Widespread agreement in Congress on the need to replace Medicare's payment system for physicians is offset by deep divisions over how to pay for a new reimbursement model.
With a two-day hearing being held this week in Congress, the annual scramble has begun to plug a gaping hole in the formula Medicare uses to calculate physician reimbursement.
In 1997, Congress crafted the Sustainable Growth Rate formula (SGR), which ties Medicare's payment rates for doctors to the projected growth of the national economy. But healthcare spending quickly outpaced economic growth, opening a multibillion-dollar gap in funding for Medicare payments to physicians.
Lawmakers placed the first temporary patch on SGR in 2003, and the quest for a permanent Medicare "doc fix" has become an annual ritual ever since. The latest SGR patch, which Congress adopted last winter after failing to agree on financing for a bipartisan SGR repeal-and-replacement deal at a cost of $128 billion, is set to expire on March 31.
On Wednesday, lawmakers and witnesses at a hearing of the House Committee on Energy and Commerce's health panel were unanimous in their desire to reach a long-term deal on Medicare's reimbursement system for physicians.
In his opening remarks, the chairman of the subcommittee, Joe Pitts, (R-PA), called finding a permanent replacement for SGR the paramount issue facing the health panel. "This subcommittee has made permanent repeal of the flawed Medicare Sustainable Growth Rate formula, or SGR, a top priority for the last four years. In 2014, we reached a bipartisan, bicameral agreement on a replacement policy that enjoys widespread support both in Congress and among the stakeholder community," he said.
In his opening remarks, Rep. Gene Green of Texas, the ranking Democrat on the health panel, noted that Congress has patched the SGR formula 17 times since 2003, at a total cost to taxpayers of about $169.5 billion.
In a report released this month, the Pittsburgh-based Center for Healthcare Quality and Payment Reform asserts an "urgent need" to repeal and replace the SGR. "The draconian 21% cut in Medicare payments to physicians that it requires would make it difficult for physician practices to survive, make it difficult for Medicare beneficiaries to get care, and shift Medicare costs to workers and businesses, while only reducing Medicare spending by 3%," the report states.
Paying for Replacement Remains Stumbling Block
Witnesses and lawmakers from both sides of the aisle called Wednesday for the resurrection of last winter's bipartisan deal, the SGR Repeal and Medicare Provider Payment Modernization Act. The 10-year replacement plan for SGR features a five-year period of stability in the Medicare payment system, with a 0.5% annual pay rate hike for doctors. In the last five years of the plan, the pay rate would be frozen and a series of reforms would be launched to help push Medicare physician reimbursement toward value-based models.
"After this hearing, we should wait no longer at rolling up our sleeves," said Rep. Frank J. Pallone Jr., (D-NJ). "We all agree the previous bill is a good compromise."
The first witness, former Sen. Joseph Lieberman (I) of Connecticut, said the lawmakers who crafted last winter's SGR repeal-and-replacement deal beat long political odds in an era of hyper-partisanship. "You've done something that's really been unheralded," he told the health subcommittee members. "You've come up not only with a fix, but a solution."
Despite widespread agreement on the need to repeal SGR and continued support for last year's bipartisan SGR repeal-and-replacement deal, deep divisions remain over how to pay for a Doc Fix.
Lieberman testified that lawmakers must offset the cost of repealing SGR to avoid hiking the country's national debt, which hit $18 trillion for the first time in December, according to the Department of the Treasury. "This is really unsustainable. It's sustainable only by placing an incredible taxation burden on our children and grandchildren," the former senator said, adding later that Congress must find a way to pay for replacing SGR. "I hope you offset the cost of the solution … because otherwise you are going to increase our national debt."
While posing questions to Lieberman after his testimony, Pitts said that any SGR repeal legislation will be doomed unless lawmakers can find spending cuts or Medicare beneficiary cost-sharing measures to offset the cost. "As a practical matter, the House leadership has said bills must be offset before they can be heard on the House floor," the health subcommittee chairman said.
Lieberman, who made an unsuccessful bid to overhaul Medicare in 2011 with former Sen. Tom Coburn of Oklahoma, strongly agreed with Pitts. "This extraordinary achievement … will not make it into reality unless there is an offset," Lieberman said.
Democrats on the health subcommittee were adamant that seniors not be saddled with the cost of a Medicare Doc Fix, and they called for tax increases to be included among the financing options.
After noting "this is the richest country on the face of the Earth," Rep. Jan Schakowsky said she is firmly opposed to asking seniors to pay higher Medicare premiums or deductibles. "I say shame on us that we can't provide healthcare to our seniors and people with disabilities. I find that repugnant and my hair is on fire."
Schakowsky added that reforms are slowing Medicare spending and have the potential to offset the cost of replacing SGR. "We are adding incredible savings as a result of the Affordable Care Act. I say, we have plenty of money," she said.
Payment Plan Proposal
Alice Rivlin, director of the Engelberg Center for Health Reform at The Brookings Institution in Washington, DC, testified that a combination of targeted cost-sharing for seniors and value-based reforms would be the best way to address the SGR challenge.
"You can replace the Medicare SGR; and, at the same time, you can begin phasing in reforms," said Rivkin, who served as director of the federal Office of Management and Budget under President Clinton.
Pitts asked Rivkin whether the slowdown of Medicare spending in recent years could justify not offsetting a doc fix. "Whether this slowdown continues depends on whether we make bolder moves," she replied, calling on lawmakers to press forward with payment reforms in Medicare such as bundled payments as well as efforts to foster accountable care contracting.
In the cost-sharing arena, Rivkin said carefully crafted measures would avoid placing an unfair or unsustainable burden on seniors and people with disabilities. "Means-testing of the premium—I think you can do that without hurting low-income people," she said.
Rivkin said deductibles could be added to Medicare in a way that would not result in seniors delaying necessary medical treatments. "You could have it not apply to physician visits," she said of new deductibles.
The health subcommittee's hearing is set to resume Thursday, with several witnesses including Richard Umbdenstock, president and CEO of the American Hospital Association.
In the effort to create a consumer-driven healthcare industry, innovations are needed to help individuals and families carry a hefty cost-sharing load.
With deductibles and copayments spiking, health plans and employers are pushing the bounds of consumer tolerance for out-of-pocket healthcare spending.
A pair of reports released this month by the Washington, DC-based Commonwealth Fund spotlight the delicate balancing act playing out in the elevation of consumers' economic role in the health insurance market.
On Jan. 8, CF released a report on employer-sponsored insurance (ESI) that showed a slowdown in health insurance premium hikes over the past decade has been accompanied by a sharp rise in consumer out-of-pocket spending for healthcare. The findings include data indicating consumer spending for premiums and deductibles nearly doubled from 5.3% of median household income in 2003 to 9.6% in 2013.
