The largest health plan provider in Pennsylvania is exploring opportunities to diversify beyond the insurance market. Its latest innovation is a retail concept for consumers with sleep disorders.
One of the largest Blue Cross Blue Shield-affiliates in the country is seeking growth opportunities outside its core health plan business line.
Pittsburgh-based Highmark Inc. offers health insurance products that provide coverage for 5.2 million lives in Delaware, Pennsylvania, and West Virginia. But the Business Innovation and Development department Highmark created three years ago is thinking outside the BCBS box.
"Our fundamental purpose is to develop new products and services that meet a consumer need and drive growth for the company," says Paul Puopolo, VP of business innovation and development for Highmark. "We are not looking at insurance. We are an innovation group, with a heavy emphasis on going to market."
Puopolo's innovation and development crew has helped launch two new Highmark business lines. "Our group has only been in existence for three years," he says. "Two new businesses in three years is a pretty good rate."
The first was CaregiverHQ, a home-based caregiver support service that the company started marketing in April. Individual consumers pay a subscription fee for the service, which includes emotional support and stress management strategies for friends and family members who are serving as caregivers.
The second is set to launch next month, with the opening of a REMWorks Sleep Store retail business in Homestead, PA. It seeking to fill an unmet market niche, says Amy Phillips, director of the new business. "There are nearly 80 million people in the United States who have sleep disorders of one kind or another."
A rendition of Highmark's new sleep store
The Sleep Store will be staffed with three respiratory therapists, a nurse, and a polysomnographic technologist. Rather than conducting overnight sleep studies, a questionnaire will be used to "[identify] whether the level of your sleepiness during the day is normal," she says.
The Sleep Store will offer counseling and sell durable medical equipment that requires a doctor's prescription. Market differentiators of the Sleep Store include a direct-to-consumer business model and "an environment that is not focused on disease," she said. "It will be a soothing environment; you won't see tubes when you walk in the door."
Puopolo says development of the Sleep Store followed a four-step process that Highmark has adopted for growth opportunities: intake, conceptualization, business case formation and commercialization. "It came in as an idea because of the market," he said. "We met with consumers, and we saw there was a gap."
The development process for the Sleep Store has taken about two years, Phillips said. "Once we put the business case together, we had to go through Highmark for approval," she said.
Highmark is poised to develop retail business lines because of the company's experience with Highmark Direct, nearly a dozen brick-and-mortar sites in Pennsylvania that help individuals and families purchase health insurance products. "They blazed the trail," Puopolo said.
Highmark Direct's branded storefronts have given the company critically important institutional knowledge to succeed in retail ventures, he says. "We have people in this company who have experience now. It's not a heavy lift. If you don't have that experience, it could be daunting."
Highmark is dreaming big for the Sleep Store.
"We want to see this one be successful and get off the ground," Puopolo said of the Homestead location. "We're taking it one step at a time, but it could be national. We have a lot of other Blue plans we work with."
An appropriate reduction in the number of diagnostic lung biopsies "has the potential to reduce costs and improve patient outcomes," says a researcher who has studied diagnostic costs associated with Medicare beneficiaries who had abnormal chest CT scans.
The research focused on a random sample of nearly 9,000 Medicare beneficiaries who underwent diagnostic tests after an abnormal chest computed tomography scan. The study found 43% of the total diagnostic workup cost after the abnormal CT scans was linked to biopsies with negative results for patients who ended up not being diagnosed with lung cancer.
The total diagnostic workup cost for patients in the study was pegged at $38.3 million, with Medicare spending at $16.5 million on biopsies for patients who did not have lung cancer.
The study was presented at the 2014 Chicago Multidisciplinary Symposium in Thoracic Oncology. The lead author of the report, Tasneem Lokhandwala, PhD, a research analyst at the Xcenda subsidiary of Chesterbrook, PA-based AmerisourceBergen Corp., drew a three-fold conclusion for the conference attendees:
Biopsies are a significant proportion of the overall cost of diagnosing lung cancer
To reduce lung cancer diagnostic costs, oncologists need to develop "more precise risk stratification tools to better identify patients who require referrals for lung biopsy"
An appropriate reduction in the number of diagnostic lung biopsies "has the potential to reduce costs and improve patient outcomes"
Bearing Down on the Numbers
In an interview this week, Lokhandwala said her research team's data was drawn from Medicare beneficiaries across the country.
"This is a nationally generalized sample," she said of the 8,979 Medicare beneficiaries who had abnormal chest CT scans from January 2009 to December 2011. "They all could have been diagnosed with lung cancer."
She said more research would have to be conducted to determine the potential annual savings for the Medicare program if unnecessary lung biopsies could be eliminated. "You would need extensive analytical modeling to get that number," she said.
To conduct a study on the potential annual savings linked to elimination of unnecessary biopsies, Lokhandwala said researchers would have to consider focusing only on patients at high risk for lung cancer and weigh murky factors including cost estimates for new diagnostic tools.
Tradeoffs in High-Stakes Cancer Battle
The moderator of the conference, Laurie Gaspar, MD, MBA, a professor at the University of Colorado's School of Medicine in Denver and longtime clinical oncologist, says Lokhandwala's research highlights the benefits of improving lung cancer diagnostics.
"It is always possible to develop more precise risk-stratification tools for lung cancer so that we have more accuracy in our diagnosis of lung cancer as opposed to benign lesions."
"The areas that appear most promising are in the ability to diagnose early lung cancer from blood samples, referred to as liquid biopsies sometimes; the use of new imaging modalities such as new types of PET and CT scans; or the use of exhaled breath to detect chemicals that are correlated with early lung cancer," she says.
A key finding of Lokhandwala's research is relatively low utilization of positron emission tomography compared to biopsy in lung cancer diagnosis. PET scans were performed on less than 1% of patients. Lung biopsies were performed on about 19% of patients. This finding suggests oncologists are not following diagnostic guidelines for lung biopsies.
