SGR Fix: Could This Be the Year?

It’s that time of year again. Absent Congressional action, physicians will see a 21% cut in Medicare Physician Fee Schedule payments April 1. That’s no April Fools’ Day prank: the most recent short-term sustainable growth rate (SGR) fix expires March 31.

The Congressional Budget Office estimates the cost of repealing the SGR at $174 billion. Not surprisingly, most observers expected Congress to opt for yet another (the 18th, in fact) short-term patch, most likely paid for (again) by reducing hospital payments and extending the 2% sequestration cut to Medicare payments.

However, on March 19, Congressional leaders introduced H.R. 4017 and S. 810, The SGR Repeal and Medicare Provider Payment Modernization Act. This bi-partisan legislation was crafted last year as a permanent solution to the SGR problem. A detailed summary of H.R. 4017 and S. 810 is available here

The following is a brief summary of that legislation, which also replaces current Medicare value-based purchasing programs with a single Merit-Based Incentive Payment System, or MIPS.  

The Basics

  1. The SGR formula now used to calculate MPFS rates is repealed effective April 1, 2015, avoiding the scheduled 21% reduction in those payments.
  2. Current MPFS rates will be increased by 0.5% effective June 1, and each year thereafter through 2019. 
  3. MPFS rates will remain constant at the 2019 rates through 2025.
  4. During that same period – 2019 to 2025 – providers will have the opportunity to earn bonus payments available through the new Merit-Based Incentive Payment System, or MIPS, discussed in greater detail below.
  5. After December 31, 2018, providers no longer will be subject to the penalties associated with the Physician Quality Reporting System (PQRS), the meaningful use program, or the physician value-based purchasing program; these programs will be replaced with MIPS.  Current Medicare value-based purchasing programs for hospitals will remain in place.
  6. Beginning in 2026, and thereafter, the MPFS rates will be updated annually by 0.5%. However, providers who participate in approved alternative payment models (as discussed below) will receive an additional 0.5% increase, earning a total annual increase of 1.0%.

Merit-Based Incentive Payment System

So let’s talk MIPS.  This new version of physician value-based purchasing starting in 2019 will be based on a provider’s score in four areas:  quality measures; efficiency measures; meaningful use of electronic health records; and clinical practice improvement activities.  While the legislation provides parameters for each category, the detail work is left to the Centers for Medicare & Medicaid Services (CMS).

Providers will receive a composite performance score from 1 to 100 based on their performance on the to-be-specifically-defined measures.  Providers whose scores improve year-to-year will receive extra credit, as a way to incentivize performance improvement.

Each year, CMS will establish a threshold score based on the median or mean composite performance scores of all providers measured during the previous performance period.  The threshold will be published at the beginning of each year, in advance of the performance period to be measured.

Providers scoring below the threshold will be subject to payment reductions.  These negative payment adjustments will be capped at 4% in 2019, 5% in 2020, 7% in 2021, and 9% in 2022.  

Over time, the MIPS penalties become substantially greater than those contemplated in existing CMS programs.  This, coupled with the fact private payers are likely to “piggy-back” on the MIPS program, make the push for quality and efficiency simply too strong for providers to ignore.  

Providers scoring above the threshold will receive MIPS bonus payments.  Those providers with higher performance scores will receive proportionately larger payments, up to three times the annual penalty cap.  These payments will be funded by the penalties assessed against providers scoring below the threshold.  

In addition, the best-of-the-best – those who score above a “stretch” performance score established by CMS – will receive an additional bonus payment allocated from a $500 million annual pool.    These additional incentive payments will be allocated according to a linear distribution, with better performers receiving larger bonuses.

Providers who receive a significant percentage of their income through alternative payment mechanisms (APMs) that involve risk of financial losses and quality reporting requirements will have the option to opt out of MIPS, and instead receive an annual 5% bonus payment between 2019 and 2024.  Again, the legislation provides broad outlines, leaving it to CMS to define exactly what qualifies as an APM and what amounts to a significant percentage of income.    

The proposed legislation specifically provides that any standard established under any federal healthcare program cannot be used in a medical malpractice case as evidence of a standard or duty-of-care owed by a provider to a patient.  Thus, MIPS participation cannot be used in liability cases.  