On Jan. 15, CF releaseda reportthat showed a significant drop in the uninsured population from 37 million people in 2010 to 29 million people in 2014 as well as improvement in affordability measures, but the report concluded that "excessive cost-sharing for Americans across all insurance types could jeopardize improvements in access to care and medical bill burdens."
I quizzed the lead authors of both studies about a healthcare reform quandary: In the push to create a consumer-driven market for medical services, how high can patient cost-sharing be elevated without prompting a consumer backlash?
Cathy Schoen, lead author of the ESI report and executive director of the private foundation's council of economic advisers, told me that consumers will ultimately draw the line on cost-sharing.
"Is there a limit to it? That's going to come from families and consumers themselves. We are clearly far higher in cost-sharing that anyone would have predicted five years ago. There is a question of how far this needs to go before employees are going to be cost-sensitive… and will look for alternative options for care," she says.
High Deductibles
Consumers are feeling the pinch of higher healthcare cost-sharing. "We're clearly at the point where the deductibles are over $1,000," Schoen says. "If there's a family plan, there are two deductibles. It's leaving less for everything else."
Sara Collins, PhD, lead author of the CF report on health insurance coverage levels and affordability, says that another CF consumer affordability study released in November showed high deductibles are a double-edged sword in the struggle to create a consumer-driven healthcare industry.
"People who had deductibles that were high relative to their income were much more likely than those with lower deductibles as a share of their income to say they had avoided or delayed needed care such as going to the doctor when they were sick or filling a prescription. While deductibles have been used in part as a way to reduce the use of unnecessary care, we find evidence that they also reduce the use of necessary care, particularly among people with middle to lower incomes."
To avoid making cost-sharing overly burdensome for consumers, Collins says several challenges must be addressed.
"Innovation in benefit design is needed to provide incentives to people to get timely care, rather than giving people incentives to delay care, which is what we are seeing in our surveys… as a response to ever growing deductibles."
"In addition, " she says, "system-wide efforts to address the underlying rate of healthcare cost growth—and we are seeing a great deal of innovation in the way care is organized and paid for across the country —will be the key to achieving affordable premiums and out-of-pocket costs in employer-based as well as individual marketplace insurance over time."
Slow Income Growth
"But the other major issue is slow income growth… Even though we see a slowdown in deductible growth in the past few years, median income hasn't grown much if at all in most states, so people with low and moderate incomes are still spending more as a share of their incomes."
Christine Riedl, director of national accounts strategy and product management at Hartford, CT-based Aetna, says that the shift to more value-based models of healthcare delivery is needed to cushion the cost-sharing blow on consumers.
Christine Riedl
"With the amount of waste in our healthcare system and the increasing costs, we have to join forces to move our healthcare system to one that focuses on better management of individuals and populations—where we pay for value delivered, not services rendered," she says.
"At Aetna, we are partnering with the providers, and by 2018, at least half of all our claims payments will be paid to doctors and providers who practice value-based care. Today, more than 3 million Aetna members receive care from doctors committed to the value-based approach."
Riedl cites several examples of Aetna embracing value-based care, including 2013 data from the carrier's accountable care collaboration with Phoenix-based Banner Health Network, which posted a 5% reduction in overall medical costs.
Health plans have to help consumers play an effective role as economic agents in value-based delivery of healthcare services, she says. "Individuals are overwhelmed with information on choosing the right plan, benefit and premium… so it's important to provide consumers with meaningful information at the right time, and in a manner that is relevant and preferable to them."
Engagement and Incentives
Riedl says Aetna is providing health plan members with a combination of consumer engagement tools and financial incentives to help boost informed decision making. Online resources include pre-enrollment and plan selection tools that give the complete picture of total costs as well as transparency tools that provide insight on cost and quality.
Financial incentives are crucial to helping guide consumers to finding the most cost-effective healthcare coverage, Riedl says. "Financial incentives are also an important element to any benefit and wellness strategy to encourage consumers to take action on their health; for example, for participation in wellness programs, to complete biometric testing or to obtain routine preventive care.
Incentives can not only help lower consumer costs today, they reward healthy behaviors that can prevent health complications—and higher costs—in the future."
Encouraging healthy behaviors is a fundamental building block of affordable healthcare, she says.
"One issue that deserves more attention is lifestyle and the growing burden of chronic diseases, which add significantly to escalating healthcare costs. We have to focus the system around wellness to stem the cost increases we're seeing from an aging population and obesity. The consumers have to take responsibility for improving their health through a focus on wellness. This is also a focus of the value-based care programs we're deploying with providers. They reach out to patients who may not step foot in their office for preventive care – so we identify and head off issues before they develop into chronic conditions," Riedl says.
With healthcare payers increasingly relying on narrow provider networks to contain costs and achieve quality, California regulators are pressing health plans to blunt out-of-network costs and maintain accurate provider directories.
California insurance officials are drawing the line on health plans with narrow provider networks.
Emergency regulations announced on Jan. 5 by Insurance Commissioner Dave Jones "are meant to address the deficiencies in the market we have been seeing," says Janice Rocco, deputy commissioner for health policy and reform at the state Department of Insurance.
"The department received more complaints in 2014 over access to in-network care than in previous years," says Rocco. In the prepared statement announcing those regulations, DOI officials detailed some of the consumer complaints:
Trouble getting appointments with doctors
Traveling long distances to receive in-network medical care
Seeking care from doctors who appeared in their health insurer's provider directory but who were not actually in the health insurer's medical provider network
In 2014, two of California's largest commercial health insurance carriers, Anthem Blue Cross and Blue Shield of California, offered narrow provider networks on The Golden State's new public exchange, Covered California. Both carriers drew fire over network adequacy, including a lawsuit 33 health plan members filed against Anthem in August 2014 and investigations launched by the state Department of Managed Health Care.
The DMHC, which is under the direct authority of the governor's administration, has regulatory oversight for most health coverage in California, including more than 9 million people covered through Medi-Cal and coverage purchased by individuals and their families through Covered California.
In November, the DMHC released the final report of a "Non-Routine Survey" of Blue Shield of California based on 2014 data that found significant inaccuracies in the provider director for the health plan's narrow network.
The report revealed that "a significant percentage (18.2%) of the physicians listed in the directory were not at the location listed in the Provider Directory and that a significant percentage (8.8%) were not willing to accept members enrolled in the Blue Shield's Covered California products, despite being listed on the website as doing so."
Through a spokesman, Blue Shield of California declined to comment. Anthem did not respond in time for publication.
Rocco say the emergency regulations, which will become effective after a state legal review is completed, feature several new consumer protections such as wait-time standards for a range of medical services appointments and requirements on payers to provide information on providers in their network.
Additionally, health plans must update provider directories on a weekly basis, and they must make provider information available to the public online and in "hard copy" upon consumer demand.
The emergency regulations also set a strict standard for out-of-network care. "If they don't have a provider in-network who is accessible, the health plans have to arrange for a provider out-of-network," Rocco says. And "the cost sharing has to be the same" to protect consumers from unexpected healthcare expenses.
