct. 1. UIC researchers focused on hematology-oncology because it has fewer ICD-10 codes and less convoluted mappings when compared with other sub-specialties.
The study used 2010 Illinois Medicaid data to identify ICD-9-CM outpatient codes and the associated reimbursements used by hematology-oncology physicians. Researchers identified 120 codes with the highest reimbursement for analysis. They also looked at ICD-9-CM outpatient diagnosis codes and associated billing charges used by University of Illinois Cancer Center physicians from 2010 to 2012 and selected the 100 most-used codes, the study said.
Using a web-based conversion tooldeveloped at UIC, the ICD-9 codes were entered and translated into ICD-10 codes. Researchers looked at whether the translation made sense, whether a loss of clinical information occurred, and whether a loss of information had financial implications.
"What we found was the transition from ICD-9 to ICD-10 led to significant information loss, affecting about 8% of the Medicaid codes and 1% of the codes in our cancer clinic," said Neeta Venepalli, MD, UIC assistant professor of hematology/oncology and lead author of the study.
Researchers found that 39 ICD-9-CM codes with information loss accounted for 2.9% of total Medicaid reimbursements and 5.3% of UI Cancer Center billing charges.
Venepalli and study co-author Andrew Boyd, an assistant professor in biomedical and health information sciences at UIC, spoke with HealthLeaders Media about the findings and what providers can do to prepare for Oct. 1. The following is an edited transcript.
HLM: Where are these losses coming from?
Andrew Boyd
Assistant Professor in Biomedical and Health Information Sciences at UIC
Boyd: We have three categories: An incorrect mapping, which is flat out wrong, too specific, where you get a whole lot more information, and too general. If you have more detail you can detect fraud. If it is too specific and a patient gets reassigned multiple codes by different clinicians on the oncology side, that could be picked up as fraud by the insurance companies.
You have more specificity, but there is disagreement about that and you get flagged as fraud. The goal is to be revenue neutral from the insurance companies, but with the increased specificity there are other concerns.
This 2.9% (reimbursements) and 5.3% (billing charges) are what you really have to be careful about. This information loss is critical because as a clinician you put down what is medically necessary or correct. But if it is an incorrect mapping and the insurance company maps it incorrectly to 10 and their algorithm to approve what gets reimbursed [may not get you] paid.
HLM: If you are identifying these issues with oncology, which you say is a relatively simple code set, what does this say about potential problems on Oct. 1 with more complex subspecialties?
Boyd: I'm not comfortable making predictions. Right now, appropriately, most of the training for physicians and coders is 'What are the 10 codes I need to memorize?' So, when you're looking at transitioning to ICD-10 the first thing you do is train everyone for the new codes. The first pass of training, just so you can collect money, is training on what the new codes are and what the new interface is.
What we are talking about in this translation tool and this new paper is that second analysis of these reports that the hospital or the outpatient clinic runs. Right now we are just trying to get through Door No. 1 before we get through Door No. 2. When you begin that second step we're saying here are some problems.
Venepalli: Come October every single report that your hospital is going to generate is going to be under a different set of codes. What are they going to do when they have to compare how that hospital is doing to last year or the year before? They are comparing apples and oranges in some situations.
How do you know? How can you explain your numbers going down or up? How can you use your numbers to predict who you hire or how you should be expanding? This is really relevant for what is happening with (accountable care organizations) and how to you base purchasing. That secondary level of analyses once you are using 1CD-10 may even become more important as a tool to look back at, at least for the first five or six years.
HLM: How can providers best prepare for the transition?
Venepalli: Take your 100 most-frequent billing codes, inpatient and outpatient, and also look at the hundreds you are getting the most reimbursements for and run it through this analysis. What you will find is that the majority of the codes you are OK with and that 18% to 20% of codes are convoluted and maybe incorrect.
This is so easy to do you can do it in an afternoon. Run these codes and wherever you are seeing that the ICD-10 codes are not making sense, or there is some sort of information loss, train your coders, train your billers and physicians to recognize and anticipate that.
Boyd: We have a limited time before the transition and every clinic has a different amount of time to invest in this. If you have 100 codes and it is somewhere between 15 and 20 of codes that are convoluted and you only have a few hours to spend with your staff those are the one you focus on. We are trying to triage the training. You can't spend 100 hours between now and October to train all of the physicians and staff.
The other idea is to have one of your data analysts pull the codes you use for your weekly and monthly reports and if you are actually running your reports off of ICD-9 codes pull those out of the reports and see which reports aren't going to make sense with ICD-10.
If they don't make sense you either have to redesign the report in ICD-10 or just realize that this is complex and some numbers are better than no numbers but this may be incorrect. Physicians and managers are used to uncertainty. Everyone knows you don't know the exact number of patients you are going to see next week.
We are providing tools to help them quantify what the [answers are] in reports and in financials and along those lines. Knowing that 20% of your reimbursement is going to be complex, maybe that is comfortable for you. Everyone has different risk tolerance. Maybe someone is comfortable with that. If not, then spend the hours and the staff time to drill down.
HLM: How does your translation tool work?
