Don Berwick, the embattled former administrator of the Centers for Medicare & Medicaid Services, should be proud. Consumers are embracing the triple aim of healthcare: better care, better health, and lower cost. Okay, they may not be familiar with Berwick's mantra, and they may not understand all the in and outs of healthcare reform, but a look at a consumer survey from the PwC Health Research Institute indicates that they have embraced some of the basic tenets.
Health insurers need to sit up and take notice. Jeff Gitlin, a partner at PwC Health Industries, says the survey results show that consumers are interested in taking a more active and educated role in assessing their healthcare coverage options. "We're seeing a willingness on the part of consumers to look at different care models," he says.
That doesn't mean consumers are going to march into their physician's offices and demand to be part of an accountable care organization, but the survey results do demonstrate that consumers have embraced many of the big ideas of healthcare reform.
Here are some of the key findings of the PwC consumer survey: Consumers want their health plans to link cost and effectiveness. Just over half (52%) of consumers surveyed indicated interest in value-based insurance plans, which reward their members for using cost-effective treatments while charging higher prices for new treatments where the benefits are not proven. Health plans have been releasing a steady stream of products aimed at meeting this demand, including one old chestnut: the narrow network. Years ago narrow networks were often based around a particular hospital and its contracted providers and reimbursement rates. This time around, health insurers are developing narrow tertiary care networks connected with primary care physicians and based on the delivery of quality and coordinated care.
Consumers put off care. In the short term this is sweet for health insurers, who have seen their bottom lines explode as members limit visits to physicians and hospitals. At issue are higher deductibles and co-payments, which often cramp utilization. Some 46% of respondents to the PwC survey said they deferred care—some as many as five times—in the past year because of cost. Studies have shown that deferred care often includes cutting back on prescriptions and preventive services such as vaccinations, mammograms, and cancer screening. That could mean long-term trouble for insurers in the form of increased medical bills and declining revenue.
Consumers think integrated healthcare is a good idea. Some 72% prefer an integrated healthcare model, with 38% linking that model to reduced healthcare costs. Meanwhile, 36% think the quality of care will increase if their health insurer and hospital or physician merge. Health insurers committed more than $2 billion in the last year to acquire or align with physician groups, clinics, and hospitals, according to PwC. That's probably just the tip of the iceberg. Gitlin says it's just a matter of time before integration becomes more of a differentiating factor for consumers in the selection of providers.
Consumers are willing to share their medical data. Sixty percent of survey respondents are willing to share data among healthcare organizations to improve their care coordination and 54% said they are okay with sharing data to support real-time decision-making for their care. That's good news for the Department of Health and Human Services, which has been promoting information exchange as part of healthcare reform. Farzad Mostashari, MD, the national coordinator for health information technology at HHS, likes to mention a study that looked at the delivery of basic care for diabetics, such as getting their eyes and blood sugars checked. Only 7% of people with paper records had that basic standard of care, compared to 51% with electronic records.
Consumers are looking forward to health insurance exchanges. Thirty-seven percent of the respondents indicated HIX will make it easier to find and purchase a competitive health insurance plan. Health plans considering skipping HIX may want to reconsider. Thirty-four percent of consumers said they would have a less favorable impression of a health insurance company that decided not to participate in their state's health insurance exchange.
Consumers want to "friend" you. About one-third of survey respondents have used social media channels for healthcare purposes, such as connecting with health organizations and other people with shared health interests. Facebook (18%) and YouTube (12%) are the most popular social media venues. Health plans are employing social media to let their members know about plan benefits, personal health, and wellness goals, among other uses. Healthcare organizations are experimenting with building stronger connections and communities through social media, a trend expected to continue in 2012.
Farzad Mostashari, MD, ScM, is the national coordinator for health information technology at the Department of Health and Human Services. In a telephone interview with HealthLeaders Media Mostashari spoke about the challenges his office faces, the importance of patients being involved in their care, and how his office is working to protect patient medical records.
HLM: What are three toughest challenges you plan to tackle in 2012?
Mostashari: Adoption of meaningful use, information exchange and interoperability, and maintaining privacy and security. We want 2012 to be a huge year for meaningful use. I think doctors, hospitals, and vendors are geared up. It will be an enormous year for providers who qualify for the incentive, but more importantly to start to establish the information foundation for delivering care that is inconceivably better in all ways—higher quality, safer, more patient-centered, and more coordinated.
It is fantastic to have the records in an electronic format in the doctor's offices and to have those records used to take better care not just of individual patients, but of the entire population of patients.
It is just as important that those records be shared across the different settings when the patient moves from outpatient to inpatient care, then back home or to a long-term care facility, and back to the primary care doctor's office and then to specialist. We're really pushing in major way on information exchange and interoperability.
Of course, what has to be paramount for everybody is the shared responsibility of maintaining the privacy and security of those patient records.
HLM: Where will meaningful use be at the end of 2012?
Mostashari: Wildly successful! In the last two years more doctors adopted electronic health records than adopted them in the 20 years before that. Adoption doubled in two years. It's intense.
When you look at gold standard surveys out of the CDC, over half the doctors intend to go for meaningful use and for hospitals it's even higher. If you look at registrations for the meaningful use program, over 100,000 doctors have registered for the program and over half of all hospitals have registered for the program.
They're not doing it for their health. They are doing it because they intend to apply for meaningful use and we intend to help them get there.
HLM: What do you think has been the big hang-up in implementing the exchange of patient information?
Mostashari: It's really three things: reducing the cost of exchange, increasing the value, and creating the preconditions for trust to emerge. The bottom line is that the cost of exchanging patient information has to be less than the value that the provider gets from moving that information. We're trying to reduce the cost of those transactions through standards, so you don't have to build $10,000 or $50,000 interfaces to get through to whoever you want to talk to.
We're getting the industry to come together to create how the information will be packaged, the code systems to be used, and the interfaces and specifications to be used so we're driving down the cost of those standards.
We're working with states to have some shared services to make sure everyone has access and to reduce costs there.
