Bridging Business & Healthcare : Healthcare Management Consultants for Dispute Resolution, Valuation & Clinical Compliance

 The Office of Inspector General (“OIG”) has posted updated guidance regarding healthcare providers employing or contracting with individuals who have been excluded from participation in federal healthcare programs.  The federal excluded individual rule prohibits a provider from submitting a claim to Medicare for any good or service furnished by or at the direction of such an individual.  

A provider that violates the excluded individual rule must refund any payment received on such a claim.  Also, the OIG may impose civil money penalties if the provider knew or should have known about the exclusion.

The excluded individual rule has been broadly interpreted to prohibit any direct or indirect involvement by an excluded individual in providing goods or services billed to Medicare.  This includes physicians, administration, nursing staff, and support personnel.  The rule extends to employees as well as suppliers and independent contractors.    

OIG has long taken the position that Medicare providers should screen employees and contractors through federal exclusion databases.  Although such screenings are not required by statute or regulation, OIG has made clear that failure to screen is a basis for imposition of civil money penalties. 

Among other things, the OIG’s updated guidance addresses (1) how to screen; (2) who to screen; and (3) how often to screen.

(1)  How to screen.  The OIG directs providers to utilize the List of Excluded Individuals and Entities (“LEIE”).  This on-line database, along with detailed instructions for its use, is available at http://exclusions.oig.hhs.gov/.   

(2)  Who to screen.  TheOIG recommends a provider review each job category or contractual relationship to determine whether the item or service being provided is directly or indirectly, in whole or in part, payable by a federal healthcare program. If the answer is yes, the provider should screen all persons that perform under that contract or that are in that job category.

According to the OIG, a provider should determine whether or not to screen contractors, subcontractors, and the employees of contractors using the same analysis that it would for its own employees.  For example, OIG recommends screening nurses provided by staffing agencies, physician groups that contract to provide emergency room coverage, and billing or coding contractors. 

Alternatively, a provider could choose to rely on screening conducted by the contractor, but OIG recommends that the provider validate such screening.   Regardless of whether and by whom screening is performed and the status of the person (e.g., employee, subcontractor, employee of contractor, or volunteer), the provider will be subject to overpayment liability and for any items or services furnished by any excluded person and may be subject to civil money penalties if the provider does not ensure that an appropriate exclusion screening was performed.

(3) When to screen.  The OIG directs providers to check the LEIE prior to employing or contracting with persons and periodically check the LEIE to determine the exclusion status of current employees and contractors. 

While noting it is up to a provider to decide how often screenings should be performed, the OIG notes that the LEIE is updated monthly, so screening employees and contractors each month best minimizes potential liability for  overpayment and civil money penalties. 

In support of its position, the OIG cites a January 2009 state Medicaid director letter issued by the Centers for Medicare & Medicaid Services (“CMS”) recommending that states require providers to screen all employees and contractors monthly.  Also, in 2011, CMS issued final regulations mandating states to screen all enrolled providers monthly.

The OIG’s new guidance is an important reminder of the emphasis the agency places on providers maintaining effective compliance programs that prevent, detect, and correct compliance problems.  PYA can assist you in evaluating and improving the effectiveness of your compliance program, (800) 270-9629.

Martie Ross is a Consulting Principal with PYA.

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If my calendar is any indication, people are hungry for information about health care reform.  Last Wednesday, I participated in the annual meeting of the Kansas County Commission Association, with a one-hour “everything you wanted to know about the Affordable Care Act but were afraid to ask” presentation.  You can find the powerpoint I used here.

Later the same day, I was a featured guest during a 30-minute live broadcast of “This Week in Accountable Care” on BlogTalkRadio. During the interactive discussion, we explored the world of accountable care organizations, the Medicare Shared Savings Program, and PYA’s whitepaper “Medicare ACO Roadmap,” a to-the-point resource for ACO formation and navigation.  The broadcast may be found on BlogTalkRadio’s sister blog “ACOwatch.”

To round out the week, I presented at the National Rural Health Association’s Annual Meeting in Louisville, Kentucky, on accountable care organizations involving rural providers.  You can find the powerpoint for that presentation here. We had a great discussion regarding rural clinically integrated networks, or RCINs, as an alternative to the MSSP ACO.

Martie Ross is a Consulting Principal with PYA.

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This quote, which is attributable to a health system strategy executive attending last fall’s Executive Dialogue sponsored by the Society for Healthcare Strategy & Market Development (SHSMD), sums up the sentiments of the participants in the unique round-table discussion of major challenges and issues facing our industry.  I had the privilege of facilitating the lively dialogue among the strategic planning, marketing/business development, and communication executives attending the event, which included presentations from industry leaders representing the Jefferson School of Population Health, Catholic Health Initiatives, Wells Fargo Bank, and Geisinger Health System. (An Executive Briefing summarizing the major ideas and insights from the Executive Dialogue, which was authored by my PYA colleague Chris Wilson and me, is available from SHSMD.)

Even though debate continues on whether the Affordable Care Act offers the best solutions for reforming our healthcare system, most agree that change must occur. Perhaps more than any specific legislation or mandate coming from Washington, D.C. or a state legislature, it is a new sense of innovation from healthcare providers, payers, technology firms, and major employers that will provide the best solutions for improving outcomes and reducing cost.

So why does “this time feel so different?”  This time, it is the market that is demanding higher value in healthcare services, and the organizations that lead with the most promising innovations in cost and quality will be the major winners.

Burl Stamp is a Consulting Principal with PYA

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On April 2, 2013, the Centers for Medicare and Medicaid Services (“CMS”) released key dates for the 2014 Medicare Shared Savings Program application cycle.  Many were expecting the 2014 application deadline to be the same as 2013: the first week in September.

However, CMS has announced a July 31 deadline.  An accountable care organization intending to submit an application must file a Notice of Intent by May 31 and obtain a CMS User ID by June 10.  Failure to meet these deadlines will disqualify an organization from MSSP participation in 2014.  CMS has not yet published the Notice of Intent form or the application packet.   
CMS will be hosting a national provider call regarding the 2014 MSSP application process on April 9.  A second call is scheduled for April 23.

We know from experience that compiling the information needed to complete the MSSP application is no small feat.  Providers interested in participation now need to accelerate their planning efforts.  To help organize your efforts, please refer to our MSSP ACO Development Task List.

To discuss how PYA can support your organization in completing these tasks and submitting your MSSP application, please contact David McMillan or Martie Ross.

Martie Ross is a Consulting Principal with PYA.

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“Is going it alone still an option for your hospital?” was the interesting question posed on the cover of Hospitals and Health Networks magazine in the current March issue. Arguably, what was even more interesting was the emphatic answer: “Yes!”

But looking beyond the provocative headline, the second paragraph of the story actually refutes the categorical answer on the cover:

“… as an independent hospital, keeping up with the current pace of change is a demanding, never-ending task. Increasingly, (CEO Rachel) Gonzales is looking beyond the four walls of the institution and closely collaborating with other regional providers, from a nearby critical access hospital to two larger tertiary centers.”

Today, savvy organizations that understand the limitations of capital, operational expertise and clinical capabilities are looking in unexpected places to enhance market position and competitive advantage. A prime example is the announcement this month of the new strategic alliance between Community Health Systems, the nation’s second-largest for-profit provider system, and the venerable Cleveland Clinic, whose heart program was ranked as the best in the nation for the 18th straight year in the U.S. News and World Report annual survey of top hospitals.

Obviously, the right question to be asking is whether an individual hospital organization should remain independent from the standpoint of governance. The right answer to that question is dependent on many factors, including market position, financial strength, capital needs, and community support. In today’s environment, those hospitals that pursue a strategy of truly going it alone without collaborative relationships with physicians and other providers are increasingly at risk of being outmaneuvered by those who recognize the power of strategic partnerships.

Burl Stamp is a Consulting Principal with PYA

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 Despite our industry’s focus on the need to better coordinate care and reduce costs, only slight progress was made in reducing 30-day readmissions between 2008 and 2010 according to a new report from the Robert Wood Johnson Foundation and the Dartmouth Atlas of Health Care. In “The Revolving Door: A Report on U.S. Hospital Readmissions”, researchers also document significant variability from market-to-market in readmission patterns, which cannot be explained by differences in underlying patient population characteristics.

The fact that there are significant discrepancies in practice patterns, utilization, and resultant cost of providing care in markets across the country is not new news. John E. Wennberg, M.D., M.P.H., the founder of the Dartmouth Atlas, pioneered the methodology of determining population-based rates of healthcare utilization. Dr. Wennberg’s small-area analysis methodology was first published in 1973, and it uncovered significant variations in health care usage among different areas and that the higher spending was not correlated with improved outcomes as measured by mortality rates. Over the years, the Dartmouth Atlas’ research has consistently corroborated these findings, and the project continues to release reports detailing the variations in care for Medicare patients.

While the quantitative findings of this study are interesting, in many ways it is the back half of the report that is most enlightening. “Hospital Readmissions from the Inside Out: Stories from Healthcare Patients and Providers” helps to uncover the why behind the disappointing results in readmissions trends nationwide. Conducted by PerryUndem Research & Communication, the patient and provider in-depth interviews studies in this report revealed a number of the root causes of unnecessary readmissions trace to what happens – or doesn’t happen – before patients are discharged from the hospital. Quoting from report, the major reasons patients cited for readmission were:

• Patients did not necessarily see readmission as a problem
• Many patients felt they were discharged too soon
• Many patients did not understand their discharge instructions
• Care instructions were too general
• Patients and caregivers  both wished they had been more assertive (in other words, they wished they had asked more questions)
• New diagnoses posed special challenges
• Primary care physicians were missing from the picture
• Some patients had only limited or no support at home
• Some patients were not ready to change behaviors
• A few patients had chronic health conditions for years but were not educated about their illnesses
• If their doctor was affiliated with the hospital, their outcomes were better

Note that over one-half of the reasons (italicized above) cited by patients relate to ineffective, insufficient communication with patients and their families before they leave the hospital. Despite this finding, there is a tendency to immediately jump to solutions that rely primarily or exclusively on post-discharge intervention.

The temptation to jump to addressing downstream symptoms instead of the root cause of problems reminds me of the great story about the deteriorating granite on the Jefferson Memorial that has been told countless times at healthcare quality improvement seminars over the past couple of decades. The story appears in the Juran Institute’s Quality Minutes Video Collection. In case you haven’t heard the story, following is a brief recap.

The National Parks Service was having difficulty figuring out why the granite on the Jefferson Memorial was crumbling faster than at the other monuments in Washington, D.C.  At first glance, the solution to the problem seemed to be removal of the birds that were leaving droppings on the memorial – a process that would be expensive and likely inhumane. But digging deeper into the root cause revealed a simple, economical solution. Here is an abbreviated version of the root cause process that revealed the most effective solution:

Problem: The granite of the Jefferson Memorial is crumbling at an increased rate

Why? Because it is hosed off with corrosive detergent more frequently than other monuments

Why? Because it needs to be cleaned more often

Why? Because it attracts a larger bird population

Why? Because there are large numbers of spiders for the birds to eat

Why? Because there are large numbers of gnats for the spiders to eat

Why? Because gnats are most active at dusk and are attracted to the lights of the Jefferson Memorial

Solution: Turn on the lights after dusk and the number of gnats will decrease … leading to fewer spiders … then fewer birds, and ultimately decreasing the need for frequent washings

 

Are healthcare provider organizations missing one of the most important, straightforward solutions to reducing readmissions when they short-change efforts to improve patient/family communication? Using Juran’s root cause philosophy of asking, “Why? Why? Why?”, perhaps one of the primary solutions to the complex problem of excessive readmissions is more obvious than we think.

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One of the greatest opportunities for increasing savings and efficiency – and for improving outcomes - is providing appropriate follow-up care for patients discharged from institutional settings.  Study after study demonstrates that health systems that have implemented even the most rudimentary transitional care management programs realize impressive results. 

For the first time, the 2013 Medicare Physician Fee Schedule includes reimbursement for post-discharge transitional care management services. Specifically, Medicare now pays physicians and other qualified non-physician professionals for post-discharge transitional care management services (TCM services) under two new CPT codes, 99495 and 99496. Based on the 2013 conversion factor, the national payment rates for TCM are $163.99 (for 99495) and $231.36 (for 99496). 

The Centers for Medicare & Medicaid Services (“CMS”) anticipate two-thirds of all discharges will be eligible for TCM.  Based on these estimates, CMS expects to spend well over $1 billion on TCM services in 2013.

A well-designed and well-run TCM program – one that identifies and enrolls eligible patients and provides the required post-discharge services in an efficient manner- can generate significant revenue, especially if commercial payors follow CMS’ lead and pay for these services.  Also, the savings from reduced readmission and other costs avoided are significant.

Our new white paper, Transitional Care Management Programs:  The Time Is Now, provides a step-by-step explanation of the Medicare billing rules for TCM services.  The paper also details how providers can organize TCM programs to take advantage of this new source of revenue.

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We may have swerved to miss the fiscal cliff, but spending cuts will remain front and center for the next several months.  A serious plan that purports to reduce entitlement spending without cutting essential services would be likely to garner significant attention, as it would hold the promise of satisfying both sides of the political debate. 

In a new report released on January 10, the Commonwealth Fund details a ten-step program to slow national health expenditures by more than $2 trillion over the next decade, all while improving health outcomes. 

The Commonwealth Fund worked with Actuarial Research Corporation (ARC) to estimate the ten-year cumulative financial impact of implementing a set of ten policies identified below beginning in 2014.  As compared to current estimated growth in health care spending over the next decade, ARC determined these policies could generate significant savings for the federal government ($1.036 trillion), state and local governments ($242 billion), private employers ($189 billion), and individual households ($537 billion).

The ten policies fall into three broad categories:

I.             Payment reforms promoting value and accelerating delivery system innovation. ($442 billion in savings between 2013 and 2018; $891 billion between 2019 and 2023) 

A.           Keep Medicare physician payments at current levels, but adjust relative rates for services identified as overpriced; tie future increases to provider participation in population health management strategies; institute competitive bidding for drugs, equipment, and supplies.

B.           Change payment for primary care to reward care management, coordination, and patient centered medical homes.

C.           Bundle hospital payments.

D.           Adopt payment reforms across markets by requiring private plans participating in health insurance exchanges to incorporate similar payment reforms.    

II.           Policies creating incentives for consumers to choose high-value care and high-performing care systems based on comparative information about quality and costs. ($41 billion in savings between 2013 and 2018; $148 billion between 2019 and 2023)

A.           Offer a new "Medicare Essential" plan with value-based benefit design to encourage beneficiaries to seek care from high-performing care systems.

B.           Provide positive incentives for Medicare and Medicaid beneficiaries to seek care from high-value providers.  

C.           Enhance information on clinical outcomes and patient experiences to inform treatment decisions and choices of providers and care systems. 

III.          System-wide actions to improve market functioning.  ($203 billion in savings between 2013 and 2018; $279 billion between 2019 and 2023) 

A.           Simplify and unify administrative policies across public and private health plans.

B.           Reform medical malpractice policies to provide fair compensation for injury while promoting patient safety and adoption of best practices.

C.           Establish national and regional spending targets not to exceed economic growth per capita and adjust policies as appropriate based on progress in meeting targets.

Maybe not every policy championed in the Commonwealth Fund’s report will catch on like wild fire.  However, by attaching real dollar amounts to specific policy options, the report makes a compelling case that payment and delivery system reform – rather than across-the-board payment and benefit cuts – is the best starting point for entitlement reform.

Provisions in the Affordable Care Act – everything from the Medicare Shared Savings program to value-based purchasing to bundled payment initiatives – push payment and delivery system reform, but mostly over a three- to five-year window.   We anticipate those timelines may accelerate as private insurers, providers, and lawmakers better understand the potential economic impact of these reforms.    

Providers will no doubt be carefully following the budget discussions in Washington.  But providers should also anticipate and prepare for a more comprehensive move to value-based purchasing in federal health care programs than now on the books.

The Commonwealth Fund report’s estimated savings are based in part on private payers implementing reforms at the same pace as federal health care programs.  While private payer initiatives are not likely to be as coordinated with government initiatives as the report recommends, it is reasonable to expect a similar acceleration in the pace of value-based purchasing tactics implemented among providers and private payers.  The value-based purchasing “train” has left the station, so they say, and is accelerating down the tracks rapidly. 

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Hospitals and physicians keep hearing that new payment and delivery models demand collaboration among independent providers, but how can providers pursue possible opportunities given the restrictions imposed by antitrust laws?  Given the harsh penalties for violating these federal and state laws, you may be reluctant to start or join discussions about alignment opportunities.

Providers interested in pursuing these conversations with competitors (i.e., anyone who is not part of the same organization that offers the same or similar goods or services) should follow a basic code of conduct in their preliminary discussions.  Once they decide they are interested in exploring opportunities together, the providers should enter into a more formal confidentiality agreement to protect their individual interests as they work through the group process.

The following are six simple principles to include in a "code of conduct" for communicating with competitors about opportunities for collaboration and alignment:

First and foremost, keep in mind that e-mails and electronic files are permanent records.  Once you create, send, and/or store an e-mail or electronic document, you are answerable for its content.  Assume that any attempt to recall, hide, revise, or delete any electronic record will fail, and such actions could be construed as an attempt to conceal inappropriate behavior.  Always think twice before hitting the send or save key.

Second, until the parties enter into a formal confidentiality agreement, do not assume any of your communications are confidential.  Instead, assume anything you say or write to one of your competitors can be printed on the front page of the local newspaper or posted on-line.

Third, in dealing with competitors, there are five subjects that should be off limits, regardless of the way in which the parties communicate:

(1) Price fixing:  any form of agreement (written, verbal, or inferred from conduct) among competitors that raises, lowers, or stabilizes prices or competitive terms.

(2) Bid rigging:  competitors agreeing in advance which person/entity will win a bid.

(3) Market division or customer allocation:  an agreement among competitors to assign sales or service territories or customers.

(4) Group boycott/refusals to deal:  an agreement among competitors not to do business with targeted individuals or businesses except on agreed-upon terms.

(5) Exclusive member benefits:  an agreement among competitors to withhold the benefits of their business association from would-be members who offer a competitive alternative that consumers want.  If the agreement is exclusive to members and it is difficult for non-members to compete without access to those benefits, the agreement is a barrier to competition.

Any communication which could be interpreted as an attempt to garner support for such an agreement or as evidence of such an agreement should be avoided.  Review all written communications prior to distribution to ensure they cannot be construed as furthering an impermissible purpose. 

Fourth, communications should focus on working together to achieve clinical integration, quality improvement, and efficiency.  Do not discuss banding together to gain economic clout to negotiate with insurance companies, employers, health systems, or other third parties.

Fifth, do not discuss referrals as leverage to get another provider (physician, hospital, long-term care, etc.) to act in a particular manner.

Finally, as a practical matter, avoid side-bar conversations.  At this stage in the process, the goal is to develop trust among the participants needed to engage in productive conversations and negotiations. As soon as someone gets wind of the fact that x and y have been talking (and presumably making decisions for the entire group), it will be difficult to win back that party's trust.

Of course, every situation is unique, and you may require experienced advisors to guide you through more treacherous waters.  By agreeing to such a code of conduct, however, you can start your collaboration-focused conversations on the right foot, rather than stumbling out of the gate.

 

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With the reality of value-based purchasing settling in, over the past several months I’ve had the same conversation with a number of healthcare executives related to H-CAHPS performance. In describing their efforts, they explain, “We’ve set specific goals; we’ve clearly identified standards on checklists for each H-CAHPS dimension; and we’re rounding with purpose more often to monitor compliance, but ….”