Boyd: We built that but it is derived from the government to help with the transition through the General Equivalent Maps. They have the files where they map from ICD-9 to ICD-10 in one file and in the second file from 10 back to 9. We did analytics about future implications. Like everyone else found out, it's hard.
From that we decided to continue to iterate along those lines the way to look at 9 and 10 codes in their totality in both directions so you could understand what the analytical impact was that is how we developed the analysis tool.
Previous guidance for 9 and 10 from the AMA and other agencies told people to only go in one direction, forward or backwards. When we followed their guidance we got conflicting data. The reports changed, which was the impetus to begin this tool. We weren't looking to analyze the mappings for all of them. We took the highest costs and the most complex ones. There is in GEMs something like 150,000 relationships. This is a small project.
Venepalli: When you type in a 9 and try to get a 10, what you get from the current GEMs government-provided mapping is a table of numbers. You don't know what to do with those numbers. I had no idea. It is very confusing. Then this tool represents graphically what these conversions are going to look like. It makes it much easier to look at. We would not have been able to do this analysis to quantify how much of our diagnoses are at risk from information loss and at financial loss only using that table of numbers.
Boyd: We gave the tool away for free and the codes we used to design the tool. If someone wants to import it into an (electronic health record) or if someone wants to make a copy of the tool, we are giving everything away for free. It is not even copyrighted. Please use it.
If someone wants to take the code and bring it in-house because they don't want to post their codes on a website, we have given away in a prior paper the Excel file showing the motifs of every ICD-9 code and the database we used to actually derive the concept of convulsion. If someone has added additional mapping to GEMs they can take their own proprietary mappings and use this algorithm to say we are more convoluted or less convoluted than the government.
HLM: Why is the transition proving to be so difficult?
Boyd: Remember, we've got 500 EHR vendors, several hundred insurance companies, and ICD-9 is used for the medical necessity of service. So, most clinicians will just put down an ICD-10 code saying this is the medical diagnosis.
But if the information is wrong and your insurance company uses the incorrect mapping, we don't know what the insurance company is going to do. You may be able to defend the claim. We are just saying here are the hard codes, here is additional information. Make sure your coders are aware of it. Not everyone is going to be able to go through these 150,000 mappings and make sure everyone is clinically correct or even medically necessary.
Reacting to the vote, Ardis Dee Hoven, MD, president of the American Medical Association, said she was disappointed to see the legislation mired in "partisan politics."
On a 237–182 mostly party line vote, House Republicans on Friday passed a bill that would eliminate the Sustainable Growth Rate Medicare funding formula for physicians, and pay for it by delaying for five years the individual mandate to buy health insurance, a central pillar of Obamacare.
Earlier this week Senate Democrats had warned that they would not consider the amended House version of HR 4015, the SGR Repeal and Medicare Provider Payment Modernization Act. The White House had also threatened to veto any attempt to delay the individual mandate under the Patient Protection and Affordable Care Act. The two chambers are expected to extend a 17th temporary fix for the SGR, which otherwise expires on March 31 and slaps physicians with a 24% cut in Medicare reimbursements.
Ardis Dee Hoven, MD, president of the American Medical Association, said Friday she was disappointed to see the legislation mired in "partisan politics." The usually studiously nonpartisan physicians' association leader placed blame squarely on the House leadership.
"While the House has not been able bridge this partisan divide to date, it is time to move forward," Hoven said in prepared remarks. "We thank all members who spoke on the floor in support of a return to bipartisan negotiations and encourage the United States Senate to proceed in a timely and bipartisan manner to advance legislation in that body."
"Continuing the cycle of kicking the can down the road through temporary patches in the months ahead simply wastes more taxpayer money to preserve a bad policy of Congress' own making."
House Republican Conference Chair Cathy McMorris Rodgers (R-WA) defended the vote and said the House had "acted to make a number of much-needed improvements to our nation's broken healthcare system."
"Medicare's current Sustainable Growth Rate is anything but sustainable, and this legislation provides the certainty and security that our seniors—and the physicians who treat them— desperately need," McMorris said in prepared remarks. "By protecting people from Obamacare's unfair individual mandate tax for five years, we have extended the same relief to all Americans that the President has already given to businesses with big checkbooks."
Rep. Allyson Y. Schwartz (D-PA) accused House Republicans of "threatening seniors' access to their doctors in order to advance a political agenda that would undermine quality, affordable health coverage for millions of Americans."
"For months, we have worked in a bipartisan, good-faith effort to develop a permanent solution for Medicare's broken physician payment system that has threatened seniors' access to care for more than a decade. Finding common ground on a responsible way to pay for a permanent SGR fix was never going to be easy, but that doesn't mean it should be used to score political points," Schwartz said in prepared remarks.
This nonprofit, three-hospital health system in eastern Massachusetts has prioritized directing care to the most appropriate setting, which often means admitting patients to the community hospitals closest to their homes.
Richard W. Nesto, MD
executive vice president of Lahey Hospital
Community hospital leaders often express anxiety about the loss of independence and control that comes when their hospital is acquired by a larger health system. In many health systems the smaller hospitals are used as feeders to ship patients to the flagship hospitals.