"From this analysis, it was found that the National Comprehensive Cancer Network (NCCN) lung cancer screening guidelines were not followed, which resulted in many patients who ultimately had a negative lung cancer diagnosis undergoing unnecessary biopsies. The NCCN guidelines call for low-dose computed tomography of the chest followed by a PET scan to identify patients for biopsy," says a statement accompanying the release of the report.
In Lokhandwala's study, the average cost to Medicare for a complication-free lung biopsy was $8,869 and the average cost of a PET scan was $624. She notes that the average cost of a PET scan in her study only covered the procedure, but Medicare spending on lung biopsies included all incidental costs.
"It's not just the cost of the procedure," she says. The incidental costs for biopsies in her study accounted for "everything that could happen" such as length of stay in a hospital and the cost of managing adverse events linked to a biopsy.
Gaspar says oncologists and researchers will have work carefully as they seek to refine lung cancer diagnostics.
Developing more cost-effective diagnostic tests involves a large measure of uncertainty and "the cost of these tests is not yet known. The ultimate cost depends on whether the new tests replace the traditional biopsy or are just done to avoid some biopsies. The latter sounds more likely at this point."
Lung cancer is among the most deadly diseases afflicting the Medicare population, so the stakes will be high in any effort to reduce the number of lung biopsies, Gaspar says. "Money would be saved as long as we are not missing the early detection of lung cancer in the vast majority of patients."
The office of the Massachusetts attorney general responds to public comments on a settlement pact between the state and its largest employer, Partners HealthCare. The agreement, it concludes, is better than the likely outcome of a lengthy court battle.
The showdown is set.
Massachusetts Attorney General Martha Coakley has filed her office's response to the final set of public comments filed on a merger and acquisition settlement between Partners HealthCare and state officials.
Partners HealthCare, the largest private employer in Massachusetts has been on a years-long quest to expand further and consolidate its holdings. The contentious matter reached a pivotal point in a Boston courthouse last week with the filing of the AG's response.
Coakley and Partners reached the settlement pact earlier this year to resolve an antitrust case the AG had pressed in Suffolk Superior Court over the health system's M&A plan, which features the acquisition of three suburban hospitals.
In the response document Coakley's office file last week, the AG calls on the state court to approve the settlement deal on several grounds:
The settlement advances the public interest, including measures such as a healthcare service price cap over a period of several years that helps address "the harms threatened by Partners' acquisitions."
Broad policy concerns raised in public comment letters filed by foes of the settlement deal are beyond the state's authority. "Most of these comments are grounded in advocacy about important healthcare matters, but the issues raised by these organizations are often outside the antitrust principles and analysis that supports the Commonwealth's Complaint," Coakley's office wrote.
The settlement deal is clear and enforceable. "The price cap cannot be gamed in any meaningful way," the AG's office wrote, adding, "Partners' ability to negotiate different price increases for different services is unlikely to materially cause its revenues to increase at a rate greater than the price cap."
The conclusion of the AG's response letter claims the settlement pact is better than the likely outcome of a lengthy court battle. "Accounting for all the fully investigated facts, the realities of litigation risk, and the broad, immediate and effective remedies contained in the settlement, this Consent Judgment is superior to uncertain and prolonged litigation," Coakley's office wrote.
On Nov. 10, Suffolk Superior Court Judge Janet Sanders is set to hear oral arguments from the AG and Partners on why their proposed settlement deal is in the public interest. After that hearing, the fate of the settlement pact is expected to be in Sanders' hands.
Opposition Remains Entrenched
The last round of public comment letters filed on Partners' M&A plan focuses on revisions to the proposed settlement deal between the health system and Coakley's office. The comment letters, which were submitted by a court-ordered Oct. 21 deadline, include expressions of stiff opposition.
Laura Pellegrini, president and CEO of the Massachusetts Association of Health Plans, filed a direct but polite comment letter on behalf of the group's 17 insurers, which provide healthcare coverage for 2.6 million Bay State residents. "We recognize the effort that has gone into the investigation and proposed judgment, but believe the amended provisions fail to address our overriding concern that the proposed judgment will not remedy the market dysfunctions it seeks to correct and could have the unintended effect of increasing healthcare spending," she wrote.
Attorneys for the Washington, DC-based American Antitrust Institute are equally skeptical in their comment lettersubmitted on Oct. 21. "We ultimately conclude, as we did in our original comments, that the proposed consent should be rejected as not in the public interest because it does not adequately remedy the competitive harms alleged in the complaint and it will be difficult and costly for the judiciary to enforce," the attorneys wrote.
The AAI attorneys raise several criticisms of the price caps in the proposed settlement deal, including the ability of the court to enforce the price caps; the likelihood that the price caps "provide, at best, only temporary relief;" and "concerns that the price caps do not apply to Medicaid Managed Care or Medicare Advantage."
Rigorous M&A Review Process
To boost coordination of care and shore up their finances, health systems from coast to coast have launched a wave of M&A efforts. Partners has faced a particularly arduous journey in its attempt to acquire South Shore Hospital in South Weymouth, MA and two other suburban hospitals.
Partners has been in acquisition talks with South Shore Hospital for three years, according to a health system official. In May, Coakley struck a settlement deal on Partners' proposed M&A plan, sparking a legal inferno in Suffolk Superior Court.
An aspect of the court battle that is unique to Massachusetts is a new state healthcare law adopted in 2012: Chapter 224. In a comment letter filed at the attorney general's office on Oct. 21, Stuart Altman, PhD, chairman of the state Health Policy Commission, describes a critical provision of Chapter 224 that establishes Cost and Market Impact Reviews for healthcare organization transactions.
The CMIR process includes "public assessment of a broad spectrum of potential impacts from healthcare market changes, ranging in changes from cost, quality, and market performance to impacts on the availability and accessibility of services," Altman wrote.
