Guest post by Ken Perez, vice president of healthcare policy, Omnicell.
Ken Perez
We’ve often seen the U.S. federal government announce its intent to drive major changes in the way the healthcare system is run, only to have the private sector respond in a tepid or negative manner.
That was not the case at a January 26 Department of Health and Human Services meeting, at which HHS Secretary Sylvia M. Burwell announced concrete goals and an aggressive timeline for moving Medicare payments from fee for service to fee for value. Nearly two dozen leaders representing consumers, insurers, providers and business leaders were in attendance and clearly supportive of the vision cast by Burwell. Notably, high-ranking representatives from the American Academy of Family Physicians, the American Medical Association, the American Hospital Association, and America’s Health Insurance Plans (AHIP) were among the participants.
The announcement was a landmark one. For the first time in the history of the Medicare program, HHS has communicated quantified goals for pushing a significantly greater share of Medicare payments through alternative payment models, such as accountable care organizations (ACOs) and bundled payments. Such payments will rise from 20 percent ($72.4 billion) of Medicare payments in 2014 to 30 percent ($113 billion) in 2016 and 50 percent ($213 billion) in 2018—a compound annual growth rate of 31 percent over the five-year period.
Guest post by Ken Perez, vice president of healthcare policy, Omnicell.
Ken Perez
During much of 2014, there seemed to be a rising tide of negativism about the Centers for Medicare & Medicaid Services’ accountable care organization (ACO) programs. After losing nine of its participating organizations after its first year of operation, the Pioneer ACO model suffered some more high-profile departures in 2014.
In August, Sharp HealthCare, a five-hospital system in San Diego, Calif., exited the program, and the following month, three other ACOs—Franciscan Alliance in central Indiana, Genesys PHO in Flint, Mich., and Renaissance Health Network in Pennsylvania—also dropped out. Since the Pioneer program’s inception in January 2012, the total number of Pioneers has dropped by 41 percent, from 32 participants to 19.
The bad news wasn’t confined to the Pioneer program. An October 2014 survey by the National Association of ACOs (NAACOS) indicated that two-thirds of Medicare Shared Savings Program (MSSP) participants are “highly” or “somewhat” unlikely to remain in the ACO program as it currently stands. Clearly, the Medicare ACO ship certainly seemed to be sinking.
In an attempt to right the ship, on Dec. 1, 2014, CMS released a long-awaited 429-page proposed rule to modify the MSSP, seeking to retain as many of the current MSSP ACOs as possible and attract new participants to the program. The words “encourage” or “encouraging” appear almost 100 times in the document—with an eye, ultimately, toward greater ACO participation in risk-based models. However, in spite of CMS’s intention, NAACOS and the American Hospital Association’s initial responses to the proposed rule were generally critical. CMS is accepting public comments until Feb. 6, 2015, after which it will compose the final rule, a process which should take, if history is a guide, three to six months.
It should come as little surprise to me that no matter the healthcare sector — long-term care, ambulatory or in patient, for example – most of the worries faced are the same or very similar. Many of the same levels of attention is given to many of the highly complex usual suspects – interoperability, health information exchange, accountable care, HIPAA and even mandates like meaningful use. The murmurs of those working here are often similar and there is a fairly deep collective holding of the breath in regard to advancements or developments in these areas regarding the blowing winds of how these and other issues sway constituents throughout the marketplace.
The general sentiment of individuals, those leading large hospitals and multi-location care facilities, who express their opinions and concerns to organizations like HIMSS, to name one, are the same as the concerns voiced by many of the attendees at PointClickCare’s annual user meeting, to name one, in Orlando Nov. 2-5, 2014. These same sentiments also are expressed at variety of other meetings of the minds throughout the US in similar constituent groups or with vendor and other allegiances.
Educational and work sessions held at these gatherings always have the same look and feel; the same as those expressed at PointClickCare’s Summit 2014. Engagement, connection, care; ACOs, HIEs, and managing their relationships; EHRs, interoperability, and managing this relationship and the flow of information (or doing so when the information does begin to flow); and change management strategies that provide guidance and advice for … managing change.
The information exchanged in venues such as these and the sessions themselves are valuable, of course, and needed to fill an enormous information void. Most importantly, these healthcare education sessions draw together folks seeking guidance and those needing insight, as well as provide a dash of leadership at times when much seems to be lacking. Finally, these educational sessions – quick and concise as many of these sessions may be – alleviate fear during a scary and tumultuous time in healthcare.
Although most accountable care organizations (ACOs) have the health information technology (HIT) to improve clinical quality, poor interoperability across systems and providers remains a barrier, according to an ACO survey conducted by Premier, Inc. (NASDAQ: PINC) and the eHealth Initiative. Access to data from external organizations was challenging for 100 percent of respondents.
The survey, fielded in July-August of 2014, collected responses from 62 ACOs, including members of Premier’s PACT Population Health Collaborative.
Compounding the challenge of accessing and sharing data is the fact that 88 percent of the ACOs face significant obstacles in integrating data from disparate sources, and 83 percent report challenges integrating technology analytics into workflow – barriers that become more acute as ACOs add new platforms or build on their expansive network of medical settings. As ACOs collect data from more sources, they also report concerns about interoperability and data management. Interoperability of disparate systems is a significant challenge for 95 percent of organizations using HIT, and could be limiting the abilities of ACOs to exchange data.
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.
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.
According to a recent survey conducted by Purdue Healthcare Advisors, a nonprofit healthcare consulting organization, hospital executives are reluctant to implement ACOs — 46 percent — and they have no plans to implement an Accountable Care Organization (ACO)-like model in the near future.
Conducted in October 2013 among 206 hospital executives at a director level and above, the survey also reveals that executives are struggling with finding solutions for lower reimbursements and increased costs, while still maintaining an acceptable level of quality care.
“This survey has identified a significant need for advocacy and education to support hospitals and help them survive the wave of changes brought on by the Affordable Care Act,” said Mary Anne Sloan, director of Purdue Healthcare Advisors. “Hospital executives are charged with enhancing patient care and managing margins with a shrinking workforce and diminishing patient volumes.”
Hospital executives find ACOs to be unstable and financially risky
Executives are waiting for ACO models that are more stable and mature to avoid having to reinvest funds to implement changes or updates, according to the survey. The executives who do not have plans to implement an ACO model in the future (46 percent) cited the following reasons:
Guest post by Bill Walker, chief technology officer, Aegis Health Group.
Fo r the last several years, there has been an increasing emphasis by the federal government on digitizing the healthcare industry. The allocation of meaningful use dollars to physician practices for converting to electronic health records was only the beginning. The Affordable Care Act (ACA) was the seminal event that demonstrated without a doubt that electronic management of patient information was going to be an absolute if hospitals and health systems are to survive.
The ACA puts healthcare organizations at financial risk for duplication of services, lapses in care coordination and questionable patient safety practices. Population health management demands that electronic patient records be accessible for planning, managing and tracking care coordination. But the fact is fully managing the continuum of care for a patient cannot be achieved without data collection both inside and outside the hospital’s walls. This is a trend that will take on increased importance as healthcare reform rolls out in 2014.
Health systems with forward-thinking HIT executives saw the writing on the wall after the ACA became law and began converting their organizations to electronic medical records. Systems that are considering becoming accountable care organizations (ACOs) – and accepting value-based reimbursement, which will become the predominant reimbursement model – need to find ways to track the health status of individuals in their community before they become patients. How? By embracing the use of technology that closes the healthcare loop before people even know they need those services.
