ACPE Cover Story Examines "Big Data: Understanding the Pros and Cons of Big Analytics"

The July/August 2014 issue of the Physician Executive Journal of Medical Management from the American College of Physician Executives features a cover story titled “Big Data:  Understanding the Pros and Cons of Big Analytics,” authored by PYA Analytics leaders Kent Bottles, MD (Chief Medical Officer and PYA Principal), Edmond Begoli, PhD (Chief Technology Officer), and Brian Worley, PhD (President and CEO).

The article explores how the explosion of data can be analyzed to develop actionable correlations that hospital and medical groups can use to address pain points such as length of stay, re-admissions, and hospital-acquired infections.  These correlations can help hospitals and medical groups cut per-capita costs and increase the quality of the care they provide.  The development of cloud computing makes it economically feasible for small systems and organizations to utilize predictive analytics without investing millions of dollars in data-warehousing projects. 

Despite economically attractive opportunities for entry, the authors also explain some of the pitfalls that often trip up unsophisticated analysts.  Predictive analytics can be a powerful tool, but the complexity of the approach must be appreciated and taken into account.

For more information, please contact PYA Principal Kent Bottles, MD, (800) 270-9629.


CMS Awards $12.5 Million Grant For Innovation In Rural Healthcare

On July 9, the Center for Medicare and Medicaid Innovation (CMMI) completed its announcement of grant recipients under the Health Care Innovation Awards. From the hundreds of applications received during the second round of the Healthcare Innovation Awards, CMMI intends to fund 39 proposals, ranging in size from $2 million to $23.8 million, for a total of $360 million.

The University of Kansas Hospital (KUH) was awarded $12.5 million (the 7th largest of the 39 grants awarded) to develop and implement new rural healthcare delivery and payment models. Partnering with Hays Medical Center, 10 critical access hospitals, and physicians practicing at these facilities, KUH will support a rural clinically integrated network, or RCIN, to improve health outcomes while reducing costs.  

The RCIN will focus on improving the prevention, diagnosis, management, and treatment of heart disease and stroke in rural Kansas communities. Participating providers will form a collaborative governance structure through which these providers can refine the entire care continuum for the population they serve.

As explained by CMMI, the RCIN “resembles another uniquely rural business entity: the agricultural service cooperative. By working through a jointly owned and operated association, independent farmers secure resources and market products more efficiently than acting alone. Similarly, RCIN members will pursue collaborative implementation of clinical interventions to improve care and lower costs.”

The RCIN will test transitional payment policies, including a disease-specific shared savings program and centralized care management services, as incentives for collaborative care. Using data analytics, the RCIN also will develop a transformational payment model for rural healthcare, such as global payments tailored to the unique needs of rural communities. 

PYA is honored to have worked with KUH and its partners to develop the RCIN model and prepare the successful grant application. Along with our sister company, PYA Analytics, we look forward to continuing that work over the next three years to make the RCIN a reality – protecting and preserving rural healthcare.


Ten Key Payment Policies in the Proposed 2015 Medicare Physician Fee Schedule

While the rest of us were heading out the door for the holiday weekend, the Centers for Medicare & Medicaid Services (CMS) in the late afternoon of July 3 posted the proposed 2015 Medicare Physician Fee Schedule.

CMS does not propose to make any payment update for 2015, noting the Protecting Access to Medicare Act of 2014 provides for a 0% payment update for services furnished during the first quarter of 2015.  According to CMS, any payment update – positive or negative – for services provided on or after April 1, 2015, is the subject of the legislative process, not agency rulemaking. 

The payment policies proposed by CMS in the 607-page document, however, will have a direct and lasting impact on Part B providers’ day-to-day operations.  From this point forward, there is no turning back on the road to value-based purchasing in the Medicare program.

Comments on the proposed rule are due to CMS by September 2, 2014, the day after Labor Day.  The final rule will be published around Thanksgiving. 

(1) Chronic Care Management

As promised last year, CMS will move forward with payment for non-face-to-face chronic care management (CCM) services.  Beginning January 1, 2015, Medicare will make a per-beneficiary-per-month payment (at a proposed rate of $41.92) for CCM services provided to patients with two or more significant chronic conditions.