Under Chapter 224, the Health Policy Commission bears responsibility for conducting CMIR investigations. If the CMIR process raises any red flags, a report is filed with the attorney general's office. After conducting a CMIR probe of Partners' M&A plan, the Health Policy Commission filed two reports with Coakley's office: one on the proposed South Shore Hospital acquisition and the other on Partners' proposal to acquire Hallmark Health System, which includes a pair of hospitals in Medford and Melrose.
Coleen Elstermeyer, chief of staff at the Health Policy Commission, says Massachusetts is leading the nation in conducting rigorous reviews of health system mergers and acquisitions. "To our knowledge, Massachusetts' CMIR process is unique; no other state has authorized such broad, policy-oriented reviews that enable the public and policymakers to assess the cost, quality, and access impacts of health care transactions. Such reviews are distinct from, but may complement, administrative determinations of need and law enforcement reviews," she says.
Rich Copp, Partners' VP of communications, says opponents of the health system's M&A plan have turned the CMIR process to their advantage. "Judge Sanders is being asked to approve a settlement agreement arising out of a complaint filed by the AG alleging antitrust violations. These allegations are being asserted based on extensive antitrust investigations that were conducted by the AG and the federal Department of Justice into Partners' past contracting practices and proposed acquisition of SSH and Hallmark."
"The Health Policy Commission's findings, pursuant to Chapter 224, are merely part of the input that the DOJ and the AG considered in reaching their conclusions. But the public nature of the HPC's process has allowed competitors and payers to express their opposition in a forceful way."
Copp says the CMIR process has placed Partners' M&A plan under unprecedented scrutiny. "Thus far, the judge has opted to continue to let those voices be heard as she considers whether to approve the settlement. Most courts would yield to the judgment of the DOJ or a state AG to settle a case, given the well-established legal principle of prosecutorial discretion."
Orthopedics is all they do at New England Baptist Hospital, and they do it very well, drawing patients from across the Northeast to a new outpatient surgical care center outside Boston. "We are a focused factory," explains one senior executive.
John Richmond, MD
The struggle for survival is presumably ingrained in the genetic code of all organisms on Earth.
Whenever I look for journalistic partners, I seek organizations that have excellence present in their collective DNA.
New England Baptist Hospital in Boston has the excellence gene. When alerted earlier this year that I would be moderating an orthopedic medicine webcast, I immediately targeted NEBH, which has a world-class main campus in Boston's Mission Hill neighborhood. Next week's webcast will focus on NEBH's new outpatient surgical center in Dedham, MA, one of Boston's southwestern suburbs.
The first time I crossed paths with one of the webcast's two speakers was more than a year ago. John Richmond, MD, is NEBH's medical director for network development, and the description he provided of his employer during our first encounter resonated with my inner economist. "We are a focused factory," he told me.
Orthopedics is all they do at NEBH, and they do it very well. The organization has amassed awards and honors, including recognition from Healthgrades for Patient Safety Excellence and Outstanding Patient Experience and high hospital rankings from U.S. News and World Report.
NEBH draws patients from across New England, other Northeast states, and beyond. Serving that far-flung patient population was one drivers behind NEBH's decision to open the Dedham outpatient surgical center, which is located near Route 128, the main bypass highway that rings Boston.
Convenient access to NEBH orthopedic services is a plus for patients who live outside the city and allowed NEBH to strengthen its organization, broaden its market reach, and establish a new revenue stream. Payers benefit from orthopedic services being delivered in a lower-cost setting.
The Dedham facility has been developed and operated through two joint-venture companies: one focused on management and the other on real estate. Ownership of the facility is spread between three entities: NEBH and Quincy, MA-based Shield HealthCare have 25% stakes, and physicians associated with NEBH have a 50% stake.
The outpatient surgical center is not a new concept. Way back in January 2007, HealthLeaders magazine forecast the growth of ambulatory surgical centers. One of the many prescient points made in that article is directly applicable to next week's webcast: "In the future, general outpatient care may lose business to centers offering more directed services."
That future is playing out at the New England Baptist Outpatient Care Center in Dedham.
The second member of next week's webcast presenter duo is Rachel Rosenblum, NEBH's VP of ambulatory operations and program development. She describes NEBH's facility in Dedham, which opened last fall, as a "musculoskeletal care center" and "a destination for care across the orthopedic spectrum."
"One-stop shopping" has become a catch phrase in the marketing of outpatient care facilities, and it is an apt description of the patient experience at the New England Baptist Outpatient Care Center.
The 66,000-square-foot structure houses a wide array of professionals and equipment under one roof, including offices for surgical practices and an MRI-equipped imaging center. The range of services includes several state-of-the-art operating rooms paired with dual-use pre-operative and post-anesthesia care unit bays, an interdisciplinary pain center, rehabilitation services, a spine center, and occupational health programs such as firefighter and police exams.
When it comes to outpatient surgical centers, NEBH has provided an excellent model for others to follow: high-quality care, convenience for patients, and a business model that spreads the risks associated with building and operating a world-class facility.
Webcast: Join leaders from New England Baptist Hospital as they share best practices and host an interactive Q&A around contemporary strategies for orthopedic success in the ambulatory environment in a webcast on Nov. 12, from 1:00–2:30 PM ET.
The launch of an accountable care health plan product in Washington State includes new partnerships between Aetna and four healthcare provider organizations.
With four new pacts announced last week, Aetna is continuing its nationwide push to rack up commercial accountable care collaborations with healthcare providers.
Norman Seabrooks
Aetna's Northwest Market President
Norman Seabrooks, Aetna's northwest market president, says the pacts raise the tally of the insurer's accountable care collaborations to 51.
"Aetna believes that healthcare is moving in a direction where collaboration and innovation are vital to improving the quality, value, and efficiency of care while providing a better overall patient experience. To that end, we are working with healthcare providers and organizations across the country, including the four provider groups in the Puget Sound region, to create a more sustainable healthcare model that will move the needle on improving outcomes while controlling costs," he said.
