A survey of more than 1,100 physicians, payers, and vendors from the Workgroup for Electronic Data Interchange finds that the biggest obstacle to industry readiness is the belief that there will be another delay.
For years physicians' associations have successfully lobbied the federal government to delay the implementation of the ICD-10 diagnostic coding set.
Now, with the ICD-10 implantation date looming on Oct. 1, a survey of more than 1,100 physicians, payers, and vendors from the Workgroup for Electronic Data Interchange finds that the biggest obstacle to industry readiness is the belief that there will be another delay.
Jim Daley, ICD-10 Committee chair at WEDI, is urging laggards to take heed.
"Get ready. Other than the past history, there is no strong reason to believe this will be delayed again," says Daley, who is also the IT director at BlueCross BlueShield of South Carolina.
"If you've been following some of the Congressional hearings on this, most of the people testifying recommended moving forward," he says. "The chair of the hearing indicated there was no reason not to move forward. CMS has been saying they are moving forward. So all indications are that they are going ahead with the Oct. 1 implementation date."
Barbie Hays, coding and compliance strategist for the American Association of Family Physicians and a former family practice office manager, says physicians have created a "catch-22" with the delays. They've pushed so hard for so many delays that now they're uncertain if the implementation will hold, and so they're delaying potentially costly investments in IT upgrades to accommodate the new codes.
"With it being delayed for so many years, I kept telling my physicians in my old practice that it will take an act of Congress to delay it again. Well guess what! That happened last year," she says.
Hays says the best chance to delay the Oct. 1 start slipped away when the House passed the massive SGR bill late last month. While the Senate could slip in a provision to delay the ICD-10 again when it takes up the bill at mid-month, Hays says there doesn't appear to be any enthusiasm for it.
"Technically it could happen again this year, but the normal timeframe for that has come and gone," she says. "The amendment attached to the SGR that was voted down. There was an amendment attached. That was voted down. It's going through. At this point it would need a presidential mandate for this to stop and I don't think that is going to happen."
Daley says anyone behind the curve on ICD-10 implementation could see their operations in disarray if they don't get up to speed. He says it's time to end the excuses.
"I hear a lot of people are concerned about if this person is ready or that person is ready. First and foremost, you need to take care of what you are doing in-house," he says. "If you aren't ready it doesn't much matter what the readiness is of the other parties. That is really key. Don't delay. If you finish early that isn't a problem. If you don't finish on time that is a big problem."
The new, unnamed entity to be created by the merger of Wellmont Health System and Mountain States Health Alliance will be led by executives from both organizations. In other news, the FTC has issued the latest, and perhaps the final, shot in a three-year legal battle between itself and Phoebe Putney Health System.
Wellmont Health System and Mountain States Health Alliance announced plans to merge and create an integrated, locally governed healthcare network targeting health issues affecting people living in a four-state slice of Appalachia.
The boards of directors for both health systems last week unanimously approved an exclusive agreement to explore the merger. The decision caps more than a year of merger discussions by the two health systems, both of which are headquartered in Upper East Tennessee.
"Northeast Tennessee and Southwest Virginia disproportionately suffer from serious health issues—cardiovascular disease, diabetes, addiction, and access to mental health services, to name a few—and they must be addressed," said Alan Levine, president and CEO of Mountain States, who would become executive chairman and president of the combined system.
"The cost of this poor health is not sustainable," Levine said in prepared remarks. "By integrating, we can refocus our efforts from being measured based on how many patients we can admit to the hospital and how many ways we can duplicate these efforts, to how we measurably improve the health of our region while eliminating unnecessary costs and making healthcare more affordable. The people of this region deserve nothing less. We intend to demonstrate the merger's substantial specific potential in these areas."
Under the proposal, a new board would be created, have equal representation from both systems, and an additional two independent, jointly appointed members. The board will include a lead independent director who will be a Wellmont board appointee tasked with coordinating work with the executive chairman.
The president of East Tennessee State University will be a non-voting member of the board. ETSU will collaborate with the new system and focus on expanding opportunities to compete for research investment in the region, and bolster physician and allied health training.
The new board would direct the health system, which will get a new name, which has yet to be determined. One leadership team, composed of current executives from both organizations, would lead the combined system. The CEOs of both organizations would share leadership responsibilities.
"Together, we'll work alongside our employed and independent physicians to shape the future of healthcare by modeling effective clinical collaboration, building new community health solutions and becoming a national model for rural healthcare delivery," said Bart Hove, president and CEO of Wellmont, who would be CEO of the new system.
"As one system, our physicians would share best practices, collaborate to benchmark our outcomes against the nation's best, and develop new high-level services closer to home."
With the negotiatingagreement signed, the two systems will now work to clear regulatory hurdles in Virginia and Tennessee, a process that is expected to be completed by the end of the year.
