More than $1 billion in Medicare savings projected as CMS and Maryland state officials sign a five-year agreement to expand the state's value-based payment system into non-hospital settings.
The federal government has given the go ahead for a renewal and expansion of the "Maryland Model," which will take Medicare value-based care beyond hospital walls to include long-term and community-based care, and mental health services.
"The new Maryland Model will expand healthcare access and affordability – and ultimately improve quality of life – for Marylanders, especially those with chronic and complex medical conditions,” Maryland Gov. Larry Hogan said in a media release.
With the existing all-payer model up for renewal at the end of 2018, the Centers for Medicare & Medicaid Services required Maryland to build a new model that encompassed all of the healthcare that patients receive, both in the hospital and the community, including long-term care and mental health services.
The five-year contract signed this week by state and federal officials takes effect on January 1, 2019, and is expected to provide an additional $300 million in savings per year by 2023.
The expanded model will:
Invest resources in care that is focused on the patient and enhance primary-care teams to improve individual patient outcomes;
Set a range of quality and care improvement goals and provide incentives for providers to meet them;
Concentrate resources on population health goals to help address opioid use and deaths, diabetes, hypertension, and other chronic conditions;
Encourage and facilitate programs focusing on the needs of Medicare recipients across geographic settings and other key demographics.
The current Maryland All-Payer Model Contract started on January 1, 2014, and was set to expire on December 31, 2018. Maryland officials say the current model has already saved Medicare more than $586 million through 2016, compared to national spending, through reduced readmissions, and lower growth in hospital per capita costs.
The private equity firm says it has heard nothing from leadership at Athenahealth, one week after Elliott made a cash offer to buy the company for $160 per share and take it private in a deal valued at about $7 billion.
Elliott Management Corp. has sent a second letter to the board at Athenahealth Inc., urging them to prod the medical IT company's leadership to take up the acquisition bid made by the private equity firm.
"Last week, we made public our interest in acquiring Athenahealth, Inc. at a price of $160 per share in cash. Additionally, we made clear that we may be able to raise our offer substantially if given access to diligence," Elliott Partner Jesse Cohn said in the letter sent Monday.
"Since that time, we have heard nothing from the company beyond its cursory, boilerplate press release," Cohn said. "We have received no direct communication despite our emails and messages to Athenahealth offering to discuss next steps or to answer any questions regarding our proposal. None of the company’s advisors has contacted us."
Athenahealth issued a brief statement Monday night reiterating its response last week to the Elliott bid and said it would respond to the proposal "in due course."
Cohn called the silence from Athenahealth's leadership "concerning because, unfortunately, this is the same pattern of behavior we experienced when we tried to get the company to engage in November."
"Athenahealth's board refused to engage with us, despite our repeated offers to make ourselves available for discussion," Cohn said. "Moreover, as far as we are aware, Athenahealth did not even engage an investment bank to evaluate our interest, as no investment back or other third-party advisor contracted us."
The only response that Elliott has received so far from Athenahealth "amounted to nothing more than a one-paragraph letter dismissing our interest," Cohn said.
"This letter was dashed off so quickly that Athenahealth forgot to even sign it. (a signed version was transmitted to us 45 minutes later)," Cohn said. "Though minor, we found this careless oversight illustrative of the broader lack of seriousness with which Athenahealth has treated our efforts to engage."
In the acquisition bid pitched last week, Cohn said that Watertown, Massachusetts-based Athenahealth has a history of underperformance both strategically and operationally.
"Unfortunately, we are faced now with the stark reality that Athenahealth as a public-company investment, despite all of its promise, has not worked for many years, is not working today and will not work in the future," Cohn said.
"Given Athenahealth's potential, this reality is deeply frustrating, but the fact remains that Athenahealth as a public company has not made the changes necessary to enable it to grow as it should and to create the kind of value its shareholders deserve."
Athenahealth Responds
Athenahealth issued the following statement late Monday:
"As stated in our May 7, 2018 press release, consistent with its fiduciary duties and in consultation with its independent financial and legal advisors, the athenahealth Board of Directors is carefully reviewing Elliott Management's proposal to acquire the Company for $160 per share in cash."
"The board will determine the course of action that it believes is in the best interest of the Company and athenahealth shareholders and will respond to Elliott Management's proposal in due course."
The investigation has thus far resulted in 53 convictions – 38 of them doctors – in what is believed to be the largest number of medical professionals ever prosecuted in a bribery case.