Seabrooks says the collaborations will target the group health insurance market. "The Aetna Whole Health plan… will allow our customers who purchase the plan to offer their employees enhanced, coordinated care through four distinct and robust networks… This means that employees will be able to choose where they get care based on their personal and geographic preferences," he said.
"We anticipate that this new product will save participating [employers] between 7 and 12% on medical costs in the first year," Seabrooks said. "There is a shared-risk agreement with each of the four networks that rewards them for reducing medical costs and improving the quality of care provided."
'Aligns Our Interests'
The top executives of Aetna's new Washington State partners are bullish on the accountable care collaboration.
"One of the strongest features of the Aetna Whole Health product for the Rainier Health Network is the benefit design for enrollees," says Rainer CEO Rick MacCornack, PhD. "The plan provides a financial incentive to establish a lasting relationship with a primary care provider, which is the basis in trying to provide more value and better health for plan participants. This feature enhances our network's ability to provide continuity of care and better coordination of patient care for most, if not all, of the services provided by Rainier Health Network."
Lloyd David, MBA, The Polyclinic's CEO, says the Aetna pact is a win-win for his organization and its patients. "We have full confidence in our ability to deliver healthcare efficiently and cost effectively, and this partnership with Aetna Whole Health allows us to demonstrate our strengths and be rewarded for our performance."
"When patients make a choice to get their care from The Polyclinic network, they establish a stronger relationship with us, which opens the door for us to reach out to engage and coach them more vigorously. And our contract aligns our interests with the patient and the purchaser by creating rewards for increasing quality and managing the total cost of care."
Provider Network Perspective
Aetna's new partners says the accountable care collaboration will deliver value to health plan members in provider networks that are more than adequate in terms of geography and quality.
The CEO of Providence-Swedish Health Alliance, Joe Gifford, MD, highlighted his organization's provider network. "[It] is a network with boundaries, but it's anything but narrow," he says.
"With six hospitals in King and Snohomish counties, 80 clinic locations, and over 1,500 physicians, Providence and Swedish offer comprehensive care. We offer access to a wide range of specialists and sub-specialists, and are well prepared to meet virtually any medical need. To receive the maximum benefit, members must seek care through Providence-Swedish Health Alliance providers, clinics, walk-in clinics and hospitals. Seeking care within our network helps enable our goal to achieve the 'triple aim:' lower cost, better population health and better quality."
MacCornack said Aetna has created the equivalent of a broad network in the Puget Sound region. "Rainier Health Network consists of nearly one thousand providers representing fifty-five medical specialties. Geographically, we have providers in South King, Pierce, Kitsap and Thurston counties. We would not consider this to be a narrow network, especially since Aetna Whole Health also includes health care systems that cover King and Snohomish counties," he said.
Accountable Care Deal Goals
All four healthcare provider CEOs say they have lofty goals for their new relationship with Aetna.
Gifford says Providence-Swedish Health Alliance is hoping to hit three targets:
Improving medical care for members with chronic conditions;
Providing patients with "top-notch member experiences," including greater access to healthcare providers; and
Making sure patients get "appropriate and necessary care they need when they need it."
David says The Polyclinic is primed to succeed. "Our goal as an Aetna Whole Health provider is to use our years of experience in full-risk and shared savings contracts to provide patients with high-quality, personalized care, and to offer employers a cost-effective product that helps them reduce their insurance costs and better manage their bottom line," he says. "Delivering great value should enable us to continue to grow and increase market share."
Vik Dabhi, MD, PhD, chief medical officer of Pacific Medical Centers, says the accountable care pact with Aetna is a golden opportunity.
"We have shifted our perspective to focus on prevention and health, and PacMed's approach to care works to reduce cost and improve the health of our patients. With products like Aetna Whole Health, we can change the way healthcare is organized, delivered and paid for, and provide our patients with exceptional quality, producing excellent outcomes and high patient satisfaction with lower costs."
Some Blue Cross Blue Shield health plans are trying to achieve medication cost savings in the form of discounts and rebates through outcomes-based contracting. While the effort is showing significant value-based potential, tracking cost savings has so far been elusive.
Health plans seeking to rein in runaway drug costs should consider the sage words of the Chinese philosopher Lao Tzu: "The journey of a thousand miles begins with a single step."
Efforts to established value-based pricing for drugs are in their infancy, but a consortium of 13 Blue Cross Blue Shield health plans owns a company that is making impressive baby steps.
Steve Johnson
PBM's Senior Director of Health Outcomes
Eagan, MN-based Prime Therapeutics LLC manages pharmacy benefits for health plans, employers, and government agencies including Medicare. The company began as little more than a twinkle in the eyes of executives at Blue Cross Blue Shield of Minnesota more than 25 years ago. Now Prime provides pharmacy benefit manager (PBM) services for more than 25 million people.
Four years ago, Prime started negotiating outcomes-based contracting for drugs with pharmaceutical manufacturers, according to Steve Johnson, the PBM's senior director of health outcomes. "It is an approach to contracting that is not linked to formulary," he told me last week.
The business side of outcomes-based contracting, which Prime calls 'care-centered contracting,' is relatively easy. Prime cuts an outcomes-based deal with a pharmaceutical manufacturer, "then brings that care-centered contracting opportunity to the Blues plans for their and dissemination," Johnson told me.
But negotiating an outcomes-based contract deal is "very challenging," he says.
Prime has developed several forms of outcomes-based contracting. The most popular model is medication-adherence improvement incentives, Johnson says. "It's easier to set up, to measure, and to report on," he says.
Medication Adherence
In terms of alignment, which has become the Holy Grail of many healthcare industry reform initiatives, medication adherence is a win-win-win. Patients feel better if they can be faithful to their prescribed medication regimen. Pharmaceutical manufacturers feel better because they can maximize drug sales. And payers feel better because medication adherence helps avoid costly trips to the hospital. "Adherence to therapy has been shown to have a benefit," Johnson says.