Based in Kingsport, TN, Wellmont Health System operates in Northeast Tennessee and Southwest Virginia.
Mountain States provides care in Northeast Tennessee, Southwest Virginia, Southeastern Kentucky and Western North Carolina. The not-for-profit system is based in Johnson City, TN, operates 13 hospitals serving a 29-county region.
FTC, Phoebe Putney Finalize Antitrust Settlement
The Federal Trade Commission has reached a settlement in its longstanding and complex dispute with Phoebe Putney Health System, Inc. that will allow the Albany, GA-based provider to keep Palmyra Park Hospital, even though the deal creates a hospital monopoly in the region.
"While we continue to have reason to believe that Phoebe Putney's acquisition of Palmyra violated Section 7 of the Clayton Act and Section 5 of the FTC Act, any relief attempting to restore the competition lost as a result of the merger is precluded by Georgia's strict Certificate of Need requirements," the Commission wrote in a statement.
This week's announcement represents the latest, and perhaps the final, shot in a three-year legal battle between the FTC and Phoebe Putney that went all the way to the U.S. Supreme Court.
The FTC alleged that Phoebe Putney constructed an elaborate scheme that used the Hospital Authority of Albany-Dougherty County, GA as a "straw man" to "cloak private, anticompetitive activity in governmental guise in the hopes that it would exempt the acquisition from federal antitrust law" in the purchase of Palmyra Park Hospital from HCA.
In 2011 a federal district judge ruled that the PPHS was immune from federal antitrust liability under the FTC Act and the Clayton Act. The FTC appealed the ruling to the 11th Circuit Court of Appeals but lost again.
In 2013, however, the U.S. Supreme Court ruled that the appeals court had "loosely" interpreted a state 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 region. The high court reversed the appeals court ruling and sent the case back to federal district court.
Under the consent agreement with the FTC, Phoebe Putney and the Hospital Authority must notify the FTC in advance of acquiring any part of a hospital or a controlling interest in other healthcare providers in the Albany, Georgia area for the next 10 years, and will be prohibited from objecting to regulatory applications made by potential new hospital providers in the same area for up to five years.
Jay L. Levine, a Washington, DC-based antitrust lawyer with Porter Wright Morris & Arthur LLP, says the FTC agreement this month "Is effectively the same agreement they put out before for public comment."
"They never gave final approval previously because they received word that the Georgia CON laws may not preclude a divestiture," Levine said by email.
"Recently, though, it became clear that the CON laws would preclude a divestiture and hence they moved forward with the agreement. It prohibits Phoebe Putney from objecting to others' CONs, from acquiring assets without giving notice to the FTC and it requires the parties to stipulate that the transaction was anticompetitive, which has implications should consumers of healthcare in that area decide to sue, claiming their healthcare costs were larger than they would have been absent the merger."
Robinson Health System Joins UH
Ravenna, OH-based Robinson Health System will join University Hospitals, the two Northeastern Ohio health systems announced jointly.
"Without question the agreement with University Hospitals will further strengthen Robinson and help us fulfill our mission to provide high-quality patient-centered health care to our patients and the communities that we serve," Robinson Health President and CEO Stephen Colecchi said in prepared remarks.
"UH also has an outstanding record of employee and medical staff engagement," Colecchi said. "We are confident that becoming part of UH will be a dynamic and important change for Robinson and is in the best interests of our patients, the Portage County community, our employees and medical staff. UH is consistently recognized as one of the leading health systems in the country and we are very proud and excited to become part of the UH system."
The financial details were not immediately disclosed, but the deal is expected to be finalized this year.
Thomas F. Zenty III, CEO of Cleveland-based UH, said the acquisition of Robinson Health "affirms our shared conviction that together we will best serve the residents of Portage County and surrounding communities."
Robinson Health System includes the flagship 117-bed Robinson Memorial Hospital, with nearly 400 physicians on staff covering more than 40 specialties. Robinson also operates an urgent care center, imaging facilities, a network of physician practices, and outpatient centers and medical facilities throughout Portage County.
UH employs 25,000 Ohio residents and is the second-largest employer in Northeast Ohio. The health system is an integrated network of 15 hospitals, including its relationships with Southwest General Health Center and St. John Medical Center, and 29 outpatient health centers located in 15 counties throughout the Northeast Ohio region.
News of the acquisition came on the heels of an announcement that Robinson had agreed to pay $10 million to the federal government to resolve self-disclosed claims that it paid illegal kickbacks to physicians referring Medicare patients.
Federal prosecutors say the Ohio nonprofit health system self-reported that it made kickback payments to physicians but disguised them as payments for bogus management services, a violation of the False Claims Act, the Anti-Kickback Statute, and the Stark Statute.
Ravenna, Ohio-based Robinson Health System Inc. will pay $10 million to settle self-disclosed claims that it illegally provided payments to referring physicians, the U.S. Department of Justice said this week.