Other Provisions

  • Provides funding for quality measures development and technical assistance for smaller physician practices
  • Expands access to Medicare claims data to support quality improvement activities
  • Expands the information made publicly available regarding individual physician scores on performance measures
  • Requires that Electronic Health Records (EHR) be interoperable by 2018 and prohibits providers from deliberately blocking information sharing with other EHR vendor products.
  • Requires the Secretary to issue a report recommending how a permanent physician-hospital gainsharing program can best be established. 
  • Requires GAO to report on barriers to expanded use of telemedicine and remote patient monitoring.


Presently, Congressional leaders are discussing the SGR fix as part of a package deal that includes an extension of the Children’s Health Insurance Program (CHIP), as well as funding for other specific Medicare programs. The package would be paid for through a combination of means testing, i.e., making wealthier individuals pay more for Medicare; changes to the Medigap program; and reductions in the payment updates for hospitals and post-acute providers. 

These reforms will not cover the full price tag of the deal under consideration, but leaders will try to convince conservative critics that it will yield greater out-year savings after 10 years. As is usually the case in Washington, we’ll know what will happen when it happens.

Chronic Care Management: Inquiring Minds Want To Know

On February 18, the Centers for Medicare & Medicaid Services (CMS) sponsored a National Provider Call (NPC) on Medicare reimbursement for chronic care management (CCM).  The NPC was the first formal presentation CMS has made regarding CCM since it began paying for this service January 1, 2015.  In conjunction with the NPC, CMS also released a Medicare Learning Network Fact Sheet on CCM.    

While CMS now has provided clarification on several important points, there still remain some lingering questions that will require further attention from the agency.  Having now fielded hundreds of inquiries regarding CCM, PYA has compiled the following Top Ten list of CCM questions, along with the best answers we can offer at this time. 

If you would like a more comprehensive explanation of CCM, please refer to our white paper, Providing and Billing Medicare for Chronic Care Management.

Also, we have recently published an article on transitional and chronic care management from a coder's perspective.

1. What is required to initiate CCM services?

In its rulemaking, CMS had proposed that a practitioner must furnish an annual wellness visit (AWV) or an initial preventive physical examination (IPPE) for a beneficiary within the last 12 months to bill CCM for that beneficiary.  CMS, however, chose a different approach in the 2014 Medicare Physician Fee Schedule Final Rule:

However, in light of the widespread concerns raised by commenters about this requirement, we have changed the requirement to a recommendation for a practitioner to furnish an AWV or IPPE to a beneficiary prior to billing for chronic care management services furnished to that same beneficiary.

78 Fed. Reg. 74425 (Dec. 10, 2013) (emphasis added). 

CMS’ recent guidance, however, is not consistent on this point.  According to the Fact Sheet, “CMS requires the billing practitioner to furnish an [AWV], [IPPE], or comprehensive evaluation and management visit to the patient prior to billing the CCM service, and to initiate the CCM service as part of this exam/visit.”  Also, during the NPC discussion of the informed consent requirement, the CMS representative stated the provider must “initiate the CCM service...during a face-to-face visit.”  

As a technical matter, the statement made by CMS in the rulemaking process trumps the agency’s subsequent guidance.  When we asked the CMS representative who presented the NPC about this apparent contradiction, she advised us to communicate with the Medicare Administrative Contractor (MAC).   

Thus, at present, it is not clear exactly what is required to initiate CCM; hopefully, CMS will provide clarification soon. As a practical matter, however, we believe CCM services will be more effective if the service is initiated – and the beneficiary’s written consent is obtained - as part of a face-to-face visit. Keep in mind that such a face-to-face visit would be separately billable from the CCM.    

2. Can a physician practicing in a hospital outpatient department bill for CCM? Can the hospital charge a facility fee associated with CCM? (updated on 3/2/15)

CMS has clarified that a physician practicing in a hospital outpatient department who bills for CCM will be paid at the facility rate, which is approximately $9.00 less than the non-facility rate (i.e., the payment made to a physician practicing in an outpatient office setting).  The payment  to the physician reimburses him or her for supervision of hospital staff furnishing the non-face-to-face care management services, as well as any care management services furnished directly by the physician himself or herself.  CMS also has clarified that a hospital may bill a separate facility fee for CCM.  This payment reimburses the hospital for the costs associated with the licensed clinical staff furnishing the non-face-to-face care management services and related expenses.