“But your scores aren’t changing?” I interrupt.

“Exactly. How did you know?”

Each healthcare organization’s journey to improve the patient experience and resultant H-CAHPS scores is unique, with many factors influencing performance. But a common problem I hear from many frustrated executives revolves around the mistaken hope that applying tried-and-true approaches that are designed to change discreet, tactical procedures – the kind that lend themselves to checklists – also will change aspects of the culture that support improved H-CAHPS results.

Exacerbating the problem is the natural response to disappointing performance when you use checklists. Assuming that better hardwiring and stricter compliance is the answer, managers pressure staff to adhere to the checklist, which usually heightens frustration and discouragement. The downward spiral of employee dissatisfaction makes progress on the patient experience measures in H-CAHPS nearly impossible.

The recent experience of one hospital provides of stark example of how an organization can perform exceptionally well on process measures but struggle mightily on improving the overall patient experience.

Data in the following two graphs is taken from “Why Not the Best?” (www.whynotthebest.org), the not-for-profit Commonwealth Fund’s healthcare improvement portal, which is arguably the most robust, user-friendly place on the web to access and understand CMS provider scores. Graph 1 trends the composite care process scores of “St. Elsewhere,” an anonymous but real hospital’s current results. The institution’s progress in improving care process compliance is remarkable, moving from below the 75th percentile just a couple of years ago to above the benchmark 95^th percentile in the most recent reporting period.

One might expect an institution’s ability to move performance this rapidly on care process measures would translate to superior performance across the board. But the second graph tells a different story. For the past several years, this hospital has struggled well below the threshold 50^th percentile rank on H-CAHPS scores. (Remember that institutions scoring below the median of all hospitals receive no points in value-based purchasing scoring methodology.)

While there are surely many factors contributing to this hospital’s results, the data do demonstrate that achieving success in process does not translate directly to success in patient experience as measured by H-CAHPS.

So what’s really at the heart of this dichotomy? To understand the problem with using a checklist mentality to improve patient experience scores, let’s look at a few of the specific questions from both the Care Process Measures and H-CAHPS sections from value-based purchasing.

 

• For AMI patients, fibronolytic therapy received within 30 minutes of arrival? “Check.”
• For pneumonia patients, blood cultures performed in the ED prior to initial antibiotic? “Check.”
• For surgical patients, prophylactic antibiotic received within one hour of incision? “Check.”

Process measures are well defined and straightforward. But when you try to apply that same checklist methodology to H-CAHPS questions, compliance plays out in a very different way that doesn’t lend itself to a simple “check, complete, move-on” mentality.

• Did we (specifically, nurses and doctors) always explain things in a way that patients could understand? “I gave them the required information. I think they understood.”
• Did we always listen carefully to patients?  “I tried to listen … most of the time … I think.”
• Did we always do everything we could to help with pain?  “I told her to push her call light when she needed more pain medication.”

These examples highlight three major differences between H-CAHPS and care process scores that organizations must understand and address to make real, sustainable progress in patient experience improvement.

How, not just what

While process improvement is about doing the right things, patient experience improvement is more about doing things right. How hospitals implement clinical staff hourly rounding programs, for example, provides a great case study. Staff can enter the patient’s room, assess the required four Ps (pain, position, “potty,” and possessions) on the checklist, and then document compliance. But if they haven’t communicated effectively and connected with the patient on a personal level, the positive impact of hourly rounding is questionable.

Every patient, every hour, every encounter

Remember that the performance standard for most H-CAHPS questions is expressed in how often the practice or behavior was experienced by patients, with “Always” being the top-box response that counts in value-based purchasing scoring. Checklists work for discrete, single-incident compliance; consistent behaviors like those measured in H-CAHPS demand changes in organizational culture and peer-to-peer accountability.

Talents, not just tactics

At the heart of a majority of H-CAHPS measures is effective interpersonal communication. Assuming that all staff naturally possess the skills to communicate effectively is naïve, especially when we know that many communication encounters with patients and their families are under stressful, difficult circumstances. Just as we educate staff to ensure clinical competence, investing in staff development to build superior communication competencies supports higher performance in patient experience, patient safety and employee engagement.

Checklists are effective in standardizing performance and ensuring compliance in many care processes. But expecting them to change organizational culture and the overall patient experience is akin to prescribing a great medication when what the patient really needs is surgery.

Smart leadership teams understand the need to build a robust toolbox of diverse approaches to improve all aspects of organizational performance. Equipping staff with both the tactics and the competencies to achieve success is essential in healthcare’s move from volume to value.

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At an industry or even organizational level, it is easy to conceptually talk about the monumental changes that must occur to be successful in the emerging healthcare world of tomorrow. Concepts of population health, volume-to-value and outcomes management continue to be actively dissected, debated and developed by most healthcare provider organizations.

But from a tactical perspective, all of these new philosophies and approaches are going to require changes well below the organizational level. Ultimately, what individual healthcare professionals know and how they do their work will determine whether or not we collectively achieve aggressive goals in cost reduction and quality improvement.

In an important recent report, the Physician Leadership Forum of the American Hospital Association (AHA) examines the specific competencies that individual physicians must develop to make real progress in three major areas of focus:

• Improving the experience of care
• Improving the health of populations
• Reducing the per capita costs of healthcare

This qualitative study asked leaders serving on AHA’s regional policy boards, governing councils and other committees to consider the six competencies identified by the American Council for Graduate Medical Education (ACGME) and the American Board of Medical Specialties (ABMS) for physicians completing residency training. To that list was added “use of informatics” to recognize the Institute of Medicine’s 2003 competency priorities. Eleven competencies are grouped in the following seven categories:

• Medical knowledge
• Patient care
• Practice-based learning and improvement
• Systems-based practice
• Professionalism
• Interpersonal and communication skills
• Use of informatics

Some of the study’s results were not surprising. For instance, when asked about the overall importance of each competency, ratings for all factors were bunched at the top of the five-point scale, with the lowest rated competency – “investigate and evaluate patient care practices; appraise and assimilate scientific evidence” – rated at 4.68. Essentially, respondents agreed that all of these competencies are relevant and important for practicing physicians today.

But when respondents were asked to rate how often these skills were evident in practice, a different picture emerged: scores were lower overall and the range between the top and bottom factors was significantly wider. “Medical knowledge,” the traditional measure of a physician’s skill and reputation, was rated highest at 4.56, with “provide cost-conscious, effective medical care” rated lowest at 3.35.

The study points out that the gap between the ratings of how important the competency will be in the future and how evident it is in practice today is highest in four important areas:

• Provide cost-conscious, effective medical care
• Demonstrate skills that result in effective information exchange
• Coordinate care with other health care providers
• Work effectively with the health care team

Given the nature of medical school training and the importance placed on independent critical thinking skills and decision-making, the fact that the most significant gaps exist in the areas of “systems-based practice” and “interpersonal and communication skills” is predictable. What will make significant change difficult is the fact that physicians must begin to think differently about how they practice – essentially “unlearning” many of the traditional practices and well-entrenched beliefs about the right way to manage care.

Let’s start with the concept of providing “cost-conscious, effective medical care.” For all intents and purposes, what a specific diagnostic test, pharmaceutical, or procedure costs has not factored into physicians’ decision-making regarding the appropriate course of care for an individual patient. In fact, many physicians would argue that considering how much different care options cost raises ethical issues. Further, regulations such as the civil monetary penalties (“CMP”) statute expressly prohibit hospitals from making payments to physicians that may induce them to reduce or limit services under Medicare.

Despite strong tradition and regulation, most forward-thinking healthcare provider organizations – and physicians – would agree that we will make the most progress in reducing per capita healthcare costs with doctors at the table. This assumes, of course, that physicians come to the table with the old idea that “cost shouldn’t matter” left at the door.

Second, effective interpersonal communication, strong teamwork and coordination of care across the team – and with the patient – have not been encouraged nor highly valued historically.  But the importance of these skills and practices is reflected in more than just contemporary thinking on ways to best transform today’s healthcare system. In hospital patient experience studies by the country’s leading satisfaction research companies, “how well staff worked together as a team” is consistently one of the most highly correlated factors to patient/families’ overall satisfaction and willingness to recommend an institution to others. Simply, if physicians, nurses, and other care professionals communicate well with one another it significantly improves a patient’s experience and perception of quality.

The first important step in unlearning old ways is to recognize that there are better, more effective approaches to achieving improved results. This important study from the AHA’s Physician Leadership Forum quantifies that recognition among a group of healthcare leaders and hopefully provides further support for individual provider organizations to shed approaches that may have worked in the past but that will limit our ability to make the transformational changes necessary to sustainably reduce cost and improve quality.

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This is the second of our four-part series on the 2013 Medicare Physician Fee Schedule final rule.

For years, the Medicare Physician Fee Schedule final rule has represented the Center for Medicare and Medicaid Services’ (“CMS”) annual attempt to reign in fee-for-service reimbursement by imposing more restrictive billing rules.  This year, however, CMS is taking a step in a different direction.  Beginning on January 1, 2013, Medicare will pay for transitional care management, to the tune of more than $1 billion.

Last year, in the 2012 Medicare Physician Fee Schedule proposed rule, CMS “initiated a public discussion regarding payments for post-discharge care management services” seeking to improve “a beneficiary’s transition from the hospital to the community setting within the existing statutory structure for physician payment and quality reporting.” 

In response, both the American Academy of Family Physicians and the American Medical Association (“AMA”) formed workgroups to consider new options.  Both organizations recommended CMS create new codes and pay separately for post-discharge care transition and care coordination activities. 

CMS has, for the most part, accepted the AMA’s specific recommendation to create two new transitional care management (“TCM”) codes, 99495 and 99496.  Beginning January 1, 2013, CMS will pay physicians and other qualified non-physician professionals for the work needed to successfully transition a patient out of institutional care back into the community setting.  The specific requirements for TCM billing are detailed in the chart below. 

CMS is investing an astonishing amount of money on the promise of TCM generating upstream savings from a reduction in repeated and prolonged hospitalizations.  Based on the 2012 conversion factor, the national average payment rates for TCM would be $142.96 (for 99495) and $231.11 (for 99496).  (Absent Congressional action, the 2013 conversion factor will be 25.5% lower due to the sustainable growth rate adjustment)

For 2013, CMS estimates two-thirds of all discharges will be eligible for TCM, representing approximately 6,667,000 claims.  Using CMS’ assumption that 75% of those claims will be submitted under 99495, the 2013 TCM price tag will be approximately $1.34 billion (again, based on the 2012 conversion factor).  With beneficiaries responsible for the 20% co-payment, CMS expects to pay $1.1 billion for TCM. 

CMS estimates TCM will generate a 4% increase in payments to family medicine physicians, 3% each for internal medicine and pediatrics, and 2% each for gerontologists, NPs, and PAs.  By contrast, CMS estimates several specialists will see a 1% decline in payments due to increased TCM, including cardiologists, oncologists, OB/GYNs, and urologists. 

The following summarizes the requirements for billing TCM services:

Who is eligible to receive TCM services?	Beneficiaries discharged from inpatient acute care hospitals (inpatient, observation, and outpatient partial hospitalization); skilled nursing facilities; and community mental health center partial hospitalization programs.
What is the time period for TCM services?	30-day period beginning on discharge date.
Who is eligible to bill for TCM services?	Physicians, physician assistants, nurse practitioners, clinical nurse specialists, and certified nurse midwives (referred to as “qualified professionals”).  Rural health clinics and federally qualified health centers cannot bill for TCM.
Must the beneficiary be an established patient of the qualified professional ?	Previously established relationship is not required.
What are the required elements for TCM services?	(1) Communication with patient or caregiver within two business days of discharge (or two separate, unsuccessful attempts at communication). (2) Face-to-face visit within fourteen days (99495) or seven days (99496)(cannot be performed on day of discharge; not separately billable; may be performed at any appropriate location; elements of visit not specified). (3) Medication reconciliation and management performed no later than date of face-to-face visit. (4) Non-face-to-face care management services (see next section for further explanation). (5) Medical decision making of moderate complexity (99495) or high complexity (99496) (using E/M code definitions).
What non-face-to-face care management services are required?	The following services must be provided unless the qualified professional determines a particular service is not medically indicated or needed: Performed by a qualified professional:  obtain and review discharge information; review need for, or follow-up on, pending diagnostic tests and treatments; interact with other providers involved in patient’s care; educate patient, family, guardian, and/or caregiver; arrange for needed community resources. Performed by clinical staff or case manager under direction of qualified professional:   communicate with home health agencies and other community services utilized by patient; educate patient and/or family/caretaker regarding self-management, independent living, and activities of daily living; assess and support treatment regimen adherence and medication management; identify available community and health resources; facilitate access to necessary care and services.
When can claims for TCM services be submitted?	No sooner than 30 days following discharge.
Can multiple TCM claims be submitted for the same patient?	CMS will pay for only one TCM claim for the 30-day period following discharge.  .  The first claim to be filed will be paid.  CMS will not pay a second TCM claim in connection with a discharge that occurs within 30 days of the original discharge (i.e., if the patient is readmitted and discharged within the 30-day period.
What are the limits on submitting claims for TCM services?	A qualified professional who reports a global procedure cannot bill for TCM services for the same time period.  A qualified professional who bills for TCM services cannot bill for the following services during the 30-day period:                                        Care plan oversight services (99339, 99340, 99374-99380                 Prolonged services without direct patient contact (99358, 99359)                 Anticoagulant management  (99363, 99364)                 Medical team conferences (99366-99368)                 Education and training   (98960-98962, 99071, 99078)                 Telephone services (98966-98968, 99441-99443)                 End stage renal disease services (90951 – 90970)                 Online medical evaluation services (98969, 99444)                 Preparation of special reports (99080)                 Analysis of data (99090, 99091)                 Complex chronic care coordination services (99481X, 99483X)                 Medication therapy management services (99605-99607)

With CMS set to begin paying for TCM in just over five weeks, now is the time for hospitals and physician groups to develop strategies and processes for delivering these critical services.  For example, developing an “extensivist” program to support TCM provides an excellent opportunity for collaboration between a hospital and its medical staff. 

PYA professionals are prepared to assist you in moving forward with your TCM program.  For more information, please contact Martie Ross, Denise Hall, or Rachel Harris.  

 

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The Affordable Care Act (“ACA”) may have become the law of the land on March 23, 2010, but it became the reality of the marketplace on November 6, 2012.  Now, the health insurance reform package known as Obamacare will continue on course toward nearly full implementation in 2014.

We often refer to the “two halves” of the ACA.  The front half represents government as regulator, imposing changes on the private health insurance market with the goal of making coverage more affordable, available, and adequate.  By contrast, the back half represents government as market participant, looking to drive payment and delivery system reform in response to changes in how the Medicare and Medicaid program pays providers.

Today, our healthcare system is designed to maximize the delivery of healthcare services, as more services equal more payment.  Tomorrow, providers will be rewarded for maintaining the health of a defined population.  By changing the incentives, the government (and private payors, as well) expects providers to reinvent the system to improve efficiencies and the quality of care.

Providers, therefore, must pay careful attention to changes in the Medicare program as they are announced and identify and implement strategies in response to them.  As methods of payment change, your methods of business must do the same.  Otherwise, your financial future will be compromised.

Last week, the Centers for Medicare & Medicaid Services ("CMS") published its annual Medicare Physician Fee Schedule (“MPFS”) final rule.  This 1,362-page regulation (along with its 10 appendices) includes a few elements that fundamentally shift CMS’ historic payment policy philosophy, the impact of which we will see for years to come.

Here are our “Top Ten” critical provisions of the 2013 MPFS, all of which require careful study and near-immediate response:

(1)    New payment for transitional care management
(2)    Calculation of physician value-based payment modifier
(3)    Development and distribution of Physician Feedback Reports
(4)    Changes to Physician Quality Reporting System and Physician Compare website
(5)    Reduced payments to specialists due to misvalued code adjustments
(6)    Expansion of multiple procedure payment reduction
(7)    Additional payment for telehealth services
(8)    Foundation for new payment system for therapies
(9)    New preventive services coverage
(10)  Imposition of limits on coverage for durable medical equipment

Of course, the elephant in the room is the sustainable growth rate adjustment (“SGR”).  Absent Congressional action by January 1, 2013, the MPFS conversion factor will be reduced by 26.5%.  Some measure to forestall this one-quarter cut to Medicare rates likely will be part of whatever compromise is reached to avoid the looming “fiscal cliff” at the end of this year.  

As Congressional leaders and the President begin negotiating how to avoid the fiscal cliff, including the so-called “grand bargain” of tax increases and spending cuts, healthcare reimbursement will once again be on the chopping block.  Former Republican Senator Dr. Bill Frist recently commented, “I don't think hospitals understand how deep these cuts are going to be in the grand bargain.”  He suggested the ultimate grand bargain solution would likely focus on a 2.5-to-1 ratio of spending cuts to tax increases.  That sort of philosophy, in the shadow of the looming fiscal cliff, brings into focus the very real possibility of SGR “type” draconian cuts in Medicare reimbursement.

Over the next two weeks, PYA will circulate additional Alerts to provide analysis of the impact of key provisions of the 2013 MPFS, as well as any “SGR fix” that comes into focus.  This information will also be available on PYA’s website.  The election (and speculation over the future of healthcare reform) is over; now the real work begins.  For more information, contact Butch Bullock, David McMillan or Martie Ross at (800) 270-9629.

 

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Los Angeles hosted the Third National Accountable Care Organization Congress from October 30 to November 1.  More than 1500 individuals participated in this leading forum on ACOs and related delivery system and payment reforms. 
 
Along with Terry Spoleti, president of Glenridge Healthcare Solutions, I presented at the Congress during a session entitled How to Successfully Integrate Specialists into an Accountable Care Organization. A copy of our presentation materials is available here.

We began our presentation with a brief tutorial on accountable care economics, including the “rob Peter to pay Paul” reality,  i.e., primary care physicians’ opportunity to enhance their compensation through shared savings programs by reducing costly inpatient admissions and specialists’ services.  Next, we discussed how these economics are likely to impact specialists, as primary care providers become more selective in making referrals. 
 
Terry, whose firm specializes in network development and data management for providers and payers, demonstrated how providers and consumers soon will have access to reports regarding specialists’ scores on quality and cost measures.  In the very near future, these scorecards will have a significant impact on network and referral decisions, as well as specialists’ reimbursement rates. 
 
Finally, we discussed specialists’ strategies for adapting to the new world of accountable care.  Of course, all physicians need to be aware of, and focus on, improving their quality measure scores and their efficiency.  For specialists who are currently part of an integrated delivery system, the focus should be on expanding the patient base served by the IDS, particularly by expanding services into new markets. 
 
One such strategy is the development of a service line franchise.  Often referred to as “outreach programs” in the past, the service line franchise enhances the relationship between providers and gives smaller communities the opportunity to participate in a continuum of care for a specific disease state or chronic condition.  Local providers have access to, and training on, care protocols to manage patients closer to home, with strong referral relationships to a tertiary care provider for more specialized care. 
 
For independent practitioners, we discussed the opportunity for “clouding,” i.e., clinically integrating with other specialists in the community (the “cloud”) while maintaining  economic independence.  Among other benefits, clouding provides an opportunity for branding, and identifying a specialist with a network of high-quality, cost-effective providers.  When structured and executed appropriately with respect to state and federal regulatory issues, clouding also presents an opportunity for joint contract negotiations with payers.
 
All of the presenters at the ACO Congress offered keen insights into emerging models of care delivery.  The level of energy among the attendees reinforces our belief that change is here, and now is the time for providers to make their own destiny.

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Happy New Year!

