A pair of research studies reveals high hurdles providers face as they try to reduce readmission rates and avoid reimbursement penalties.
Two recently released studies on costly hospital readmissions of seriously ill, elderly patients draw the same conclusion: Fixing this vexing problem is far from easy.
Ariel Linden, DPH
With hospitals under mounting financial pressure to reduce readmissions in the form of Medicare reimbursement penalties, the search is on to find intervention strategies that work. The studies released this month deliver a sobering message.
Ariel Linden, DPH, is lead author of "a study on interventions to reduce readmissions in chronically ill patients published in the American Journal of Managed Care.
The research, which was conducted at a pair of standalone community hospitals in southern Oregon, found "no statistical difference" between seriously ill patients who participated in a hospital-based transitional care program and those who received "usual care."
"In the macro, I was surprised," Linden says of the study's results. "We threw everything we could at this thing… The truth of the matter is, if the physician doesn't want to be engaged with these really sick patients, nothing is going to happen."
In addition to standard transitional care interventions at the pair of hospitals, Linden says his study added two elements: motivational interviewing of patients to "get them to listen to what their doctors told them to do" and "interactive voice response" consisting of a nurse calling patients every morning to answer a brief questionnaire on their health status. The nurses and patients also reached out to local physicians.
"We sent out letters to the doctors, and we made follow-up phone calls," Linden says. "We did everything we could except beg and plead with doctors."
Local physicians lacked the necessary incentives to work with their community hospitals to help reduce post-hospitalization readmissions for patients suffering with congestive heart failure and chronic obstructive pulmonary disease. "In some cases, the doctors said they had no time for these patients," Linden says. "These doctors had no skin in the game."
The researcher, an adjunct associate professor at the University of Michigan's School of Public Health in Ann Arbor, and president of Linden Consulting Group, says the research revealed a key weakness at the Oregon hospitals. "They do not have a very good collaborative relationship with physicians in the community."
'Not One-Size-Fits-All'
L. Elizabeth Goldman, MD, is the lead author of the another readmissions study published this month in the Annals of Internal Medicine, focused her research on an urban hospital in Northern California and drew similar results and conclusions to Linden's study.
"There have to be reasons for people to feasibly collaborate," she says. "It's developing solutions that actually work for the stakeholders."
In Goldman's study, the post-hospitalization intervention involved the following: "Usual care versus in-hospital, one-on-one, self-management education given by a dedicated language-concordant registered nurse combined with a telephone follow-up after discharge from a nurse practitioner."
Hospitals seeking to reduce readmissions must examine the challenges in minute detail, she says.
"One of the big takeaway points for us is [that] it's really important for any of these interventions to see if it fits locally," Goldman said. "These are not one-size-fits-all products."
In addition to finding ways to boost collaboration between hospitals and community-based physicians, transitional interventions have to be crafted to individual patients, she says. "Some folks may need targeted home visits. Some folks might need the follow-up visit very soon after discharge. Different folks might need different things."
Solving the readmissions problem requires a constellation of caregivers, such as behavioral health clinics, hospice organizations, and nursing homes, Goldman suggests. "It's not just the primary care clinics and hospitals. It really depends on the setting and facilitating communication between these groups."
Stepping Up to the Plate
Linden says the results of the Oregon-based research have shaken his confidence in the advisability of penalizing standalone community hospitals for failure to hit readmissions targets set by the Centers for Medicare & Medicaid Services.
"Everybody is running around saying, 'The transitional care model!'" he said. "At this point, we don't know what works… I have a newfound respect for serious illness and the resources we should throw at this."
Standalone community hospitals could be at a disadvantage compared to integrated health systems, and CMS should consider taking that possibility into account when meting out Medicare reimbursement penalties linked to readmission rates, Linden argues.
"They will ding hospitals if their readmissions are too high," he said of CMS. "Is it fair to ding hospitals when they can't engage their physicians? It takes two to tango."
Linden believes more research is needed to address the fairness issue. "Do big, integrated health systems have better readmissions outcomes? I don't know. The studies haven't been done yet."
CMS: "Readmission Measures Can Signal Potential Issues"
All hospitals need to be held accountable for their readmission performance, says a CMS spokesman in response.
"CMS believes the readmission measures can signal potential issues with a hospital's system for transitioning patients to the outpatient setting, collaborating with communities and providers, and communicating with patients and caregivers regardless of the type of hospital," the spokesman said.
"CMS continually strives to improve the Hospital Readmission Reduction Program as the agency gains further experience with it. We will continue to work with all stakeholders to seek feasible ways to encourage hospitals to reduce hospital readmissions while addressing any unintended consequences, particularly for those hospitals serving dual-eligible and low-income beneficiaries."
Goldman believes the healthcare industry is in the beginning stages of trying to come to grips with the readmission challenge. "If we think we can make a dent in healthcare in general, we can make a dent here, too," she says. "Now it's getting the attention it deserves because there are financial incentives involved."
The University of California-San Francisco researcher said CMS officials deserve credit for taking action: "They have brought the attention to where it needs to be."
High-ranking health plans in the Medicare Advantage program share the strategies that have led to their success.
Garnering high marks in the Medicare Advantage five-star ratings program involves a complex set of factors that can change from one year to the next.
David Jarboe
Regional President of CarePlus
Health plan executives say the key drivers for achieving star ratings success are commitment to quality across their organizations and provider networks, sharing healthcare data in real time, and the ability to annually adapt to changes in how the plans are evaluated by the Centers for Medicare & Medicaid Services.
CarePlus Health Plans Inc., a subsidiary of Louisville, KY-based Humana, which offers MA coverage to thousands of seniors in Florida, is among 16 MA carriers that earned five-star ratings for 2015. David Jarboe, regional president of CarePlus, says a commitment to quality care is essential to achieving a high star rating.
"We believe our five-star achievement is due to our entire company's focus on achieving the best clinical and customer service possible, and improving each year," he says. It's an accomplishment that "couldn't have been achieved without our outstanding team of employees and the physicians who care for our members and partner with us to focus on preventive care and disease management."