Federal prosecutors s aid the nonprofit health system self-reported that it made the kickback payments to physicians but disguised them as payments for bogus management services, a violation of the False Claims Act, the Anti-Kickback Statute, and the Stark Statute.
"The Department of Justice has longstanding concerns about improper financial relationships between healthcare providers and their referral sources," Acting Assistant Attorney General Benjamin C. Mizer of the Justice Department's Civil Division said in prepared remarks.
"Such relationships can alter a physician's judgment about the patient's true healthcare needs and drive up healthcare costs for everybody," Mizer said. "In addition to yielding a recovery for taxpayers, this settlement should deter similar conduct in the future and help make healthcare more affordable."
Robinson Health said in a media statement that the bulk of the violations occurred in 2006 and 2007. The health system reported its potential violations to federal prosecutors after discovering irregularities during a due diligence process that was part of a partnership search.
Robinson's President and CEO Stephen Colecchi said the contracts involved the lease of an office and contracts to provide management and technical services to the hospital and healthcare services coverage to patients of the hospital.
Robinson Health System operates 117-bed Robinson Memorial Hospital, an urgent care facility, imaging facilities, a network of physician practices, and outpatient centers. It has nearly 400 physicians on staff.
"Some of these issues were primarily technical in nature and involved things such our failure to maintain required paperwork or supporting time logs involving these contracts," Colecchi said. "None of the issues identified, in any way, adversely affected the quality or appropriateness of patient care."
"Our intent has always been to comply with the very complex and extremely technical laws governing our relationship with physicians. In hindsight, we should have managed the administration of these contracts more thoroughly to ensure we were fully compliant. We cooperated fully with the United States Attorney and Department of Justice in reporting and resolving the issues that we identified."
Since the irregularities were discovered, Colecchi said Robinson has strengthened internal controls around a centralized process to track and monitor physician agreements to insure proper documentation.
"We have certainly learned a hard lesson from this experience," Colecchi said, "but we are confident that we have taken the appropriate action to insure full compliance in the future."
On Thursday, after the settlement was announced, Cleveland-based University Hospitals said it would move forward with an agreement for Robinson to join the UH health system. "Without question the agreement with University Hospitals will further strengthen Robinson and help us fulfill our mission to provide high-quality patient-centered health care to our patients and the communities that we serve," said Colecchi.
Five hospitals in northern Maine have formed a collaborative alliance to improve healthcare access and outcomes and to generate savings. The arrangement allows each hospital to maintain some level of autonomy.
Has the term "independent hospital" become an anachronism?
I suspect not, or at least not yet.
There are still plenty of hospitals out there, particularly in rural areas, which are not formally part of a health system, and that maintain a local board of trustees and executive suite for strategic planning and budgeting. These hospitals are a growing rarity.
The Community and Rural beat at HealthLeaders Media has allowed me to interview dozens of rural hospital leaders over the years. To a person, these leaders tend to be feisty, independent, problem-solvers who greatly value local control of their healthcare.
It's a matter of pride born from necessity. They've had to learn to make do with what they have, and they often justifiably believe that no one better understands the healthcare needs of the communities they serve.
To a person, however, these executives all say it's getting harder, if not impossible, to go it alone. I cannot recall speaking to a hospital leader who was not looking for some sort of affiliation, whether an outright acquisition by a larger hospital or health system, or some sort of looser affiliation to pool resources and improve leverage with vendors and payers.
Last month, for example, five hospitals in northern Maine formed the Maine Rural Health Collaborative, LLCto improve healthcare access and outcomes and to generate savings. At the same time, the arrangement allows each hospital to maintain some level of autonomy. The five hospitals are:
Northern Maine Medical Center in Fort Kent
Cary Medical Center in Caribou
Houlton Regional Hospital in Houlton
St. Joseph Hospital in Bangor
Mount Desert Island Hospital in Bar Harbor
Houlton and Mount Desert Island are critical access hospitals. Every hospital has an equal vote, and all decisions by the collaborative must be unanimous.
Tom Moakler, CEO at Houlton Regional Hospital, summed up the need for the collaborative when the project was announced March 12.
"The advent of the Affordable Care Act, changes in reimbursement, and a number of other complex issues are reshaping the landscape for hospitals and other healthcare providers across the nation," Moakler said.
"Our hospitals here in Maine are coping with these changes while facing unique challenges in providing healthcare to a rapidly aging and low income population, particularly in rural parts of the state. By working together in a collaborative fashion we can all benefit from each other's experience, standardize best practices and protect quality, accessible care."
An Opportunity to Reduce Expenses
What's happening now in Maine is not a new idea. Hospitals in Georgia, New Hampshire, Illinois and other rural states have formed collaboratives and the Maine providers will be taking notes from those projects.
