Contending that hospitals taking advantage of mandated lower drug prices should be held accountable for the levels of charity care they provide, a group funded by the pharmaceutical industry is getting pushback from two major hospital associations.
A group funded by the pharmaceutical industry wants Congress to review the 340B outpatient drug discount program to ensure that hospitals aren't gaming the system.
The Alliance for Integrity and Reform of 340B says in a report out this week that "a substantial portion" of hospitals that have enrolled in the 340B program don't provide enough charity care to justify their discounts and may not be living up the spirit and intent of what Congress envisioned when the program was created in 1992.
AIR 340B spokesperson Stephanie Silverman says her group does not want to see the 340B program abolished, but does believe that hospitals taking advantage of the mandated lower drug prices should be held accountable for the levels of charity care they provide.
"When a program expands well beyond its original intent, there are legitimate questions about sustainability. For hospitals that are doing the right thing, we don't want to jeopardize their program," Silverman said.
"The concern is for those that don't want to be on the hook for colleagues in the industry who are not deploying the resources appropriately. There is always a threat, which we are not advocating, of throwing the baby out with the bathwater. We are trying to define where the bathwater is."
The AIR 340B study found that:
More than two-thirds of hospitals that receive 340B drug discounts provide less charity care as a percentage of patient costs than the national average for all hospitals, including for-profit hospitals which do not qualify for 340B.
For 24% of 340B hospitals charity care represents 1% or less of the hospitals' total patient costs.
Only 22% of 340B hospitals provide 80% of all charity care delivered by 340B DSH (disproportionate share) hospitals.
Drug purchases through the 340B program will almost double, from $6 billion in 2010 to $13.4 billion by 2016, a cost which will be borne by drug makers.
Silverman says the 340B program lowers outpatient drug costs for participating hospitals on the presumption that they will help vulnerable, uninsured patients but that there are no restrictions on how hospitals spend the revenues generated if they charge both insured and uninsured patients higher prices than the 340B discount.
That contrasts with requirements on other providers in the 340B program who must show that they provide services to vulnerable populations and that they reinvest the revenues into specific services for their vulnerable populations.
"What we would like to see done is for Congress to do a full examination of appropriate eligibility criteria," Silverman says. "We want to be partners in that conversation with other stakeholders. We also believe there needs to be substantially more oversight by regulators and more requirements for accountability among hospital participants on how the funds are deployed and whether or not they are reaching their intended beneficiaries."
Hospitals Push Back
AIM 340B's claims have been hotly disputed by the hospital lobby.
Linda Fishman, the American Hospital Association's senior vice president for public policy analysis and development, told me in an email exchange that the AIM 340B report "ignores the fact that the 340B program enables hospitals to provide essential healthcare services to the nation's most vulnerable populations."
"This vital role 340B hospitals play in their communities cannot be boiled down into a few data points derived from publicly reported information such as the Medicare's Cost Report S-10 worksheet; it is found in the programs and services these 340B hospitals provide every week, every day, every hour. Charity care alone does not account for the myriad programs and services that hospitals provide, which are tailored to the needs of their own unique community," Fishman wrote.
"The more important fact is that 62% of all uncompensated care provided by our nation's hospitals is provided by 340B hospitals. Uncompensated care for these hospitals includes sponsored charity care programs to assist patients seeking care, as well the unreimbursed care provided to patients after care is rendered. Half of all 340B hospitals provide care in rural areas with more than 41% designated as Critical Access Hospitals."
Beth Feldpush
Senior Vice President, Policy and Advocacy, for America's Essential Hospitals
"The 340B program generates valuable savings on outpatient drugs for these eligible hospitals to reinvest in community programs such as free vaccines, mental health clinics, community dialysis programs or free or reduced priced prescription drugs. To qualify for the 340B Drug Pricing Program, hospitals must serve a disproportionate share of low-income and uninsured people in their communities or be critical access hospitals providing essential services to their rural communities. In addition, these hospitals must provide services to low income populations that do not qualify for Medicaid or Medicare."
'Consider the Source'
Beth Feldpush, senior vice president, policy and advocacy, for America's Essential Hospitals, says anyone reading the AIM 340B report should "consider the source behind it."
Feldpush says a 2011 report by the Government Accountability Office found that that 340B program was fulfilling the program obligations. "To me that says the program really is benefitting patients and giving hospitals and providers the ability to provide drug and other services to patients that they otherwise would not be able to do if the 340B program was not in place."
However, the GAO report also validates concerns raised by AIM 340B. Federal auditors called the Health Resources and Services Administration's oversight of the 340B program "inadequate" and overly reliant on "self policing to ensure compliance."