Jarboe says successful MA health plans need to have a shared commitment to quality and attention to stars-rating metrics with their physician networks. "We work hand-in-hand with our physicians to actively educate and engage our members to improve their health outcomes," he says.
"We believe programs like our diabetic initiative, which encourages diabetic retinal exams, and our medication compliance and adherence outreach, have not only improved our star ratings but also and, more importantly, truly made a difference in the health and quality of life for our members."
Collaboration has been an essential element in boosting MA stars ratings at Franklin, TN-based Cigna-HealthSpring as well
"[We] made significant improvement with our 2015 star ratings, increasing our percent of membership in a four-star or higher plan from about 38% to 57%," the company said in a prepared statement.
"Our physician engagement model works collaboratively with both our network doctors and customers to align incentives and resources around quality health care results, which correlate directly with star rating measures. We've had the strongest results in markets where our networks are more engaged and aligned with our quality efforts."
Crossing the four-star threshold is a prime goal for all MA health plans because the high rating on the five-star scale makes insurance carriers eligible for quality bonus payments from CMS.
Portland, ME-based Martin's Point Generations LLC has earned a five-star MA rating in 2015, 2012 and 2010. Rebekah Dube, VP of senior products for Martin's Point, says a commitment to quality inside the organization and with all of its partners has been crucial.
Rebekah Dube
VP of Senior Products for Martin's Point
"Across the organization, you have to have people working together," she says, noting that teamwork optimizes chronic disease management. "You have to have your physician network onboard, and you have to have your customer service people engaged."
Dube says high-quality customer service is both challenging and rewarding for MA health plans. "It's such a critical piece. We really value our relationship with our members and how they trust us," she said. "Every single interaction you have with a member is a moment to make an impact."
Martin's Point customer service representatives "have consistent, scripted conversations" with members, but the commitment to quality service does not stop there, Dube said. "We want to make sure you are getting the best care possible," she said, noting customer service representatives give members prevention tips and diplomatically inquire about whether members are in compliance with chronic condition care. "This isn't just about checking off a box for them."
CarePlus' Jarboe agrees that customer service is important. "The survey measures that assess member perception about a plan's performance are more subjective and are limited to a small sample of members, so that can be challenging. We have worked hard to improve customer service and believe that is a big factor in our becoming a five-star health plan," he said.
Tracking the Data
Dube, who has been an MA stars-rating program leader at Martin's Point for four years, says getting a real-time handle on healthcare utilization data is a make-or-break challenge.
"As the star-ratings program unfolded, what became very apparent was if you didn't have the data, you weren't going to achieve your full potential," she says.
But MA data provided to health plans by CMS is notoriously tardy. So Martin's Point developed its own ways to use real-time data to drive results. "We needed to be able to monitor ourselves. We worked with our data management team internally to build up our processes," Dube says.
Dube says Martin's Point has mastered tracking several data points in the NCQA's Healthcare Effectiveness Data and Information Set, particularly for key star-ratings metrics such as blood sugar management, blood pressure control and process measures such as compliance with testing schedules.
Pharmacy data has been a thorny area for MA health plans, she said. "CMS provides tracking and trending pharmacy data, but there's a lag there," Dube says. "We've built our own processes to follow member compliance on medication."
Moving Metrics
One obstacle common to all government-sponsored business lines is adapting to regulatory changes.
"Each year, CMS challenges health plans by changing some of the targets of measure that are used to determine star ratings. We will have to continue to improve our performance year-after-year in order to maintain our current five-star rating," Jarboe says.
"In general, we work to improve all areas and dedicate resources to improve ourselves each year. Quality improvement is a mindset that requires constant oversight to improve and maintain what we have achieved."
Dube says MA health plans must have flexibility ingrained in their business culture.
"It's not standing back and saying, 'No, we can't do that.' It's taking a problem-solving approach," she said. "We know that this business is rapidly changing, and that's not going to stop. Grounding our team in that mentality is really important."
The high cost of specialty drugs that cure hepatitis C and treat specific forms of cancer has sparked heated criticism. Value-based pricing is an alternative—but it may be impractical.
The marketing of an ever-growing number of new drugs that come with eye-popping price tags is spurring a drive to develop value-based pricing models.
"Pricing is the issue," says Samuel Nussbaum, MD, executive VP for clinical health policy and chief medical officer for Indianapolis-based WellPoint, Inc.
He says the healthcare industry faces an unsustainable cost trend for so-called specialty drugs such as medications that are targeted at specific forms of cancer capable of treating relatively small pools of patients annually.
"It is expected that these specialty drugs alone will cost more than all drugs used today in five years," he says, noting that the total annual cost for clinical drugs is currently about $330 billion and the annual cost of specialty drugs alone is forecast to rise to $400 billion in five years. "There will be no other room for everything else."
Nussbaum believes public officials and all stakeholders in the healthcare industry have to find a way to finance the most effective specialty drugs, while holding the line on drugs that deliver a marginal benefit. "It's absolutely appropriate to expect those drugs will cost a lot of money to develop," he says. "If there is a breakthrough therapy, we're all for it. But if you have a drug that is precise but doesn't necessarily provide a major clinical benefit, it doesn't hold the same power."
'Too difficult to measure'
Alexander Bastian, a healthcare practice leader at market research firm GfK Bridgehead, says establishing value-based pricing models for drugs is a daunting challenge.
In particular, an impending avalanche of "personalized" medications has caught the healthcare industry off guard, most notably in oncology, he says.
"The average size of a patient population has reduced to 200 or 300 patients in cancer care," Bastian says, whereas earlier generations of oncology drugs were marketed to several thousand patients annually. "Fewer patients are being treated with more resources per head, and society has not come to grips with that yet."
Establishing performance-based models for drug pricing is highly desirable but extremely difficult to implement. In the United Kingdom, Bastian says efforts to establish performance-based pricing for oncology drugs hit several roadblocks. "The administrative burden and the time to make that work was sapping resources from the system," he says. "It's too difficult to measure. They have backed away."
To construct performance-based models for drug pricing, it is critically important to be able to follow the effectiveness of medications over time. "You have to have a closed network, where you can have that life as long as possible," he says.
