What Is Population Health, Anyway? - Part V: A 10-Part Plan of Attack for Population Health

A Five-Part Series
Part V: A 10-Part Plan of Attack for Population Health

In our earlier blog entry, we posited that the term “population health” is rather meaningless unless stated in terms of how it is implemented, which involves the application of the clinical, organizational, and technical aspects of population health management.  We previously examined the clinical aspect, the organizational aspect, and the technical aspect.       

Having identified the three aspects of population health, thought leaders within the Organizational Hub can then define the concept of population health for their own population through the strategies and tactics they develop to improve the status of health for that population.  The question then becomes: what constitutes a viable, common-sense population health management program? 

Let’s revisit the notion that population health management is key to thriving and surviving in the new world of healthcare payment and delivery.  Value will be rewarded over volume, and new methods will need to be adopted to promote wellness for the population served.  Value will be determined using increasingly more precise metrics gauging patient satisfaction and outcomes.  Strategies will be aimed at the entire population served while individual needs within that population will continue to be addressed.

Let’s also accept the fact that the hospital and its medical staff must be the initiators of action. They must be harnessed together, developing administrative and clinical capabilities concurrently to manage population health.  They must bring together other community services and resources that impact the social determinants of health and serve as the Organizational Hub for community action.

Given that starting point, the Organizational Hub should consider the following plan of attack:

1.       Create the trust environment within which hospital administrative leaders and physician leaders can begin to develop a common understanding of the urgency of preparing the organization to move from volume to value, recognizing the compelling need to design processes that produce value, and immediately undertake the task of reforming their mutual business and clinical operations to succeed in a rapidly changing healthcare environment.

2.       Identify the population served: i.e., identify the community which comprises the population to be addressed by a planning process. 

3.       Conduct a comprehensive Community Health Needs Assessment (CHNA) which engages every entity in the community that has an impact on the social determinants of health for the residents of the community.  Engage those constituent organizations in an honest evaluation of the community’s population health status and a detailed planning process designed to address areas of concern in a deliberate and organized way. The CHNA must identify the sources of relevant clinical, demographic, and financial data associated with that population; the resources available to attempt to address population health needs; and the gaps in capabilities and resources needed to impact population health.

4.       Invest in diverse, patient-oriented access to facilities and IT infrastructure. Facilities should be designed to provide convenient care sites for patients and capabilities for outpatient, office-oriented care.  At a minimum, the IT system should be able to perform network-wide scheduling, provide patients with a portal to their own healthcare information, provide a patient-friendly means of communication with providers, and provide a virtual care interface for providers within the network. 

5.       Perform data analysis that is aimed at identifying care gaps.   By integrating evidence-based medicine best practices garnered from national and local sources with the organization’s claims data and clinical data for chronic disease states, care gaps for individual patients and the population as a whole can be identified.  Clinical data will show what clinical plan was pursued.  Claims data will show what actually was done and the effectiveness of the care rendered.

6.       Stratify patients into risk groups.  Using data analytics, patients can be sorted into three risk groups: healthy, intermediate or rising risk, and high risk.  Resources can then be allocated toward the groups in ways that yield the greatest return on investment.  For instance, strategies advocating exercise and healthy eating can be implemented at low cost and have general application across all three groups.  Strategies designed to keep patients in the rising-risk category from moving to the higher-risk category should perhaps receive the most attention because of the higher return on investment that can be realized.  By taking advantage of new Medicare payment codes to pay for chronic care management, providers can now receive compensation for more proactive management of high-risk, high-cost patients.

7.       Engage and activate patients within the population to take responsibility for their own health.  The Patient Activation Measure, developed by Judith Hibbard, and the 43 engagement behaviors, identified by Jesse Gruman of the Center for Advancing Heath, is an excellent tool for engaging the population.  The effort must be aimed at both the population level (to address the community social determinants of health) as well as at the specific patient level (engaging the patient in decisions and habits that impact their personal health status). 

8.       Place in motion a continually evolving and dynamic plan that incrementally begins to manage care for the population.  It should contemplate a team approach, led by the Organizational Hub, but employ the skills and resources of all the assets of the community in which the population resides.  Care must be coordinated across the continuum of care, specialized for the patients based upon the stratification of risk groups.  The healthy group should receive wellness and prevention programs; the rising-risk group will need frequent screening for the condition for which they are at risk and interventions to encourage lifestyle changes, and the high-risk group will need care strategies to prevent further complications of their disease or diseases (as is frequently the case).

9.       Consider an investment in a lean, scalable care team that can expand the physician staff’s capabilities to effect population health management and allow practitioners to practice at the top of their respective licenses, doing what they presumably like doing best. 

Strategically deployed advanced practitioners can greatly improve patient interaction and relieve physicians of time commitments. An expanded role for pharmacists can accelerate access to care, monitor medication therapy management, and prevent readmissions to the hospital.  Robust extended-care resource teams can provide the necessary patient monitoring and interaction to effect lifestyle change and assure patient compliance with care plans.  The care team can be empowered to care, communicate, and coordinate – all keys to managing care.  An integrated behavioral health function can have dramatic impact on patients’ compliance with care plans and significantly assist patients with co-morbidities.

10.   Measure and compare outcomes with baseline data to demonstrate progress and success.  The basic IT system used will need the capability to identify clinical processes, care outcomes, cost of care, and patient satisfaction scores.  A system of continual process improvement will need to be implemented wherein the outcomes measured can identify areas that are capable of improvement so that the planning team can address those gaps and continue to advance capability and improve process.  

Ultimately, population health is defined by the healthcare executives, clinicians, community stakeholders, and individuals comprising the population in question.  The definition emerges from the process of harmonizing the views and talents of those seeking to positively impact the population’s health status.  Each aspect of population health identified above – clinical, organizational, and technical – must be uniquely adapted to address the multiple needs of the defined population and the complexity of environmental factors within its community.

What Is Population Health, Anyway? - Part IV: Technical Aspect

A Five-Part Series
Part IV: Technical Aspect

In our earlier blog entry, we posited that the term “population health” is rather meaningless unless stated in terms of how it is implemented, which involves the application of the clinical, organizational, and technical aspects of population health management.  We previously examined the clinical aspect and the organizational aspect; finally, we focus on the technical aspect.    

Health information technology provides the foundational support for the workflow and process changes necessary for effective population health management.  Those changes ultimately will foster the strong healthcare relationships needed to implement organized systems of care; coordinate care across multidisciplinary teams and settings; enhance access to primary care; centralize resource planning; provide continuous care either in, or outside of, office visits; promote patient self-management education and healthy behavior and lifestyle changes; and facilitate essential communication among providers and patients.

The Agency for Healthcare Research and Quality has identified five domains of health information system functionalities to support population health management:

  • Domain 1:  Identify subpopulations of patients who require preventive care or tests.
  • Domain 2:  Examine detailed characteristics of identified subpopulations.
  • Domain 3:  Create reminders for patients and providers to make information actionable.
  • Domain 4:  Track performance measures in real time to compare care delivered to national guidelines.
  • Domain 5:  Make data available in multiple forms (e.g., printed, exported, or graphically displayed).

Presently, there is a significant gap between existing and optimal functionality for population health management.  Progress is being made, but the lack of cost-effective health information technology solutions remains a major impediment to fully integrated population health strategies. 

Providers are particularly challenged when selecting and implementing technology solutions.  Many have adopted EHRs, but that is only the first step.  A wide range of other applications will be required to implement the functionalities identified above.  Further, systems must be adaptable to a rapidly changing payment and regulatory environment and the light-speed change of technology itself. 

The Accelerating Pace of Technological Development.  Emerging daily are cutting edge applications that are making the initial iteration of health information exchange obsolete.  No longer must providers query raw form records from individual episodes of patient/provider interaction in order to get the actionable data they need for the specific analysis they are conducting. Selective data extraction from multiple patient records and collation of that specific information for more efficient analysis is becoming feasible.

Increasingly, healthcare executives are looking beyond the vendors who supply their core financial and clinical information systems for the IT capabilities needed for population health management.   The more specialized, creative technology developers are capturing a larger portion of the population health management space.

