Bundled Payment? Not So Fast!

From Boston.com’s ‘White Coat Notes’:

By Liz Kowalczyk

A new survey from the Massachusetts Medical Society reveals interesting divisions among doctors over plans to hold down health care spending — and perhaps some words of warning for lawmakers.

More than half — 58 percent — of the 1,100 doctors who responded to the society’s survey this year said they would not voluntarily agree to treat patients under so-called global payments.

Global payments, which are considered one of the best hopes for saving money on medical care, put providers on a monthly per-patient budget for care. That’s a big change from the current fee-for-service system, which allows doctors and hospitals to bill for each separate service rendered to a patient, with few limits on the number of services.

Primary care doctors were more accepting of global payments than specialists; just 32 percent of specialists said they would voluntarily participate in the system.

These responses may be instructive for legislators, who are working to finalize legislation that could include strong incentives for global payments. They may have to be ready to mandate the change to a new payment system and provide financial assistance with the transition, or at least be prepared for an intense educational campaign to bring doctors around.

The medical society did not ask doctors why they’re skeptical, but….

To read complete ‘Doctors: We aren’t ready for global payments’, click here.

Editors Note: so even in the ‘people’s republic’ of Massachusetts where innovation and a more ‘risk friendly’ attitude is found a la west coast culture, the mainstream of medicine’s comfort level remains attached to traditional fee for services compensation.

ACO Accelerated Development Learning Session

Sponsored by the Center for Medicare and Medicaid Innovation & Centers for Medicare and Medicaid Services

On November 17-18, 2011, CMS is hosting its final “accelerated development learning session” (ADLS) to educate executives about ways to organize and administer ‘Accountable Care Organizations.

The session will be held at CMS headquarters in Baltimore, MD.

For more information, or to register, click here.

Follow The Money?

By Jeffrey L. Cohen

Conversation regarding ACOs and even healthcare reform itself is misplaced. The well established facts are (1) more people will receive health care, and (2) the cost of healthcare will come down. It does not matter whether the stimulus is a new law or just marketplace reaction. The fact is that a healthcare system whose players are incentivized to do more with more expensive stuff is not economically sustainable or socially tolerable.

Take a look at our evolving marketplace. What’s the single most distinctive feature in healthcare, aside from inactivity? Integration. Larger hospital systems and larger medical practices, typically single specialty. Good adaptation? Maybe. It is in the short run. Single specialty aggregation is purely defensive though. It allows groups to maintain market share and to resist price compression better. But how will that allow providers to do more with less? How will that stimulate more outcome based, financial risk based care? It doesn’t. It is well established that cost and quality management demands broad spectrum system awareness….ummmm primary care physicians. The adaptation of single specialty group integration is short term. How short? Who knows? But it is clearly not as sustainable as one whose preparation for change includes primary care capabilities.

And how do hospital-based physician alliances help physicians survive and thrive? They don’t unless they have a strong primary care base, and even then it is very questionable whether hospitals will be able to utilize their PCPs and specialists in a way that rewards outcomes based, financially smart behavior. Hospitals have always been sink holes in the landscape of healthcare costs, so why jump in? Physicians need to make sure that their affiliated hospital systems have clear plans and abilities (e.g. management and good physician billing and collection experience) to deliver outcomes at the right price. Studies, however, that indicate over sixty percent of Florida hospital admissions are unnecessary are consoling in a fee for service environment, but devastating in a capitated (or other risk based) one. Physicians have to make sure the ship they book passage on can sail a long way.

And they have to make sure they are part of the right team. What expertise is there in things like IT, financial management, clinical outcomes management, and risk based contracting? You’re gonna need that!

If one believes that healthcare costs are unsustainable (this guy does) and that our entire payment system is driving that result, then the need for new payment systems is clear. And the challenge, just in terms of thinking about healthcare differently, is enormous! How do you go to work and not think “I gotta do a lot, test a lot, do lots of procedures.” How do you begin to shift? Do you shift?

The compelling answer is “YES.” Why not act now, before any law (even one dumber than the one that passed a year ago) gets passed, before our society calls the issue a failure and politicians and our neighbors demand a single payer-type system? Isn’t there a huge opportunity RIGHT NOW? You betcha.

