Guest post by Ken Perez, vice president of healthcare policy, Omnicell.
Ken Perez
Under the authority of Section 3021 of the Affordable Care Act (ACA), the Centers for Medicare and Medicaid Services (CMS) has launched a variety of accountable care organization (ACO) initiatives, including the Pioneer ACO Model, the Medicare Shared Savings Program (MSSP), the Advance Payment ACO Model, and the Next Generation ACO Model. ACOs continue to be the most aggressive of the healthcare delivery reforms mandated by the ACA.
Notably, none of the aforementioned ACO models has a disease-specific focus. During the past few years, DaVita Inc., the nation’s second-largest dialysis provider, lobbied CMS diligently for a renal-specific ACO or at least creation of a framework that would allow for a disease-specific approach. DaVita formed the Accountable Kidney Care Collaborative to prepare the nephrology community to participate broadly in general ACOs and/or in disease-specific renal ACOs.
An ACO Program Focused on Renal Disease
On Oct. 7, 2015, the Center for Medicare and Medicaid Innovation (the Innovation Center) made a groundbreaking announcement, launching the Comprehensive ESRD Care (CEC) Model, with its sole focus on end-stage renal disease (ESRD), also known as kidney failure. This disease afflicts more than 600,000 Americans. These individuals require life-sustaining dialysis treatments several times each week. In 2012, ESRD beneficiaries comprised 1.1 percent of the Medicare population and accounted for $26 billion or 5.6 percent of total Medicare spending.
The CEC Model’s first three-year agreement period began on Oct. 1, 2015, with 13 ESCOs in 11 states: Arizona, California, Florida, Illinois, New Jersey, New York, North Carolina, Pennsylvania, South Carolina, Tennessee, and Texas. All except one of the 13 ESCOs are owned by a large dialysis organization (LDO), defined as an organization that owns 200 or more dialysis facilities. Dialysis Clinic, Inc. (DCI), the nation’s largest non-profit dialysis provider, owns three of the ESCOs, as does DaVita. Fresenius, the largest dialysis provider, owns six of the ESCOs. The lone non-LDO is the Rogosin Institute in New York City.
As with all Medicare ACO programs, the CEC Model has both quality measures and expenditure-reduction targets which impact the model’s payment arrangements.
Quality Measures
The CEC Model features 26 quality measures—14 outcome and 12 process—for both LDOs and non-LDOs. The quality measures span five domains: patient safety, person- and caregiver-centered experience and outcomes, communication and care coordination, clinical quality of care, and population health.
Guest post by Ken Perez, vice president of healthcare policy, Omnicell.
Ken Perez
“I get by with a little help from my friends.”– The Beatles
In simple terms, healthcare delivery reform under the Patient Protection and Affordable Care Act (ACA) is catalyzed by the Centers for Medicare and Medicaid Services (CMS) through establishment of performance standards or goals and application of behavioral economics—financial carrots and sticks—to encourage improved quality and reduced cost. The financial incentives—both positive and negative—are usually offered to healthcare provider organizations, such as accountable care organizations, which are on the hook to meet numerous quality measures and hold costs below targeted benchmarks, or commercial health insurers running Medicare Advantage plans, which pass along some of the onus to maintain quality performance onto providers.
However, these applications of behavioral economics do not directly target or impact the central player in the healthcare system—the individual member or patient. Engagement by the patient in their care is critical and explains why billions of dollars are spent each year on patient outreach and communications, as well as development and promotion of consumer-friendly apps and wearable devices. When patients are engaged, the healthcare system can more effectively and efficiently prevent, diagnose and treat health conditions.
On Sept. 1, 2015, CMS’s Center for Medicare and Medicaid Innovation (Innovation Center) announced the Medicare Advantage (MA) Value-Based Insurance Design (VBID) Model, an initiative that will test whether allowing health plans administering MA plans to offer targeted additional benefits or reduced cost sharing to enrollees who have certain chronic conditions will result in better quality and more cost-effective care.
The model’s goals are to enhance enrollee health, decrease the use of avoidable high-cost care, and reduce costs for MA plans, beneficiaries, and ultimately, the Medicare program. The model focuses on MA enrollees with the following chronic conditions: diabetes, congestive heart failure, chronic obstructive pulmonary disease (COPD), past stroke, hypertension, coronary artery disease, and mood disorders.
The MA VBID Model will take effect Jan. 1, 2017, and run for five years in seven states which were deemed representative of the overall national MA market: Arizona, Indiana, Iowa, Massachusetts, Oregon, Pennsylvania, and Tennessee.
Guest post by Ken Perez, vice president of healthcare policy, Omnicell.
Ken Perez
“We have to take the long view, and be focused on iterating, evolving, and improving the concept, rather than seeking summary judgment.” – Farzad Mostashari, former national coordinator for health information technology, commenting on accountable care organizations
On Aug. 25, 2015, the Centers for Medicare and Medicaid Services (CMS) released 2014 financial and quality performance results for 353 accountable care organizations, 333 in the Medicare Shared Savings Program (MSSP) and 20 in the Pioneer ACO Model (although as of this writing, the CMS website only lists 19 Pioneer ACOs). As is customary, proponents (such as CMS) and critics of ACOs interpreted the results quite differently, as a glass half-full or half-empty.