3. Are there circumstances in which time spent providing non-face-to-face care management services cannot be counted toward the 20-minute requirement?

CMS stated in the rulemaking process that time spent while the patient is in an inpatient setting cannot be counted.  In its general discussion of care management services, the CPT Manual states non-face-to-face care management services furnished the same day as an E/M visit cannot be counted. CMS has not specifically recognized this rule, although the CPT Manual generally is considered authoritative unless contradicted by CMS. Thus, unless the same-day non-face-to-face service is wholly unrelated to the E/M visit, it should not be counted. 

4. To what information must the care team have access on a 24/7 basis?

This is another example of an inconsistency between CMS’ recent guidance with its statements in the rulemaking process.  The Fact Sheet states the beneficiary’s entire medical record must be accessible 24/7 to those members of the care team providing CCM service after hours.  However, CMS stated in the rulemaking that only the electronic care plan must be accessible.  See 79 Fed. Reg. 67722 (Nov. 13, 2014).   In this case, the CMS representative who presented the NPC acknowledged this inconsistency, and indicated the Fact Sheet would be revised to refer to the electronic care plan.  

5. Can Medicare Shared Savings Program (MSSP) participants bill for CCM?

Participants in CMS’ Multi-Payer Advanced Primary Care Practice (MAPCP) Demonstration and the Comprehensive Primary Care (CPC) Initiative cannot bill CCM for those beneficiaries who have been attributed to them for purposes of these programs. Otherwise, participation in other CMS’ initiatives – including the MSSP – does not disqualify a practitioner from billing CCM for any beneficiary. 

6. When filing a claim for CCM, what should be listed as the date of service? As the site of service?  As the relevant diagnosis?

CMS has stated that there are no claims edits in place for date of service, site of service or diagnosis codes, and thus CCM claims will not be denied based on the information listed for these items.  As a practical matter, we recommend the date of service be the date on which the 20-minute requirement is satisfied, the site of service be listed as the practitioner’s primary practice location, and that at least two of the beneficiary’s chronic conditions be listed as the diagnosis codes. Note: When listing the site of service, ensure that the location selected is associated with the practitioner in Medicare Provider Enrollment, Chain, and Ownership System (PECOS) to avoid unnecessary claims issues.

7. When should a claim for CCM be submitted?

Again, CMS has not provided guidance on this point, but we believe it is appropriate to submit the claim any time after the 20-minute requirement has been satisfied for that calendar month.

8. How should the subjective acuity test be applied?

To be eligible for CCM, a beneficiary must have two or more chronic conditions (the objective condition test)  expected to last at least 12 months, or until the death of the patient, that place the patient at significant risk of death, acute exacerbation/decompensation or functional decline (the subjective acuity test).  

During the NPC, the CMS representative noted that two-thirds of Medicare beneficiaries have two or more chronic conditions, and explained that CCM was intended to reach as many of these beneficiaries as possible.  It seems, therefore, the subjective acuity test was not intended to restrict access to CCM; instead, it was intended to identify those beneficiaries who would benefit from 20 minutes of care management services.  So long as legitimate and beneficial non-face-to-face services are being furnished to the beneficiary, the subjective acuity test should not otherwise limit access to this care.  

9. Who is qualified to provide non-face-to-face care management services?

To be counted, non-face-to-face care management services must be performed by licensed clinical staff under the general supervision of a physician.  This includes any person with a state-issued license in a healthcare profession, as well as medical assistants credentialed by a third-party organization.  Regardless of licensure or credentials, no person should provide any service beyond his or her training and competency.

10. What does it mean to electronically capture care plan information?

The electronic care plan – one of the key requirements for billing CCM – must be maintained in electronic format.  The plan must be available on a 24/7 basis (by means other than facsimile) to members of the care team, and the provider must be capable of transmitting the plan (by means other than facsimile) to other providers involved in the patient’s care.  Also, the provider must furnish an electronic or paper copy of the care plan to the beneficiary.  