State and federal regulators are working together in California to achieve "expansion of insurance," Rocco says. "Without access to care from doctors who are in the network, insurance coverage offers limited value."
When drawing the line on narrow networks, regulators have to consider patient need as paramount. "Patients have to have access in a timely manner to meet all of their healthcare needs," she says.
California a Sets Bar for Network Adequacy
Rodger Butler, spokesman for DMHC, says the agency has followed state laws for network adequacy that were in place before passage of the Patient Protection and Affordable Care Act in 2010.
"Health plans under DMHC oversight are required to provide enrollees access to primary care physicians within 15 miles or 30 minutes of their homes," he said via email. "There are some exceptions for rural areas; for example, when there isn't a hospital or doctor's office within 15 miles of a person's home. In these cases, the plan may request an alternate access plan."
Butler says there are also quantitative physician staffing standards for provider networks. "Plans are also required to have a PCP-to-enrollee ratio of 1 to 2,000 and an overall physician-to-enrollee ratio of 1 to 1,200. The number of enrollees a PCP may be eligible to oversee increases by 1,000 for each full-time physician assistant or nurse practitioner under the PCP's supervision."
Health plans are required to provide "reasonable access to specialists," Butler says. "The law does not establish specific time or distance requirements for specialists, as there are a wide variety of specialists and their availability varies based upon their rarity. If for some reason a health plan does not have a particular type of specialist that an enrollee needs to treat a condition, then the health plan is obligated to find such a provider and cover those services. Health plans are also required by law to meet the state timely access standards."
Narrow Networks 'Infinitely More Important Now'
Micah Weinberg, PhD, who was elevated this month from senior policy adviser to president at the San Francisco-based Bay Area Council Economic Institute, says narrow networks have emerged as a huge factor in California health insurance markets.
"It's not that it was unimportant before," he says. "It's just infinitely more important now… We've limited the things that health plans can do to design networks and benefits."
Weinberg says the California DOI's emergency regulations for network adequacy carry symbolic weight compared to the stronger watchdog role of the DMHC. "For total healthcare coverage oversight, we're talking about under 20% and shrinking under DOI." The state's insurance commissioner, he notes, is an elected official outside the direct authority of the governor.
The DMHC appears to be showing at least a measure of resolve on narrow networks. "The DMHC has conducted studies and issued some warnings to different health plans," Weinberg says. "They're not political the way the DOI is political. Dave Jones is on the short list to be the next governor."
With the PPACA-spawned exchanges expanding the individual health coverage market, Weinberg says health plans and regulators are under pressure to carve out standards for narrow networks. "The insurance companies are changing their business model for the individual market overnight," he says.
Despite changes designed to improve audits of medical service billings to Medicare, healthcare providers are still crying foul.
Change is coming to Medicare's Recovery Audit Contractors program this year, but healthcare providers do not expect the reforms to take hold for several months and say the claims review program is deeply flawed.
The Centers for Medicare & Medicaid Services is implementing a set of changes to the RAC program, with the agency marshaling the initiative on three fronts:
Reducing provider burden
Enhancing CMS oversight of audit contractors
Increasing program transparency
The reforms include a dozen measures designed to ease the administrative burden on providers such as requiring RACs to have a "contractor medical director" who is a physician.
"While we're pleased that CMS has acknowledged the administrative burden on providers, they're still tinkering around the margins," says Melissa Jackson, senior associate director for policy at the Washington, DC-based American Hospital Association. "Financial incentives drive RACs to make inappropriate denials of claims. Change won't come until RACs face financial penalties for poor performance."
RAC reforms are being implemented as part of new contracts CMS is awarding to the program's audit contractors. The originals were signed in 2008, and existing contracts are slated to expire in 2016.
The first new contract was awarded last month to Connolly LLC, a subsidiary of Atlanta, GA-based iHealth Technologies. Connolly will be serving as the RAC program auditor for durable medical equipment, home health, and hospice claims.
The bidding process for the other four RAC contracts, which correspond to geographic areas of the country, is stalled in federal court. The pending contracts include authority to review Medicare Part A and Part B claims—the bulk of Medicare spending.
In May 2014, the incumbent contractor for Medicare RAC Region B challenged the CMS bidding process at the US Court of Federal Claims in Washington, DC. CGI Federal Inc., based in Fairfax, VA, reviews Medicare claims in seven states: Illinois, Indiana, Kentucky, Michigan, Minnesota, Ohio, and Wisconsin.
In August 2014, Federal Claims Judge Mary Ellen Coster Williams rejected CGI's request for injunctive relief, ruling the CMS bidding process for RAC auditors did not violate federal law.
CGI had alleged the CMS "payment terms were inconsistent with customary commercial practice, unduly restrictive of competition, and violated the recovery audit program's enabling statute as well as prompt payment requirements," according to William's ruling.
The appellate court is set to hear oral arguments on the case early next month.
Jackson says providers are not expecting CMS to award more RAC contracts until the CGI case has been resolved in six to nine months.
CMS 'Beginning to Implement Improvements'
Last week, a CMS spokesman said the agency is committed to reforming the RAC program. In June, CMS announced the establishment of a provider relations coordinator to help increase program transparency and offer more efficient resolutions to providers affected by the medical review process.
"The provider relations coordinator serves as a point of contact for providers and associations regarding questions and concerns related to the medical review process and the recovery audit process that they are not able to resolve by contacting the Medicare administrative contractor or recovery auditor directly."
Hospital Associations Seek RAC Crackdown
CMS has taken some steps forward to reform the RAC program but a giant leap is required to address healthcare provider concerns, hospital association officials say.
In the new RAC contracts, Jackson says CMS has improved a vexing claim-review process linked to patient admission status. Designation of patient status has significant Medicare reimbursement implications, with inpatient services billed at Medicare Part A rates drawing higher reimbursement than outpatient services billed at Medicare Part B rates.
Jackson says CMS is making it easier to resolve one of the worst RAC scenarios for hospitals: claims for medical services that are billed at the Medicare Part A inpatient rate that RAC auditors deny because the claim should have been billed at the Medicare Part B outpatient rate.
CMS has shifted away from an all-or-nothing struggle through Medicare's five-level system for claims review and appeals, she says. "The hospital has been out the whole payment if it loses in appeal. Now, CMS is allowing us to rebill at the outpatient rate."
The reforms slated to be implemented in the new RAC contracts include a key provision for claims that RAC auditors contest over patient admission status.
Currently, auditors can look back three years to contest billing at inpatient rates, but providers only have one year after the first billing for a Medicare claim to switch billing to the outpatient rate. Under the new contracts, RACs will only be able to look back six months to review claims for patient admission status.
"They're trying to tweak things without revising that one-year billing requirement," Jackson says.