So where is it? It’s in management. The money is in the management. The data collectors, crunchers and implementers are the new gods in healthcare. Anyone who can collect data, show what makes clinical and financial sense and then implement it will be more sought after than conflict diamonds. Show one hospital how to live in that new system, where there are more patients, but less money available, and you retire rich. Show physicians and other healthcare business people the same thing and lead change. And since physicians are busy being physicians, except for a handful of physician entrepreneurs, they’re best bet is gonna be to find good partners in “business” who embrace change and see opportunity.

With over 20 years of healthcare law experience, Mr. Cohen is board certified by The Florida Bar as a specialist in healthcare law. With a strong background and expertise in healthcare law corporate matters, particularly as they relate to physicians, surgery centers and imaging centers. Mr. Cohen’s practice immerses him in regulatory, contract, corporate and compliance. As Founder of The Florida Healthcare Law Firm, he has distinguished himself and his firm for providing exceptional legal services with the right pricing, responsiveness and ethics. He can be reached at (888) 455-7702.

ACOs Are The Answer | Despite Chorus of Whining in Simi Valley

By Gregg Masters, MPH

As if there wasn’t enough criticism of the ‘Patient Protection and Affordable Care Act’ and it’s provisioning for the logically developed, and sound market tested tenets of ‘accountable care’, and the entities in which both the culture and operational where-with-all can be infused. Now where have whining 2.0, with beauty pageant-esque positioning statements by politicians who ‘know healthcare.’

“ There will be winners & losers. Smart money is on: ‘Future of Accountable Care, ACOs & Payment Reform http://t.co/usKwXF4 ACO #ACOchat
2healthguru
September 7, 2011
“ Dan Fogelberg (RIP) nailed the strategic v. tactical planning confusion of most hospitals/system parents. lyrics to follow….
2healthguru
September 7, 2011
“ ‘It’s never easy, and it’s never clear. Who’s to navigate, and who’s to steer….
2healthguru
September 7, 2011
“ ‘…So you flounder drifting ever near the rocks’. (metaphorically speaking).
2healthguru
September 7, 2011
“ @JimCanto Hi Jim, clearly t’was context & gateway for Fogelberg’s message; though it crystallizes strategic v. tactical plan confusion.
2healthguru
September 7, 2011
“ At it’s core the governance model is a failed enterprise. Christensen recognized one of its major failures in the Innovator’s Prescription.
2healthguru
September 7, 2011
“ Yet, none of that has slowed the rate of CEO compensation packages whether proprietary or so called non for profits.
2healthguru
September 7, 2011
“ @JimCanto then they ‘delay & pray’ the referee (ie, their agent), the CEO, supported by a paramilitary nursing organization can pull it off!
2healthguru
September 7, 2011
“ @JimCanto typically a lay board of directors, delegate broad clinical (regulatory) authority to a club aka the voluntary medical staff…..
2healthguru
September 7, 2011
“ There has been, and remains so today, a leadership vacuum. The continued push-back from ‘accountability’ is avoiding the duty of care.
2healthguru
September 7, 2011
“ @JimCanto 3 legged wobbly stool no longer (if it ever) served general hospital governance.
2healthguru
September 7, 2011
“ Drill down is ‘cultural, ie., the ops. v. staff silos inherent in the typical general hospital org culture. Ops = power, staff marginalized.
2healthguru
September 7, 2011
“ Staff includes: marketing, IT, PR, planning, etc., ops = departmental silos mostly driven by comand & control vertical silos.
2healthguru
September 7, 2011
“ p.s. we need add ‘social media’ departments to the impotent(?) ‘staff’ mix. more marginalization in the making?
2healthguru
September 7, 2011
“ The few examples of service line or matrix-ed organizations have shown some value adds. Though 3 legged wobbly governance trumps progress.
2healthguru
September 7, 2011
“ Absent restructuring of the healthcare borg. So called ‘consumer directed health plans’ = ‘the road to serfdom’. Watch what you pray for!
2healthguru
September 7, 2011
“ Many legitimate ‘tactical’ R issues duly noted re: NPRM; yet, vision is sufficient for strategic direction. So WAYW – why are you waiting?
2healthguru
September 7, 2011
“ If health plans with hundreds of thousands if not millions of members can’t effectively negotiate or restrain medical CPI, how can patients?
2healthguru
September 7, 2011

CMS Conference Call Digest & Reaction

By Gregg Masters, MPH

Tuesday, August 23rd, 2011 CMS held an informative conference call, on the new “Bundled Payments for Care Improvement” Initiative, click here for summary and replay instructions. For those who missed, this is a ‘Tweet Digest’ of some of the salient observations, thoughts and re-tweets.