As a result of the dynamics inherent in identifying and deploying IT solutions to support population heath management, healthcare executives are understandably moving cautiously – developing their population health strategy, identifying gaps in IT needs to support it, and addressing the urgent IT needs such as automated patient outreach capabilities and patient communication.   But they are keeping their options open when considering the more complex analytical applications that will ultimately be required for the development of more comprehensive strategies to address population health needs and effectively manage patient stratification—those actions that truly move the needle in improving population health status. 

Impact of Disruptive Technology. The IT space is being further complicated by the proliferation of disruptive technologies that are likely to cause fundamental changes in access to, and delivery of, healthcare.  Consider smart phone applications that harness the device’s capabilities—computing power, camera, audio, video, motion sensor, and GPS—in new ways to manage health and wellness.  There are fitness and weight control apps, exercise programs and progress monitoring apps, apps to monitor glucose for diabetics, heart rate and blood pressure apps, sleep hygiene apps, and stress reduction apps, just to name a few.

What happens when all the data such devices produce find their way into the medical record?  How will data be used productively and applied to benefit the patient?  How might that information be used to impact population health management?  How will providers cope with the influx of information and effectively deal with it? What apps are being developed daily that could come online virtually overnight and will totally disrupt how healthcare is monitored and delivered?

It’s somewhat terrifying to realize these rhetorical questions are already being answered.  Creative digital geniuses can use established technology systems to tinker freely with ideas and develop and market new applications with no investment other than their time.  Digital disruption is not only reducing the barriers of entry into the market, it is obliterating them.  Development of technological solutions that used to take years from development to market can now be done in days.  Large IT investments can be rendered obsolete overnight. 

Rapid Change – Challenges and Opportunities.  So how do leaders contend with the volatile environment of such a key component of the organization’s population health narrative?  First, management must obviously be prudent in making any large investment in IT.  Having the ability to meet immediate needs while remaining nimble enough to capitalize on new and emerging technology that dramatically enhances capabilities is a prudent planning strategy, as we noted above. 

Second, perhaps the challenge can, and should be, recognized as an opportunity.  Digital innovators are having a hard time maximizing the potential that comes from their efforts and creativity.  They need some connection to healthcare providers who can channel that power productively.  We often encounter digital developers who have a nifty new application, but who have no appreciation of how that application can really be used to impact the healthcare environment. 

Those well-meant efforts would be better channeled were there better communication between digital developers and healthcare leaders grappling with the complexity of population health efforts.  Grasping that opportunity, healthcare leaders may be able to dramatically cut their IT investment with technology solutions tailored to their specific needs.  Really strong solutions could be marketed to others, perhaps creating a whole new source of revenue for the healthcare organization.

The potential benefits from the use of digital technology are illustrated by a recent longitudinal study by the Veteran’s Health Administration (VHA).  The VHA has been using a wide variety of technology, including videophones, messaging devices, biometric devices, digital cameras, and telemonitoring devices in its home telehealth program since 2003. 

A retrospective analysis of VHA data from 2009 through 2012 found that VHA’s routine use of such digital technology has been successful in coordinating care and more efficiently managing patients with complex chronic conditions. For example, after 12 months of home telehealth (non-institutional care) the mean annual healthcare costs for VHA home telehealth patients fell 4%, while the corresponding costs in a matched cohort group increased 48%.

Without harnessing the power of technology, the reach of population health management will be severely limited, extending only so far as an individual physician’s working knowledge of his or her patients’ medical conditions and social circumstances.  Properly aligned with the clinical and organizational aspects, technology is the key to unlock the potential of population health management.


Next up:

A 10-Part Plan of Attack for Population Health

No Fooling: Mandatory Medicare Bundled Payments for Hip and Knee Replacements Start April 1

On November 16, the Centers for Medicare & Medicaid Services (CMS) released its 1000-page final rule implementing its Comprehensive Care for Joint Replacement payment model, or CCJR.   Beginning April 1, 2016 (three months later than the originally proposed start date of January 1), CMS will bundle payments for nearly all Part A and B services related to hip and knee replacement surgeries performed at hospitals located in 67 selected metropolitan statistical areas (MSAs).

Over much objection, CMS is moving forward with converting what is now a voluntary payment model—Bundled Payment for Care Improvement (BPCI)—into a regulatory mandate.  CMS anticipates saving $343 million—or 2.8% of the $12.299 billion it expects to spend on hip and knee replacements over the five-year course of the program. 

Back in July, when CMS introduced the proposed payment model, we summarized CCJR’s key provisions in a Q&A format.  We now have updated those answers (and added a few more) based on the final rule and related CMS commentary.   

What services are included and bundled for a CCJR episode of care?

A CCJR episode will start on the day a traditional Medicare beneficiary is admitted for hip or knee replacement surgery (limited to MS-DRGs 469 and 470), and will continue for 90 days following the beneficiary’s discharge from the hospital.  The episode includes all Part A and Part B services furnished to the beneficiary during this period with the exception of a specific list of services CMS has deemed clinically unrelated to these episodes.  CMS will update the list, found at 42 CFR 510.200(d), on an annual basis.

Which providers are subject to CCJR?

Any hospital located in one of the 67 selected MSAs that bills traditional Medicare for a hip or knee replacement surgery is subject to CCJR. (Maryland hospitals and other hospitals now participating in a risk-bearing phase of BPCI Model 2 or 4 for lower extremity joint replacements are excluded from CCJR.) 

CMS had proposed including 75 MSAs, but eliminated 8 of them because they no longer met the eligibility criteria.  Hospitals in the following MSAs can decide whether they dodged a bullet or missed out on an opportunity:  Las Vegas, NV; Richmond, VA; Virginia Beach, VA; Fort Collins, CO; Colorado Springs, CO; Evansville, IN; Medford, OR; and Rockford, IL.        

Hospitals in the 67 selected MSAs will bear the financial risk for the total cost of care furnished by all providers for the included episodes of care.  The hospital and these individual providers (e.g., physicians, long-term care hospitals, skilled nursing facilities (SNFs), home health agencies, ambulance services) will continue to submit, and CMS will continue to pay, claims for services furnished during a covered episode of care.   

On an annual basis, CMS will compare the actual total cost of care for all episodes provided at a hospital to that hospital’s predetermined episode target price.  If the actual cost is less than the target price, the hospital will receive a reconciliation payment equal to the difference, provided the hospital has met certain performance standards. 

If, however, the actual cost is more than the target price, the hospital will be required to pay the difference to CMS (with the exception of Year 1, as described further below), subject to a cap to protect hospitals from what CMS characterizes as “excessive risk.” 

Because a hospital already receives a flat amount for its services within the episode of care – its DRG payment – its opportunity/risk is, for the most part, based on the performance of other providers furnishing care during the episode.  CMS is incentivizing hospitals to assume the “captain-of-the-ship” role and aggressively manage the entire episode of care.   

How will CMS calculate the target pricing? 

CMS will calculate each hospital’s benchmark price annually based on 3 years of historical data updated every other year:   performance Years 1 and 2 will use historical CCJR episodes that started between January 1, 2012, and December 31, 2014; performance Years 3 and 4 will use historical episodes that started between January 1, 2014, and December 31, 2016; and performance Year 5 will use episodes that started between January 1, 2016, and December 31, 2018.

In Years 1 and 2, the formula will be based two-thirds on hospital-specific data and one-third on regional data.  (CMS will calculate cost data for 9 different geographic regions.) In Year 3, the formula flips: the benchmark price will be calculated weighting one-third of the price on hospital-specific data and two-thirds of the target price on regional data.  In Years 4 and 5, the benchmark price will be based exclusively on regional data.  The formula also makes certain adjustments for low-volume hospitals and high episode spending. 

The most significant difference between the proposed and final rules is the discount rate used to adjust the benchmark price to arrive at the target price.  Under the proposed rule, CMS would have set each hospital’s target price by applying a fixed, standard discount rate to the benchmark price to account for Medicare’s share of reduced expenditures. 