October 1 marked the beginning of the 2013 Federal Fiscal Year.  As with each new federal fiscal year, the new Medicare hospital inpatient prospective payment system (IPPS) final rule took effect today.  As with most years, payment rates to general acute care hospitals will increase, this year by 2.8 percent. The 2.8 percent is a net update after the typical market basket update, improvements in productivity, a statutory adjustment factor, and adjustments for hospital documentation and coding changes.

But there’s also something very new and different about the IPPS final rule this year.  Starting this Monday, Medicarenow adjusts hospital payments based on how well the hospital has performed previously on a set of standard clinical quality measures and on surveys of patients’ experience.  Hospitals that have done well receive higher Medicare payments, while poor performers have seen their payments cut.  Also, Medicare now shaves up to one percent from payments to hospitals with high readmission rates.

These are two small steps forward on the long journey of payment and delivery system reform.  A study published in Health Affairs last month estimates that Medicare payments to more than two-thirds of hospitals will be affected by just a fraction of one percent.

While they may have limited financial impact today, the new VBP payment adjustment and readmission penalty make it difficult to deny the fact change is coming.  Over time, we can expect tried-and-true strategies to maximize fee-for-service reimbursement to begin unraveling, as they are inconsistent with the principles underlying value-based purchasing.  Leaders face the challenge of living in two worlds: maintaining current fee-for-service reimbursement to build the foundation for quality and efficiency essential to new payment models.

October 1 also marked a major milestone for PYA, as the firm officially opened its new Kansas City office.  Chris Wilson, Jonas Varnum and I are thrilled to join the most creative and innovative health care consulting firm in the country.  And, we look forward to the addition of our colleague and good friend Jeff Ellis in January.  ContinuingPYA’s reach into the Midwest, the KC office also adds a new public policy service line for the firm. 

Drawing on decades of experience in healthcare transactional and regulatory work, we will help providers translate evolving public policy issues and challenges into informed strategic direction.  We also will serve as a backbone organization for the facilitation of public policy initiatives for providers and public entities.  Finally, our public policy service line will deliver practical and accessible education and analysis on the forces impacting healthcare for the public, employers, providers, governmental agencies, and others.

October 1 marks more than the beginning of a new federal fiscal year:  it marks the beginning of the biggest change in health care since the introduction of DRG-based reimbursement.  Payment and delivery system reform holds the promise of aligning providers, payers, and patients in a manner than improves overall population health while containing costs.   Like the healthcare industry we serve, PYA consistently evolves and responds to the needs of providers and patients.  The addition of our new Kansas City office, our new colleagues, and public policy service line are part of the next exciting chapter in our firm’s story.  Now, more than ever, PYA is ready to support your strategic visioning for the future.

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 In an introspective conversation last week, a close friend who is a hospital CEO shared a story that reflects the real struggles most healthcare leaders experience today as they balance the significant – and often competing – demands of reducing cost, increasing quality and improving patient experience. As he was leaving the hospital on a Sunday evening after several hours of catching up on paperwork and emails, he ran into a nurse walking out at the end of her 12-hour shift. “Hi, how are you?” he asked as they walked toward the employee parking lot.

She started to reply with the expected, “Just fine.” But instead she paused. Perhaps it was because it was the weekend or the fact that the CEO was wearing a polo shirt instead of his typical suit and tie. Whatever the reason, she felt safe opening up.

“You know, I’m tired,” she admitted in a frank but respectful way. “Working shifts with a six- or seven-patient assignment seems to be happening way too often. It’s just really hard to take care of the patients and families in the way I know they deserve to be cared for.”

He couldn’t disagree with her heartfelt concerns. Sincerely, he listened and reverently replied, “I understand.”

For healthcare organizations to stand any chance of truly transforming the way that care is managed,realizing aggressive goals for lower cost, increasing quality, and improving patient experiences, candid conversations like the one between this nurse and CEO must happen more often. In many ways, the quality of our engagement with frontline nurses and how we incorporate their critical input into the difficult work of redesigning care will determine how successful, and sustainable, our change efforts will be.

In countless ways, nurses indisputably have earned the right to play a leading role in care redesign efforts at all levels. While we are sometimes reluctant to admit it, the fact is that the lion’s share of the burden of many of the necessary – but difficult – changes we are making today fall squarely on the shoulders of frontline nurses. These include, but certainly are not limited to, reductions in labor costs that affect staffing ratios, the introduction of complex electronic medical records, and increasing requirements from regulatory agencies. In addition to these challenges, research confirms that interactions with bedside nurses are among the greatest influences on a patient’s positive perception of their overall experience during a hospital stay.

The good news? The ranks of nurses are filled with compassionate, talented, dedicated individuals who were called to the profession because of their deep commitment to caring for individuals at some of the most vulnerable times in their lives. Is it any surprise that in Gallup’s annual poll of the most trusted professions in the country nursing again came out on top? The profession has held that top spot for 12 out of the past 13 years, displaced only once in 2001 by firefighters in the wake of the 9-11 tragedy.

Our patients trust their nurses to provide exceptional care. Similarly, healthcare organizations that seek meaningful change in the value and quality of care must trust their wisdom, insights, and commitment to finding solutions that will best meet the needs of our institutions and the patients we serve.

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I have profound hope in the future of the American healthcare system. And it has nothing to do with the Supreme Court’s decision that found most of the provisions of the Affordable Care Act constitutional.

Rather, I’ve seen the future of our troubled system through the wisdom, dedication and enthusiasm of Elisabeth Askin and Nathan Moore, two aspiring physicians at Washington University School of Medicine who have just completed an important new book that should be required reading for anyone who will depend on our healthcare system at some point in their lives. In other words, this is a book for everyone.

“The Health Care Handbook: A Clear and Concise Guide to the American Health Care System,” which is currently available as an ebook and will soon be in print, was inspired by Elisabeth and Nathan’s keen interest in learning more about the economic, organizational and societal challenges inherent in providing healthcare services to American citizens. Given medical school’s daunting, jam-packed clinical coursework and patient care rotations, these issues get scant attention in the traditional curriculum. So it took a handful of students with similar interests to launch a health economics and policy special interest group to provide a forum to explore important questions prompted largely by public debate around health reform.

As the group came together, they quickly discovered that contemporary, comprehensive information on exactly how our complicated healthcare system works – or sometimes doesn’t work – was tough to come by. Elisabeth and Nathan approached Dr. William Peck, the group’s adviser and the Director of the Center for Health Policy at Washington University, with the idea of writing a book to fill this void. As the past dean of the School of Medicine, Dr. Peck is intimately aware of the rigors facing medical school students. His initial reaction to the idea of writing a book while a medical school student was a respectful version of, “Are you serious!?”

Fortuitously, Elisabeth was approaching the summer following her first year, one of the few times that medical school students have several unscheduled weeks before they graduate. She applied for and received a small grant available to first-year students from the National Institutes of Health to help fund initial research and writing time for the book. With Nathan supporting the effort as primary researcher, Elisabeth completed the majority of the first draft during the ten-week break last summer.

The extraordinary commitment and discipline required to author a book – especially in the middle of medical school – must surely be inspired by more than simply a passing interest in health policy. When asked why they were so driven to complete this important project, Nathan and Elisabeth explained their desire to play a role in helping to improve healthcare in the future by advancing knowledge about how care in the U.S. is actually provided and paid for in today’s fragmented system. Their goal of producing a resource that both professional and lay audiences could read and understand has been achieved in “The Health Care Handbook.”

Further, Elisabeth and Nathan hope that this initial edition of the handbook will become an enduring legacy in the tradition of the “Washington Manual of Medical Therapeutics,” which was first published in 1942 and has become the best-selling medical textbook in the world. The manual remains current because it is updated every few years by residents in the School of Medicine, and Nathan and Elisabeth hope that future students with an interest in health policy and economics will similarly update the Handbook to provide current information on health system questions and issues.

Whether you believe that the Affordable Care Act will help make things better or create new problems, experts on all sides of the health reform debate have to admit that there are vast misconceptions and gaps in understanding about the true nature of the issues we face and how to solve them. If Nathan and Elisabeth’s new book plays even a small role in lessening this gap of understanding, they have made a significant contribution to addressing one of the greatest challenges facing our generation.

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  “Even if you’re on the right track, you’ll get run over if you just sit there.” – Will Rogers

Though the witty philosopher-of-the-people Will Rogers spoke these words decades ago, the advice could easily have been meant for healthcare providers today. By design, the Centers for Medicare & Medicaid Services will reward approximately half of the hospitals in the country with higher Medicare reimbursement under the Value-Based Purchasing (VBP) payment methodology, with the other half seeing DRG rates decline because of lower relative performance on care process measures and H-CAHPS.

While the calculation of a hospital’s VBP score is rather complicated, two straight-forward facts are easy to understand and important to heed. First, an institution’s absolute score is somewhat meaningless until it is compared to how other hospitals in the country performed. VBP reimbursement is based on the relative value a hospital delivers compared to other providers.

And second (tipping our hat, as it were, to Will Rogers), if recent trends hold, hospitals that maintain consistent performance will be “run over.” The overall trajectory in both care process and H-CAHPS scores is upward, leaving institutions that are not improving at an increasing disadvantage. This point was emphasized by Jan Gnida, the Director of CAHPS for Professional Research Consultants, at the group’s annual “Excellence in Healthcare” conference earlier this month. The slide below from Jan’s presentation makes this point graphically for several key H-CAHPS component measures.

 

 

Steadiness may be a laudable virtue in some aspects of life, but for success in Value-Based Purchasing, institutions must consistently improve performance just to stay even with the pack. Organizations that have developed a culture of continuous improvement will be best-positioned to effectively deal with VBP – and the other challenges that will likely confront healthcare providers over the next several years.

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Although it might not make the popular “What’s trending now?” lists, healthcare followers on Twitter have seen a common theme emerge over the last several days. “Our hospital received an ‘A’ in patient safety” has been proclaimed by numerous institutions that performed well on The Leapfrog Group’s Hospital Safety Score website report card released last week. The news has gradually spread to other media outlets, including my local morning news program, which included among its opening stories, “Some St. Louis hospitals are safer than others ….”

While the “A” students happily bask in their public recognition, some “C” players are quick to point out that flaws persist in the data collection and research methodology. Even though most healthcare institutions might agree that the science of measuring patient safety is far from perfect, the reality is that structural flaws are generally applied consistently across providers. Cries from “C” players that “our hospital is different” are tougher to defend when you can find examples of “A” players among all types of institutions; from large, urban, academic medical centers to small, rural, community-based hospitals.

Hospitals, physicians and health systems that accept the reality that transparency is here to stay will be best positioned to effectively compete under increasing payer scrutiny and escalating consumerism. Building a culture focused on continuous improvement and delivering higher value is the only way individual providers will survive – and thrive – in the healthcare fishbowl of cost and quality scrutiny.

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During a session on great leadership at the Becker’s Hospital Review Annual Meeting in Chicago last Friday, four prominent healthcare executives talked about the characteristics of contemporary leaders and how they contribute to a multidisciplinary, team-based culture that is essential for success.

Especially notable were insights from Pamela Stoyanoff, executive vice president and COO of Dallas-based Methodist Health System. When asked about her biggest mistakes as a healthcare leader, she humbly admitted that she found out from others that she interrupted them while talking, and her listening skills needed honing.

The powerful takeaway -- As healthcare leaders, all of us need to be as self-aware as Ms. Stoyanoff about the ways our interpersonal communication skills and practices affect the culture in our organizations.

Illuminating this important point, President Woodrow Wilson once said: “The ear of the leader must ring with the voices of the people.”
 

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For those of us old enough to vaguely remember life before prospective payment, it is easy to understand why cost-plus reimbursement might be described as the “good old days.” Like a leisurely drive on a straight country road, if you paid attention, maintained a reasonable speed, and navigated the occasional slight curve, you were fine.

Changes that began in the 1990’s significantly changed the landscape. Comparable to a multi-lane freeway, the speed of change increased significantly. Dramatic shifts in hospitals’ relationships with physicians, managed care constraints and increasing risk in payer reimbursement models were like the vehicles coming on and off freeway access ramps. If you made adjustments as necessary, and adapted to the changing traffic flow, you survived.

But like driving the dramatic, curve-filled Highway 1 along the rocky Pacific Coast, today’s healthcare roadway is filled with significantly more risks – as well as potential rewards. Leaders who are in the driver’s seat of provider organizations must pay much more attention to the speed with which they implement major changes to be sure they don’t lose key constituencies along the way.

Think of it this way: if we were driving a small, high-performance sports car we could zip through the hills and curves on Highway 1 easily. But large, complex provider organizations with many constituents to bring along handle more like a Greyhound bus. If we take the curves too fast before our staff, physicians, Board members and patients understand both the “why” and “what” of major changes, we risk careening off the cliff into a devastating crash.

Given the altered terrain, following are key ideas to consider when navigating today’s risky healthcare highway.

Collaborative planning is essential

Gone are the days when a small group of executives could craft strategic plans in isolation and still successfully implement new initiatives. Today, the strategic planning process is more important than the document it produces, giving key players opportunities to both weigh-in and buy-in to critical changes in care models, cost management and clinical service line development.

Education is vital

The economic issues facing healthcare over the next decade are daunting, so it should come as no surprise that many of the changes proposed to lower costs and deliver higher quality care are extremely complex. For Board, health system, and physician leadership, a solid understanding of the incentives and risks associated with new care models is critical to crafting appropriate responses and gaining support for significant change.

Transparency has never been more important

When key partners feel as if they have been left in the dark regarding new strategies, initiatives have very little chance of succeeding in the long-term. While it may require a greater investment of time in the early stages, transparency builds the trust that is absolutely essential.  Developing innovative care models that will be successful from both clinical and financial perspectives is not possible without a commitment to transparent processes and communication.

In an environment as complex and changing as healthcare today, it is unwise to abruptly step on either the brakes or the gas pedal; the former risks being run over by competitors while the later risks moving beyond the organization’s capacity to manage change and bring along key constituents. Smart, strategic organizations pay attention to adjusting their pace to appropriately respond to both the anticipated as well as the occasional unexpected curves in the road ahead.

 

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It was almost nine o’clock in the evening when I finally arrived at my hotel from a long day of meetings and travel in preparation for the full-day workshop I would lead the next day. I was tired, but I was also hungry. I asked the front-desk clerk as I checked in if there was a place nearby where I could still get a quick bite. She pointed across the lobby and said, “I think Joan over in the bar can still get you something to eat.”

The bar at the suburban hotel where I was staying was not exactly a hot spot on a Monday night. There were only two other people at a small table talking when I walked in and pulled up a bar stool. Joan was busy cleaning up behind the bar but cheerfully greeted me with a menu. Our small talk quickly brought her to the question, “So what brings you to town?”

“I have a meeting tomorrow at General Hospital,” I replied.

She immediately stopped what she was doing, looked at me with the appreciative smile a mother has when you ask about one of her children, and uttered three simple words.

“That’s my hospital.”

Her heartfelt expression of what General Hospital meant to her and her family said it all. Sure, she went on to explain that “her babies” were born there and that they took wonderful care of her husband when he needed surgery. But the details weren’t necessary to convey the powerful connection she had developed with General Hospital because of the compassionate, respectful care she had received there. It was as if she was telling me about a member of her family, and she was so proud of who they were and what they had accomplished.

The expression of an institution being “my hospital” is, in many ways, the ultimate compliment and should be considered as one of the best measures of success in assessing a patient or family’s long-term experiences with our organizations. It’s tough to pose the question on a patient satisfaction survey. (Asking “Is General Hospital your hospital?” just doesn’t get you to the same place.) But we know it when we see it. And this level of loyalty and commitment is a dialogue worth having among care teams to discern what it would take to elicit the same reaction and response from all of the patients as I got from Joan.

Certainly General Hospital had done a multitude of things right over the years to build the kind of trust and connection that Joan and her family felt with the institution. But my guess is that at the heart of all of those things was the sense among frontline staff – especially nurses – of each patient being “my patient” – an individual who deserves the same level of compassion and care that I would provide to my own mother, child or very dearest friend. In a business that at its core is dependent on personal connections more than any other, that sense of dedication and accountability to each individual is what will continue to distinguish the very best healthcare organizations.

 

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I frequently joke with those that I work with that my dream job is to be the “Vice President of Big Thinking.”  It would be great to have the time to take all of the complex issues we are facing in healthcare, sit in a room and come up with big ideas and big solutions.  Unfortunately, I have not yet been able to find an economic resource willing to sponsor my dream, if not imaginary, job description. Here in the real world, it seems as if the dilemmas we are facing in healthcare- reimbursement, quality, access, legislation - are closing in on us from all sides and with no real solutions in sight and no time to take them on. 

This week during the Annual Meeting of the American College of Physician Executives, I had the opportunity to have my mind stretched on this issue a bit and saw just a bit of light at the end of the tunnel.  I participated in a workshop on “Little Bets.”   It may be difficult to imagine a room full of over 200 left-brained, type A physician executives in “full creative mode,” but with some good facilitation it happened.  After a morning of doing improv acting, playing “soundball,” and generating ideas through the eyes of Einstein, Bob Dylan, and Michael Jackson to get our right brains engaged, an interesting thing happened – it worked. We actually began to come up with solutions that we could take home and implement.  And in the course of the day, I learned some important things about innovation and how we can all apply it.

Innovation doesn’t have to be big

We can all agree that our problems in healthcare are as big as they come, and most of us are approaching them from the top down with attempts at big solutions; developing an integrated delivery system, merging with another group, implementing a new IT solution.  Most of us seem to be constantly swinging for the fences, and in the process, our frustration grows.  Within the framework of Little Bets, the answer lies in “smallification”- starting to solve big problems by trying a bunch of little solutions, some of which will certainly fail.  But at the end of the day, those failures will lead us to some solutions that will stick, allowing us to get at the big problems piece by piece from the bottom up.  As the old adage reminds us; how do you eat an elephant? One bite at a time.

Anyone can do it

Many of us in leadership seem to believe that true innovation is reserved for those with lots of money or lots of time. We hear our peers criticizing ideas as too expensive, too disruptive, or too hard.  Frequently, this atmosphere of “can’t do” results in unworkable solutions that we feel the need to try despite their propensity for failure.  In the meantime, our wheels continue to spin in frustration. 

This weekend’s creative workshop gave me hope that we can all have access to the type of creativity needed to break this cycle, but it can’t happen behind our desks in our typical work flow.  No committee on the planet is designed to create, they are designed to manage. With a new set of tools, a slightly uncomfortable approach, and very little time, I watched our group of physicians create new “real” healthcare solutions that were inexpensive, scalable, and could be made ready to go live virtually immediately.

Innovation is Fun

For many, the joy of working in healthcare seems to have evaporated.  The things that drew us to this profession of caring are clouded by the storms of finance and change.  But as I watched our group create solutions, I saw true passion and joy rekindled in many of my colleagues. The fact that we were coming up with real workable solutions, and even having fun doing it, was a source of great satisfaction for all of us. Unleashing some of our pent up creativity may be just what the doctor ordered to help us recapture the real reasons we got into healthcare in the first place.

I know the challenges we are facing in healthcare are many, are complex, and sometimes feel downright scary.  But if given the right set of new tools and the courage to make some little bets in healthcare, the whole truly could once again be greater than the sum of its parts.

 

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Several months ago, I committed the mistake that strikes fear in the heart of every businessperson who is a frequent flyer:  I missed a flight. No bad weather. No huge traffic jams on the way to the airport. I simply had in my mind that the flight left one hour later than it actually did.  I glanced at the Eastern time zone label on my Outlook calendar instead of the Central time zone.