A Monmouth County doctor is the latest physician to trade in his white lab coat for a prison-issue orange jumpsuit in a sweeping bribery case that has taken down dozens of medical professionals practicing in New York and New Jersey.
According to federal prosecutors:
Ralph Messo, MD, 56, of Colts Neck, New Jersey, was sentenced this month to two years in prison after pleading guilty to one count of accepting bribes in exchange for test referrals.
The bribe was part of a long-running and elaborate scheme operated by now-defunct Biodiagnostic Laboratory Services LLC, of Parsippany, New Jersey, its president and numerous associates.
Messo admitted he accepted bribes in return for referring patient blood specimens to BLS and was paid approximately $3,000 per month. Messo's referrals generated at least $828,000 in lab business for BLS.
In addition to the prison time, Messo was sentenced to two years of supervised release and fined $4,000.
The investigation has thus far resulted in 53 convictions – 38 of them doctors – in connection with the bribery scheme, which its organizers have admitted involved millions of dollars in bribes and resulted in more than $100 million in payments to BLS from Medicare and private insurance companies.
The investigation has to date recovered more than $13 million through forfeiture. On June 28, 2016, BLS pleaded guilty and forfeited all of its assets. It is believed to be the largest number of medical professionals ever prosecuted in a bribery case.
Physicians who use stigmatizing language in their patients' medical records may negatively affect the care those patients get for years to come.
Be careful what you write, physicians.
Recording disparaging medical notes about your patients could adversely affect the care they receive or how aggressively their pain is managed, according to a study published this month in the Journal of General Internal Medicine.
"This record may be the only source of information a new clinician has about some patients," says Mary Catherine Beach, MD, the study's lead author, said in comments accompanying the study.
"We have to question the assumption that the medical record always represents an objective space," Beach says.
The study gave more than 400 medical students and residents one of two vignettes about a hypothetical patient, a 28-year-old African-American man with sickle cell disease and chronic hip pain.
The vignettes contained medically identical information. However, one used neutral language to describe the patient and his condition, while the other vignette contained nonessential language that implied various value judgements.
For example:
"He has about 8-10 pain crises a year, for which he typically requires opioid pain medication in the ED."
"He is narcotic dependent and in our ED frequently."
For example:
"He spent yesterday afternoon with friends and wheeled himself around more than usual, which caused dehydration due to the heat."
"Yesterday afternoon, he was hanging out with friends outside McDonald's where he wheeled himself around more than usual and got dehydrated due to the heat."
For example:
"His girlfriend is by his side but will need to go home soon."
"His girlfriend is lying on the bed with shoes on and requests a bus token to go home."
The study found that physicians-in-training who read the stigmatizing patient chart notes were significantly more likely to have a negative attitude toward the patient than those who read the chart containing more neutral language.
And not only did their attitudes change—so did their treatment plans. Those physicians-in-training who had read the stigmatizing chart note decided to treat the patient’s pain less.
Even physicians-in-training who recognized the language as stigmatizing were more likely to form more negative opinions about the patient and to treat that patient’s pain less aggressively.
Beach said medical residents had more negative attitudes than medical students toward the hypothetical patient.
"Attitudes seem to become more negative as trainees progress," she says. "It may be that trainees are influenced by negative attitudes and behaviors among their peers and seniors in the clinical setting."
Physicians-in-training who identified as African-American generally had more positive attitudes toward the patient.
"That affirms what some other studies have shown," Beach says, "specifically, that African-American clinicians have more positive attitudes toward patients with sickle cell disease."
The researchers said they were encouraged by one result of the study.
"When prompted, the participants seemed able to reflect on how the words used in the chart notes communicated respect and empathy for the patient," said study co-author Anna Goddu, a Johns Hopkins School of Medicine student. "To us, this seems like a promising point of intervention."
Stakeholders said they appreciate the administration's vow to tackle rising drug costs, but they want to hear the specifics on when, where, and how these initiatives will be implemented.
President Donald Trump received a mixed reaction from various stakeholders Friday after he unveiled a multifaceted—but vaguely outlined—proposal to reduce prescription drug costs for consumers.
Pharmaceutical Research and Manufacturers of America CEO Stephen J. Ubl: "These far-reaching proposals could fundamentally change how patients access medicines and realign incentives across the entire prescription drug supply chain. While some of these proposals could help make medicines more affordable for patients, others would disrupt coverage and limit patients' access to innovative treatments."
"The proposed changes to Medicare Part D could undermine the existing structure of the program that has successfully held down costs and provided seniors with access to comprehensive prescription drug coverage. We also must avoid changes to Medicare Part B that could raise costs for seniors and limit their access to lifesaving treatments."