"For example, the agency does not periodically confirm eligibility for all covered entity types, and has never conducted an audit to determine whether program violations have occurred," the GAO report said. "Moreover, the 340B program has increasingly been used in settings, such as hospitals, where the risk of improper purchase of 340B drugs is greater, in part because they serve both 340B and non-340B eligible patients."
The report continues, "This further heightens concerns about HRSA's current approach to oversight. With the number of hospitals in the 340B program increasing significantly in recent years—from 591 in 2005 to 1,673 in 2011—and nearly a third of all hospitals in the U.S. currently participating, some stakeholders, such as drug manufacturers, have questioned whether all of these hospitals are in need of a discount drug program."
Feldpush concedes that safety net hospitals are frustrated by the relatively "informal" administration of the program.
"We look at Medicare and Medicaid and those programs are run by the agency giving guidance to hospitals through formal rule making processes and through codified regulations. The 340B program has been largely run through informal guidance. HRSA has used things like—and I am not making this up, 'frequently asked questions' posted on its Web site to provide official guidance on the program."
"That has been a challenge for hospitals," she said, "because they are by their nature highly regulated and they do want to make sure that they are following the program in the right way. So, it's very hard to make sure that if you are following the program guidance to a 'T' without that formal rulemaking process."
HRSA is now reforming its rulemaking process to include formal notice and comment periods and those reforms should be made public this summer, which Feldpush says "is very much a good step forward."
Lobbying efforts by community hospital chain Steward and a labor union take on the Boston-based teaching hospitals.
A new report out this week details a "vicious cycle" of inequality in healthcare financing in Massachusetts that has created a "rich get richer" caste of prosperous Boston-based teaching hospitals that drive up costs at the expense of community hospitals and low- and middle-income families.
The report, Healthcare inequality in Massachusetts: Breaking the Vicious Cycle, was commissioned bySteward Health Care System LLC, which operates 11 community hospitals in Massachusetts, and 1199 SEIU United Healthcare Workers East. The labor-management pair founded a lobbying organization, Healthcare Equality and Affordability League (HEAL), to press their argument.
"There tends to be a fairly high usage of teaching hospitals for more routine services in Massachusetts than in other states. That is partly one of the reasons why the costs are fairly high in Massachusetts," says lead author David E. Williams, a consultant with Health Business Group.
"We have some world-famous and renowned hospitals and physicians in Massachusetts and they are rightly seen as key economic drivers for the whole state economy. Patients like to go to these providers, and traditionally the health plans have supported that. It's just a matter of those larger famous institutions using their brand to be able to do the kind of business they want and people wanting to go there."
Williams says many of his findings have already been well-documented by state government and the news media. He says the fact that the points raised in the report support the views of Steward and other community hospitals does not invalidate the findings.
"What the report really does in terms of new ground is ask 'what are the real implications of this for the Commonwealth?' If you look at from the hospitals' and hospital workers' standpoint, it relates to them. But also we are focusing now in Massachusetts on the idea of cost containment and trying to grow the costs at the rate of the overall growth of the economy. This starts toward forming the debate about how you do that. Do you just accept the status quo or is there a change in the mix that needs to be considered?"
The report found that:
"The rich get richer"because the highest-cost hospitals attract a greater proportion of patients with commercial insurance and the higher reimbursement rates than Medicare and Medicaid.
Medicaid managed care organizations that contract with the state are perpetuating the hospital reimbursement inequities seen with commercial payers. Public data show that Medicaid MCOs reimbursements for Boston teaching hospitals are more than 40% higher than for community hospitals.
"Patient migration"for routine care from community hospitals to high-cost Boston teaching hospitals increases total medical costs and contributes to higher premiums for all people with commercial plans.
"The poor get poorer" as community-based hospitals are disadvantaged by larger numbers of inadequately reimbursed Medicaid patients and lower commercial payment rates for their remaining commercially insured patients.
Middle- and low-income communities subsidize the healthcare of people in wealthier towns. Higher-income communities generate greater medical expenses per person than lower-income communities but these costs are spread across geographies in the form of higher premiums for everyone.
Adam Powell, a healthcare economist and president of Boston-based Payer+Provider Syndicate, says the report's findings are "unsurprising" considering who paid for it. Nonetheless, he says community hospitals have a legitimate beef.
