Tag: Ken Perez

Some Early Results and Optimism for Medicaid ACOs

Ken Perez
Ken Perez

Guest post by Ken Perez, vice president of healthcare policy, Omnicell.

Accountable care organizations (ACOs) are primarily associated with Medicare or commercial payer-led arrangements. However, the Affordable Care Act (ACA) also authorized limited demonstrations that allow states to test Pediatric ACOs from 2012-2016. In addition, the Centers for Medicare and Medicaid Services (CMS) has provided guidance letters to several state Medicaid directors on how to implement integrated care models, which may include ACOs, in their Medicaid programs.

With this encouragement from CMS and the need to rein in Medicaid spending—which is generally increasing due to the ACA and is shared by the federal government and states—it is estimated that about half of the states are at some stage of planning Medicaid ACOs.

This emerging trend runs counter to a couple of the conventional caveats about ACOs—they won’t scale to handle large populations, and they won’t work with patients who are economically disadvantaged.

However, these caveats are being challenged by the experiences of Colorado, Utah and Oregon, respectively, as well as the plans for North Carolina’s Medicaid ACO program.

Colorado’s Accountable Care Collaborative (ACC) has been in existence since 2011 and today has more than 350,000 members, almost half of the state’s Medicaid population. The ACC has focused on connecting members with their primary care physicians, using care coordinators, and leveraging analytics extensively.

According to the report on the ACC’s most recent fiscal year, which ended in June 2013, the program generated gross savings of $44 million, returning $6 million to the state after expenses. It accomplished this in part by reducing hospital re-admissions by between 15 percent and 20 percent and decreasing the use of high-cost imaging services by 25 percent versus a comparison population prior to implementation of the program. In addition, relative to clients not enrolled in the ACC program, it slowed the growth of emergency department utilization, lowered rates of exacerbated chronic health conditions (e.g., hypertension by 5 percent and diabetes by 9 percent), and reduced hospital admissions for chronic obstructive pulmonary disease patients by 22 percent. Most importantly, Colorado has seen improved health for the ACC member population.

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CMS Proposed Rule for the Inpatient Prospective Payment System: Taking a Closer Look at the Numbers

Ken Perez
Ken Perez

Guest post by Ken Perez, vice president of healthcare policy, Omnicell.

On April 30, 2014, the Centers for Medicare & Medicaid Services issued its proposed rule for the Inpatient Prospective Payment System (IPPS), which pays about 3,400 acute care hospitals, and the Long-term Care Hospital Prospective Payment System (LTCH PPS), which pays about 435 LTCHs.

The issuance of this proposed rule is a significant event, as it discloses CMS’s intent regarding the average change (increase or decrease) to the IPPS reimbursement rate, what one might call an “annual inflation adjustment.”

While CMS projects that the payment rate update to general acute care hospitals will be 1.3 percent in FY 2015—which on the face of it doesn’t look too bad—it’s important to understand how CMS arrived at that figure, what is the projected overall impact on hospital payments because of other regulatory changes, and how the proposed update compares with the recommendation of the nonpartisan Medicare Payment Advisory Commission (MedPAC).

How did CMS arrive at the 1.3 percent update (adjustment)?

CMS started with a proposed annual market basket update (inflation projection) from research firm IHS of 2.7 percent. That starting point was then reduced, per the Affordable Care Act, by a multi-factor productivity adjustment of 0.4 percent and a specified reduction to the market basket update of 0.2 percent, yielding 2.1 percent. Then CMS reduced it by a documentation and coding recoupment adjustment (basically to correct for past, unintended documentation and coding over payments) of 0.8 percent, resulting in a net update of 1.3 percent.

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Sustainable Growth Rate Reform: Close, But No Cigar

Ken Perez
Ken Perez

Guest post Ken Perez, vice president of healthcare policy, Omnicell.