Another key to establishing performance-based pricing models is transparency. "Right now, if you go to a payer with a drug in development, you can get consultations but the consultations are nonbinding," Bastian says. "Rules can change after two years of development. It de-incentivizes pharma from adopting new models."
WellPoint's approach
In July, WellPoint adopted a relatively modest approach to value-based drug pricing in oncology.
The health plan's Cancer Care Quality Program gives oncologists a financial incentive to use cancer drugs that have a proven track record of effectiveness. "We know there is a wide variation of care," Nussbaum says. "We know there are variations in effectiveness of care. … We scanned the literature to find the best 'pathways' of care."
In the Cancer Care Quality Program, oncologists receive a one-time $350 payment for adopting a treatment plan that is consistent with the health plan's approved pathway of care. On top of that one-time payment, oncologists also receive $350 per-month-per-patient payments as long as patients are receiving treatment that is consistent with the pathway of care.
"We think that is an incredibly more responsible way for doctors to pay for care, and for us to pay for care that is more responsible and affordable," Nussbaum says.
He says it is too early to evaluate the effectiveness of the program, which was launched in July in Georgia, Indiana, Kentucky, Missouri, Ohio, and Wisconsin.
Developing value-based models
Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform, a research and advocacy group in Pittsburgh, says the healthcare industry has barely scratched the surface in value-based drug pricing.
"There are many examples of drug pricing that are ostensibly value-based," he said. "Pharmaceutical companies routinely introduce improved versions of drugs and ask for higher prices for those drugs than the previous versions because they perform better in some way, according to the drug company. Health plans routinely place drugs into different cost-sharing tiers based on the health plan's assessment of the value of the drug, which means the health plan, not the drug company, determines the value-based price the patient pays.
"However, what is generally missing today is having the difference in price or cost-sharing between two drugs be directly proportional to the difference in the value of the drugs. For example, a drug manufacturer may charge a lot more for a drug that delivers only slightly better results than another drug, so the difference in price exceeds the difference in value; while the patient may be expected to pay the same copayment for each, which means the difference in price to the patient is less than the difference in value."
Peter Bach, MD, director of the Health Outcomes Research Group at Memorial Sloan-Kettering Cancer Center in New York, proposed "indication-based" drug pricing in the Journal of the American Medical Association earlier this month.
"When costs are essentially the same but benefit differs widely, value is not the same," Bach wrote. "One crude metric of value is the cost per year of life gained. Using Medicare reimbursement rates, the cost per year of life gained with nab-paclitaxel is estimated at $145,000 in breast cancer and $400,000 in [metastatic non-small lung cancer], as measured by the change in median survival."
Bach notes significant reforms would be necessary for adoption of indication-based drug pricing.
"The health care system does not and cannot accommodate indication-based pricing," he wrote. "Oral agents for treating cancer, such as erlotinib (Tarceva), are distributed from pharmacies to patients. The parties that buy and then distribute these medications to pharmacies do so in bulk, and manufacturers do not know which patients are receiving their drugs for which indications. Pharmacies do not necessarily record the indication, even if the prior authorization process required by the insurer does."
Federal data shows a lift in quality rankings for Medicare Advantage health plans with and without prescription drug coverage—and a steep drop in the number of lowest-performing plans.
Ratings data released for Medicare Advantage plans shows significant year-over-year improvement in the number of plans earning top rankings, which "are driving improvements in Medicare quality," says the Centers for Medicare & Medicaid Services.
"We continue to see increases in the number of Medicare beneficiaries in high-performing [five-star] Medicare Advantage plans," the Centers for Medicare & Medicaid Services says a fact sheet released with the star ratings for 2015. "This year, there are significant increases in the number of Medicare beneficiaries in high-performing Prescription Drug Plans (PDPs)."
CMS also noted a striking decline in low-performing MA plans, citing an 80% reduction in the number of health plan contracts that received a "low-performing icon" designation for the 2015 star ratings compared to 2014.
CMS uses a five-star quality ranking system to rank
Outcomes
Intermediate Outcomes
Patient Experience
Access
Process
Outcomes and intermediate outcomes are weighted highest with a relative value three times as much as process measures. Patient experience and access measures are weighted 1.5 times as much as process measures.
The ranking system is used by Medicare beneficiaries to compare health plans and by insurers, to determine "quality bonus payments" for plans that earn at least four stars. In 2015, three-star ratings will no longer be eligible for bonus payments.
14 Medicare Advantage Plans Earn 5 Stars (2014)
Compared to the current year's quality rankings, the 2015 data shows an 8% increase in the number of MA-PD health plan contracts with rating of four stars or higher.
5-Star MA Plans with Prescription Drug Coverage
Kaiser Foundation HP, Inc.
Kaiser Foundation HP, of CO
CarePlus Health Plans Inc.
Kaiser Foundation HP, Inc.
Kaiser FNDN HP of the Mid-Atlantic States
Group Health Cooperative
Gundersen Health Plan
Martin's Point Generations, LLC
Healthspan Integrated Care
Kaiser Foundation HP of the NW
Providence Health Plan
5-Star MA-Only Plans
Medical Associates Health Plan
Dean Health Plan
5-Star Prescription Drug Plans
HealthPartners, Inc.
Wellmark IA &SD, & BCBS MN, MT, NE, ND, & WY
Wisconsin Physicians Service Insurance Corp.
3 Factors Raise Rankings
Detroit-based Blue Cross Blue Shield of Michigan garnered a four-star ranking for its BCBSM Medicare Advantage PPO and a 4.5-star ranking for its BCN Advantage HMO. BCBSM is a nonprofit organization and the largest health insurer in Michigan, with about 4.4 million covered lives in the state.
Mary Smith, VP of BCBSM's Health Care Value Center of Excellence, said three factors have driven a track record of star-ratings success at the BCBS affiliate: "partnerships with physicians to improve quality, sustained operations measure performance, and improving the member experience."
Organizations that are non-profit tend to receive higher ratings than those that are for-profit, according to CMS. But in the final rule on health insurance exchanges, CMS declined to require that tax-status be disclosed.
Hospitals are weighing their options on whether to accept settlement deals on Medicare claim denial appeals as the Oct. 31 deadline nears.