‘New’ CMS Bundled Payments for Care Improvement Initiative: 6 Preliminary Take-aways

By Vince Kuraitis

This afternoon (August 23rd, 2011)  CMS announced the Bundled Payments for Care Improvement Initiative (BPCII). For details, start reading here.

Here are six quick first impressions:

1. It’s very creative and innovative. CMS has demonstrated out-of-the-box thinking and leaves a lot of room for applicants to propose their own approaches. Expect to have to read the materials 2-3 times to wrap your thinking around it.

Unlike the Medicare Shared Savings ACO rule, the BPCII is flexible. Expect some innovative and non-traditional proposals from diverse applicants. Unlike the Medicare ACO Shared Savings rule, the BPCII invites flexibility in:

  • Definition of care bundles
  • Proposal of specific financial terms
  • Participation by diverse care providers (see below)
  • Risk adjustment of beneficiaries

2. Discounted payments and downside financial risk will discourage almost all local care providers from applying. Applicants are at risk for repaying CMS for costs above targets; applicants will need to provide irrevocable letters of credit that guarantee their ability to repaying CMS. CFOs will balk. Anyone remember Medicare Health Support?

3. Broad eligibility criteria and potential for financial upside will attract entrepreneurs, regional and national care and care management providers, and niche care providers.

The Medicare Shared Savings ACO rule allows a narrow scope of care providers to apply. As a practical matter, hospitals and physicians will be the core of ACOs.

Model #3 of the BPCII explicitly allows applications from:

  • Physician group practices
  • Acute care hospitals
  • Health systems
  • Inpatient rehabilitation facilities
  • Home health agencies
  • Skilled nursing facilities
  • Physician-hospital organizations
  • Conveners of participating health care providers

All 4 models allow applications from this last category of “conveners”. It will be interesting to see who applies under this open-ended label.

4. Hospitals will be threatened. Many will see the primary savings target of the BPCII as avoiding hospital readmissions.

The message from CMS to hospitals seems to be “disrupt your own business/care models or we will enable others to do so.”

While hospitals are invited to be applicants, model #3 (accepting risk for post-discharge services only) likely will attract applicants that have little interest or need to involve the local hospital.

Based on a first read, I also see little potential for hospitals to gain volume from the BPCII. Why would a hospital want to provide a discount on existing business if there is no potential to make it up through volume?

5. Physicians will be intrigued, but most won’t have the financial strength to take leadership roles.

6. How will CMS resolve mixed messages in the BPCII?

On one hand, CMS is encouraging creative and flexible proposals. This invites entrepreneurial thinking along the lines of geographic cherry picking, carve-out delivery approaches, and tight focus on niche diseases/conditions.

For example, a national care provider might think about developing a proposal along these lines:

We are a home health company that operates in 50 markets. We will submit BPCII proposals in the 10 highest cost markets for 3 high cost conditions. That’s where we will have the opportunity to achieve the greatest cost savings.

On the other hand, CMS expects applicants to collaborate with local care providers, particularly physicians. Such collaboration will create tension for applicants thinking along the lines of geographic cherry picking, carve-out delivery approaches, and tight focus on niche diseases/conditions. I foresee the potential for unintended consequences and fragmentation of care delivery.

Vince Kuraitis, aka @vincekuraitis, is a consultant, author, lecturer and fellow ‘healthtweep’ in good standing in the social media domain. This post was originally published in the popular ‘e-care management blog which Vince publishes. 

CMS Conference Call on the new ‘Bundled Payments for Care Improvement’ Initiative [Re-play]

August 23rd, 2011 – The Centers for Medicare and Medicaid Innovation today announced the Bundled Payments for Care Improvement Initiative to help improve care for patients while they are in the hospital and after they are discharged.