"Misaligned incentives in the supply chain are resulting in savings for middlemen, but higher costs for patients. After negotiations, medicine prices increased just 1.9% last year, below the rate of inflation, and yet patients' out-of-pocket costs continue to skyrocket. Giving patients access to negotiated discounts at the pharmacy counter and protecting seniors in Medicare Part D from catastrophic costs would help make medicines more affordable."
Rick Pollack, president and CEO of the American Hospital Association: "The AHA appreciates many of the actions that the Administration has proposed, such as incentives to speed up the arrival of generic drugs into the market and reducing out-of-pocket costs for patients. These are good first steps and additional actions are needed. The AHA has specific recommendations to further increase competition, transparency, access and value, while fostering innovation."
"We also urge the Administration and the Congress to oppose any efforts to scale back the 340B drug savings program, which for over 25 years has been critical in helping hospitals stretch scarce federal resources to expand access to healthcare services in communities with a significant number of vulnerable patients. 340B is a critical tool in the toolbox that provides drugs at lower prices to those on the front lines of patient care."
AARP Chief Advocacy & Engagement Officer Nancy LeaMond: "We welcome a broad look across the entire drug supply chain to find ways to help drive down drug prices. AARP also strongly believes that it is critical that any proposals to lower prescription drug costs don’t simply shift the costs around in the health care system without addressing the root problem: the prices set by pharmaceutical companies."
Robert Weissman, president of Public Citizen: "What Trump laid out is policy that Big Pharma can love—and no wonder, because Big Pharma wrote it. Trump abandoned his campaign commitment to Medicare Part D negotiation—which would save $16 billion a year or more—and shamefully aims to beat up on other countries to make them pay more, doing nothing for American consumers but forcing more rationing overseas. Those are the top lines. That’s what matters, and everything else is noise around the margins."
340B Health: "We applaud President Trump’s efforts to rein in the high cost of prescription drugs, but are deeply concerned that his administration’s continued misguided attacks on the 340B drug pricing program will lead to higher drug costs and less access to care for vulnerable patients. The administration’s proposals are based on a faulty understanding of the 340B program and the pharmaceutical market. The notion that 340B discounts are raising drug prices is simply false. Drug companies set the prices for their products and they, alone, decide how high those prices go. The president’s proposal to cut Medicare payments to 340B hospitals violates the Medicare and 340B statutes. It cuts $1.6 billion from the safety net and does nothing to reduce drug prices for seniors and the disabled."
Express Scripts: “President Trump rightly recognizes drug companies charge way too much, and their prices need to come down. In particular, we were pleased that the Administration recognized and endorsed policies that we have advocated for over the years, including increasing access to biosimilars, increasing the number of generic drugs available, and eliminating gag clauses and clawbacks -- anti-patient practices that we do not engage in."
IBM Watson compiles price fluctuation data over the past decade in the wholesale acquisition costs for the 10 most-frequently administered emergency department drugs.
President Donald Trump is scheduled Friday afternoon to outline his administration's plans to control drug prices.
In anticipation of his remarks, IBM Watson Health has provided a breakdown of changes in pharmaceutical wholesale acquisition cost for the top 10 most frequently-administered emergency department drugs within the last 10 years:
In addition, the most-commonly administered non-drug treatment in emergency departments, intravenous sodium chloride, has experienced price increases ranging from 162% to 328% depending on the manufacturer and quantity.
The Cincinnati-based, not-for-profit health system self-disclosed the allegations after an internal audit found that payments to six employed physicians exceeded fair market value for the services provided.
Mercy Health will pay the federal government $14.2 million to settle False Claims Act allegations involving self-disclosed improper financial relationships with referring physicians, the Department of Justice said.
DOJ said Cincinnati-based Mercy provided compensation to six employed physicians—one oncologist and five internal medicine physicians—that exceeded the fair market value of their services.
"During an internal audit, Mercy Health learned that it made errors in the administration of a small number of physician arrangements," the health system told HealthLeaders Media in a statement Friday. "Mercy Health promptly disclosed the administrative errors to the federal government, with which it cooperated fully, and is pleased to have resolved the matter."
"When physicians are rewarded financially for referring patients to hospitals or other healthcare providers, it can affect their medical judgment, resulting in overutilization of services and higher health care costs," said acting Assistant Attorney Chad A. Readler, head of the Justice Department’s Civil Division.
"In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make health care more affordable," Readler said.