CMS had proposed a discount rate of 1.7% for hospitals that successfully submitted patient-reported outcomes data for at least 80% of eligible patients for that performance year.  Non-reporting hospitals would have been subject to a 2% discount rate.  Remember, the lower the target price, the harder it is to earn a reconciliation payment (or avoid a repayment liability). 

That would have been simple, but CMS opted for an alternative, composite quality score (CQS) methodology “to provide stronger incentives for more hospitals to improve quality.”  A hospital’s annual CQS will determine its discount rate (higher CQS = lower discount rate), meaning top-performing hospitals will have higher target prices than poor-performing hospitals.

CMS published 22 pages of supplemental information describing the manner in which the CQS will be calculated for each hospital for each year of the program.  (Trust us:  this publication is much easier to navigate than the 80+ pages devoted to the subject in the final rule.) 

The CQS will be based on two measures:  (1) hospital-level risk-standardized complication rate following elective primary total hip arthroplasty (THA) and/or total knee arthroplasty (TKA) (NQF #1550); and (2) Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) Survey measure (NQF #0166).  The relevant performance periods are as follows:

Highly simplified, a hospital’s CQS will be based on its performance percentile relative to the national distribution of all hospitals’ performance on the two measures, as well as the hospital’s year-to-year improvement on its scores.  Also, a hospital will have the opportunity to improve its CQS (i.e., earn extra credit) by voluntarily submitting to CMS patient-reported outcomes and risk-variable data associated with primary elective THA/TKA procedures.

Once the CQS has been calculated, CMS will use the following tables to determine the discount rate for purposes of calculating the reconciliation payment or repayment amount.  CMS then will communicate these target prices to each hospital prior to the beginning of the performance year.

Recognizing that many CCJR hospitals will need time to analyze data and establish relationships with episode providers, there will be no downside risk in Year 1 (April 1 to December 31, 2016).  Hospitals still will be eligible for reconciliation payments in Year 1 (and each year thereafter) if (1) the hospital has a positive net payment reconciliation amount (NPRA) (i.e.,  the actual adjusted  episode payments are less than  the episode target price; and (2) the hospital’s CQS is at least “acceptable.”   

Under the proposed rule, CMS only considered a hospital’s performance on quality measures to determine whether it was eligible for a reconciliation payment.  With the final rule, CMS now considers such performance in determining the dollar amount of a hospital’s reconciliation payment or repayment obligation.  A hospital that achieves a high quality score will owe less in repayment than if it was a poor performer. 

Also new in the final rule is a provision authorizing CMS to withhold or recover any reconciliation payment if the agency should determine the savings were realized through “inappropriate and systematic underdelivery of care.”





To what degree of financial risk is a hospital exposed?

Repayments are capped at 5% of the applicable target episode price in Year 2, 10% in Year 3, and 20% in Years 4 and 5.  (In the proposed rules, these percentages had been 10% in Year 2 and 20% thereafter).  For example, if a hospital’s target episode price was $10,000 and there were 100 episodes per year, the hospital’s potential liability would be limited to $50,000 in Year 2, $100,000 in Year 3, and $200,000 in Years 4 and 5.  A lower stop-loss limit applies to rural hospitals, sole community hospitals, Medicare- dependent hospitals, and rural referral centers.

On the other end of the spectrum, CMS has imposed the following limits on reconciliation payments:  5% of the applicable target episode price in Years 1 and 2, 10% in Year 3, and 20% in Years 4 and 5.     

What options are available to a CCJR hospital to manage this risk?


CMS intends to make reconciliation payments to, and require repayments from, hospitals only; the agency does not propose to hold other providers financially responsible.  Instead, CMS expects hospitals to engage other providers to manage these episodes of care efficiently.

Prior to the April 1 start date, CMS will provide CCJR hospitals, upon request, up to 3 years of retrospective claims data, including both summary and raw claims-level data and quarterly updates thereafter.   Hospitals will be required to sign an appropriate data use agreement to receive this data.  This data will help the hospital identify specific opportunities to partner with other providers to drive down the total cost of care. 

CMS encourages hospitals to enter into what it refers to as CCJR sharing arrangements with CCJR collaborators (including physicians and non-physician practitioners, skilled nursing facilities, long-term care hospitals, inpatient rehabilitation facilities, home health agencies, and outpatient therapy providers).  Under such a written contract, the CCJR collaborator would agree to participate in specific quality and efficiency initiatives relating to the episodes in exchange for “gainsharing payments,” i.e., the hospital’s agreement to share a portion of any reconciliation payment and/or a portion of the hospital’s internal cost savings generated through such initiatives. A CCJR collaborator also may agree to pay the hospital an “alignment payment,” i.e., a portion of any repayment the hospital owes to CMS.

Under the final rule, a hospital is required to develop and maintain written policies regarding its selection of CCJR collaborators, including quality-related criteria to evaluate potential candidates.  The hospital must maintain on its website a complete list of current and historical CCJR collaborators. 

The regulations include several specifications for CCJR gainsharing arrangements, including quality performance requirements, caps on gainsharing and alignment payments, the timing of such payments, and detailed recordkeeping requirements.   Also, CMS uses a narrow definition of internal cost savings for purposes of gainsharing payments.  Any such payments are limited to the hospital’s measurable, actual, and verifiable cost savings resulting from care redesign undertaken by the hospital in connection with the CCJR episodes.  

 What opportunities does a CCJR hospital have to pursue care redesign?

To afford CCJR hospitals greater flexibility in pursuing care redesign, CMS has exercised its statutory authority to vary specific payment rules as necessary to implement alternative payment models.  Specifically, CMS has approved the following:      

  1. A waiver of the requirement for a 3-day inpatient hospital stay prior to admission for a covered SNF stay under specific conditions detailed in the regulations.
  2. Allowing payment for telehealth services furnished to the patient in his or her home, regardless of whether the beneficiary resides in a rural or urban area.   
  3. Allowing payment for up to 9 home visits by licensed clinical staff for non-homebound beneficiaries (i.e., requiring only general supervision under the “incident to” rules).

Additionally, CMS and the Office of Inspector General (OIG) published a joint notice on November 16 regarding waiver of certain fraud and abuse laws in connection with CCJR.  The waivers are narrow, especially as compared to those afforded to participants in the Medicare Shared Savings Program.  They relate only to (1) distribution of gainsharing payments and payment of alignment payments under sharing arrangements; (2) distribution payments from a physician group practice to a practice collaboration agent; and (3) patient engagement incentives provided by participant hospitals to Medicare beneficiaries in episodes.  Each waiver has several specific requirements, all of which must be satisfied for a provider to enjoy its protections. 

How will CCJR impact Medicare beneficiaries?

CCJR hospitals must notify beneficiaries of the model’s requirements at the time of admission in the manner specified by CMS.  Hospitals also must require as a condition of any sharing arrangement that the collaborators notify beneficiaries of the existence of a sharing arrangement.  In the case of physicians, this notification must occur at the point of the decision to proceed to surgery, or, in the case of other collaborators, prior to the furnishing of the first joint-replacement-related service provided by the collaborator. Also, as part of discharge planning, CCJR hospitals must inform beneficiaries of all Medicare-participating PAC providers/suppliers in an area but may identify those providers/suppliers that the hospital considers to be preferred.

So now what?

For hospitals, orthopedic surgeons, and post-acute care providers in the selected 67 markets, now is the time to start unpacking the details of the CCJR program.  Hospital leaders should become educated regarding program requirements. These leaders, in turn, should invite potential CCJR collaborators into conversations regarding the program, thus beginning to build the trust relationships that will be key to success.   

Hospitals also should bring laser-beam focus to improving performance on CCJR’s two quality performance measures.  A hospital’s CQS, which is based on these measures, determines eligibility for any reconciliation payment and can vary the amount owing to or owed by the hospital by 1.5 percentage points. 

To prepare for CCJR’s launch in April 2016, providers should begin compiling and analyzing available data regarding CCJR episodes to identify potential cost savings opportunities.  Once CMS makes historical claims data available to individual hospitals, these opportunities will come into clearer focus.