With two exceptions, CMS has not changed the elements of CCM services outlined in the 2014 Medicare Physician Fee Schedule Final Rule.  (Those requirements are detailed in PYA’s very-soon-to-be-updated
white paper on CCM services.)  First, CMS eliminated the requirement that CCM services be furnished under direct physician supervision (i.e., physician present in the office suite), opting instead for general supervision (no physician presence requirement).  This change is welcome news, as it opens up new opportunities in delivering CCM services that will be detailed in our updated white paper.

Second, CMS will require that a provider furnishing CCM services utilizes an electronic health record (EHR) system certified by the National Coordinator for Health Information Technology (ONC).   CMS previously had discussed imposing some sort of separate standards that providers would have to meet to bill for CCM services, such as certification as a patient-centered medical home.  Instead of going that route, the agency chose this more limited requirement intended to ensure members of the care team have immediate access to the most updated information informing the care plan.    

(2) Value Modifier

Over the last three years, CMS has introduced the value-based payment modifier for the Medicare Physician Fee Schedule.  The value modifier provides for differential payment to solo practitioners and physician groups based on the quality of care they provide to Medicare beneficiaries compared to the cost of that care over a specified period of time. 

Based on their relative scores on specified quality and efficiency measures, solo practitioners and physician groups will be placed in one of nine quality tiers ranging from high quality/low cost to low quality/high cost.  Each tier will have a corresponding upward, downward, or neutral payment adjustment.

The agency has made available to providers
resources detailing the calculation and application of the value modifier.  The payment differentials go into effect in 2015 for groups with 100 or more eligible professionals and in 2016 for groups with ten or more.

In the proposed rule, CMS announces its plans to expand the value modifier in 2017 to apply to all physicians and non-physician practitioners.   CMS proposes also to increase the maximum upward and downward adjustments from -2.0/+2.0 in 2015 and 2016 to -4.0/+4.0 in 2017.  That is, solo practitioners and groups in the lowest tier (as well as those that do not meet reporting requirements for the Physician Quality Reporting System [PQRS]) would see a negative 4% payment adjustment while those in the highest tier would benefit from a positive 4% payment adjustment. 

CMS also proposes solo practitioners and groups with fewer than ten eligible professionals would not be subject to downward adjustments in 2017 so long as they meet PQRS reporting requirements.  Those that do not meet those requirements, however, will be subject to the full negative 4% payment adjustment. 

(3) Physician Feedback Program/QRURs

Later this summer, CMS will make available on its
portal individualized Quality and Resource Use Reports (QRURs) for all solo practitioners and group practices based on 2013 data.  Each QRUR will include the recipient’s performance on the quality and cost measures used to calculate the value modifier as well as the specific performance tier to which the recipient would be assigned based on its scores on those measures.

For those groups subject to the value modifier in 2015, the QRUR also will show how the group’s payments will be affected.  CMS strongly encourages all providers to access their QRURs once they are available to better understand their current performance levels and how to improve their scores on quality and cost measures.

In the proposed rule, CMS states it will make available informal review mechanisms for providers to request certain limited corrections to their QRURs.  For 2015, such requests will have to be made by January 1, 2015.  CMS intends to formalize and expand the review process in 2016 and beyond.  

(4) Physician Quality Reporting System

After years of bonus payments for physicians who reported specific quality information to CMS, PQRS switches gears in 2015.  Now, physicians who did not report in 2013 will be subject to a downward payment adjustment.  Failure to report in 2014 will mean a downward adjustment in 2016. 

In the proposed rule, CMS outlines updates to PQRS related to the 2017 payment adjustment.  In addition to increasing the downward adjustment from 2% to 4%, CMS proposes adding 28 new individual measures and two new measures groups to fill existing gaps.   Also, CMS intends to require physicians to report measures from a newly proposed set of cross-cutting measures (i.e., measures of improvements in patient functional status) in addition to any other required reporting.

