Continual Rise of Medicaid: Two Paths to Reforming Healthcare Delivery

Ken Perez
Ken Perez

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

When one thinks of the areas targeted for healthcare delivery reform by the Patient Protection and Affordable Care Act (PPACA), Medicare, the largest area for healthcare spending by the federal government, obviously comes to mind. Notably, there are more than 400 Medicare accountable care organizations, and that figure is projected to rise in the coming years.

However, Medicaid is another significant and growing area of healthcare spending that could benefit from reform.

According to the Centers for Medicare and Medicaid Services (CMS), as of February 2015, 70.5 million people—more than one in every five Americans and 25 percent more than the number of Medicare beneficiaries—were enrolled in Medicaid or the Children’s Health Insurance Program, which represents an increase of almost 40 percent from the number enrolled at the end of 2009.

In 2013, the federal government and states together spent $438 billion on Medicaid, with $250 billion (57 percent) covered by the federal government. With 28 states and the District of Columbia expanding Medicaid coverage, in 2015 the federal government will spend $343 billion on Medicaid, an amount equal to 9 percent of total federal outlays and two-thirds of Medicare expenditures. Taking into account funding by the states, well over half a trillion dollars will be spent in total on Medicaid in 2015.

Moreover, spending on Medicaid is projected to eclipse the growth of the U.S. economy over the course of the next decade. The Congressional Budget Office projects the federal government’s spending on Medicaid will reach $576 billion in 2025, a compound annual growth rate (CAGR) of 5.3 percent over 2015 to 2025. That compares with projected a 4.3 percent CAGR for U.S. gross domestic product for the same period.

Although the coverage or access-to-care issue has been partially addressed via Medicaid expansion—with much more work to be done—how to provide high-quality care in a cost-effective manner through Medicaid constitutes the next challenge.

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CMS Moves to “Modernize” Medicaid Plans

Ken Perez
Ken Perez

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

Since the passage of the Patient Protection and Affordable Care Act, most of the health reform activity in the Medicaid arena has primarily been about expansion of coverage. According to the Centers for Medicare and Medicaid Services (CMS), as of February 2015, 70.5 million people—more than one in every five Americans—were enrolled in Medicaid or the Children’s Health Insurance Program (CHIP), which represents an increase of almost 40 percent from the number enrolled at the end of 2009.

However, on May 26, CMS aimed its sights on improving the quality of care delivered by Medicaid, issuing a 653-page proposed rule to “modernize the Medicaid managed care regulations,” which have not been revised in a decade. The proposed rule faces a public comment period that will continue thru July 27.

The changes presented in the proposed rule would align the regulations governing Medicaid managed care with those of other major sources of coverage, including Medicare Advantage (MA) plans and Qualified Health Plans (QHPs), which are offered thru health insurance exchanges (marketplaces). CMS has said that the proposed Medicaid measures will emphasize evaluating health outcomes and the patient experience enrollees have with private plans. In addition, the proposed rule mandates public reporting of information on quality of care, as well as the use of financial incentives to reward Medicaid managed care plans that meet quality measures, a la Medicare Advantage Star Ratings.

CMS’s announcement has been met with mostly favorable responses. “It was about time for the changes” has been a common refrain, with the revisions viewed as a natural, logical progression.

How big is the market that will be impacted by the changes? Per CMS, Medicaid managed care organizations (MCOs) have grown from handling 8 percent of Medicaid beneficiaries in 1992 to about 70 percent of the 70 million Medicaid enrollees today—almost 50 million people. That figure compares with 17.3 million MA enrollees as of January 2015.

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Modifications to Meaningful Use for 2015 through 2017: Realigning the EHR Incentive Programs

The following is an announcement from CMS about potential modifications to the meaningful use program, announced Apr. 10, 2015:

On April 10, 2015, the Centers for Medicare & Medicaid Services issued a new proposed rule for the Medicare and Medicaid Electronic Health Record (EHR) Incentive Programs to align Stage 1 and Stage 2 objectives and measures with the long-term proposals for Stage 3, to build progress toward program milestones, to reduce complexity, and to simplify providers’ reporting. These modifications would allow providers to focus more closely on the advanced use of certified EHR technology to support health information exchange and quality improvement.