The heat is on.
In the weeks approaching the Oct. 31 deadline for hospitals to cut settlement deals on Medicare claim appeals estimated to total more than a billion dollars, there has been a burst of activity among providers.
Officials at the Centers for Medicare & Medicaid Services were peppered with questions after a conference call presentation Oct. 9 on the proposed settlement deal, which offers hospitals 68 cents on the dollar to resolve disputed claims. It was the second of two presentations on the topic.
A handful of thorny questions stumped the four-member panel of CMS officials, who promised to post new information on the federal agency's settlement offer web page or to call hospital officials individually with responses. But the panel was able to provide clarity on several issues.
A couple of callers raised issues related to the potential for two rounds of settlement review and payment.
Under CMS's settlement offer, hospitals are required to submit spreadsheets that list all of their pending appeals, which are then matched to CMS records. "If everything is in agreement, there won't be a second round," said Melanie Combs-Dyer, director of the Provider Compliance Group in the CMS Office of Financial Management.
If the records do not match, the CMS panel advised the callers about issues related to settlement payment and patient privacy. If there is a second round in a hospital's settlement process, the hospital would receive two lump-sum payments to settle its claims instead of one.
On the privacy front, hospitals were advised that there is no need to encrypt the electronic files containing their spreadsheets and other settlement initiation documents. If a second round to a hospital's settlement process is necessary, however, any supporting documents that contain confidential patient information should be encrypted, Combs-Dyer said.
She also advised hospitals on the legibility of their claims agreement documents and spreadsheets.
"We really need to be able to read the settlement agreement, particularly the name of your hospital," she said, noting an early version of the CMS settlement agreement form cuts off long hospital names and an updated version of the form should be used.
Combs-Dyer also urged hospital officials "to complete the spreadsheet in its entirety," noting failure to fill out the header fields at the top of the CMS spreadsheet form could lead to rejection of a settlement deal. She said hospitals can use their own spreadsheet forms, but noted that doing so would lead to processing delays.
No Help with Third-Party Payers
The panel also answered questions about the impact hospital settlement deals will have on related claims involving third-party payers such as commercial insurers. Hospitals apparently will have to fend for themselves.
"The claims will remain as 'denied' in the Medicare system," said Mark Korpela, acting deputy director of the Financial Service Group at the CMS Office of Financial Management. "We will not be advising other payers on how to process claims."
Appeals Backlog CaseStill in Court
AHA et al. v. Burwell, filed against the federal Department of Health and Human Services, claims "unlawful delays" in the adjudication of Medicare claims appeals. Filed in May, it seeks a court order that would compel HHS to clear the Medicare appeals backlog.
In a US District Court legal motion filed Oct. 2, the American Hospital Association asks the court to deny HHS's motion to dismiss the case and seeks summary judgment in favor of the hospital association and several co-plaintiff healthcare providers.
"HHS's failure to adjudicate appeals timely has led to an immense backlog of close to a million appeals of claim denials worth more than a billion dollars in Medicare reimbursement. As a result, the system is broken," the AHA motion states.
The hospital association casts the federal government's response the lawsuit in a dim light.
"...Has responded to this lawsuit by throwing up its hands, denying blame, and asking for forgiveness based on two central arguments: First, that the ninety-day deadlines for deciding claims at the ALJ and DAB levels are not, in fact, deadlines that can be enforced; and, second, that 'this action does not involve the sort of delays that are so egregious as to warrant exercise of the Court's discretion to enter the extraordinary remedy of [ordering HHS to clear the backlog].
CMS officials did not respond to a request for comment on the AHA legal motion.
Fuming Over RAC Fees
In a Sept. 25 letter to CMS Administrator Marilyn Tavenner, the AHA raises a red flag over federal Recovery Audit Contractor contingency fees paid for previously denied claims that are eligible to be included in the Medicare appeals settlement deal.
"Specifically, we are inquiring about whether the RACs will be required to forfeit any of the contingency fee they received for those denials," AHA Executive VP Rick Pollack wrote. "As you are aware, when a hospital prevails in its appeal of a denied claim, the RAC must return the entire fee paid for that denial."
A "Frequently Asked Questions" document posted on the CMS website, says: "Recovery Auditor contingency fees are governed by contract requirements and will be handled accordingly."
A CMS spokesman, responding to a request for comment, said that the agency is engaged in an open dialogue with providers about the proposed settlement deal. "CMS has made extensive outreach efforts regarding this settlement offer, including posting detailed information on its website. CMS has also established a mailbox to facilitate communication with the healthcare provider community. Questions submitted to the mailbox are responded to and posted to CMS' website."
Ronald Hirsch, MD, VP of the regulations and education group at Chicago-based Accretive Health, says RACs are a festering sore point for hospital officials across the country.
"The RAC fee is important to hospitals because they consider the audit process where everything is in favor of the RAC and the government to be patently unfair," he says. "If a hospital misses a deadline, there is no recourse, but yet the [qualified independent contractors] and ALJs have been allowed to miss their deadlines by weeks, months and years without as much as an apology."
Increasing access to primary care services in poor and rural communities means approaching the issue on multiple fronts, including telemedicine, patient engagement, and coordinated care, a payer's report suggests.
Rural and economically disadvantaged areas of the country pose a daunting challenge to boosting primary care services, a recent UnitedHealth Group study has found. But there is no single pathway toward expanding access and capacity, it suggests.
"Approximately 50 million Americans live in areas with an under-supply of primary care physicians. Most of these areas are rural," says the report, "Advancing Primary Care Delivery: Practical, Proven, and Scalable Approaches."
"Increased roles for nurse practitioners and physician assistants would add to the system's overall primary care capacity, and could help target capacity to areas where there are fewer primary care physicians," the report suggests.
But to improve primary care services in communities, increasing the number of physicians in the country will not be enough, the report concludes.
Richard Migliori, MD, executive VP of medical affairs and chief medical officer of UnitedHealth Group, said in a statement: "This research shows the value of improving primary care capacity, not only in terms of improving patients' health but also in catching problems early and avoiding unnecessary and costly hospital services."