“Politics is the art of the possible.” -Otto von Bismarck

This was supposed to be the year for permanent repeal of the sustainable growth rate (SGR), a formulaic approach intended to restrain the growth of Medicare spending on physician services. There was the rare cosmic convergence of bipartisan and bicameral support for SGR reform proposals at the end of 2013, and cost estimates by the Congressional Budget Office of a long-term “doc fix” reached new lows earlier this year.

But those hopes were dashed, as permanent SGR reform bills from both sides of the aisle died in the Senate. Instead, Congress agreed upon yet another short-term SGR patch. On March 27, 2014, the House, under a suspension of normal rules, approved via a voice vote a one-year patch to the SGR that would avoid a 24.4 percent reduction to Medicare’s Physician Fee Schedule (PFS) slated to take effect April 1, 2014 (replacing it with a 0.5 percent increase to the PFS for 12 months). Then on March 31, the Senate approved the patch via a roll-call vote, and President Barack Obama signed the bill into law that same day.

Why did the efforts to pass a permanent doc fix fail? The aforementioned bipartisan and bicameral support of SGR reform proposals was limited to “policy,” i.e., the future system by which physicians will be reimbursed by Medicare. Congressional Democrats and Republicans did not see eye to eye on the so-called “pay-fors” that would offset the increased government spending that would result with repeal of the SGR and allow the reform legislation to be deficit-neutral.

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Sustainable Growth Rate Reform: An Indication of the Broad Strategic Intent of CMS

Ken Perez
Ken Perez

Guest post by Ken Perez, vice president of healthcare policy, Omnicell.

Years ago, I worked in a business unit of a large technology company that was involved in mergers, acquisitions and partnerships. In the course of our work, even when some proposed deals would fall through and some partnerships would not come together, the strategic intent of the company remained clear to us. It was like a beacon that we kept pursuing no matter what.

With healthcare-related legislation, all too often we can lose sight of the strategic intent of CMS. We immerse ourselves in the debate over details, but often fail to step back and reflect on the “end game” that one can hang their hat on. What is CMS signaling to healthcare providers?

Currently, there is bipartisan and bicameral support for permanent repeal of the unpopular, annually overridden sustainable growth rate (SGR) provision, a formulaic approach intended to restrain the growth of Medicare spending on physician services. The SGR threatens to impose a 24.4 percent reduction to the Medicare physician fee schedule (PFS) effective April 1, 2014.

Lawmakers from the House Ways and Means, House Energy and Commerce, and Senate Finance committees have worked together to consolidate separate bills that their respective committees passed toward the end of 2013. The result is H.R. 4015, the SGR Repeal and Medicare Provider Payment Modernization Act of 2014, which was introduced by Rep. Michael C. Burgess, a Texas Republican and physician on Jan. 6, 2014.

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‘Tis the Season for Speculation About Medicare Sustainable Growth Rate Reform

Ken Perez
Ken Perez

Guest post by Ken Perez.

This is the time of year for speculation regarding which teams will play in the various college football bowl games, but also, unfortunately, whether Congress will finally pass a permanent repeal of the unpopular Medicare Sustainable Growth Rate, which once again threatens to impose a sharp decrease to the physician fee schedule, reportedly 24.4 percent on Jan. 1, 2014.

Just as most every college football team had a sense of optimism when the season began, throughout the summer and fall it seemed like politicians on both sides of the aisle were, to switch metaphors, singing from the same hymnal, railing against the Medicare Sustainable Growth Rate and arguing for a permanent “doc fix.” And, of course, physician groups provided supportive background vocals.

But here’s the problem: A permanent solution will be costly, very costly. According to the latest estimate by the Congressional Budget Office (from May), freezing (i.e., holding flat) all Medicare physician rates for 10 years would cost $139 billion, and proposals that are more generous to physicians would obviously cost more. The Medicare Sustainable Growth Rate remains the elephant in the room of deficit reduction. As for temporary patches, I’ve seen ballpark estimates of $18 billion for a one-year doc fix and $36 billion for a two-year freezing of rates, but both of those solutions would simply “kick the can down the road” yet again.

