Fecal microbiota transplantation is an inexpensive treatment for a potentially deadly infection. But FMT is not for the squeamish. It's time for payers to get on board with this antibiotic alternative, which has a 90% cure rate.
First the good news about Clostridium difficile, the deadly bacteria that can take over the gut of hospitalized patients after their natural gastrointestinal flora has been decimated by antibiotics: There's an inexpensive and highly effective treatment for it.
C. diff, which is antibiotic-resistant, causes diarrhea that contributes to the deaths of about 14,000 Americans this year, according to the federal Centers for Disease Control and Prevention. It's also a cause of costly hospital readmissions, with about a quarter of infected patients experiencing at least one relapse within a month after completing antibiotic treatment.
There are reports of fecal transplantation in early Chinese medicine, but the earliest documented instances of the procedure in Western medicine date back only to the 1950s. Now researchers are trying to isolate the beneficial microbiota that seek and destroy C. diff.
One Mayo Clinic researcher likens exploration of the uses of gut microbiome in disease treatment to "the beginning of the space program."
Microbiome as 'Miracle Cure'
"Our patients have failed all other therapies," Lee Jones, founder, CEO and president of Rebiotix, told me this week. The Roseville, MN-based company is developing a fecal matter suspension that can be delivered to a C. diff patient's GI tract with an enema. The shelf-stable product, RBX2660, is in the final stage of testing at the federal Food and Drug Administration.
Rebiotix decided "the most prudent action was to mimic" the real microbiota.
Although it's "a non-antibiotic product… we've had to formulate our product as a drug product," she told me. "We try to preserve as much of the natural product as possible. Fresh stool is almost always guaranteed to work."
"We don't talk with our patients, but we hear about them in our clinical data," Jones told me. "For those people, this is like a miracle cure."
James Burgess
Rebiotix is raising millions in capital for its microbiome business, and Jones is convinced that healthcare payers will soon rank this treatment high on their lists. "There's a great deal of value in stopping people from returning to the hospital," she told me of C. diff patients. "We do believe there will be people willing to pay."
Far from commercialization, however, Rebiotix does not yet have pricing information and has "not yet begun to investigate the reimbursement landscape," a spokesperson told me.
NonprofitApproach
In Massachusetts, Open Biome, a nonprofit startup venture, is filling the fecal microbiota transplantation market niche one homogenized 250-milliliter bottle at a time. Each is priced at $250.
"The steps for sourcing and distributing fecal microbiota "are fairly simple," Open Biome Executive Director James Burgess told me this week. "What's a little more complicated is the donor screening."
Open Biome donors deposit four samples per week at its Cambridge facility. "We run them though a couple rounds of risk evaluation," Burgess said of the donors. The cost can rise to "several thousand dollars" for same-day fecal transplant procedures, he said.
First, donors complete a questionnaire that includes queries about recent antibiotic use and travel to countries with waterborne illnesses. A second round of screening tests donor candidates for several diseases including HIV and syphilis.
"Only about 30 percent pass through that questionnaire and round of assays," Burgess said. Once a sample is obtained, the material is homogenized and held in quarantine for 60 days in one of the startup's minus-80-degree freezers.
"That's just to make sure we haven't seen any change in the donor since the beginning of the collection window," Burgess says.
At that point, the microbiota samples are ready to be administered to patients. As the startup's website says, "With Open Biome, all that's needed to deliver FMT is a doctor and an endoscope."
Who Will Pay for FMT?
Hospitals, their patients, and some commercial insurers already see the value and are paying for the procedure.
For now, Hartford, CT-based Aetna was the only commercial payer willing to discuss FMT with me. "Aetna considers fecal bacteriotherapy medically necessary for persons with Clostridium difficile infection, with infection confirmed by a positive stool test for C. difficle toxin, that has recurred following at least one course of adequate antibiotic therapy," an Aetna spokesperson told me last week. It covers the cost of the fecal material and the procedure to administer including clinician fees.
While the insurance carrier has established standards for C. diff treatment with vancomycin and metronidazole, "Aetna considers fecal bacteriotherapy experimental and investigational for all other indications."
Aetna appears to be among the enlightened few payers who have seen the fecal transplantation light, Burgess told me. "Most of the costs are being borne by the patients and the hospitals," he said, adding that there are reimbursement codes in place for elements of fecal transplantation delivery such as colonoscopy.
The Open Biome executive director expects other payers to see the benefits of FMT soon. "This is a really big win from the payer perspective," Burgess told me, noting a $250 bottle of fecal matter is a bargain compared to a $1,500 course of vancomycin.
A new player in the healthcare delivery system is taking on an old challenge: primary care.
Relief for a common side effect of healthcare reform—increased demand for primary care services—may come from a place well known for soothing many ills.
CVS Caremark, one of the biggest retail pharmacy brands in the country is playing a major new-entrant role in healthcare delivery.
With several new provider partners announced last week, the Woonsocket, RI-based company has established clinical affiliations with more traditional healthcare providers in six states: Hartford HealthCare and ProHealth Physicians in Connecticut, Memorial Health in Georgia, Lahey Health and Baystate Health in Massachusetts, Texas Health Resources in Texas, Palmetto Health in South Carolina and The Baton Rouge Clinic in Louisiana.
The centerpiece of the pacts are MinuteClinics, which offer treatment for conditions that do not require a trip to an emergency room or an urgent care center, CVS officials said via email Monday.