The proposed rule includes several changes to the methods and manner in which quality data is to be submitted.  Finally, CMS continues its phased approach for public reporting of PQRS data on the Physician Compare website.  By 2016, the number of group-level and individual measures to be publicly reported will be expanded significantly, giving beneficiaries more information on which to base treatment decisions.      

(5) Open Payment Act

The Open Payments program requires applicable manufacturers of covered drugs, devices, biologicals, and medical supplies to report payments or other transfers of value they make to physicians and teaching hospitals to CMS.  This information will be made available to the public on CMS’ website through searchable databases.

Now excluded from the reporting requirements are payments related to certain accredited or certified continuing medical education events.  CMS proposes to eliminate this Continuing Education Exclusion in its entirety, noting this will create a more consistent reporting requirement.

(6) Elimination of Global Surgery Periods

CMS proposes to eliminate all 10- and 90-day global codes in 2017, noting that many providers are not performing the number of post-surgical visits contemplated by these codes.  To address this potential for misvaluation of surgical services, CMS plans to make one payment for all services rendered on the day of surgery and to pay separately for visits and services actually furnished any subsequent day.

(7) Expanded Telehealth Services

CMS proposes to include four new services on the list of services that can be furnished to Medicare beneficiaries under the telehealth benefit.  These include annual wellness visits, psychoanalysis, psychotherapy, and prolonged evaluation and management services.    

(8) Medicare Shared Savings Program Quality Measures

The proposed rule includes updates to parts of the Medicare Shared Savings Program regulations. First, CMS proposes to reward accountable care organizations (ACOs) that make year-to-year improvements in quality performance scores by adding a quality improvement measure that adds bonus points to each of the four quality measure domains based on improvement.

Second, CMS intends to make revisions to reflect up-to-date clinical guidelines and standards of practice, reduce duplicative measures, increase focus on claims-based outcome measures, and reduce the ACO reporting burden.  New measures would be added to focus on avoidable admissions for patients with multiple chronic conditions, heart failure, and diabetes; depression remission; all-cause readmissions to a skilled nursing facility; and stewardship of patient resources.  Also, the existing composite measures for diabetes and coronary artery disease would be updated.

Finally, CMS proposes that during a second or subsequent participation agreement period, an ACO would continue to be assessed on the quality performance standard that would otherwise apply to an ACO if it were in the third performance year of the first agreement period.

(9) Off-Campus Hospital Departments

CMS proposes to begin collecting data on services furnished in off-campus provider-based departments beginning in 2015.  Specifically, hospitals and physicians would be required to report a modifier for those services furnished in an off-campus, provider-based department on both hospital and physician claims.  CMS would use this data to evaluate whether practice expense methodology should be revised in response to the growing number of hospital acquisitions of physician practices.

(10) Adjustments for Misvalued Codes
CMS continues its statutorily mandated hunt for misvalued codes, i.e., those codes for which work and/or practice expense (PE) relative value units (RVUs) are overstated based on comparison to actual practice.  For 2015, CMS has identified that special building requirements to house linear accelerators do not represent a direct cost in its PE methodology; instead, it is accounted for in the indirect PE methodology. 

CMS, therefore, proposes to remove these building requirements as a direct PE input from radiation treatment procedures.  This seemingly minor change is expected to result in a 4% reduction in Part B payments for radiation oncology and an 8% reduction for radiation therapy centers. 

With regard to future adjustments, the proposed rule includes a list of all high-expenditure codes across specialties CMS intends to review.  It is likely, therefore, that CMS will identify and propose more high-impact revisions to work and PE RVUs in the near future. 

PYA’s Opportunity Forecasting & Positioning Team can assist your organization in analyzing the impact of proposed payment policies and preparing comments for submission to CMS.  Additionally, our consultants can support your organization in developing CCM services, maximizing performance under the value modifier, complying with PQRS and Open Payment Act requirements, and establishing and expanding a successful telehealth program.  For more information, please contact
Marty Brown, Nancy McConnell, or Martie Ross at PYA, (800) 270-9629.