"Teaching hospitals and community hospitals have different cost structures, as teaching hospitals engage in activities which are not revenue-generating, which they must fund through both higher payments and grants," he says. "That being said, Chapter 224 does lock in maximum growth rates for institutions, reducing the ability of community hospitals to grow their reimbursement rates faster than teaching hospitals. Teaching hospitals are able to negotiate higher rates with insurers because patients often prefer them, and it can be difficult to sell a health plan without including them. In 2000, Tufts Health Plan attempted to discontinue providing access to Partners hospitals, and ultimately reversed its decision after a negative consumer reaction."
The report recommends:
Reducing disparities in hospital reimbursement. The state's cost growth benchmark should be adjusted to account for providers' relative price differentials, requiring high-cost providers to hold cost growth below the benchmark as a first step in addressing the wide variation in reimbursement.
Consider providers' payer mixes when setting Medicaid and commercial insurance reimbursement Rates. Healthcare providers that care for a high percentage of Medicaid patients should be compensated for Medicaid underpayment through higher Medicaid and/or commercial insurer reimbursement rates.
Implement a Medicaid accountable care organization. The state should use its $13 billion purchasing power to immediately implement a Medicaid ACO program, similar to the Medicare Pioneer ACO program, which rewards quality and cost containment.
Encourage insurance companies to design plans that reward using lower-cost community hospitals.
Powell says some of these recommendations may not be feasible. "Payers negotiate to serve their members' interests. It is unclear why a commercial payer would voluntarily increase reimbursement rates for institutions with many Medicaid patients unless compelled to do so," he says. "Furthermore, these rate increases would likely result in higher premiums for members of the health plan in question."
Other aims of the report and study sponsors may already be happening, however. "Health plans are already designing narrow network plans that offer limited provider choice in exchange for lower premiums. For instance, Fallon Community Health Plan offers a narrow network plan focused on Steward providers," Powell says. "As these plans are already on the market without additional government encouragement, I do not see an additional reason to advocate for them."
Healthcare leaders and community leaders who aren't actively working to shore up funding for community health centers stand to damage a valuable primary care resource and the vulnerable population it serves.
Community hospitals, critical access hospitals and other safety net and primary care providers are challenged enough just keeping the doors open and the lights on in this era of reduced reimbursements and narrowing bottom lines. These providers could be excused if they were to adopt an "everyone for themselves" attitude when it comes to pleas for more funding.
Fortunately, most of the frontline providers I've spoken with over the years understand that no successful provider is simply an island of care cut off from the other providers in the community. There has to be coordination and cooperation among providers to improve community health.
That emphasis will only intensify in the coming years with the evolution of population health, the continuing shortage of skilled clinicians, and the expectation that providers will have to do more with fewer resources.
With this in mind, hospital leadership would be well advised to reexamine their relationships with and support for their local community health centers.
Specifically, Federally Qualified Health Centers face a 70% reduction in mandatory funding along with potentially other discretionary cuts as an election-year Congress thumbs through the budget. Funding reductions of that magnitude would shutter many health centers, or at least force staff layoffs and reduce services at a time when demand for care is growing.
Dan Hawkins, senior vice president for policy and research at the National Association of Community Health Centers, believes that when community health centers provide effective and coordinated primary care everybody wins:
Patients get better care
Private practice physicians aren't constantly pressed to provide charity care or extended on-call hours
Hospitals' uncompensated care caseloads are reduced and they don't get dinged for readmissions
The public sees lower healthcare costs
"For all of those reasons health centers are good partners to other healthcare providers in their communities. They can help them better organize care and control costs and improve health outcomes," Hawkins says.
Hawkins says the Patient Protection and Affordable Care Act will extend healthcare coverage to millions of people. However, he says that the PPACA by itself will not address the challenges that tens of millions of people in this country have when they attempt to access healthcare. A report released this week by NACHC estimates that 62 million people nationwide have no access to primary care because of a shortage of such physicians.
Some basic stats on those affected:
43% are low-income
28% live in rural areas
38% are racial/ethnic minorities
The vast majority of these medically disenfranchised Americans actually have insurance coverage; 22% rely on Medicaid and 58% have other insurance.
NACHC, which represents more than 1,200 FQHCs in every state and the territories, holds its national conference this week in Washington, DC. Their priorities are to call on President Obama and Congress to fix the "primary care cliff" and to extend mandatory health center funding for another five years, enabling health centers to reach 35 million patients by 2020.
FQHCs now serve about 22 million people at more than 9,000 sites and NACHC says the centers save $1,263 per patient per year because patients have access to timely and appropriate care. When the expected upsurge in demand for primary care kicks in NACHC says health centers could generate up to $24 billion a year in savings.
But to generate that savings and provide the access, Hawkins says, health centers have to be properly funded and they have to be fairly reimbursed by third-party payers.