So your thought at this point probably parallels my initial reaction … How could I be so stupid!? To soothe my bruised ego, I reminded myself that on this particular day I was juggling even more issues and priorities than usual, got sidetracked by a last minute request that I had to respond to immediately, and was mentally preoccupied by a family issue that concerned me.

In short, my afternoon was very similar to a frontline healthcare professional’s typical day on a patient care unit. But there was one major, important difference. The personal price I would pay for my mistake – several hundred dollars to get the last seat on the last flight out that evening – paled in comparison to the potential price a clinical professional can pay for errors: the emotional burden of a patient’s physical harm or even loss of life.

Making care safe for patients – and caregivers

During the past decade, a number of the most forward-thinking healthcare systems across the country have embraced “High Reliability Organization” (“HRO”) theory as a path to developing safer cultures that minimize and contain errors. One of the most liberating aspects of HRO theory is the assumption and acceptance that because we are human and imperfect, we will make mistakes. Across the five core HRO principles, one organizational characteristic in particular emerges as requisite for achieving higher levels of reliability and safety -- teamwork. Interestingly, I don’t think it’s a coincidence that one of the most highly correlated patient experience factors to overall satisfaction also is “how well staff worked together as a team.”

Most healthcare providers publicly avow that teamwork is a priority and a core organizational value. But how often do our actions and decisions indicate otherwise? Following are several key questions for leadership teams to consider in assessing whether better teamwork is indeed a priority in the organization.

Do we model effective teamwork from the top down?

During my career, I’ve been a member of a leadership group that functioned well as a team and one that didn’t. Sometimes, to my amazement, that dysfunction was keenly recognized and directly transmitted to the frontline. Executive teams are made up of high-performing, often competitive individuals (frequently with healthy egos) who have risen largely by their own personal accomplishments. Unless teamwork is specifically identified as a non-negotiable expectation and openly discussed by the group, it often doesn’t happen naturally.

Have we prioritized privacy over safety and teamwork?

No one would argue that important gains have been made over the past 20 years with regard to patient and family privacy in healthcare institutions. But the larger and larger private rooms that sometimes necessitate longer, more isolated hallways away from common nurses’ stations mean that caregivers more often are flying solo, with less inherent collaboration among colleagues.

In his breakthrough book Why Hospitals Should Fly, author and patient safety expert John Nance depicts a new, safer patient unit design that might best be described as “retro.” In his circular pod format, rooms face a common caregivers’ station where nurses, doctors and support staff could see all patients from a central vantage point. Increases in patient privacy, Nance argues, should not be at the cost of patient safety. Is the circular pod design too radical a solution? Perhaps. But seriously contemplating its advantages may bring to the surface unintended patient safety compromises resulting from a heightened focus on patient privacy.

Is better interpersonal communication an organizational priority?

Over the past decade, healthcare organizations have spent billions upgrading electronic documentation and record-keeping systems to increase access to information. While these investments are an important step, their implementation too often is thought of as the answer to perfecting communication across the care team. In reality, blind reliance on electronic communication can have a detrimental impact on critical face-to-face interactions that are essential for good teamwork. A physician I was working with in one institution that had implemented a new electronic health record reluctantly described its impact on the culture this way: “It’s almost as if we turned on the EHR and everyone stopped talking to each other.” Patients and caregivers deserve the advantages of better electronic communication, but it can’t replace the constructive give-and-take of face-to-face interactions.

In today’s fast-paced, stress-filled world, strong teamwork has never been more important to ensure a safe environment of care for both patients and the compassionate professionals who have dedicated their careers to taking care of them. If patient safety is indeed a top priority, healthcare organizations must add an important question to their decision-making and investment considerations: How does this decision impact teamwork?



 

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This past weekend, I got to do something I truly enjoy. My tried and true 2007 Avalon was groaning and moaning a bit more than in days past, so I decided it was time to take the dive and go buy a new car.  Unlike many people, I actually enjoy the car buying process. I don’t know if it’s the thrill of the hunt, the joy of seeing all of the new bells and whistles, or just the simple pleasure of that “new car smell.” I enjoy it all.  After driving the requisite number and style of cars (sports cars, luxury cars, even an SUV), I settled back in to my comfort zone with a brand new shiny Avalon.  Just like my 2007 model, this new Avalon still seemed to fit my tastes just fine.

It was getting late in the day and quite honestly, I was ready to get the deal done and get home, but knew I had to be patient and wade through the requisite two trees worth of paperwork.  As I began to dive in, my sales person leaned in a bit and said – “You know, I don’t like to sell cars late in the day.”  OK, I’ll bite, I thought. “Why is that Frank?” I queried. “My satisfaction scores might be lower” he replied. “People are in a hurry and it doesn’t seem to matter how well I do. We’ll get you out of here; just don’t gig me on my survey – OK?”

In the auto sales and service industry, customer service – or more accurately customer service scores – are king.  Every interaction is followed by a phone or email survey and every salesperson and technician is constantly showing you exactly the score they need to have.  (Often, only the highest score is considered to be a “passing” score, with all other scores considered to be “failing.”)  The incentives for good scores are obviously big and have taken on an almost comic sense of importance.

As we in health care move towards subjective metrics, in the world of patient satisfaction, I can’t help but wonder if we are implementing some of these same behaviors.  When we focus too much on short-term, isolated tactics to improve scores, are we really improving the culture in healthcare organizations in a way that genuinely makes patients happy and enhances their overall experience? 
I am not saying that patient satisfaction is unimportant, I’m just curious if we are really asking the questions and improving aspects of their experience that mean the most to the patients in terms of their satisfaction.  Alternatively, could it be argued that we are simply “teaching to the test” to be sure we capture the maximum amount of revenue associated with patient satisfaction?  

All this thinking made me wonder – what questions would I want to see on my own healthcare satisfaction survey?  Sure a clean, quiet environment is important, but is that what would make me really satisfied?  Here is my first pass at a listing of outcomes that would contribute most to my satisfaction as a patient:

• I know exactly what the services will cost before they are provided. No surprises or hidden fees.
• I know my doctors provide the highest quality care in my area of need, and they have the data to prove it.
• I have access to all of my clinical and financial data all of the time.
• My doctors and caregivers talk to each other. They all know my plan of care and execute it flawlessly in concert with one another.
• I’m healthier now and have been taught how to stay that way.

I don’t know if we will see questions leading to these outcomes on a patient satisfaction survey anytime soon, but as we move toward using patient satisfaction measures more and more, I hope that we in healthcare don’t fall prey to achieving “great scores” that have no real connection at all to patients being truly satisfied.

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On one of my many road trips recently, I pulled over at a rest area for a brief stretch and caught a glimpse of something I’d never seen before. It almost felt as if I was getting to see the proverbial “man behind the curtain.”  Sitting there in the parking lot next to me was a vehicle with an enormous and complicated camera mounted to the top – the Google maps  Streetview car.  Here it sat, the very low tech way that Google is creating high tech data -putting together a comprehensive map, neighborhood by neighborhood, seemingly one frame at a time by driving across country snapping pictures from the top of this simply modified car.  Even though the data they went out to capture was time consuming and in small bits, their method seemed to be working.

Jumping back in my car and having a bit more time to ponder, I began to think about how we are collecting data in the world of healthcare.  As the industry continues to edge closer and closer to delivery and payment models based on value, alignment, and care coordination, the mad scramble to create and capture truly meaningful data is gaining speed.  The approach to find the “holy grail” of data for most appears to be integration, integration, integration.  Let’s make sure every physician, hospital, payer, and even patient are all on (or have access to) the same system with the same gigantic bucket of data.  If we can just get everyone to push all of their data into the same place, surely we will be able to divine the answers we seek. 

Google’s approach appears to be a bit different. Rather than trying to force everyone to push data into a common place, they are going out and pulling it in, bit by bit and coming up with a very comprehensive, very usable to tool that provides direction and gives meaningful information.  Our approach in healthcare to getting everyone to push their data into a common place would be like Google asking everyone in the country to please send a picture of their home to Google headquarters, hoping we all use the same size, format, color, and resolution. 

How might this model look in healthcare?  Each time a patient refills their blood pressure meds, what if their blood pressure was recorded at the pharmacy and sent directly back to the physician?  Could this allow us to begin to track the outcomes of individual medications in a more meaningful, real time way?  What if our focus was not a common electronic medical record structure that is primarily physician focused, but on creating a common portal for all patients to share data with all physicians?  Would we actually be getting better and more meaningful clinical data from the field as opposed to capturing well coded data that is designed, at least in part, to maximize our reimbursement?

I understand the privacy and operational challenges that something like this would create. It would truly force us to question the model we are currently using, but isn’t that the point?  If we continue to place all of our focus on building the perfect, fully integrated information system, we may be missing the opportunity to capture smaller, discrete pieces of information that may not initially provide us with the “big picture,” but will certainly give us useful direction along the way.

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In our conceptual analysis and debate about what really defines “patient-centered care,” healthcare organizations may be missing one of the most basic yet important issues for today’s modern family. Regardless of how compassionate, individualized and inclusive a provider’s approach may be, care is not patient-centered if it’s unavailable when the patient wants or needs it most.

I remember well my wife’s careful search for an obstetrician when we moved to a new city many years ago. In terms of criteria, healthcare organizations might guess that she would be most concerned about where the physician went to medical school, his/her hospital affiliation or office location. But as a young, practical career woman, my wife’s first priority was clear:  did he/she offer Saturday hours? “When I get pregnant,” I vividly remember her saying, “I’m not going to have time to be taking off in the middle of the week to go to doctor’s appointments all the time. I won’t even consider a practice that doesn’t offer Saturday and evening hours.”

Interestingly, my wife found an obstetrician who attended a prestigious medical school, practiced at a number of the city’s leading hospitals, had a convenient office location – and scheduled patient appointments on Saturday.

Some may believe that the fact that many physician offices and other ambulatory services operate on what used to be called “banker’s hours,” can easily be minimized as simply a minor inconvenience for patients. But in an era that requires more aggressive, proactive management of all aspects of care, access limited by hours can have significant consequences.

“In the ambulatory arena, one of the things we hear from patients is that many of them are actually trying not to go back to the hospital and get readmitted, and yet they find they have very few care options after hours,” pointed out Eric Coleman, MD, MPH, Professor of Medicine and Head of the Division of Health Care Policy and Research at the University of Colorado Denver, in a recent CMS-sponsored webinar.

Regarding patients’ after-hours dilemma, he went on to explain, “In some cases there’s a recording or a person who doesn’t know anything about them or just hears that they’ve been in the hospital, and they automatically get sent back to the ED. When the ED hears that they were recently discharged, the pretest probability of getting readmitted goes up fairly substantially.”

Perhaps the commonly held belief that many patients end up in the Emergency Room because they don’t have a primary care provider only partially explains the problem of “inappropriate” emergency care. The fact that a patient’s primary care provider or specialist isn’t available may be just as important a contributing factor.

So without returning to the days when primary care providers were expected to be on-call 24/7, how can today’s healthcare organization offer care that respects the reality that families must have reasonable access outside the hours of 9 to 5? Innovative use of well-structured after-hours phone triage programs, well-trained physician extenders, innovative telemedicine applications and even emerging IT-aided patient self-prescription applications may be options. In addition, more creative scheduling of young physicians who might be more likely to trade evening hours for something less than a 50-hour-per-week schedule could be part of the solution in some practice settings.

But the most important first step? Admitting that limited hours that do not fit the needs of all patients is more than just a patient convenience issue, it is an access to care problem that needs to be solved.

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As a traveling consultant, I eat at a lot of restaurants on the road and am frequently short on time when I do. I have had to learn to live with the very inefficient current model of business in restaurants. Wait to be seated, order your beverage, wait again, hear the specials, order my meal, wait some more, eat my meal, wait for the check, pay the bill, wait again, you get the picture.   I love good service, but why do I have to wait to be asked and for the server to share the specials with me as if it were some big secret. Information seems to be shared only when you ask, and then only in limited amounts. Why can’t I just go online, see the menu, order, and pay when I’m done with the terminal at my table? And now..here it is – they have an app for that. An iPad at every table to put the customer in charge of his destiny. This model has the potential to upend the current service model. The dependence on those running the restaurant is gone. Now the customer is truly in control. Although servers were concerned they would be put out of a job, the opposite has happened. They now have more time to focus on actual service and spend more time with their patrons. Customer and server satisfaction has increased and tips have actually gone up. Restaurants are still reluctant to adopt this, but are cautiously evaluating its effectiveness and are studying how this just might work. 

With a bit of tweaking, it seems to me that something like this would be the perfect patient centered app for hospitalized patients. One of the biggest fears and frustrations for those in our healthcare system today is the lack of information and the lack of control. How much better would the care and outcomes be if we used this type of technology to truly put the patient in the center of their own care by providing real time, up to date information? What if the “app for that” looked something like this:

• Every morning a daily summary in laypersons terms of the physician’s orders and daily notes is shared that allows the patient to advance their care. “Good morning, Mark. The doctor has changed your diet this morning. Would you like to see a menu for lunch? Click here”

• A summary of medication changes with links to layperson information on new medication as an educational tool appears with each medication update. “Your medicine for your blood pressure has been changed. Here is a link to information on this medicine. Click here for links to the pharmacy nearest your home with the best pricing. Would you like this link sent to your physician”

• “Your doctor is running late on rounds today. He has shared with us he plans to be here around 3PM. Please let your family know.” How much more time would there be for nurses to actually care for patients if this type of communication was automatic?

• “What questions do you have for the doctor today?” “When can I take a shower?” “The doctor will be happy to discuss this with you, but in the meantime, click here for information provided to us by your doctor on what to expect after this surgery.”

• “There will be a live online hangout with others who have had your surgery. Some are still here in the hospital and some have had your surgery recently and are now home. Click here to reserve your spot.”

• And this is my favorite – “Here is a running total of your bill to date. If you have any questions about your bill, click here to speak with a live representative now.” 

I understand that this type of communication would require an enormous change in culture and in systems. The creation of the “app for that” will be necessary, but not sufficient to create this change. And much like the restaurant industry, few in healthcare would be willing to jump into this with both feet. It will take a lot of momentum for something like this to occur, but many are looking for new and better ways to re-create the healthcare system every day and as the call for true patient centered care continues to grow, the “app for that” may be here sooner than we all think. 

 

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While the individual mandate for insurance coverage has been the most hotly contested aspect of the Affordable Care Act among the general public and politicians, providers have struggled more with the development of new care delivery models such as Accountable Care Organizations (“ACO”). Opinions still vary as to how important ACOs will be in making real progress in reforming the health care system, but most experts do agree that providers must be more accountable for managing cost and outcomes – with or without ACOs.

Individual examples of breakthrough success in managing cost and quality exist in physician practices and other provider organizations across the country. But important progress in three specific strategies heralded as essential for better management of care – medical homes, patient/family partnerships, and chronic condition management – has already been largely achieved in one segment of our industry: pediatrics. Adapting key lessons from the successful management of children’s health could be very helpful in better managing care for adults.

Developing Medical Homes

While many health care professionals might guess that the development of medical homes is a reaction to current health reform legislation (or even the 1990s managed care era), the concept was actually conceived and introduced in 1967 by the American Academy of Pediatrics (“AAP”). But even if the AAP hadn’t called it a “medical home,” shouldn’t the way care is managed by a pediatric practice define the way care should be provided for everyone? Convenient, responsive access when you’re sick. Structured, preventative care to keep you well. And a long-term relationship with a health care professional who is available to answer questions about everything from nutrition to serious physical symptoms.

Pediatrics also pioneered strategies to support self-care outside of -- but in cooperation with -- the physician’s office. Dr. Barton Schmitt’s breakthrough work in the 1970s at the University of Colorado and Children’s Hospital Colorado is still the definitive source for comprehensive, evidence-based telephone triage protocols for children’s health. Hundreds of programs were inspired and shaped by his work, including this author’s launch of the Answer Line at St. Louis Children’s Hospital in 1989. The program today remains one of the most important, far-reaching things I’ve been involved with in my 25+ year health care career.

Involving Families More Actively in Care

While “family-centered care” is seen by many as a contemporary idea to better manage care, especially for chronically ill patients, the concept was developed first in children’s hospitals in the 1970s. Caregivers recognized that parents deserved to be more fully involved in decision-making and all aspects of their child’s treatment. Since that time, much research around the “patient-centered care” concept has reinforced its importance, as emphasized in the recent article “Shared Decision Making: The Pinnacle of Patient Centered Care” in the New England Journal of Medicine. Seeing family members as important partners of the care team – rather than as a distraction or burden – makes sense for all patients. This is especially true in situations where the risk of readmission is high.  Family member involvement can mean the difference between effective compliance and a trip back to the hospital that may not be fully reimbursed.

Improving Outcomes and Lowering Cost for Chronic Conditions

While much work has been done across a number of diagnoses related to management of chronic conditions, none is any more impressive than the significant gains over the past two decades in asthma care and treatment among pediatric patients. Building a sense of personal responsibility and empowerment among patients are two key strategies that have resulted in the reduction of hospitalizations and emergency visits for young asthmatics. “I can control my asthma; it doesn’t have to control me,” is a philosophy that must be replicated more often in adults with controllable, chronic conditions if optimal gains in outcome improvement and cost reductions are going to be achieved. The consequences of inadequate attention to chronic disease management were highlighted last week in a news release by the Agency for Healthcare Quality and Research. The article reported that readmission rates for chronic conditions such as diabetes and congestive heart failure are significantly higher than for acute conditions.  Better understanding the proven success factors modeled and implemented in pediatrics is a worthy investment of time for those adult hospitals still struggling to significantly reduce avoidable admissions.

Despite the achievements cited above, it is not unusual for successes and breakthroughs in pediatric care to sometimes go unnoticed in the adult medicine world. But in the emerging era of accountable care, ignoring the track record that pediatric professionals have amassed in the development of constructive relationships with patients and families that help improve care and reduce costs could be especially short-sighted. Indeed, this pediatric expertise could be among the most important contributions to a system of adult care that must become more “accountable.”

 

 

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Earlier this week, CMS announced its latest updates to their Physician Compare website.  This site, required by the healthcare reform law, is designed to provide information specific to physicians related to the quality of care provided.  Although it is currently not much more than a physician directory for Medicare, it will ultimately be designed to make information on physician performance publicly available. CMS is not alone in the payer world in developing access points to provide information on physician related quality metrics. With four clicks of the mouse on the BCBS website, I can find specific information on quality (and cost) for all providers by specialty.  Again, the metrics are not robust, but the information is being developed and is easily available.

Seeing this growing access to quality information in the payer world made me curious to see what was happening in quality on the clinical side of the aisle. Certainly we, as physicians, were “keeping up with the Joneses” on the payer side, so I decided to start with the specialty societies. Even if I couldn’t find physician specific information, I was sure I could at least find some direction as to which metrics should be used to truly define quality in each specialty.  So off to the sites for the American Academy of Family Medicine and American College of Physicians I went, confident the information would jump off the page, just as it did on the BCBS site.  Alas, after 20 minutes of diligent searching, I gave up. Although both sites provided a fair amount of patient education materials, neither one provided any specific information on physician quality or how to best measure it.

As our society continues to demand access to more and more detailed information on all types of purchases, physicians are certainly not exempt.  Most of the information related to quality that is currently available, however, lives with the payers and insurers in the industry.  This information certainly can be valuable in assessing which physician to choose, but does it truly provide an accurate assessment of the quality of care provided?

We are all on a journey toward a system that will rely more and more on measuring quality and value in healthcare.  Who will define quality is yet to be determined, but it appears that those most directly affected by these definitions have yet to fully exercise their voice in this discussion.
 