The AHA is skeptical about a RAC reform that is intended to speed the claims appeal process by shortening the amount of time RAC auditors have to make their determinations, she says. Under new RAC contracts, auditors will have 30 days to render claims determinations; the current contracts allow 60 days for determinations.
In December 2013, Chief Administrative Law Judge Nancy Griswold issued a memorandum that details the claims appeals backlog at the federal Office of Medicare Hearings and Appeals. She reported that the backlog had mushroomed over a period of less than two years, rising from 92,000 claims to 460,000 claims.
"Our concern is there is a low compliance rate now with the 60-day decision timeframe," Jackson says. "Hospitals face a financial penalty if they miss a deadline. We believe there should be similar penalties for RACs."
She says auditors have a strong financial incentive to deny claims, noting that RACs bank as much as 12.5% of the claims money they recover for Medicare. "The financial incentives are far and away the number one issue."
Basic Flaw Remains Ivy Baer, senior director and regulatory counsel at the Washington, DC-based Association of American Medical Colleges, said the financial incentives for RACs must be overhauled.
"The basic flaw in the program, which only Congress can fix, remains: RACs continue to be financially incentivized to find disallowances and are not subject to monetary penalties if those disallowances are appealed and overturned. CMS's changes appear to lessen that incentive, though not with direct financial penalties," she says. "RACs will not receive a contingency fee until after the second level of appeal is exhausted, but they still will not be penalized if the appeal is successful."
Clinical affiliation deals between retail clinics and hospitals or health systems expand access to services, speed care, help control spending, and drive patient referrals.
For hospitals and health systems, relationships with retail clinics are a relatively easy sell: They help boost patient volume for inpatient and outpatient services while effectively outsourcing basic healthcare services such as vaccinations.
James Parobek, SVP of Operations
Texas Health Physicians Group
James Parobek, SVP of operations for Arlington, TX-based Texas Health Physicians Group, says affiliations between hospitals and retail clinics benefit both sides of the healthcare partnership and their patients.
"The clinical affiliation between Texas Health Resources and CVS MinuteClinic has created another access point to Texas Health for residents of the Dallas-Fort Worth metroplex. This allows patients to receive care at the appropriate place and price for minor illnesses that do not require care in an emergency room or urgent care center. Over time, we believe this will decrease some of the activity in the emergency room to allow truly emergent patients to be seen quicker," Parobek says.
How Physicians Benefit
Plans to establish a clinical affiliation with MinuteClinic did raise concerns among some Texas Health doctors. "[They] were concerned they would lose patients to the MinuteClinics, and/or their patients would not see them for routine minor illnesses, resulting in a potential loss of income," Parobek explains.
But individual physicians benefit from the clinical affiliation between Texas Health and MinuteClinic, he says. "For our Texas Health Physicians Group practices, this allows a patient to be seen quickly for episodic care when they may not be able to access their physician after-hours or on weekends."
Texas Health Physicians Group leadership "needed to fully explain to physicians the objective of increasing access to Texas Health Resources," he says. "We also emphasized to our physicians the benefits of this affiliation: the potential for referrals; the fact they won't lose patients, as the vast majority of MinuteClinic patients do not have a physician; and the potential to supervise the [advanced practice registered nurses] and receive a stipend for doing so."
"The primary care physicians in our group have seen a number of new patient referrals from the MinuteClinics." And more than 30 primary care physicians receive a stipend for supervising APRNs working in the MinuteClinics.
The Benefits of Clinical Affiliation Deals
Retail clinic officials say the partnerships they are establishing with hospitals and health systems are win-win scenarios.
"In many of our markets, we have formal clinical affiliations," says Eileen Myers, VP of affiliations and patient-centered strategies at Nashville, TN-based The Little Clinic. "Each clinical affiliation is unique as it takes into consideration the strengths and resources of The Little Clinic, the health system, and the needs of the community."
The Little Clinic operates about 150 retail clinics in Indiana, Ohio, Arizona, Colorado, Georgia, Tennessee, Kentucky, Indiana, and Virginia.
"Sharing a healthcare market extends access to patients in need of care," she says. "With our without a formal clinical affiliation, The Little Clinic provides the community with convenient, affordable and high-quality health and wellness care for the whole family. For businesses, this means we help control healthcare spend. Together with the health system in the community, we provide improved healthcare access to all levels of care."
The Little Clinic focuses on the core business activity of retail clinics: "a limited scope of service," Myers says.
"When we see patients who need a higher level of care, we first ask if they have a [primary care physician]. If so, we help the patient make an appointment with their physician. If they do not have a PCP, we have a list of nearby physicians and help the patient make an appointment."
The Little Clinic is branching out into providing a wider spectrum of services in some markets, such as chronic care.
"Patients without a primary care provider will come to The Little Clinic with elevated blood pressure or elevated blood sugar. The patient's finances, work schedule, and/or denial of their condition often keeps them from finding a doctor. But the patient agrees to be followed by the provider at The Little Clinic… who follows a protocol approved by the health system and consults with the physician at the health system as needed, Myers says.
Patients are sent to the health system for services outside the scope of the clinics' capabilities, but are otherwise managed and monitored at The Little Clinic.
Greater Access to Care
Nancy Gagliano, MD, chief medical officer at Woonsocket, RI-based CVS Health's MinuteClinic, says retail clinics are playing a key healthcare access role for thousands of patients.
"MinuteClinic provides critical access to patients for acute minor illnesses, vaccinations, and important wellness services such as smoking cessation and weight management," she says.
"We provide much of this care on nights and weekends, when physicians are not available, and we provide the care in coordination with the primary care physicians that are affiliated with us by sending important visit notes" to physicians—directly into their electronic medical records system, if they have an EMR.
MinuteClinic has formed clinical affiliations with 49 hospitals and health systems across the country.
"They include large academic institutions such as the Cleveland Clinic, Emory Healthcare, Dartmouth-Hitchcock, Robert Wood Johnson and UCLA Health as well as smaller, community-based health systems such as Greenville Health System in South Carolina, Virtual Health in southern New Jersey, and The Baton Rouge Clinic," Gagliano says.
"The collaborations include joint patient education initiatives and the integration of electronic medical records systems. In many markets, the collaborating physicians for our MinuteClinic practitioner teams are provided by the health system affiliate."
Retail clinics have emerged as an essential slice of the continuum of care, she says.
"We really see no drawbacks. Hospitals and physicians are increasingly organized in accountable care organizations that benefit when costs are reduced and quality is improved. Health systems see us as an efficient alternative to more expensive emergency rooms and urgent care centers," she says.
"Everyone benefits when we can work together to make healthcare more convenient, accessible, and affordable for patients."
Making Market Relationships Work
Charles Lewis, executive director of emergency services and ambulatory care at St. Anthony's Medical Center in St. Louis, says establishing gainful market relationships in a competitive market takes work.
St. Anthony's not only shares its urban market with independent urgent care centers and retail clinics, but also operates four urgent care centers of its own.