That's not the way they do business at Burlington, MA-based Lahey Health. For the past two years the nonprofit, three-hospital health system has prioritized directing care to the most appropriate setting, which often means admitting patients to the community hospitals closest to their homes.
The arrangement appears to be working. Richard W. Nesto, MD, chief medical officer of Lahey Hospital & Medical Center, says Lahey Health, which will soon include the 229-bed Winchester Hospital, has thrived with its emphasis on appropriate care settings. Inpatient volumes are up at Lahey Hospital & Medical Center, Beverly Hospital, and Addison Gilbert Hospital, even though inpatient admissions are down in the rest of the Bay State.
The medical center is seeing fewer low-acuity patients because they've been redirected toward Beverly and Addison Gilbert, which can provide care at a lower cost and with greater convenience for the patients being treated closer to home.
At the same time, with fewer low-acuity patients, Lahey has freed beds to treat more complex patients who historically would have headed 20 miles south to get their care at Boston's prestigious academic teaching hospitals.
Nesto spoke with me recently about Lahey Health's appropriate care model. The following is an edited transcript.
HLM: Why the emphasis on appropriate care settings?
Nesto: We have deployed our specialists in as many as 10 community hospital settings as far away as 60 miles from here in an effort to delivery Lahey quality and expertise locally in community hospital settings. We've been doing this for 15 years or so in a number of specialties, always by invitation and never with the interest in stealing or absorbing patients back into Lahey. We want them treated in the appropriate location and returned to the appropriate primary care doctors in those settings.
Because we have two community hospitals locally and a third one to come on line, Winchester Hospital, we now have hospital partners and we can be much more nimble.
Some examples: We have patients now who come to our emergency department at the tertiary medical center in Burlington who reside in communities where our other partner hospitals are located. If those patients have a condition that can be treated just as well in a community hospital setting, we actually transfer them back to the community hospital.
This is a very novel idea because most academic teaching hospitals want to take on as many patients as they can to fill their beds. What we are doing is reversing the transfer process and patients are getting great care within our system at a lower cost to the plans and the patients and the Commonwealth of Massachusetts.
We are also actively telling our primary care practices surrounding the tertiary medical center to use local consultants and specialists who are on the medical staffs of our system community hospitals to keep care local. Before, we would encourage those primary care doctors to send their patients to the mother ship because we didn't have partner community hospitals.
HLM: How can you tell if your efforts are successful?
Nesto: The end result is that our community hospitals have the highest censuses they've had in years because of this redirection of care.
Community hospitals, particularly in a highly competitive market like eastern Massachusetts, unless they keep their census up are going to wither. That is counter-productive because then more and more care will go to Boston, where it is much more expensive.
I worked 25 years at Boston and Harvard teaching hospitals and at any one time probably 30% of the patients have conditions that can be treated just as well in a community hospital setting and the patient can stay close to the home.
We are introducing more specialists in Lahey community hospitals so patients don't have to migrate to Boston. They are getting procedures done in their community hospitals that they may not have been able to get before because we have sprinkled these hospitals with Lahey specialists. We really think our system is more than aspirational. In fact, it is working and we have the data to prove it.
HLM: How to you determine the appropriate care setting?
Nesto: Our community hospitals now are redirecting all of their transfers to us as opposed to Boston teaching hospitals. Because we are in constant dialogue with these hospitals, they have a better idea of what should be transferred and what should be held locally. And with the access to Lahey specialists and physicians on site they can retain more of these patients who formally where directed to tertiary care, which was a great inconvenience to the patients' families and a greater expense to the healthcare system.
There has been a 22% increase in the number of patients from Lahey primary care doctors who are admitted to Beverly Hospital who formerly would have gone to Burlington prior to the merger. That is a pretty robust increase in a community hospital census as a consequence of this merger.
The other evidence that this is working, the (Case Mix Index) of severity of illness is going up at our community hospitals, which means that sicker and sicker patients are being treated more and more locally and as long as the quality is good, which we measure through a variety of score cards, then that also means the system is working.
HLM: How do you determine what service lines you'll carry?
Nesto: The big ones we are concentrating on are neurosciences and neurosurgery, cardiovascular disease, cancer, and primary care. Now you can get a neurosurgical operation at Beverly Hospital where there was no neurosurgery before.
We are doing a lot of spine surgery that had to be shipped out before, but now patients are having it done there because we have a Lahey neurosurgeon there. We are doing a lot of cardiovascular implants at local hospitals, like defibrillators, and some cardiology testing that couldn't be done formerly without Lahey physicians and expertise.
HLM: What effect has this push for care settings had on inpatient volumes?
Nesto: For the first quarter of this fiscal year compared to last year, overall in the state of Massachusetts the inpatient census is down 6%. Outside of the top 10 hospitals, most hospitals are in double-digit declines. That is huge for a hospital year over year.
Our community hospitals have increased their censuses but it is not at the expense of Lahey because we are getting their tertiary work that they had formerly sent to four or five hospitals. Our census is about 94% and our CMI tops 1.9 for the past two months.
We have the highest case mix index in the state. So, we are caring for sicker and sicker patients and we have more and more patients in our beds. Beverly is caring for more and more patients, and frankly their CMI has gone up too.