PYA has extensive experience supporting providers participating in CCJR’s older sibling, BPCI, both with technical compliance and development and implementation of care redesign plans.  PYA can partner with your organization to develop and implement a successful CCJR strategy.

  • PYA offers interactive educational opportunities for leadership teams to understand the details of the CCJR program and its impact on the organization.
  • PYA’s performance improvement experts can identify and support implementation of strategies to improve key quality scores.
  • PYA can assist a hospital with developing and implementing processes to ensure full compliance with CCJR regulatory requirements.
  • PYA Analytics’ computational scientists have deep and wide experience extracting knowledge from CMS claims data, including opportunities for greater efficiency and cost savings.
  • Drawing on its extensive experience in the development and operation of clinically integrated networks and clinical co-management and gainsharing arrangements, PYA can facilitate communications between a hospital and potential CCJR collaboratives, and support development of mutual strategies for success.
  • PYA provides financial modeling to help an organization understand and respond to the potential financial impact of CCJR. 

For additional information, please contact David McMillan or Martie Ross at (800) 270-9629.  

What Is Population Health, Anyway? - Part III: Organizational Aspect

A Five-Part Series
Part III: Organizational Aspect

In our earlier blog entry, we posited that the term “population health” is rather meaningless unless stated in terms of how it is implemented, which involves the application of the clinical, organizational, and technical aspects of population health management. We previously examined the clinical aspect; now, we focus on the organizational aspect.   

To accomplish the herculean task that lies before core hospital/physician teams as integrators and their broader resource teams of community experts, organizational functionality and discipline are essential. If the goals of the “Triple Aim” are to be realized, the process to be undertaken must result in complete culture change, refocusing the entire enterprise on population health improvement.

Consider that the hospital has thrived on a fee-for-service payment system that relies on the hospital being filled to capacity with its medical staff optimizing the use of its beds, ORs, laboratory, and imaging capabilities. The medical staff members have functioned in silos of specialties, increasing their revenues by the number of times they tested or touched the patient. Both the hospital and its physician staff have been motivated by helping patients with each isolated healthcare issue, a specific episode of illness or injury. Neither has been incentivized to collaborate to achieve better health status outcomes more efficiently.

Now consider that both the hospital and physician staff will be rewarded in the future if they demonstrate patient satisfaction scores superior to their competitors and health outcomes that actually keep people out of the hospital’s expensive confines. In this zero-sum reimbursement environment, those who fail to compare favorably will be penalized financially. The funds realized from the penalties assessed will be used to reward those achieving the superior results. 

In addition, metrics have been developed and the analytics capability established that will allow comparisons to be made and published. The results will become public knowledge (read: transparency). As these new payment and reporting models take hold and a grade card becomes public, the very future and continued success of the hospital and its co-dependent medical staff will only be realized through their unified attack on the detriments to population health.

The successful hospital and medical staff must collaboratively develop the systems and processes to meet this challenge. An environment of trust must be created within which both can confront their common challenges. The process also must involve the expanded group of community experts and stakeholders in some meaningful fashion.

The Organizational Hub. The hospital has the requisite organizational and administrative expertise to lead change. It is the most likely candidate to take the lead in establishing the structure and process necessary to develop a population health action plan. In taking the initiative, however, the hospital must solicit and honestly consider the input of its physician staff. The structure in which to house the planning process can be called the “Organizational Hub” for healthcare reform efforts in the community. 

The structure will vary in each Organizational Hub, but the Hub must, at its core, provide an environment of trust which encourages creativity and sound decision making.  It must solicit and honor ideas and opinions from all participants.  The structure also must be built for growth in order to include the involvement of community resources and be capable of morphing into an operational structure to implement the plans which are cooperatively developed.

An example of this integrative process was successfully undertaken by Flagler Hospital in St. Augustine, Florida. When challenged by community employers and commercial payers to provide better value in delivered care, the hospital board invited the members of the medical staff to help design a structure and process that would meet the challenge. The hospital board actually asked the medical staff to propose its desired organizational structure, one that would engage physician involvement.

When presented with a carefully developed and well-thought-out proposal, the board accepted and launched – with the medical staff – a separate physician/hospital-owned organization which was designed to harness the respective capabilities of both parties to achieve their common purpose. (See our White Paper, “Zero to CIN in Less Than Nine Months,” which describes the Flagler story.)

As tertiary and quaternary hospitals work to change their culture and orient toward population health management, they also will want to secure relationships with their cohort of referring hospitals, many of which are struggling with the same pressures. Engaging those referring hospitals in the process of population health management will solidify the referral relationship and aid those smaller institutions in their efforts. The formation of collaborative networks designed to engage providers regionally to impact population health is improving patient care across the continuum from rural to quaternary and bringing urban hospital capabilities cost-effectively to the rural bedside.

The University of Missouri Hospital, an academic medical center, has formed such a regional collaborative with five rural community hospitals known as the Health Network of Missouri (HNM). Through a disciplined planning process, the hospitals created a co-owned governing entity. The governing entity provided each of the hospitals, regardless of size, equal participation in the process of creating a clinically integrated network of hospital and physician resources aimed at improving the population health of the residents of Central Missouri. 

There are many other examples of structures created to promote the concept of independence through interdependence. Hospitals are able to do the hard work of converting their cultures from volume-focused to value-focused. Each has recognized the need for physician involvement in the process. Each has embraced the Triple Aim as a goal. Each believes that change is possible when trust is given and received in return, collaboration is rewarded, respect for another’s unique capabilities is honored, and the synergy of cooperation is allowed to flourish.

The Community Hub of Wellness and Health. The hospital or health system, in harmony with its medical staff, will naturally serve in the role as the Community Hub of Wellness and Health (CHWH). As financial incentives change to encourage prevention, wellness, and consideration of the social determinants of health, medical care will flow from the CHWH into the community. In this model, the hospital naturally will be relied upon as the primary coordinator of community care toward the end of improving population health.

As a result of the awakening to the importance of population health management, remarkable change is starting to emerge. Take, for instance, a Kaiser program that serves as a great example of a CHWH. It brings farmers’ markets into 30 hospital facilities in four states. 

Dr. Preston Maring introduced the Friday Fresh Farmers’ Market at Kaiser Permanente Oakland Medical Center in May 2003. Since then, the market has grown to include a system that supplies locally grown fruits and vegetables for 23 Kaiser hospital kitchens, in addition to supplying the weekly farmers’ markets in those hospital service areas. Dr. Maring also has helped establish a seasonal market at GM-Toyota’s new United Motor Manufacturing Inc., plant in Fremont, California, where 5,000 people work. 

Kaiser also worked with Sustainable Economic Enterprises of Los Angeles to open the Watts Healthy Farmers’ Market. That market provides not only farm fresh food options, but also health screenings, nutrition education, and other health promotion activities for the community. Dr. Maring noted, “Markets change the community. They provide good food, fun, and a meeting place.”[1] Such programs also create new, trusting relationships among the hospitals, farmers, food distributors, and other employers and can only increase the standing of the hospital in the community, truly establishing it as the Community’s Hub of Wellness and Health.

The Community Health Needs Assessment. A comprehensive Community Health Needs Assessment (CHNA) can serve as the perfect launching pad for a population health management effort. Bon Secours Baltimore Health System conducted such an assessment over the period of 2009-2012 that included meetings, interviews, community summits, and literature studies. It engaged community members with public health knowledge, the broad interests of the communities it served, as well as individuals with special knowledge of the medically underserved, low-income, and vulnerable populations, and people with chronic diseases.