"Hospitals should employ their physicians at a compensation level that is consistent with fair market value for the area of practice, and should not attempt to incentivize physicians to refer patients based on anything other than the best clinical interests of the patient," said First Assistant United States Attorney Vipal Patel for the Southern District of Ohio.
The newly formed Partnership to Empower Physician-Led Care will use education and advocacy to promote alternative payment models and consumer-directed care.
A group of prestigious medical associations from across the nation have formed an organization to promote value-based care in independent physician practices and speak up on their behalf.
The coalition, launched today, is called the Partnership to Empower Physician-Led Care. Founding members include: Aledade Inc.; the American Academy of Family Physicians; California Medical Association; Florida Medical Association; Medical Group Management Association; Texas Medical Association; and PracticeEdge.
"Independent doctors are often very tied into their communities, working with patients on the frontlines," says Tim Stapleton, CEO of Florida Medical Association. "These are exactly the types of providers who should be the center of the healthcare system of the future."
PEPC Executive Director Kristen McGovern says independent physicians make up 45% of the physician workforce, so it's "impossible to achieve truly value-based care without a robust independent practice community."
"Our goal is to ensure that independent practices are recognized as a vital part of the healthcare system and are given a clear path to continue to contribute to this transformation," McGovern says.
PEPC says it will focus on education and advocacy to urge action on four policy priorities:
Advancing physician-led alternative payment models;
Ensuring an equitable policy framework that promotes choice and provider competition;
Creating new opportunities for physicians in commercial markets such as Medicare Advantage;
Supporting consumer-directed care.
McGovern says other stakeholders often don't realize that independent practices are able to take risk for their patients, or that independent practices can lead alternative payment models like accountable care organizations, often with better results.
She pointed to a report on the Medicare Shared Savings Program which found that 45% of physician-only ACOs earned savings, and that they were more likely to do so than other types of ACOs.
The nonprofit health system's CEO talks about the acquisition of the nation's second-largest post-acute care company and expectations of surging demand for long-term care and home health services.
ProMedica Health System President and CEO Randy Oostra spoke with HealthLeaders Media about the Toledo-based health system's$3.3 billion acquisition of HCR ManorCare in a joint partnership with Welltower, the real estate investment trust.
The following is a lightly edited transcript.
HLM: What makes this a good time to acquire HCR ManorCare?
Oostra: Like most systems, we are looking at the future and all the disruption going on, and you realize a lot of the lines are blurred between what we have traditionally done.
We are in a non-growth market. How do we grow as a system? How do we begin to diversify? We have a health plan, we have hospitals, we have a physician group. Being more diversified in this space made sense.
Then you look at the trends, whether it’s the number of 85-year-olds, or the numbers of people who are going to get Alzheimer's, home health numbers, hospice numbers, etc. You see all this massive growth, but the people moving in that space are venture capital companies.
The more we talked to ManorCare as they were going through their issues, it made a lot of sense. It went from an interesting idea to "why didn’t we do this before?" Plus, they are a locally based company. It gives us scale and opportunities that we hadn't had before.
HLM: Is ProMedica venturing into post-acute care because of the demographics pressures, or because you anticipate a change in the way care is delivered to seniors?
Oostra: It's both. Not many Baby Boomers want to go to a hospital. They want to stay home. Who is going to develop those services? Why wouldn't that be hospitals? The expectations are going to change, so as we delivery these services we are going to have to change as well. It's exciting to think about, this blurring of the lines.
HLM: Did you buy ManorCare because it was bankrupt, or were you looking to move into post-acute services beforehand?
Oostra: We started discussions two or three years ago, before their more recent issues. We did a partnership on one of our campuses here in Sylvania, Ohio. They have a Heartland facility on our Flower hospital campus. We began discussions even back then that maybe we ought to work together and maybe you ought to be a nonprofit. Their initial reaction was "are you people crazy?"
ManorCare is one of the best operators in this space in the country. We think there are opportunities to get more efficient. We think there are ways to get together through telehealth and urgent care through our physician group, maybe exploring some options with our health plan.
Overnight we went from a $3 billion system to a $7 billion system, from 17,000 to 70,000 employees, from facilities in five states to 30 states. We put a lot of emphasis on the skilled nursing piece, but there are other pieces. The home health piece, assisted living, rehab and hospice pieces are incredibly profitable. We have some ideas about how to grow that.
When we look at what we were able to structure on the SNFs with Welltower, the reduction in lease rates, the balance of what we are able to provide with our current system and the growth in other areas, we became comfortable that in a short period of time we can drive that 3% to 4% operating margin on a larger scale, and that is how we got comfortable that this was a great strategic step for us.