The plan does not have to be generated using a certified electronic health record, nor does it have to be maintained in an EHR.  The information in the care plan may come from paper documents (such as a questionnaire completed by the beneficiary), but this information must be incorporated into the electronic document.  

During the NPC, the CMS representative emphasized these were the care plan rules for 2015, implying that CMS is contemplating tightening these requirements in 2016.  However, the representative gave no indication as to what CMS is intending to pursue.

Open Payments Update - Managing Reporting Risks

In the fall of 2014, the Centers for Medicare and Medicaid Services (CMS) launched its Open Payments website, a public, searchable database for information regarding payments made to physicians and teaching hospitals by pharmaceutical companies, medical device manufacturers, and other “applicable manufacturers” in the life sciences.

Currently, the searchable database contains information on payments made between August 1, 2013, through December 31, 2013, including the number of discrete payments made to each physician or teaching hospital, the form of each such payment (e.g., cash, in-kind items, stock), and the consideration for the payment (e.g., consulting fee, food and beverage, travel, education).

The scope of the data release included approximately $3.5 billion in payments received by 546,000 physicians and 1,360 teaching hospitals from 1,419 applicable manufacturers. Of these totals, about $2.2 billion (approximately 63% of total payments, or approximately 39% of total payment records) was de-identified before publication. While the database does not currently note the respective recipient, CMS has stated this data will be identified during a future cycle.

The regulations governing the Open Payments program afford physicians and teaching hospitals the opportunity to review and dispute payment information prior to public release. During the period leading up to the public release of data, multiple shutdowns of the Open Payments website in which physicians and teaching hospitals could view and verify their reported payment data caused widespread concern regarding the accuracy of the information. The data integrity issues that caused CMS to temporarily close the system stemmed from the attribution of payments to misidentified physicians.

Specifically, an error was reported in which one physician’s payments were incorrectly attributed to another physician, which alerted CMS to the “intermingling” of data for physicians with the same first and last names. Upon discovery of the problem, CMS elected to delay the release of a portion of data for 2013 until a later date.  The scope of this dataset, which was reported to CMS but not published (de-identified or otherwise) totals approximately $1.1 billion, or 199,000 records.

Despite concern regarding the accuracy of Open Payments data, only 26,000 physicians and 405 teaching hospitals successfully registered in the system during the initial review period. Of the 4.4 million records submitted, 17,994 records were affirmed, while 12,579 records were disputed (with 9,000 of these disputes still unresolved).

Applicable manufacturers now have through March 31, 2015, to report 2014 payments (i.e., payments made between January 1 and December 31, 2014), as well as corrected 2013 reports.   These reports will be available to the public in June of this year. Prior to that date, physicians and teaching hospitals will again have the opportunity to review and dispute the submitted payment information.

In light of nagging concerns regarding the accuracy of Open Payments reporting, and given the potential ramifications of public reporting, it is imperative that all impacted parties—physicians, teaching hospitals, and applicable manufacturers—plan their review, implementation, and compliance efforts accordingly. For more information, PYA’s upcoming whitepaper, “Don’t Get Burned By The Sunshine Act: Scrutinizing Physician Compensation,” will discuss the fair market value and commercial reasonableness issues that may arise when life sciences organizations make payments to physicians, and how these organizations can mitigate their associated regulatory risks. PYA has extensive experience in navigating the complex healthcare regulatory environment, and is well-positioned to assist all parties as they address the compliance issues that may arise due to the public release of Open Payments data.

The St. Luke's Antitrust Decision: Hit the Brake or the Gas Pedal?

On February 10, the U.S. Court of Appeals for the Ninth Circuit upheld the lower court decision that the 2012 acquisition of Saltzer Medical Group, Idaho’s largest multi-specialty physician group, by Idaho-based St. Luke’s Health System violated federal antitrust law. Absent further appeal, St. Luke’s now must divest itself of the acquired assets.

Since its filing by competing hospitals back in November 2012, the St. Luke’s case has garnered enormous attention, given the rapid pace of hospital practice acquisitions. St. Luke’s defended the acquisition as part of its overall strategy to deliver integrated patient care and to accept risk-based reimbursement. If St. Luke’s was unsuccessful, would that force others to recalibrate similar strategies? 