In addition to the findings on primary care in rural and economically disadvantaged areas, UHG also reported that:
Primary care office visits represent 55% of the 1 billion office visits annually nationwide. Full implementation of the federal Patient Protection and Affordable Care Act could add 25 million primary care office visits annually.
High rates of avoidable emergency room visits and avoidable hospitalizations indicate many patients could be treated more cost effectively at primary care facilities.
Payment policy is a "significant barrier" to improving primary care services. Medicare and Medicaid often pay less when NPs and PAs deliver a service compared to when a physician delivers the same service, the study said.
Building multi-disciplinary teams is effective at helping primary care practices leverage available resources to see more patients.
Electronic health records and data exchanges help primary care practices improve care coordination, elevate quality, and reduce costs.
Rural California Experience
Earl Ferguson, MD, PhD, a cardiologist who practices in rural areas of California, said his experience mirrors many of the UHG report's findings.
In his experience, the biggest problems with primary care services in rural areas are:
Earl Ferguson, MD, PhD
"The failure of some primary care providers to concentrate on comprehensive care coordination that must involve a network of all the specialists necessary for providing care
"The lack of the health information technologies needed to coordinate that care."
"We need to recognize that primary care can't do everything alone. Primary care providers must be the coordinators of comprehensive care, but specialty care is essential to assist them in the ongoing management of many of their patients," says Ferguson.
To boost primary care services in rural and economically disadvantaged areas, it is critically important to leverage human and technological resources, Ferguson said.
He has been doing cardiology and general medicine consults in a rural health clinic of less than 2,000 people 80 miles from his hospital via telemedicine for more than a decade.
"With readily available assistance, the primary care nurse practitioners have markedly improved their capability to handle patients with congestive heart failure, hypertension, diabetes, and other conditions. They have learned to handle the routine care of some complex diseases without my direct supervision and know when they need a consult and assistance. Compared to other consults I'm asked to provide for other providers, the PCNPs from this community are almost always appropriate, and my review of their records confirms that they are managing these patients well," he reports.
Lee Barron, MBA, serves as CEO, CFO and COO of the Southern Inyo Hospital District, which operates the small rural health clinic in Lone Pine, CA, where Ferguson has been providing consulting services. Lone Pine is nestled in a valley between the Sequoia and Death Valley national parks.
"We have found with many of our highly complicated patients that have multiple diseases that their quality of life is not impacted unless we address the 'whole' patient," Barron says.
"Many times, their biggest worry or hurdle to care is the fact that they might not have adequate transportation, or that they do not have access to appropriate food, or they are depressed or concerned about their family's welfare, and a very long list of other issues that directly impact their health and well-being."
In rural areas of the country, a concerted effort is needed for primary care providers to effectively manage care coordination, she says.
"With care coordination, we are addressing all of their issues. Through the first interview-visit process, we identify along with the patient what their primary concerns are, which may have nothing to do with their diagnoses, and then we follow-up with resources and support."
"Once we have been able to address their other issues," she says, compliance rates "[have] soared with medication and treatment."
Bigger Picture
Ferguson, who works as a cardiologist and director of cardiovascular imaging at Ridgecrest Regional Hospital, says the primary care lessons he has learned in rural settings can be applied at community hospitals that bridge the gap between rural and urban areas of the country.
Ridgecrest, CA, has a population of slightly more than 28,000 and is located about 150 miles north of Los Angeles. The nearest larger city and larger hospital is 80 miles away.
"We have now set up a similar coordinated cardiovascular care program in our hospital's rural health clinic," Ferguson said. "Our program is coordinated by a PCNP who is available every weekday, makes decisions on what studies and consultations are necessary, and arranges consultations with specialists that rotate through our Cardiovascular Care Clinic."
For complicated cardiac cases, Ridgecrest Regional Hospital has established contracts with a cardiology group and large hospital in the Los Angeles metropolitan area, he said.
Efforts to create a sustainable value-based healthcare delivery system face financial, social, and political barriers.
Talking about healthcare innovation is a hopeful exercise. Tackling obstacles to innovation is hard work.
Anita Goel, MD, PhD
Chairman and CEO of Nanobiosym
I recently attended a conference in Boston that focused on innovation in the healthcare industry. The news story I wrote about the conference delved into the exciting innovative work the forum participants discussed. You are now reading the untold story I have been itching to write for nearly a month.
I reached out to three of the forum's participants to pick their brains about obstacles to change in healthcare: Harold Miller, president and CEO of the Center for Healthcare Quality and Payment Reform, a research and advocacy group in Pittsburgh; Anita Goel, MD, PhD, chair and CEO of Nanobiosym, based in Cambridge, MA; and David Hare, chief executive of National Health Service Partners Network in the United Kingdom.
Miller commented on financial barriers to innovation. Hospitals and physicians are floundering under the weight of ill-advised and uncompensated fixed costs—a trend that will worsen with the advent of population health management, unless addressed by new payment systems.
"We want hospitals to have emergency rooms, operating suites, and cardiac catheterization labs ready to go 24/7 when we have an accident or heart attack, but we don't pay hospitals for standby services, we only pay them when they have admissions and do procedures. It's not just hospitals that have this problem; physician practices also have significant fixed costs to cover, but they are only paid for office visits and procedures," Miller says. "That means that when a hospital has fewer admissions and readmissions and when a physician practice helps its patients stay healthier, their revenues will decrease faster than their costs."
Harold Miller
President and CEO,
Center for Healthcare Quality
and Payment Reform
Payment reforms are crucial to clearing the financial obstacles blocking value-based healthcare innovation, he told me.
"You can't solve that problem by adding small bonuses or penalties on top of the existing fee-for-service system. That's the weakness with most shared savings programs, and it's why many high-quality healthcare organizations have been exiting Medicare's Pioneer ACO program," Miller says. "Providers need completely different payment systems—such as bundled payments, warrantied payments, condition-based payments, and global payments—that give them the flexibility to redesign care in a way that reduces overall spending for payers in a way that is financially feasible for the providers."
The hard work of innovation comes with a payoff, he says. "The good news is that better payment systems can enable win-win-win solutions: Patients can get better care, payers can spend less than they do today, and providers can actually improve their operating margins."