Hawkins says community health centers would greatly appreciate any help that local providers can give in making the case for continued funding of FQHCs. "As civic and community leaders many in hospital leadership can speak to their elected officials and encourage them to support the continuation of funding for health centers," he says.
"That is what is going to keep those health centers functioning well in their community, and even allow them to reach and serve more of the population, among those who will be gaining coverage and who don't have a regular source of care today, and for those who will be left behind for whatever reason."
"We know that the majority of the 30 million Americans who will remain uninsured even after reforms are fully implemented are folks who by and large will be uninsured simply because they cannot afford the premium costs of insurance coverage. Only a small portion will be uninsured because they are undocumented. The vast proportion will be too poor to afford insurance coverage."
We all know what will happen if funding dries up for community health centers. They will close, and access to primary care will get that much harder, especially for the poor and most fragile people in our poorest and most isolated communities. These people will delay care until it becomes so serious that they'll have to use the emergency room for episodic relief.
They'll get their care in the most expensive setting, and then get discharged back into their environment with no one coordinating their recovery or ongoing care, or creating any sort of sustained prevention or disease management plan. These people will almost assuredly end up back in the emergency room, assuming they don't die first.
It's time for providers everywhere to speak in support of community health centers. Their work is too important. They need your help and you need theirs.
In our November Intelligence Report, 88% of healthcare leaders indicated that their organization's executive compensation structure needs enhancement to attract, retain, and engage leaders. What are some changes your organization has implemented recently or is exploring along these lines?
Michael D. Williams
President and CEO
Community Hospital Corp.
Plano, TX
On incentive compensation. The compensation committee of the board adopted a philosophy two years ago that says we will target the 50th percentile for executive compensation cash and, more important, the 75th percentile for total cash compensation. Inherent in that is an expectation that there is going to be at least a 25% cash incentive compensation payment. That is not just for the executives or the CEO; that is across the managerial staff of both the corporate and the hospital offices.
On competitive recruiting. Boards in the not-for-profit world have to understand that, while their compensation structures can't necessarily be the same as [those] with the investor-owned segment, there still has to be some ability to be competitive to recruit. We are seeing more individuals recruited with business acumen coming from the investor-owned sector to the not-for-profit sector. About 70% of our executive team has worked in the investor-owned sector. What we are finding is, to recruit the executive talent that we need ... we are looking into the investor-owned sector for those individuals who want to marry mission and margin, and we are having much success in bringing them over in competitive pay fashions, but out from under the pressure of quarterly performance.
On retaining talent. Compensation is but one factor in addressing turnover. Much more important than compensation is culture. One of the reasons we are seeing individuals jump from organizations is that, although the compensation package is attractive, the culture is not where they want to find themselves.
Kenneth S. Lewis, MD, JD
President and CEO
Union Hospital
Elkton, MD
We are one of 10 hospitals in Maryland that are under a unique reimbursement model called Total Patient Revenue. This reimbursement model rewards the transition to value-based care delivery. Our board of directors has established goals for the management team that support the transition to this new model.
Also, our board has been more than comfortable allocating financial resources for coaching and development of the talent we have here. That is not just for programs to develop traditional areas of expertise but to improve our ability to develop the relationships and skills needed to function in a new environment.
As one of the few remaining independent community hospitals in our region, we have had many conversations about affiliations or mergers. For the time being we believe that we are best off with an affiliation model that maintains our independence. A severance package was developed for change and control for almost all executives on the senior executive team. That also provides some degree of reassurance. The package encourages leadership continuity if there is a merger. Eligibility for payment and the severance model would occur if an executive experiences significant change in the scope of his or her responsibilities or compensation. It has worked out well in promoting some degree of comfort.
Denny DeNarvaez
President and CEO
Wellmont Health System
Kingsport, TN
There is an interest in creating more at-risk compensation than there has been in past years. It's not that we haven't had strong at-risk compensation, but it wasn't necessarily tied directly to the idea that if you create something that is helping physicians and the facility fiscally and qualitatively that you should be rewarded.
This industry now is every bit as complex as any entrepreneurial industry. So how do you attract talent? We have just started to have that conversation. The other issue we have talked about is, how do you retain talent at a time when there is so much unknown?
We use three different surveys to peg our compensation and make sure it is market driven. It is a very defendable position.
We have to run our facilities with strong folks. We have always been proud of when you get the best and brightest talent, you don't need 10 of them. You can take one good executive and do what others do with four and five of them. That we have proven in our cost of care. It's not so much per se what we are paying one individual but what is our cost of compensation in total and how are we managing that. And when we hit on those markers, we hit best practice.