Peggy Pinkham, RN, executive director—and the only employee—at the Maine Rural Health Collaborative, says the first item on the agenda will be the search for opportunities to reduce expenses in areas that are not directly related to patient care.
"Some of the examples could be what collection agencies are the members using and is there an opportunity to negotiate a better rate with five hospitals versus one," she says. "There are opportunities to identify revenue cycle initiatives, reduce the number of denials that hospitals experience by discussing what best practices the hospitals are using."
Employee benefits are another area identified for potential savings or efficiencies by the five hospitals.
"We aren't into health insurance now, but things like disability and long-term life. Again, using one vendor versus potentially five," Pinkham says. "So, it's looking at those types of things that could be more cost-effective as a group, versus individually."
Healthcare IT is also on the radar.
"That is something we will always be looking at," she says. "We are going to start collecting that data this year at least so we have an inventory of what everybody is using and where they are using it."
In the future, Pinkham envisions the collaborative "moving into some clinical arena, which would be a bit more challenging, as well as looking at opportunities perhaps for grant funding. Obviously the goal is how can we stay connected to our communities, provide the best service possible, and be as efficient and effective as we can be."
It's probably a safe bet that this collaborative will gain new members once it demonstrates success.
"I am sure people will be keeping tabs on how the collaborative works, some of the results they will achieve, and they might consider whether that would work for them," Pinkham says.
When you look at the challenges that rural providers face providing care for an older, sicker, poorer population, collaboratives such as Maine Rural Health could mean the difference between shuttering and continuing to provide care.
Independent hospitals are not an anachronism. They're adapting to a new reality, and the understanding that maintaining independence in this evolving healthcare landscape is going to require a group effort.
Physicians will have at least another two weeks of lag time to account for processing before Medicare reimbursement cuts take place—or the SGR is repealed—according to the Centers for Medicare & Medicaid Services.
The 21% "negative update" in Medicare reimbursement for physicians mandated by the Sustainable Growth Rate funding formula goes into effect on Wednesday, but physicians will have another two weeks of lag time to account for processing before the cuts take place, according to the Centers for Medicare & Medicaid Services.
"The Administration urges Congress to take action to ensure these cuts do not take effect," CMS said this week in an advisory to physicians. "However, until that happens, CMS must take steps to implement the negative update. Under current law, electronic claims are not paid sooner than 14 calendar days (29 days for paper claims) after the date of receipt. CMS will notify you on or before April 11, 2015, with more information about the status of Congressional action to avert the negative update and next steps."
In the short term, CMS has used the processing delay previously to circumvent cuts mandated by a lapsed SGR deadline, which has allowed Congress to intervene and extend the temporary deadline, as it has done 17 times before.
That 14-day window pushes the drop-dead date for the SGR cuts back to April 14, which means that when the Senate reconvenes on April 13 it will have one day to debate the legislation and pass it.
"By law, no claim can be paid sooner than the 14 calendar days from [its] receipt," says Jennifer Pollack, government affairs representative for the Medical Group Management Association.
"CMS has instructed its carriers to hold any claims for 10 business days for services provided on April 1. That means they will be held through April 14. Hopefully, between the 14 calendar days and people holding a little bit, Congress will have time to come back and fix everything," Pollack says.
Despite grumbling from some Senators in both parties, the bill is expected to pass. It receivedstrong bipartisan support in the House, which approved the $145 billion package on a 392−37 vote. President Obama has already said he will sign the bill.
"People are generally supportive. It's been something that's been a pain in the side for so long," Pollack says."The Democrats in the Senate were hoping to have a little bit more of their wants included in this, with the CHIP extension for four years, and getting rid of the Hyde Amendment language. But, I would think and hope that they would understand that negotiations did take place and frankly this is the best deal we are going to get on all sides. I think they will all end up supporting it in the end."
Even if the Senate cannot act before April 14, Pollack says that doesn't necessarily mean that physicians will see their reimbursements slashed.
"CMS can't do it themselves, but in the bill Congress can say we are voting on this so the cuts won't happen on April 1. Say it is April 18, for example. What most likely happen is people will have to resubmit their claims. They won't get cut, but it is additional paperwork for CMS and the providers. It's a bit of an administrative burden, hence the urgency now."
The fact that nine out of 10 emergency physicians admit to ordering medically unnecessary tests indicates that existing protocols and safeguards to prevent overuse clearly aren't working, survey results suggests.
Nearly all of the 435 emergency physicians in a recent survey admitted to ordering too many diagnostic tests, but said they did so out of fear of error, uncertainty, and non-medical reasons.
The survey, published this month in Academic Emergency Medicine, focused specifically on the use, and over-use, of imaging tests. More than 85% of the respondents said they believe that too many tests are ordered in their own departments, and 97% admitted they ordered "medically unnecessary" radiology tests, which were defined as imaging the physician ordered in response to external pressures and not for optimal medical care.