Bon Secours’ assessment ultimately determined that to address the community’s most significant health needs, it needed to develop an action plan which:

  • Helped make the Southwest Baltimore community-of-focus a place where residents could live long, satisfying lives by being proactive about their health and wellness, understand the importance of healthful eating, and have access to healthful foods in a variety of locations and outlets, including the hospital.
  • Made the community a place where residents were ready to work, were self-sufficient, and had access to jobs that enabled them to support themselves and their families.
  • Helped the community to become more environmentally friendly, more lush with nature and green open spaces, lead-free, and a place with fresh air to breathe and safe water to drink.
  • Developed a coalition of senior leaders from the organizations which comprised the community’s health safety net.
  • Focused on primary care engagement, expanded primary care capacity, and prepared for healthcare payment and delivery transformation.

Launching this population health management plan-of-action not only has begun improving the lives of the patients served by Bon Secours, but it has cemented the hospital as an integral partner in securing the future of the community it serves. It is thereby securing its own future.

Engaging clinicians and organizing for change are the first two aspects of population health management and improvement which inform the understanding of population health as a concept. Next up, we will discuss the technical aspect of population health.

Next Up:

The Technical Aspect of Population Health

A 10-Part Plan of Attack for Population Health

[1]               M. MacVean, Kaiser Permanente Farmers Markets Put Nutrition Within Reach, Los Angeles Times (May 20, 2009), available at http://www.latimes.com/food/la-fo-kaiser20-2009may20-story.html.

What Is Population Health, Anyway? - Part II: The Clinical Aspect

A Five-Part Series
Part II:  The Clinical Aspect

In our earlier blog entry, we posited that the term “population health” is rather meaningless unless stated in terms of how it is implemented, which involves the application of the clinical, organizational, and technical aspects of population health management.  In this blog, we focus on the first of those three aspects.

If the key to achieving the “Triple Aim” is to address the social determinants of health for a defined population, as some have suggested, it is the providers on the front line who must create and deploy a plan of action.  Hospitals are the logical focal point of healthcare in a community, and a hospital’s medical staff is on the front line of interaction with the individual patients who comprise the defined population.  These hospital/physician teams logically become the “integrators” Dr. Don Berwick suggested must accept responsibility for organizing efforts to accomplish the Triple Aim.

Obviously, a new and intense level of cooperation is demanded of this team of administrators and providers.  In the past, hospitals and their physician staffs were competing for the same healthcare dollars, but now collaboration to achieve efficiencies is demanded.  Cuts in hospital reimbursement can only be accommodated with the help of physicians who work with hospital administration to find ways to reduce costs and maximize the effectiveness of hospitalization.

Physicians need hospitals, and vice versa.  If these providers are going to have any impact on the social determinants of health, which we maintain they must, then other organizations and entities in the community serving the defined population must be engaged as well.  Those contributing entities naturally will look to the hospital/physician organization as the integrator - the Organizational Hub - to lead a community discussion and issue a call-to-action focused on population health improvement.

Physician Engagement.  There are many challenges to achieving the level of cooperation that is demanded.  Certainly, physicians are essential to the process of shifting the focus of healthcare delivery from the existing episodic sick-care model to a system yielding value.  But physicians often are the ones who are the most perplexed, depressed, overwhelmed, threatened, and downright angry about the direction healthcare delivery is headed.  While physicians may, in their hearts, understand the need for change and concur with the ultimate goal, the process of getting there has many of them totally confused and defeated.  Unfortunately, they don’t necessarily see the hospital as a natural ally.

One of the first steps necessary for hospitals to engage physicians is to repair any broken trust that may have arisen between the hospital and its medical staff.  Such schisms are common.  They must be confronted directly and reconciliation achieved before the hospital/physician Organizational Hub can provide any sort of meaningful leadership in the community to address the challenges of population health and its management.  

Secondly, hospitals must address the challenge of sustaining physicians emotionally and financially while engaging them in the process of change.   Emotional stability flows from having the ability to control one’s environment, and it is this very sense of loss of control that has physicians so out of sorts. 

When we balance the enormous need to reinvent clinical processes with physicians’ need to gain control of their environment, the obvious answer for hospitals is to invite the physicians into a structured process that examines everything from clinical protocol to hospital procedures and business practices that are refocused on Triple Aim objectives.  Physicians will engage if their ideas and opinions are valued.

The efficiency and effectiveness of clinical processes are at the heart of creating value.  Only physicians can effectively drive the development and deployment of the most efficacious treatment protocol.  Only physicians have the prestige and the opportunity to meaningfully engage patients in the process of managing their own health.  Only physicians can meaningfully engage their peers in monitoring providers’ adherence to protocol and manage the efficiency with which care is delivered. 

Physician Leadership.  Identifying effective physician leadership is key to establishing a workable partnership between the hospital and its medical staff.  Many healthcare organizations seeking to implement effective population health management strategies are calling upon a new C-suite leader, the Chief Population Health Officer (CPHO), to lead the Organizational Hub’s efforts.  This relatively new position is often a physician executive who reports directly to the hospital CEO.   He or she is charged with developing and implementing the Hub’s population health management strategy. 

The CPHO job description includes responsibility for complex case management; overseeing disease management programs; implementing health risk assessments; devising wellness and lifestyle management strategies; developing health education programs; monitoring population health indicators such as patient activation, patient satisfaction, quality of life, actuarial analysis of risk evaluation methodologies; and overseeing managed care contracting. 

Physicians have to be at the table when clinically integrated processes are developed, and they must accept the invitation to participate lest they have processes foisted upon them.  It is not reasonable to expect every physician to participate actively in the role of planner and administrator of new clinical processes.  Each physician, however, must at least accept responsibility for becoming aware of the dialogue and monitoring the change that is occurring around him or her. 

Expanding the Team.  As physicians and hospital leaders begin their collaborative efforts, they also must realize that they are part of a much larger, very diverse team that is required to achieve improved population health.  Access to quality medical treatment accounted for only 10% of a person’s health status.  Behavioral choices such as diet, physical activity, and substance abuse; social circumstances such as education, employment, housing, crime exposure, and social cohesion; genetics; and environmental conditions all impact population health status far more profoundly.

It has been argued that one’s zip code may be more important to health and wellness than one’s genetic code.  This concept is the underpinning of a new discipline known as healthography. 

The Robert Woods Johnson Foundation has created city maps which highlight the enormous disparity in the status of nearby neighbors.  For instance, babies born in Washington, D.C., separated by a few metro stops, may experience as much as a 7-year difference in life expectancy.   Newborns in different neighborhoods in Kansas City, Missouri, can have a 14-year difference in life expectancy.   Babies delivered in different New Orleans locations can be expected to show a 25-year difference in life expectancy.

To impact all these factors and improve population health status, the core team of physician and hospital leadership will have to involve a variety of other community stakeholders:  therapists, behavioral health professionals, social workers, community healthcare organizations, educators, social service agencies, urban planners, law enforcement agencies, politicians, the judicial system, the faith community, restaurants, gyms, and retailers.

Improvement in population health will require engagement of all the social and medical systems that impact the quality of patients’ lives.   It will have to consider the impact of healthography and determine the causes of the dramatic disparities it illustrates. The hospital’s CPHO logically should serve as the catalyst for community engagement and be tasked to develop meaningful relationships with community partners that traditionally have been ignored by healthcare leaders.

Finally, and perhaps most importantly, the expanded team of providers and community stakeholders must devise ways to engage the individual patients who comprise the population served to pursue improving their own personal health and healthy lifestyles.  That may be the biggest challenge of all. 

Patients have almost been trained to live in ignorance of the impact their lifestyle choices have on their health.  Often, they live recklessly and expect simply to have health problems “fixed.”  Environmental influences such as fast food ads, the size of soft drink cups, food portions served in restaurants, the tolerance of tobacco and drug use, movies and advertising that portray risky lifestyles, and the impact of poverty create strong headwinds of social mores that must be overcome to successfully achieve gains in population health.  Patients need to know they have responsibility in this effort, and they must be encouraged to accept that responsibility. 

When hospitals, their medical staffs, community partners, and stakeholders are brought into alliance to pursue population health improvement, the definition of population health will begin to crystalize.  With sharpened focus, terminology will cease to be an obstacle to defining strategic objectives and developing realistic tactics that harness the power of providers to measurably improve the health status of the defined population they are serving.