It is really a shift in market share. We are full and Beverly is full because we are doing a better job of retaining patients and keeping them within the system, and somebody else has fewer patients. There is no question about that. The population is not expanding. Our marketing and communications plans are all focused on community-based care.
HLM: How do you burnish the Lahey brand with healthcare customers?
Nesto: There is pretty intense loyalty to community hospitals in this area. Both Beverly and Lahey have been in place for more than 100 years so they have a strong community identity. We have added to that. We haven't diluted it. We haven't changed the names of these hospitals. They are members of Lahey Health. They are marketing that they can do even more for their communities now since the Lahey merger. That has been our message.
You get some momentum in the community and the word travels fast that the hospitals are healthy. Most hospitals are announcing layoffs right now. When the public hears that a hospital is closing beds and laying people off, that doesn't serve people's confidence. We have not done that. We are busy. We are hiring people. That also is a positive statement to patients.
HLM: Where do you see Lahey in five years?
Nesto: We don't know where we are going to be next week with the movement of the players in this market. But our goal is to have four or five community hospitals within 50 miles of Lahey so that we can expand our current modus operandi. We also plan to develop a much bigger primary care base outside of the networks of those hospitals.
That may require us to go into southern New Hampshire or other places. Ultimately, the goal is to be big enough to have our own insurance product. When you have all of the resources in-house you can reinvest what you've made from giving better care. You can take whatever revenue you generate and you are responsible for your own bottom line. You can reinvest it in the system.
The churn rate for hospital CEOs fluctuated between 14% and 18% for a decade, but spiked to 20% last year, the American College of Healthcare Executives says.
One-in-five hospital chief executive officers churned through the job in 2013, a record rate of turnover, according to the American College of Healthcare Executives.
ACHE tracking data released this week put CEO turnover at 20% in 2013, the highest rate since ACHE began analyzing the numbers in 1981. In the decade before 2013 the turnover rate had fluctuated between 14% and 18% and was at 17% in 2012. ACHE's CEO turnover rates are based on leadership changes organizations report to the American Hospital Association.
Deborah J. Bowen, president/CEO of Chicago-based ACHE attributes the record-high churn to a combination of factors. "Turnover happens because people can leave for better positions, turnover happens when hospitals close, turnover happens when hospitals consolidate and changes are made in leadership," Bowen said in a telephone interview. "There are demographic reasons too, with people who are just retiring and exiting."
Bowen added that "there is a lot going on in the industry right now" and that some executives might not have the enthusiasm to contend with the sweeping changes mandated under the Patient Protection and Affordable Care Act, continuing Medicare reimbursement challenges, various performance measures, along with complex mandates around healthcare IT interoperability.
"We are seeing it reflected in the turnover," she says.
Bowen says she doesn't know if this high hospital leadership turnover is a temporary blip or the new normal. "I don't have a crystal ball about the future," she says. "We will have to see, but this is a challenging and dynamic time in healthcare, so obviously we are going to watch this with interest."
Either way, the turnover suggests that hospital leadership and trustees should evaluate their succession planning, she says. "Executives need to be thinking about not only the short-term problems they have today but the sustainability of the organization."
"If I were trying to take away the lessons learned here obviously boards and senior leaders want to pay close attention to succession planning and things like that because when you have a lot of churn in senior leadership that is not necessarily a good thing for hospitals. Any change management strategy usually takes a minimum of three and more like five years, and with tenure we are seeing the incremental range sliding down too. So if tenure is going to be about four years and that change management strategy takes about five years, then that could lead to more disruption than is ideal for long-term planning."
Alaska's 37% adjusted turnover rate for hospital CEOs was highest in the nation in 2013.
Lawmakers can't agree on a way to plug the $122 billion hole in the budget that would be created by the elimination of the reimbursement cuts and "chances are not great" for a permanent fix by the March 31 deadline, says the co-chair of the GOP Doctors' Caucus.
Congress likely will not find a permanent solution for the Sustainable Growth Rate funding formula before the deadline expires at the end of March, and will impose yet another temporary fix and re-address the issue later this year, a leading House Republican says.
U.S. Rep. Phil Gingrey, MD, (R-GA) co-chair of the 19-member GOP Doctors' Caucus, says there is widespread support in both parties and both chambers for ending the SGR Medicare reimbursement formula for physicians. However, he says lawmakers can't agree on a way to plug the $122 billion hole in the budget that would be created over 10 years with the elimination of the reimbursement cuts.
"By the end of the month I would have to say the chances are not great. That would require another short-term patch. But before the fall elections is what I am hoping for. There is a lot of work to be done between now and then," Gingrey said in a telephone interview.
Pressed by the American Medical Association and other physicians' associations to find a permanent fix, lawmakers had talked about finding common ground. However, momentum appeared to stall with word that House Republicans are expected this week to pass a bill that would pay for the cost of eliminating the SGR with a delay of the individual mandate under the Patient Protection and Affordable Care Act. Gingrey says he expects the bill will pass the Republican-controlled House.