Private health plans, Medicaid and Medicare are putting out new models for paying for care that rewards coordination (so) we're seeing the value proposition start to emerge for information exchange.
On the technology side, we're going to see standards that enable of low cost exchange so we're going to see the value proposition rise. Once the preconditions are there for information exchange, the only thing needed is trust.
I think we're going to see information move in a trickle in local networks where people have relationships and know each other and trust each other for particular purposes. That trickle will become a flow and that flow will become a flood as trust grows.
HLM: A recent PWC consumer survey indicates that patients are willing to share their data to improve care.
Mostashari: How about that! You know why patients say that? Because when they go to the specialist the specialist says: "Tell me why you are here. I didn't get anything on you." People like their doctors. They like their doctors' office. They like their healthcare providers. They respect them and they trust them. One thing that no one would question is that it's a problem that doctors and hospitals don't talk to each other. That is abundantly clear.
When we look at diabetes care and there's a landmark study out of Cleveland that found that if you look at the basic stuff, the right care for someone with diabetes like getting their eyes and blood sugars checked, only 7% of people with paper records had that basic standard of care compared to 51% with electronic records.
But people don't see that. They don't know that and maybe they don't want to know that. That advantage of electronic health records maybe is a little bit lost on people. But the part about sharing information, nobody doubts that their doctors and hospitals could be talking more.
HLM: In terms of privacy and security, there have been so many breaches. How are you going to bring everything under one umbrella and make this all happen?
Mostashari: It has to be a shared responsibility, so we have to work with our partners. That's the only way we're going to be able to succeed. People trust their doctors and one of the things they trust their doctors for is to keep their record secure. That goes back to the Hippocratic Oath.
We're working with doctors, hospitals and clinics all over the country to have them learn the best practices, to make sure they are meeting the HIPAA security standards, and to mitigate risks so they don't put patient data in harm's way. It's simple things like making sure if there's data on a laptop then the laptop is encrypted, so if stuff is stolen or lost you don't have a breach of privacy.
There's also the important partnerships. The Office of Civil Rights enforces those breaches and makes sure that if there is willful disregard on the part of a covered entity for protecting that information that enforcement takes place. There have been literally millions of dollars in fines levied against organizations.
The new protections under the HITECH Act mean not only do they have to pay higher fines but they literally have to alert the media and the patients if they have a significant breach of patient records. We're working with vendors to make sure they have the capabilities within certified electronic health records to do the encryption, to make sure there are audit trails that track who opens a file, and to make sure access is protected so that clerical workers don't have to see the clinical data to do their job.
These are just some of the things we are doing with our partners to get all hands on deck to protect the privacy and security of patient information.
HLM: Patient engagement is a priority under healthcare reform. How do you respond to the argument I hear a lot that physicians really can't lead disengaged patients to water?
Mostashari: I think there's a germ of truth to that. I think in many ways we (patients) are the ones that are most responsible for our own behaviors, for taking our medications, and for going to the doctor's office in the first place. But I think there is something to the other side too. If we (doctors) get our hackles up when patients ask for copies of their records, which is all too often the approach that some providers have taken, then it changes the conversation.
One of our meaningful use vanguards says 'I love it that the patients correct my medical records. I have an army of fact checkers who care more about this than anyone else possibly could. I give them a copy of their visit notes and they help me correct their records. They tell me what medications they are on that I don't have on my list. They help me fix the diagnosis or whatever else is in my record. I use that as a tool to help engage with the patient, their family and their caregivers.'
There is a difference in providers who don't put the computer screen between them and the patient, who really use the information tools as a way to engage with the patient, and who say to the patient: Look at what I am typing or look at this graph. Here's what is happening with your blood sugars. Log onto a portal and look at your lab results. Feel free to send me a message.
What they find is that patients don't abuse those tools. Not all patients want to, but a lot of patients take advantage of those tools. It does make a difference.
The Centers for Medicare & Medicaid Services has tapped 73 healthcare professionals for its innovation advisors program. Funded with $6 million from the healthcare reform act, the program is designed to help drive improvements to patient care and help reduce healthcare costs. A second group of 120 advisors will be selected in June 2012.
The program, which is managed by the CMS Innovation Center, includes six months of orientation as well as in-person national and regional meetings, virtual training sessions, and seminars and presentations by healthcare experts. Each advisor will receive a stipend of about $20,000 to help cover the cost of transportation, lodging, and other expenses.
This first group of advisors includes clinicians, allied health professionals, health administrators, physicians and nurses from 27 states. Each one is required to develop a systems improvement project that will be scalable to other areas.
Julie Lewis, vice president of health policy and government relations for Amedisys, will look at care management for high risk elderly patients. Tina Schwien, quality improvement consultant at Qualis Health in Seattle, is developing a project to engage patients and their families to help reduce hospital acquired infections.
Lewis, who works out of Washington, D.C., says her project is an offshoot of some work she did with Jeffrey Brenner while she was at the Dartmouth Institute for Health Policy and Clinical Practice. Brenner, a New Jersey physician, formed the Camden Coalition of Healthcare Providers to provide care management for vulnerable populations in the city. Lewis plans to take that effort a few steps further to test if care management for high risk populations can be sustained and replicated across a larger population.
The project will be based in Louisiana where Amedisys, a home health and hospice company, is based. Plans call for a hospital-physician partnership that initially will treat 50 to 100 Medicaid, Medicare Advantage and indigent patients.
Reassigning care management responsibilities
In this case, innovation dictates how care is administered. Care management will be directed by providers, not by payers as is typically the case. "If a physician contracts with eight plans, that can mean dealing with eight care managers and that can make care coordination very difficult," Lewis explains. In measuring its success, Lewis says the project will look at utilization metrics, inpatient hospitalizations, and patient and caregiver experiences.
Lewis is committed to the innovation program for 12 months but expects her project to extend beyond that time period.
Reducing infections
Tina Schwien says her project will build on her work with quality improvement organizations. As she has looked at healthcare delivery she has become interested in how patients and their families, which she describes as "untapped resources" can be engaged to reduce the incidence of hospital-acquired infections. With a hospital partner, she will have to explore whether teaching families about the symptoms of infection will help identify potential problems more quickly.