Patience goes with the toil. "This can't happen overnight, though. There will need to be a transition, and healthcare providers and purchasers-payers will need to work together to achieve win-win-win results through that transition."
David Hare,
Chief Executive,
National Health Service
Partners Network
Goel talked about how consciousness is acting as a barrier to healthcare innovation on several fronts.
Nanobiosym has developed a mobile device platform that enables low-cost but highly sensitive and accurate diagnostics in real time. Goel's vision for developing nanobiophysics technology at a low cost is a potentially revolutionary approach to patient care, one which is the polar opposite of the prevailing notion that equates medical technology with multimillion-dollar equipment such as advanced imaging and radiography machinery.
"I believe we should promote the consciousness that high-technology innovation can help to reduce prices and increase access to a particular commodity. Google, for example, decentralized access to information and made it more affordable for the masses. Likewise, cellular technology enabled vastly larger numbers of people to have access to telecommunications. In our case, I believe that our nanobiophysics solutions will help to democratize access to healthcare on a global scale," Goel told me.
She says the U.S. healthcare system is ripe for disruption.
"Our consciousness in the healthcare industry is very much rooted in a centralized paradigm dating back to the Industrial Revolution of the 1700s," Goel says. "Just like Google disrupted the information industry and a country like India went from a few hundred thousand land lines a little over a decade ago to over 900 million cell phones today, I believe we are at the tipping point of a similar impending disruption in the healthcare industry."
She believes a change of consciousness will be required to achieve the kind of financial reforms Miller is advocating in healthcare.
"The consciousness in the financing industry is not always aligned with what the broader stakeholders of the healthcare ecosystem want," Goel told me, noting the widespread focus on maximizing return on investment in the shortest amount of time.
The financial obsession over ROI is "a consciousness that undermines the commercialization of disruptive innovations that threaten traditional revenue streams and requires extra time to establish niche markets in the midst of legacy infrastructure and entrenched business models. … Often the best way to maximize ROI is to sell out to the competitors, who will pay the highest price just to avoid disruption of their revenue stream," she says.
Lastly, I asked Hare to shine light on the tangled political webs in democratic societies that snare healthcare innovation.
"The party political divide in the U.K. over the future of the National Health Service is very real but it is not as acute as in the U.S.," he told me. "This is because reform in the NHS has actually been incredibly slow and has allowed politicians to cluster around a general outlook whilst disagreeing at the margins. In the U.S., how healthcare is paid for and delivered has opened up a much deeper fault line, and the consequences of that will play out for some time."
Hare made a bold statement at the Boston forum that will resonate with U.S. healthcare provider leaders: "The hospital is the symbol of healthcare, and we need to change that." Apparently, the United Kingdom and its former crown jewel colony across the Atlantic are charting similarly perilous political courses.
"One of the biggest challenges facing policymakers in healthcare is to shift thinking from the institution to the citizen. Institutions treat patients, but for people to live healthier lives healthcare systems need to adapt to support and inform greater self-care and management of long-term conditions. This will entail using resources differently and de-commissioning services that are no longer fit for purpose," he told me. "Here, local politics can be a bigger barrier than national politics, and finding a way through the politics of these changes is going to be one of the biggest issues healthcare leaders face in the coming years."
Lawmakers and the courts have been drawn into the controversy over the complicated distinction between observation status and a hospital admission, which carries a high cost differential.
Several states are adopting or studying laws to alert hospital patients about the potential financial consequences of observation vs. admission status.
Victoria Veltri, JD
This month, a new Connecticut law requires hospital staff to inform patients in writing about the nuances of observation status, which include exposure to out-of-pocket expenses.
Under the law, a written notice provided to patients must indicate "that observation status may affect the patient's Medicare, Medicaid, or private insurance coverage for (A) hospital services, including medications and pharmaceutical supplies, or (B) home or community-based care or care at a skilled nursing facility upon the patient's discharge."
The written notice must also recommend "that the patient contact his or her health insurance provider or the Office of the Healthcare Advocate to better understand the implications of placement in observation status."
Victoria Veltri, JD, who leads Connecticut's Office of the Healthcare Advocate, says her agency is monitoring the new law. "We will be watching the implementation of this bill closely, tracking the calls that come in on this bill, and may intervene, when warranted, on the behalf of an individual consumer to challenge observation status," she says.
Early Adopters
According to the Connecticut Health I-Team, Connecticut, Maryland, and New York are the first states to adopt observation status notification laws, with Massachusetts, New Jersey, and Pennsylvania considering similar legislation.
Officials at the Maryland Hospital Association said that state's observation status law is helping patients navigate the complicated distinction between observation and admission.
"The state and MHA worked with hospitals on a standardized communication template that provides this information to patients, in addition to sharing best practices for hospitals to tailor to their individual situations," the hospital association officials said in a prepared statement.
MHA officials say the Maryland law is adequately crafted to ensure patients are informed about the consequences of being listed in observation status.
"Since the move to observation status was strongly encouraged by the state rate setting commission, federal government, and commercial insurance companies to cut costs by shifting them from insurance companies to patients, patients have understandably been confused when they [have] found themselves in a hospital bed but categorized as outpatients and responsible for the accompanying extra out-of-pocket costs," the MHA said. "We think the law and hospitals' response to it will help patients."
The "standardized communication template" recommended for use at Maryland hospitals starts with this advisory: "When a patient is at the hospital the doctor caring for you must determine whether you require care as an inpatient or an outpatient. Your doctor has assigned your status as an outpatient in observation. You have not been admitted as an inpatient to the hospital."
The Maryland communication template lists information targeted specifically at holders of commercial health insurance and Medicare coverage.
Financial Liabilities
One of the biggest financial liabilities Medicare patients face when designated for observation status is paying a high share of the bill if they are transferred to a nursing home or other skilled nursing facility. The Maryland communication template includes an advisory to patients about this potential cost.
'A Burden on Top of a Burden'
Hartford Hospital, an 819-bed acute care facility in Connecticut, says its state's new law, which is similar to Maryland's, places an undue burden on medical staff.