"I am not surprised by the findings," says Hemal Kanzaria, MD, the lead author of the study, and an emergency physician practicing at UCLA Ronald Reagan Medical Center, and VA West Los Angeles Medical Center. "I face these issues every time I work in the emergency department and I agree with the collective response from my colleagues that there are many aspects of the practice environment that drive over-diagnoses."
"A lot of what I heard from our survey respondents regarding a fear of being wrong, or missing a low-probability, but potentially life-threatening diagnosis resonates with my own clinical practice, says Kanzaria, who is also a clinical scholar with the Robert Wood Johnson Foundation, which funded the study with the Department of Veterans Affairs.
The fact that nearly every emergency physician admits to ordering medically unnecessary tests indicates that existing protocols and safeguards to prevent overuse clearly aren't working, survey results suggests.
"Overall, I interpret our results to suggest that over-testing is not due to physicians' lack of knowledge or lack of insight or poor medical judgment, but reflects a cultural response both within and outside medicine to uncertainty and error," Kanzaria says.
"I personally think that to overcome over-testing we need to address our collective intolerance of uncertainty both within medicine and within society at large as well as this culture of blame that triggers the malpractice system."
When asked how they'd address the problem, the physicians in the survey suggested several approaches including tort reform, increased adoption of shared decision-making with patients, feedback to physicians on test-ordering metrics, and improved training on diagnostic testing.
"There is not one magic bullet. I don't think that any isolated approach to curbing over-imaging exists," Kanzaria says. "There is one idea that is being discussed right now, the idea of safe harbors. Using clinical practice guidelines to determine the local standard of care might help physicians follow both evidence based guidelines and offer some protections from malpractice and could potentially result in fewer medically unnecessary tests."
More feedback on test orders and behavior also would give emergency physicians a better sense of where they stand in relation to their colleagues. "This type of benchmark does not get at appropriateness, but it still would begin a discussion about use and overuse," Kanzaria says.
Another big driver for imaging overuse is pressure from patients, who are often arrive at the emergency department in pain, afraid, and with unrealistic expectations.
"The first step is recognizing for yourself and your patients that uncertainty exists and that we might not figure out the answer today, and acknowledging that there are potential harms and benefits with every test," Kanzaria says.
"Acknowledging that uncertainty exists both for the physicians and for their patients may be a good first step," he says. "Beyond that, addressing our low tolerance for uncertainty on the part of physicians and patients will really require addressing a number of widespread beliefs that are held in society, including the perception that error is the cause of any bad outcome, or that technology can solve all of our problems, or that catching things early is always beneficial. Myths like that we will have to address."
While the price of ending the Sustainable Growth Rate formula is steep, the Congressional Budget Office says it's cheaper than doing nothing, because the status quo would cost $900 million more than the proposed reforms over the next 10 years.
A bill before Congress that would eliminate Medicare's Sustainable Growth Rate funding formula would also add about $141 billion to federal budget deficits over the next 10 years, the nonpartisan Congressional Budget Office said Wednesday.
The bipartisan bill, H.R.2, would increase direct spending by $145 billion from 2015–2025. It would also generate about $4 billion in offsetting revenues over the period, CBO said in a letter to House Speaker John Boehner (R-OH).
While the price is steep, CBO says it's cheaper than doing nothing, because the status quo would cost $900 million more than the proposed reforms over the next 10 years.
"The nonpartisan Congressional Budget Office confirmed today that H.R. 2, bipartisan legislation to strengthen Medicare and permanently repeal the Sustainable Growth Rate, will save taxpayers money and put the nation's budget on a more sustainable path," Boehner's office said in a statement.
That $900 million savings could make the bill more palatable for Republicans in Congress who have been loath to raise taxes, and have resisted deficit spending, and have insisted on budget cuts to offset new spending.
It appears that they are waiving those demands for H.R.2, which reportedly has broad bipartisan support in the House, where a vote is scheduled on Thursday. President Obama said Wednesday, "I have my pen ready to sign a good bipartisan bill," according to an Associated Press report.
The CBO said that there is potential for even greater savings beyond 2025 as the incentives and reforms in H.R.2 push the healthcare sector toward value-based care, population health, and alternative payment models.
The SGR was enacted by Congress in 1997 to control Medicare cost growth but lawmakers stepped in to delay the cuts as they accrued each year. Rather than permanently fix the problem Congress has instead spent $150 billion in 17 short-term fixes since 2003. The most recent patch is scheduled to expire on April 1, which would leave physicians with a 21% cut in Medicare payments
H.R.2 eliminates the SGR and replaces it with new systems to update Medicare payments for physicians. The sweeping bill also:
Provides 0.5% annual increases to Medicare payments for the next five years to provide a period of stability.
Delays disproportionate share payment cuts to safety net hospitals until 2018 and extend the DSH policy through 2025.