Even as compared to the fraud and abuse laws and Medicare reimbursement rules, the antitrust laws are highly complex and their application to specific facts and circumstances is challenging.   The crux of the argument in the St. Luke’s case was that the acquisition resulted in a significant increase in the hospital’s market share of adult primary care physicians (PCPs) in the Nampa, Idaho, area. 

The competing hospitals (and later the State of Idaho and the Federal Trade Commission) challenged the acquisition under Section 7 of the Clayton Act, which prohibits mergers that may substantially lessen competition. 

To prove a Section 7 case, the party challenging the transaction must: (1) define the relevant market, both in terms of geographic area and product or service (in this case, adult PCPs in Nampa); (2) quantify the parties’ respective pre-merger market share; (3) calculate the merged entity’s resulting market share; (4) and demonstrate that such market share may permit the entity to raise prices or otherwise lessen competition in the relevant market.  If the plaintiff is successful, the acquiring party then has the opportunity to rebut the presumption of anti-competitiveness, i.e., prove that it will not exercise market power in an anticompetitive manner. 

The district court found – and the appellate court agreed – that the plaintiffs successfully presented the four elements of a Section 7 case. The court’s ruling (and, from this point, “court” refers to both the district court and the appellate court that agreed with that lower court’s findings of face and conclusions of law) with regard to St. Luke’s rebuttal case is particularly informative, given current market trends in the face of delivery and payment system reforms. St Luke’s emphasized the procompetitive effects of the merger, particularly how the transaction would advance its efforts to move toward integrated care and risk-based reimbursement.

The court was unimpressed. First, the court questioned St. Luke’s true commitment to these goals, noting the merger documents “contained hortatory language about the parties’ desire to move away from fee-for-service reimbursement, but included no provisions implementing that goal.” 

Second, the court found even if the merger would allow St. Luke’s to better serve patients, that was not sufficient to offset its potential anticompetitive effects. In fact, based on the evidence presented, the court held that the reimbursement rates for PCPs in the Nampa market likely would increase. The antitrust laws do not authorize otherwise prohibited conduct merely on the basis the merged entity can improve its operations.

And, finally, the court determined that the merger was not necessary to achieve the claimed efficiencies. Based in part on testimony highlighting examples of independent physicians who had adopted risk-based reimbursement, the court found St. Luke’s could assemble a committed team without employing physicians. 

So……should those health systems contemplating physician practice acquisitions steer clear of such entanglements, based on the St. Luke’s decision? Should organizations pursuing clinical affiliations be concerned that their efforts may be undone by the antitrust laws?

Potential antitrust issues are always lurking somewhere when two independent economic entities contemplate combining their efforts. Before consummating a merger or acquisition, the parties should consider carefully potential market share issues and structure the deal to avoid any issues. For example, in the St. Luke’s case, the parties could have carved out the Nampa PCPs from the acquisition (which may or may not have been possible or practical). St. Luke’s also could have incorporated specific performance measures into the transaction to measure progress towards integration.

On the other hand, the St. Luke’s decision is a vote of confidence in favor of clinical affiliations among providers that are not based on ownership or employment, with the court noting such arrangements are a proven vehicle for delivery and payment system reform. 

Even these arrangements, however, have potential antitrust traps, specifically under Section 1 of the Sherman Act, which prohibits competitors from colluding on price, allocating markets, or engaging in other anticompetitive behavior. 

In healthcare, Section 1 is the reason why independent providers cannot jointly negotiate with insurance companies.  However, the antitrust enforcement agencies have recognized that there are circumstances in which such joint negotiations can be part of a procompetitive strategy. Specifically, as the Statements of Antitrust Enforcement Policy in Health Care explain, if independent providers are “clinically integrated ”— i.e., they have developed, implemented, and enforce a common standard of care and jointly engage in care coordination activities— then it is appropriate for that network of providers to engage in joint payer negotiations. In such cases, the joint negotiations support and promote clinical integration activities, with a pro-competitive effect.

Of course, clinical integration is challenging work, and it requires significant cultural change. But rather than rearranging the pieces on the chess board, clinical integration involving independent providers is a strategy that supports real transformation in healthcare.