Calls to the office of Senate Majority Leader Harry Reid, (D-NV), were not immediately returned Monday, but Democrats in the Senate are not expected to support any bill that tampers with the individual mandate.
As a result, Gingrey says, another temporary fix, the 17th such stop-gap measure since the SGR took effect in 2001, likely will be enacted to avoid the mandatory 24% cut in Medicare reimbursements that would otherwise go into effect when the deadline expires.
"It's just the clock. I am afraid there is not time," Gingrey says. "We are going to pass it in the House this week. It goes over to the Senate. The following week is a district work period, but two weeks from this week it could come back to us amended and then the conference would begin. But by then you're at the end of March and the patch only lasts until March 30. So obviously if we are going to mitigate, and clearly we on the Republican side and I would think the Democrats as well, don't want the doctors to take a 24% cut to their reimbursements to Medicare. They wouldn't stay in the game if they do."
Anything short of a permanent fix would be the latest in a long string of disappointments for the American Medical Association and other physician organizations that have complained for more than a decade about the SGR and the anxiety and uncertainty it creates. Last week, the AMA and more than 600 state and national physicians' organizations sent a joint letter to House and Senate leaders asking them for a permanent repeal before the end of the month.
AMA President Ardis Hoven, MD said in a statement Tuesday, "As we inch closer to March 31st without a permanent fix to the flawed SGR policy, the AMA is disappointed that some lawmakers may be abandoning a bipartisan, bicameral solution in favor of adding to a growing budgetary problem of Congress' own making. Another stopgap measure to brace Medicare's troubled payment system simply wastes more taxpayer money to preserve a bad policy."
The letter was sent as hundreds of physicians descended on Washington, DC, to take part in the AMA's annually national advocacy conference. In addition, physicians from across the country were asked to contact their members of Congress and urge them support the legislation, HR 4015 and S 2000, that repeals SGR formula and creates what the AMA calls "a pathway to developing and implementing new healthcare delivery and payment models to improve the quality and effectiveness of care."
Gingrey says that the House bill will move the process forward. What's important, he says, is getting into a conference committee with the Senate so that lawmakers can negotiate a solution.
"I am not going to get over the tip of my skis by saying what the pay-fors might be coming out of the conference committee," he says. "But we are very optimistic that we can get an agreement in conference and finally, after about 10 or 15 years of trying, to get rid of this flawed SGR formula [that] we can have a better payment system for our physicians so we keep them in the system accepting Medicare patients, which our precious seniors desperately need."
Connecticut's largest health system and Tenet will remain independent of one another, but would work together to improve clinical services and coordinate care and referrals at four hospitals in the state.
Yale New Haven Health System announced Thursday that it has formed a partnership Tenet Healthcare Corporation. The move comes as the Dallas-based for-profit hospital chain expands its footprint in Connecticut. Financial terms were not disclosed.
Yale New Haven CEO Marna Borgstrom says the blue-chip system, which is the largest health system in the state, and Tenet will remain independent of one another, but would work together to improve clinical services and coordinate care and referrals at four hospitals in Connecticut that Tenet is acquiring.
Those hospitals are: Waterbury Hospital, a teaching hospital in Waterbury, CT, Bristol Hospital in Bristol, CT, and Eastern Connecticut Health Network, which includes two hospitals in Manchester and Rockville, CT.
"We and Tenet are in the process of trying to put this in place and keep these hospitals as strong as possible," Borgstrom said in a telephone interview. "We can help in these communities where the medical communities want this to supplement the clinical resources that they have had trouble replacing. It is about keeping the appropriate amount of care local. It is not about bringing it all down to the academic medical center because right now it is imperative on all of us to ensure that care is given in the lowest-cost appropriate setting."
Borgstrom says discussions had been ongoing with Vanguard Health System about a possible collaboration before Tenet's $4.3 billion acquisition of Vanguard last year. The talks continued with Tenet.
"Opportunities like this are organic and they grow out of relationships and fundamentally there were some hospitals that were looking for an opportunity to become part of a system that we felt we couldn't meet through the Yale New Haven Health System. So, they began to talk to Vanguard [and] now Tenet," Borgstrom said.
"We have had relationships with these organizations and when they began talking with the leadership in Vanguard who we have also known for a long time they also talked with us and said 'this is in your neck of the woods. Is there an opportunity for us to do something together?' We said 'let's explore it' and that is how it evolved."
Yale and Tenet said in a joint media release on Thursday that the collaboration would "create a comprehensive healthcare delivery network in Connecticut, with the intention to expand into the greater Northeast region."
"Using the strengths of each organization, the partnership will enhance the efficiency and coordination of healthcare in the region by offering comprehensive clinical services to a larger geography," the two systems said. "Additional plans include creating a clinically integrated delivery platform with local physician groups and entering into value-based contractual relationships with employers and other payers of healthcare services."
Tenet Vice Chairman Keith Pitts said the agreement "capitalizes on the respective strengths of both organizations and will enhance the clinical care and the access to that care in the communities we serve. The partnership will bring improved clinical technologies, increased economies of scale, and capital resources to the hospitals, ambulatory care centers and physician practices that we will become affiliated with in the future."