In Retail Medicine, Opportunity for Market Share Growth
"MinuteClinic locations are not intended to act as primary care sites, but instead complement the work of the primary care physicians by supporting their efforts in providing convenient and accessible care," CSV said. "MinuteClinic provides treatment for common family illnesses and administers wellness and prevention services, including health-condition monitoring for patient with chronic diseases."
CVS Caremark cited research indicating that the quality of care at "retail clinics" is equivalent to traditional healthcare delivery settings such as hospitals. It is "on par with the care provided at ERs, urgent care centers and physician offices, which was demonstrated through a Rand-sponsored study, published in the September 2009 issue of the journal Annals of Internal Medicine," CVS said, noting the research "was largely based on MinuteClinic data."
With headquarters in Fort Worth, Texas Health Resources is a faith-based, non-profit health system that includes 25 acute care and short-stay hospitals. Texas Health doctors are set to serve as "collaborating physicians" at 34 MinuteClinic locations in the Dallas-Fort Worth area, according to the health system and CVS.
"Texas Health Resources and Texas Health Physicians Group are collaborating with CVS Caremark as part of our strategy to coordinate care for people across the continuum of health needs through each stage of their journey from birth to end of life," said Donald Fowler, MD, a family physician at Sunnyvale Medical Group.
"We believe this affiliation with CVS Caremark will reinforce our ability to keep people healthy and out of the hospital. That will enhance their overall well-being and help fulfill our mission to improve the health of the people in the communities we serve."
Fowler said Texas Health physicians "will provide medical supervision of nurse practitioners and physician assistants who staff the MinuteClinics." The new partners will have an integrated electronic medical records capability in place next year.
And because MinuteClinic is migrating its EMR to an Epic system, "bidirectional, real-time connectivity will be available between MinuteClinics and THPG practices," he added. "The migration begins this fall and should be complete by the end of 2015."
Gauging the Marketplace
Market conditions are ripe for healthcare organizations to boost primary care services in Texas and nationally, said W. Stephen Love, president and CEO of the Dallas-Fort Worth Hospital Council. "Nationwide, a lack of primary care providers is something hospitals are looking at. There is a shortage of primary care," he said.
Love said regional economic growth, which includes a fracking boom in the petroleum industry, is contributing to the need for more primary care services. "As you look at North Texas and you see the growth rate in North Texas, the hospitals are reaching out to their communities," said the leader of the Fort Worth council, which includes 85 hospitals.
"Providers are looking at ways to provide services in the communities they serve in a collaborative way and to offer the best primary care services they can."
The MinuteClinic deal in North Texas is designed to meet a market need, Fowler said. "Approximately 50 percent of MinuteClinic patients report that they do not have a primary care provider."
"Patients without a primary care physician are given a resource list of primary care physicians in the area, which will include Texas Health Physicians Group practices and others. If a patient indicates she has a primary care provider, with the patient’s permission, MinuteClinic will send a visit summary to the named provider.
Retail Medicine Syncs with High-Deductible Health Plans
"One of our goals is to expand access to quality primary care close to where people live and work," Convenient access to primary care, medication monitoring, and other information promises to enhance care coordination and improve outcomes.
In addition to the 34 MinuteClinics that Texas Health and CVS are opening this year, the partners have announced plans to open seven more North Texas clinics by early 2015.
The Rhode Island-based retail giant also appears to be looking for broader retail clinic growth in the near future. "CVS continues to explore opportunities to collaborate with health systems, hospitals, integrated delivery systems, patient-centered medical homes and accountable care organizations throughout the country," the company said.
A large multi-hospital research effort is underway to solve one of the great mysteries of federally driven healthcare reform— the net financial impact of providing coverage to millions of previously uninsured Americans.
Katherine Hempstead,
Coverage Team Director and
Senior Program Manager,
RWJF
About 1,700 hospitals have embarked on a quest for elusive healthcare reform truths that could determine the fate of their financial futures.
In a collaborative effort with the Robert Wood Johnson Foundation, 24 state hospital associations and their members are collecting data on inpatient admissions and emergency department utilization. The Hospital ACA Monitoring Project is designed to gauge the net financial impact on hospitals from the federal Patient Protection and Affordable Care Act.
"The impact of healthcare reform on hospitals has upside, but also downside issues that are concerning," Katherine Hempstead, coverage team director and senior program manager at RWJF, said of risks including "expansive utilization of medical services by low-margin payers."
As more Americans who previously lacked health insurance gain coverage through the new public exchanges and expansion of Medicaid to more poor adults, hospital bottom lines are expected to benefit from a reduction in uncompensated care. That's the upside.
The downside risks for hospitals include the expectation that there will be surge in medical services utilization, particularly from the expanded Medicaid population.
Research conducted on the 2008 lottery-based expansion of Medicaid in Oregon raised alarms in hospital board rooms last year. The study, published in the New England Journal of Medicine, found a spike in medical service utilization after Oregon's Medicaid expansion. [One state, Arizona, has reported benefits stemming from expansion.]
Although the implications of the Oregon research are cause for concern, Hempstead says the increased utilization finding should not have come as a surprise.
"If you give uninsured people access to primary care through coverage, they will use medical services more," she said, adding that the Hospital ACA Monitoring Project is designed tackle questions that can't be answered by looking at a single state.