Her project will focus on three common HAIs—surgical site, clostridium difficile, and catheter infections. The key she says will be to find "ways on a daily basis where the patient and family will be engaged in the process of reducing HAIs. That could be something as simple as remembering to wash their hands when they walk into the patient's room."
She hopes to identify steps to reduce infections that can be adapted and tailored to different hospitals. "I want this to become part of the hospital culture."
Schwien says participating in the innovation advisor's program is a great opportunity. "There is energy around the idea of innovation that this program captures. The time is right for sharing best practices."
Like a battered fighter who keeps coming back for another round, Florida is not giving up on its quest to be granted a waiver from the medical loss ratio requirements required by the Patient Protection and Affordable Care Act.
Florida officials have appealed the Centers for Medicaid & Medicare Services' decision to deny the state's request for a waiver to allow health insurers more time to meet the MLR requirements.
In a December 30, 2011 letter to CMS's Steve Larsen, the Florida insurance commissioner, Kevin McCarty, contends that 'failure to obtain the requested adjustment will cause permanent, irreparable harm to our market and the distribution channel for health products and services.'
The PPACA requires that health insurers spend no more than 15% to 20% of their annual premium dollars for individual policies on administrative expenses beginning in 2011. Health plans that don't meet the MLR standard must provide a rebate to their customers.
In the waiver request filed with CMS in March 2011, Florida officials asked for an adjustment of the MLR standard to 68%, 72%, and 76% for 2011, 2012, and 2013, respectively.
That request was denied in mid-December 2011. At that time Larsen noted that with 20 carriers, Florida has a very competitive individual health insurance market and there was no indication that meeting the MLR requirement would create a hardship for the insurers.
McCarty's letter, which also requests 'further time to augment and amplify' the state's waiver application for reconsideration, refers to the departure of six carriers as proof that 'significant damage to our marketplace has already occurred.' While noting that the six represent a 'relatively small portion of the marketplace,' the letter contends that the departures 'translate into fewer products and less competition' for the individual market.
The letter also cites the effect of the new MLR ratios on the agent and broker workforce. According to an informal survey, agents have already faced reduced commissions, layoffs, and reduced compensations.
CMS has not issued a timeline for reaching a decision on the appeal. It took CMS about two weeks to recently deny Louisiana's appeal request.
Meanwhile, Kansas and Oklahoma officials learned on Wednesday that their waiver requests have been denied. Kansas asked for MLR adjustments of 70%, 73% and 75% for 2011, 2012, and 2013, respectively. Oklahoma wanted its MLR requirement set at 65% in 2011, 70% in 2012 and 75% in 2013.
CMS made similar findings in both appeals, noting that because no issuers are likely to withdraw from the either state's individual market it was unlikely that the MLR requirement would destabilize the market.
The agency also noted that issuers in the Kansas and Oklahoma individual markets either already meet the 80% MLR standard, or are 'adapting their business models in order to continue to achieve sustainable financial performance in that market, as well as to comply with, and benefit from, the provisions of the Affordable Care Act.'
John Doak, the Oklahoma insurance commissioner, released a lengthy statement criticizing the MLR waiver decision, asserting that it could lead to a 'massive disruption' of Oklahoma's insurance market. 'MLR is an arbitrary and superficial means of judging the worth of an insurance company to its policyholders,' Doak said.
'Just because one company is able to attribute a smaller percentage of its operating costs to each policyholder does not necessarily mean its policyholders received a greater value for their dollar.'
According to the release, Doak supports efforts to repeal PPACA. 'We look forward to the coming months as the Supreme Court will hear challenges filed against this law, and I look forward the eventual, total repeal of the Act.'
Still, Oklahoma officials aren't ready to pull the trigger on a definite appeal of the waiver denial. 'Any determination to appeal will be based on a thorough analysis by the Oklahoma Insurance Department of the rationale behind the denial,' Glenn Craven, spokesperson for the department told HealthLeadersMedia in an e-mail exchange. 'We would need to find new evidence or make additional points to bolster our case, not just insist that HHS got it wrong.'
Sandy Praeger, the Kansas insurance commissioner, voiced similar concerns regarding a possible appeal. 'As we've looked at 2011 data, it looks like insurers are making adjustments and getting close to the 80/20 requirement.' In a telephone interview she explained that the state's primary concern is to protect the individual market. 'It's not huge, but everyone [insurers] is important and we don't want anyone to leave.'
Only 17 states and Guam filed MLR waiver requests and CMS has acted on all but three: North Carolina, Texas, and Wisconsin. CMS has granted six waivers: Georgia, Iowa, Kentucky, Maine, New Hampshire, and Nevada.
It denied a waiver for Guam and eight states: Delaware, Florida, Indiana, Kansas, Louisiana, Michigan, Oklahoma, and North Dakota.
Our intrepid members of Congress return from their year-end holiday and district work sessions breaks in a couple of weeks. While a heaping plate of healthcare concerns will demand their attention, here I focus on four items I'd put at the top of the pile.
1.Fix the SGR
In the current political climate it is laughable to imagine that Congress will look long-term (meaning beyond the next election cycle) and either repeal or replace the sustainable growth rate, but that is exactly what needs to happen.
When the SGR was developed back in 1997, its formula was designed to control Medicare spending on physician services. Everything worked pretty well when the formula was followed, but about 10 years ago Congress began tinkering with the SGR and overriding the formula.
Now doctors are looking at a cumulative 27.4% reduction in reimbursement rates in 2012. Just before its holiday break, Congress did step in and delay the reduction for 60 days with an eye to extending it for a full year, but just about everyone agrees that it's time to bite the bullet and do something permanent with the SGR.
What's particularly egregious is the across-the-board application of the reduction. Cost-conscious physicians get slapped with the same reduction as spendthrifts, which mean there's no incentive to practice the triple aim of better care, better health, and lower costs.