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As a consultant, I spend a lot of time in the friendly skies.  On a recent flight, while once again waiting on the tarmac for air traffic control to decide my destiny, I peered into the cockpit.  As expected, the pilot and first officer were busy going through their pre-flight routine, but they were not alone. Squeezed ever so uncomfortably into the “jump seat” was a gentleman in civilian clothes, clipboard in hand, perched directly over the shoulders of both of the men who were in charge of getting me from point A to point B safely and without incident that morning.  The captain and his co-pilot went about their normal duties, not acting as if the in-flight evaluator were a distraction, but even chatting with him and treating him as a welcome addition to their day.

As I watched this real time assessment of quality unfold, I had a great deal of comfort knowing that the people in charge of my life for the next few hours were happy and willing to be graded and assessed on their performance. 

As physicians, our performance assessment is far from this model.  At best we assess ourselves indirectly, infrequently, and retrospectively.  We are in constant debate about the quality data that is available not really representing “true” quality of our care. I began to think what a real time assessment model might look like if we applied it to what we as physicians do daily.  Could it actually work?  What if rather than an annual “Maintenance of Certification” for our license, we all participated in a real time assessment by a peer through our individual specialty boards each year?  What if we all agreed that this real time assessment was a much better indicator of clinical quality than a look through the medical record long after care actually occurred? What if the results of this data were reported publicly?

With any new model, of course, the devil is in the details. The issues of patient privacy, cost of assessment and training, and a myriad of others will be brought up as reasons that something like this simply won’t work.  I am not here to say moving to this model would be easy and it certainly would not be popular among some. It would, however, move us away from debating about whether the data currently reported represents clinical quality and directs our energy on creating a renewed focus on getting our patients safely from point A to point B on their healthcare journey.
 

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2,080. 40 times per week. That’s the number of wrong site surgeries still happening annually in hospitals and clinics across the US, according to a recently released study from The Joint Commission. I read the article with great interest yesterday morning as I was making my way through several airports traveling to a client site. As I walked through an airport I stopped to watch several news stations, expecting to see some outrage at such statistics. Maybe even a catchy new headline – “The War on Error”.  I watched them all - CNN, Fox News, the political gamut – and saw…nothing. Not one story. Not even a passing interest. 

Have medical errors become so much a part of the fabric of our healthcare system that this type of news doesn’t even merit a mention? Has getting the wrong care become not only accepted, but expected?

As healthcare reform continues to press forward, we continue to design fixes that will allow us to slowly evolve into a new delivery system, all while not changing our current system too much or too quickly. We seem to have agreed somewhere along the way that some frequency of errors is acceptable, and that we need to work on this slowly, lest we break the system we have worked so hard to create.

This study proves what we already know – our healthcare system is still broken. How long will we as a nation continue to tolerate slow and steady fixes to the system, and at what cost? 

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In a nine page letter last week to CMS, the Mayo Clinic has definitely outlined its position on ACOs. Under the current proposed rules they, like many others, have publicly chosen not to participate. Mayo goes on to say that the proposed regulations are “in conflict” with the way it currently runs it Medicare operations.

Although the Mayo Clinic is only one voice in a growing chorus of dissent, I can’t help but wonder if their voice is louder than the rest. In a public letter to Senators Ted Kennedy and Max Baucus on June 2, 2010, President Obama stated that "we should ask why places like the Mayo Clinic in Minnesota, the Cleveland Clinic in Ohio, and other institutions can offer the highest quality care at costs well below the national norm. We need to learn from their successes and replicate those best practices across our country. That’s how we can achieve reform that preserves and strengthens what’s best about our health care system, while fixing what is broken." With that type of endorsement, it would hold to reason that if Mayo is a model we can all learn from and even strive to replicate, yet they aren’t going to participate in ACOs, would it be logical for anyone to participate?

I know the Mayo model is certainly not the only way to skin the accountable care cat, but they are certainly held in high esteem by most in the medical community and even more so in the political community. Although there are those who believe that one voice alone will not be enough to derail the ACO train, I do believe that Mayo’s position will significantly drive the outcome of the final rule. As a wise friend of mine once said – “Sometimes you have to count the votes, and sometimes you have to weigh the votes.”

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Recently as a colleague of mine and I were debating the latest developments in healthcare reform, he posed a not-so-rhetorical question. “So, when do you think the independent practice of medicine as we know it will cease to be?” Current statistics, if you are believer in statistics, suggest the answer to his question might be “Sooner than you think!” Hospital employment of physicians is up 75% from 2011 to 2012, operating costs in physician practices are up 51% over the last decade, only 25% of practices have successfully implemented a fully functional electronic medical record, all in the face of flat or declining reimbursement. The die does appear to be cast.

However, even in the face of what appear to be overwhelming odds, there still remain a large group of physician practices looking to reinvent themselves in any way needed to assure their continued independence. Although the independent practice as we know it will certainly change, many are unready to write its epitaph quite yet.

So what will it take to remain independent in today’s merger happy, consolidation focused environment? Here are a few thoughts (with many thanks to my colleague Jon-David Deeson for his contributions to the list below):

• Define independence – Practices may not have to be employed/aligned/merged/acquired, but every practice will need to learn to work outside of its own four walls if they are to take advantage of new payment systems, particularly bundled payments. Even the most independent of practices will need to become comfortable sharing data, both clinical and financial, with other groups and health systems.
• Measure and share your value – Living on the reputation of being the best –ologist in town who the CEO comes to see as his/her personal physician is no longer enough.  Those physicians and practices who wish to survive independently must be able to objectively demonstrate their value to patients, physicians, and health systems that they desire to have as partners and customers. Once that value is shown, proactive transparency with the data will be crucial.
• Embrace the new quality - There must be an awareness that the traditional ways we as physicians measure ourselves will not be adequate. Successful groups must not only show that they perform better than national benchmarks, they must also demonstrate that they perform better than others in the same specialty. Relative performance will become more important than absolute performance with regard to almost all measures of quality. In a world of reform, if you are not demonstrating quality outcomes, you may not be able to play at all. Those who wish to thrive must also realize that all quality measures will not objective. Patient satisfaction and communication have always mattered, but now your income will depend on mastering them and proving that you have.
• Change your ways – Although productivity still matters, maximizing your business model around a fee for service, volume focused model will not allow practices to thrive and control their own destinies. Along with the quality focus mentioned above, physicians must learn to not only provide care, but to direct care. Developing and leading a team of providers (physician extenders, care mangers, home health providers, etc..) will differentiate a physician from the rest of the pack. This model is much different than the traditional “the-doctor-will-see-you-now” model of care most physicians grew up practicing, but mastering it will be critical for any practice wishing to succeed.

It is certainly getting tougher by the day to practice medicine independently, but for those that are willing to innovate and embrace change rather than pining for the “good old days” of medicine, there may yet be hope.

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In its June 1 letter to CMS, the American Hospital Association outlined a litany of concerns and issues with the ACO proposed rule as it is currently written.  One of the key concerns brought out by  AHA was the large number of quality metrics to be tracked by participating organizations, currently set at 65 different measures.  Their proposal goes on to suggest that CMS consider a “concise set of measures” be included in the startup phases of ACOs to encourage greater participation and a greater likelihood of success in improving those metrics.  The AHA did not, however, define what it thought those metrics should be that would adequately define high quality care delivery.

Although there are certainly many quality metrics out there currently defined by CMS and others, most would agree that they have failed to capture the measurement of the delivery of truly high quality care. With that in mind, I am going to attempt, at least in part, to fill in the blank left by AHA.  Here are my thoughts on what might constitute a few new core measures for quality.

1. Physician and nurse communication as a “trigger metric”.  Even in the most sophisticated healthcare systems, thorough communication to the patient so about their care is not always the focus for all caregivers.  No communication – no quality reward. 
2.  Percent of participating physicians using clinical decision support tools – A version of this metric currently exists in the proposed rule, but is limited only to primary care.  With the rapidly growing complexity of care, not using decision support tools as they become available will become akin to not using antibiotics to treat infections. We must learn to work in new and innovative ways, using all the tools we have available, if we truly wish to improve care and lower costs. 
3. Time to implementation of evidence based care – The medical field continues to be content with slowly adopting therapies and interventions that are known to work and save lives. As an example, the use  of care guidelines around the insertion and care of central lines has been definitively shown to save lives, yet adoption across the country is not yet universal. Adoption of this type of guideline should be expected within one year of release of data deemed as “clinically significant” by a panel led by physician experts in clinical quality.

This list may not be complete and may not represent exactly the type of quality metric that CMS or AHA has in mind.  However, if we as a healthcare system, cannot successfully address some of these tough issues at the very core of care delivery, we have little hope of reaching our defined goals of truly providing the highest quality of care that we know can be delivered.

 

 

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Yesterday was no different than many other days in my life as a consultant.  Two clients, three cities, and finally arriving late evening at the hotel. It had been a long day of travel and I was looking forward to getting into my room and off of my feet. As I got onto the elevator, for some reason, the inspection certificate caught my eye and I felt compelled to read it. Capacity 1750 lbs. No more than 5 passengers. Inspection good through January 2012. And then I saw it – Certified by the State Administrator for Elevators and Amusement Rides. Elevators AND Amusement Rides?  Did I miss the “You must be THIS tall to ride this ride” sign? Visions of “approved” rusty carnival rides whirling in the air made me very glad to step out of the elevator and onto something a bit more structurally sound.

This week a new study from Mayo Clinic was released, outlining the volume of colonoscopies a physician must perform to demonstrate expertise as rated by an objective test of endoscopic skill. The study showed that the number of procedures needed to show competence in colonoscopy was nearly double the 140 procedures currently recommended. It also raised questions regarding many procedures and the training required to attain true expertise in performing them.

As we continue to plunge into a world of healthcare accountability based on value and not solely on volume, I have to ask the question: are setting the quality bar high enough? It is a difficult discussion for many practices and health systems to have, but the question of clinical competence must be expanded beyond performance that is simply ”greater than the state or national average.” Have we given our nurses and clinical staff the appropriate training to truly excel in caring for our patients? Are we holding all physicians to the same high standards for every procedure, in every setting?  Have we allocated our financial resources to truly focus on the highest clinical outcomes attainable, not just performing better than our nearest competitor? 

As the concept of measuring value and holding each other accountable for outcomes evolves, we must be cautious not to measure only what we currently can track and assume that it is good enough. We must continue to push to measure that which truly demonstrates a standard of excellence, not just a standard of competence, even if that means that some physicians or health systems won’t be able to provide that service until they can demonstrate a higher level of care. It may be difficult, but until we in healthcare hold ourselves to these new, higher standards, we will never know if we are getting elevator or amusement ride quality.

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Ask anyone who was alive in the 60’s to list the greatest accomplishments of our country and they will most certainly include the successful flight of Apollo 11 and the first moon landing.  The US spent nearly $25 billion dollars to get Neil Armstrong and company to the moon and back, but what did we really see when we got there?  Buzz Aldrin captured it best when he looked at Neil Armstrong and said: “OK. About ready to go down and get some Moon rock?” $25 billion dollars and over 200,000 miles to get there and we get…moon rock.

In 2008, the US government spent nearly $400 billion dollars on Medicare with another $200 million on Medicaid, and the numbers continue to grow every year. We now find ourselves facing the challenge of nearly 500 pages of new rules governing how this money will be spent and facing a long and arduous journey to find new models of care delivery to somehow make this all work in a new and different way. If and when we finally reach the promised land of Accountable Care Organizations, what will we find when we finally arrive?

The creation of new models of care delivery may be the greatest challenge healthcare has faced in decades, but where we actually end up may not be the most important part of the journey.  Even though our Apollo astronauts came back with a bucket of rocks, the trip to get there had great value in and of itself.  Without it we may never have had dialysis machines, CT scanners, contemporary physical therapy machines, cook/chill equipment, Mylar, athletic shoes, or even cordless power tools. 

What new innovations will come from our journey to a new world of healthcare? A patient portal app that is standard on all smartphones?  New medication delivery systems that eliminate the need for IV lines entirely? True real-time quality measures and interventions? - (Mr. Browne,  this is your patient care coordinator. I see through your iPhone app that your BP has been above baseline for 5 days. Have you been taking your medications?) And many, many others….

The destination of the new care model as it has been currently defined may end up being no more exciting or memorable than a big pile of moon rock, but the innovations we create along the way may just make it worth the trip.

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Since the term hospitalist was coined in 1996, this new specialty has grown faster than any other in the history of medicine.  Continued financial pressures on primary care, combined with increased restrictions on resident work hours and the desire of physicians for a more manageable lifestyle, created a perfect environment for the rapid growth of this field.  The success of this model has spawned the creation of similar models in obstetrics (the laborist) and, most recently, surgery (the surgicalist).  As I read through and began to digest the proposed rule for implementation of ACOs over the last week, I began to wonder if we were once again creating the perfect environment for the creation of a brand new kind of specialist….

The proposed rule has more than 50 pages dedicated to defining specific quality measures, how they will be used, and how physicians will be rewarded (or punished) based on their performance. There are 65 metrics currently outlined, the majority of which are to be measured in the outpatient, primary care setting.  Metrics include seven measures on patient satisfaction in the primary care setting, rates of 30-day post discharge visits, surveys for patients on how well they understand their care plans, “ambulatory sensitive conditions” (diabetes, CHF, dehydration, pneumonia, and others) measured both on how well you manage them as well as your ability to keep patients with these diagnoses out of the hospital – and the list goes on.  The rule goes on to outline that you must report on and perform well on each and every one of these metrics if you wish to participate in any available shared savings. The potential financial rewards for many organizations are great as are the adverse risks of underperforming. 

Primary care has been thrust into the center of medicine once again (can anybody say capitation?), but this time it appears that at least some of this model may actually stick.  Although putting the primary physician in the proverbial driver’s seat will have advantages for managing care and outcomes, there is only so much a physician can do in a day.  How will primary care physicians find the time to continue to do what they have always done – diagnose, treat, and care for their patients?  Ladies and gentlemen, I give you, The Preventionist.

The Preventionist will focus solely on the optimization of care as defined by CMS, BCBS, and any other outside entity or payer.  They will only see patients with conditions defined as focus areas for cost and quality, nothing more.  Diagnostics or other conditions? Leave that up to your family physician.  Acute illness?  We have a nurse practitioner that will see you now.  Without this focus on the ever-rising bar we are being measured against, how will any organization be able to truly succeed? This may be taking this looming model of primary care to an extreme, but ask any internist who has practiced more than 10 years if they ever thought, when they first began, they wouldn’t be caring for their own patients in the hospital?

The new rules are upon us and I do believe they were well intentioned and designed (at least in theory) to lead to better care for patients and populations at a lower cost by charging primary care, once again, to steer the ship.  However, in our haste to create a model to save money and to care for the most challenging patients, I fear we may be creating just what we are trying to avoid – misaligned incentives and a model of care that is even more fragmented than the one we have today.
 

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As I was getting my daily fix of ESPN this morning, something a bit different than the routine scores and highlights came across my TV. Two very talented men, both potentially bound for NFL stardom, were showcasing their talents for scouts, coaches, recruiters, and reporters – a panel of judges if you will. Although these players have certainly proved their talents in the past, these workouts will likely determine which player an NFL team will choose to build their future around. These workouts are vigorous, competitive, and very, very public. As draft day approaches, there is a running tally of whose stock is up and whose is down. Which player is at the top of Mel Kiper’s big board? Who will be drafted in the top ten? Will they succeed or be a bust?

As I listened to the reporter break down every step of Cam Newton’s latest pro day, I wondered what it might be like if physicians were put through this type of workout and evaluation before we were “chosen to play on a team?” If professional entertainers are subject to this type of scrutiny, shouldn’t we expect at least that from those of us sworn to care for the sick and “do no harm?”

I thought about the standard recruiting process for most physicians. A check of our background and training. A reference check from those with whom we have worked. An interview or two and a nice dinner. All of this is usually followed by an offer and a contract. Not exactly the NFL combine when it comes to assessment of quality.

The world of quality in healthcare is at a pivotal point in its history. Tracking of quality data and performance is certainly central to any health reform effort, but when it comes to individual physician performance, we admittedly have a long way to go. The arguments over which data are good enough and whether or not it “applies to me” continue to be the core of many discussions in many physician lounges and hospital board rooms. We may not ever get to the level of intensity seen on NFL draft day, but if we truly hope to deliver the highest level of quality for our patients, we must be more open to increasingly higher levels of scrutiny and evaluation of our performance.

 

 

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As a consultant, I spend a lot of time on airplanes and subsequently get to meet a new “person in the next seat” almost every week. Once the small talk is over, the conversation is nearly the same every time. “Oh, you work in healthcare! What do you think about all of this reform stuff anyway? Is there an answer?” I’m always very cautious how I frame my answer. As those of us who work in this world know, there is not AN answer so I am very careful not to endorse one model or the other, keeping the conversation turned toward the general nature of reform and the complexities it entails. 

Well today I am breaking my own rule. I want to talk about a model that just might work. I’m not sure if my inspiration was generated by the storms this weekend, making me feel a bit like the good Dr. Frankenstein, but I began to consider what a new model of care might look like if we took the best parts of some good models and built an entirely new “beast.” My thoughts are not entirely complete and your feedback is welcomed, but here goes….

The model is based on the following premises:

• Some of the best and brightest physicians have become frustrated with the complexities of billing, the noise of paperwork, and the inability to care for an unmanageable number of patients to make ends meet. As these complexities worsen, more and more physicians will either leave practice, seek out a partner (read “hospital”) to accept the growing economic risk, or move to a model of “cash for care”.
• A small number of the sickest patients consume a large share of available medical resources. In many of the new models proposed, safeguards are built in so that physicians don’t select these patients out of the care model as the risk for caring for them poses too great of a financial penalty.
• Carrots work better than sticks.

So here is the plan. Why not pay the best and brightest physicians to care for the sickest patients as simply and effectively as humanly possible? Let’s take the best parts of a concierge model of care, throw in a bit of primary care medical home and a touch of Dr. Gawande’s hotspotting model and see what we get.

The model would work like this. Take a population of no more than 300-400 patients with at least one chronic disease as their primary diagnosis and assign them to one physician. This physician would be responsible for the care of those patients and those patients only. But rather than pay the physician through any type of complex, CPT driven payment mechanism, pay them cash. No billing, no coding, simply cash up front. Sound too much like capitation? Here would be the key difference. In a capitated model, it is assumed that too much care is given and the payments are designed to reflect the risk of managing care down to a certain level of payment and reimbursement. Physicians are motivated by avoidance of an undesired negative financial outcome. In this model, the assumption up front would be one of excellent care. Remember, only those physicians who have demonstrated that they are already the best of the best in caring for complex patients would be invited. Physicians would receive payments based on their continued provision of the highest quality care to patients - not just to avoid negative outcomes, but assure positive ones. Payments would be based on the assumption that at least one hospital admission for at least half of the patients would be avoided on an annual basis. Although current payment structures for hospital care are based primarily on the volume of admissions, this model will set the stage for a value based model of reimbursement that is likely represents the next iteration of hospital payments. If you assume that a hospital admission for a chronically ill patient can quickly add up to $10,000 or more, you would very easily have enough cash flow to run a practice.   In order to assure that excellent care was given, outcome based quality and cost metrics would be measured on all patients. There would be no “quality bonuses”. Quality care is assumed and paid for on the front end. As long as the highest quality is continually demonstrated, physicians would be allowed to continue practicing in this model.

So in the end here is what we get:

• Patients who need the most care get focused attention from the best physicians leading to better outcomes of care than they can achieve in our current fragmented system.
• Unnecessary care, in particular expensive hospital based care, is reduced, thus decreasing total costs to the system.
• Physicians are rewarded (instead of penalized) for caring for complex patients with financial recognition, and by minimizing the administrative burdens inherent in practices currently.