Pioneer ACO Performance
During the third performance year, the Pioneer ACOs generated total model savings of $120 million. That figure constitutes a 24 percent increase versus the $96 million of savings produced during the previous year. A total of 15 ACOs (75 percent of all Pioneers) were able to generate savings during performance year three, compared with 14 ACOs (61 percent of all Pioneers) for the prior year. Of those generating savings in the most recent performance year, 11 Pioneers produced savings that exceeded the minimum savings rate, garnering shared savings payments totaling $82 million. One quarter of the 20 Pioneers generated losses, with three generating losses beyond a minimum loss rate, requiring them to make $9 million in shared-loss payments to CMS.
The Pioneers improved the quality of care delivered during performance year three, as their mean quality score rose from 85.2 percent to 87.2 percent year-to-year. The Pioneers improved in 28 of 33 quality measures and generated average improvements of 3.6 percent across all quality measures compared to Performance year two. CMS highlighted significant improvement in medication reconciliation (up from 70 percent to 84 percent), screening for clinical depression and follow-up plan (up from 50 percent to 60 percent), and qualification for an electronic health record incentive payment (up from 77 percent to 86 percent).
Moreover, Pioneer ACOs improved the average performance score for patient and caregiver experience in five out of seven measures compared to performance year two.
Guest post by Ken Perez, vice president of healthcare policy, Omnicell.
Ken Perez
Tracy Morgan, the “30 Rock” and “Saturday Night Live” star, once said, “Bad news travels at the speed of light; good news travels like molasses.” Such is the case with respect to the cost and clinical performance of the U.S. healthcare system.
Steven Brill, founder of Court TV and the American Lawyer, famously pilloried America’s healthcare system in “Bitter Pill: How outrageous pricing and egregious profits are destroying our healthcare,” the cover article in the March 4, 2013 issue of Time and the longest in the history of the magazine. Brill wrote, “In the U.S. people spend almost 20 percent of the gross domestic product on health care, compared with about half that in most developed countries. Yet in every measurable way, the results our health care system produces are no better and often worse than the outcomes in those countries.” In a subsequent article in the Jan. 19, 2015 issue of Time, Brill went on to describe the U.S. as having “a broken-down jalopy of a health care system.”
Brill’s “Bitter Pill” article received generous coverage by CBS, the Commonwealth Club, the Huffington Post, the Los Angeles Times, National Public Radio, the New Yorker, the New York Times, and even Jon Stewart’s “The Daily Show.”
The July 28, 2015 issue of the Journal of the American Medical Association (JAMA) included an article, “Mortality, Hospitalizations, and Expenditures for the Medicare Population Aged 65 Years or Older, 1999-2013,” that shared the findings of a study of over 68 million Medicare fee-for-service and Medicare Advantage beneficiaries by H.M. Krumholz, et al.
This lengthy, detailed, heavily footnoted, and carefully written study reported the following encouraging findings:
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.
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.
Guest post by Ken Perez, vice president of healthcare policy, Omnicell.
Bipartisanship is not dead in the United States, and that is good news for physicians as well as Medicare beneficiaries. Building on bipartisan and bicameral support of sustainable growth rate (SGR) reform proposals that emerged at the end of 2013 and again in 2014, on Mar. 26, 2015, the House of Representatives voted overwhelmingly—392-37, with support from 212 Republicans and 180 Democrats—to pass H.R. 2, The Medicare Access and CHIP Reauthorization Act of 2015, also known as “MACRA.” Then on April 14, two days after returning from its spring recess, the Senate passed the legislation in a similarly overwhelming manner, 92-8, and a couple of days later, President Barack Obama signed MACRA into law. Thus came to an end an unpopular legislative provision that had been worked around repeatedly since 2003.
For long-time SGR critics, the passage of MACRA elicited the same kind of feeling of relief one experiences at the end of a long plane flight, when the plane’s wheels finally touch down on the tarmac.
Enacted as part of the Balanced Budget Act of 1997, the SGR formula incorporated medical inflation, the projected growth of per capita gross domestic product, forecasted growth in the number of Medicare beneficiaries, and changes in law or regulation.
The SGR required Medicare each year to set a total budget for spending on physician services for the following year. It also sought to enforce long-term fiscal accountability. If actual spending was higher than the annual budget, the Medicare conversion factor that is applied to more than 7,400 covered physician and therapy services in subsequent years was to be reduced so that over time, cumulative actual spending would not exceed cumulative budgeted (targeted) spending, with Apr. 1, 1996, as the starting point for both.
Partially because of the effective lobbying efforts of physicians, Congress temporarily suspended application of the SGR by passing legislative overrides or “doc fixes” 17 times from 2003 to 2014. As a result, actual spending exceeded budget every year during those years. Because the annual fee update had to 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 Apr. 1, 2015, (but in practical terms implemented in the latter half of the month), would have been a dramatic reduction in Medicare physician fees of 21.2 percent.
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.