Joseph Pepe, MD
President and CEO
Catholic Medical Center
Manchester, NH
The incentives were once based on personal goals, and we felt that the best way to get a team approach and everyone rowing in the same direction would be that everyone has to be responsible for team goals. Those team goals used to be a small percentage. Now we have flipped that and the team goals are 75% and the individual goals are only 25%. So even though you may be in finance, that quality goal is very important to you because that is part of your incentives, and vice versa.
Because of this, we have seen the silos coming down and now when you go into interdepartmental meetings, you see people from five or six different departments all working together. Everyone is pulling and pushing for everyone else because if one person fails, we all fail, and if one person does well, we all do well.
We are focusing on the value metrics that we are going to be penalized on with CMS—readmissions and certain outcomes along with patient satisfaction—rather than some other value metrics that we are not getting penalized on. This change is going to take place; some quickly, some moderate, and some will be a little bit more long term. The trick is to know which is which.
Two advocates for public health want healthcare workers trained to be "structurally competent" in basic economics, urban infrastructure, and other societal factors that can negatively impact patients' health.
Jonathan Metzl, MD
UPMC/Director of Vanderbilt University's Center for Medicine, Health and Society
Physicians must become vocal and assertive political advocates for their patients and possess "structural competence" to identify and address social ills that harm public health. Teaching that structural competence should be part of pre-med and medical school curriculum, two public health advocates say.
In an essay published this month Social Science and Medicine, psychiatrists Jonathan Metzl, MD, director of Vanderbilt University's Center for Medicine, Health and Society and Helena Hansen, MD, of New York University, say it's clear that people's health and wellness can be linked to their zip codes as much as their genetic codes. As a result, they say, physicians need to understand and identify the "social factors" that can make their patients sick.
"The impetus behind this project is that the voice of medicine in standing up for better infrastructure for people has been absent," Metzl said in a telephone interview. "We are not asking anyone to advocate any particular position. We are saying that since we know that social factors can cause illnesses, medicine needs to be more vocal and using its moral voice to stand up for improving social infrastructure factors."
Metzl and Hansen want healthcare workers trained to be "structurally competent" in basic economics, urban infrastructure, and other societal factors that can harm health. They two psychiatrists say that training could be part of pre-med undergraduate curriculum or included in employee orientations at hospitals and clinics.
Helena Hansen, MD
New York University
"Doctors are well trained to address the individual needs of patients. We train doctors about communication with patients, diagnosing the individual patient in front of them in the exam room," Metzl says.
"But increasingly we know there are medical conditions that are caused by a host of social and economic problems. We know that growing up in a poor area is bad for someone's brain development. It causes a host of psychiatric and other mental conditions. We know that dietary factors are linked to diabetes that is worse off in low-income areas where there are no grocery stores. The evidence mounts every day that infrastructures, economic issues, [and] wealth imbalances are all causing medical conditions. The point we are trying to make is that doctors need to be aware of the ways these social factors can impact people's lives and livelihoods."
To gain structural competency, Metzl says physicians must first adopt an attitude of "structural humility" and accept that they may not understand many of the issues confronting their patients and must therefore be willing to collaborate with community activists, local political leaders and the patients themselves.
Metzl says the idea of adopting structural competency courses as part of medical school or pre-med education is growing in popularity among medical students.
"Medical students are seeking us out for this particular kind of stuff. We are seeing a lot of desire among socially active medical students for this kind of training. They are frustrated they're not getting it," he says. "It is incumbent upon medical schools to listen to that. Curriculum is very tight but medical students are demonstrating that there is a need for this kind of training. The market bears that out. When medical students graduate and enter the real world, training in health economics are pretty important for the careers they are pursuing."
Metzl says becoming a political advocate on behalf of patients does not mean that a doctor has to adopt a particular political philosophy such as liberal or conservative or Democrat or Republican.
"Caring about the infrastructure and the health of people in relation to the health of their communities, it is sad for me that that would be a liberal or a conservative issue. If we really care about health, the data is pretty clear about what sorts of things people need to do to live healthy lives," he says.
"Any responsible democracy should advocate for those positions no matter what side you're aligned with. Whether or not this curriculum gets picked up by every medical school medicine itself needs to be making that argument much more loudly. Medicine needs a vocabulary for saying that infrastructure and access to healthcare are not a liberal or conservative issue. It's a societal issue. Part of what we are trying to do through this is develop a new language for medicine itself to take up some of these issues. Medicine has been far too quiet."
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."