PYA Assists Missouri Hospitals In Forming Health Network of Missouri

Back in 2011, as the University of Missouri Health System (MU) was considering population health management initiatives, executives recognized the need to collaborate with surrounding hospitals, given that more than half of the academic medical center’s inpatient admissions were coming from outside the county in which it is located. MU, therefore, invited leaders from four surrounding community hospitals - Bothwell Regional Health Center (Sedalia, MO), Capital Region Medical Center (Jefferson City, MO), Hannibal Regional Healthcare System (Hannibal, MO), and Lake Regional Health System (Osage City, MO) – into a discussion regarding  joint efforts to improve healthcare in Central Missouri.

For the next two years, members of the Learning Collaborative, as it was called, met on a quarterly basis to discuss healthcare payment and delivery reform and related opportunities. Over time, however, frustration set in, as it seemed impossible for this information-sharing organization to convert conversations into concrete plans of action.

Leaders of the five hospitals decided earlier this year to pursue a more formal relationship through a legal entity co-owned equally by the hospitals. They envisioned this entity would provide a trust environment through which the hospitals could protect their independence through interdependence. 

Following several months of careful planning, the hospitals announced on June 25, the formation of the Health Network of Missouri.  The five founding members combined have more than 1,000 hospital beds, more than 9,300 employees, and approximately 1,000 employed and affiliated physicians. They serve patients in adjacent counties throughout Central and Northeast Missouri.

The Health Network of Missouri is structured to allow these providers to work together as a clinically integrated network while enabling them to serve the healthcare needs of their own communities and preserve their independence and unique identities. Each hospital will have equal representation in governance of the network.

Initially, the Health Network of Missouri will focus on developing three compacts defining how all members will work together on care coordination, population health management strategies, and employer and payer initiatives. Committees comprised of representatives from all five hospitals already are hard at work on these compacts. 

Also, members will explore potential contractual arrangements between two or more members to address more specific needs, such as telehealth, clinical research, and joint purchasing. Over time, the Health Network of Missouri expects to expand its membership as well as its scope of operations to meet the needs of the communities it serves.

PYA is proud to have assisted the members of the newly formed Health Network of Missouri in designing and implementing the organizational structure and developing the network’s initial operational plan. We look forward to working with the network in the near term to put this plan in motion.  

In the near future, PYA will publish a detailed case study on the development and implementation of this innovative model for hospital affiliation to address regional needs. We will focus on overcoming obstacles in creating a trust environment in which independent providers committed to a common cause can leverage resources to improve patient experience of care and clinical outcomes and enhance efficiency.

For more information about PYA’s approach to affiliation strategies, contact Jeff Ellis or Martie Ross at PYA, (800) 270-9629.


OIG "Top Ten" List Costs Hospital Nearly $10 Million

 Nothing strikes fear in the heart of a hospital compliance officer like receiving a medical record request from the Office of Inspector General (OIG). Now, with the OIG’s recent report on its review of Medicare billing by a Midwestern academic medical center, the prospect of such a review is even more terrifying. 

Based on an extrapolation of its findings from a review of 228 claims, the OIG concluded the University of Cincinnati Medical Center (UCMC) owes $9.8 million for overpayments received in 2010 and 2011.

For reasons not explained in the report, the OIG chose to review “Top Ten” claims submitted by UCMC in 2010 and 2011. Through computer matching, data mining, and data analysis techniques, the OIG has identified the following ten types of hospital inpatient and outpatient claims that pose a high risk for noncompliance with Medicare billing requirements: 

1.           Inpatient short stays

2.           Inpatient claims paid in excess of charges

3.           Inpatient claims billed with high-severity-level DRG codes

4.           Inpatient and outpatient manufacturer credits for replaced medical devices

5.           Inpatient transfers

6.           Inpatient psychiatric facility (IPF) emergency department adjustments

7.           Inpatient claims for blood clotting factor drugs

8.           Outpatient claims with payments exceeding $25,000

9.           Outpatient claims billed with evaluation and management (E&M) services

10.       Outpatient claims billed for Doxorubicin Hydrochloride

According to the report, Medicare paid UCMC $256 million for 16,674 inpatient and 98,043 outpatient claims during this two-year period. The OIG’s audit covered $22.8 million in Medicare payments for 2,742 “Top Ten” claims submitted by UCMC in 2010 and 2011.  