"Whether it's from retail clinics and urgent care centers, or other hospitals and health systems, there will always be competition to draw patients and clinicians. Those pressures will always exist. It's up to us to use that competition to improve the care we provide for our community."
In the urgent care arena, opportunities for mutually beneficial cooperation outweigh the risks of financially damaging competition, healthcare providers say.
Over the past decade, health systems and hospitals have been adapting to a challenging market reality: the rise of "retail medicine."
Traditional healthcare provider organizations have faced vexing market dynamics on two fronts: retail clinics at sites such as pharmacies that offer a relatively limited suite of services, and urgent care centers capable of treating most non-life-threatening conditions.
With few areas of direct competition in core services, hospitals and health systems have largely embraced peaceful co-existence with retail clinics, but urgent care centers have been more daunting.
Alan Ayers, practice management adviser and board member at the Naperville, IL-based Urgent Care Association of America, says health systems and hospitals have delicately nuanced relationships with urgent care centers.
"One challenge in integrating urgent care into a health system is competition within that entity for the patient. For example, emergency departments may want to save physician time and reduce overcrowding by redirecting low-acuity visits to urgent care, but at the same time these visits can represent high margins for the emergency department," Ayers says.
"Additionally, some primary care physicians want to maintain exclusive relationships with their patients, and, as a result, they may extend their hours and raise their level of clinical capabilities."
In any given healthcare market, the key to establishing urgent care centers that optimize value for both providers and patients is matching the site of care appropriately with the patient's level of need for services, he says.
"An outcome of this competition is some duplication or overlap of capabilities across the system. Ideally, a process would be in place to guide patients to the most appropriate option for their specific need."
If You Can't Beat 'Em, Join 'Em
St. Anthony's Medical Center in St. Louis was among the early innovators in urgent care, opening its first urgent care center in 2004 and currently operating four such facilities.
"We believe urgent care centers are an important service for our community, which is why we were one of the first providers in the St. Louis area to open [one]," Charles Lewis, says executive director of emergency services and ambulatory care at St. Anthony's.
"For many patients, including those without a primary care physician, we need to provide access to immediate care without the trip to the emergency department when true emergency services aren't necessary. Whether patients visit our urgent care centers or another provider's, we know it's a service that helps our entire community."
Lewis says St. Anthony's urgent care centers emphasize to patients the importance of following up with care from a primary care physician or a specialist and are able to make referrals and coordinate follow up care.
"The urgent care centers also provide our clinicians with a cost-effective after-hours care option for their patients," he says. "We also believe it's important that urgent care centers exist to relieve emergency departments of some of the burden of seeing too many patients. Every patient who seeks appropriate care at an urgent care center instead of the emergency department allows us to improve the care of our emergency patients. All of these options work to improve access to our health system."
Ron Stiver
Last month, Indianapolis-based Indiana University Health announced plans to open a dozen urgent care centers in partnership with Premier Health, a Baton Rouge, LA-based organization that helps health systems and hospitals develop urgent care facilities.
Ron Stiver, president of Indiana University Health's clinical services, says the health system's urgent care center initiative is part of an ambitious strategy.
"The addition of urgent care centers broadens our efforts to improve access to healthcare and make it more convenient for consumers to access IU Health clinical expertise. It is one component of a larger strategy that also includes our launch of same-day primary care appointments, online self-scheduling, onsite/near-site employer clinics, virtual health offerings and the myIUHealth portal," Stiver says.
He has high praise for Premier Health, which has "demonstrated expertise in partnering with health systems to launch and operate urgent care clinics… We believe their expertise and track record, combined with our clinical expertise and brand strength, will form a powerful combination to the benefit of consumers," Stiver said.
Steve Sellars, CEO of Premier Health, says the partnership with IU Health exemplifies his company's approach to working with hospitals. Sellars is also on the board of the Urgent Care Association of America.
"Premier Health was one of the first companies in the country to partner with hospital systems in the urgent care space. That was 16 years ago," he said. "We are recognized in the industry as a company that understands urgent care and the management processes necessary to be successful in a retail health model. We believe that has great value. We also believe there is great value in having an established hospital partner that has built its brand in the market providing excellent patient care and outcomes. That's critically important because of our unique approach to urgent care partnerships. Each of the urgent care centers Premier Health shares ownership in and/or manages bears our hospital partner's name. In that respect, you could describe us as a silent partner."
Friction Point: Emergency Departments
Independent urgent care centers pose some competitive challenges to health systems and hospitals, but there are several opportunities to establish a mutually beneficial relationships, according to Max Puyanic, co-CEO of Portsmouth, NH-based ConvenientMD Urgent Care.
"We tend to collaborate with the majority of departments and groups within a hospital network," Puyanic says. "The main area of competition is within the hospital's ED, specifically patient visits that are non-life-threatening and can be treated in one of our facilities for a fraction of the cost and significantly more convenient access to care."
He says ConvenientMD, which opened its first clinic in Windham, NH, two years ago and plans to have 10 clinics in the Granite State by the end of this year, works cooperatively with health systems and hospitals on several levels.
"We often act as an extension of their network to provide their patients an option for convenient access to high-quality medical care. Primary care groups within health systems will refer patients to us when they have a higher acuity case that would not be treated in a primary care setting but is not life-threatening," Puyanic said. "Another common scenario is that PCPs refer patients to us if they cannot see one of their patients right away, due to a full schedule for the day, or the office is closed on evenings, weekends and holidays."
A nationwide study has found that healthcare cost-shifting to consumers combined with stagnant household incomes is denying workers an economic benefit from slowing growth in health insurance premiums.
Research released this week is providing a national view of a health insurance trend that has been playing out in local healthcare markets across the country—cost-shifting to consumers.
The rate of premium increases for employer-sponsored health insurance has slowed over the past decade, but deductibles and other forms of cost-sharing are hitting household budgets hard, according to data from nearly 40,000 businesses that was analyzed by the Washington, DC-based Commonwealth Fund.
In a teleconference held Wednesday, Commonwealth Fund President David Blumenthal, MD, said there has been a "recent historic slowdown in healthcare costs" linked in part to cost-cutting requirements of the Patient Protection and Affordable Care Act as well as Medicare initiatives including efforts to reduce unnecessary hospitalizations. "However, workers and their families are not seeing the benefits of these changes."
The research, which features data collected from 31 states and the District of Columbia, covers the period from 2003 to 2013. Key findings include:
The annual cost of employee contributions to premium costs has doubled over the past decade.
The pace of premium growth outpaced household income growth in all 31 states and DC.
Out-of-pocket costs for premiums and deductibles have nearly doubled, rising from 5.3% of median household income in 2003 to 9.6% in 2013.
Annual growth of premium rates has slowed significantly since passage of the PPACA in 2010. From 2003 to 2010, annual premium increases for workers' health plans were pegged at 5.1%. From 2010 to 2013, the rate of premium growth fell to 4.1%.
