Tag: Omnicell

The Prospect of Permanent SGR Reform in 2015

Ken Perez
Ken Perez

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

In the wake of the U.S. 2014 midterm election, it’s natural to turn our eyes toward the future and begin to speculate about possible legislative developments, such as a permanent repeal of the sustainable growth rate (SGR), often referred to as a “doc fix.”

The SGR is a formulaic approach intended to restrain the growth of Medicare spending on physician services. The SGR requires Medicare each year to set a total budget for spending on physician services for the following year. If actual spending exceeds that budget, the Medicare conversion factor that is applied to more than 7,400 unique covered physician and therapy services in subsequent years is to be reduced so that over time, cumulative actual spending will not exceed cumulative budgeted (targeted) spending, with April 1, 1996, as the starting point for both.

In part because of the effective lobbying efforts of physicians, Congress has temporarily suspended application of the SGR by passing legislative overrides or doc fixes 17 times from 2003 to 2014. As a result, actual spending has exceeded budget every year during these years. Because the annual fee update must be adjusted not only for the prior year’s variance between budgeted and actual spending but also for the cumulative variance since 1996, the next proposed update, effective April 1, 2015, is a reduction in Medicare physician fees of 21.2 percent.

There are three reasons to be optimistic that a permanent doc fix will be passed in 2015.

Reason for optimism #1: It’s much cheaper than before.

Since 2012, the Congressional Budget Office (CBO) has released some 15 estimates of the 10-year cost of SGR fixes, usually assuming a freeze in rates (i.e., 0 percent annual updates to the physician fee schedule). These cost estimates have ranged from a low of $116.5 billion to a high of $376.6 billion. In August 2014, the CBO estimated that holding payment rates through 2024 at current levels would raise outlays by $131 billion, a figure near the low end of the range and relatively more affordable.

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CMS’ Pioneer ACO Program: Results to Date and Changes Ahead

Ken Perez
Ken Perez

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

The recent flurry of upsets in college football has caused pundits and fans of the sport to do a mid-season recalibration of their projections for their respective teams. Many of the pre-season favorites — selected just seven or eight weeks ago — are no longer in the running for the national championship, others are plugging along pretty much in line with expectations, and a number of “Cinderella” teams have emerged. All teams, no matter how well they have done thus far, will need to make adjustments in the second half of the season.

In like manner, with recent developments and disclosures about CMS’ Pioneer ACO Model, it’s time to do a kind of mid-season recalibration and speculate a bit about needed adjustments to the program.

In August and September, four hospital systems — Sharp HealthCare, a five-hospital system in San Diego, Calif.; Franciscan Alliance in central Indiana; Genesys PHO in Flint, Mich.; and Renaissance Health Network in Pennsylvania — dropped out of the Pioneer ACO Program. With those departures and nine that were previously announced, the number of Pioneers has dropped by 41 percent, from 32 original participants to 19. It should be noted, however, that the majority of the ACOs that have left the program have transferred to the less challenging Medicare Shared Savings Program (MSSP).

On August 6, CMS posted 879 pages of public comments received in response to the CMS Innovation Center’s December 2013 request for information that solicited input on the Pioneer ACO Model as well as new ACO models.

On October 8, CMS released detailed quality and financial data by ACO for the first two years of the Pioneer Program. With regard to quality performance, average quality scores for the Pioneers improved by 19 percent year-to-year, with improved performance on 28 of 33 measures (85 percent) between the first and second year.

Financially, in year one of the program, 13 of the Pioneers (41 percent) met or beat their expenditure benchmarks, qualifying for shared savings and garnering an average of $5.9 million, with the amounts received ranging widely. One Pioneer had to pay CMS a shared loss of $2.6 million, and the remaining 18 ACOs either did not earn shared savings or did not owe CMS money because of  losses.

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The History of the Sustainable Growth Rate, and How Its Repeal and ACOs are Linked

Ken Perez
Ken Perez

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

Section 4503 of the Balanced Budget Act of 1997, enacted on Aug. 5, 1997, replaced the Medicare Volume Performance Standard (MVPS) with the sustainable growth rate (SGR) provision, a formulaic approach intended to restrain the growth of Medicare spending on physician services. The SGR formula incorporates medical inflation, the projected growth of per capita gross domestic product (GDP), projected growth in the number of Medicare beneficiaries, and changes in law or regulation.