Of the total number of “Top Ten” claims, the OIG selected for review a stratified random sample of 228 claims (169 inpatient and 59 outpatient) with payments totaling $3.3 million. The OIG auditors found billing errors on 127 of the 228 claims and calculated the net overpayment as $603,267. Nearly all of the overpayment was attributable to inpatient billing errors; only one-half of 1% related to outpatient billing errors.

With respect to inpatient billing, the vast majority of the overpayment – nearly $400,000 – related to short stays that should have been billed as outpatient rather than inpatient services. The OIG noted that UCMC “may be able to bill Medicare Part B for all services (except for services that specifically require an outpatient status) that would have been reasonable and necessary had the beneficiary been treated as a hospital outpatient rather than admitted as an inpatient.” The OIG, however, did not reduce the total overpayment, noting it would not have enough information to do so unless and until such Part B services are billed by the hospital and adjudicated by the Medicare administrative contractor.  

Two other “Top Ten” errors had significant price tags: claims paid in excess of charges ($153,000) and claims billed with high-severity-level DRGs ($130,000). Other identified errors included manufacturer credits for replaced medical devices, transfers, and psychiatric facility emergency department adjustments.

Without an explanation of how it made the calculation, the OIG extrapolated that UCMC received net overpayments totaling at least $9,818,296 for 2010 and 2011. This represents nearly half of the total amount UCMC received in payment for “Top Ten” claims during the same period.

The OIG expects UCMC to repay this nearly $10 million to the Medicare program. Presumably, the total overpayment will be reduced somewhat once UCMC bills and receives payment for Part B services as explained above, but the amount remains staggering.

According to the OIG, “[t]hese errors occurred primarily because [UCMC] did not have adequate controls to prevent the incorrect billing of Medicare claims within the selected risk areas that contained errors.” For the short stays, the OIG identified three specific weaknesses in UCMC’s internal controls: (1) lack of documentation to support the physicians’ clinical decisions to admit patients; (2) physicians’ non-receptiveness to the involvement of case managers; and (3) interpretation of third-party vendor services.

With respect to improper billing for high-severity-level DRG codes, the hospital acknowledged some of these errors were the result of mistakes made by hospital staff. Although mistakes were made on a small number of claims, the alleged lack of adequate oversight had a significant financial impact given extrapolation of the error rate over a larger number of high-dollar claims.    

For UCMC, the OIG’s “Top Ten” list billing errors stands to cost the organization nearly $10 million, an amount hospital officials claim will have a “devastating effect” on its operations. In light of the OIG’s extrapolation of audit results, the importance of proper documentation, coding, and billing procedures cannot be overstated.  

PYA can assist your organization in evaluating and enhancing internal controls and processes around each of the OIG’s “Top Ten” billing errors. Our professionals can assist in resolving internally identified overpayments and provide support in anticipation of and during government audits and investigations. For more information, please contact Nancy McConnell or Denise Hall at PYA, (800) 270-9629.

MedPAC Recommendations: New Approach to Quality Measurement, Per-Beneficiary Payments for Primary Care

The Medicare Payment Advisory Commission (MedPAC) is an independent congressional agency established by the Balanced Budget Act of 1997 to advise Congress on issues affecting the Medicare program.  Its 17 Commissioners meet publicly to discuss policy issues and formulate recommendations based on staff research, presentations by policy experts, and comments from interested parties. 

Twice each year – in March and June – MedPAC delivers its report to Congress.  Over the years, many recommendations made in these reports have been the basis for significant program initiatives including, for example, EHR meaningful use incentive payments and the Medicare Shared Savings Program.  Thus, each semi-annual MedPAC report offers a glimpse into the future of the Medicare program.