The proposed rule is just one part of a larger effort across HHS to deliver better care, spend health dollars more wisely, and have healthier people and communities by working in three core areas: improving the way providers are paid, improving the way care is delivered, and improving the way information is shared to support transparency for consumers, health care providers, and researchers and to strengthen decision-making.

The proposed rule is a critical step forward in helping to support the long-term goals of delivery system reform; especially those goals of a nationwide interoperable learning health system and patient-centered care. CMS is also simplifying the structure and reducing the reporting requirements for providers participating in the program by removing measures which have become duplicative, redundant, and reached wide-spread adoption (i.e., are “topped out”).  This will allow providers to refocus on the advanced use objectives and measures.  These advanced measures are at the core of health IT supported health care which drives toward improving the way electronic health information is shared among providers and with their patients, enhancing the ability to measure quality and set improvement goals, and ultimately improving the way health care is delivered and experienced.

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CMS Proposes Changes to the Medicare Shared Savings Program Quality Measures

Ken Perez
Ken Perez

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

In the wake of mixed initial results for the Pioneer ACO Model and Medicare Shared Savings Program (MSSP), this is the year for the Centers for Medicare & Medicaid Services (CMS) to take the feedback it has received and revamp its ACO programs.

The proposed rule for the 2015 Physician Fee Schedule (PFS), a 609-page document released on June 19, 2014, interestingly included the first installment of modifications to the ACO programs. The proposed rule devoted 52 pages to changes to the quality measures for the MSSP. Throughout the document, CMS emphasized its intent to align the numerous physician quality reporting programs, such as the Medicare EHR Incentive Program for Eligible Professionals and the MSSP, as much as possible, to reduce the administrative burden on the eligible professionals and group practices participating in these programs.

The final rule for the MSSP, issued in November 2011, presented 33 quality measures against which ACOs would be measured. These quality measures also apply to Pioneer ACOs. The measures pertain to four domains: patient/care giver experience, care coordination/patient safety, preventive health, and at-risk populations.

The proposed rule recommends the addition of the following 12 new measures:

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Health IT Thought Leader Highlight: Adnan Ahmed, CNSI

Adnan Ahmed
Adnan Ahmed

Adnan Ahmed is co-founder and president of CNSI. He is responsible for the overall health of the company and leads CNSI’s management with an emphasis on identifying new strategic markets and leveraging relationships with customers and partners. Under Ahmed’s direction, CNSI has experienced extensive growth in the healthcare and federal markets. Ahmed is credited for CNSI’s expansion into several new verticals, including the State Medicaid and CMS Medicare markets.

Ahmed brings vast experience in federal government and strategic growth areas. Prior to founding CNSI, Ahmed started the federal product sales division for INET Inc., a government systems integrator, growing it to $30 million in three years.

Adnan Ahmed is a board member of the Tech Council of Maryland (TCM), The Organization of Pakistani American Entrepreneurs of North America and is an active supporter of The Citizens Foundation, USA (TCF-USA).

Tell me about CNSI and its relation to healthcare. What’s your footprint and what are some of the organizations you’ve worked with?

Happy to do so and thank you for the opportunity to engage in this dialogue.

CNSI delivers business transformation and business technology solutions to a diverse base of federal and state government agencies. Some of the agencies we are working with include health and human services departments for Michigan, Maryland, Utah and Washington. Within that space and working with those agencies, healthcare takes up the majority of work we are involved in today.

For every project we undertake, our mission is to deliver high-quality, innovative solutions that improve performance. In the healthcare industry, our goals around performance are twofold: we aim to introduce solutions that dramatically cut down on costs and also make for a stronger, more connected experience between the people administering and receiving healthcare services.

From your dealing in the space, what are some of the most pressing issues you’re seeing? What needs to be addressed that’s not receiving the attention it deserves? Anything overblown?

With healthcare poised to make up a fifth of our total economy by the year 2020, the industry and each individual it serves has a lot to gain from the implementation of cutting-edge, cost-saving technological solutions.

One area we’ve seen as having so far prohibited the full potential health IT has to offer has been around interoperability. A lack of industry standardization makes it difficult to share and utilize information across platforms and deters a complete capture of standardized healthcare data.