Unfortunately, crystalized vision and unified effort are squandered without an effective organization to guide and direct the army of stakeholders required to effect change in a population’s health status.  Next up, we will discuss the organizational aspects of population health as we continue exploring this elusive concept.

Next Up: 

The Organizational Aspect of Population Health

The Technical Aspect of Population Health

A 10-Part Plan of Attack for Population Health

Top 10 Provisions in the 2016 Medicare Physician Fee Schedule Final Rule

On October 30, 2015, the Centers for Medicare & Medicaid Services (CMS) released the 2016 Medicare Physician Fee Schedule Final Rule (Final Rule).  Weighing in at 1,358 pages, the Final Rule covers a wide range of subjects, including payment methodologies, advance care planning, and physician value-based purchasing programs.  The Final Rule will be published in the Federal Register on November 16. 

After wading through the new regulations, here’s our Top Ten list of the Final Rule’s most impactful provisions (not necessarily in order): 

1.         The Conversion Factor – One-Quarter Percent Payment Reduction

Let’s start with the bottom line: In 2016, payments under the Medicare Physician Fee Schedule (MPFS) will be 0.29% less than 2015 payments.  If you want to know the sordid details, read the next five paragraphs. Otherwise, skip down to No. 2.

Medicare payment for a specific service under the Medicare Physician Fee Schedule (MPFS) is determined by multiplying the assigned relative value unit (RVU) for the code assigned to that service by the then-applicable conversion factor.  For the second half of 2015, the conversion factor is $35.9335.  Thus, the payment for a code assigned 1.5 RVUs would be $53.90. 

The Medicare Access and CHIP Reauthorization Act of 2015, or MACRA, repealed the sustainable growth rate formula previously used to calculate the annual conversion factor.  In its place, MACRA provided for a 0.5% increase in MPFS rates for 2016.  Thus, one would assume the 2016 conversion factor would be $37.7302, meaning the payment for a code assigned 1.5 RVUs would increase to $56.60.

Not so fast.  In the Protecting Access to Medicare Act of 2014, Congress set an annual target for adjustments to misvalued codes equal to 0.5% of estimated MPFS expenditures each year.  (To clarify:  a code is misvalued if the assigned RVU is greater than the actual work and/or resources involved in performing the service, meaning the payment is higher than it should be.  Once the RVU is adjusted appropriately, the payment is reduced accordingly.) 

Then, in the Achieving a Better Life Experience Act of 2014 (ABLE), Congress increased the target to 1.0% for 2016.  Also, Congress required that if the estimated net expenditure reductions from adjustments to misvalued codes are less than the 1.0% target, the conversion factor must be reduced by the percentage difference between the 1.0% target and the actual estimated reductions.  

In the Final Rule, CMS made adjustments to misvalued codes that will result in a net reduction in expenditures of only 0.23%.  (Some of the key adjustments are discussed below.)  Thus, under ABLE, the 2016 conversion factor must be reduced by 0.77%.  Coupled with the required -0.02% RVU budget neutrality adjustment, that means the 2016 conversion factor will be $35.8279, about 0.29% less than the 2015 conversion factor. 

2.         Advance Care Planning – Third Time’s the Charm

Call it funding for death panels or whatever else you please, but beginning January 1, 2016, Medicare finally will pay physicians and non-physician practitioners for time spent providing face-to-face advance care planning (ACP).

In the Final Rule, CMS provided the following directives on providing and billing for ACP, while also promising to issue further sub-regulatory guidance: 

  • There are no specific performance standards, special training, or quality measures a provider must satisfy to bill for ACP.
  • ACP may be furnished and billed separately on the same day as an evaluation and management (E/M) visit.
  • ACP is subject to cost-sharing requirements, unless furnished in conjunction with the Welcome to Medicare visit or an annual wellness visit.
  • Presently, ACP is not reimbursable if furnished via telehealth.
  • ACP may be furnished “incident-to,” subject to direct supervision.
  • ACP will be a stand-alone billable visit in a rural health clinic (RHC) or Federally Qualified Health Center (FQHC), when furnished by an RHC or FQHC practitioner and all other program requirements are met. If furnished on the same day as another billable visit at an RHC or FQHC, only one visit will be paid.

3.   Improving Payment Accuracy for Primary Care and Care Management Services – Or Not

In the proposed rule published last July, under the heading Improving Payment Accuracy for Primary Care and Care Management Services, CMS requested comment on (1) how to simplify the rules for providing and billing chronic care management (CCM), (2) whether current reimbursement for CCM is adequate for the work involved, (3) potential new E/M add-on codes for professional care management services, and (4) potential new codes for collaborative care. 

In the Final Rule, CMS thanked the many individuals and organizations that submitted comments, but deferred taking any action on any of these four items.  CMS’ failure to address these matters is particularly troubling in light of the results of the National Chronic Care Management Survey 2015, which show many providers are hesitant to pursue CCM due to compliance concerns and inadequate reimbursement.   

4.         RHC and FQHC Payments for Chronic Care Management – Yes, But…

Beginning January 1, 2016, RHCs and FQHCs will be paid at the MPFS national average non-facility payment rate for CCM (as opposed to the all-inclusive rate for RHCs or the FHQC PPS rate).  An RHC or FQHC must satisfy the same requirements as other providers to bill for CCM, including written patient consent and use of a certified electronic health record.

However, CMS refused to vary the supervision requirements for RHCs and FQHCs furnishing CCM.  Thus, the clinical staff providing the non-face-to-face care management services must be directly supervised by a physician or non-physician practitioner (i.e., physically present in the same suite of offices when the service is provided).  For other providers, only general supervision is required (i.e., no physical presence requirement).  CMS promised to re-visit this issue in later rulemaking if the direct supervision requirement becomes an obstacle to RHCs and FQHCs furnishing CCM. 

5.         Billing for “Incident-to” Services - Supervising Physician Only

With some revisions to the specific language, CMS has finalized its proposal to amend the incident-to regulations to state explicitly that only the physician or other practitioner who directly supervises the auxiliary personnel who provide the incident-to services may bill Medicare for the incident-to services.  CMS is not requiring the supervising practitioner be the same individual who orders or refers the beneficiary for the services, or who initiates treatment. Rather, CMS is requiring that under circumstances where the supervising practitioner is not the same as the referring, ordering, or treating practitioner, only the supervising practitioner may bill Medicare for the incident-to service.

What CMS describes as a “clarification” may prove particularly problematic with respect to CCM.  Rather than hiring additional staff to provide the non-face-to-face care management services, many providers have contracted with third parties that furnish centralized care management services.  These arrangements often are referred to as “call centers.”  Generally, call center staff are supervised by a single medical director.  Now, with CMS’ “clarification,” these arrangements will have to be re-visited, to ensure the billing practitioner and the supervising practitioner are one and the same.

CCM is not the only thing that will be impacted by this “clarification.”  Many services – including E/M services and physical and occupational therapy – are provided and billed incident-to.  Providers should review these arrangements and make necessary modifications to comply with the supervisor=billing provider rule.  

6.         Physician Quality Reporting System – One Last Time

CMS has finalized the requirements for the 2018 PQRS payment adjustments.  This includes the 2016 reporting requirements on which the 2018 adjustments will be based.  Because MACRA repeals the PQRS payment adjustment effective December 31, 2018, the last year for PQRS reporting will be 2016.  CMS is now working on new reporting requirements for the Merit-Based Incentive Payment System, or MIPS, which are scheduled to be in place by 2017.

For 2018, CMS has established the same criteria for satisfactory reporting that was established for the 2017 PQRS payment adjustment.  Generally, this requires reporting on nine measures covering three National Quality Strategy domains. The agency did make changes to the PQRS measure set to add measures where gaps exist, as well as to eliminate measures that are topped out, duplicative, or are being replaced with a more robust measure. For 2016, there will be 281 measures in the PQRS measure set and 18 measures in the GPRO Web Interface.  CMS also has added a reporting option that will allow group practices to report quality measure data using a Qualified Clinical Data Registry.