The SGR requires Medicare each year to set a total budget for spending on physician services for the following year. If actual spending exceeds that budget, the Medicare conversion factor that is applied to more than 7,400 unique covered physician and therapy services in subsequent years is to be reduced so that over time, cumulative actual spending will not exceed cumulative budgeted (targeted) spending, with April 1, 1996, as the starting point for both.

In part because of the effective lobbying efforts of physicians, Congress has temporarily suspended application of the SGR by passing legislative overrides or “doc fixes” 17 times from 2003 to 2014. (It utilized five different pieces of legislation in 2010 alone to avoid cuts exceeding 20 percent.) As a result, actual spending has exceeded budget every year during these years. Because the annual fee update must be adjusted not only for the prior year’s variance between budgeted and actual spending but also for the cumulative variance since 1996, the next proposed update, effective April 1, 2015, is a reduction in Medicare physician fees of 20.9 percent.

Those hoping for a permanent repeal of the SGR—which is pretty much everybody, given the almost universal disdain for it—entered 2014 with a sense of optimism that this would be the year. These hopes were fueled by bipartisan and bicameral support of SGR reform proposals that emerged at the end of 2013 and significantly lower estimates by the Congressional Budget Office (CBO) of the cost of a long-term doc fix.

Ultimately, the inability to figure out how to pay for the SGR repeal blocked the passage of the permanent reform bills, and Congress settled for yet another short-term patch. On March 27, 2014, the House of Representatives, under a suspension of normal rules, approved via a voice vote H.R. 4302, the Protecting Access to Medicare Act of 2014. The bill provides a patch to the SGR that would avoid a 24.4 percent reduction to Medicare’s Physician Fee Schedule (PFS), effective April 1, 2014, replacing the scheduled reduction with a 0.5 percent increase to the PFS through Dec. 31, 2014, and a 0 percent increase for Jan. 1, 2015, through March 31, 2015. Four days later, the Senate approved H.R. 4302 on a bipartisan 64-35 vote, and President Barack Obama signed the bill into law.

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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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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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Thoughts and Images from HIMSS14 Day 2

Day 2 at HIMSS14 was much the same as day 1: Lots of walking, talking and great meetings with great organizations. I can’t thank enough vendors like Verisk Health, Omnicell, Amazing Charts and SAS for the great information they’ve shared, and for the perspectives about the market, trends and what’s ahead (and what’s behind).

Electronic health records are now foundational, and in many cases, they’ve lost their sex appeal. Though there’s an obvious and huge presence by them here, this year’s HIMSS doesn’t seem to have the same energy around the technology, from my point-of-view, that they did two or three years ago, for obvious reasons. Though their importance is still great, as we all know, other issues are taking center stage. ICD-10 is the obvious elephant in the room.

“Risk” is the biggest buzz word I’ve heard here in Orlando. I’ve heard it dozens of times. “Patient engagement” seems overcooked, according to those I’ve spoken to; an aspirational concept, yes, but actionable in an an entirely different story. Lofty goals and strategy, fewer practical best practices approaches for proceeding.

Patient engagement has only just begun, or at least is just developing past its infancy, and I look forward to seeing how it matures as a concept. Remember, just a couple years ago, those with vested interest claim patient portals would solve the ever elusive patient engagement issue. Portals clearly have not done so. Why would they? I remain skeptical that the actual patient is at the heart of this conversation rather how a systems can implement “best practices.” We’ll see, I suppose.

That said, HIMSS14 remains a wonderful experience and I’m glad to be here and meeting some wonderful people. I look forward to what today brings. Likely, more walking!

Here are some images I captured from Day 2.

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Managing Medications in an IDN or ACO

Mo Kharbat
Mo Kharbat

Guest post by Mohammad (Mo) Kharbat, RPh, MBA, director of pharmacy, ProHealth Care Inc.

Managing medications throughout several facilities within an integrated delivery network (IDN) or accountable care organization (ACO) is challenging. Recent Joint Commission surveys show that appropriate medication storage is the most common regulatory standard hospitals struggle with. As director of pharmacy at ProHealth Care Inc. (ProHealth), a regional integrated health network in Wisconsin with about 400 hospital beds, this is a challenge that I am all too familiar with.

One of my primary responsibilities is ensuring that all medications are well-managed throughout our facilities. As ProHealth has expanded to include a wider array of care delivery sites, medication management has increasingly become associated with high financial stakes. If medications are not well managed, hospitals lose money. Every pill that is unaccounted for translates to dollars lost for a provider. And when facilities fail to meet Joint Commission medication management standards, they risk valuable Medicare reimbursement funds.

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