Compared to other forms of value-based drug pricing, the mechanism for medication adherence-improvement incentive contracting is relatively straightforward.
For many drugs, Johnson says the gold standard for adherence is 80%. In other words, if patients are taking their medications as prescribed by their doctors at least 80% of the time, then they have cleared the medication-adherence threshold.
This is where Prime puts the incentive in medication-adherence improvement incentive contracting: If a health plan can boost medication adherence over the 80% threshold, then the insurer can reap a discount or rebate from the pharmaceutical manufacturer.
Johnson describes two forms of medication-adherence improvement incentive contracting. One rewards health plans for members reaching an established medication-adherence rate such as the 80% threshold. "If we can get some percentage of our members over 80%, then we can negotiate a discount."
The other rewards health plans for demonstrating year-to-year increases in adherence rates.
Adherence'Simple' to Measure; Costs Elusive
Tracking medication adherence is relatively simple, Johnson says. "Adherence is pretty easy to measure. You use the prescription claim history as a 'surrogate.' You have to assume based on the prescription claims that they are using their medications."
Drug price discounts in medication-adherence improvement incentive contracts range as high as 3%, but have the potential to be significantly higher, according to Johnson.
Prime's other models of outcomes-based contracting are more complicated. Johnson says the most ambitious model is medical-event avoidance protection.
"Medical event-avoidance protection care-centered contracting provides an incremental payment from the manufacturer when the medication is in the formulary preferred tier status, the member is adherent to the medication, and a medical event occurs that the medication was intended to prevent," he says.
Real-life challenges such as varying rates of patient adherence to medication regimens have made medical event-avoidance protection contracting difficult to negotiate and operationalize, he says. "We've been working on it for a few years," Johnson says. Prime has established one contract under this model so far, but has yet to gather a full year of data to assess the deal's performance. "We're getting a lot of interest, but it's challenging."
But Johnson says tracking the cost savings from outcomes-based contracting for health plans and their members also has been elusive. "We've been asked that number forever. It takes years to get that data," he says. "There is agreement that the drugs are effective. The question of cost savings goes back to the data showing the drugs are effective."
The absence of cost-saving data may be disappointing, but if health plans want to control the soaring costs of medications, they have to start somewhere.
A Medicare advocacy group is seeking early notice and an appeals process for hospital patients designated for observation rather than inpatient status.
One of the highest courts in the land is focusing on one of the hottest issues in healthcare.
Attorneys from the Center for Medicare Advocacy and the federal government recently sparred in the US Court of Appeals for the Second Circuit over a lawsuit linked to the distinction between inpatient and observation status at hospitals.
The stakes are high for Medicare beneficiaries, who face paying the whole bill at skilled nursing facilities if they are transferred from the hospital without spending at least three days designated as inpatient status.
In November 2011, seven Medicare beneficiaries or their estates filed a federal lawsuit against Kathleen Sebelius, who was then serving as secretary of the US Department of Health and Human Services. Bagnall v. Sebelius asked the federal District Court in Connecticut to find HHS's observation status rule in violation of the Medicare statute. The plaintiffs also sought creation of public notice and appeal rights for Medicare beneficiaries placed under observation status.
In September 2013, a District Court judge granted a government motion to dismiss Bagnall v. Sebelius, prompting CMA to file an appeal.
In New Haven, CT, this month a three-member panel of the US Court of Appeals for the Second Circuit heard oral arguments on CMA's appeal.
Alice Bers, an attorney for CMA, approached the immaculately finished, dark-wooden podium to face the judges first. "The issue before us today is about notice and appeal rights," she said, then was quickly interrupted by Judge Ralph Winters, who asked whether doctors or HHS regulators are driving the decision-making on determining Medicare patients' hospital admission status.
"We differ with Medicare on this," Bers replied. "The decision is being driven by the agency."
Judge Jose Cabranes noted that CMA had drawn support from "an impressive array" organizations and asked what kind of information CMA is seeking from the government in the appeal process.
Bers replied that the plaintiffs and healthcare providers need a clear understanding of "the criteria" that are the determining factors in deciding whether someone is an inpatient or designated for observation status. "You can see the providers struggling to comply," she said.
The American Medical Association and the American Health Care Association are among those who have filed briefs in support of the plaintiffs. The American Hospital Association has filed a brief that does not explicitly support the plaintiffs, but describes how AHA's members are struggling to comply with Medicare's observation status rules.
Pressed by Winters for her clients' "ultimate objective," Bers said the plaintiffs want the case to be sent back to District Court, where they will press for a requirement that patients receive notice as soon as possible about their admission status and the possible financial consequences as well as "a clear appeal process."
Walker chimed in again: "You have a due process problem. You would like to get that nailed down through discovery (of information from HHS)."
Government's View
Jeffrey Clair, an appellate staff attorney at the U.S. Department of Justice Civil Division, took his turn at the podium and argued that the plaintiffs have no "property interest" at stake because they have no right "to be admitted to a hospital on an inpatient basis." He added that the determination of patient admission status is strictly a medical decision at the discretion of physicians.
Walker and Winters pressed Clair on whether there are clear standards for setting admission status and whether bureaucrats could second-guess a doctor's admission-status determination. "The Medicare people accept without question the doctor's decision on whether someone is admitted [as an inpatient]?" Winters inquired.
"Your honor, it's a little more complicated than that," the DOJ official said.
Then Winters hammered Clair on the issue of patients' reasonable expectations. "The fact is, we have plaintiffs here that spent eight days in the hospital… and I find it hard to believe they were not in admitted status," he said.
Clair replied that when hospitals make the determination that a patient has been designated in observation status, which Medicare pays at relatively low Part B reimbursement rates compared to Part A inpatient rates, there is no second-guessing in Washington. "When the claim is submitted for Part B status, the [HHS] secretary does not look at whether the patient was properly admitted," he said.