As always, the devil on any idea like this is in the details, but if we are to come up with meaningful solutions we may need to develop a tolerance for living out here closer to the edge of creativity, avoiding the gravitational pull of current thought and the status quo.

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“Primum non nocere” – First, do no harm. This is one of the first things we are taught as physicians going through training. If Hippocrates were alive today, I think he would make it even simpler – “Do the right thing. Every time.” It seems simple. It seems so straight forward. But as we all learn, practicing medicine is neither of those things. To many physicians, medicine seems to have become a maze of complex clinical algorithms laced with a myriad of regulatory and legal hurdles and barriers to overcome. And at the center of it all is the dirty little issue no one seems to want to discuss – defensive medicine and tort reform.

On Jan 25^th, to very little fanfare, the HEALTH act was reintroduced into the House and passed by the Judiciary Committee several days later. The bill has been introduced to congress annually for the last 6 years with little or no traction at all. The bill, which focuses on medical malpractice reform, is a mere 28 pages in length - 1900 pages less than PPACA. The bill’s basic tenets are pretty straight forward: cap punitive damages; replace joint and several liability (in other words, not every physician can be held liable for the actions of other physicians); set statute of limitations on filing claims; and limit the amount attorneys can make on malpractice claims. 

The arguments on both sides of tort reform are certainly passionate, both for and against, but one thing is certain – sweeping the discussion under the proverbial rug and doing nothing (again) is no longer an option. Whether defensive medicine costs $7 billion, as the CBO claims, or $70 billion, as the AMA claims, it is a very real practice leading to the waste of very real dollars. 

We are all trying to make progress on changing the healthcare system to one that is focused on decreasing costs, improving outcomes, and holding one another accountable. If we do not address this barrier to providing high quality, appropriate clinical care, our ability to focus on the real issues will continue to be clouded and our chances of developing a truly improved care delivery system are greatly diminished.

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My last several posts have been, shall we say, a bit on the frustrated side, so I’ve decided today to change my approach and embrace my inner optimist. Rather than lament the challenges surrounding us as we all swim our way through the muck and mire of healthcare reform, I have resolved to focus on the positive and share some of the new care models that are being tried by some very innovative folks. To be sure, these ideas are not what has been in the mainstream press and not one of them has the momentum of ACO’s, but I believe there are some real pearls in each of them. This list is not complete by any stretch and I would love to hear about others that I might have missed.

• The Prometheus Payment system – The theory of getting a group of physicians together to decide what it costs to care for a particular disease, paying them upfront, and then holding them accountable for the care is a very interesting physician-led twist on the ACO. Several large health systems are trialing this system as we speak. It has significant backing through the Robert Wood Johnson Foundation.
• FaircareMD – By striving for transparency in pricing, this model targets those with large out-of-pocket expenses and lets patients choose their doctors based on price. Wouldn’t this get interesting if it also included good solid quality measures and let patients choose on value? Maybe we could call it ValueCareMD….?
• Practice Fusion – Practice Fusion provides a completely functional EMR free of charge (yes, that’s right – free). The EMR is web-based and ad-supported with non-intrusive ads throughout the product, shifting the cost away from the provider to the vendors.
• Care Practice – By providing 24/7 urgent care and house call service this group has embraced the concept of “radical access” leading to “the practice of least resistance.”
• Qliance and One Medical Group – These models are bringing concierge care to the masses. For a fee similar to your monthly gym membership, you can get a greater level of service and attention than your traditional primary care practice as well as online records access and same day appointments. This may appeal to those with a high deductible HSA plan and who are becoming more and more cost conscious.
• Hello Health – By putting patients in charge of their own healthcare through creative use of the Internet and social media, this model is truly on the leading edge of the healthcare curve, and it may be just what the doctor ordered for the new iPad generation.
• ZocDoc – Think OpenTable.com but for medical appointments. The website says it all: Find a doctor. Choose a time. See a doctor. You are in control.

Even though CMS has created a Center for Innovation, true innovation is much more likely to occur on the fringes in models like the ones mentioned above. I, for one, will be watching these new and exciting innovations closely as they continue to evolve. PPACA is certainly not the only game in town and others are providing us with lots of great ideas and information along the way. Maybe the healthcare reform glass is half full after all.

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Over the last several days I have been pouring myself into the latest information from CMS on what lies ahead in the world of quality – that being the proposed rule on Value Based Purchasing as published in the Federal Register. As with most things that the government produces, I prefer to read the original text, not only the summaries, as many of the finer details tend to get overlooked.

As I dug into the first page, I was actually a bit encouraged. We all know that quality will be included in whatever form of reimbursement is on the horizon and CMS’s approach sounded reasonable. 

Scoring methodologies should be reliable, as straightforward as possible, and stable over time and enable consumers, providers and payers to make meaningful distinctions among provider performance.

Makes sense to me. Then I read on….

After a 7 page description on why the metrics chosen were the most appropriate metrics, CMS goes on to dedicate a full 20 pages of the 39 page rule to describing the proposed scoring system, including a discussion of the use of "cube versus linear models" of the exchange function to determine ultimate distribution of payments among hospitals. It reminded me a bit of my vector physics classes from undergrad, but a little less understandable.

As those of you who know who know me well, I am in full support of integrating the measurement of quality into any reimbursement model. However, by trying to so fully objectify this measurement, it appears as if CMS has created (or at least proposed) a system that is begging to be gamed by those that participate in it. How long will it take for vendors to begin promoting “key indicators” that, if focused on and improved, will lead to greater reimbursement? And even if these “key indicators” are met, will we really see any appreciable improvement in quality of care? By focusing on payment reform first and care delivery reform second, we are once again creating another model of measurement rather than a model of improvement.

I don’t have all the answers, but I do believe as do many of my colleagues, that for any new delivery system to succeed, there will need to be a greater degree of collaboration between physicians and hospitals. If a measurement system of this complexity is ultimately implemented, it may very well lead us to the law of unintended consequences. By focusing on the details of the payment system and not the improvement of the delivery system, we make it more difficult, if not impossible, to achieve the integration, alignment, and redesign necessary to build the new delivery system that we can all agree is sorely needed.

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This may be a surprise to some of you, but I do not look good in a mu’u mu’u. For those of you who may not know, a mu’u mu’u is a very comfortable, very loose fitting Hawaiian dress that just sort of hangs off the shoulders of the wearer. It is designed to fit almost anyone and to be worn for any situation. And although it may fit over my frame, I certainly do not look good in one.

As I read and follow what’s happening in the healthcare landscape, it seems to me that many people are searching for the mu’u mu’u model for healthcare. What can we design that fits (most) everyone in every situation? And by doing so we have lost sight of the fact that there are very likely multiple solutions to this very complex problem.

Last week Atul Gawande wrote an excellent article in The New Yorker entitled “The Hot Spotters” that asked the question Can we lower healthcare costs by giving the neediest patients better care? His arguments were both persuasive and thought provoking. I do believe, this model may indeed work for certain patient populations – the sickest among us, but will almost certainly not work for the remainder of us. Models such as Qliance in Seattle or Hello Health in New York City provide new and innovative ways of seeing patients and will be great for some, but will not work as well for the patients Dr. Gawande describes.

Much of the discussion and debate on Capitol Hill and around the country is focused on which model will improve quality the most and save the most cost. This equation too frequently circles back around to a model which is driven by the most efficient payer structure or by what will fit into the already existing mammoth infrastructure that exists in healthcare today. As long as we continue to ask the question of which model is best, I fear we will continue to get the same answers. The question we should be asking is how can we best care for very different patients with very different healthcare needs. Before we all get herded blindly into the ACO corral, let’s be certain we are focusing on caring for the needs of patients, not just the need to have a solution.

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In yesterday’s Wall Street Journal, Tennessee Governor Phil Bredesen presented a well-written argument to show how many employers may benefit financially under the new healthcare law by no longer providing insurance coverage to their employees as a direct benefit of employment. Today, Louisiana Governor Bobby Jindal announced that his state would delay changes to the Medicaid system that would have made care available to thousands of the poorest citizens of his state due to opposition from many hospitals there. 

As I read both of these pieces, I couldn’t help but notice something, or should I say someone, continues to be conspicuously absent from these discussions. Throughout Governor Bredesen’s piece he refers to “coverage,”“plans,” and “employers” caring for patients. Governor Jindal’s plan refers to “coordinated care networks” caring for patients. Networks, plans, and employers do not care for patients – physicians do. 

As politicians and businesses scramble to try to define and implement the new normal, physicians continue to be seen at only at the end of every story, simply reacting to each new twist in interpretation of the law as it is imposed. With few exceptions, physicians seem to be content to follow the actions of others.

I am not calling for a massive rebellion on the physician front, but simply for individual physicians to begin to take a leadership role in the process. Ask most physicians and they will agree that the current delivery system is unsustainable and that changes must be made. If we as physicians want to be more than a footnote in this process, then we must begin to take a more active role in shaping it as it unfolds.

 

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This morning United Health Care announced its new Cancer Care Payment Pilot. According to UHC, this pilot is designed to “advance a new cancer payment model that focuses on best treatment practices and better health outcomes.” As a matter of fact, most agree that the cost of treating cancer under the current model is unsustainable. As evidence for this position, Dr. Michael Neuss, an oncologist from Cincinnati, described existing payment plans that reward physicians for using expensive chemotherapy medications as “our dirty secret” in today’s New York times. In this world of the “new normal” of healthcare reform, I am “all for” exploring new models of care that attempt to provide the best care at the best price, but that does not appear to be the true goal of this model.

In reviewing the details of the model as outlined by UHC, this new pilot will reimburse providers utilizing a bundled payment plan based on the “expected cost” of treating a patient. The physician will choose the care plan, but all reimbursement will be independent of the drugs that are chosen to treat the patient. Basically, the physician will get a flat fee for what it should cost for him/her to see the patient in the office, plus a bit of a bump for case management and drug administration. The drugs will be reimbursed at cost, removing any profit incentive for the physician.

So far so good right? Not so fast. Although the disincentive for profiting on medications may lead to lower costs, what incentive will there be for truly improved quality and better care? Reading on in UHC’s press release, they do mention that they will be measuring the number of emergency room visits  (a cost measure), the incidence of complications (a cost/quality measure), and “health outcomes.” Exactly how they will be measuring outcomes is not said.

Even if you give UHC the benefit of the doubt that they are going to create robust, meaningful, outcomes-based quality metrics (which I am admittedly skeptical of), they have missed the boat on one very important piece of this equation. None of these quality metrics appear to be tied in any way to the physician’s income. How much the physician is paid is tied solely to the time likely to be spent caring for the patient – a bundling of expected fee for service payments, nothing more.

Creating appropriate incentives for any behavior is complicated, but B.F. Skinner showed long ago that negative reinforcement is short-lived. If you desire to have long-term change, you must reinforce a desired behavior. We must create new models that help us reign in cost. However, without including positive financial incentives that reward the best care, we will simply end up with another band-aid approach that rewards the payer, frustrates the physician, and fails to provide incentives to improve the outcomes of those at the center of care, the patients.

 

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Last week the healthcare world was all abuzz. The federal government was set to begin the journey that every player in the marketplace has been waiting for, the road to the accountable care organization. Over 300 industry leaders gathered in Baltimore to hear just how this was going to occur, to hear the “new normal.”  Well… that’s not exactly what was heard. Although there were some mentions of changes to safe harbors and inclusion of all players, not a lot of new and different ideas were shared. While following those who were live tweeting the event, comments like “..is an ACO a PHO without the H?” and “Without antitrust legislation, we’ll have only large hospital networks remaining..”  and even “..capitation is on the horizon” were the norm of the conversation.

The closer we get to implementation of this “new” model, the more similar it appears to ideas that have been tried (and failed) before. It seems we have not yet developed the appetite for a model that is new and truly different.

Apple’s iPad has been out for less than a year.   It is anticipated that within the year it will have its own category of electronics, and will outsell netbooks by a large margin within the next two years. The iPad was expected to do well, but not this well. The iPad, like healthcare reform, was promoted as something new and truly different. But the iPad was not only new and different, it was also better for the customer…at least at some things. It made doing things that customers truly wanted to do (get information fast) better and easier, even at the cost of not being as good at others (word processing, gaming, etc.).

In an article in Kaiser Health News this morning, the author outlines how many industry players are lining up to make ACO’s work – not for the patient, our customers, but for them, the providers of services. These industry insiders all seem to be afraid of what they might have to give up under this new model of care, and are looking to make sure they maximize their own gains. There may be a lesson for us to learn from our friends at Apple. If we truly want to improve our model of care, we are going to need to give some things up. Everything cannot stay the same with different titles. Different for the sake of different is not going to cut it either. If healthcare is truly going to be reformed, we need to come up with both “different” and “better” – for the providers AND for the patients. So the question remains, does the highly publicized and government-endorsed accountable care organization meet these standards? Based on those attending the listening sessions this past week, I’m afraid the jury is still out.

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As we continue to move further down the path of healthcare reform, finding ways to focus on and measure the quality of clinicians is generating more and more discussion. An article published this week in the Columbus Dispatch highlighted the value of board certification as a proxy for quality. The article even went so far as to reference the possibility of a higher rate of pay for physicians who maintain their certification. Opponents to board certification argue that performing well on a multiple choice exam does not truly represent good clinical quality, and that the cost to the physician as well as the time lost caring for patients in this era of physician shortage is not warranted. 

In a related article from NPR, the dying art of physical examination of the patient was highlighted.  In a 2002 study of family physicians, less than 40% could correctly identify 12 common heart sounds.

It would seem to me that these two studies cry out for the same solution – include hands on testing as a component of demonstrated competence for physicians. Now, before I cause a revolt at the ABMS, let’s think about this for a minute. Nurses are required to continually demonstrate hands on competencies in most hospitals to continue working in individual units such as the ICU. To be certified as an open water lifeguard you must demonstrate at least 4000 hours of open water experience to even be considered. If you want to fly a multiengine commercial jet you need at least 280 hours of experience, 10 of which are under the eye of an inflight instructor while demonstrating all the requisite skills needed to fly in a myriad of different circumstances. Why then would it seem so far fetched to require the same demonstration of skill for physicians? Combine a written course to assure mastery of knowledge with a live demonstration of clinical skills relevant to each physician specialty.   Putting something of this nature into practice would of course be very challenging, but if we are truly going to demonstrate quality, this may be a good place to start the conversation.

 

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This week the newly appointed head of CMS, Dr. Donald Berwick, gave his first public speech since his appointment in July. As the speech opened, he mentioned a lot of the “what’s” of healthcare reform; costs must decrease, new ideas are needed, we must work together, change is imperative, etc He did not, however, mention much regarding “how” he intends to lead us there. Further into the speech however, Dr. Berwick may have given us a glimpse into his plan. He referred to a “three part strategy" to:

• Improve the experience of patient care;
• Attack population-wide causes of disease; and,
• Reduce per-capita costs of health care. 

This strategy is an apparent reference to the “Triple Aim”, a concept first promoted by Dr. Berwick following its introduction in an article published in the journal Health Affairs in 2008.

Since his appointment, Dr. Berwick has been criticized for not outlining a solid plan to implement healthcare reform. When asked how he would do just that in his original article, Dr. Berwick did have a plan. That plan included some very difficult and not very politically popular suggestions: global budget caps on total healthcare spending, measurement and fixed accountability for the health status of populations of patients, standardized measures of care and quality, sharing of financial gains with those that help reduce cost and improve quality, and training clinicians to improve their ability to change processes of care. Curiously, Dr. Berwick chose not to include any of those suggestions in his speech this week.

Over the last few months, the healthcare reform debate has been peppered with cries of things that various groups will NOT do, but no one has yet emerged as the leader who has the ideas of what we CAN do to achieve meaningful reform. Among other attributes, leadership involves establishing a clear vision, sharing that vision clearly so that others can follow, and then providing the information, knowledge and methods needed to accomplish that vision. I may not agree with every tenant of Dr. Berwick’s plan, but he at least he (at one time) had a plan. By choosing not to continue casting his vision for that plan, the opportunity to become the leader healthcare reform desperately needs may just have passed him by.

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We all have our guilty pleasures. One of mine is reading my weekly issue of Sports Illustrated cover to cover. During this time of year, every issue ends with the same column titled “Things I Think I Think” – a column dedicated to “all the latest news, buzz, and inside information”. Like all of you, I have been bombarded with buzz daily about the latest developments in healthcare reform. In an attempt to keep up, I have immersed myself in the law for the last several months, trying to make as much sense of it as I can. After taking in all of this information, and adding in a few of my own thoughts, here (so far) is what I think…I think.

• Even though I get email every day on how to be one, and the law allows for the formation of them, I don’t believe that ACOs are ready for primetime just yet. There is a lot of good that may come from them in theory, but the operational challenges of actually designing, implementing, and successfully managing an ACO are daunting at best. The complexities of actually pulling all of the moving parts together may prove too much for the majority of healthcare organizations, leaving much of what the law has set out to do a distant goal for many. 
• The pilot project that CMS has underway for orthopedics, interventional cardiology, and cardiovascular surgery is already approaching the halfway mark, with preliminary performance data expected in November of 2010. These bundled payment models are likely here to stay, at least in high dollar specialties. There are several facts that lead me to this conclusion. First, these models are designed to jointly incentivize physicians and hospitals in their efforts to deliver high quality care by removing the primary reimbursement barrier facing them today; disparate payment systems that are misaligned.  Secondly, the outcomes metrics in these specialties are well developed, and some of them have already been rolled out by CMS for public comment outside of the demonstration project to be used in other portions of the healthcare law. And last, but certainly not least, the enormous amount of financial savings that is likely to be gained by implementing these models will simply be too great for CMS and other payers to ignore.
• Physician payment reform may not come in the form of repealing the SGR, but will be greatly shaped by the Value Based Payment Modifier section of the new law. This section (section 3007) is designed to reward physicians who deliver high quality, low cost care with respect to their peers by changing the amount paid per work RVU. The metrics to be used are due out by January 2012, rule making is set for 2013, with full implementation scheduled for January 1, 2015. This may seem a long way out, but the advantage this modifier may have over other methodologies is that it avoids the need to overhaul the payment infrastructure currently in place. Once quality metrics are defined, you will simply be paid more (or less) per work RVU using the same systems that CMS currently has in place.

At the end of the day, I guess what I think I think is that even though we have a long way to go before all of the pieces of the puzzle fall into place for truly meaningful reform, we are soon to see the effects of several of these pieces,  signaling the beginning of truly significant change to our system.

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This week Modern Healthcare released its annual list of the top 100 most powerful people in healthcare. It’s populated with many people who most would agree are quite powerful –Barack Obama, Nancy Pelosi, Bill Gates, and the list goes on.  Perhaps more interestingly, however, are the people who topped the 2008 list of healthcare’s power brokers – Steve Case (founder of AOL and Revolution Health), Eric Schmidt (CEO of Google) and Hillary Rodham Clinton – who have dropped off of the list entirely. If they had such enormous power two years ago, why are they seemingly no longer even in the equation?

Webster’s dictionary defines power as “the possession of control or command over others; authority; ascendancy.”  Power is fleeting. Exerting power may allow you to achieve your short-term goal, but it has a downside – it gets used up. If your only approach is to exert or impose your will to achieve your ends, there will always be another waiting to take your place.

Influence is another thing entirely. It is the capacity or power of persons to be a compelling force, to produce effects on the actions, behaviors or opinions of others. In short, to influence is to cause long-term, meaningful change.