7.         Physician Value-Based Payment Modifier – Also One Last Time

The Physician Value-Based Payment Modifier adjusts a group practice’s or solo practitioner’s  MPFS payments during a given year based on performance on specific quality and efficiency measures two years earlier.  Along with the PQRS payment adjustment, the Value Modifier will be replaced by MIPS effective January 1, 2019.  In the Final Rule, CMS made several refinements to the Value Modifier impacting the 2016 performance year (on which 2018 payment adjustments will be based.)   

In the Final Rule, CMS adopted the following key provisions regarding 2018 payment adjustments:

  • The Value Modifier will, for the first time, apply to payments for services furnished by physician assistants, nurse practitioners, clinical nurse specialists, and certified registered nurse anesthetists (collectively, non-physician practitioners, or NPPs) in group practices, and to those providers who are solo practitioners. 
  • All group practices and solo practitioners will be subject to upward, neutral, or downward adjustments derived under the Value Modifier quality-tiering methodology, except group practices comprised solely of NPPs.  NPPs who are solo practitioners will be held harmless from downward adjustments. 
  • The maximum upward adjustment under the quality-tiering methodology shall be +4.0 times an adjustment factor (to be determined after the conclusion of the performance period) for groups with ten or more professionals, and +2.0 times an adjustment factor for all other groups and solo practitioners. 
  • The maximum downward adjustment for 2018 shall be -4.0% for groups with ten or more professionals and -2.0% for all other groups and solo practitioners (with the exception of NPP-only groups and NPPs who are solo practitioners). 

8.         Physician Compare – More Data for Comparison

In 2016, CMS will continue to expand public reporting on performance measures that (1) are statistically accurate, valid, reliable, and comparable, and (2) resonate with consumers.   In addition to data previously made available, CMS will expand Physician Compare to include the following:

  • An indicator on profile pages for individual eligible professionals (EPs) who satisfactorily report the new PQRS Cardiovascular Prevention measures group in support of the Million Hearts initiative.
  • Reporting on group-level qualified clinical data registry measures.
  • In the downloadable database, the value modifier tiers for cost and quality, noting whether the group practice or EP is high, low, or neutral on cost and quality; a notation of the payment adjustment received based on the cost and quality tiers; and an indication of whether the individual EP or group practice was eligible to, but did not report, quality measures to CMS.
  • In the downloadable database, utilization data for individual EPs.

9.         Stark Law, Simplified

The Final Rule establishes two new exceptions to the Stark Law’s prohibition on a physician making referrals for designated health services to an entity with which the physician or an immediate family member has a financial relationship.  The first new exception permits payments to physicians by hospitals, FQHCs, and RHCs for the purpose of compensating nonphysician practitioners under certain conditions.  The second exception permits timeshare arrangements for the use of office space, equipment, personnel, items, supplies, and other services.

Also, CMS clarified certain regulatory terminology and requirements for existing Stark exceptions. The most impactful changes include the following:

  • With respect to physician-owned hospitals, changing the calculation of physician ownership percentage to include both referring and non-referring physicians (effective January 1, 2017) and clarifying the requirements for ownership disclosures on websites and in advertising.
  • Permitting the writing required in many Stark exceptions to be a collection of documents, not just a single formal contract.
  • Clarifying that the term of a lease or personal service arrangement need not be in writing if the arrangement lasts at least one year and is otherwise compliant.
  • Allowing expired leasing and personal services arrangements to continue indefinitely on the same terms if otherwise compliant.
  • Affording a 90-day grace period to obtain missing signatures regardless of whether the failure to secure the signature was inadvertent.
  • Requiring that compensation paid to a physician organization cannot take into account the referrals of any physician in the physician organization, not just a physician who stands in the shoes of the physician organization.
  • Clarifying that a financial relationship does not exist when a physician provides services to hospital patients in the hospital if both the hospital and the physician bill independently for their respective services.

10.       Telehealth – Still Moving Slowly

Each year for the last several years, CMS has added a handful of new CPT codes to the list of services covered if furnished via telehealth. For 2016, CMS has added the following: 

  • 99356 and 99357 for prolonged inpatient or observation care.
  • 90963 through 90966 for services related to home dialysis for patients with end-stage renal disease.

CMS also has added certified registered nurse anesthetists to the list of qualified telehealth providers for healthcare services.  Beyond these minor changes, Medicare reimbursement for telehealth services remains strictly limited by statutory requirements.

We now are preparing two webinars, which will be available before Thanksgiving, offering a deeper dive into these key provisions in the Final Rule. Stay tuned for more information on how to access these on-demand webinars.    

What Is Population Health, Anyway? - Part I: From a Theoretical to an Operational Definition

A Five-Part Series
Part I:  From a Theoretical to an Operational Definition

Last year, everyone in healthcare was talking about clinical integration. This year’s buzzword is population health. In our previously published Glossary of Terms for Payment and Delivery System Reform we offered a simplistic definition of this term:

This academic discipline, developed in Canada, studies why people who live in different locations experience different degrees of health and wellness.  Research in this field focuses on social determinants of health:  education, wealth, geographic location, and class.  Many who study population health believe your zip code is more important than your genetic code in predicting health outcomes.

We now realize that describing population health as an academic discipline misses the mark.  Instead, to provide any real meaning, we must move from a theoretical to an operational definition of population health.

To this end, population health needs to be put into the context of how to manage it, i.e., what must occur operationally to achieve improved health status of the defined population.

Population health management is generally regarded as a four-step process:

  1. Identifying those high-risk and rising-risk individuals in the defined population; i.e., risk stratifying the population.
  2. Defining and implementing clinical practice guidelines and care management programs among the provider team.
  3. Engaging identified individuals using these guidelines and services.
  4. Ensuring healthy individuals receive regular preventive services and wellness resources.

This implies population health has three operational aspects that must be addressed: a clinical aspect, an organizational aspect, and a technical aspect.  Over the next two weeks, we will examine each of these aspects in a separate blog entry.  The final entry in this five-part series will be our 10-step plan of attack for population health.    

In our nation’s historical fee-for-service-based healthcare economy, providers interact with patients only when they present to the physician’s office or to the hospital or its emergency room; i.e., sick care.  To impact population health, providers must proactively interact with patients to promote healthy lifestyles; i.e., wellness care.

In pursuit of population health, our healthcare system must shift from an event focus to a process focus.  It must address the health of the whole person and all of the social, environmental, and hereditary factors that impact health.  Providers must learn and deploy methods of treatment that achieve efficiency and improve the overall health status of the population for which they are responsible.  In addition, the individuals comprising the population itself must be engaged in the process and take responsibility for their health and well-being more directly and personally, while guided by the providers.

We now have set our sights on the Triple Aim: the simultaneous pursuit of improving the experience of care, improving the health of populations, and reducing per capita costs.  When he first spoke of this new direction for healthcare, Dr. Don Berwick with the Institute for Healthcare Improvement (and later acting CMS Administrator) identified a corresponding three-part foundation from which to reach for the Triple Aim:   (1) the enrollment of an identified population, (2) a commitment to universality for its members, and (3) the existence of an organization - an “integrator” - that accepts responsibility for that identified population.  As envisioned by Dr. Berwick, the integrator’s role would include partnership with individuals and families, redesign of primary care, population health management, financial management, and macro system integration.[1]

As today’s healthcare organizations strive to become integrators, they must appreciate how all aspects of their current operations – clinical, organizational, and technical – must change to meet the demands of population health.   Through this transition, these organizations will move from healthcare providers to population health champions.

Next Up:

The Clinical Aspect of Population Health

The Organizational Aspect of Population Health

The Technical Aspect of Population Health

A 10-Part Plan of Attack for Population Health

[1]   Berwick, Donald M., Thomas W. Nolan, and John Whittington. The Triple Aim: Care, Health and Cost, HEALTH AFFAIRS 27, no. 3 (2008): 759-769.


Meeting the Challenge of Valuing Emerging Payment Models

Earlier this week, I attended the first Health Care Payment Learning and Action Network (LAN) Summit in Washington, DC.  The LAN was established earlier this year as a collaborative network of public and private stakeholders, including health plans, providers, patients, employers, consumers, states, federal agencies, and other partners to coordinate the development and implementation of alternative payment models (APMs).

