CO-OPs The Stealth ‘Accountable Care’ Opportunity

Co-Ops, no not the apartment kind, are entities somewhat buried in the Patient Protection and Affordable Care Act that may hold some hiddlen promise on the innovation front. New wine in the same old bottle, or  incremental innovation at the margins?

Consumer Operated and Oriented Plan (CO-OP) program to foster the creation of non-profit, member-run health insurance companies in all 50 states and District of Columbia to offer qualified health plans. To be eligible to receive funds, an organization must not be an existing health insurer or sponsored by a state or local government, substantially all of its activities must consist of the issuance of qualified health benefit plans in each state in which it is licensed, governance of the organization must be subject to a majority vote of its members, must operate with a strong consumer focus, and any profits must be used to lower premiums, improve benefits, or improve the quality of health care delivered to

its members. (Appropriate $6 billion to finance the program and award loans and grants to establish CO-OPs by July 1, 2013)

The Patient Protection and Affordable Care Act (Full Text) – Section 1322 is below the fold :

SEC. 1322. FEDERAL PROGRAM TO ASSIST ESTABLISHMENT AND OPERATION OF NONPROFIT, MEMBER-RUN HEALTH INSURANCE ISSUERS.

(a) Establishment of Program-

(1) IN GENERAL- The Secretary shall establish a program to carry out the purposes of this section to be known as the Consumer Operated and Oriented Plan (CO-OP) program.

(2) PURPOSE- It is the purpose of the CO-OP program to foster the creation of qualified nonprofit health insurance issuers to offer qualified health plans in the individual and small group markets in the States in which the issuers are licensed to offer such plans.

(b) Loans and Grants Under the CO-OP Program-

(1) IN GENERAL- The Secretary shall provide through the CO-OP program for the awarding to persons applying to become qualified nonprofit health insurance issuers of–

(A) loans to provide assistance to such person in meeting its start-up costs; and

(B) grants to provide assistance to such person in meeting any solvency requirements of States in which the person seeks to be licensed to issue qualified health plans.

(2) REQUIREMENTS FOR AWARDING LOANS AND GRANTS-

(A) IN GENERAL- In awarding loans and grants under the CO-OP program, the Secretary shall–

(i) take into account the recommendations of the advisory board established under paragraph (3);

(ii) give priority to applicants that will offer qualified health plans on a Statewide basis, will utilize integrated care models, and have significant private support; and

(iii) ensure that there is sufficient funding to establish at least 1 qualified nonprofit health insurance issuer in each State, except that nothing in this clause shall prohibit the Secretary from funding the establishment of multiple qualified nonprofit health insurance issuers in any State if the funding is sufficient to do so.

(B) STATES WITHOUT ISSUERS IN PROGRAM- If no health insurance issuer applies to be a qualified nonprofit health insurance issuer within a State, the Secretary may use amounts appropriated under this section for the awarding of grants to encourage the establishment of a qualified nonprofit health insurance issuer within the State or the expansion of a qualified nonprofit health insurance issuer from another State to the State.

(C) AGREEMENT-

(i) IN GENERAL- The Secretary shall require any person receiving a loan or grant under the CO-OP program to enter into an agreement with the Secretary which requires such person to meet (and to continue to meet)–

(I) any requirement under this section for such person to be treated as a qualified nonprofit health insurance issuer; and

(II) any requirements contained in the agreement for such person to receive such loan or grant.

(ii) RESTRICTIONS ON USE OF FEDERAL FUNDS- The agreement shall include a requirement that no portion of the funds made available by any loan or grant under this section may be used–

(I) for carrying on propaganda, or otherwise attempting, to influence legislation; or

(II) for marketing.

Nothing in this clause shall be construed to allow a person to take any action prohibited by section 501(c)(29) of the Internal Revenue Code of 1986.

(iii) FAILURE TO MEET REQUIREMENTS- If the Secretary determines that a person has failed to meet any requirement described in clause (i) or (ii) and has failed to correct such failure within a reasonable period of time of when the person first knows (or reasonably should have known) of such failure, such person shall repay to the Secretary an amount equal to the sum of–

(I) 110 percent of the aggregate amount of loans and grants received under this section; plus

(II) interest on the aggregate amount of loans and grants received under this section for the period the loans or grants were outstanding.

The Secretary shall notify the Secretary of the Treasury of any determination under this section of a failure that results in the termination of an issuer’s tax-exempt status under section 501(c)(29) of such Code.

(D) TIME FOR AWARDING LOANS AND GRANTS- The Secretary shall not later than July 1, 2013, award the loans and grants under the CO-OP program and begin the distribution of amounts awarded under such loans and grants.