Companion Infographic to PYA CCM White Paper

Starting this month, physicians can bill on a monthly basis for providing chronic care management (CCM) services to Medicare beneficiaries with two or more chronic conditions.  PYA’s white paper, Providing and Billing Medicare for Chronic Care Management – 2015 Medicare Physician Fee Schedule Final Rule, details the requirements for this new service.

Now, we have developed a one-page infographic, Step-By-Step Chronic Care Management, which provides a summary of those requirements.  While a provider looking to develop a CCM program still needs to master the detailed requirements, the new infographic can serve as a quick reference guide or a staff training tool.  We believe you will find it to be another helpful resource like the white paper and our sample CCM consent form.

View Full Infographic here:

Another CCM Calculator

Back on December 16, we highlighted the release by the Office of the National Coordinator for Health IT (ONC) of a Health IT Dashboard for chronic care management (CCM) payments.  However, it appears ONC now has removed the dashboard from its website.

Beginning on January 1, 2015, however, CMS will pay for CCM services furnished by a provider using a certified EHR technology. For a detailed discussion of the rules for providing and billing Medicare for CCM, please refer to the PYA white paper on the subject. 

Providers who meet all the requirements may bill CMS approximately $40 per patient per month for CCM services.  Although the ONC tool no longer is available to calculate potential CCM revenue, another useful tool is available on Kryptiq Corporation’s website, using the formula PYA developed for the aforementioned white paper.   Kryptiq develops software solutions for population health and patient relationship management, enabling providers to identify care opportunities informed by clinical and financial data at the point of care.

As you will see, the opportunity for new revenue from CCM is significant.  The challenge is to provide the service effectively to lower total costs of care  and efficiently to realize greater practice income.  As we work with providers on implementing CCM, we are seeing a wide range of creative solutions to control overhead costs while truly serving patient needs.  As predicted, this new economic incentive to provide care management is bringing real change to healthcare delivery.

Seed Money: How CCM May Save ACOs

Walgreens made big news two years ago when it partnered with large physician groups in New Jersey, Texas, and Florida to form accountable care organizations (ACOs) to participate in the Medicare Shared Savings Program (MSSP).  The concept was for Walgreens’ pharmacists to be integrated into the patients’ care team to facilitate medication therapy management, as well as administer immunizations and provide health testing. 

The pharmacy giant is in the news again, this time for terminating its relationship with two of the three ACOs including the Advocare Walgreens Well Network, which was formed with New Jersey physicians, and the Scott & White Healthcare Walgreens Well Network in Texas.  Walgreens will continue to work with one ACO, the Diagnostic Clinic Walgreens Well Network in Florida.

In the first performance year, the Advocare ACO exceeded its benchmark by $6 million.  The Scott and White ACO largely held spending in line with its target, while the Florida ACO saved Medicare over $1.5 million.  All three ACOs met the MSSP quality performance standards.

According to Modern Healthcare, Walgreens spokesman Jim Cohn said the company found the MSSP “less conducive" to efforts that include medication therapy management and analysis because “providers feel restricted to only provide services where Medicare will directly reimburse.” 

In other words, the ACOs’ physicians were unwilling to participate in care management because there is no reimbursement for that work.  They viewed their time as better spent providing services that generate immediate revenue.  Despite the fact care management is proven effective in reducing total costs of care, providers prefer the bird in hand (fee-for-service reimbursement) to the two in the bush (potential revenue from shared savings).   

But what if the birds could be lured out of the bushes with seed money?  What if physicians were reimbursed for care management services?  Starting January 1, Medicare now reimburses physicians approximately $40 per month for chronic care management (CCM) services.  As detailed in PYA’s chronic care management (CCM) white paper, this payment is based on 20 minutes of non-face-to-face care management services furnished to qualifying beneficiaries by licensed clinical staff in a practice that meets specific regulatory requirements.

For an ACO, CCM reimbursement can serve as an up-front capital investment in new care processes to improve quality and enhance efficiency.  By supporting its participants in developing and deploying CCM programs within its practices, an ACO can provide immediate return on investment in the form of new revenue.  Physicians will be incentivized to do the work now that results in long-term success.