"The hospitals are not really starting out at the same place," Hempstead said. Rather, the impact of healthcare reform on a hospital with a large Medicare and commercially insured patient population is not going to have the same financial impact from the PPACA as a safety net hospital that serves a large number Medicaid patients. "Expanding coverage isn't the same thing as changing the delivery system."
'Real, Documented Information'
The New Jersey Hospital Association is serving as the data repository for the Hospital ACA Monitoring Project. Kerry McKean Kelly, vice president for communications and member services at the NJHA, said the monitoring project should provide hospitals with essential information.
The monitoring project has targeted a handful of conditions to follow because they are believed to be good indicators of cost-effective utilization of medical services.
"Newly covered patients theoretically will have greater access to primary care for minor health issues, so the question this study will answer is: Will they use that rather than go to a hospital emergency room or wait until a problem becomes serious enough for a hospital admission?" she said.
"This project focuses on those minor issues that we expect to see a change in—up or down—with respect to emergency department visits. These include urinary tract infections, headaches, and acute upper respiratory infections. We’d also expect to see volume changes in those conditions that, if treated early on in either a primary care or ED setting, would prevent an inpatient hospitalization. These would include avoidable admissions for things like short-term diabetes complications, hypertension and urinary tract infections."
Examining Utilization
The Hospital ACA Monitoring Project will be collecting utilization data by payer because the hospitals involved in the effort are eager to determine how healthcare reform is going to affect their payer mix, Hempstead said.
"We may see the volume increase but the revenue decline due to low-margin payers. I do think the margins are going to change… Providers want to know who's paying because it determines how much they are going to get paid."
In addition to a spike in overall medical services utilization, the Oregon Medicaid research found an increase in emergency department usage. "What surprised people is that patients didn't stop using the emergency room," Hempstead said of the Oregon study.
While more research is needed to explain why Medicaid expansion can increase emergency department utilization, some reasons are obvious, Hempstead said. "A lot of people like to use the ER. It's just a pathway that they have established," she said. "A lot of people find it convenient."
Unlike the new public health insurance exchanges, which have policies with cost-sharing features that provide patients with financial incentives to stay out of the emergency department, Medicaid programs often lack incentives for patients to seek care in the most cost-effective setting, according to Hempstead. "There have to be some other delivery system reforms," she said.
With 2013 baseline data in hand, the RWJF researcher is confident that the Hospital ACA Monitoring Project is going to provide insight about questions that have vexed hospital officials from coast to coast.
"The real excitement is going to come when we get the 2014 data," Hempstead says, adding the first quarter data from 2014 is slated for publication around the Labor Day weekend. "I'm really glad these hospitals decided to share this data."
Kelly says the monitoring project will provide essential information to healthcare providers.
"Hospitals have bought into the ACA and in fact conceded billions of dollars in Medicare funding to support the law. New Jersey hospitals, for example, will see their Medicare reimbursement decline $4.5 billion over 10 years under the ACA."
"The hope is that those investments will help us transform our healthcare system for the future, insuring more Americans and reducing healthcare costs in the long run by delivering the right care in the right setting. So the stakes are high for hospitals, and the financial impact could be severe if the positive impacts of the ACA aren’t realized, such as more patients in primary care versus EDs. "
"We don’t know – and we can’t assume," Kelly said, "whether the ACA will greatly reduce the need for charity care services. And we’re worried that new plans, with higher out-of-pocket costs for consumers, could increase hospitals’ bad debt expenses. Those are some of the very important unknowns that we hope to see through this data over time."
The Senate Finance Committee hears testimony and is expected to examine in the coming months possible solutions to the problems posed by chronic disease care, which accounts for 93 percent of all Medicare spending.
Even by Washingtonian political standards, testimony for a Senate Finance panel hearing on addressing the crushing cost of chronic disease care opened on a dramatic note this week.
Tuesday morning's first witness knows the costs associated with chronic disease all too well. Stephanie Dempsey, an American Heart Association volunteer who lives in Georgia, has suffered with heart disease since she was 21, the 44-year-old told the senators.
Over the next several months, the committee is expected to examine several possible solutions to the problems posed by chronic disease care, which accounts for 93 percent of all Medicare spending, according to the panel's chairman, Ron Wyden (D-OR). Among the proposals the committee will be assessing is the Better Care, Lower Cost Act, which Wyden and three other lawmakers introduced in January.
"My heart disease is hereditary and has impacted all of the women in my family. My only sister died at the age of 28 from heart disease. My mother, who is 69, underwent quadruple bypass surgery at the age of 48, and my maternal grandmother died at the age of 72 from coronary artery disease."
As Dempsey read nearly verbatim from her prepared statement, there were several emotionally charged pauses as she described the impact her multiple chronic conditions had on her family.
"As you might imagine, my medical expenses are significant and are becoming more significant by the day. We fell behind on our mortgage and were forced to sell our home… As it became more difficult for me to manage my illnesses, the growing burdens became overwhelming for my husband, and after 21 years of marriage, he decided to walk away."
After Dempsey concluded her testimony, Wyden proclaimed that Congress is determined to ease her burden. "You asked that you not be forgotten, and you have here both Democrats and Republicans who want to make sure that doesn't happen."
Rare spirit of bipartisanship
Although a couple of senators on both sides of the aisle could not resist the temptation to alternately praise or poke holes in the politically polarizing federal Patient Protection and Affordable Care Act, all of the lawmakers present sought to set a bipartisan tone.