The next line of questioning from the judges turned to the issue of Medicare patients' admission-status notice and appeal rights.
"They want to get notice upfront at the hospital," Walker said of the plaintiffs. "They want the opportunity to be heard, even if they are in the hospital. Why is the agency fighting that so hard? Is that burdensome?"
Clair replied that Medicare officials have no legal basis to require hospitals to notify patients about admission status and the possible financial consequences of being designated in observation. "The statute doesn't call for it," he said. "The government has no statutory authority to order it."
The DOJ official added that state legislatures are creating laws to require hospitals to provide admission-status notice to their patients. "This is becoming increasingly irrelevant in New York and Connecticut," Clair said. "The state of Connecticut, as of October 1 … has now required common notice."
Reading the Tea Leaves
After the hearing, Bers and Clair offered guarded assessments of the appellate judge's questioning.
"It's always dangerous to read the tea leaves, but they were clearly interested in the due process issue," Bers said in an interview outside the courtroom. "They seemed to understand people in hospitals are really in the dark."
Clair had to leave the courthouse immediately after the hearing, but provided the following comment via email: "I thought the judges asked some hard questions for both sides and really do not have a clear sense of how they might rule."
Gil Deford, JD, CMA's director of litigation, appeared in court with Bers but did not participate actively in the advocacy group's oral argument presentation. He said the CMA had made a strong case to compel the appellate court to send the notice and appeal rights issues back to District Court.
"The judges understood the counter-intuitive nature of observation status," he said. "Most people don't find out until they leave the hospital. That's why you need early notice. You need notice upfront."
Bers said the appellate court is likely to rule on the CMA appeal in less than a year. "It can be as quick as two months or take eight months," she said. "The average is three to four months."
Public comments filed on a proposed merger and acquisition pact in Massachusetts reflect the breadth of consolidation debates raging across the country.
Is bigger always better?
That question has triggered an avalanche of controversy in Massachusetts, where the largest health system in the state is seeking to get larger.
Partners HealthCare, which is the top private employer in The Bay State with about 60,000 workers and a dozen hospitals in its provider network, is a not-for-profit health system based in Boston. It was founded 20 years ago by two of the most prestigious academic medical centers in the country: Massachusetts General Hospital and Brigham and Women's Hospital.
Partners' quest to acquire three more suburban hospitals has drawn fire from insurers and other critics, who are pressuring Massachusetts Attorney General Martha Coakley to toughen an anti-trust settlement deal she cut with the health system in May.
The pact includes price caps and growth limits on Partners for several years. On Sept. 25, the AG filed a revised version of the pact in Suffolk Superior Court, and Judge Janet Sanders set an Oct. 21 deadline for the public to file comments with Coakley's office.
Former CMS Administrator Donald Berwick, MD, made his view of the deal public in an opinion piece published by the Boston Globe Oct. 19: "You don't have to be an antitrust lawyer to predict the consequences of even more market power: higher prices, less competition, and the squeezing out of smaller players." Coakley, a Democrat, is in a tight race for Governor of Massachusetts. Berwick challenged her in the primary for the party's nomination.
The public comments provide a snapshot of the arguments for and against Partners' consolidation effort, which features the acquisition of South Shore Hospital in South Weymouth as well as Hallmark Health System's hospitals in Medford and Melrose. The public comments also reflect themes common to debates over health system consolidation efforts across the country, with supporters highlighting benefits such as financial stability and detractors raising alarm over higher healthcare costs and monopoly risks.
Settlement Supporters
Mark Haas, director of health information management at South Shore Hospital, makes a spirited defense of the settlement deal. The IT expert, who also teaches budgeting and management as a member of the Tufts University School of Medicine, wrote that he had recently joined the South Shore Hospital staff after working for eight years at Mass General.
"There is a significant need for deep investment in the infrastructure—information systems in particular," he wrote. "SSH would benefit significantly from the advanced electronic health record technologies in place at Partners and be better able to keep up with the newest technology opportunities. If SSH could begin to utilize the electronic health record system in place at Partners, the coordination of care can occur with far fewer resources being utilized."
Hass contends that the merger would reduce healthcare costs at South Shore Hospital. "I have grown to appreciate how vital primary care is to keeping costs down in the US healthcare system. The SSH community desperately needs access to a network of community primary care physicians that can seamlessly communicate with the specialists in the area as well as the hospital and emergency room."
State Sen. Jason Lewis, (D-Winchester), chairman of the Joint Committee on Public Service, wrote that the settlement deal would help ensure the financial future of Hallmark Health and its hospitals.
"The proposed merger of Hallmark Health and Partners HealthCare is an excellent opportunity for Hallmark Health to remain a viable provider of quality health care in its core communities," he wrote. "Specifically, Partners HealthCare will be able to provide primary and secondary healthcare in Melrose, Stoneham and Medford at more affordable sites… than in Boston; and the volume of patients from Partners HealthCare will help Hallmark Health achieve operational sustainability in a lower-cost health care environment."
In an email exchange with HealthLeaders, Lewis said state officials are determined to make sure Partners does not gain monopolistic advantages over its competitors and healthcare payers. "That could be a risk, but there are mechanisms in the settlement agreement as well as other tools the state has to prevent that from happening," he said.
Melinda Matthews, VP of clinical services at Lexington-based Eliot Community Human Services Inc., defended Partners' plan to consolidate mental health services in the North Shore region of the state. The mental health consolidation plan, which is included in the settlement pact, includes boosting mental health services at North Shore Medical Center Union Hospital and moving acute care services at the Lynn facility to North Shore Medical Center Salem Hospital. The hospitals in Lynn and Salem are already part of the Partners family.
"Eliot often collaborates with (Partners HealthCare) and affiliates to coordinate care and improve service delivery," she wrote. "Eliot believes that the proposed agreement to create a Center of Excellence in Psychiatry and Behavioral Health at Union Hospital along with maintaining current service levels is a crucial and important commitment that is necessary to preserve and enhance treatment and services for individuals living in the North Shore area."