Borgstrom says Yale New Haven "brings to the table a strong brand that brand reflects a commitment to a whole array of healthcare services including tertiary care services, medical education, and opportunities to work with physicians in different ways because we have a large and robust group of physicians not only on the fulltime faculty but in the community."
"Clearly what Tenet brings to the table is much deeper experience in integrating and enhancing community-based healthcare and these are hospitals that were in search of a variety of things from capital to certain kinds of transformational management experience," Borgstrom said.
"Tenet has great experience there. Together we can also build off of some experience with Vanguard and Tenet have in understanding what it means to take insurance risk and how to make that productive for all parties. But fundamentally, this is about preserving access to patient care, enhancing that access, and providing the right kinds of care in these communities."
As physicians convene for the AMA's annual advocacy conference, President Ardis Dee Hoven, MD, says she remains optimistic that Congress will pass legislation to repeal the Sustainable Growth Rate formula, despite the lack of a clear funding plan.
Ardis Dee Hoven, MD,
President of the American Medical Association
With Congress facing an end-of-the-month deadline to repeal the reviled Sustainable Growth Rate, hundreds of the nation's physician organizations on Wednesday intensified their calls for a permanent fix for the funding formula.
Ardis Dee Hoven, MD, president of the American Medical Association, said that more than 600 state and national physicians' organizations sent a joint letter to House and Senate leaders on Wednesday asking them to repeal SGR before the latest temporary delay lapses on March 31 and a mandated 24% cut in Medicare reimbursements kicks in.
The letter was sent as hundreds of physicians descended on Washington, DC, to take part in the AMA's annually national advocacy conference. In addition, physicians from across the country are being asked this week to personally contact their members of Congress and urge them support the legislation, HR 4015 and S 2000, that would repeal the SGR formula and create what the AMA calls "a pathway to developing and implementing new healthcare delivery and payment models to improve the quality and effectiveness of care."
Even with the clock ticking, Hoven told HealthLeaders Media Wednesday that she is optimistic that Congress will get the job done.
AMA: Momentum 'Gathering'
"We continue to be very enthusiastic about repeal," she says. "Clearly the momentum has been gathering over the last several months and we now have a piece of legislation with bicameral bipartisan support that has been supported aggressively by the physician community and has been met with great support by members of Congress on both sides of the aisle, which goes to the intent and energy that has been committed to this. The challenge we have now is that there is a time crunch."
"Sometimes they do their best work when there are deadlines facing them. There has been a lot of energy and effort put into this by members of Congress already. We are encouraging them to keep up the conversations and bipartisan work that they have demonstrated they can do on the policy piece of this. So there are great opportunities there, she said"
The legislation repealing SGR appears to have widespread and bipartisan support in both the House and Senate. Hoven said that Congress has spent $153.7 billion on 16 previous legislative patches to the SGR formula, far more than the Congressional Budget Office's $138 billion estimate for the cost of a permanent fix over 10 years.
Seeking Pay-Fors
Hoven concedes, however, that the challenge now is finding a way to pay for the repeal.
"The AMA understands there are diverging opinions about where the pay-for should come from," she says. "Congress has a large menu of pay-for opportunities that CBO has presented to them. We are simply now waiting to understand where these pay-fors will come from."
Nicholas Manetto, a healthcare policy consultant and director at FaegreBD Consulting, says it's difficult to determine whether Congress will be able to repeal SGR by the end of the month.
"That is the $64,000 question," he says. "There is a lot of agreement on the core policy and the provisions of the legislation, but now the biggest question out there is really what's the final price tag and how is it going to be paid for?"
While there are any number of ways to find cuts in the federal budget to pay for the SGR repeal, Manetto says the trick is to move quickly once a set of cuts are identified and agreed upon.
Another Patch?
"The longer your pay-fors sit out there exposed, the more you are like a sitting duck," he says. "You are going to give the opposition time to marshal and rally the troops."
Manetto says the chances of passing a permanent SGR repeal grow slimmer with each passing day, as members of Congress look to wrap up business and head home to run for reelection.
"The more time that goes on absent progress in that direction, the more likely you are going to need another temporary patch and then the question is going to be what will that look like," he says. "Will it be short term, or do they try to do something longer, and really how do you get anything done this year on the longer term?"
Hoven is not entertaining thoughts about potential contingency plans if this latest SGR permanent repeal attempt fails.
"Right now all we are going to talk about is SGR repeal," she says. "Clearly the opportunity exists to get this done. I believe strongly it can be done. Our job right now is to make sure that members of Congress understand the importance of getting this repealed."
A legal matter in North Carolina, concerning whether or not a state board is exempt from federal antitrust laws, could have far-ranging effects, which explains the interest in the case from the AMA and other provider associations.
The U.S. Supreme Court said this week that it would review an antitrust ruling against a dentistry board in North Carolina in a case that could have broad implications for state regulatory boards overseeing professional activities, including those of physicians and hospitals.
The North Carolina Board of Dental Examiners had been the subject of an administrative complaint by the Federal Trade Commission in 2010 for violations of the FTC Act after the board banned non-dentists operating in mall kiosks and other venues from performing discount teeth-whitening procedures.