For better or worse, we now have an outline for change to our healthcare system, but we have yet to see the type of long-term influential leadership needed to sustain and implement meaningful change. There are some new and creative ideas out there; some of which just might work, but unless we can identify consistent, passionate, and effective leadership in healthcare at the highest levels, the door will continue to spin.

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As all of us who work in healthcare know, we are all swinging for the fences to hit the home run of Electronic Health Record ("EHR") implementation. Practices and hospitals across the country are racing to make sure all of the myriad of boxes are checked, T’s are crossed, and I’s are dotted to be sure that their version of the EHR meets all of the new standards for meaningfulness. There are core measure items and menu measure items – pick all from column A and some from column B and you now have meaning. The search for meaning has been defined, but achieving it still seems a very distant reality for many of us that are just stepping up to the proverbial plate.

In the midst of this mad scramble toward meaning, two very different studies on IT were released this week. On Monday, a study was published stating that only “fully functional” emergency department EHR’s led to lower lengths of stay and lower waiting times. The study goes on to say that only 1.7% of the systems surveyed met the definition of “fully functional”. In fact, if you ended up in an ER with an EHR that was of the more basic variety, your wait time was likely to be longer than the majority of hospitals with no EHR at all. (A swing….and a miss.)

On Thursday an article in the Boston Globe's health blog, White Coat Notes, highlighted a new study being undertaken by the Emergency Department ("ED") in Boston’s MetroWest Medical Center. The program allows patients to text the ED to check on wait times. One of the goals of this program is to “promote better customer service” by decreasing waiting times. At the time of publication of the article, over 450 patients had sent text messages to the two emergency departments in the MetroWest system. The average wait time was 24 minutes to see a physician. (A bunt down the third base line…and he scores!)

Like many other parts of the new healthcare reform world, many of the goals may be admirable, but seem unobtainable and overwhelming to many hospitals and healthcare providers. Successful implementation of the EHR across the healthcare system may be the home run we are all looking for, but if we want to achieve true meaning for IT in healthcare, we may have to hit a few singles first.

 

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This past week, Nevada’s state board of health found itself in the middle of an all too familiar debate – just how much information should hospitals be required to share directly with the public.  The debate arose over a new regulation that would require Nevada hospitals to report hospital acquired infections to the CDC’s infection database. That information would then be available to state regulators to track, trend, and respond to as needed.  The information would not, however, be available directly to the public. In leading the debate against full public disclosure, Bill Welch, the president of the Nevada Hospital Association, stated that although he was against allowing the public to identify which hospitals had which infections, he was in favor of “meaningful transparency.”
 
This debate over how much to share already has taken place in at least 27 other states. But as I read how others had solved this, I began to believe we aren’t looking for the right answer as much as we are asking the wrong question.
 
As an industry, healthcare is going through a transition in the realm of quality.  It is moving (or in some cases being moved) from only measuring processes of care – did the patient get an aspirin - to measuring outcomes of care – did the patient live or die?  Forces from within the industry, such as doctors Pronovost and Gawandi, and external forces as great as the new healthcare law itself are driving healthcare quickly toward this goal. While progress is being made, we are far from the end of this transition. 

Focusing on “how transparent we are” misses the point.  When we can focus on and achieve meaningful quality as demonstrated by consistently improved outcomes, debating over who sees the data won’t seem very meaningful at all.

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Recently, a friend of mine went out to his car late one night to run an errand, only to find that it would not start. He was immediately concerned as he had an early AM meeting that he couldn’t miss. He had just replaced the battery so knew it must be something else. Knowing nothing of cars, he did what any of us would do, he Googled it. One brief phrase – “Infiniti QX56 won’t start battery new”—and presto, up popped three online mechanics, one at $15, one at $25, and one at $45. Choosing the middle of the range, he clicked on the link and there was his trusty online mechanic at 11:30 PM to answer his questions and hopefully solve his dilemma. After a brief history of the problem, the mechanic quickly shared with him what he thought to be the most likely answer – it was a relay switch. Fortunate for him, this particular model has 6 other relays that are identical, one of which was to the fog lights. The fix was simple; he would just need to switch out the two parts. Knowing that my friend was not adept in the ways of car repair, the mechanic, e-mailed him a diagram of where to find the correct part, he switched it out, and like magic, his car started up. Thirty minutes after getting online – Problem solved.

As I thought about this story, it made me wonder about how we continue to care for patients today. My physician’s office is one of the very few places in my life that I have to wait for an appointment in order to receive the information I want or need. A friend of mine called last week for an appointment as a new patient with a specialist she needed to see. First available appointment – 6 weeks.

Much of the discussion we are seeing is about how physicians must change the way we practice in response to healthcare reform and the new law. Although that is undeniably true, there are other forces of change at work in the world of healthcare. Given that nearly everything else in our lives has become designed around immediate access, it is only a matter of time until physician practices must find a way to get on board. 

• New models of care, using social media tools and immediate access such as hellohealth are emerging. Follow @jayparkinson on twitter to see more.

• Jennifer Shyne Dyer, MD, [@endogoddess] is using texts and tweets to monitor her diabetic patients. 

• The Mayo Clinic recently launched its new Center for Social Media with the tagline Bringing the Social Media Revolution to Healthcare.  

If physicians are to survive and thrive in this new healthcare world, they will need to join in this “revolution,” developing new and creative ways to care for their patients and make information immediately available to them.  How long will it be till your patients are really able to see you…now?

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This past week, CMS announced a public comment period on several newly released quality metrics focused on stroke outcomes – 30-day all cause mortality and 30-day readmission rates. As I spend most of my day working on healthcare reform and quality, I spent the weekend diving into these metrics, wanting to be sure exactly which clinical improvements CMS was looking to incentivize physicians and hospitals to achieve. I quickly scrolled down through the 30-page “Measure Information Form,” looking to find the definition of the metric and why it was chosen. I had to go about 10 pages into the document, but there it was.  I came upon the section titled “Measure Justification” with the subtitle "Importance.” Under this impressive heading, CMS went on to say it would define this "Importance” by the "Extent to which the specific measure focus is important to making significant gains in healthcare quality (safety, timeliness, effectiveness, efficiency, equity, patient-centeredness) and improving health outcomes for a specific high impact aspect of healthcare where there is variation in or overall poor performance.” OK. Makes sense so far.

Not too much further into the document, CMS goes on to define the Summary of Evidence of High Impact. Perfect. This is just what I am looking for. Let’s see – Affects Large Numbers. I can buy that. Stroke affects almost 800,000 people every year in the U.S. Next. Leading Cause of Morbidity/Mortality. Stroke is the third leading cause of death in the U.S. after heart disease and cancer. Well said. CMS seems to be right on point. Next. Severity of Illness Stroke survivors frequently experience significant long term disability. And finally – High Resource Use. The estimated direct and indirect cost of cerebrovascular disease for 2010 is $73.7 billion. Hey, wait just a minute. I thought we were talking about improving clinical quality. How did this get in here?

When I was a young physician in training, we spent hours learning to read and interpret clinical studies, always keeping current on the latest trends to assure we were providing the best clinical care to our patients. It wasn’t that we were trained to ignore the cost of care, but we didn’t include it as we defined whether or not quality was improved. Quality was on one hand, cost on the other, and we weighed them together in our decision. Now it seems as if that line has become a bit blurred. 

In 2007, CMS released a report to Congress entitled “Plan to Implement a Medicare Hospital Value-Based Purchasing Program.” The report's goal is defined by moving more towards a value-based system of care as follows:

CMS recommends replacing the current quality reporting program with a new program that could include both public reporting and financial incentives for better performance as tools to drive improvements in clinical quality, patient-centeredness, and efficiency.

When you critically examine current demonstration projects, the trend continues. Right alongside of "Post-operative stroke” you will find "Average and median length of stay” both listed as metrics to measure quality.

When the definition of whether or not quality is achieved is dependent on the resources consumed, are we limiting our focus to only those outcomes that also provide financial savings? Has cost become the new sine qua non of quality? Maybe the new line isn’t that blurred after all….

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“I read the news today, oh boy"

The outlook for Medicare has improved substantially, or at least so say the Trustees of the Social Security and Medicare trust funds in their recently released report. According to this latest report, Medicare will now be solvent until at least 2029. The good news is, this is 12 years longer than previous estimates. The bad news is, I will only be 64 – 2 years short of eligibility for my full Medicare benefit. Paul McCartney's words – “Will you still need me, will you still feed me?" – suddenly have taken on a very personal meaning.

According to the report, this windfall for Medicare is entirely due to “...program changes made in the Patient Protection and Affordable Care Act.” It goes on to say that “If health care efficiency cannot be substantially improved through productivity gains or other measures, then over time the statutory Medicare payment rates would become inadequate.”

This new math is quite telling. With all the new programs and new ideas, why does health care reform only buy us 12 more years in an admittedly optimistic, best case scenario? For all of the talk about continuity and coordination, this plan is largely focused on gaining efficiencies in our current system. New models of payment do not necessarily equal new models of care. There are certainly opportunities to lower our costs, and improve our delivery, but there is a limit to the efficiency you can gain in any system. There is only so much juice in the proverbial orange. 

We are currently living in a system of uncoordinated sick care with the goal being to move to a system of coordinated health care. Although the new law moves us in that direction, it really only gets part of the way – to a coordinated sick care system. Unless we can continue to move toward a model of truly coordinated health care, we are simply delaying the inevitable. We may have a good start, but we still need a better plan.

Title: When I'm Sixty-Four, John Lennon & Paul McCartney

Opening Quote: A Day In the Life Lyrics, Paul McCartney

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"It would be so nice if something made sense for a change.”

Alice in Wonderland

One of the primary challenges of living in the new healthcare world is embracing the concept of value. Value in the world of healthcare means mastering the balance between improving the quality of care while simultaneously decreasing its cost. I frequently am privy to debates on what constitutes “real” quality and how is it going to be defined and by whom, but I am rarely questioned about cost. Cost would seem to be rather straight forward. Not so fast. A recent study published in the Journal of Hospital Medicine showed that only one tenth of hospitalists were within a 10% accuracy rate when surveyed about the actual cost of commonly used inpatient services, tests and procedures. Some were off by thousands of dollars. A recent article on healthleadersmedia.com referred to this phenomenon as “price opacity”. The article goes on to say that It would be almost unheard of for you, the individual patient, to be able get a clear price on a menu before the service is delivered”

One of the key tenants of healthcare reform has been the promotion of transparency, mostly focused on quality. I do agree that transparency is necessary and will ultimately lead to improved care, but if we are ever to get to truly improved value – not just improved quality – we are going to need to find a way to clear the smoke from the costs of care for physicians and patients alike.

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Great Britain and the National Health Service are having a rough week. A total overhaul of the “model” healthcare system with $30 billion in savings targets needed to keep the country from fiscal ruin were announced to a flurry of political wrangling. One paper called the US healthcare effort a “warm-up act” in comparison. Trying to keep up with all things healthcare, I read the summary of the new healthcare proposal for Great Britain, hoping to pull out a nugget or two on centralization of care or significant payment reform. What I found headlining the summary surprised me – “First, we will put patients at the heart of everything we do.”

Now, maybe I shouldn’t have been so surprised. Healthcare is, after all, supposed to be about the patients we care for. My curiosity piqued, I looked at our new law, the PATIENT protection and affordable care act to see how our focus on patients compared. The proposed law in Great Britain is very direct – “The Government’s ambition is to achieve healthcare outcomes that are among the best in the world. This can only be realized by involving patients fully in their own care.” They have dedicated the first section of their new law to ways for the patient to lead his or her own care and focus on shared decision making.

How did we tackle this?  The words “patient decision” are used together a total of 25 times in our new law, 24 of which are contained in a single section outlining a demonstration project on the creation of patient aids to help patients make the “right decision” about their care. The words “shared decision” found a mere 13 times, 9 of which are in the same demonstration project mentioned above.  

I’m not here to say the British have gotten it all right. I do believe however that there is a valuable lesson to be learned. Allowing patients to have a shared decision-making role can be uncomfortable for us in the industry for a myriad of reasons. But without it, will we really be able to make significant change in our system?  More and more research has shown improvement in outcomes as well as cost savings by including patients more directly in their own clinical decisions. With the majority of our discussion focusing on the “affordable care” piece of the puzzle, we may all be better served by realigning our focus on the patient.

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As a father of three teenage boys, my life is rarely dull. Their insights and slant on most things are generally entertaining to say the least. Last night as I was sitting at my dinner table, my 16 year old son caught my attention.  “Dad, the folks who make video games have got it figured out. They are marketing geniuses. They must be rolling in money.” Curious, I asked what he meant. He went on to share with me that on his new gaming system, there was a small avatar that sat in the lower right hand corner of the screen. According to my son, this avatar had no purpose whatsoever. It was not part of the game. It didn’t even move. It just sat there and blinked. The gaming company, it seems, has developed a system of buying “points” as imaginary money and with this money you can customize and dress your avatar in any way you wish. My son, perplexed by this, said “Dad, why would anyone buy something that has absolutely no value?”

My thoughts immediately went to the world I work in every day… the world of healthcare. CT scans for every headache in the ED? MRI for everyone with back pain? The list goes on.

As a physician, I do understand that the thought that goes behind these decisions is complex, but our current system has led some to pursue this type of behavior with incentives that are far from clinical. According to a recent survey by the Commonwealth Fund and Modern Healthcare, 93% of those healthcare leaders surveyed believe that current financial incentives for providers and other stakeholders are “extremely significant” or “very significant” barriers to the growth and adoption of new care models such as accountable care organizations. As we transition to a new system which places a greater value on quality, we as health care leaders have an obligation to ensure that these incentives are designed to assure true value is delivered. Let’s make sure we are no longer just “dressing the avatar."

 

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PYA’s one-stop healthcare reform information website is getting great reviews in its debut at the American Health Lawyers Association conference in Seattle.

PYA ReformLoupe is our free, interactive website that continuously updates our firm’s healthcare alerts, news stories, blogs, social network sites and other Internet information while it idles on a computer desktop or mobile communications device. Users can also use ReformLoupe to search the hundreds of pages of the healthcare reform act (PPACA.)

Typical comments from Seattle are: “This is great. What’s the subscription fee?” When told there’s no cost to use it, the next question is, “For how long?”

The original idea was to do something that is quick and easily accessible for physicians, healthcare executives and others, like attorneys, whose primary professional interests are in healthcare. As our affiliates at Bluegill Creative were building and designing the site, we decided that journalists, bloggers or anyone else with an interest in healthcare reform might find it useful. We opened it up for everyone, and there really is no cost for using it.

Users can customize the flow of information they want to see, save their preferences for the next visit and search the summary of the federal healthcare reform law.

Look for posts from several of our staff, including Marty Brown, senior healthcare consulting shareholder; Mark Browne, MD, principal consultant and a former practicing physician and hospital executive; James Lloyd, shareholder and healthcare valuation specialist; and Carol Carden, a finance, valuation and managed care consulting shareholder.

After you’ve visited the site, let us know what you think and give us your suggestions on the Contact link.

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NY Times:

In Health Care Overhaul, Boons for Hospitals and Drug Makers

March 21, 2010

“Hospitals have little to fear...the hospitals agreed to help defray the costs of the legislation by agreeing to contribute $155 billion....”

Moody’s Investors Service:

Long-term Credit Challenges of Healthcare Reform Outweigh Benefits for Not-for-Profit Hospitals

April 2010

So who are we to believe? The “old gray lady,” a journalism destination in the midst of a journalism wasteland...or a comprehensive analysis as prepared by Moody’s Investors Service....

The conflict of perception is stark in its nature, but it reflects the lack of understanding by millions of people about the impact of the PPACA.

I find Moody’s analysis to be thoughtful and thorough; yet even it is limited by the potential impact of reconciliation, state reactions, regulatory interpretation, and numerous other competitive reactions.

To quote Roger Goodell, NFL commissioner, “do not let 'perfect' get in the way of better.” But there is always a better, and I don’t think better will always come out of legislation. To wit, hospitals did not agree to defray the cost of the legislation by agreeing to contribute $155 billion over 10 years as the NY Times states. Hospitals simply absorbed this legislative impact, understanding that other significant changes must occur which will hopefully offset this cost.

This analysis of PPACA is still not complete. And as patients and providers are impacted, you can rest assured, more changes will be promulgated. Providers, however, must begin the planning and education process now. We have performed five health system education sessions for their board members and the dialogue that has occurred in those sessions was superb and thought provoking.

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I continue to hear that 2014 is the year that so much of PPACA will really "kick in."  Our clients have been lulled into this false sense of security. In today's PYA Alert, it is apparent that action must be taken immediately in the areas of In-Office Imaging Services and Refund of Overpayments.

Please read the alert to see if you are impacted, and if you haven't already subscribed, please sign up here to receive PYA Alerts.

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I work with clients daily who are trying to best prepare themselves by implementing quality-based incentive compensation into their physician alignment strategies. As healthcare reform continues to be better understood and begins to be implemented, it is critical that hospitals understand how these bonuses/penalties will work.

The clients I work with are prone to latch on to the concept of a 1% to 2% bonus for quality outcomes, citing Pay for Performance and similar programs. However, the industry is moving away from a “carrot” and more to a “stick.” Healthcare reform will continue this movement. I found an interesting article that lays out the direction of quality-based incentive compensation in the future.

For hospitals that want to be on the forefront of the quality-based incentive compensation movement, it is important to start now by:

1. redesigning metrics based on outcomes;
2. requiring improvement year to year to continue earning incentive; and
3. incorporating down-side as well as up-side criteria in the agreement.

 

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In 1995, leaders from two health systems and Pershing Yoakley & Associates tackled what many thought was an impossible task – improve medical care and patient satisfaction while reducing costs. They embraced the challenge by developing a comprehensive provider network that contracted to serve over 130,000 TennCare (Tennessee’s Medicaid program) members in Tennessee.

This wasn’t your typical healthcare initiative. The network previously servicing that population had lost over $35 million in its first year and was tracking to lose over $25 million in its second year, despite numerous efforts to contain costs.

In approximately 90 days, a network of over 1,200 providers was developed and contracts finalized. The network consisted of providers for all levels of care from home health to major medical centers. Policies were developed, including care plans, to promote the best medical practices while improving patient service. Below are a few examples of the network’s efforts to provide high quality care less expensively.

• Primary care physicians were assigned to every member to establish what is now commonly referred to as a “medical home.”
• Case managers were hired to serve those having the greatest needs or facing medical crisis.
• Highly trained, experienced pharmacists were made available for consultations with physicians to assist in managing medications for those seriously ill and/or facing chronic medical conditions.
• Arrangements were made with bus and other transportation companies to provide transportation for those lacking such resources or with special needs to ensure members could travel to appointments.
• Robust data systems were developed to monitor and report information to staff and management to allow timely monitoring of utilization.
• Caregivers were recognized and rewarded for successfully improving patient outcomes and service satisfaction.

In addition, care initiatives were promoted that would have long-term benefits. As an example, vaccination rates for kids exceeded 95%, a rate previously unheard of for this population.

Within six months of start-up, the network was successful beyond everyone’s dreams. Enrollees were receiving high quality healthcare in appropriate settings. Emergency room usage was dropping and unnecessary inpatient hospital admissions were virtually eliminated. Patient satisfaction scores were vastly improved and physicians participating in the program became its champions. Finally, those financial losses were eliminated as the network’s financial results were break-even by the fifth month.

In short, those responsible for the formation of the network were ecstatic and dreaming of promoting it as an effective model for the state and, ultimately, the country. That never happened.

The Downfall

During the network’s second year of operations, a federal judge ruled that certain TennCare benefits or services could not be limited as designed under the plan, including prescription drugs.  The ruling was seen as being so pervasive that common medical management practices were discouraged due to the legal risks of being deemed a violation of patient rights. Demand for services, particularly prescription drugs, exploded.