Of the many recommendations in MedPAC’s June 2014 report, there are two in particular that deserve a close study.  First, MedPAC offers a new approach to quality measurement in the Medicare program.  Today, there are dozens of process measures on which providers report (e.g., tobacco use assessment and cessation counseling, vaccinations, cancer and depression screening), all of which focus on detecting underuse of clinically appropriate services.  For the future, MedPAC envisions reporting on a small set of population-based outcome measures to assess the quality of care provided under each of Medicare’s three payment models – fee-for-service (FFS), accountable care organizations (ACOs), and Medicare Advantage (MA) plans – within a local area.  Specifically, MedPAC proposes the following measures:


MedPAC contemplates these population-based outcome measures would be used for public reporting and payment policy for ACOs and MA plans, but acknowledges these measures are ill-suited for FFS Medicare in both regards.  Instead, individual provider quality measures, with all of their shortcomings, would remain the dominant evaluative tool for FFS Medicare providers.  Despite a host of technical challenges, MedPAC concludes the benefits to be realized from population-based outcome measures are well worth the effort involved in developing, deploying, and reporting on these measures.

MedPAC’s second recommendation of note is the development of a per-beneficiary payment for primary care, or PBPC.  Recognizing that the Affordable Care Act’s 10% primary care bonus payment expires at the end of 2015, MedPAC emphasizes the need for a new incentive structure to support primary care.  According to the report, “a per-beneficiary payment could help move away from a fee-for-service, volume-oriented approach toward a beneficiary-centered approach that encourages care coordination, including the non-face-to-face activities that are a critical component of care coordination.”

Unlike reimbursement for transitional and chronic care management, which is limited to services for a specific population, PBPC would cover all Medicare beneficiaries.  MedPAC addresses several design issues relating to PBPC—requirements that practices must meet to receive the payment, mechanisms for attributing beneficiaries, and funding sources—none of which appear to be deal-breakers.  Like population-based outcome measures, PBPC would support providers – as well as beneficiaries – through the transition from volume-based to value-based reimbursement.

For more information about how quality reporting and new payment models will impact your organization, contact David McMillan or Martie Ross at PYA, (800) 270-9629.

Value-Based Reimbursement: From Fad to Fact of Life

By 2020 – just over five years from now—value-based reimbursement will overtake fee-for-service payments. 

That’s not the musing of some policy wonk. It is the key finding of a recent national survey of payers and hospitals and health systems conducted by the research and business intelligence firm ORC International.  The survey included 114 payers and 350 hospitals and health systems of varying sizes located in diverse markets.

The same survey reports that 85% of hospitals agree: value-based reimbursement is not just a fad; it’s here to stay.   Even among smaller hospitals (fewer than 100 beds), that are less convinced of value-based reimbursement’s holding power, more than 70% agree these new payment models are the future of healthcare.   

Hospitals identify physician buy-in as the biggest obstacle to the success of value-based purchasing, with patient engagement a close second.  Payers agree physician buy-in is the top challenge, but cite technology systems integration as the second biggest hurdle.

Another significant challenge in the transition to value-based reimbursement is learning to measure value.  While three-quarters of hospitals surveyed currently are tracking quality of care and outcomes measures, fewer than 40% have implemented cost-efficiency measures.  More than half of those hospitals not tracking cost efficiency, however, plan to do so within the next two to three years. 

This discomfort of the “straddle” – the transition period from fee-for-service to value-based reimbursement – is universally recognized. While there is no sure remedy to ease that pain, the following strategies are key to managing through uncertainty:

(1)    Dialogue with physicians.   The first step in engaging physicians is starting a conversation regarding the mechanics and impact of value-based reimbursement on all types of providers.  Hospitals should look to be physicians’ trusted source of straightforward and reliable information regarding payment and delivery system reform.     

(2)    Engage patients. In addition to their medical staffs, hospitals should communicate with patients regarding their changing roles as healthcare consumers.  For example, as knowledge is power, hospitals should actively promote access to and use of their patient portal. 

(3)    Land and expand.  Focus first on achieving and promoting success on one or two limited projects, and then leverage the results as a catalyst for broader initiatives.    

(4)    Focus on decision-support technology.  Use IT to make information immediately available to clinicians, as they make treatment decisions, and managers, as they evaluate and redesign operations.

(5)    Lean in.  Focusing on the elimination of variations in care and unnecessary expense is a strategy that improves financial performance in the current fee-for-service environment, while laying the foundation for value-based reimbursement.  By engaging (and rewarding) physicians in these efforts, one strategy can serve two key purposes.