The Centers for Medicaid & Medicare is awash in demonstration projects that reward efficient and effective care. How about developing a system wide approach to reimbursement that employs lessons learned from the demonstration projects?
What Congress might really do
It's an election year so don't expect to see any new trails blazed on this issue. Looks like we're in for another one-year extension, which means a lame-duck Congress will take up the issue (again) at the end of 2012.
2.Don't mess with the new MLR rules
Health insurance agents and brokers are angry about the medical loss ratio and worried that new requirements in the federal Patient Protection and Affordable Care Act will hit them where it hurts—their bank accounts.
The National Association of Health Underwriters lobbied hard to get the Department of Health and Human Services to exclude broker and agent fees from MLR administrative cost calculations, but HHS declined to make the change in the final rule.
Now there's talk that Congress may step in and try to reverse that decision. But consider this General Accounting Office report, which concludes that 64% of all healthcare insurers in 2010 would have met or exceeded the 2011 MLR requirements contained in PPACA. And the PPACA itself expands the MLR definition to include programs like case management for chronic diseases, care coordination, quality initiatives, and the IT needed to support the programs.
Those extras will help insurers increase their MLRs. Yes, some insurers are paying lower sales commissions but that's one step among many that they are taking to boost their MLRs. Congress needs to give the system some time to work.
What Congress might really do
The House Energy & Commerce Committee's Subcommittee on Health held a number of hearings in 2011 on the issue of broker commissions and is itching to do something. Still, HR 1206, a bill to "preserve consumer and employer access to licensed independent insurance producers" has languished in the committee since March 2011. There doesn't seem to be a big legislative appetite beyond the subcommittee for this particular fight.
3.Give the IPAB a chance
The controversy that surrounds the Independent Payment Advisory Board has the makings of a great novel—with power, politics and money at center stage. IPAB is empowered to analyze the drivers of Medicare cost growth and then to recommend to Congress policies to control those costs, if spending exceeds a targeted growth rate.
The 15-member board, which will be named by the president and confirmed by the Senate, will be comprised of doctors, nurses, medical experts, and consumers. Supporters see IPAB as similar to Medicare Payment Advisory Commission (MedPac), but with the power to implement what it decides needs to be done. IPAB recommendations will be put in place unless Congress votes to block them and comes up with equivalent cost-cutting measures.
Congressional objections to IPAB seem to focus on the potential power of the un-elected IPAB board. If IPAB is implemented, Congress may not control the purse strings when it comes to Medicare. Stakeholders such as the powerful American Medical Association aren't too thrilled with IPAB's potential to cut provider payments.
Meanwhile America's Health Insurance Plans objects to the exemption of hospital costs from IPAB consideration until 2019. On the other hand, the American Academy of Actuaries has crunched some numbers and thinks IPAB needs more authority to help move Medicare toward a more sustainable financial model.
What Congress might really do
Congress is focused on repeal when tweaking is probably what's needed. Both the Senate and the House have bills in place to repeal IPAB. More than half of the House members, including some Democrats, have signed on as co-sponsors of HR 452. The House bill may gain some traction, but that won't make any difference unless the Senate can get something bipartisan going.
S 668 was introduced in March and sits in the Senate Finance Committee. The bill has 32 Republican co-sponsors and zero co-sponsors from the other side of the aisle, which means it will probably go nowhere.
4. Stop leaving everything to the last minute
As crazy as it may seem, people in the real world (outside of Capital Hill) are actually affected by many of the decisions Congress makes. So when members talk about how important is it to develop long-term plans to tackle Medicare reimbursements or payroll taxes it's annoying to watch Congress run the clock down to minutes before a calamitous deadline and then settle on short-term, patchwork action that simply postpones real resolution. Until the cycle starts up again. It's time to stop this.
What Congress might really do
With Congressional approval ratings hovering in the single digits expect members of Congress to return from the holidays with a spring in their step and a determination to boost their ratings by rolling up their sleeves and making the hard decisions. Gotcha! After much hand wringing and finger pointing it will be business as usual on Capital Hill. Oh wait. It's an election year. So things will move even slower.
A rule proposed by the Centers for Medicare & Medicaid Services to allow changes in the governance structure and medical staffing at hospitals has little support among the more than 100 public comments submitted.
The rule is part of an extensive CMS review of the entire set of conditions for participation (CoP) that hospitals must meet to participate as deemed hospitals in the Medicare and Medicaid programs. CoP requirements have been reviewed and revised on an ad hoc basis, but this is the first time in many years that CMS has undertaken a retrospective review of the CoP.
The proposed revisions fall into several broad categories, including governance, staffing, care plans, medications, infection control, and transplant organ recovery. Among the specific proposals:
Allow one governing body to oversee multiple hospitals in a single healthcare system.
Allow hospitals to grant privileges to physicians and non-physicians to practice within their state's scope of practice regardless of whether they are appointed to the hospital's medical staff.
Revise nursing services requirements to allow hospitals to develop either a stand-alone nursing care plan or an overall interdisciplinary care plan.
Allow hospitals to set up a program so patients or a support person can self-administer hospital-issued medications as well as the patient's own medications brought into the hospital.
Eliminate the requirement that a dedicated log of infection incidents be maintained and instead allow hospitals to develop their own tracking systems.
Eliminate the blood typing requirement performed by transplant centers before organ recovery takes place.
The comments filed were primarily from individual physicians and nurses. The usual stakeholders also weighed in, including the American Hospital Association, American Nurses Association, and the American Medical Association. Comments were also submitted by the American Telemedicine Association, Catholic Health Initiatives, and the National Kidney Foundation.
Here's a sampling of the comments posted on regulations.org:
A 13-page letter signed by more than 80 physicians groups, including the AMA, the American Academy of Family Physicians and the American College of Surgeons, takes issue with proposed changes to the existing governance and medical staff regulations. The letter notes that CMS is not statutorily authorized to reduce the regulatory burden for hospitals or to address healthcare workforce shortages. "The statute limits CMS' authority to promulgate the CoPs in furtherance of the health and safety of hospital patients." The letter adds that the proposed changes "would be detrimental to the health and safety of patients in the hospital setting."