As an example, the average cost per member per month (“PMPM”) for prescription drugs was approximately $20 PMPM when the initiative began. After the judge’s ruling, prescription costs began rising rapidly, quickly reaching almost $40 PMPM. The decision was then made to shut down the network as the potential financial and legal risks were overwhelming. We continued to follow data on the enrollees, learning that prescription drug costs eventually escalated to over $80 PMPM within a very few years. 

The enormity of the TennCare funding problems ultimately required the governor and legislators to work on reform provisions that limited the impact of the judicial rulings. The scope of benefits was narrowly defined and strict limitations enacted.

Unfortunately, the “model” network was a casualty long before the crisis was solved. Those involved in its creation are still troubled by the loss of such an effective program. Those that advocated for a broad expansion of benefits, indirectly contributed to substantial restrictions in benefits. As I read about other states facing budget deficits and escalating healthcare expenditures, it repeatedly reminds me of the promising results of our initiative that were undermined by the actions and/or inactions of those who did not understand the unintended consequences of their positions.

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There is no doubt that cost control will be a major component of efforts to overhaul the current healthcare system.  These efforts are now only vaguely spelled out in the Patient Protection and Affordable Care Act (PPACA) and include such approaches as the development of accountable care organizations (ACOs), implementation of patient-centered medical homes (PCMH) and utilization of global payment methods (perhaps a new and improved version of capitation).  Quality of care will continue to be a driving factor, which incidentally means that pay-for-performance (or value-based purchasing) will be emphasized in payment reform.  For example, the PPACA outlines the implementation of the hospital value-based purchasing program with a proposed effective date of October 1, 2012.  Acute care hospitals will receive bonus payments for performance in five measures.  In the following year, hospitals will also be evaluated utilizing efficiency measures such as Medicare spending per beneficiary in addition to the five core measures. 

Similar to the Balanced Budget Act of 1997 (BBA), it is also quite likely that a reduction in physician payment for services may also become necessary (termed "productivity adjustments" in the PPACA).  However, while physicians did see a cut in payment during the initial years of the BBA, payment was increased in subsequent years.  The report issued by the CMS actuary determined that "projected Medicare cuts could drive about 15 percent of hospitals and other institutional providers into the red."  It seems that it would be somewhat counterproductive to open up healthcare coverage to additional millions while jeopardizing coverage for others.  Another potential impact of cutting payment to physicians, other than its effect on current physician practices, hospitals and Medicare beneficiaries, is fewer physicians entering the field of medicine in the future.  Should the proposed payment cuts actually be enacted, it is probable that fewer graduates will commit to practice medicine.  This would be very detrimental to healthcare access. 

It seems that cutting costs while attempting to improve quality and increase access to care will require extensive creativity and great sacrifice on many fronts.  The Rolling Stones said it best - You can't always get what you want.  I just hope that as we try very hard as a nation to find the best solution to our healthcare issues we will get what we need. 

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The patient-centered medical home (PCMH) is not a new concept, but it's getting increased attention as a result of the Patient Protection and Affordable Care Act (PPACA).  Under the PPACA, the newly funded Center for Medicare & Medicaid Innovation will evaluate the effectiveness of medical home models.  Many healthcare providers have already begun to implement the medical home model in an effort to provide more coordinated care, improve quality and decrease overall healthcare costs (read about Blue Cross Blue Shield of Texas and Carillion's implementation of a medical home model). 

Some say that the PCMH model is just a new version of the "gatekeeper" model even though there are significant distinctions between the two.  Under the new legislation, it is very likely that primary care physicians will play a more central role in the healthcare delivery system - more playing time on the field.  So, what are the key tenets of a PCMH?  The AAFP and the NCQA both lay out some basic requirements in their extensive checklists - but here are a few to get you thinking.

• On-going relationship with a personal physician
• Physician-directed medical practice
• Whole person orientation - care across all stages of life
• Coordinated care across all facets of the healthcare system and the patient's community
• Emphasis on quality and safety
• Enhanced access to care
• Payment reflective of various components - i.e. support adoption and use of health IT, e-mail and telephone consultation, separate fee-for-service payments for face-to-face visits, share in savings from reduced hospitalizations, additional payments for quality improvement

It will be interesting to see if a shift to PCMH models on a nationwide scale will in fact reduce healthcare costs while improving quality and outcomes.  A shift in the paradigm, a procedurally-based payment system emphasizing the role of specialists to that of a primary care physician playing a larger role in the delivery of care across the healthcare spectrum, will require more primary care physicians.  Do we have the necessary resources to build this medical home?  Time will tell....

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I read a few interesting articles regarding planned expansions by the nation’s largest retail pharmacies in Business Week and this one in Health Leaders. CVS, Walgreens and Wal-Mart have all announced plans to greatly expand their in-store clinics in anticipation of primary care shortages due to healthcare reform and the increase in the number of Americans with insurance coverage.

While the clinics themselves do not typically generate a profit, the additional foot traffic will likely improve profits for retail pharmacies resulting in increases in their value. It will be interesting to see if the regional and local pharmacies (to the extent these still exist) follow suit resulting in an overall upward movement in acquisition multiples for pharmacies across the nation.

For those of us involved in the healthcare valuation industry, we will need to keep this shift in operations and its potential impact on the valuation of not only pharmacies, but also on primary care practices in mind.

 

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Approximately 4 years ago, a family friend who was a practicing attorney in his early 60's had a moderately complex valve surgery performed at a reputable hospital. He was told he would eventually need the surgery, but it was not critical to have immediately. He decided to proceed with the surgery.  He was in relatively decent health. He survived the surgery and recovered well, getting moved from CCU to private room within a couple of days. Then he acquired an infection (sepsis). He never returned home, leaving a widow and many loved ones.
 
Risks are inherent in any invasive procedure. But the incidence of hospital-acquired sepsis and pneumonia are preventable and manageable. Without doing so, the costs are extraordinary. For example, Healthcare Financial Management Magazine recently reported that in 2006 alone there were 48,000 people "killed" due to these two hospital-acquired infections. The cost of these infections totaled 8.1 billion dollars....and this does not include the cost associated with the loss of a productive life, as in the case of my friend.
 
The ultimate face of real healthcare reform will likely include more accountability for these types of results as, indeed, government payers such as Medicare have already begun to reduce payments for such infections. Clinical outcomes must be the centerpiece of real reform. Time will tell if PPACA will accomplish this or not. But rest assured that a central tenet  of any health system strategic plan we are privileged to lead will include a focus on improving clinical outcomes. Consumers cannot easily discern quality in healthcare (see Michael Millenson's post about misunderstood Joint Commission data.), but numerous efforts are under way to provide real direction for consumers. This will, of course, eventually impact market share, as it should.
 
We are interested to learn more from our clients and friends about how they discern quality. Are there websites you utilize? Reports you read? Let us know. We will of course keep you posted on all things Quality, Strategy, and Finance related to healthcare, so check our healthcare blog often for updates.

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Now that federal healthcare legislation has been signed in to law, I hope that the fiscal impact of the legislation does not imitate that of other reform efforts made at state and regional levels. What appeared to start as an expressed effort to contain rising healthcare costs now appears to expand access while failing to include enough remedies to contain costs. Increasing access is an admirable and worthy goal; failing to recognize and prepare for the total financial impact can be hazardous to fiscal health.

In 1994, the state of Tennessee enacted TennCare as a Medicaid waiver program to expand access to Medicaid coverage to total approximately 1.4 million Tennesseans while controlling rising state healthcare expenditures.  It was a commendable goal, but an action that led to massive increases in state healthcare funding obligations. The resulting budget crisis jeopardized the State’s bond rating. The crisis was a catalyst that forced bipartisan efforts to contain costs by slashing enrollment and reducing benefits. Leadership by Tennessee’s current governor, Phil Bredesen, a former managed care health insurance company executive, was instrumental in defusing the crisis. Some who closely observed that crisis wonder if our federal branches, executive, legislative and judicial, will be facing similar challenges within this decade. 

Immediately upon passage of TennCare, numerous efforts were made through the judicial system to expand benefits. Such efforts were surprisingly successful, causing providers to face legal risks if they denied any form of care as medically unnecessary. Utilization of services, including emergency rooms and inpatient hospital facilities, exploded. Physicians “closed” their practices to new patients to avoid the escalating legal and financial risks. Evidence of the inability for providers to manage utilization was Tennessee’s quick ascension to first in the nation in prescriptions per capita for psychotropic drugs. One provider network, established to be a “model” program was initially successful in balancing the management of care and resources while increasing quality and member satisfaction scores. It promoted public health initiatives such as increased vaccination rates and annual checkups while establishing  “medical homes” for its membership through a strong primary care network. It was enormously successful in its first two years as it addressed many of the challenging and perplexing issues of balancing provider resources with patient needs. However, a federal judge’s ruling regarding TennCare program benefits and coverage made it apparent that it would be impossible to manage utilization of resources without being exposed to enormous financial and legal risks. The “model” network soon elected to shut down operations as it foresaw the inevitable financial collapse it would face if it attempted to meet unrestrained demands for medical services.

One definitive difference between the current federal initiative and Tennessee’s program is the federal government’s ability to pay for its legislation by borrowing through budget deficits. By constitutional mandate, Tennessee must balance its budget annually, as must most states. That “limitation” probably saved the economic well being of the state. Legislators could not reportedly “kick the can” down the road for the next legislative session or administration to fix. Thus, the funding crisis never grew to an overwhelming magnitude. Our federal government has no such imposed discipline. 

Some may say, “This time it’s different.” Some have even pointed to the Massachusetts’ initiative, a state much different than Tennessee. Massachusetts’ universal insurance program was adopted in 2006 at an expected annual cost to taxpayers of $88 million annually. Timothy P. Cahill, State Treasurer of Massachusetts, recently wrote in The Wall Street Journal that the program “has been a fiscal train wreck.”  Massachusetts’ governor has just recently announced a $294 million shortfall related to healthcare costs. In his editorial letter to The Journal, Mr. Cahill wrote:

If not for federal Medicaid reimbursements and commitments from Washington to prop up this plan, Massachusetts would be broke. The only reason MassCare has survived is that we have been repeatedly bailed out by the federal government. But that raises the question: Who will bail America out if we implement a similar program? 

Many who have worked on various state and regional reform efforts also ask that question. We desire meaningful, affordable reform. Some, like me, fear those who have crafted this federal reform do not grasp the frightening enormity of possible unintended consequences. Our national leaders would not be the first to make such a mistake. Just ask Massachusetts. Just ask Tennessee. The scale of the federal initiative is exponentially larger than those of Tennessee and Massachusetts combined. Unfortunately, and frighteningly, so are the possible unintended consequences.

So, what’s my point? The need for healthcare reform is irrefutable. Even the leaders of both parties agree on that! Now that we have a starting point, the just passed legislation, let’s demand bipartisan efforts to effectively implement the plan. When problems arise, and they will, don’t stand on the sideline pointing out the issues. Jump in and be part of the solution.

Learn from Tennessee’s experiences. TennCare has trod a rocky road, but our state and its residents are better for it having been implemented. Its evolution has been painful at times. However, Tennesseans now have an affordable program that does provide much needed coverage for 1.2 million residents. Children have benefited enormously. TennCare, and now CoverKids, effectively serves kids at greatest risk. I do not know how one “puts a price”on that. It seems priceless to me. 

I think we all should follow the example of Tennessee Governor Phil Bredesen, who deserves praise for his effective leadership in transforming TennCare to the program it is today. Governor Bredesen, who opposed the federal reform legislation that just passed recently, said he’s “going to get on with the business of figuring out how to make this work.” Sound advise for all, both those who supported the federal reform legislation and those who opposed it. When unintended adverse consequences arise, all should try to address and mitigate such. And when unforeseen benefits for our country appear, let’s gratefully acknowledge those as well.

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On March 30^th, President Obama signed into law the Health Care and Education Reconciliation Act of 2010 (the “Reconciliation Act”). This Act is the final piece of legislation relating to healthcare reform and modifies some items contained in the Patient Protection and Affordable Care Act (the "Healthcare Act”) signed into law last week. It also includes some additional items previously unmentioned, as detailed below.

Unearned Income Medicare Contribution – Beginning in 2013, the Reconciliation Act levies a 3.8% surtax on the lesser of net investment income or income in excess of a defined threshold amount. The thresholds are $250,000 for a joint or surviving spouse return, $125,000 for married individuals filing separately, and $200,000 for all others. For estates and trusts, the 3.8% surtax is on the lesser of undistributed net investment income or income in excess of the highest estate or trust tax bracket.

Individual Health Insurance Requirement – Penalties for the lack of coverage continue to be phased in starting in 2014, but the penalty itself decreased slightly from the ones noted in the Healthcare Act. By 2016, penalties will reach the greater of $695 per uninsured adult or 2.5% of household income, with a cap of $2,085 per family. 

Penalties on Large Employers – After 2013, penalties will be assessed on largeemployers (those with at least 50 full-time employees) that do not offer affordable health coverage and have any employees who qualify for tax credits because they purchased insurance on an exchange. The Reconciliation Act modifies the penalty amount to be $2,000 for every full-time employee over a 30-employee threshold, regardless of how many employees actually receive a tax credit.

Dependent Coverage – Effective upon the President’s signature, the general exclusion for reimbursements for medical care expenses under an employer-provided plan extends to any child of the employee age 26 and under as of the end of the tax year.

Excise Tax on High-Cost Employer-Sponsored Plans – For tax years after 2017, a 40% nondeductible excise tax will be levied on insurance companies and plan administrators for any health coverage plan to the extent that the annual premium exceeds $10,200 for single coverage and $27,500 for family coverage.

Health-Related Accounts & Reimbursements – The Reconciliation Act postpones the changes related to flexible saving account limits. The amount of salary reduction that can be deducted under a flexible saving account is decreased to $2,500 beginning in tax years after 2012.

Photo used under creative commons license by Speaker Pelosi.

Related Posts:

• Healthcare Reform Legislation: Overview of Facts
• Upcoming Changes for Individuals due to Healthcare Reform
• Upcoming Changes for Businesses due to Healthcare Reform

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On March 23rd, President Obama signed into law the Patient Protection and Affordable Care Act (the "Act").  Though this Act has been signed into law, a second piece of legislation, the Reconciliation Agreement ("Agreement"), continues to be debated at this time.  If signed, the Agreement could alter some aspects of the Act as detailed below.

In summary, the Act imposes penalties on businesses that do not provide health coverage, adds credits for small businesses that do provide coverage, and changes some reporting and compliance items.

Penalties

After December 31, 2013, employers that either do not provide health coverage or offer unaffordable coverage and have at least 50 full-time employees could be subject to a penalty of $750 per full-time employee, as an inducement for employers to provide health coverage.  This penalty will only apply if an employee becomes entitled to a tax credit (as described in the March 24th summary), meaning they otherwise have coverage on the individual market or through a health insurance exchange.

If an employer does offer health coverage and an employee obtains a tax credit, the penalty is increased to $3,000 for each employee that obtained the credit, but in no case more than the company would have paid if it did not offer insurance coverage.

Possible changes from the Reconciliation Agreement, if passed, would exclude the first 30 employees from the penalty calculation, but increase the penalty to $2,000 per full-time employee on employers that do not offer insurance coverage.

Small Business Health Coverage

Small businesses that make contributions towards employee health benefits will be eligible for a credit that offsets a portion of the cost of coverage.  To qualify, the business must have no more than 25 full-time employees, provide qualifying medical coverage and pay average annual wages of less than $50,000 per employee.  For years 2010 through 2013, the credit is equal to 35% of the lesser of the employer’s non-elective contributions for premiums paid for coverage or the average premium for the small group market in the employer state.  This credit is effective for amounts paid after December 31, 2009 with the credit increasing to 50% in 2014.

Reporting and Compliance Changes

The Act adds a requirement for employers related to Form W-2 reporting.  The value of employer-sponsored health benefits must be disclosed on Forms W-2 for years beginning after December 31, 2010.
 
Also, the Act extends the filing of Forms 1099 to include services provided by corporations, where before corporations have been exempt from reporting, and to include amounts paid for property in addition to services. These changes are effective for amounts paid after December 31, 2011.
 
Please note that the Reconciliation Agreement items described above have not been signed into law by the President at this time and are subject to change.  If you would like more information on this new legislation, please contact Doug Yoakley or Heather Martin at (800) 270-9629.

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On March 23rd, President Obama signed into law the Patient Protection and Affordable Care Act.  Though this Act has been signed into law, a second piece of legislation, the Reconciliation Agreement, continues to be debated at this time.  If signed, the Agreement could alter some aspects of the Act as detailed below.

In summary, the Act requires that most individuals obtain health insurance, provides a refundable healthcare premium tax credit (to help affordability), and increases the adoption credit, but adds limits on health-related accounts and reimbursements and increases the threshold for claiming medical expenses as an itemized deduction.  A large portion of revenue raised to offset the cost of the Act will come from an additional Medicare tax on higher-income individuals.   

Medicare Tax Changes

Effective for wages paid after December 31, 2012, the Act imposes an additional 0.9% Medicare payroll tax on earnings and wages exceeding $200,000 ($250,000 for individuals filing jointly), thus raising the rate from 1.45% to 2.35%.

In addition, the Reconciliation Agreement proposes an additional Medicare tax on unearned income for tax years beginning after December 31, 2012.  If the Agreement is passed, an additional 3.8% surtax will be imposed on interest, dividends, capital gains, annuities, royalties, and rents from passive activities that exceed the earning thresholds mentioned above.

Health Insurance Requirement

Under the Act, beginning in 2014, most individuals will be required to obtain minimum essential health insurance coverage or pay an annual penalty.  “Minimum essential coverage” includes coverage under an employer plan, governmental plan, or any plan offered on the individual market.  To encourage individuals to obtain coverage, the Act includes a number of provisions intended to increase the availability and affordability of coverage. 

The penalty will be phased in starting in 2014 and will reach the greater of $750 or 2% of income by the year 2016, with a cap of $2,250 per family.  Exceptions to the penalty include individuals in transition between plans and low-income individuals.  If passed, the Reconciliation Agreement would slightly decrease this penalty structure.

Refundable Healthcare Premium Tax Credit

For tax years after 2013, the Act provides a refundable tax credit to individuals who purchase healthcare coverage on the individual market or through the newly-established health insurance exchanges.  This credit is available to those with income ranging from 100 – 400% of the poverty line ($43,420 for an individual or $88,200 for a family of four).  Some advance payments of this credit will be provided to help individuals pay for coverage.

Health-Related Accounts and Reimbursements

For tax years after 2010, the Act limits medical reimbursements from FSAs, HSAs, HRAs and MSAs to prescribed medicines, drugs and insulin, thereby eliminating over-the-counter medication (unless prescribed by a doctor).  The Act also increases penalties on non-qualified distributions from HSAs and Archer MSAs (from 10-15%) to 20% for tax years after 2010. 

The itemized deduction threshold for deducting un-reimbursed medical expenses will increase from 7.5% to 10% of the taxpayer’s adjusted gross income for tax years beginning after December 31, 2012.  For taxpayers over the age of 65, the threshold remains at 7.5%.

The Act also limits the amount of salary reductions that can be deducted under a flexible savings account to $2,500 beginning in years after 2010.  The Reconciliation Agreement would postpone the flexible savings limit to years beginning after December 31, 2012. 

Adoption Credit

The Act increases the child adoption tax credit and adoption assistance exclusion from $12,070 to $13,170, extends the credit through 2011, and makes the credit refundable.

 
Please note that the Reconciliation Agreement items described above have not been signed into law by the President at this time and are subject to change. 
 

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