Delays until Sept. 30 changes in the two-midnight rule on inpatient billing that were set to take effect at the end of this month.
Fully funds the Children's Health Insurance program through Sept. 30, 2017.
Preserves all extenders included in 2014's temporary SGR patch, including addition to funding for Community Health Centers through 2017.
Provides incentive bonuses to providers who receive a significant portion of their revenue from an alternative payment model or patient centered medical home.
Permanently extend Medicare's Qualifying Individual program for low-income seniors, and the Transitional Medical Assistance program that helps families on Medicaid keep their coverage as they transition from welfare to work.
Senate Democrats support the SGR repeal, but have threatened to pull their support any remedy that does not include at least four years of funding for the Children's Health Insurance Program. H.R. 2 provides two years of funding for CHIP.
H.R.2 offsets target means testing for Medicare recipients that could generate savings. For example, starting in 2018, the premiums would increase from 50% to 65% for Part B and D beneficiaries who earn between $133,500 and $160,000 ($267,000 − $320,000 for a couple). For those in higher income brackets, the premiums would increase from 65% to 75%.
The plan also calls for limits on first dollar coverage for some Medigap plans, starting in 2020. The IRS would also be authorized to impose levies of up to 100% on tax delinquent Medicare providers. Currently, the maximum levy is 30%.
In addition, Medicare reimbursements would be increased by no more than 1% in 2018 for post-acute care providers.
The bill also delays until Sept. 30 changes in the two-midnight rule on inpatient billing that were set to take effect at the end of this month.
The House on Tuesday unveiled a bipartisan proposal to permanently fix the Sustainable Growth Rate funding formula and transition Medicare toward value-based payments.
"This package is the best opportunity to turn the page on years of short-term fixes so that we can finally make the reforms we need to strengthen Medicare for our seniors," Ways and Means Committee Chairman Paul Ryan, (R-WI), said in remarks accompanying the bill.
"This is real patient-centered reform—done in a bipartisan way—and I urge all of my colleagues to support it."
The much maligned SGR is a budget cap put in place by Congress in 1997 to control Medicare cost growth. It never worked, but rather than permanently fix the problem Congress has instead spent $150 billion in 17 short-term fixes since 2003. The most recent patch is scheduled to expire on March 21, which would leave physicians with a 21% cut in Medicare payments.
This latest permanent fix proposal builds upon HR1470, which earlier this month garnered support in the House Energy & Commerce and Ways & Means Committees, and by the Senate Finance Committee. According to a "working framework" released by the House Energy & Commerce Committee, the bill would:
Repeal SGR and replace it with HR1470, a bipartisan, bicameral agreement that also transitions Medicare to a value-based payment scheme.
Provide 0.5% annual increases to Medicare payments for the next five years to provide a period of stability.
Delay disproportionate share payment cuts to safety net hospitals until 2018 and extend the DSH policy through 2025.
Delay until Sept. 30 changes in the two-midnight rule on inpatient billing that were set to take effect at the end of this month.
Fully fund the Children's Health Insurance program through Sept. 30, 2017.
Preserve all extenders included in 2014's temporary SGR patch, including addition to funding for Community Health Centers through 2017.
Provide a 5% bonus to providers who receive a significant portion of their revenue from an alternative payment model or patient centered medical home.
Permanently extend Medicare's Qualifying Individual program for low-income seniors, and the Transitional Medical Assistance program that helps families on Medicaid keep their coverage as they transition from welfare to work.
Repeal of the SGR and other provisions in the bill are expected to cost anywhere from $175 billion to $200 billion over 10 years and it's not clear where all of that money would come from in a Congress that is locked down against tax increases.
The House bill provides "offsets " for means testing for Medicare recipients that could generate some savings. For example, starting in 2018, the premiums would increase from 50% to 65% for Part B and D beneficiaries who earn between $133,500 and $160,000 ($267,000 − $320,000 for a couple). For those in higher income brackets, the premiums would increase from 65% to 75%.
The plan also calls for limits on first dollar coverage for some Medigap plans, starting in 2020. The IRS would also be authorized to impose levies of up to 100% on tax delinquent Medicare providers. Currently, the maximum levy is 30%.
In addition, Medicare reimbursements would be increased by no more than 1% in 2018 for post-acute care providers.
The total dollar value of the offsets was not clear.
It's also not clear if the bill has the support of Senate Democrats, who support the repeal of the SGR, but who said they cannot "guarantee" their support for the proposal unless it includes four years of additional funding for CHIP.
In one of three deals Tenet Healthcare signed Monday, it formed a joint venture with United Surgical Partners International to have ownership interests in 244 ambulatory surgery centers, 16 short-stay surgical hospitals and 20 imaging centers in 29 states.
Monday was a busy, busy day for Tenet Healthcare Corporation, which announced three separate deals that will expand the for-profit provider's footprints in its Dallas backyard, across the nation, and into the United Kingdom.