To allow one governing body to oversee multiple hospitals in a single healthcare system would "disenfranchise the patients of any hospital…that is unique among its member hospitals for any reason, including geographic location, services rendered and patient demographic," says the letter.
Stephen P. Blatt MD, president-elect of the Good Samaritan Hospital medical staff in Cincinnati, agrees saying, "allowing a single governing body to oversee all hospitals within a multi-hospital system would further remove the governing body from the daily operations, governance and medical staff affairs of each individual hospital. Governing bodies are essential for maintaining quality of care within hospitals and health systems and having them further removed from these issues will only worsen safety and quality of care."
No surprise that the American Hospital Association supports the governing change. "This change recognizes the more integrated organizational model adopted by many hospitals." The AHA asked CMS to clarify that hospitals with more than one CMS certification number may have a single governing body.
In its letter the AMA group also opposes allowing hospitals to grant privileges to physicians who are not on the medical staff of the hospital. The move would "allow a hospital to …exclude some physicians from the medical staff. This proposal would undermine the medical staff's chief function: self governance."
The Tennessee Medical Association notes that "the stake in quality for those of the staff and thus responsible for quality would be much different from the class beholden to the business side of hospital administration."
"The hospital medical staff is best suited and most qualified to determine provider privileges at their respective facilities," says Steve Campbell, who is identified only as being from South Carolina. "Allowing some providers to circumvent medical staff oversight will detrimentally impact patient safety and quality of care afforded to Medicare beneficiaries and all patients. In my 20 years of working in a hospital setting, I have seen cases where physicians were denied hospital staff privileges because their practices were unrelated to the mission of the hospital or their practice patterns did not meet the medical community standards. To legitimize these practices by giving them hospital status would be a disservice to the community."
The American Nurses Association would like to CMS to add language to ensure that all medical practitioners are granted clinical and medical staff privileges, including voting rights and full due process. The ANA would like advanced practice registered nurses to have admitting and discharge privileges, as well as the ability to serve on hospital committees. It supports efforts to allow hospitals to develop either a stand-alone nursing care plan or an overall interdisciplinary care plan as long as "it is recognized that nurses alone are responsible for development of the nursing care plan."
Stephanie Hutchins, an RN in California, opposes allowing the patient or a support person to administer medications in the hospital setting. She notes that studies have shown that 30% to 50% of patients ignore or otherwise compromise instructions concerning their medication. "If a person other than the nurse administers medications in the hospital, the potential for lack of adherence and therefore lack of crucial therapeutic benefit from the prescribed meds in the hospital is high. Also, if nurses are required to monitor meds given by a person other than the nurse to ensure adherence, it would create a time backlog for the nurse, negating much of the benefit of having them given by another person."
The proposal to allow hospitals to develop their own tracking systems for infection incidents is not a good idea according to the National Nurses Union, which represents 170,000 members. "There is no empirical evidence cited supporting this. The change…is being made solely on the basis of providing flexibility to the industry. Hospitals know their reimbursement, quality data, and public perceptions will be affected by infection rates, so they have a vested interest in eliminating this requirement or rendering the data meaningless …by a lack of uniformity and transparency in recording and reporting."
Catholic Health Initiatives, a Colorado-based health system with facilities in 19 states, supports allowing patients and their caregivers to administer personal and hospital-based medications. "CMS is recognizing that different hospitals have different needs and that many hospital patients are already on maintenance drugs." CHI also supports the elimination of the dedicated log of infection incidents. "Currently, CMS requires an infection and communicable disease log separate from the hospital's general infection control surveillance policy. CMS is proposing to remove this redundant and burdensome requirement."
The National Kidney Foundation agrees with the elimination of the requirement that the transplantation team verify blood type before organ recovery because organ procurement organizations already perform that function. But to prevent medical errors the foundation wants the multiple checks of blood types to be maintained before transplantation. In its letter the foundation noted recent deaths related to incompatible organ transplants.
The American Telemedicine Association wants CMS to consider the advantages of telemedicine in setting requirements for emergency care and stroke treatment. "In the last 10 years telestroke initiatives have been instituted in practically every state…it is now time for CMS to take the next step to allow hospitals the use of telemedicine to eliminate the burden and cost of maintaining their own stroke specialists."
The comment period for the proposed rules ended Dec. 23. CMS has not announced a time frame for issuing its final rule on hospital conditions of participation.
What criteria and methods should the Department of Health and Human Services use in deciding the list of diagnostic, therapeutic, and preventive healthcare services which constitute the so-called essential benefits that private insurance companies must offer low- and moderate-income uninsured Americans?
That was the question the Institute of Medicine set out to determine in January. In October, it issued a 300-page report, Essential Health Benefits: Balancing Coverage and Cost, which set out the methods and criteria that the IOM recommended be used to develop a list of essential health benefits, as mandated by the Patient Protection and Affordable Care Act.
Those benefits must be offered?beginning in 2014?by health insurance exchanges, and individual and small group health insurance policies. PPACAcharges HHSwith making the final call after getting input from the Department of Labor and the independent Institute of Medicine.
Two weeks ago, HHS boiled the IOM report down to a 15-page bulletin that can be summarized in five words: Let the states do it.
The move caught almost everyone by surprise. Consumer groups quickly released critical statements noting that 50 states would mean 50 different interpretations of essential health benefits. Political observers were more pragmatic, suggesting that HHS punted the essential benefits decision to the states in an attempt to blunt potential Supreme Court case arguments that the federal government was taking over the country's healthcare system.
At the IOM, reaction to the HHS bulletin was critical, but hopeful. John Ball, who chaired the IOM committee, told me in a telephone conversation that the committee looked at essential benefits in terms of how to offer the most comprehensive, medically effective benefits at a cost that could be managed by employers and employees. "Our plan emphasized paying for care that is medically effective. I don't see that in the HHS bulletin."
The bulletin is not HHS's final word on essential health benefits. It's more of a trial balloon or a test of just what will fly and what won't.