A federal district court rejected the board's initial complaint. Last spring the U.S. Court of Appeals for the Fourth Circuit sided with the FTC and noted that the dental examiners board was composed of dentists who stood to gain financially by restricting the practice.
"At the end of the day, this case is about a state board run by private actors in the marketplace taking action outside of the procedures mandated by state law to expel a competitor from the market," the appeals court said in its ruling.
The American Medical Association disagreed with the appeals court and this week called the FTC action an "infringement on states' powers." The AMA filed a friend-of-the-court brief with the American Dental Association and 12 other provider professional organizations that support the dentistry board.
AMA President Ardis Dee Hoven, MD, said that the decisions of state regulatory boards "meet exemption criteria from federal antitrust challenges under the 'state action doctrine' created by the U.S. Supreme Court."
"The American Medical Association is grateful that the U.S. Supreme Court has agreed to re-evaluate a case in which the federal government is interfering with the ability of state regulatory boards to protect public health and safety," Hoven said this week in prepared remarks.
"The decision in North Carolina State Board of Dental Examiners v. Federal Trade Commission allows a federal agency with no particular knowledge of medicine or dentistry to strip authority away from experts who are charged by a state legislature to shield patients from unlawful practice."
"State regulatory boards acting to fulfill the directives of state law should be free to make decisions on public health issues without fear of second-guessing under the federal antitrust laws," she said.
However, Jay L. Levine, a Washington, D.C.-based healthcare antitrust lawyer and a partner at Porter Wright Morris & Arthur LLP, says the FTC has built a strong case that has already been affirmed by lower courts. "If I had to place a bet, it would be on the FTC winning," Levine told me. "The courts have stressed that exemptions are narrowly applied. The FTC has a fair argument and I don't think the state action doctrine is one that the Supreme Court is looking to expand."
A ruling in favor of the FTC could have far ranging effects beyond the ability to limit teeth-whitening procedures in mall kiosks, which explains the interest in case from the AMA and other provider associations.
"There are a number of quasi governmental bodies that license professions that are made up of the professionals themselves. So, this is not merely teeth whitening," Levine says. "The question is: If you have boards like the North Carolina Dental Board made up of essentially private citizens who are in the professions, who are otherwise competitors in the given profession, and they enact rules and regulations that keep out would be entrants, is that conduct subject to antitrust laws or not? In a number of professions, and especially in healthcare, that is going to be a very big deal."
The board of dentistry case marks the second time in less than two years that the high court has taken on a case involving antitrust issues within healthcare. In February 2013 in FTC v. Phoebe Putney Health System, Inc. a unanimous Supreme Court ruled that the appeals court had "loosely" interpreted a Georgia law cited by Phoebe Putney to justify a merger that would give the consolidated health system control of about 85% of the market in the Albany, GA service region.
Levine says the issues driving the two suits are different, but related, and that could bode well for the FTC.
"The question in Phoebe Putney was 'was the enabling legislation that created the hospital authority sufficiently explicit in that it allowed the hospital authority to essentially authorize anticompetitive acquisitions?'" Levine says.
"The 11th Circuit Court of Appeals had said that the legislation authorizing the hospital authority essentially was broad enough to contemplate the anticompetitive consequences of it acting on its authority. The Supreme Court basically said that is too loose of a standard and that essentially exemptions to the antitrust laws are disfavored."
"The FTC has a very powerful argument, and the fact that the Supreme Court went out of its way in Phoebe Putney to deliver the message that exemptions are disfavored doesn't help the North Carolina Dentistry Board."
While new drug shortages impacting patient care have lessened, the supply chain remains vulnerable to drug shortage 'spikes', says an executive from the group purchasing organization, Premier.
Drug shortages remain widespread and hospitals spent nearly $700 million over three years to cover the additional costs of finding more expensive generic substitutes, according to a survey and analysis from the group purchasing organization, Premier.
"It's clear that this remains to be a very serious problem that continues to impact patient care and it creates major challenges for our healthcare system and other providers," Premier COO Mike Alkire said on a conference call with media last week.
The Premier survey of 124 "pharmacy experts" conducted in December 2013 and January 2014 found that 90% of respondents experience some sort of drug shortage within the last six months. Alkire says those results are similar to those found in a Premier survey conducted in 2010 at the height of the drug shortage crisis.
"Although recent reports show that new drug shortages have decreased, longer-standing, ongoing drug shortages remain an issue," he said.
"The supply chain is also vulnerable to shortage 'spikes' that significantly disrupt patient care and hospital operations. To remedy these types of shortages, including one currently affecting the supply of intravenous solutions, we need a 'SWAT team' mentality by all, including the FDA, the manufacturers, the distribution channel, the GPOs and the hospitals. FDA in particular plays a critical role given their role in approving the availability of additional drug supplies."
A Premier analysis found that U.S. hospitals spent nearly $230 million a year between 2011 and 2013 to pay for the additional costs of generic substitutes for shortage drugs.
"This is the estimated additional acquisition cost for hospitals for back-ordered products. The total economic impact is likely much higher since the figure excludes drugs purchased from off-contract distributors, more expensive purchases of therapeutic alternatives and indirect costs such as labor," Alkire says.