Consolidation Critics
Morton Heafitz, MD, a retired physician who served as president of a Medford-based surgical practice, wrote that advocates of the Partners settlement are overstating the deal's financial benefits.
"All of us were accredited cardio-thoracic surgeons by appropriate medical societies that served as consultants 24/7 at more than 20 hospitals… We cared for patients in their communities for a fraction of the cost of (Boston-based) hospitals. True, we did not do transplants, but did participate in resident training and research—the supposed reason for high-cost surgery—but the results were just as good if not better than utilizing these institutions as way stations for inaccessible [Boston-based] monopolies."
Heafitz calls on Judge Sanders to take a stand for community-based care: "I urge you now as someone who appreciates community needs to deny Partners this unnecessary monopoly and monetary waste."
Katerina Panagiotakis Koudanis is the founder and leader of Union Hospital Advocates, a community group that opposes Partners' plan to convert NSMC Union Hospital to a psychiatric facility. She says the group has about 100 active members who live in Lynn, Lynnfield and Saugus.
"We're devastated at the decision," she said of Partners' plan for NSMC Union Hospital. "We've had a community hospital in Lynn since the 1800s."
Koudanis filed two public comment letters at Coakley's office this month. One letter challenges determination of need proceedings related to NSMC Union Hospital.
The second letter contends that the relocation of acute care services to NSMC Salem Hospital places a potentially dangerous and costly burden on Lynn residents, namely an increased reliance on ambulance service.
"It will be tragic," she said in an interview this week. "To access Salem Hospital, it's almost impossible to reach the hospital during rush hour."
Koudanis says many Lynn residents cannot afford to take an ambulance to Salem Hospital and will choose to drive themselves, even in an emergency. "The median family income is $44,000. A lot of people don't have insurance," she said.
Koudanis said she has embraced the underdog role in a David versus Goliath struggle: "I'm not afraid of saying what's right."
Representatives for both Partners and Coakley declined to comment for this story, stating that their stands on the settlement deal are in documents filed at Suffolk Superior Court.
"Representatives for both Partners and Coakley declined to comment for this story, stating that their stands on the settlement deal are in documents filed at Suffolk Superior Court."
With Medicare upping the ante on hospitals to reduce readmission rates, pressure is mounting on hospitals to get the job done. Crafting collaborative relationships with community-based caregivers to boost patient care is key, researchers suggest.
A pair of research studies released earlier this month on efforts to reduce hospital readmissions reached the same conclusion: There will be no quick fix, but boosting collaboration between hospitals and community-based caregivers is the key to solving the problem.
The task ahead, authors of the studies say, is crafting specialized keys to unlock the unique combination of readmission difficulties that plague communities across the country.
"The hospitals that don't have trusting relationships with local providers are going to face a more complicated challenge," says L. Elizabeth Goldman, MD, lead author of a study published in the Annals of Internal Medicine. "They need to take a different model of outpatient care. There needs to be a structure—a primary care structure and financial structure—that works."
Medicare payments for hospital readmissions cost the federal government about $26 billion annually, with more than half that expenditure linked to avoidable hospitalizations, according to a Robert Wood Johnson Foundation report published last year.
Ariel Linden, DPH, who published a study on readmissions earlier this month in the American Journal of Managed Care, says healthcare providers and the communities they serve will have to walk a fine line. "You need to create collaborative relationships to boost patient care," he says. "But how do you do that without monopolizing the community and increasing the cost of care?"
Ariel Linden, DPH
Resolve in Washington
Officials at the Centers for Medicare & Medicaid Services are determined to push for reduced hospital readmission rates, "while addressing any unintended consequences, particularly for those hospitals serving dual-eligible and low-income beneficiaries," a spokesman said last week.
CMS, he says, is committed to working with hospitals through a multi-step process aimed at reducing readmissions.
"The first step to reducing the readmission rates is to understand what the readmission rates mean and how they are calculated. Prior to publicly reporting the readmission rates, CMS provides hospitals with Hospital-Specific Reports containing a comparison of their summary results to the state and national results as well as detailed discharge-level data. CMS also posts additional resources on QualityNet.org to assist the hospitals in understanding the measures' specifications. Together, these resources will assist hospitals in understanding the type of admissions that are included in the calculation of the readmission measures."
Performance Monitoring
After a hospital and CMS are on the same page regarding readmission rate measures, the next step is for the facility to monitor performance and identify areas for improvement. "Once they understand how the measures are calculated and how their rates compare to the national rates and state average, some hospitals choose to calculate their raw (unadjusted) readmission rates to more closely monitor their performance on these measures as they work on improving their systems for transitioning patients to the outpatient setting, collaborating with communities and providers, and communicating with patients and caregivers," he said.
CMS is also providing resources to help hospitals build readmission intervention programs. "CMS [has] designated Quality Improvement Organizations to reduce unnecessary readmissions to hospitals and promote seamless transitions between healthcare settings. Hospitals may reach out to their QIOs for assistance in identifying ways to reduce their readmission rates," he added.
The federal agency has also identified several "initiatives and peer-reviewed studies" that have demonstrated success in reducing readmissions. Those readmission intervention models include Partnership for Patients, a CMS initiative that is pushing participating hospitals to achieve a 40% reduction in hospital-acquired conditions and a 20% reduction in hospital readmissions compared to 2010 levels.
Rising to the Challenge
Turner West, MPH, palliative care leadership center director at Lexington, KY-based Hospice of the Bluegrass, says there is no one-size-fits-all approach to creating readmission intervention programs.
Turner West, MPH
"A wide range of models exist to reduce hospital readmissions. There is variability among these models largely based on the patient population served, available community resources, and the type of hospital, so it is difficult to say a specific intervention is feasible or replicable in all settings," he says.