The IOM's cost strategy looked at what a typical small business would pay for health insurance coverage in 2014 if healthcare reform wasn't in effect and suggested fitting essential benefits into that payment structure. Ball explained that the committee heard complaints about the skimpy health insurance plans offered by some small employers and thought that this approach would help make sure employees were paying for meaningful health insurance coverage.
In regard to the HHS bulletin, Ball said, "the issue of cost still very much needs to be addressed." He noted that HHS promises to revisit the issue in 2016 so "everyone will have another chance to look at costs."
The PPACA specifies 10 broad categories of medical care that must have their essential benefits defined:
Ambulatory patient services
Emergency services
Hospitalization
Lab services,
Maternity and newborn care
Mental health and substance use disorder services
Pediatric services, including oral and vision care
Prescription drugs
Preventive and wellness services, including chronic disease management
Rehabilitative and habilitative services and devices
The Department of Labor took its own swing at the essential healthcare benefits effort in April 2011. Its report was barely acknowledged by HHS. Meanwhile, trade groups and lobbyist dismissed the DOL effort as irrelevant and minimalist after noting that the report was skewed toward benefits offered by large employers and had little application to individuals and small groups.
The IOM's 18-person committee composed of academics, actuaries, health system executives, health insurers and policy wonks was charged not with defining the benefits, but rather with recommending a set of criteria and methods for HHS to use in deciding the actual list of essential benefits.
The group's final report stressed medical effectiveness, safety, and costs. It provided recommendations in five areas:
Develop a premium target. HHS should determine what the national average premium of typical small employer plans would be in 2014 and match the benefits to that premium cost.
Define priorities. Hold a series of small group meeting around the country to discuss the benefits and costs of different plan designs, including coverage-specific services and cost-sharing.
Ensure appropriate care. Only medically necessary services should be covered and the definition of "medically necessary" should depend on individual circumstances.
Promote state-based innovations. HHS should grant states' requests to adopt alternatives to the EHB package only if the alternatives are consistent with PPACA requirements and do not vary significantly from the federal package.
Update the EHB. HHS should update the EHB package annually, beginning in 2016. Advances in medical science and cost should define the updates. A National Benefits Advisory Council should be appointed to offer external advice.
Reaction to the IOM report was generally favorable although there was grumbling from consumer groups that wanted the IOM to endorse robust benefits and to not worry so much about costs.
HHS faces a tight timeline for establishing EHB. Health insurance exchanges have already been a tough sell in many states where the political powers that be view healthcare reform as yet another federal mandate that will be costly for states to implement.
HHS took IOM's advice and conducted three listening sessions in Washington, DC for provider groups and consumer advocates, as well as one session for health plans and employers. The department also held a conference call with state government representatives to hear their thoughts on the EHB policy. HHS also held 10 sessions across the country that drew more than 1,000 participants.
HHS identified these key themes:
Consumer groups are concerned about the IOM's emphasis of cost over the comprehensiveness of benefits while employers supported the IOM conclusion that the benefits be based on small employer plans.
Consumer groups want specific benefits to be identified while employers said they preferred more general guidance and flexibility.
Consumer groups are worried that about discrimination against individuals with particular conditions. Employers stressed concern about resources and asked for a moderate benefit package.
Consumers favor a uniform benefits package that included state mandates. Employers and others focused on the need for flexibility to reflect local preferences and practices.
For now it seems that employers, health plans and government officials have won the latest battle of the benefits. HHS has announced that each state will have the flexibility to select an existing health plan to set the benchmark for the items and services included in an essential health benefits package.
States will still have to make sure that their health insurance plans cover the 10 categories of care mandated in the PPACA, but this decision provides states with flexibility in how the categories will be covered.
But remember, this was all released as a bulletin. That means HHS is testing the waters and probably expects the give and take to continue. Comments are welcome at EssentialHealthBenefits@cms.hhs.gov until Jan. 31, 2012. The final rule is expected in May.
Health plans—at least, most of the big nationals—have money burning a hole in their pockets, and they are on the hunt for investments. Health plans specializing in government health insurance programs continue to be attractive acquisition targets but insurers also are looking for ways to diversify their holdings to influence the cost structure along the continuum of care.
Here’s how the year may play out for health plans.
1. Health insurers may be acquired by hospitals
It’s déjà vu again for provider-sponsored health plans. Back in the 1990s, with an eye toward upstream revenue, almost every self-respecting hospital had its very own health plan. That arrangement fell out of favor and hospitals dropped those health plans like the proverbial hot potato. Fast forward to 2012 and guess what?
With patient volumes and case mixes in decline, hospitals once again want to get involved in the financing end of healthcare delivery. Hospitals want to be able to control where dollars get spent for services and networks. That means owning a health insurance company. The nationals such as Aetna and WellPoint won’t be in play, but expect regional hospital systems to take a hard look at regional health plans. Medicaid plans, especially in states where managed care is being implemented, will also be attractive acquisition options.
2. Medicare Advantage will stay hot
Enrollment in Medicare Advantage plans is exploding as baby boomers, who have experience with managed care, turn 65 years old. CIGNA, Humana, UnitedHealth, and WellPoint each happily opened their wallets in 2011 to acquire MA plans. Expect interest in the senior segment to continue as insurers with strong cash positions compete for a share of this lucrative market.
These acquisitions can create an opportunity for commercial insurers to attract lifelong members who can be easily shifted to a Medicare Advantage plan at age 65. The MA market is fragmented, and analysts say it’s getting harder and harder for small MA plans to achieve those important economies of scale. Time is of the essence, as coding changes that will be implemented for hospital reimbursements beginning in 2013 will require costly investments in IT that will be tough for small MA players to afford.
3. Medicaid insurers will get hot
As state budgets flounder and Medicaid costs increase, states are turning to Medicaid managed care to try to control those program costs. Adding to the problem—or opportunity, depending on your outlook—is that as part of healthcare reform, Medicaid eligibility standards will expand in 2014 and 2015, with coverage available to all individuals under age 65 with incomes up to 133% of the federal poverty level.