Maureen Zukauska, RN, is the nurse manager who leads the Hartford Hospital Case Coordination Department, which is charged with advising patients about outpatient status. "Our focus is supposed to be caring for the patient, and it's very prickly to get into conversations about finances," she said.
Mitchell McClure, MD, director of the Hartford facility's Division of Hospital Medicine, says the new observation status law puts doctors in a difficult position. "Physicians have certainly talked about this with patients before, but not in a formal way," he said. "It is an issue that has been contentious with patients, and I understand that. We're in the middle of this conversation."
McClure says hospital staff members were already feeling pressure to comply with a dizzying array of rules and regulations before the new law was enacted. "It's a burden on top of a burden that was already there," he says.
Ajay Kumar, MD, chief of the Hartford Hospital Department of Medicine, says officials at the Centers for Medicare & Medicaid Services who have been the driving force behind patient admission status reform need to take more responsibility for educating the public.
Ajay Kumar, MD
"I have found that very little has been done by CMS and Congress to inform the public," he says. "We do not find that the beneficiaries are well-educated."
Placing the educational onus on hospitals requires a burdensome amount of time to train staff members, he says. "It is an enormous amount of undertaking for us. We're educating a lot of staff in a short period of time."
CMS officials did not respond to a request for comment about Connecticut's new law or about a federal lawsuit linked to observation status. The federal agency does have information online that clarifies the differences between hospital observation status and admission.
Pressing the Feds
In 2011, the Willimantic, CT-based Center for Medicare Advocacy filed a class action lawsuit against the federal government on behalf of Medicare beneficiaries who were placed on observation status at hospitals and then paid thousands of dollars for post-hospital skilled nursing facility care because they had not been admitted to hospitals for at least three days.
"The case challenged Medicare's use of observation status, as well as the lack of an appeal mechanism for beneficiaries to challenge the classification," Alice Bers, an attorney at CMA, said last week.
"In September 2013, the court dismissed the case. We have appealed to the U.S. Court of Appeals for Second Circuit, but limited the appeal to the issue of the right to an effective notice and appeal process for beneficiaries placed on observation status."
Oral arguments on the class action lawsuit appeal have been scheduled for later this month.
Terry Berthelot, senior attorney at CMA, says there is a pressing need for federal legislation to help clear up confusion about the difference between observation status and admission.
"There should be federal legislation requiring both notice and expedited appeal rights for Medicare beneficiaries admitted to the hospital as outpatients," she says. "Whether a patient requires an inpatient level of care is a factual issue. When the hospital and the patient disagree as to whether the patient needs to be hospitalized or could be treated in an outpatient setting, a third party arbiter should step in and review the case. A meaningful appeal process would ensure that Medicare beneficiaries receive the kind of care they need without having to spend large sums of money out-of-pocket."
Pending Bill
Berthelot says federal legislation sponsored by U.S. Rep. Joe Courtney, (D-CT), and U.S. Sen. Sherrod Brown, (D-OH), would help clear up the controversy. "If Medicare counts time on observation status toward the three-day qualifying hospital stay required for Medicare coverage of subsequent care in a nursing home, the observation status problem would largely go away," she said.
A panel of distinguished academics gathered at Harvard University last week gave federally driven healthcare reform efforts high marks, but cautioned that several daunting hurdles remain.
Theda Skocpol, PhD, a Harvard professor and director of the Scholars Strategy Network, which co-sponsored the "Taking Stock of Health Reform" forum, delivered a stirring defense of the Patient Protection and Affordable Care Act.
Skocpol highlighted three areas where she believes the PPACA has made tremendous strides:
Creating "new rules of the game" for insurance companies that improve quality of care and reduce costs;
Boosting subsidized care through mechanisms such as Medicaid expansion to ensure health insurance coverage becomes more affordable;
Launching exchanges that serve as marketplaces where people can compare health insurance products.
"It is surprisingly successful. It didn't look that way a year ago," she said.
Lawrence Jacobs, PhD, a political science professor at the University of Minnesota, pointed to polling data indicating that Americans are supportive of the core elements of the PPACA. They like the healthcare reform law more as they learn more about it, he added.
"The reality is, there's quite a bit of support for it," he said, citing polling data collected at Stamford University in California. "As knowledge increases, support for the Affordable Care Act rises to about 88 percent among Democrats. Even among Republicans, support rises to about 40 percent… Support for the law rises as people actually experience the benefits of the law."
In a brief interview after the forum, Jacobs noted that public support for the PPACA mirrors the historical experience with other major pieces of social legislation. "We find that the knowledge about Social Security is greatest among people who are in the program," he said.
Linda Blumberg, PhD
Senior fellow, The Urban Institute
Linda Blumberg, PhD, a senior fellow at The Urban Institute, noted that the PPACA has generated major improvements in the health insurance marketplace over a relatively short period of time.
"There has been significant reduction of the uninsured relative to the expected trend," she said, noting that millions of previously uninsured Americans have gained health insurance coverage through Medicaid expansion and the PPACA-spawned exchanges.
"We've also seen increasingly competitive insurance markets, particularly in the non-group markets… These are all very good signs."
PPACA Obstacles
The forum participants identified several impediments to the successful implementation of the PPACA, including political, financial, operational, and legal hurdles.
"The politics remain rancorous and poisonous," Skocpol said, noting that an appetite for repeal of the PPACA is "still on the table" for many of its political foes. "That reacts with a media that over-hypes the possibility of repeal."
Just two days before the Oct. 2nd forum on the Harvard campus, U.S. Rep. Kevin Brady, (R-TX), released a statement peppering the PPACA with harsh criticism.
"Today, Americans were supposed to be able to enroll in an Affordable Care Act plan for the second year, but the opening of 2015 enrollment was delayed [until] after the mid-term elections to avoid consumers finding out that much of the backend of healthcare.gov still doesn't work, and that they may face higher premiums and a more narrow network," the chairman of the House Ways and Means health subcommittee wrote on Oct. 1.
"While this poorly written law has helped some, it has hurt many, many more," Brady wrote. "One year later, too many families have had the plans they liked cancelled and can no longer see the local doctor they trusted. That is not the healthcare reform they were promised."