An ACO’s support for CCM programs may involve educating participants on the reimbursement rules, providing sample documents, identifying eligible beneficiaries, vetting technology solutions, or even furnishing centralized non-face-to-face care management services.  An ACO can custom-design its offering to the needs and wants of its participants.   

Many have characterized the MSSP’s first-year results as underwhelming, with most ACOs not eligible to receive shared savings.  There are several possible explanations, but Walgreens’ decision to discontinue its participation in two of its three ACOs highlights how challenging it is to change physician behaviors.  That challenge becomes more manageable, however, with the opportunity for CCM reimbursement.


December 18, 2014: A Very Sunny Day in Healthcare

On December 18, the Centers for Medicare & Medicaid Services (CMS) made available to the public through its Hospital Compare website new data on the quality of care furnished by hospitals. By posting this data, CMS intends to “empower consumers with information to help with health care decisions, encourage providers to strive for higher levels of quality, and drive overall health system improvement.” 

For the first time, CMS is releasing hospital performance results on Hospital-Acquired Conditions (HACs). This data compares hospitals’ rates of avoidable complications such as central line-associated bloodstream infections, catheter associated urinary tract infections, pressure ulcers, and accidental punctures or lacerations. 

Beginning in 2008, under the statutorily mandated HAC Reduction Program, CMS has not paid hospitals for the costs associated with treating HACs. For example, if a patient admitted for pneumonia experiences a catheter-associated urinary tract infection during the hospital stay, (as opposed to having this condition upon his or her admission), CMS will not pay the hospital for treating that condition (although the hospital will be paid for treating the admitting diagnosis). 

As part of the HAC Reduction Program, hospitals have been required to report on HACs. Now, under a related program authorized by the Affordable Care Act, CMS is using public reporting of this data (sunshine) and the threat of financial penalties to encourage hospitals to implement programs that reduce HACs and improve patient safety.

Under the new program, CMS assigns each hospital a Total HAC Score based on its rate of avoidable complications as compared to other hospitals. Hospitals with higher Total HAC Scores have experienced higher complication rates than other hospitals. Like the game of golf, higher scores equate to poorer performance.

CMS has identified and now publicized the list of hospitals that rank in the top quartile of Total HAC Scores.  In addition to being labeled poor-performing hospitals with regard to patient safety, these hospitals will see a 1% payment reduction on their Medicare inpatient claims. Each year, CMS will calculate hospitals’ Total HAC scores based on the most recent data and assess the penalty against the hospitals in the top quartile. 

Thus, even those hospitals not in the top quartile must focus on preventing HACs, at the risk of being pushed into the top quartile by other hospitals’ performance improvement efforts. If you are standing still, so they say, you are moving backwards.  

Also December 18, CMS released information on the Hospital Value-Based Purchasing (VBP) Program 2015 payment adjustments. Each year, CMS withholds a specified amount from hospital payments and then re-distributes that money to hospitals based on their scores on certain performance measures. For example, if $10 was withheld from each hospital, a hospital with the lowest score would receive no VBP payment (thus losing its $10 withhold) while the hospital with the highest score would receive a $20 payment. 

For 2015, the third year of the VBP Program, the amount of the withhold increased by 0.25% over the prior year, resulting in a redistribution pool of $1.4 billion. Also in 2015, the number of measures considered in calculating a hospital’s VBP score increased. They now include clinical process of care (20%), patient experience of care (30%), efficiency (20%), and patient outcomes (30%). 

More hospitals will experience a positive change in their payments (1,714) in 2015 compared to the number of hospitals that will experience a negative change (1,375) – a reversal from 2014.  This change indicates many hospitals are improving the quality of care delivered to patients, or at least learning to maximize their performance against the VBP metrics measured by CMS.
The VBP Program is about more than money, however. In addition to releasing how much each hospital will gain or lose under the program in 2015, CMS also posted to the Hospital Compare website each hospital’s score on each measure used to calculate its VBP score. Now consumers (both patients and referring physicians) have significantly more objective information available at their fingertips to use in selecting a hospital.

CMS is committed to even more “sunshine” in the coming years, believing that “transparency is critical to transforming the health care delivery system to achieve the three aims of better care for patients, better health for communities and spending dollars wisely.”