"Here's my bottom line: the way healthcare is delivered in America has to change," Wyden said in remarks that opened Tuesday's hearing. "This is not something that is going to be solved overnight. This committee hearing marks the beginning of a bipartisan effort."
Sen. Orrin Hatch (R-UT), the finance panel's ranking Republican member, said taking action to manage chronic illness more effectively and efficiently is "one area where both parties can make progress."
The Utah lawmaker said the country could not afford to ignore the daunting financial challenges that chronic disease pose to every American. "Healthcare costs place enormous strain on the federal budget," Hatch said, noting total healthcare spending in 2012 has been pegged at about $2.8 trillion or 17.2 percent of the US economy's gross domestic product.
David Rehm, president and CEO of Massachusetts-based hospice and primary care services provider HopeHealth, says common ground can only take the political leaders so far.
"All of the players recognize there is a problem, and it's focused around this population of patients," says Rehm. "They all share the same focus and the same goals. But the problem comes when you have to decide what you're going to do."
Coordination of care key
Nearly all of the witnesses and senators who spoke at Tuesday's hearing said improving coordination of care is the top priority to improve treatment of chronic disease and cut costs.
Wyden asked Dempsey and another witness, Mary Lehmann, who is serving as caregiver for her elderly husband as his Alzheimer's disease advances steadily, whether it would help them to have one "go-to person to coordinate the array of services."
"It would be life-changing. If I had that one person who was the go-to person," Dempsey said, "it would be invaluable… It would not only be life-changing, it would also be life-giving," Lehmann said of the possibility of having a care coordinator to help manage the treatment of her husband.
"Most of my time is spent feeling overwhelmed," she told Wyden.
William Bornstein MD, chief quality and medical officer at Atlanta-based Emory Healthcare, said boosting coordination of care for chronic disease patients is a Herculean test for healthcare and political leaders.
"The challenge is, how do we make sure all the care is coordinated to make sure we have a patient-centered approach," he said of chronic disease patients, noting that many have a dozen specialists that they see annually.
Sen. Johnny Isakson, (R- GA) asked Bornstein about Emory nurses who serve as care coordinators. The senator noted that Emory has taken on the cost of the nurse coordinators because they add tremendous value. "It costs more to do less and less to do more," Isakson said.
Bornstein said having care coordinators "embedded" at hospitals and other points of care is only part of the solution to the country's chronic illness problem.
"We need someone who is captaining the ship," he said, "but we also need all of the specialists to think about coordination of care."
When Bornstein treats people with diabetes, he said specialists working with his patients should be planning around the effects of multiple medications. "How often does that happen? In my experience, almost never," he said.
Rehm said coordination of care for chronic disease patients "is a challenge in a number of ways," adding that the necessity to take action is pressing.
Wyden said he and his colleagues on the Senate Finance panel are determined to make progress. "In the months ahead, this committee can find bipartisan solutions to meet the challenges and strengthen the American healthcare system, and I'm committed to working with the senators to address it."
After helping to establish managed care plans for an insurance carrier, David Burton, MD, former CEO and chairman of Health Catalyst, is still committed to helping providers retool themselves into accountable care organizations.
David Burton, MD
Who can resist a good epiphany?
For David Burton, MD, the flash of clarity that set the course toward the twilight of his career came just weeks after he launched one of his most ambitious enterprises.
Burton, who had a distinguished career as an ER physician, co-founded Intermountain Healthcare's managed care plans after joining the company in 1982. Now known as SelectHealth, Intermountain's managed care plans provide insurance coverage to about 600,000 people.
His eureka moment came soon after the rollout of Intermountain's managed care plans.
"I had 10% of the premium dollar to work with," Burton says of Intermountain's payer slice of the premium rate pie. "That would get lost in the noise of the total premium." He decided the most effective way to build a value-based healthcare delivery system would be on the provider side of the equation.
While acknowledging that political reality has dictated the terms of transforming healthcare to a more value-based effort, Burton believes federally driven strategies to use payment reform such as Medicare policies to spur change are a "backwards" approach to the problem.
Burton says providers need to lead the value-based transformation, which is a process that will take far longer than any election cycle in Washington. "Transforming the delivery system takes at least 10 years to have a significant impact," he told me.
Soon after retiring from Intermountain in 2008 with expert data analytics skills he developed while operating its managed care plans, Burton became CEO and later Chairman of Health Catalyst. After retiring from the board last month, he is now at Health Catalyst in a mainly advisory capacity as a senior vice president.
The Salt Lake City-based company, which has developed a data warehouse platform, is committed to helping providers retool themselves into accountable care organizations. Burton shared his perspectives on ACOs with me last week.
HLM: What's your vision for accountable care organizations?
Burton: There's a whole lot of confusion about what we're talking about. "ACO" is used interchangeably with anything that has anything to do with shared risk. There are building blocks and additional competencies needed in order to be successful with population management.
About 98 percent of the effort is learning how to manage a population… The building blocks include network development and conducting a clinical evaluation of your population… Infrastructure is one of the most important competencies.
You have to have a platform. And that's where the data warehouse comes in. There are disparate data sources in healthcare. The data warehouse integrates those disparate sources.
HLM: How should ACOs conduct population evaluations?
Burton: Rather than focusing on year-over-year costs, I want to know how many chronic disease patients like diabetics do I have in this population. I want to be able to report out this disease density so I can tell a third-party payer how much risk is present. Then I bear down on the level of severity of disease… It's clinically-driven underwriting.