For starters, Tenet and United Surgical Partners International announced that they will combine their ambulatory surgical and imaging assets under a joint management plan that will create the nation's largest provider of outpatient surgery.
In a deal valued at about $2.5 billion, which includes $1.5 billion in assumed debt, Tenet will own 50.1% of the joint venture and will consolidate its financial results. USPI principal investors Welsh, Carson, Anderson & Stowe, a private equity fund, will own the remaining 49.9%. By 2020 Tenet will have full ownership of USPI through a put/call structure, the companies said in a joint media release.
"This transaction is transformational for our outpatient strategy. It immediately establishes us as the market leader for short-stay surgeries," Tenet CEO Trevor Fetter said in a conference call Monday.
"It also enhances our growth and profitability potential and positions us well for the future of healthcare delivery, where a consumer-centric model and a compelling value proposition will be essential."
When the deal is finalized this fall, the Dallas-based joint venture will have ownership interests in 244 ambulatory surgery centers, 16 short-stay surgical hospitals and 20 imaging centers in 29 states. It will maintain the USPI brand, and its three-way partnership model with physicians and not-for-profit health systems.
Fetter says the investment in outpatient care reflects the rapidly shifting landscape in healthcare delivery.
"We are operating in an environment where consumers increasingly make their own healthcare decisions," he says. "Improvements in medical technology around more complex procedures has transitioned to the outpatient setting, and changing models for reimbursement incentivize patients to select lower-cost options for care. USPI enhances our position in this new landscape."
"Additionally, USPI gives us the premier ambulatory platform in a fragmented market, which provides our new joint venture substantial opportunities to continue growing through accretive acquisitions and development of new centers," he says. "In our acute-care market this partnership will also enhance our ability to expand ambulatory services, build integrated networks, and participate in the value-based models."
Tenet will contribute 44 freestanding ambulatory surgery centers and 20 imaging centers. Welsh Carson will contribute USPI's 202 ambulatory surgery centers and 16 surgical hospitals. Tenet will pay approximately $425 million in cash to Welsh Carson and the other existing shareholders in USPI to align the respective valuations of the contributed assets. The venture expects to realize approximately $50 million of corporate and facility level synergies over the next three years, the companies said.
The combined operations will have partnerships with 50 health systems and more than 4,000 physicians at the facility level. Bill Wilcox will continue to lead USPI as CEO. Tenet's Kyle Burtnett will be USPI's president of ambulatory services and chief integration officer.
Tenet Buys UK's Aspen Healthcare for $215M
Also, Monday, in a separate transaction, Tenet announced that it will buy Welsh Carson's Aspen Healthcare Ltd., for $215 million in cash.
Aspen Healthcare operates nine private hospitals and clinics in the United Kingdom. Aspen began as a two hospital system that was acquired by USPI in April 2000 with backing from Welsh Carson. USPI grew the system before a restructuring of the USPI group in 2012, which resulted in it becoming an independent company majority owned by Welsh Carson, the companies said.
Tenet says the Aspen acquisition provides an opportunity to enter the U.K. market, where there is a growing demand for private healthcare services due to an aging population, growth in consumer spending, and more opportunities for private providers to work within the National Health Service.
The deal is expected to be finalized this fall.
Tenet, Baylor Scott & White Health Form TX Partnership
And finally on Monday, Tenet and Baylor Scott & White Health announced a partnership to provide care through five North Texas hospitals in Rockwall, Collin and Dallas counties.
The two providers will jointly own Centennial Medical Center, Doctors Hospital at White Rock Lake, Lake Pointe Medical Center, and Texas Regional Medical Center at Sunnyvale—currently owned and operated by a subsidiary of Tenet – and Baylor Medical Center at Garland—currently owned and operated by Baylor Scott & White Health. Baylor Scott & White Health will hold a majority ownership interest in the five hospitals, and all five will operate under the Baylor Scott & White Health brand.
Financial terms were not provided.
"This is an exciting step as we partner with a like-minded organization to create a strong network that will improve the health of individuals, families and communities across eastern and northeastern Dallas," Gary Brock, president/COO of Baylor Scott & White Health, North Texas, said in prepared remarks. "This partnership demonstrates our commitment to advancing population health in North Texas."
Under the agreement:
The partnership will be governed by a jointly appointed board of managers. Each hospital will have a governing board and independent medical staffs and medical staff leadership responsible for certain medical staff and clinical matters.
Centennial Medical Center, Doctors Hospital at White Rock Lake, Lake Pointe Medical Center, and Texas Regional Medical Center at Sunnyvale will transition to Baylor Scott & White Health.
Tenet will continue to manage the operations of Centennial Medical Center, Doctors Hospital at White Rock Lake, Lake Pointe Medical Center, and Texas Regional Medical Center at Sunnyvale on behalf of the partnership. Baylor Scott & White Health will continue to manage Baylor Medical Center at Garland.