HLM: ManorCare was in Chapter 11. What will you do differently to make it profitable?
Oostra: Right now, with everything from sales taxes to real estate taxes, we've done a fair amount of research on how to convert to nonprofit status. We are fairly proximate to one another. In a $7 billion company there are some great opportunities for synergies. Also, the lease rates we will be paying are significantly lower than they were paying in the past. It only takes a couple of those factors to turn them profitable.
In some ways this is not that different as when hospitals merge. You have to look at the same areas, the same management services.
HLM: ManorCare has a significantly larger footprint. How will you coordinate care in outlying facilities that might be several states away from your Ohio base?
Oostra: In some of the states where they have a smaller footprint, maybe we will exit certain markets. In each case we will look at what we can bring that's consistent with our system and in other cases we will partner locally. It's going to be on a one-by-one, market-by-market basis. As we work over the next year those are the things we'll look at.
HLM: What is the status of ManorCare under ProMedica?
Oostra: They are fully part of ProMedica. They will be one of our divisions. They will be our employees. We will own 100% of HCR ManorCare. On the real estate side, we will own 20% of the real estate in a joint venture with Welltower. HCR will be fully integrated in our system.
HLM: Are you in uncharted waters with this acquisition?
Oostra: I hate to say we are in uncharted waters here, but it seems to be a unique, first-of-its-kind partnership. A nonprofit health system, a large post-acute provider and a real estate investment trust as partners is unique.
This is different from other deals we've done where you talk through mission, vision, values and culture and then you come to the business model. This was all about the business model, and it had to work because of where they were with this bankruptcy. It's the opposite of what we’ve done in the past, where you build up to the financial model and that's toward the end. This was first, and this was all about the economic model. Does it work? Can we exit bankruptcy?
But, we know ManorCare and Welltower. We are confident that we will figure out some of the other stuff as we move along.
HLM: With this acquisition, you will more than double in size. Are there any particular areas in this deal that you view as potentially problematic, and what are you doing about it?
Oostra: The fear is the fear of the unknown. We are all at the mercy of reimbursements. I don't think the post-acute world can face further reimbursement cuts, especially when you see what's happened in the past. That's the sort of thing we worry about the most.
We are comfortable that we can operate and grow, unless something further happens to devastate the financials of skilled nursing facilities.
On the other side, the home health, hospice, assisted living, rehab, memory care, those are all more profitable and if we can grow those while managing the skilled nursing at a break even or better margin we are going to be fine.
HLM: What metrics will you use to determine if you're succeeding?
Oostra: Right now we are taking a hard look at quality and safety. We would look at many of the metrics for performance in the nursing home world. We're looking to grow, so financial metrics are important. We talk about balancing out between skilled vs. nonskilled. We will be cognizant in growing in some of the nonskilled areas to balance out the financial portfolio. Those are the first pass metrics.
HLM: Are you nervous about being in the vanguard?
Oostra: We talk a lot in healthcare about how we need to change, how we need to disrupt. But some of the people who would say that would be the first people who will criticize us for doing this. We are in a non-growing market. We have to think nontraditionally.
For most of our careers, once you left the hospital, good luck! We didn't pay attention until it hit our finances and all of a sudden we were worried about readmissions. We look at this as the next step. If we are going to care for all these people beyond our traditional hospital walls, why wouldn't we move into that space? Why wouldn't we do it quicker and why don't we move in even more. It makes sense to us.
A critical access hospital and UPMC affiliate in rural northcentral Pennsylvania settles allegations arising from two self-disclosed Medicare billing irregularities.
Charles Cole Memorial Hospital, a not-for-profit, critical access hospital in Coudersport, Pennsylvania, will pay the federal government $373,547 to settle self-reported irregularities in its Medicare billings.
According to the Department of Justice:
Cole Memorial "failed to bill under a particular modifier to reduce the Medicare reimbursement amount for services provided by physician assistants and nurse practitioners in its pain management, orthopedics, gastroenterology, and medical oncology physician office practices." The alleged infractions occurred between 2007 and 2013.
A second self-disclosure found that Cole Memorial failed to perform face-to-face encounters with some of its Medicare hospice patients prior to the third benefit period recertification and every subsequent benefit period re-certification from 2001 through early 2014.
Cole Memorial has taken corrective action and voluntarily disclosed the violations, and the payment resolves the case without litigation.
The hospital is located about 170 miles northeast of Pittsburgh. The violations occurred and were self-reported before Cole Memorial affiliated with UPMC in March.