The survey found that the most often cited shortage drugs affecting patient safety and costs were:
Electrolytes, intravenous (IV) fluids and parenteral nutrition solutions.
Cardiovascular agents used to treat heart disease and other cardiac conditions, such as nitroglycerin IV solution.
Surgical agents used for surgery preparation/anesthesia and sedation, such as propofol.
Fewer Shortages
The survey results suggest that the prevalence of shortages affecting patient care appears to be decreasing. Compared to 2010, Alkire says the number of respondents experiencing between one and five drug type shortages increased by 30%, but that those experiencing six or more drug type shortages decreased 26%.
In addition, 35% of respondents said they did not experience a shortage that could have delayed or cancelled care, a two-fold improvement from 2010. Respondents experiencing six or more occurrences decreased 46% from 2010.
"Part of the reason why shortages have lessened is because providers have become more skilled and capable of handling severe supply chain disruptions. They are implementing more effective programs to cope with shortages," Alkire says.
"Among the survey results 90% said that they've added back up inventories or adjusted par levels for critically important categories, 87% increased communication to internal stakeholders, and 83% implemented restrictions or rationing for short-supply drugs which obviously added to their overall costs of care," he said.
The delay in the employer mandate "causes a timing mismatch between the benefit of fewer uninsured patients and the negative impact hospitals face related to reduced payment updates and cuts to Medicare and Medicaid DSH," says Moody's Investor Services.
Postponing the Affordable Care Act's mandate for mid-sized employers for a second time is a "credit negative" for not-for-profit hospitals because it delays expanded coverage for previously uninsured patients and the corresponding reduction in bad debt and charity care, Moody's Investor Services says.
The delay announced this month by the Obama administration gives companies with 50 to 99 employees until 2016 to offer insurance for their employees of face fines. The 2010 law originally required mid-sized employers to provide coverage beginning this year or face a $2,000 fine for each employee. The Obama administration last year delayed the employer mandate until 2015.
"The employer mandate is vital to hospitals because it offsets the costs of the ACA, which include agreed-upon cuts to Medicare Disproportionate Share money and existing rate cuts that are hardwired in the annual Medicare updates," Moody's said.
"Hospitals are facing more than $300 billion in reductions to Medicare payments through 2019 as a result of healthcare reform. This loss of revenue is meant to be balanced by the reduction in uninsured patients. The delay in the employer mandate causes a timing mismatch between the benefit of fewer uninsured patients and the negative impact hospitals face related to reduced payment updates and cuts to Medicare and Medicaid DSH. Hospitals most negatively affected by the delay in the employer mandate include those with a high percentage of their revenues derived from Medicaid, which will be subject to the highest DSH cuts without the benefit of fewer uninsured patients and reduced bad debt."
Shawn Gremminger
director of Legislative Affairs for America's Essential Hospitals
The delay irked the American Hospital Association, which called the move "yet another setback for those uninsured individuals who will not gain coverage through their employer. With the level of coverage envisioned when the ACA was originally passed not being met, it is critically important to mitigate some of the reductions included in the ACA, such as elimination of the Medicare Disproportionate Share Hospital program cuts for the next two years. This will provide relief to hospitals who continue to provide care to large numbers of the uninsured until coverage expansions can be more fully realized."
Shawn Gremminger, director of Legislative Affairs for America's Essential Hospitals, echoed the AHA's comments, but said that some concessions from Congress may soften the blow for safety net hospitals.
"Medicaid DSH cuts were scheduled under the ACA starting in fiscal 2014 and going out into the future. We were able to secure a change to that, which would be a one-year elimination of the cuts in 2014. Those cuts are no longer there. The 2015 cuts are delayed by a year so they are added on to the cuts that included in fiscal 2016," he says. "Basically, the good news is that at least in the short term, for the rest of this year and into fiscal 2015 we are not going to see any cuts to DSH."
"We think that will be helpful when it comes to helping to cover uncompensated care for a number of reasons. The biggest reasons that we see higher uncompensated care than we originally expected was the partial Medicaid expansion. There was an assumption from the very beginning that we would see a 50-state Medicaid expansion. Now that that is not happening we are literally looking at millions and millions of people who were assumed would be covered but who are not."
The delay in the DSH cuts gives safety net hospitals some breathing room. However, Gremminger says that starting in 2016 hospitals must brace for about $1.2 billion in cuts in federal spending.
"A lot is going to happen between now and October 2015 when those cuts go into effect. Our association is going to have to continue to fight this fight," he says.
In addition, Gremminger says, hospitals are grappling with the 2% cuts mandated by sequestration that will remain in effect until 2021. "Luckily, our sequestration exempted Medicaid from those cuts and Medicaid is a huge payer for us because we disproportionately treat low-income people," he says.
"But we are very concerned about the affect of sequestration. Two percent doesn't sound like a lot but when you are looking at safety net hospitals which last year had margins that were around or less than 2% it doesn't take a whole lot of cuts to get us right back down to zero and there is a significant portion of our membership that lost money in the last couple of years. There are only so many cuts that you can take."