Doctors, hospitals, and other health care providers can now apply to participate in this new program that will align payments for services delivered across an episode of care, such as heart bypass or hip replacement, rather than paying for services separately.  Bundled payments will give doctors and hospitals new incentives to coordinate care, improve the quality of care and save money for Medicare.

To learn more, join a conference call TODAY with CMS Innovation Center Director, Dr. Richard Gilfillan, Director of the Patient Care Models Group, Valinda Rutledge and Senior Advisor Dr. Nancy Nielsen.

What:  Conference Call on the new Bundled Payments for Care Improvement Initiative

When: Tuesday, August 23rd at 3:30pm Eastern/12:30 PM Pacific

Call Information :  (800) 642.1687, Conference ID: 94307536

Background on the Bundled Payments for Care Improvement Initiative

This initiative will bundle care for a package of services patients receive to treat a specific medical condition during a single hospital stay and/or recovery from that stay – this is known as an episode of care.  By bundling payment across providers for multiple services, providers will have a greater incentive to coordinate and ensure continuity of care across settings, resulting in better care for patients.  Better coordinated care can reduce unnecessary duplication of services, reduce preventable medical errors, help patients heal without harm, and lower costs.

Released today, the Innovation Center’s Request for Applications (RFA) outlines four broad approaches to bundled payments.  Providers will have flexibility to determine which episodes of care and which services will be bundled together.  By giving providers the flexibility to determine which model of bundled payments works best for them, it will be easier for providers of different sizes and readiness to participate in this initiative.

The Bundled Payments initiative is based on research and previous demonstration projects that suggest this approach has tremendous potential. For example, a Medicare heart bypass surgery bundled payment demonstration saved the program $42.3 million, or roughly 10 percent of expected costs, and saved patients $7.9 million in coinsurance while improving care and lowering hospital mortality.

Organizations interested in applying to the Bundled Payments for Care Improvement initiative must submit a Letter of Intent (LOI) no later than September 22, 2011 for Model 1 and November 4, 2011 for Models 2, 3, and 4. For more information about the various models and the initiative itself, please see the Bundled Payments for Care Improvement initiative web site at:

http://www.innovations.cms.gov/areas-of-focus/patient-care-models/bundled-payments-for-care-improvement.html.

Interested parties may obtain answers to specific questions by e-mailing CMS at: BundledPayments@cms.hhs.gov.

For more information about this initiative or the CMS Innovation Center, please visit: http://www.innovations.cms.gov.

Might There Be ‘Elephants In The Room’?

By Jeff Cohen

ACOs and other new acronyms have swamped the minds of physicians and healthcare business people alike since the terms were coined.  The still new healthcare reform law continues to worry many and challenge others to figure out ways to play the game and win.  While we scurry around chasing the regs and the new words and government agencies, while politics keeps moving the ball and shaping the healthcare agenda, the most central issues in healthcare  cost/quality debate are not even discussed.  It’s as though policy makers and business is saying “Hey, if we keep throwing new regulations at them, maybe they’ll stop asking really tough questions we can’t answer.”

Back in the 80s, the state of Oregon enacted Medicaid reform that took the breath right out of the rest of the country.  Remember?  The idea that a state would not list ALL medical services to ALL Medicaid patients was considered to be cruel and impolitic at the time.  And the national debate about (1) whether healthcare is a right of American citizens, and if so (2) what healthcare services are “in” and which are “out” has grown virtually silent.

Instead, it seems we have entered the area of political intransigence.  It appears that getting and staying in political office requires as little change as possible.  So, very little seems to be accomplished or even discussed.

So what are the “elephants in the room?”  They are the issues of “how much” and “patient accountability.”  Though it appears that the issue of whether we Americans are entitled to receive healthcare has been skirted, we are clearly missing any discussion on the issue of how much services.  Oregon hit the issue head on, but nationally there appears to be no movement or even discussion of the issue.  We don’t know who should get what.  We just know we want to reduce the costs (ration).