The leadership teams for each hospital will remain in place, and there should be little-to-no change for employees at the five hospitals.
Each hospital will maintain an independent medical staff, and physicians will retain their hospital privileges.
Centennial Medical Center, Doctors Hospital at White Rock Lake, Lake Pointe Medical Center and Texas Regional Medical Center at Sunnyvale will adopt Baylor Scott & White Health's charity care and community benefit standards.
The deal is subject to regulatory review, but is expected to be finalized later this year.
Separately, Tenet's North Texas accountable care organization recently entered into an affiliation agreement with the Baylor Scott & White Quality Alliance, effective February 23, 2015. Baylor Scott & White is the largest not-for-profit healthcare system in Texas.
Humana Sells Concentra for $1B
Also Monday, Louisville, KY-based Humana Inc. announced that it would sell Concentra Inc., a wholly owned subsidiary and one of the nation's largest providers of occupational health, urgent care and physical therapy services, to MJ Acquisition Corp., in a cash deal valued at more than $1 billion.
MJ Acquisition Group is a joint venture formed by Select Medical Holdings and Welsh, Carson, Anderson & Stowe, a private equity fund, to purchase Concentra, which Humana says provides more than 14% of all work-related injury care nationwide.
Humana acquired Concentra in December 2010 in a push to expand affordable healthcare for its membership base. These efforts included investments in primary care physician practices, clinics and medical services organizations. Humana said that the primary care platform proved to be a better way to advance company's integrated care delivery model than Concentra's focus on occupational injuries.
Humana CEO and President Bruce D. Broussard said the decision to sell Concentra demonstrates the company's commitment to vigorous, ongoing portfolio review.
"Though Concentra's operations did not ultimately align with Humana's strategy as well as we had originally anticipated, we believe Humana and Concentra have gained valuable insights into consumer behavior over the past several years that will serve us both well moving forward," Broussard said in prepared remarks. "We expect Humana will continue to invest in other primary care assets, including MSOs, as we continue to expand our integrated care delivery model."
The deal is expected to be finalized by June. Humana will use the net proceeds from the sale to advance unspecified strategic growth priorities, to fund additional share repurchases under its existing $2 billion authorization and for general corporate purposes.
Physicians are receptive to alternative care models, but face daunting challenges, an AMA/RAND report says.
Physicians moving toward alternative payment models are overwhelmed by reams of confusing quality metrics and data from the government and commercial payers and will need help sorting it, according to a new study from the American Medical Association and the RAND Corporation.
"We face the paradox of too much data being directed at physicians, yet there is a dearth of accurate, actionable, and timely information," AMA President-elect Steven J. Stack, MD, said in teleconference with media on Thursday.
Stack says the AMA/RAND report shows that physicians are receptive to alternative care models, but face daunting challenges.
"More needs to be done to streamline and harmonize quality metrics. There is far too much variability in the large array of quality metrics being promoted by multiple payers, both commercial and public," Stack says. "Many of these metrics are not validated, nor is there accuracy in the data being reported back to physicians."
The time and effort spent "managing metric variability for each health plan requires significant resources that could be better spent on the investments practices need to succeed in alternative payment models," Stack says.
RAND researchers examined 34 physician practices in six markets to note the effects that alternative health care payment models are having on physicians and medical practices. The payment models include episode-based and bundled payments, shared savings, pay-for-performance, capitation, and retainer-based practices, accountable care organizations and medical homes.
The study found that many physician practices are partnering or merging with other medical practices or hospitals to better support the costly investments needed to succeed with new payment models, such as care managers and information technology. Practices leaders told researchers that realigning their operations to the goals of the new payment strategies is a challenge when data are not available or different payment models conflict with each other.
"Physician practices need support and guidance to optimize the quantity and content of physician work under alternative payment models," Mark W. Friedberg, MD, the study's lead author, an internist, and a senior natural scientist at RAND, said at the teleconference.
The report found that most physician leaders were optimistic about alternative payment models, while physicians not in leaderships were apprehensive, particularly with regards to new documentation requirements. There were also concerns that the new data would increase "busy work" at physicians' expense.
"Many of them were very concerned about physician burnout to the extent that participating in an alternative payment model and requiring different work also added to the total amount of work that physicians were doing," Friedberg says.
While most of the physicians queried in the report agreed that the transition to alternative payment models has encouraged the development of team-based care for chronic diseases, they also believe the failure to address their concerns about the complexity of data metrics and requirements could impede the potential for value-based care to improve quality and lower cost.
"Harmonizing key components of alternative payment models, especially the performance measures, would help physician practices respond constructively," Friedberg says. "All that effort spent wrangling the measures and trying to synthesize them into something actionable could be spent elsewhere and practice leaders could more fully devote their efforts to care improvement for patients."