(3) ADVISORY BOARD-

(A) IN GENERAL- The advisory board under this paragraph shall consist of 15 members appointed by the Comptroller General of the United States from among individuals with qualifications described in section 1805(c)(2) of the Social Security Act.

(B) RULES RELATING TO APPOINTMENTS-

(i) STANDARDS- Any individual appointed under subparagraph (A) shall meet ethics and conflict of interest standards protecting against insurance industry involvement and interference.

(ii) ORIGINAL APPOINTMENTS- The original appointment of board members under subparagraph (A)(ii) shall be made no later than 3 months after the date of enactment of this Act.

(C) VACANCY- Any vacancy on the advisory board shall be filled in the same manner as the original appointment.

(D) PAY AND REIMBURSEMENT-

(i) NO COMPENSATION FOR MEMBERS OF ADVISORY BOARD- Except as provided in clause (ii), a member of the advisory board may not receive pay, allowances, or benefits by reason of their service on the board.

(ii) TRAVEL EXPENSES- Each member shall receive travel expenses, including per diem in lieu of subsistence under subchapter I of chapter 57 of title 5, United States Code.

(E) APPLICATION OF FACA- The Federal Advisory Committee Act (5 U.S.C. App.) shall apply to the advisory board, except that section 14 of such Act shall not apply.

(F) TERMINATION- The advisory board shall terminate on the earlier of the date that it completes its duties under this section or December 31, 2015.

(c) Qualified Nonprofit Health Insurance Issuer- For purposes of this section–

(1) IN GENERAL- The term `qualified nonprofit health insurance issuer’ means a health insurance issuer that is an organization–

(A) that is organized under State law as a nonprofit, member corporation;

(B) substantially all of the activities of which consist of the issuance of qualified health plans in the individual and small group markets in each State in which it is licensed to issue such plans; and

(C) that meets the other requirements of this subsection.

(2) CERTAIN ORGANIZATIONS PROHIBITED- An organization shall not be treated as a qualified nonprofit health insurance issuer if–

(A) the organization or a related entity (or any predecessor of either) was a health insurance issuer on July 16, 2009; or

(B) the organization is sponsored by a State or local government, any political subdivision thereof, or any instrumentality of such government or political subdivision.

(3) GOVERNANCE REQUIREMENTS- An organization shall not be treated as a qualified nonprofit health insurance issuer unless–

(A) the governance of the organization is subject to a majority vote of its members;

(B) its governing documents incorporate ethics and conflict of interest standards protecting against insurance industry involvement and interference; and

(C) as provided in regulations promulgated by the Secretary, the organization is required to operate with a strong consumer focus, including timeliness, responsiveness, and accountability to members.

(4) PROFITS INURE TO BENEFIT OF MEMBERS- An organization shall not be treated as a qualified nonprofit health insurance issuer unless any profits made by the organization are required to be used to lower premiums, to improve benefits, or for other programs intended to improve the quality of health care delivered to its members.

(5) COMPLIANCE WITH STATE INSURANCE LAWS- An organization shall not be treated as a qualified nonprofit health insurance issuer unless the organization meets all the requirements that other issuers of qualified health plans are required to meet in any State where the issuer offers a qualified health plan, including solvency and licensure requirements, rules on payments to providers, and compliance with network adequacy rules, rate and form filing rules, any applicable State premium assessments and any other State law described in section 1324(b).

(6) COORDINATION WITH STATE INSURANCE REFORMS- An organization shall not be treated as a qualified nonprofit health insurance issuer unless the organization does not offer a health plan in a State until that State has in effect (or the Secretary has implemented for the State) the market reforms required by part A of title XXVII of the Public Health Service Act (as amended by subtitles A and C of this Act).

(d) Establishment of Private Purchasing Council-

(1) IN GENERAL- Qualified nonprofit health insurance issuers participating in the CO-OP program under this section may establish a private purchasing council to enter into collective purchasing arrangements for items and services that increase administrative and other cost efficiencies, including claims administration, administrative services, health information technology, and actuarial services.

(2) COUNCIL MAY NOT SET PAYMENT RATES- The private purchasing council established under paragraph (1) shall not set payment rates for health care facilities or providers participating in health insurance coverage provided by qualified nonprofit health insurance issuers.

(3) CONTINUED APPLICATION OF ANTITRUST LAWS-

(A) IN GENERAL- Nothing in this section shall be construed to limit the application of the antitrust laws to any private purchasing council (whether or not established under this subsection) or to any qualified nonprofit health insurance issuer participating in such a council.