Virtually every effort to reduce costs so far has involved the use of managed care organizations.  The Florida Medicaid program pilot project that began in Broward County in 2006 has produced two clear results—reduced expenditures and huge criticism that managed care has reduced costs solely by reducing access and care itself.   Managed care has become the “black hat” that politics won’t pick up.  It’s ok for managed care to restrict access and care because it reduces costs, but it is politically impossible to directly address the issue of “how much.”  We rely on managed care to do it for us, due to our political inability to tackle the issue, then blame the payers for their (wink wink) bad behavior.  If managed care is profiting, it is only because they don’t mind profiting from our unwillingness to take responsibility for the issues they deal with on a daily basis—saying “no.”

The second elephant is the issue of patient accountability.  There is none!  What is the consequence of patient bad behavior?  What consequence is there for refusal to exercise, quit smoking, etc.?  None.  We pay more.  There isn’t a single provision in any federal law that punishes us for making expensive healthcare decisions or that rewards us for making cost saving healthcare decisions.

I liken it to having teenagers.  Expectations with no consequences yields a predictable result of no change in behavior.  Simple.

These are huge issues to tackle.  So many different kinds of people, agendas and ways of seeing the issues.  So, we don’t even try.  Instead, we “hire” managed care to bear the burden of our failure to address and answer these issues.  And we throw complex ideas like metrics and healthcare reform into the market, which only serves to distract us from addressing the root causes of our healthcare challenges.

With over 20 years of healthcare law experience, Mr. Cohen is board certified by The Florida Bar as a specialist in healthcare law.  With a strong background and expertise in healthcare law corporate matters, particularly as they relate to physicians, surgery centers and imaging centers.  Mr. Cohen’s practice immerses him in regulatory, contract, corporate and compliance.  As Founder of The Florida Healthcare Law Firm, he has distinguished himself and his firm for providing exceptional legal services with the right pricing, responsiveness and ethics. He can be reached at (888) 455-7702.

Core ACO Health Information Infrastructure: Analytics

By John W. Loonsk, Chief Medical Officer, CGI

The Accountable Care Organization draft rule is out, and the political, clinical and technical trek to establishing these lynchpins of the Affordable Care Act and health reform is on. Community physicians and hospitals are jockeying for potential shares of the incentives that will be distributed via the ACO program. Health Information Technology has been so frequently cited as being a critical part of making ACOs successful that it is now de rigueur. But if ACO information technology is assumed, it is still not completely defined and certainly not completely available or implemented.

ACOs will need new analytic, clinical workflow, administrative and communication functions if they are to actually reduce costs and improve care. Prevention, decision support, error reduction, revenue cycle optimization and disease management will all be activities successful ACOs aggressively pursue. But not all of these functions or activities are currently performed by existing electronic health records, health information exchange, or traditional hospital IT systems. Where the functions do exist, they are not carried out at the required scale in an integrated fashion across multiple care organizations.

With this article we will begin an exploration of the HIT needs of ACOs. While provider organizations are hashing out the financial distribution, we will start with the second most important influencer – the data. Data for an ACO can be considered as being used for at least three purposes:

1. to analyze and report on trends in clinical and claims data,

2. to support traditional clinical care and administrative recording processes, and in a new category; and

3. to manage shared information across multiple providers such as in ACO-wide managed problem lists, medication lists, care plans, or directories of identity and privacy settings. Here we focus on use for analysis and reporting (#1).

Identifying the analytic data

As HIT goes through the awkward teenage years and heads toward young adulthood, it is clear that a mix of well and poorly structured and maintained clinical data will persist. The first stage of meaningful use did not…. (to read complete article, click here).

John Loonsk, MD, FACMI, is chief medical officer for CGI Federal. From 2006-2009, he was director of interoperability and standards in the Office of the National Coordinator for Health Information Technology.

Source: http://www.healthcareitnews.com/blog/hit-acos-need-part-i-analytic-data

Summer Doldrums in ‘Taming The Beast’? Hardly!

We’ve been on somewhat of a ‘hiatus’ from the health reform, accountable care and health care enterprise organizational and market positioning conversation, yet the industry is not standing still.