HLM: Tell me about the contracting ACO building block.
Burton: I need to find out who is large enough for me to be on their punch list: Medicare, Medicaid, the commercials… I need a pie chart to see who I want to pursue.
In that contract, population evaluation determines the price on which I assume the risk. And I don't want to be sunk by one or two outliers like a transplant. I will share that risk with the payer or get re-insurance. The contract also includes the provider network.
HLM: Does an ACO require a critical mass of patients?
Burton: It depends on how you are going to assume risk… If you get too small of a population, then a big case can sink you. It also would take a lot of time to collect meaningful data. You're not able to react quickly enough…
The bigger the better. Kaiser is the ideal. They have millions of patients.
HLM: Is there a major difference between your vision for ACOs and the federal government's first models, Pioneer ACO, and the Medicare Shared Savings Program?
Burton: In the federal models, you have the worst of all worlds at the patient level. The problem is with the attribution algorithm. The patient may not know they have been attributed to your ACO.
You can market to the… and you can be nice to them; but, beyond that, there's no financial incentive for patients to stay in your ACO network.
HLM: How can providers develop the expertise needed to operate a successful ACO?
Burton: In this early, adolescent stage of shared risk, you're going to have people operating in an immature manner. It's a lot harder than it looks. Providers end up doing it less efficiently than a third party payer. … You do, in fact, need someone to do the administrative aspect of an ACO.
HLM: What are some of the ACO pitfalls for providers?
Burton: There is a group of providers that has its collective head in the sand. There are providers that want to dip their toe in the risk sharing water. Then there are the enlightened few that are committed to managing cost.
You have to avoid a project mentality. The SWAT team approach will improve a particular area, but within two or three months they've lost their gains. It's a permanent investment, but the return on investment is substantial. This is not amenable to a one- or two-year fix.
As the healthcare industry focuses on cutting costs, narrow provider networks designed to deliver value are taking hold as a widespread business practice.
With their prominent cost-containing role in the new public exchanges, narrow provider networks have been the object of persistent healthcare industry hand-wringing this year.
But narrow networks are not only a well-established industry practice, thrifty consumers are also open to them, according to Joseph Berardo Jr., president and CEO of New York, NY-based MagnaCare, a health plan that features a provider network with 70,000 locations in the New York and New Jersey markets.
"There's been slowly, a narrowing of networks, quietly over time," he says, noting that narrow networks are appealing to small group plans. "There's a paradigm shift here. Small groups are price-sensitive."
Narrow networks are becoming an important factor in the large group market as well, Berardo says, with health plans offering narrow networks as an effective mechanism for controlling costs when companies operate in locations spread over a wide geographic area.
In May, the National Business Group on Health conducted a poll of 46 large employers and found that 17 percent already have a narrow network in place. The poll results, which were made available to NBGH members, also found that an additional 24 percent of large employers were considering narrow network health plans for 2015 and 2016, and another 20 percent were mulling narrow networks for 2017.
As consumers become a more important factor in the health insurance market, many of them will demand the affordability that comes with health policies linked to narrow networks, Berardo believes. "Consumers are less concerned about networks. The members, left to their own devices, will pick value."
The MagnaCare chief says narrow networks are "the only way we're going to hit price points."
Further ensuring the spread, providers are creating de facto narrow networks as they reorganize to achieve greater efficiency through efforts such as accountable care initiatives, Berardo said. "It's not completely driven by the payer world," he says.
"There's a fifty-fifty split here. This is collaborative, all in an effort to become more clinically integrated… It's probably a ten-year journey."
In a bit of irony given the payer arm-twisting often associated with narrow networks, forward-thinking hospital executives need to embrace clinically integrated care in general and narrow networks in particular, Berardo argues.
"Long-term, [hospitals] need to morph into a more integrated system," he says, noting the financial pressure these capital-intensive organizations face will spur many of them to open their own health plans or seek insurer partners. "They're going to be part of a large ecosystem."
Berardo says it is highly likely that adoption of narrow networks will become widespread. "It's going to be the norm rather than the exception. It's not apparent to me that you can keep broad, fee-for-service networks and get to the payment reform everyone wants."
A Cautious Voice
JoAnn Volk, a research professor and project director at the Georgetown University Health Policy Institute, is more cautious about the long-term prospects of narrow networks.
"It's a pendulum," she says of the private healthcare insurance market, noting that the consumer backlash to health maintenance organizations that fueled growth in broad provider networks over the past two decades.
There are also regulatory barriers in the way of narrow network growth, Volk says, "regulators at the state and federal level are looking at changing the network adequacy standards." Many government officials are seeking to protect consumers who are unable to get specialty care in a narrow network to "hold them harmless," she adds.
Despite her qualms, Volk acknowledges that market conditions are ripe for adoption of narrow provider networks. "It's not a surprise that large employers are using narrow networks. [It is] a way to control costs."
Insurance carriers find narrow networks appealing because other cost containment levers, such as the ability to deny coverage to individuals with pre-existing conditions, were banned under the federal Patient Protection and Affordable Care Act. "The ACA took away tools that insurers could use to control costs," Volk says.
With the nation's focus on healthcare costs at a historic level of intensity, a bottom-line moment has seized both payers and providers, she says: "They're trying a bunch of different things at once, and seeing what lowers costs."
The proposed 2015 rules for Medicare B payments add a dozen new quality measures and patient outcome-based metrics, including unplanned admissions for patients with diabetes, heart failure, or multiple chronic conditions.