Jonathan Gruber, PhD
Professor, MIT
Skocpol places responsibility for the troubled political prospects of the PPACA squarely on the Democratic Party. It has done a poor job of explaining the law to the public, she says. "Most Americans still don't know what is in this law; so it's wrong to conclude that if they did know, they wouldn't like it."
Blumberg said the prevalence of cost sharing seen as high-deductible health plans on the new exchanges has emerged as a key financial stumbling block to offering affordable healthcare coverage to all Americans. "The cost sharing can be very high relative to their income," she said.
Katherine Swartz, PhD, a professor of health policy and economics at Harvard, said the PPACA stopped insurance carriers from denying coverage due to pre-existing conditions, but she noted that risk selection remains a threat to healthcare access.
Carriers have cast a wary eye on the least profitable markets and public exchanges and "they could stay out of certain marketplaces," Swartz said.
Narrow Networks
In response to a question from the forum's audience of about 75 people, Blumberg said "price gouging" of patients who seek medical care outside of narrow networks is a concern in many states. "We're at the beginning of what is going to be a very tension-filled conversation," she said of the simmering debate over network adequacy.
Blumberg said operational problems, such as last fall's nearly disastrous rollout of healthcare.gov, are likely to be a perennial. "What we had before was a very patchwork kind of system," Now, she said, "You've got more patches on the patches."
She believes the struggle to optimize healthcare.govreflects the PPACA's byzantine set of regulations. "The policy we have created has complex operational needs," she said. "What we don't recognize is that it's the policy that drives the complexity of this system."
Timothy Jost, JD, a professor of law at Washington and Lee University in Virginia, said court challenges seeking to eliminate health coverage subsidies in federally administered insurance exchanges could have disastrous consequences for the PPACA. If those challenges reach the U.S. Supreme Court and are successful, he said, they "will not only gut the federal exchanges but also gut the non-group market."
"I don't think the judges really understand that," Jost said.
Educating the public
One of the most challenging obstacles to effective implementation of the PPACA is the woeful status of healthcare literacy among Americans, several forum participants argued.
"We have a conglomeration of media and political parties that make fact-based evaluation [of healthcare by] regular citizens all but impossible," Jacobs said, noting the shift from the "Cronkite era" when there were limited sources of information on public policy to the prevalence of media outlets today that package news to fit viewers' preconceived notions. "There's a business and political reward to feeding that hunger."
Jonathan Gruber, PhD, a professor of economics at the Massachusetts Institute of Technology in Cambridge, and an architect of the healthcare reform law, stressed the need "to try lots of different mediums" to improve healthcare literacy.
"It's not a lack of material. It's a lack of getting people to be interested in it," he said of matching the vast amount healthcare reform information linked to the PPACA with individual members of the public.
Blumberg suggested that the need for healthcare literacy education is greatest among Americans who were previously uninsured and are now shopping for insurance coverage on the new public exchanges. "When you look at the specific target population in the exchanges… about half of them don't know what a premium is," she said. "What we need is a lot more hand-holding."
The healthcare landscape is dotted with new health plan ventures, including a bevy of opportunities to make money in federally sponsored insurance products.
Government-sponsored healthcare is the new black.
Thousands of Americans are newly eligible to enroll in Medicare every day, while millions of previously uninsured citizens have gained healthcare coverage through the new public exchanges as well as expansion of Medicaid in more than two dozen states.
One of the most attractive government business lines in the health insurance marketplace is Medicare Advantage, a value-based alternative to traditional fee-for-service Medicare.
Blue Cross Blue Shield of Michigan has embraced Medicare Advantage, scoring among the MA leaders in the federal government's 5-star system that rewards health plans for achieving high quality standards. "We're one of the few plans that leaves zero dollars on the table," Julie Smith, VP of federal business at BCBSM, told me last week.
She says there are several keys to success when operating an MA plan: managing quality to attain at least 4-Star ratings, reducing "retrospective coding" to ensure providers accurately document patient health status during visits, investing in the expertise needed to operate government-sponsored health plans, playing close heed to compliance, and building strong relationships with healthcare providers.
Smith says insurers expose themselves to grave risks if they view operating MA health plans or other government-sponsored health insurance products as an extension of their commercial business: "If you make a mistake, it can take years to turn it around," she says. "Treat it differently. Make sure you have dedicated resources. The mistake people make is they believe you can do this with the same people and technology you used in the past."
BCBSM did just that by bringing in new people and technology to achieve government-sponsored healthcare success through a partnership with Southboro, MA-based ikaSystems Corp.
"Two years ago, Blue Cross Blue Shield of Michigan switched to a new platform from their legacy platform," Joseph Marabito, president and CEO of ikaSystems, told me last week. "In the process, they halved their administrative costs. They avoid having to process manually 3.2 million claims annually."
Marabito says expertise and the ability to scale operations are critical factors to succeeding in government-sponsored healthcare markets. "You need to know what you're doing in the government business. If you do it poorly, you can really lose a lot of money," he says.
"Most health plans are regional plans; most are not national… How are you going to be competitive with a plan ten times your size? You need to be on a new platform [with] technology [that] scales better than a legacy platform."
In addition to expertise and the ability to scale up operations, Smith says BCBSM looks for a "proactive management infrastructure" when selecting partners in government-sponsored healthcare ventures. "I need my partners to be out there ahead of what the market trends," she says.
Marabito says he also carefully gauges the management of his company's health plan partners.
"I assess how committed they are to the [government-sponsored] business and how realistic they are. I look for people who are collaborative, people who are open-minded. Most health plans have been around for a long time. With that can come practices that are hard to change."
Marabito and Smith both say that insight about the inner workings of Washington and flexibility to adapt to regulatory changes are critically important when operating a government business line.
"The fact is, the rules change every day," Marabito says. "You just don't always understand what's going to happen. You have to be flexible."
Smith says the Medicare Advantage 5-Star quality program is a great example of the vagaries involved in government-sponsored healthcare.
"I plan for change, and I plan for surprises all the time because I know I'm going to have them," she says. "We are always striving to be ahead of what the expectations are of the government—high quality, members knowledgeable about the product. You have to pivot, and you have to have leadership that is willing to work in an abstract world."