PYA has expertise and experience to help your organization devise and implement straddle strategies. For more information, please contact David McMillan or Martie Ross at PYA, (800) 270-9629.


Here Comes the Sun: Physicians Need to Register Now for Sunshine Act

The federal government has long been concerned about payments to physicians by drug and medical device companies in the form of meals, entertainment, travel, consulting fees, honoraria, research grants, charitable contributions, and investment interests. Rather than prohibit these payments – which more often than not serve legitimate purposes – a federal law known as the Sunshine Act now requires drug and medical device companies to report certain transfers of value to physicians. 

Starting September 30, the general public will have access to these reports. A patient, for example, will be able to look up whether his or her physician has received anything of value from the maker of a drug the doctor has prescribed for the patient.

Since August 2013, drug and medical device companies have been required to compile data regarding physician payments.  During June, these companies must upload this information to the Open Payments system, the federal database created for this purpose, and attest to the accuracy of the information. 

The Sunshine Act affords physicians the opportunity to dispute reports made about them.  To do this, however, a physician must complete a two-step registration process.  A physician is not required to register, but will need to do so if he or she wants the opportunity to review and dispute reports before they go public. 

The first step in the process is to register using the Centers for Medicare & Medicaid Services’ (CMS) Enterprise Portal. Step-by-step instructions to complete this registration, which opened June 1, are available here.

Starting in mid-July (the date has not yet been announced), those who have registered though the CMS Enterprise Portal will be able to register for access to the Open Payments system.  This second step in the registration process will remain open for 45 days.  If a physician does not register during this 45-day window, he or she will lose the opportunity to dispute any report regarding payments made in 2013.  There will be a second registration process for subsequent reporting years. 

Once registered, a physician will be able to review any and all reports submitted by drug and medical device companies about payments made to the physician.  If the physician believes a report is inaccurate, he or she can dispute the information.  Detailed information on the dispute process is available here

Earlier this month, CMS issued a revised User Guide for the Open Payments system.  The guide includes a detailed explanation of all reporting requirements and deadlines for submission. 

With public access to these reports only weeks away, physicians not only should be registering to review and dispute reports, but preparing to answer questions and address patient concerns regarding payments received from drug and medical device companies.  PYA can assist your practice with the registration process, reviewing and disputing reports, developing responses to patient questions and concerns, and drafting and implementing a vendor relations policy.  For more information, please contact Denise Hall at PYA, (800) 270-9629.

Achieving the Triple Aim through Systems Engineering - But with Payment Reform as a Prerequisite

The President’s Council of Advisors on Science and Technology (PCAST), comprised of the nation’s leading scientists and engineers, makes policy recommendations to the President on a broad spectrum of issues relating to science, technology, and innovation.  In the last two years, PCAST has issued reports addressing policy on climate change, cybersecurity, and drug innovation, just to name a few.  Many PCAST recommendations have provided the basis for the Administration’s top policy initiatives.

Now PCAST has taken on the challenge of how to best improve quality and efficiency in healthcare.  In May, PCAST published a report entitled Better Health Care and Lower Costs:  Accelerating Improvement through Systems Engineering.

As defined by PCAST, systems engineering – known in its various forms as Lean Enterprise System, Six Sigma, agile management, and business process management – “is an interdisciplinary approach to analyze, design, manage, and measure a complex system with efforts to improve its efficiency, productivity, quality, safety, and other factors.”  One of the most notable applications of systems engineering has been in commercial airlines, “which have reduced fatalities from hundreds in the 1960s to approaching zero now, with the risk of dying from flying now at 1 in 45 million flights.”   

PCAST posits that these strategies could be employed successfully to improve healthcare administration and delivery.  Specifically, the following continuing cycle of improvement could be utilized to weed out inefficiencies and variation and improve safety and quality in systems within a single healthcare organization or a broader healthcare community:  

While other industries have embraced systems engineering, healthcare has applied these methods only on a limited scale.  PCAST observes that unique challenges facing the healthcare industry have limited the dissemination and spread of systems-engineering principles.  