Enrollment is expected to increase by 30%—adding about 17 million beneficiaries to the Medicaid rolls. The size of the potential market has the attention of commercial insurers, which are seeking turn-key acquisitions that provide an immediate presence in the Medicaid market. Meanwhile, existing Medicaid insurers are looking to expand their footprint. Either way, 2012 looks like a good year for Medicaid insurers who want to make a deal.
4. The spending spree will continue
Aetna recently announced that it has a jaw-dropping $1.3 billion set aside for acquisitions and stock repurchases in 2012. The giant health insurer didn’t provide any clues on what acquisitions it might be looking at, but the health insurance industry as a whole has been on something of a diversification kick, moving away from simply insuring care to the actual delivery of care.
Physician groups, clinics, and even entire health systems have been acquired as health plans seek to manage costs on the clinical side of the health delivery process. Expect more of these deals in 2012.
Health plans are looking for companies that can help them with medical management along the continuum of care. Humana’s recent acquisition of SeniorBridge, which manages care complex chronic care for older patients, is a good example. That will help Humana as it grows its Medicare book of business.
Finally, expect information services and data analysis to grow in importance as health plans try to increase administrative efficiencies while integrating new business lines.
The Pioneer ACO is an accelerated version of the original shared savings ACO program. It was developed after organizations experienced with coordinating patient care and managing risk complained that the ACO program was too stringent in its design. "We weren't happy with the original ACO program because it didn't allow for any flexibility," John Hensing, MD, executive vice president and chief medical officer for Banner Health Network, told HealthLeaders Media. "With the Pioneer program, we were able to negotiate the exit strategy and risk-sharing terms we needed to make the program work for us. Now we're excited to play a role in what we think is a transformative time in healthcare."
Organizations named to the Pioneer ACO program come from 18 states and include large independent practice associations, integrated delivery systems, and physician-based and hospital-based teams that represent 860,000 Medicare beneficiaries. More than 160 letters of intent were received for the program, which ultimately attracted 80 applicants.
In addition to Phoenix-based Banner Health, other Pioneer ACOs include Atrius Health, an independent physician group with offices in central and eastern Massachusetts; Brown & Toland Physicians in the San Francisco area; Franciscan Health System in Indianapolis; and Physician Health Partners in the Denver area.
"Pioneer ACOs are leaders in our work to provide better care and reduce health care costs," said Kathleen Sebelius, HHS secretary, at the press conference held to announce the Pioneer ACOs. "We are excited that so many innovative systems are participating in this exciting initiative—and there are many other ways that health care providers can get involved and help improve care for patients."
The Pioneer ACO model will test a shared savings and shared losses payment arrangement with higher levels of reward and risk than in the ACO shared savings program. In year three of the program, Pioneer ACOs that have shown savings over the first two years will be eligible to move to a population-based payment model that is intended to replace some or all of the ACO's fee-for-service payments with a monthly payment.
The contracts require that more than 50% of all patients in an ACO move to global payment–type contracts by the third year.
Gene Lindsey, CEO of Atrius Health, said his physician groups looked at the shared savings ACO but like the Pioneer model better because it is more focused. Atrius Health will begin with 26,000 participating ACO patients and expects to grow that number to 40,000 participants within three years. His group hopes to leverage what it learns in the Medicare program to develop a commercial ACO.
Five groups in the Boston area were named Pioneer ACOs. Lindsey believes that public acceptance of the ACO concept will be higher as a result, adding, "I expect we'll share information, especially best practices, and develop learning collaboratives."
The first performance period for Pioneer ACOs will begin Jan. 1, 2012.
It has been a year full of health plan surprises as insurers prepare for the continued implementation of healthcare reform. Controlling the patient cost curve was the focus of mergers, acquisitions, and new alliances undertaken during 2011.
New rules set minimum standards for medical costs, and one insurer took a controversial step it hopes will help control healthcare costs. And as an early Christmas gift for health insurers, the Department of Health and Human Services declined to set a federal standard for essential benefits.
Here, in no particular order are the top health plan stories of 2012:
1.HHS Punts on Essential Health Benefits
Charged with the political hot potato of deciding just what benefits health plans will be required to cover as part of the Patient Protection and Affordable Care Act, HHS took a time honored approach—it kicked the decision down the road.
On a Friday afternoon in mid-December when most people were probably thinking more about Christmas shopping than healthcare policy, HHS announced that each state will have the flexibility to select an existing health plan to set the benchmark for the items and services included in an essential health benefits package.
States will still have to make sure that their health insurance plans cover the 10 categories of care mandated in the PPACA, such as preventive care, emergency services, maternity care, hospital and physician services, and prescription drugs, but this decision provides states with flexibility in how the categories will be covered.
2.Four Health Plans Agree to Share Information
In September Aetna, Humana, Kaiser Permanente, and UnitedHealth Group launched the Health Care Cost Institute and agreed to provide 10 years of information on more than five billion claims representing more than $1 trillion in healthcare spending to qualified researchers.
The treasure trove means that for the first time, researchers will have extensive access to private health insurance data, including utilization and patient outcomes, and its impact on healthcare delivery.
Previously, researchers have had to make do with Medicare data, which covers only 30% of the insured population and is limited to beneficiaries over age 65. Early research projects are focused on how economic conditions and population aging affect costs, and how policies like price disclosure requirements affect costs.
3.Aetna and Carillion Form an ACO
Back in March, before HHS first presented its proposed Medicare shared savings ACO rules, Aetna and Roanoke, VA-based Carilion Clinic announced their collaboration on a commercial ACO featuring co-branded commercial health insurance plans for individuals and businesses as well as new payment models with rewards for meeting quality targets and shared cost savings.
The announcement caused a stir because although healthcare stakeholders were talking behind closed doors and off the record about the possibility of commercial ACOs, few had taken the plunge. Now it seems almost every day there's another announcement about hospitals, health plans, or physicians creating an ACO and developing their own rules for meeting quality standards, cutting costs and earning bonus payments.