New Chronic Care Management Fee Dashboard

Editor's Note: It appears that ONC has now removed the Health IT Dashboard linked in this blog post. Please refer to our subsequent blog post referencing a more sophisticated tool here.


The Office of the National Coordinator for Health IT (ONC) has just released a new Health IT Dashboard for chronic care management (CCM) payments.

As ONC explains, the only direct economic reward for the use of certified electronic health record (EHR) technology has been meaningful use incentive payments offered through the Centers for Medicare & Medicaid Services' (CMS) EHR Incentive Programs.  Beginning on January 1, 2015, however, CMS will pay for CCM services furnished by a provider using a certified EHR technology. For a detailed discussion of the rules for providing and billing Medicare for CCM, please refer to our white paper

Providers who meet all the requirements may bill CMS approximately $40 per patient per month for chronic care management services. ONC’s new tool allows a practitioner to estimate how much that payment could amount to on a monthly and annual basis, based on the number of Medicare beneficiaries with chronic conditions in the practitioner’s patient panel.    

ONC is eager to demonstrate the value of EHR adoption, and sees CCM as an important part of that proposition. Here’s an example of the tool in action, assuming 100 eligible beneficiaries: 

As new payment models and revenue sources continue to emerge, look for other tools such as these to continue surfacing.



Observations from the Back Row at the 2014 mHealth Summit

I spent two days among the 4,000 attendees at the 2014 mHealth Summit last week. Here’s the “official” description of the conference from its website:

The mHealth Summit, the largest event of its kind, convenes a diverse international delegation to explore the limits of mobile and connected health, including every aspect and every audience. Technology, business, research and policy. Mobile, wireless, digital, wearable, telehealth, gaming, connected health and consumer engagement.

In prior years, the summit has focused on what technology can do, i.e., “we can build an app for that.” This year, the focus shifted to how to integrate technology, i.e., we built the app, now why aren’t they coming?  

There are roughly four categories of mHealth solutions now available:  (1) health and fitness support tools, (2) self-diagnosis and testing tools; (3) acute care tools; and (4) chronic care management tools. Products in the first two categories of solutions are intended for direct consumer use, while the others are tools designed for providers.

There were several presentations on research relating to consumer adoption of these tools. From them, I gleaned the following conclusions: (1) most consumers recognize the value of these tools; (2) many consumers express interest in using them; (3) some consumers have purchased them; (4) only a few consumers still use the tools several weeks after purchasing them. 

Certainly I’m no marketing guru, but it seems to me the direct-to-consumer approach with the first two categories of mHealth tools may require adjustment. Many, if not most, people still look to their doctors for actionable healthcare advice. We may look to WebMD for a preliminary diagnosis for our symptoms, but we most often rely on our doctors for a definitive diagnosis and treatment plan.

Similarly, while the public seems to find new mHealth tools intriguing, most of us are not fully embracing the promise of better health through self-directed therapies and treatment. Could it be we are waiting for our doctors’ advice on how to use these tools to maintain and improve our health? Speaking for myself, I would be far more likely to strap on a wearable device or download an app if I saw it as something prescribed by my doctor.      

With respect to the mHealth tools designed for provider use – especially the chronic care management tools – it appears many vendors (and even venture capitalists) are moving forward based on the assumption there is a ready market for these products. Because payment to providers now includes consideration for patient outcomes, these vendors and their investors assume providers will be eager to invest in technology to manage patients.

While mHealth companies may see value-based purchasing as a fait accompli, healthcare providers, by necessity, are still firmly entrenched in the fee-for-service world. And in that world, there is little economic incentive to effectively manage patients with chronic conditions, and thus little appetite for high-priced technology tools. 

However, if these tools can be used to generate fee-for-service reimbursement – as well as improve patient outcomes – it seems providers’ appetites for these technologies should grow. With the advent of Medicare payment for chronic care management services, and with other payers likely to follow, these technologies can help bridge the chasm between volume- and value-based payment models.

mHealth companies would do well to study how current payment models incentivize provider behavior and how emerging models turn those incentives on their heads.   It is the opinion of this conference participant that mHealth companies should present their products as a way to ease what we know will be a painful transition, rather than just waiting on the other side for the surviving providers to “arrive.”