In its report, PCAST makes six specific policy recommendations to overcome barriers to widespread use of systems engineering in healthcare:

  1. Accelerate alignment of payment systems with desired outcomes.
  2. Increase access to relevant health data and analytics.
  3. Provide technical assistance in systems-engineering approaches.
  4. Involve communities in improving healthcare delivery.
  5. Share lessons learned from successful improvement efforts.
  6. Train health professionals in new skills and approaches.

PCAST offers a withering indictment of fee-for-service reimbursement as rewarding inefficiency and poor quality:

The predominant way clinicians and hospitals are paid for health care discourages real improvement as it rewards higher volumes of tests and treatments over whether a patient has a better outcome. At the same time, clinicians are not paid for activities that are known to improve a patient’s health—such as coordinating a patient’s care or talking with a patient about whether a treatment meets his or her needs. Perhaps most irrationally, a hospital is paid more when patients have complications, so that preventing patient harm can actually cause revenues to decline.

While noting progress has been made in the transition from volume-based to value-based reimbursement through initiatives like the Medicare Shared Savings program, PCAST urges the Administration to “work with the private sector to accelerate the transition of the payment system so that clinicians receive consistent incentives across all public and private health-insurance plans to deliver high-quality and high-value health care.”  

As a reference tool, the PCAST report offers an excellent tutorial on systems engineering and its promising applications in healthcare.  More importantly, as a policy advisory, the report makes a compelling case for the Administration to double-down on industry-wide payment reform as it is the essential prerequisite for improving quality and reducing costs.   Given PCAST’s track record, its latest report could ignite a burning platform for payment reforms.  

To learn how systems engineering can improve quality and efficiency in your organization, please contact Burl Stamp or Scott Clay at PYA, (800) 270-9629.

Datapalooza: CMS Doubles Down On Pricing Transparency

This week, more than 2,000 individuals participated in Health Datapalooza IV in Washington, D.C., sponsored by the Health Data Consortium.  As part of this event, the U.S. Department of Health and Human Services (HHS) announced new data available to the general public through the Centers for Medicare & Medicaid Services’ (CMS) website.

CMS has posted the first annual update of the hospital inpatient and outpatient data released by the agency last spring. The now-available 2012 inpatient data includes hospital-specific volume and charges for more than 3,000 hospitals for the top 100 most frequently billed discharges, while the 2012 outpatient data includes the same information for 30 different services furnished in hospital outpatient departments. The data can be sorted in several different ways—by service, hospital, state, and city.

Even the most cursory review of the data shows wide disparities in charges for the same services within the same community.  As a general rule – and certainly not true in every instance - hospitals that are part of larger health systems charge significantly more than community and specialty hospitals.  Also, there appears to be no correlation between a hospital’s charges and its volume of a particular service.  A deeper data dive will show many more correlations between hospital characteristics and charges.

With two years’ data now available, one can begin to identify trends among the charges presented, showing that hospitals often increase their charges at rates that far outstrip inflation.  Also, one can observe changes in the volume of specific services performed at a hospital.  For example, hospitals that acquired sizeable physician practices in 2012 show dramatic increases in outpatient services, as services previously performed in physicians’ offices migrate to hospital outpatient departments.

Due solely to the sheer volume of information, neither data set is user-friendly.  While it is unlikely consumers will access this data directly for purposes of comparison shopping, it is highly likely third parties – including both payers and competitors – will in short order produce and promote data analyses and tools from which consumers can make decisions.

The second set of data now available on the CMS website is new and updated information on incidents of chronic diseases and comparative costs associated with treating individuals with those conditions.  Again, the data can be sorted in several ways—by state, county, type, and number of chronic conditions.  This data presents a treasure trove of opportunities to target specific interventions to reduce spending on high-cost patients and thus lower overall healthcare spending.

PYA and PYA Analytics can assist hospitals and other provider organizations in analyzing their market data and developing a plan to address key findings.  For more information, contact Martie Ross at PYA, (800) 270-9629 or Brian Worley at PYA Analytics, (865) 862-4196.