4. New Medical Loss Ratio Requirement Takes Effect
Beginning Jan 1, 2011 health plans are required to spend 80 cents to 85 cents of every premium dollar collected on member medical care. Health plans that don't meet the standard may have to rebate millions of dollars back to their members. Health plans are not amused.
They have appealed to their state departments of insurance to request waivers to delay implementation of the MLR requirement. Meanwhile, brokers who work on commissions contend that the MLR is costing them their livelihood. Congress, or at least a couple of House committees, is itching to jump into the fray on behalf of the brokers.
But here's the rub for legislators: nine million health plan members—make that voters??could be eligible to share rebates worth as much as $1.4 billion.
5.Highmark Purchases Its Own Health System
Contract negotiations between payer and providers can often turn a little ugly with both players threatening to walk away from the contract. The protracted negotiations between Highmark and the University of Pittsburgh Medical Center are so acrimonious that the Blues plan acquired a competing health system, West Penn Allegheny Health System.
Motivated by a combination of spite, business sense and altruism, the acquisition means the Highmark-WPAHS team could challenge the dominance of UPMC in the Pittsburgh-area market. But first the successful Blues plan needs to get the five-hospital West Penn system on firm financial footing. Highmark has already committed $475 million to the task.
There's more to this acquisition than just growing market share. Owning WPAHS makes Highmark the ultimate insider in assessing the cost drivers of the healthcare delivery system. It puts the insurer in the driver's seat in terms of implementing quality and cost control programs across a large, vertically integrated system. Meanwhile, UPMC and Highmark remain at loggerheads and Pennsylvania Gov. Tom Corbett is threatening state intervention to resolve the contract dispute.
6.WellPoint Hires IBM's Watson
In the hiring coup of the year WellPoint has teamed with the well-known "Jeopardy!"champ to develop computer-based solutions that will aid the delivery of evidence-based healthcare to patients. Watson, a super computer developed by IBM, can sift through about 200 million pages of data, analyze the information and provide a response in less than three seconds.
The idea is to allow physicians to easily coordinate medical data programmed into Watson with specific patient factors to help identify the most likely diagnosis and treatment options in complex cases such as cancer, diabetes, chronic heart and kidney disease.
Applications envisioned for Watson will allow healthcare providers to use the computer to consult patient medical histories, review recent test results, and compare recommended treatment protocols with the latest research findings loaded into Watson to develop the best and most effective courses of treatment with their patients.
While there have been some early complaints that using Watson will dehumanize medicine by making patients nothing more numbers on a page, for the most part the healthcare industry is taking a wait and see approach. For his part, Watson declined to comment.
Work colleagues, who asked not to be identified, admit that Watson is a bit of a know-it-all but also credit him with being a team player who is happy to share his knowledge.
7.Health Plans Expand Medicare Advantage Holdings
Over the past 12 months three health insurers, CIGNA, Humana and WellPoint, have made significant acquisitions in the Medicare Advantage HMO market. Plans like Aetna and UnitedHealth are looking at acquisition opportunities.
Driving interest is the aging baby boomer population and a move by businesses to shift their 65 year-old and older retirees off of employee -sponsored plans and onto Medicare Advantage plans. Since 2005, the number of beneficiaries enrolled in Medicare Advantage managed care plans has more than doubled from 5.3 million to 11.1 million in 2010, according to the Kaiser Family Foundation.
Health insurers are looking to jumpstart their participation in the Medicare Advantage market (CIGNA's acquisition of HealthSpring), to expand their geographic footprint (Humana's acquisition of Arcadian Management Services), and to gain expertise in treating chronic conditions ((WellPoint's acquisition of CareMore Health Group).
8. Blue Shield of California Caps Income
In June Blue Shield officials announced that the health insurer would voluntarily limit its income to 2% of revenue and rebate around $180 million to its members and others. CEO Bob Bodaken called the cap a "paradigm shift for a health plan" and asked other health plans to take a similar step to help "solve the seemingly intractable problem of rising healthcare costs." The move was greeted with a healthy dose of skepticism by just about everyone. Some suggested that if Bodaken was really concerned about healthcare costs he should consider reducing his own $4.6 million salary.
Others interpreted the cap announcement as an admission by the insurer that it was making excessive profits. Consumer groups pointed to the Blues plan's $3.6 billion in reserves, which is considerably in excess of what is required to meet state financial solvency requirements, and asked why Blue Shield wasn't giving more money back to its policyholders.
Cynicism aside, Blue Shield members were notified in November that credits ranging from 18% to 54% percent of one month's premium would appear on their December bills.
9.Humana Taps a New Leader
CEOs come and go at most companies but Humana likes to keep its leaders around for a while. In November the company announced Bruce D. Broussard as its incoming president and future chief executive. Broussard will be the company's fourth CEO in its 50-year history.
Michael B. McAlister, the current president, CEO and board chair is expected to retire by mid-2014. He assumed the leadership position of the struggling company in 2000 and is generally credited with focusing its efforts on more lucrative books of business, including Medicare Advantage.
Broussard joins Humana from the drug wholesaler McKesson where he was CEO of McKesson Specialty Health. Before joining McKesson he was CEO of US Oncology where he worked closely with the Centers for Medicare & Medicaid Services. That's an important connection given Humana's emphasis on Medicare business.
Broussard has worked in a variety of healthcare sectors including oncology, pharmaceuticals, assisted living/senior housing, home care, physician practice management, surgical centers and dental networks. That makes him a great fit to implement Humana's long-term strategy. During Humana's third-quarter 2011 earnings call in October McAllister touted the revenue prospects for home care, pharmacy and integrated wellness.
10. Three Blues Plans Acquire Majority Ownership of Bloom Health
WellPoint, Health Care Service Corp. and Blue Cross Blue Shield of Michigan acquired Minneapolis-based Bloom Health, a private health insurance exchange that offers defined contribution plans to employers.
The move could mean the insurers are settling in to create a nationwide exchange that will compete for employer clients with the state-run health insurance exchanges being developed as part of healthcare reform. The Blues plans already have a health plan presence in 19 states.