(B) ANTITRUST LAWS- For purposes of this subparagraph, the term `antitrust laws’ has the meaning given the term in subsection (a) of the first section of the Clayton Act (15 U.S.C. 12(a)). Such term also includes section 5 of the Federal Trade Commission Act (15 U.S.C. 45) to the extent that such section 5 applies to unfair methods of competition.

(e) Limitation on Participation- No representative of any Federal, State, or local government (or of any political subdivision or instrumentality thereof), and no representative of a person described in subsection (c)(2)(A), may serve on the board of directors of a qualified nonprofit health insurance issuer or with a private purchasing council established under subsection (d).

(f) Limitations on Secretary-

(1) IN GENERAL- The Secretary shall not–

(A) participate in any negotiations between 1 or more qualified nonprofit health insurance issuers (or a private purchasing council established under subsection (d)) and any health care facilities or providers, including any drug manufacturer, pharmacy, or hospital; and

(B) establish or maintain a price structure for reimbursement of any health benefits covered by such issuers.

(2) COMPETITION- Nothing in this section shall be construed as authorizing the Secretary to interfere with the competitive nature of providing health benefits through qualified nonprofit health insurance issuers.

(g) Appropriations- There are hereby appropriated, out of any funds in the Treasury not otherwise appropriated, $6,000,000,000 to carry out this section.

(h) Tax Exemption for Qualified Nonprofit Health Insurance Issuer-

(1) IN GENERAL- Section 501(c) of the Internal Revenue Code of 1986 (relating to list of exempt organizations) is amended by adding at the end the following:

`(29) CO-OP HEALTH INSURANCE ISSUERS-

`(A) IN GENERAL- A qualified nonprofit health insurance issuer (within the meaning of section 1322 of the Patient Protection and Affordable Care Act) which has received a loan or grant under the CO-OP program under such section, but only with respect to periods for which the issuer is in compliance with the requirements of such section and any agreement with respect to the loan or grant.

`(B) CONDITIONS FOR EXEMPTION- Subparagraph (A) shall apply to an organization only if–

`(i) the organization has given notice to the Secretary, in such manner as the Secretary may by regulations prescribe, that it is applying for recognition of its status under this paragraph,

`(ii) except as provided in section 1322(c)(4) of the Patient Protection and Affordable Care Act, no part of the net earnings of which inures to the benefit of any private shareholder or individual,

`(iii) no substantial part of the activities of which is carrying on propaganda, or otherwise attempting, to influence legislation, and

`(iv) the organization does not participate in, or intervene in (including the publishing or distributing of statements), any political campaign on behalf of (or in opposition to) any candidate for public office.’.

(2) ADDITIONAL REPORTING REQUIREMENT- Section 6033 of such Code (relating to returns by exempt organizations) is amended by redesignating subsection (m) as subsection (n) and by inserting after subsection (l) the following:

`(m) Additional Information Required From CO-OP Insurers- An organization described in section 501(c)(29) shall include on the return required under subsection (a) the following information:

`(1) The amount of the reserves required by each State in which the organization is licensed to issue qualified health plans.

`(2) The amount of reserves on hand.’.

(3) APPLICATION OF TAX ON EXCESS BENEFIT TRANSACTIONS- Section 4958(e)(1) of such Code (defining applicable tax-exempt organization) is amended by striking `paragraph (3) or (4)’ and inserting `paragraph (3), (4), or (29)’.

(i) GAO Study and Report-

(1) STUDY- The Comptroller General of the General Accountability Office shall conduct an ongoing study on competition and market concentration in the health insurance market in the United States after the implementation of the reforms in such market under the provisions of, and the amendments made by, this Act. Such study shall include an analysis of new issuers of health insurance in such market.

(2) REPORT- The Comptroller General shall, not later than December 31 of each even-numbered year (beginning with 2014), report to the appropriate committees of the Congress the results of the study conducted under paragraph (1), including any recommendations for administrative or legislative changes the Comptroller General determines necessary or appropriate to increase competition in the health insurance market.

Physician Hospital Co-Management Arrangements

By Marshall R. Burack, Akerman Senterfitt

In recent years, a number of regulatory and economic factors have driven hospitals and physicians to find ways to work together in a more coordinated manner in order to improve the quality and reduce the cost of patient care. Factors causing hospitals and physicians to work together include, among other things, bundled payments for services, the imminent introduction of Accountable Care Organizations and other shared savings arrangements, and reduced reimbursements from both private and governmental payers.