The 500-plus attendees were introduced to, and asked to comment on, the draft APM Framework developed by the LAN’s APM Framework and Progress Tracking Work Group. Once finalized, the APM Framework will provide a standardized and nationally accepted method to measure progress in the adoption of APMs.  The first publicly released draft of the APM Framework is available here.  The Work Group will accept public comments on the draft document through November 20, 2015. 

The draft APM Framework places payment models in four categories:  (1) fee-for-service with no link to quality; (2) fee-for-service with link to quality; (3) APMs built on fee-for-service architecture; and (4) population-based payments.   Categories 2 through 4 are further divided into subcategories, with each moving further away from volume-based reimbursement.

Summit attendees offered both praise for, and constructive criticism of, the draft APM Framework.  For example, Category 2A is identified as “payments for infrastructure and operations” and includes “foundational spending to improve care delivery, such as HIT, telehealth, and care coordination fees.”   While many believed payers should provide fee-for-service reimbursement to fund infrastructure, others argued providers should be responsible for making investments necessary to position themselves for risk-based contracting.

One point on which there appeared to be universal agreement is that we are in the early stages of defining and measuring progress in implementing various APMs.  Payers and providers still are figuring out the proper incentives to drive improved patient experience of care, better outcomes, and enhanced efficiency.   

Herein lies a significant challenge for providers wanting to pursue APMs:  how does one determine whether payments made to physicians under these new models are consistent with fair market value for the work they perform?  For example, what limits are imposed on a health system that is participating in a shared savings or bundled payment arrangement and that wants to make distributions to employed physicians to incentivize participation in quality and efficiency initiatives?  How should such distributions be treated in evaluating a physician’s total compensation? 

In most cases, valuators use the market approach to determine the fair market value of physician services and thus evaluate the appropriateness of the physician’s compensation.   This involves analyzing available market data to determine what is actually being paid in the marketplace for comparable services.  The data is gathered and analyzed, and a comparison is made between the facts of the subject being valued and the facts of the particular market from which the information is obtained.

Presently, the available market data reflects productivity-based physician compensation, in most cases measured by work relative value units, or wRVUs.  Under an APM, however, a physician’s compensation is tied to more than productivity; a physician is incentivized to provide high-quality services in an efficient manner. 

Because APMs are not well-defined, it is difficult – if not impossible – to identify comparable market data against which to evaluate a specific physician distribution formula.  But to make APMs work, providers must have some degree of comfort that physician payments will withstand scrutiny under the fraud and abuse laws. 

For participants in certain Medicare programs, including the Medicare Shared Savings Program and Bundled Payments for Care Improvement, there are regulatory waivers of the fraud and abuse laws insulating certain physician payments from legal challenge.  However, those providers not participating in these programs (and, in some cases, even participating providers) do not enjoy these protections. 

For several months, PYA’s team of experts in valuation and APMs have been working together to address these challenges by developing a comprehensive framework for valuation in the context of APMs.  Now having worked with numerous provider organizations to address real-world challenges in this area, we are confident in providing meaningful and practical valuation tools for rapidly emerging payment models.

We now are preparing a comprehensive white paper regarding APM valuation, due out by the end of this year.  We look forward to sharing our analysis with you and learning together as our healthcare system moves through the transition from volume- to value-based reimbursement.


Haunted by ICD-10 Unspecified Codes?

It’s “on”—the transition to ICD-10 began with the October 1 implementation date.  Since then, PYA’s ICD-10 Rapid Response and Recovery Team™ has been busy fielding questions, identifying potential problems, and resolving critical ICD-10 issues.  As the healthcare industry continues to navigate these uncertain waters, our ICD-10 Rapid Response and Recovery Team™ will be providing insight on troubling topics and trending issues, and sharing best practices for tackling prevalent concerns.  In today’s blog, we’ll focus on one of the early trending issues — the denial of unspecified codes.  


In addition to rejecting claims with invalid ICD-10 codes, payers (such as Georgia Medicaid) are denying claims submitted with certain unspecified codes (find a list of the unspecified codes that Georgia Medicaid intends to deny here).  According to Georgia Medicaid’s FAQ released September 9, 2015, it will deny claims submitted with NOS (“not otherwise specified”), while accepting claims submitted with NEC (“not elsewhere classified”).  Although NOS and NEC might seem like similar coding conventions, their meanings are very different. Knowing the differences between the two coding conventions could minimize your organization’s denied claims and reimbursement delays. NOS indicates that the clinical documentation is too vague and lacks enough information to designate a specific code.  Utilizing this code will result in a denied claim.  On the other hand, NEC denotes a diagnosis in which the clinical documentation is sufficient, but there is not an appropriate or existing ICD-10 code to select.  NEC codes will be approved as long as the clinical documentation supports the code selected.     

Although you should try to code as specifically as possible, there are times when an unspecified code is appropriate, according to CMS:  

If a definitive diagnosis has not been established by the end of the encounter, it is appropriate to report codes for sign(s) and/or symptom(s) in lieu of a definitive diagnosis. When sufficient clinical information is not known or available about a particular health condition to assign a more specific code, it is acceptable to report the appropriate unspecified code (for example, a diagnosis of pneumonia has been determined but the specific type has not been determined). In fact, you should report unspecified codes when such codes most accurately reflect what is known about the patient’s condition at the time of that particular encounter. It is inappropriate to select a specific code that is not supported by the medical record documentation or to conduct medically unnecessary diagnostic testing to determine a more specific code.

 PYA Response

Although using an unspecified code may be appropriate in some cases, it should only be assigned when the documentation and the clinical presentation does not reflect a higher level of specificity.  Utilizing unspecified codes not only increases the number of potential denials, but can also impact reimbursement if the documentation and the coding are deficient. PYA recommends providers avoid billing an unspecified code.  Providers should document all aspects of a diagnosis which are known, as well as unknown, to support the diagnosis code chosen.  The appeal process will likely be easier if providers document what is unknown to support the use of an unspecified code.

Are you haunted by ICD-10 issues this month? Be the first to know as issues are identified. Keep an eye on our blog and subscribe here.  To reach members of the PYA ICD-10 Rapid Response and Recovery Team™ call or email Denise Hall or Nancy McConnell, Principals at PYA, at (800) 206-4101.

Addressing Overuse of Antibiotics in Nursing Homes

An October 12 Wall Street Journal article identifies nursing homes as the “new front … emerging in the war on the overuse of antibiotics.”  The article cites research indicating that up to 70% of nursing home residents are prescribed antibiotics each year, and “up to 75% of those prescriptions are given incorrectly—either unnecessarily or the prescription is for the wrong drug, dose or duration.”

Nursing homes face many challenges in addressing antibiotic overuse.  Nursing staff often evaluatepatients and consult with off-site physicians for prescriptions.  Many residents suffer from dementia or other cognitive impairments, and thus are unable to explain their symptoms.   Doctors are more likely to prescribe antibiotics for frail patients rather than wait on test results.  

The federal government now is proposing to require nursing homes to design and implement antibiotic stewardship programs.  ASPs are proven to improve prescribing practices, reduce complications, and lower healthcare costs.

PYA’s ASP team, directed by infectious disease specialist Dr. J. Michael Keegan, has decades of experience spearheading these initiatives in a variety of care settings.  Despite encountering challenges similar to those faced by nursing homes, they have been successful in leading change and improving outcomes.    

PYA recently submitted formal comments to the Centers for Medicare & Medicaid Services (CMS) on the proposed regulatory language regarding ASPs for nursing homes.  Based on the experience of our ASP team, we highlighted the need to incorporate written protocols, provider education, monitoring, and corrective action to ensure the success of these programs.

A copy of PYA’s comment letter is available here.  To learn how PYA’s ASP team can help your organization meet the challenge of antibiotic overuse, please contact Dr. Michael Keegan at mkeegan@pyapc.com.