A few notable announcements will highlight some of the quiet if not ‘semi-stealth’ movement underway while the CMS/provider community regulatory fermentation process plays out. Congrats to Dr. Wayne Pan, et al!

Anthem Blue Cross and Individual Practice Association Medical Group of Santa Clara County to Form First ACO for PPO Members in Northern California

Agreement includes direct contract with an IPA for Anthem Prudent Buyer Population 

WOODLAND HILLS, Calif. and FOSTER CITY, Calif., Aug. 10, 2011 /PRNewswire/ — Anthem Blue Cross and Individual Practice Association Medical Group of Santa Clara County (SCCIPA) today announced they are launching an Accountable Care Organization (ACO) program to provide coordinated, seamless medical care to Anthem PPO members in the Silicon Valley. The ACO is the first of its kind in Northern California, and includes a direct contract agreement between Anthem and the IPA.

Anthem Blue Cross expects that initially tens of thousands of PPO members whose physicians participate in the SCCIPA network will benefit from the care coordination, chronic disease management, increased provider accountability, and improved availability of medical information for patient decision-making that are hallmarks of the ACO model. SCCIPA’s network includes 284 primary care physicians, 550 specialists and ten acute care facilities throughout Santa Clara County.  Members will be included in the program if they have received the majority of their medical care from these same treating physicians in the past and where there is already a strong physician/patient relationship.

“We are pleased to expand our relationship with SCCIPA to include both a direct provider group contract and the launch of an ACO model,” said Pam Kehaly, president of Anthem Blue Cross. “Individuals who receive coordinated, patient-centered care through a collaborative partnership with their physicians can better navigate their options and more effectively manage their health care needs. SCCIPA’s investment in its innovative coordinated care IT platform and demonstrated quality clinical and administrative management performance across its electronically integrated network, make them an ideal partner to offer our first ACO model in northern California.”

J. Kersten Kraft, MD, a practicing urologist and president of SCCIPA notes, “We continue to… (read complete article here).

[Editors Note: This is a rather signifiant announcement as it pertains to the commercial market via a ‘PPO’ book of business, or alternatively known as ‘HMO lite’. To make ‘accountable care’ inroads into this population will clearly create value for the payor, participation providers, as well as covered health plan members. One to watch!]

The American Medical Association chimed in with:

Implementing Accountable Care Organizations: Ten Potential Mistakes and How to Learn From Them

By Sara Singer, PhD, MBA; Stephen M. Shortell, PhD, MPH, MBA

Achieving the triple aims—higher-quality patient-centered care, improving population health, and moderating per capita costs—will require fundamental change in the US health care system.1​ Accountable care organizations (ACOs) as outlined in the Affordable Care Act represent an early initiative in restructuring health care.2 Accountable care organizations accept responsibility for the cost and quality of care for defined patient populations. Under the Medicare shared savings program, ACOs will face expenditure targets based on their previous 3 years of Medicare Part A and Part B experience.3​ Qualifying organizations can choose between 2 risk arrangements. The first involves upside potential from shared savings in the first 2 years, adding downside risk only in the third year of operation. In the second arrangement, organizations share a greater percentage of the savings but are responsible for downside risk from the beginning. The shared savings program will require organizations to conduct quality improvement initiatives, care coordination, performance measurement, and public reporting.

To succeed, organizations contemplating participation in ACOs will need to develop and improve organizational capabilities necessary to meet program requirements. Hospitals and physician organizations will need to forge new relationships and take on new responsibilities. Success will require adaptation and change, learning quickly from mistakes, and developing an ability to transfer knowledge among participating entities. This will require ACOs to become learning organizations that can comprehend and expand what works and move to correct things that do not.4

In this commentary, we discuss 10 potential mistakes that organizations may experience in becoming ACOs whether with Centers for Medicare & Medicaid Services (CMS) payment or working with private payers. To read the complete article, click here.

There is more, but for now these two items at the top of my list!

Also, on ACO Watch: A Mid-Week Review, Wednesday August 17th, 2011 at 11AM Pacific and 2PM Eastern, my special guest commentator is Justin T. Barnes, Vice President of Greenway Medical Technologies. We’ll discuss accountable care and enabling health information technology,  key trends and updates.

Please consider joining us.