Despite the slowdown in premium growth, relatively stagnant growth in household income is resulting in healthcare costs eating a larger share of employees' household budget.
"Healthcare is consuming a greater share of income," Cathy Schoen, lead study author and executive director of the private foundation's council of economic advisers, said during Wednesday's teleconference.
In 2003, there were only two states in the CF report's data set where annual premiums gobbled up 20% or more of household income. In 2013, data shows premiums consumed 20% or more of household income in 18 states.
There has been a marked increase in cost-shifting to consumers, particularly in deductibles. Schoen said about 80% of workers had deductibles built into their health plans in 2013 compared to about 50% of workers in 2003. "High deductibles are the rule now, not the exception."
Cathy Schoen
More High-deductible Offerings As for healthcare payers, they are trying to ease the cost-shifting burden for individuals and their families, says a spokesman for Pittsburgh-based Highmark Inc. said after the release of the CF report.
"As far as consumers' having more 'skin in the game,' Highmark offers a variety of products with different levels of deductibles. This enables us to provide our members what they need by giving them the power to choose the care, place and price that is right for them," Senior Public Relations Analyst Douglas Braunsdorf says.
"Many of our small group customers continue to want to offer rich benefits to their employees, but they also are offering more high-deductible health plan products as a way to keep premiums lower and shift some of the cost-sharing to their employees."
He says the CF report reflects the findings of research conducted at the Washington, DC-based National Business Group on Health, a nonprofit organization that represents the perspective of large employers on healthcare issues.
"The health insurance industry as a whole is seeing more large groups steering their employees to high-deductible products. In fact, according to a study by the [NBGH], nearly 33% of large employers across the country were expected to offer only high-deductible health plans to their workers for 2015, up from 22% in 2014 and 10% in 2010. And 81% of those large employers were expected to add a high-deductible plan to their menu of choices, up from 53% in 2010," Braunsdorf says.
Employers Also Bear Burden
Brian Marcotte, NBGH's president and CEO, says the PPACA and other reform efforts have lowered overall healthcare spending, "but we have a long way to go."
"While healthcare cost growth has slowed recently, it is still growing faster than the overall economic growth rate. As it does, both employers and employees pay more," Marcotte said Thursday. "While employees have been paying a somewhat greater portion of the costs, employers still pay the bulk and, as costs keep going up, they have been paying more even though the employee share has increased. Employers pay on average 82% of the health insurance premium, which has remained constant since the implementation of ACA."
Employers and their employees have a shared interest in boosting the quality and affordability of healthcare, Marcotte says.
"The cost of healthcare is a challenge that both companies and their employees share and does not benefit either. Employees lose out in foregone pay increases as more of their compensation is in the form of healthcare, and companies have to reduce costs elsewhere or squeeze profits to pay for the increases in their healthcare costs. This is particularly egregious, since we know that a lot of those dollars are for unnecessary, ineffective, or duplicative care, which brings us back to the real problem: the need for radical payment and delivery reform."
Making Consumer Cost-Sharing Work
After Wednesday's teleconference, Schoen said the primary antidotes to burdensome healthcare cost-shifting to patients are informed consumers and better consumer protections.
Highmark's efforts to offer a broad range of health plan choices to consumers is "clearly where the market is moving." Offering a diverse range of health plans as a way to blunt cost-shifting to consumers will only work if individuals and their families have the tools and knowledge to make economically sound decisions, she said.
Schoen noted for example, that HealthCare.gov, has improved its cost estimator for individual coverage. "It's gotten more standardized, so it's easier to compare."
And consumer protections established under the PPACA are taking some of the sting out of cost-sharing, she says. "At least there is a floor under what has been covered," Schoen said. "It is no longer legal for health plans to put a ceiling on the cost of care."
A Pennsylvania company is offering a healthcare coverage option to segments of the population still struggling with access to affordable healthcare: the middle class and undocumented aliens.
The limits of the federally driven effort to boost access to affordable healthcare are coming into focus as the political limits of the Patient Protection and Affordable Care Act's healthcare accessibility potential are being tested on two fronts.
In a dozen Republican-leaning states, political opposition is blocking several million adults from gaining health coverage through Medicaid expansionunder PPACA guidelines.
Betty Heiman, MBA
Co-Founder and CEO
Transparent Health Group LLC
And in Washington, political gridlock has blocked immigration reform legislation, making the ED the site of first resort for more many of the country's estimated 11.5 million undocumented aliens seeking healthcare.
The economic limits of the PPACA's push for affordable healthcare are being tested in the middle class.
"The working middle class is truly being priced out of healthcare," Betty Heiman, MBA, co-founder and CEO of Swarthmore, PA-based Transparent Health Group LLC, told me recently. When accounting for undocumented aliens, who are not eligible for healthcare coverage under the PPACA, she estimates the number of uninsured and underinsured people after full implementation of the law could be as high as 40 million.
Heiman defines the working middle class as households with annual incomes ranging from $60,000 to $125,000. The PPACA-spawned public health insurance exchanges are not an affordable option for millions of Americans in this income bracket, she says, because most comprehensive plans in the "platinum" category have high monthly premium rates and HIX health plans with low premiums have high out-of-pocket costs.
"Affordability is a challenge for the middle class. In many cases, people are looking at a very significant deductible," she says.
I get it.
My family is fortunate enough to be in this income bracket. We are also fortunate enough to have a relatively generous health plan through my wife's employer. However, if I got kicked off my wife's health plan and had to buy health insurance through the federally administered exchange in New Hampshire, the numbers are sobering from my working middle class perspective.
After plugging some basic information into the user friendly cost estimator on HealthCare.gov, I perused the 16 available "silver" category health plans, a middle-of-the-financial-road option for most consumers.
Boston-based Minuteman Health Inc. offered healthcare coverage at the lowest monthly premium, $347, with a $2,000 deductible and maximum annual out-of-pocket expenses pegged at $6,000. Milwaukee, WI-based Assurant Health offered coverage at the highest monthly premium, $705, with a $2,000 and maximum annual out-of-pocket expenses pegged at $6,350.
Assurant also offered the lowest cost health plan comparable to our family's plan, "gold" category coverage at an $849 monthly premium, with no deductible and maximum out-of-pocket expenses pegged at $6,350.
My family budget might survive the financial hit of Minuteman's lowest priced silver plan. The Assurant gold plan is surely out of reach and comparable to personal finance calamities on the scale of replacing the entire roof of my 110-year-old house.
'This is Not Insurance'
Heiman's organization has created Transparent Healthcare, which is taking an unconventional approach to boosting access to affordable healthcare coverage to the middle class and undocumented aliens. "This is not insurance," she says.
Launched in 2009, it could become the AAA of healthcare, a membership-fee-financed organization that features access to a range of services and discounted pricing.