With the Medicare Shared Savings Program preparing to enter its fourth year in 2015, federal officials are recasting the list of quality metrics and providing "bonus payments" to incentivize year-to-year performance gains.
The Centers for Medicare & Medicaid Services' proposed rules for 2015 payments through Medicare B, which covers outpatient care, include several changes to the Medicare Shared Savings Program. With more than 300 healthcare organizations participating, MSSP is the largest of two accountable care programs CMS administers, in part because it is a risk-bearing contract with no downside. In the other one, CMS's Pioneer ACO program, participants benefit from gain-sharing but also face the risk of cost-sharing.
The proposed Medicare B rules both refresh and cull quality measures. A dozen new quality measures add patient outcome-based metrics to the list, including unplanned admissions for patients with diabetes, heart failure, or multiple chronic conditions.
The proposed quality measures also include post-discharge tracking of hospital patients to see whether they are admitted to skilled nursing facilities within 30 days of discharge.
Eight of the 33 MSSP quality measures that were adopted in 2011 are slated to be scrapped, mostly because they were considered redundant or out of step with best clinical practices. If CMS moves forward with its proposed changes, there would be a total of 37 MSSP quality standards next year, a net gain of four standards over the current year.
"We believe the measures chosen are more outcome-oriented and would ultimately reduce the reporting burden on ACOs," CMS officials say in the proposed rules.
Tomas Mikuckis, a principal specializing in health and life sciences at New York, NY-based management consulting firm Oliver Wyman, says there are "three notable trends" in the quality measures set to be added to MSSP:
An increasing focus on patient outcomes rather than process measures, which will require ACOs to increasingly demonstrate that their activities are having measurable impacts on patient health
The emphasis on chronic condition management, which "makes a lot of sense" given the large prevalence of chronic conditions in the senior population and the disproportionate impact these conditions have on health costs
The skilled nursing facility measure could demonstrate CMS's willingness to hold the ACOs accountable for patient care across care settings and even at providers that are not formally part of the ACO
The proposed Medicare B rules also seek to provide incentives for MSSP ACOs to improve their quality measure scores from year-to-year. The incentives would be provided in addition to the program's standard gain-sharing calculation mechanism.
"ACOs that demonstrate quality improvement on established quality measures from year to year will be eligible for up to 2 bonus points per domain," say the proposed rules.
Paul Clark, a legal analyst at Wolters Kluwer, says the incentives for annual improvement indicate CMS are both determined and flexible in the agency's efforts to optimize MSSP.
"CMS is proposing to reward not just ACOs that meet the existing quality measures, but that show year-to-year improvements in specific areas. This 'explicit incentive,' in CMS's words, is to emphasize that meeting quality goals is not a static, one-time result, but an evolving process," he says. "This is one of the reasons CMS is changing the MSSP quality measures on a regular basis."
The deadline for healthcare industry stakeholders to comment on the proposed changes to 2015 Medicare B payment rules, including ACO regulations, is Sept. 2. CMS officials have solicited comments on several possible new MSSP quality standards such as care coordination, prevention and utilization.
Mikuckis says federal officials appear to be gearing the MSSP model of accountable care for the long haul.
"Taken as a whole, the rule changes and the request for comments seem to point to the fact that MSSP is on a path toward trying to drive further improvement and impact in ACO performance, and increasingly transitioning to a broad range of quality outcomes metrics that reflect the main priorities that ACOs should focus on in improving population health," he said.
"Additionally, some of the minor tweaks to align metrics and measures with those used in other CMS initiatives are a good indicator that the program is here to stay, and that CMS will have a desire to continue to grow the number of Medicare beneficiaries that it covers."
Provider Reaction
Healthcare providers appear to find MSSP intriguing, but modest levels of gain-sharing so far have them pushing for more benefits.
"Our reason to enter this program was to dip our toe into a risk-bearing contract," says Jonathan Nasser, co-chief clinical transformation officer at Middletown, NY-based Crystal Run Healthcare, one of the first 27 MSSP ACO participants. "We viewed it as a learning experience, which has been a success."
Now that it has climbed the accountable care learning curve, Crystal Run would like to see a higher level of gain-sharing, Nasser says, adding that his organization has yet to realize any significant revenue from participating in MSSP.
"It feels like the deck is stacked against the ACOs to actually see gain-sharing," he said, adding Crystal Run had faced several MSSP challenges such as embracing data analytics. "It definitely was a lot of work."
Melissa Jackson, a senior associate director in policy at the American Hospital Association, says providers need to be able to achieve greater gain-sharing if CMS wants its Medicare ACO programs to expand in the future. "We have pushed CMS to increase the amount of benefits ACOs are able to achieve," she said. "[Providers] have to make significant financial investments on the front end to improve care… The target thresholds need some adjustment."
Akin Demehin, who also serves as a senior associate director in policy at the AHA, says the proposed changes to MSSP quality standards are welcomed "in general" but need to be crafted carefully.
"The challenge is making sure those measures are adjusted for things that are out of the control of the provider," he says, adding that MSSP quality measures need to account for fundamental differences between patients such as severity of illness and socio-economic factors. "For most outcomes measures, performance is driven not just by care but also by clinical conditions."
As he looks to the future, Nasser says MSSP ACOs such as Crystal Run will eventually hit a gain-sharing ceiling.