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The Unlikelihood of Sustainable Growth Rate Reform this Year

Ken Perez
Ken Perez

In mid-September, the Congressional Budget Office (CBO) estimated that the cost of H.R. 2810, a permanent Sustainable Growth Rate (SGR) repeal or “doc fix,” would be $175.5 billion from 2014 through 2023, up from the CBO’s estimates of $139.1 billion in May and $138 billion in February for freezing (i.e., holding flat) all Medicare physician rates for 10 years.

H.R. 2810 would be more costly, as it does not freeze rates, it raises them slightly. As with all other SGR reform bills, its implementation would avoid an estimated 24.4 percent reduction to Medicare physician payment rates that is scheduled to take effect Jan. 1, 2014, but the bill would also increase payment rates by 0.5 percent per year during 2014-2018. That change would increase federal spending by $63.5 billion through 2018, relative to the spending projection under the SGR.

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ACO Cost Reduction: First Year a Pipe Dream?

ACO Cost Reduction: First Year a Pipe Dream?
Perez

Guest post by Ken Perez, healthcare policy and IT consultant.

When he was leaving his post as the head of the Centers for Medicare and Medicaid Services, Dr. Donald M. Berwick famously said that 20 percent to 30 percent of healthcare spending is waste that yields no benefit to patients.

Given that large amount of waste, surely then, one would have thought that almost all of the original 32 Pioneer ACOs—many of which are generally considered the most sophisticated healthcare organizations in the nation—should have been able to shave a few percentage points off their costs during their first year in the program and therefore, meet or beat their expenditure benchmarks.

As we know from a July 16 press release from CMS, that was not what happened. While all of the Pioneer ACOs successfully reported the required quality measures, a majority—60 percent failed to produce shared savings, missing their cost-reduction (or more accurately, cost curve bending) targets. Moreover, two of the pioneers incurred sufficiently large losses requiring penalty payments to CMS.

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Unpacking the Pioneer ACO Program’s First Year Report Card

Unpacking the Pioneer ACO Program’s First Year Report Card
Perez

Guest post by Ken Perez, healthcare policy and IT consultant.

Don’t say we had no warning. In late February of this year, 30 of the 32 Pioneer ACOs sent a letter to CMS that expressed concern about the program’s quality benchmarks and requested reporting-based, as opposed to performance-based, payments for performance year 2013.

On July 16, CMS shared the results of the first year of the Pioneer ACO program, which were rather checkered. On the positive side, all 32 Pioneer ACOs successfully reported the required quality measures, and costs for the more than 669,000 Medicare beneficiaries in Pioneer ACOs grew by 0.3 percent in 2012 versus 0.8 percent for similar beneficiaries in the same year.

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The Weak Underbelly of Sustainable Growth Rate Reform Proposals

Perez

Guest post by Ken Perez, Director of Healthcare Policy and Senior Vice President of Marketing, MedeAnalytics, Inc.

What do all of these pieces of legislation or plans have in common?

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Dog Sledding and ACOs: What Do Health IT Leaders Do When the Lead Dogs Fail?

Ken Perez

Guest post by Ken Perez, Director of Healthcare Policy and Senior Vice President of Marketing, MedeAnalytics, Inc.

Recently, Mitch Seavey, 53, became the oldest winner of the Iditarod, the most famous dog sledding race in the world. At a distance of 1,600 kilometers, the Iditarod constitutes a race of supreme endurance. In dog sledding, the dogs that are chosen to lead the sled are usually the smartest, as well as the fastest, and they are appropriately called lead dogs.

The lead dogs in the realm of Medicare ACOs are the 32 pioneer ACOs, the selection of which was announced in December 2011 with great fanfare and optimism. With the greater risks (and rewards) of the pioneer ACO Model, the pioneers were widely considered the best and the brightest, the organizations most likely to succeed as ACOs.

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