"If you're paying for healthcare on your own, you're paying too much," Heiman says. "You can't contract or negotiate the way the big players do." And adding the billing rates for the uninsured at most hospitals is about five-fold above Medicare billing rates.
Focusing on predominantly urban counties, Transparent Healthcare has established a network of participating providers in three states: New York, New Jersey and Georgia. For $39 a month, every member of a family household gets access to a wide range of medical services at Medicare-comparable rates and 24/7 telemedicine access to a doctor.
"Our members understand the cost of care before they go through the door," Heiman told me. "They're walking in with a sense of dignity. They don't have to announce that they are uninsured, or have no idea of the cost of care."
Telemedicine Component is Key
She says unlimited free access to telemedicine is a prime component of Transparent Healthcare's approach to boosting healthcare accessibility for the previously uninsured, the underinsured, and the undocumented.
"That sets us apart. It avoids deductibles and copays. Telemedicine is part of the subscription rate. There is absolutely no cost out-of-pocket. Physicians can prescribe over the phone for many conditions. This provides a significant opportunity to speak to a doctor."
Transparent Healthcare members pay cash on a pay-as-you-go basis, which is a draw for providers, she says. "Billing can account for as much as 15% or 17% of a doctor's expenses. When they work with us, they're not billing. They're not waiting 30, 60 or 90 days for payment."
Jessica Hicks, President of Nyack, NY-based Grandview Physicians Billing Service, says Transparent Healthcare is a win-win for providers: increasing patient volume and lowering costs.
"Transparent Healthcare increases our reach into the community by bringing a new set of patients into our offices. Working directly with Transparent we save on billing and collection costs, as the patient pays directly at the time of service. Their customer service makes the process so simple. I wish all networks were this easy."
Placing a Premium on Patient Experience
"The time has come in healthcare to increase the level of customer service. We offer concierge services, helping patients find a doctor and prescription drugs at affordable prices," Heiman says. Transparent Healthcare is offers price comparisons for selecting doctors and pharmacies and allows "for the very first time, what the healthcare consumer needs – ease of use and transparency about price."
Heiman says the PPACA alone is destined for failure in its quest for universal healthcare coverage, which has opened a niche for entrepreneurialism and innovation. "Without these access gaps, there would be no room for us. The fact that there is a market of 30 to 40 million people creates a market opportunity.
In November, the Republican Party took control of both houses in Congress. The shift in political power could have a profound impact on payers, according to a diverse panel of healthcare experts.
Healthcare is one of the most regulated industries in the country, with a host of federal and state agencies overseeing all the major stakeholders.
In last fall's mid-term election, Republicans gained control of the Congress, seizing the Senate with a 54-46 edge over the Democrats and their duo of independent party allies. In the House, the GOP extended its voting margin over the Democrats, picking up 14 seats to post a 247-188 advantage.
As Republican leaders prepare to wield power at the Capitol, HealthLeaders Media polled a half-dozen healthcare experts, including representatives from payers, academia, and the business community. The panelists were asked to identify the top Congressional initiatives for healthcare payers to watch in 2015.
Three initiatives rose to the top:
The quest to fix or replace Medicare's unpopular physician reimbursement mechanism, the Sustainable Growth Rate
Patient Protection and Affordable Care Act repeal legislation
Efforts to tinker with elements of the PPACA
The SGR mess
Congress has struggled to reform or repeal Medicare's SGR physician reimbursement formula for more than a decade.
Last February, frustration fueled a bipartisan coalition of lawmakers who cut an SGR repeal deal, the SGR Repeal and Medicare Provider Payment Modernization Act of 2014. "The Sustainable Growth Rate formula—the mechanism that ties physician payment updates to the relationship between overall fee schedule spending and growth in gross domestic product (GDP)—is fundamentally broken," members of the Senate Finance Committee, the House Ways and Means Committee, and the House Energy and Commerce Committee said in a joint statement.
William Kramer, executive director of health policy for the Pacific Business Group on Health, a purchasing group based in San Francisco, says legislation designed to resurrect last winter's SGR repeal deal is of utmost importance to payers and other sectors of the healthcare industry.
William Kramer
Executive Director of Health Policy
Pacific Business Group on Health
Fixing or replacing the SGR when it expires in March would be a key step toward creating a value-based healthcare system, he says. "The stakes are high. If we don't change the way physicians are paid, we will perpetuate a system in which the primary incentive is to increase volume, not quality. Although the bill isn't perfect, this is a crucial opportunity to continue the momentum toward value-based payment. If we get it right, Medicare physician payment reform will be a game changer; it will ripple out into the broader health system and improve quality and affordability for everyone."
Paul Clark, a legal analyst at Wolters Kluwer Law and Business, is pessimistic about progress and says the forces of action and inaction are set for yet another SGR battle in Congress.
"Congress has been unable to enact significant changes in physician reimbursement, so each year they pass a Band-Aid piece of legislation that averts significant cuts for a short period of time," Clark says. "So expect at least another short-term fix early in the 114th Congress that will mollify physicians for a few months, and more rhetoric from members of Congress about a long-term fix."
Another SGR patch would likely prompt Congresspeople to attempt piecemeal reforms to physician reimbursement in 2015, according to Harold Miller, president and CEO of advocacy group Center for Healthcare Quality and Payment Reform.
Harold Miller
President and CEO
Center for Healthcare Quality
and Payment Reform
"If Congress decides to simply enact another temporary patch to the SGR this spring instead of a permanent repeal, separate legislation on physician payment reform will be needed," he says, noting that several factors have created momentum payment reform legislation in 2015, such as the bipartisan push to move away from fee-for-service physician reimbursement. "There will likely be two different kinds of legislation considered: first, legislation authorizing or requiring faster progress on alternative payment models for all types of physicians; and second, legislation requiring implementation of specific payment models for individual specialties."
PPACA repeal improbable
Despite the Republican Party's firm grip on the House and newly won Senate majority, the GOP appears far more likely to revise the PPACA than to repeal President Obama's prime domestic policy initiative.
Theda Skocpol, PhD, a Harvard University professor and director of the Scholars Strategy Network policy group, says PPACA foes face a harsh political reality. "Too many people have gained health insurance through this law," she says of Americans who have garnered health coverage through the new public exchanges or expansion of Medicaid. "Whatever changes are made, repeal remains nothing more than rhetoric."
Republicans are far short of the 67 votes that would be required to override a certain presidential veto of any PPACA repeal legislation, Skocpol says. "You can forget that."
Chipping away at the PPACA
Changes to the healthcare law are another matter. Republican lawmakers are likely to find enough Democrats to tinker with unpopular elements of the PPACA such as the tax on medical devices that helps fund the law, Skocpol says. "Some of these things will get through to Obama. You can chip away at this or that tax, then you're talking real money."
Michael Warfel, vice president of government affairs at Pittsburgh-based Highmark Inc., says the PPACA's health insurance tax is ripe for revision or repeal.