"Generally, however, successful interventions to reduce hospital readmissions require identifying patients at high risk for readmission, collaborating with the patient and family on a specific discharge plan, medication reconciliation, and effective discharge planning and care coordination with community providers—primary care, specialty care, home health, skilled nursing and hospice."
West says communities with relatively high levels of resources can supplement hospital-based readmission intervention models with technology and a constellation of patient-focused specialists.
"Some of the more successful models are innovating by leveraging technology and developing community partnerships to support patients and families," he says. "There are transition programs, health coaches and navigators, high-risk case managers, telephonic support and tele-health programs that we can all learn from."
Boosting collaboration between hospitals and community-based caregivers is a daunting but surmountable hurdle, West says.
"The starting point for any collaboration is identifying the unmet need of the patient or gap in service delivery. Both partners must be able to articulate how the collaboration enhances patient care and fills the service gap," he said. "Finally, any collaboration also requires that all partners understand each other's financial incentives and costs associated with new programming."
The research Goldman and Linden conducted identified elderly, seriously ill patients as not only prone to readmission, but also difficult to help with intervention efforts. "I wish there was a simple answer, but there is no simple answer," Linden says. "When you have congestive heart failure, you're at the end of the road."
Turner said part of solving the readmission puzzle has to be a change in mindset away from always striving for curative care and toward acceptance of a more comprehensive approach to end-of-life care.
"For many individuals with serious illness, a primary goal of care is avoiding hospitalization, and a primary driver for hospitalization is an exacerbation of pain and symptoms," he said. "Palliative care teams can often obviate readmission through expert pain and symptom management, and effective communication on prognosis and goals of care. Moreover, the interdisciplinary composition of a palliative care team helps identify social determinants that may contribute to hospitalization."
Consumers need to become more knowledgeable about managing their health and making healthcare decisions as they become bigger economic agents in the healthcare system. Health plans are providing the tools to enable them.
At any given moment, "the rise of the consumer" is on the tip of wagging tongues in every nook and cranny of the healthcare industry. For accuracy's sake, they really should be talking about "the thrusting of the consumer."
Helen Osborne
October is Health Literacy Month. Last week, I spoke with this noble effort's founder, Helen Osborne, an occupational therapist who saw the health literacy light in 1995. Inspired by one of the first scholarly articles written on the topic of health literacy, she has been hooked ever since.
Osborne told me she launched Health Literacy Month in 1999 with a "small grant" from the pharmaceutical giant Pfizer Inc. and money she raised on her own.
"It was really to join together the early adopters like me. That grew and grew into what it is today," she says, noting that she also created a health literacy consultancy enterprise. "I've been in business for 18 years, and my passion for it has not stopped."
As individuals are thrust into a more expansive decision-making role in managing their health, executives across the healthcare industry should be listening to what Osborne has to say about health literacy.
For starters, she says health literacy involves much more than fostering an understanding of medicine's esoteric terminology by consumers with known numeracy challenges: "It's much more than just reading."
I am obsessed with pressing my sources for examples, and the conversation quickly turned to one of my favorite issues: the health impact of obesity.
"It's not just knowledge," Osborne says of health literacy's limitations in addressing the problem. "We have to have that sense of personal relevance; and who knows what's going on in the home… and a whole bunch of other things. You need to explain [obesity risks] clearly, but there are a lot of other factors."
Now, she had me going.
I love it when experts open up about the bounds of possibility in which they operate. We turned our attention to the supposed cost-saving benefits of thrusting the individual into a more prominent role in healthcare decision-making.
"The problem for this field is people are going to look to health literacy to solve this whole mess. It's a start, but it's not a panacea that is going to solve all of our healthcare woes in this country," Osborne says. "Knowledge has to feel relevant, and you have to know what to do with it."
Now, she was going.
"I think shared decision-making is a good model," Osborne says. She argues for a fine-tuned balance between having doctors in charge of medical decisions and patients getting whatever they want. "The meter has gone too far. People spend a lot of time in medical school. I prefer some guidance. I don't want to make every decision on my own."
Watertown, MA-based Tufts Health Plan recently initiated two efforts to fill the guidance gap, adding quality information to the doctor-finder feature on the company's website and launching a pricing tool.
Massachusetts is in the forefront of healthcare pricing transparency. A law that went into effect this month requires all private insurers to begin making price estimates public. To that end, Tufts has launched EmpowerMe, an online health service pricing tool for its members.
Tufts has 90 hospitals in its provider network and nearly one million covered lives.
"So many of our members are now on high-deductible plans and tiered plans, where their costs are going to vary depending on who they see," Athelstan Bellerand, Tufts' director of commercial product strategy, told me last week. He cites colonoscopy as an example. "Depending on where they go, the cost could be hundreds of dollars to them."
The EmpowerMe pricing tool requires health plan members to log in with an ID and password. "This is personalized to the member," he says. "In order to get that personal information, we need to know what their plan is… The personalization of this tool is very important because it's the only way we can give actionable information."
The tool gives beneficiaries information for out-of-pocket costs. "It will help them make decisions on where to get their care. In addition, it helps them budget for those decisions," Bellerand says. "They can plan for those expenses. Often, the beneficiaries are surprised by just how much [a healthcare service] costs."
To help beneficiaries make even better decisions on value, Tufts has added physician quality information to its online doctor-finder tool. "Quality is very difficult to define. It means different things to different people," he says. "We've tried to distill this in the simplest way to communicate it to our members."
The quality information Tufts is offering online is based on standard metrics established by state officials. "We're able to rank our highest-quality to lowest-quality providers in our networks," Bellerand says, noting that a "quality ribbon" is placed next to the online listing of all physicians who score in the top quartile of the state metrics ratings.
"Over time, the cost of healthcare has slowly but surely shifted from employers in the form of premiums to individuals in the form of cost sharing," Bellerand says. He believes online tools and other informational efforts need to be at the top of health plan agendas. "Members have not become more informed as part of that process."