"Accountable care is definitely here to stay because CMS is moving to value-based care delivery," he said. "But you can't continue to share savings forever. … We think over the long-term this will move to something more like Medicare Advantage and capitation."
Primary care doctors surveyed by the Medical Group Management Association say nearly 6% of their compensation was pegged to quality metrics in 2013, up from 3% in 2012.
Part of the drive to a value-based healthcare delivery system will be gearing physician compensation to value-based metrics such as quality and customer service, according to the Medical Group Management Association.
"This is going to be a gradual shift. … It will be a trend that we will see evolve," said Todd Evenson, VP of data solutions and consulting services at the Englewood, CO-based organization. "We're on the cusp of this information being available."
MGMA has been conducting an annual physician compensation survey for three decades. Beginning in 2012, the MGMA began collecting data on physicians who reported having a portion of their compensation linked to a pair of value-based metrics: quality and customer satisfaction.
The data collected in 2012 and 2013 show modest levels of linkage between compensation and the value-based metrics, but there is the start of an upward trend, Evenson says. "We are just at the beginning. You have to be able to measure quality. We're even on the front end of that process."
Excluding doctors in accountable care organizations and patient-centered medical homes, primary care physicians polled in 2013 for the MGMA survey said that an average of 5.96 percent of their total compensation was linked to measures of quality up from 3% in 2012. Specialists surveyed said about 5.70 percent of their total compensation was based on quality metrics up from 2% in 2012.
The number of physicians reporting compensation tied to customer satisfaction was even smaller in the survey, but the MGMA polling showed 43 percent growth from 2012 to 2013 among specialists. In 2012, specialists said 1.61 percent of their pay was linked to customer satisfaction metrics. In 2013, that figure rose to 2.31 percent.
Evenson says the MGMA is trying to set "baseline data" that will help guide the group's members through potentially tumultuous change as healthcare delivery is increasingly designed to provide value. "There's a lot of confusion out there," he says. "We're trying to keep our members aware. We're trying to produce reliable, bite-sized bits of information."
Gauging the impact
Increased linkage between physician compensation and value-based metrics appears inevitable, but the long-term consequences are subject to debate.
"Quality parameters will be part of compensation increasingly in the future," says James La Rosa, chief customer experience officer for East Hills, NY-based North Shore-LIJ CareConnect Insurance Company. "New York State requires every new insurance product brought to market to have some quality indicators and every government-sponsored program will have many quality parameters built in—the ACOs are a prime example—with a significant emphasis on customer satisfaction as well."
La Rosa adds that healthcare payers will play a role as value-based metrics become "tied to payments."
The trend toward greater linkage of physician pay with quality and customer satisfaction metrics will continue with gusto, according to Ingrid Lindberg, chief customer experience officer at Eagan, MN-based Prime Therapeutics. "The requirements that are emerging are that people expect to be treated like people, not patients. They want their time, their questions, their needs to be respected as much as they respect the physician," she says.
"We're seeing [patient] satisfaction being used as a derivation of quality ratings. The subjectivity of the rating the person receiving the care is giving the doctor is becoming as important as the outcome. Can you even imagine the impact? Now, not only do you have to ensure that the quality of care is there, as a physician or hospital you now have to pay just as much attention to the experience you're providing."
Lindberg says embracing customer satisfaction as a prime goal will be a challenge for many small medical practices.
"Hospitals are figuring it out," she said. "Now it will be up to all those smaller clinics and independent physicians to figure out how to make sure that they aren't only providing exceptional care, but also an exceptional experience."
Critics wonder whether there is enough value in tying physician compensation to value-based measures.
"I'm not convinced this is the most effective way to produce major healthcare cost reductions for the US population," says Kevin Coleman, director of research and data for Sunnyvale, CA-based Healthpocket Inc.
"I'm much more interested in the factors driving per capita healthcare usage among Americans and the overall cost of healthcare delivery than I am interested in the percentage of doctor compensation that is tied to various quality metrics. Addressing consumer lifestyle issues that eventually produce expensive health conditions and reducing consumer misuse of various healthcare services may have a more dramatic effect on healthcare spending than the association of doctor compensation with quality metrics."
Regardless of how physician compensation evolves in the development of value-based healthcare delivery, Evenson says MGMA is committed to providing medical practices with guidance as value-based metrics such as quality and customer satisfaction become greater factors in the healthcare industry.
"We're trying to guide them to sources that have credible information," Evenson says of MGMA members. "We're at a critical point in time where practices are changing their reimbursement models. … I just tell them to think about it."
Health insurers are expected to save billions of dollars in billing expenses by offering e-payment to providers. But some innovative e-payment mechanisms are laced with fees, raising questions about fairness.
In an industry as big and bloated as healthcare, cutting costs is necessary, but insufficient on its own to combat waste. As cost-cutting generates windfalls, industry stakeholders also need to find a fair way to divvy up the cost-savings spoils.
Many observers have compared the reform-roiled healthcare industry to the Wild Wild West. The temptation to draw open-frontier analogies is irresistible, and I have galloped down that dusty trail for a story about the Pioneer ACO program.
With opportunity aplenty, fairness is a topic that has not arisen often; until last week, when I set out to explore healthcare's electronic payment frontier.
The feds launched an e-payment Gold Rush this year: requiring insurers to start offering e-payment to providers, which offers a number of benefits because paper checks come with administrative and mailing costs, which add up to billions of dollars of expenses for payers.