"The HIT is a tax on all fully insured health insurance policies offered by a carrier. The tax began as an $8 billion assessment on the industry in 2014. It is scheduled to grow exponentially, reaching $18 billion by 2024 and more in later years," he says. "Opposition to the tax is broad since those whose coverage it impacts—small businesses, seniors, and individuals without access to subsidized coverage—are the same groups already having a difficult time affording care. The push for repeal on Capitol Hill is being spearheaded by the small business community."
Washington wheels set to turn slowly
Cindy Morrison, executive vice president of marketing and public policy at Sioux Falls, SD-based Sanford Health, says the pace of 2015 healthcare-related legislation will be set by immutable forces in Congress: the calendar, politics, and taxpayer dollars. The deployment of these forces indicates the pace will be sluggish, she says: "There's going to be a wait-and-see approach."
The impending SGR showdown looms large on the legislative calendar. "It will have to be addressed," she says. "That's the first thing out of the chute in March."
On the political front, Congresspeople are likely to move cautiously on healthcare legislation until this summer's U.S. Supreme Court decision on whether to allow subsidies on federally operated insurance exchanges, Morrison says. "If you're a smart politician, you're not going to make a move until the Supreme Court decision in June,"
The financing of healthcare, particularly for programs linked to the PPACA, also points to a slow pace for healthcare-related legislation in 2015, according to Morrison. Attempts to repeal any of the taxes that finance the PPACA could meet the same end as last winter's SGR repeal deal, she says. "It's fine if you're going to repeal a tax, but you better have a pay-for."
In the next phase of the healthcare reform law's implementation, providers will be the primary focus of the reform revolution.
Ariel Linden, DPH
Healthcare payers have been bearing many of the heaviest burdens in the first phase of implementation of the Patient Protection and Affordable Care Act. Now, the heavy lifting is shifting to providers.
For payers, the PPACA has upended business models through regulatory edict, created an individual insurance market from a scratch exchange recipe, developed new payment models such as accountable care contracts, and introduced a bevy of new competitors including insurance cooperatives and technologically savvy startups.
For providers, the PPACA journey has just begun, with thousands of health systems, hospitals, and physicians struggling to keep pace with the first wave of reform. Providers have clamored for repeal, revision or delay of several key federal reform initiatives such as the two-midnight rule for determining patient admission status at hospitals, Meaningful Userequirements for information technology and price transparency for healthcare services.
In their regulatory struggle with providers, federal officials have not only the law, but also the logic of accounting on their side.
Providers are the big spenders in the healthcare industry, according to data collected for the National Health Expenditure Accounts, the country's official healthcare spending statistics tallied at the Centers for Medicare & Medicaid Services.
In 2013, NHEA data pegged healthcare spending at $2.9 trillion. Spending for hospital, physician and clinical services accounted for more than half of the total, at $1.5 trillion. When accounting for other provider services such as dentistry, home health, and long-term care facilities, the provider share of the healthcare spending pie rises to $2.1 trillion in 2013.
Big Spenders
Providers had a hand in an additional $314 billion in 2013 healthcare spending through prescription drugs and costs for prescribed durable medical devices such as eyeglasses and hearing aids.
Ariel Linden, DPH, lead author of a study published in October that cast doubt on the effectiveness of hospital readmission reduction efforts, says providers face a daunting healthcare reform odyssey. "In some areas, they're pretty far along, but in others, they're not even on first base," he told me recently, citing Meaningful Use as the poster boy for provider reform quagmires.
"Even though it's written into law, there are many organizations that are falling behind. Are they sharing the data with their partners? Most of them are not."
The reformist push for value over volume is just beginning to overturn the fee-for-service business model that providers have embraced for generations, Linden says.
"What do they need to make the right clinical decisions that generate the most value? They're in the process of just thinking about it. This industry is only in its diaper. Providers are not getting the data they need… We don't have clear evidence, as a system, where we know clearly what works and doesn't work. Providers need a clear pathway to what they need to do."
Peter Angood, MD, president and CEO of the Tampa, FL-based American Association for Physician Leadership, says the absence of rigorously established standards for clinical care is a massive hurdle for providers to clear in the value-based healthcare revolution.
Recently, he told me that providers desperately need "appropriately focused and realistically representative metrics and measures for clinical care that are accurately coordinated with public reporting."
The establishment of evidence-based clinical standards is vitally important to the effort of transforming patients into powerful economic agents, Angood says.
David Burton, MD
"These metrics and measures need to accurately provide information on outcomes of patient care that reflect provider performance with reality-based methodology. The public reporting should more accurately reflect the difference in outcomes between providers as health systems and providers as individuals. Health systems' performances can strongly influence reporting—positively and negatively—of individual providers. Patients are still unable to make these differentiations when making consumer decisions."
Price transparency poses a similar challenge for providers in their role as one of the midwives in the birth of healthcare consumerism, Angood says. "Cost and pricing transparency remains one of the biggest obstacles for better understanding the value equation. Value equals quality divided by cost. We do not yet know how to optimally define quality as a numerator; and the denominator of cost is not easily understood because of the lack of transparency."
2 Accelerators
David Burton, MD, developed managed care health plans at Salt Lake City-based Intermountain Healthcare and has served in several top leadership roles at Health Catalyst, a data analytics firm in the Utah capital. He says there are two kinds of "accelerators" providers need to push as they weather the next wave of healthcare reform: mastery of data integration and clinical content.
Burton says providers and their vendor partners must develop data integration technology that is capable of combining information from several disparate electronic sources such as claims records, clinical records and financial records. Combining this data provides the level of granularity in patient records that is required to achieve success in major provider reform initiatives such as care coordination, cost control and quality improvement, he told me recently.
"If you have to recreate the wheel at every provider, this process isn't going to go anywhere. EHRs have sought to make clinical data 'machine readable.' The next [information technology] accelerator has to do with data integration and the creation of data warehouses. Can you get the data flowing? Can you integrate the data?"
"Clinical content accelerators" are needed to help providers establish best clinical practices and conduct a population-management-based approach to the delivery of healthcare services, Burton says. "It begins with a new mapping schema. You get a much more accurate picture of acute care than just looking at inpatient care." Effective data analytics in the clinical realm must draw data from settings beyond inpatient facilities including outpatient settings such as retail clinics, he adds.
The most potent clinical content accelerators are based on precise patient registries and are capable of tracking outcomes such as cost of care and mortality rates, Burton says. "It's not a bottomless pit, but it is a fairly ambitious undertaking."
The effort requires using data to define best practices in about a dozen primary clinical areas for hundreds of "care processes." As an example of bringing this data analytics muscle to bear on clinical content, he cites cardiology as a primary clinical area and coronary artery bypass graft surgery as a care process worthy of close scrutiny. "With the use of good analytic techniques, you can concentrate on the big processes, so it doesn't seem that you're pushing against the ocean."