The more interoperability, the more opportunity for healthcare systems, primary care providers, specialists and patients to benefit from avoiding from duplicitous tasks and capitalizing on available information.

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One-on-one with digiChart’s CEO Phil Suiter

Phil Suiter, CEO digiChart

To this point in the meaningful use experiment, Phil Suiter, CEO of digiChart, has had the privilege of sitting at the front of one of healthcare’s greatest movements. From his place, he’s watched the market act and react, and has seen colleagues seek solutions to corner their respective markets all in the name of providing the best service for the most people.

Suiter, however, may have a view of the current health IT landscape like no other. Leading a specialty only provider of electronic health records and practice management systems, digiChart serves only OBGYNs.

Long before healthcare reform and the thought of meaningful use, digiChart created and built solutions solely for this space, and, unaplogoetically, will continue to serve the space. Plans for expansion may one day include moving into the pediatrician market, which seems to be a safe bet given the connection between the two specialties, but according to Suiter, that’s not a plan actively being pursued.

What’s interesting about digiChart’s position, as Suiter tells it, is that even though meaningful use is vitally important to digiChart and the company has helped many physician achieve stage 1, OBGYNs have not voraciously jumped aboard the program.

What this means, he says, is that it’s a clear sign that the OBGYN market continues to live up to its reputation as a fiercely independent group of healthcare providers. Suiter said that only 20 percent of all digiChart’s clients have chosen to pursue meaningful use. Apparently, the other 80 percent have chosen to overlook the federal incentives and go at it alone.

From conversations he’s had with clients, they’re just are not seeing the benefit of meaningful use, especially for all of the work required with the only benefit is $44,000 over five years.

“At this particular point, they don’t realistically see a flip side in changing. In some practices, some have decided that they are better off without changing,” Suiter said. “Practices have determined that they can survive and be profitable if they are efficient and continue doing what they are doing, especially in the OBGYN space.”

Being profitable means they’ll ultimately forego Medicare patients to avoid the federal penalties levied against them for not meeting meaningful use. In many cases, they don’t see enough Medicare and Medicaid patients to make all the effort worth their while, Suiter said, so the work required simply is not worth the effort.

And, frankly, the question remains: Is the federal money going to still be available as stage 2 progresses? And, what happens in February 2013, should a new administration take office?

Despite the answers to these questions and whatever happens with the election in November, Suiter sees plenty of change ahead for the market. For example, EHR vendor contraction is coming after a period of great anticipation.

He predicts the market will dramatically shrink from more than 400 companies to less than 100, many fewer of them actually viable and sustainable long term.

At the same time, he believes hospital’s appetite for buying and owning private practices will disintegrate as soon as 12 months from now.

“I think we’ll see a disgorgement of practices by hospital systems within the next 12 to 18 months,” Suiter said, marking the end of a repeat performance last seen in the mid-1990s (1995, ’96 and ’97, he said specifically).

Hospitals have been voraciously trying to align themselves with private practice to capitalize on funds generated from meaningful use; however, they don’t seem capable of effectively managing private practices and their employees as they seem to be able to do with their internal systems and hospital employees, he said.

Private practices are too independent, for the most part, he said; especially, OBGYNs.

The fiercely independent group of physicians might have all the leverage they need to withstand outside pressure for adopting new technologies or changing the way they run there businesses at this point in their careers.


The average physician in the OBGYN space is 62 years old. At this point in their careers, they are not particularly interested in becoming hospital employees and if they are not interested pursuing meaningful use, which seems to be the case, they’ll either retire or go their own way.

Clearly, the technology used in healthcare will gain greater acceptance as new doctors enter the space. As colleges begin to implement the systems to train their residents (which they are not readily doing now), perhaps the appetite within the space will change. Clearly, there’s room for more adoption in the market Suiter serves.

But, digiChart is positioned well, serving a market it, and Suiter, understand, and know they’re place – as leaders – in it. There are very few vendors that can represent the specialty space well, especially in the land grad market of one-size-fits-all solutions penetrating the market. DigiChart and Suiter seem to understand that sometimes it’s better not to be the jack of all trades, but a master of one.