A 2012 Institute of Medicine report estimates that waste linked to paperwork and administration costs the healthcare industry about $190 billion annually. A 2010 study conducted by several industry stakeholders pegs the potential yearly cost savings from e-paymentat $11 billion.
"It saves them a lot of money," Robert Tennant, senior policy adviser at the DC-based Medical Group Management Association, told me last week during a discussion about payers shifting away from paper checks.
Whenever there is "a lot of money" on the table, anyone within eyeshot of the pot starts thinking creatively. In the case of e-payments to healthcare providers, payers have not only adopted the standardized electronic fund transfers required under federal law, but also introduced innovations.
One of these e-creations is virtual credit card payment, which comes with fees ranging from 1 percent to 4 percent. Tennant believes it is unfair for payers or their automatic clearing house partners to take a fee for a digital process that costs significantly less than paper checks.
"Yes, there is a rule, but people are finding a way around it," Tennant said. "The goal was to save the country money, and people have not embraced it the way they should have."
When I contacted Emdeon, which is one of the country's largest vendors for administering healthcare financial transactions, Senior VP Tom Dean told me the company offers virtual credit card payment as part of a suite of options for providers.
"Emdeon realizes that not all providers are able to accept the federally mandated EFT-ACH transaction from all payers, therefore we offer a wide range of additional payment options to best serve the market, including virtual credit cards, image cash letters and printed checks," he said.
So this is how fairness works in the Wild Wild West of healthcare.
Payers are taking advantage of a newly opened frontier, not only offering federally required EFT payments, but also payment mechanisms that fulfill niche needs—for a price. Providers are struggling to keep up with the pace of change, with stragglers facing higher costs.
Like so many other dangers on the healthcare frontier, the downsides of e-payment are not as drastic or obvious as being robbed at gunpoint outside the local saloon. The main threat is falling out of touch with the evolving business environment and picking the wrong options in a field burgeoning with innovation.
On the new health insurance exchanges, inexperienced consumers are learning hard lessons about deductibles and other forms of coverage cost sharing. To avoid similar hard knocks, providers who are unprepared for EFT payments or uninformed about their digital reimbursement options need to school themselves on maximizing e-payment value.
Healthcare providers stand to benefit in several ways from the switch from paper-based payment to electronic payment, but not all e-payment models are created equal.
Healthcare payers portray the industry's historic shift to e-payments as a win-win proposition. But providers fear there may be a snake in the digital transfer Garden of Eden.
A 2012 Institute of Medicine report estimates annual waste in the healthcare systemat about $750 billion, with paperwork and administrative bloating tallied at about $190 billion.
Aetna is among the health plan e-payment early adopters, moving at a fast pace to offer e-payment to all of the company's provider partners from hospitals to individual-practice doctors.
"Medicare began requiring electronic payment for all providers effective January 1, 2014. Many other health plans have instituted similar policies," says Jay Eisenstock, head of provider e-solutions at Aetna. "Given the groundswell throughout the industry, we expect the conversion will happen fairly rapidly."
Robert Tennant, senior policy adviser at the DC-based Medical Group Management Association, says e-payment is a welcomed innovation, particularly electronic fund transfers. "We've been asking for this—the provider community— for years," he said, noting the EFT payment model features "one-stop shopping for the provider."
EFT payments include a wealth of information to help providers match bills to individual patients, including tax identification numbers and a "trace" number for each patient billing transaction, Tennant said. "That's a huge leap forward for practices. It used to be manual."
A prime pitfall for providers is that not all e-payment models are being created equal, Tennant said. "There's no downside per se with the standard," he said of federal rules for electronic reimbursement. "What some health plans are doing is sending the payment through virtual credit card… The credit card company takes a fee for that."
A virtual credit card fee ranges from 1 to 4 percent. "That's like the bank saying they are going to take a 4% surcharge on your [payroll] direct deposit, which would not be acceptable." Some insurers, Tennant says, are getting a piece of the action by "[cutting] deals with credit card companies to get a share of the fee."
In addition to taking a fee hit, medical practices can lose key information in virtual credit card transactions compared to EFTs. Most virtual credit card transactions batch large numbers of patients into one billing cycle reimbursement and drop individual identifier information found in the EFT model, including the trace number that links specific patients to specific bills, he says.
Tennant notes health plans are under no legal obligation to tell providers about the benefits of EFT transactions versus virtual credit cards. "They're not in opposition to the law unless the provider asks for EFT and the payer can't offer it."
"Some health plans are charging providers a percentage, sometimes 2 percent, for the privilege," Tennant said of virtual credit card payment. "They're using the standard to make more money, which I don't think is fair."
Nashville-based Emdeon is one of the largest e-payment vendors in the healthcare industry. Tom Dean, senior VP of financial services at Emdeon, says there is no free lunch, even in the virtual world of automatic clearing houses.
"There are expenses associated with each payment modality in the market. On a per-transaction basis, EFT-ACH is the least costly. However, Emdeon realizes that not all providers are able to accept the federally mandated EFT-ACH transaction from all payers; therefore, we offer a wide range of additional payment options to best serve the market including virtual credit cards, image cash letter and printed checks," Dean says.
"In Emdeon's program, virtual credit cards are not a substitute for EFT-ACH. In fact," Dean says, "our system uses virtual credit cards as a substitute for printed checks. For providers, we simplify the re-association process by including the virtual credit card in the same mail packet as the provider's explanation of payment."