Direct employment of physicians is one means by which hospitals can assure a cooperative relationship with physicians. An ever-increasing number of physicians are becoming employed by hospital-owned practices.1 Many hospitals, however, either do not wish to employ physicians directly, or do not have the financial resources necessary to acquire and operate medical practices. Moreover, although more physicians are electing to become employed by hospitals, many physicians do not want to become employees of a hospital or other institutional provider and wish to continue to provide patient services through an independent, physician-owned practice.

Co-Management Arrangements

For those hospitals which do not wish to establish and operate a hospital-owned medical practice, and for those physicians who wish to practice independently rather than as a hospital employee, the physician-hospital co-management arrangement offers an alternative arrangement for aligning financial incentives and encouraging physicians to work cooperatively with the hospital to which they admit patients to improve the quality and reduce the cost of hospital care.

A co-management arrangement typically involves the formation of a management company which is jointly owned by a hospital and independent physician members of the medical staff.

The purpose of the jointly-owned company is to manage one or more service lines offered by the hospital. The management company may be formed to manage a specific, narrowly defined service line (e.g., the cardiac cath lab) and include only a limited number of specialist physicians. Alternatively, the management company could be formed to manage a broadly defined service line (e.g., surgical services, or inpatient medical services) and include a substantial portion of the hospital’s medical staff. In either event, the general objective of the management company in managing a particular service offered by the hospital is to improve the quality of that service, while reducing the cost of providing the service to patients.

In order to achieve this objective, the management company and the hospital would enter into…..

To read or download complete article, click  here.

Akerman Senterfitt serves clients throughout the United States and overseas from Florida, New York, Washington, D.C., California, Colorado, Virginia, Nevada, Utah, and Texas. We are ranked among the top 100 law firms in the U.S. by The National Law Journal NLJ 250 (2011) in number of lawyers and we are the largest firm in Florida.

ACO reimbursement, bundled payments, clinical quality measures and public profiles will be based on ICD-10 data

By Lynne Thomas Gordon

Healthcare leaders are juggling multiple pressures, including the consistent delivery of high-quality patient care, evaluation and development of accountable care organizations, the careful management of sensitive patient data, achieving meaningful-use criteria, making the most efficient use of the newest technology and stretching revenue to maintain end-to-end coverage of their bottom lines.

With so many priorities, it’s easy to become distracted from managing important changes such as the International Classification of Diseases, 10th Revision, or ICD-10. But there’s an urgent date on our calendars: the HHS’ final implementation date of Oct. 1, 2013, is a hard deadline that will trigger dramatic, though different, consequences for both those who will be prepared for the change and those who won’t. ACO reimbursement, bundled payments, clinical quality measures and public profiles will be based on ICD-10 data.

Given the high stakes, it is imperative that healthcare leaders avoid getting so caught up in the day-to-day that we fail to prepare properly for the many important changes that the ICD-10 conversion will demand from us.

The change to ICD-10 provides the U.S. the chance to discard the technologically outdated, medically inferior ICD-9 coding system and join all other World Health Organization member nations that have been successfully using ICD-10 to manage patient data for more than 15 years. Healthcare leaders will find that the more granular ICD-10 codes will provide opportunities to improve workflows, dive into quality improvement initiatives, demonstrate the severity of conditions being treated and participate with the rest of the developed world in the meaningful exchange of patient data for matters related to public health, scholarly research and the overall advancement of global health information management.

While multiple surveys conducted by AHIMA over the past year-and-a-half show promising signs that healthcare organizations are now making progress in planning for the ICD-10 conversion (85% of respondents recently indicated that they had begun work on ICD-10 planning and implementation), much work still remains if we’re to continue meeting implementation milestones. There is very little time for any industry providers or professional communities involved in data set management to lag behind or experience untimely (cont’d).

Read complete Modern Healthcare Article, click here.

Lynne Thomas Gordon is CEO of the American Health Information Management Association.

Massmed Releases 10th Annual Physician Workforce Study

Physician Shortages Found in 8 Specialties, Continued Primary Care Shortages, and Physician Concerns About Global Payments and Accountable Care Organizations:

Waltham, Mass. — September 28, 2011 — The Massachusetts Medical Society today released its 2011 Physician Workforce Study showing critical and severe physician shortages in eight specialties, a sixth consecutive year of shortages of primary care physicians, and physicians’ concerns about participating in global payments and accountable care organizations.

The study also confirmed once again that the state faces difficulty in recruiting and retaining physicians and that the fear of being sued has a pervasive, negative influence on the practice of medicine by causing physicians to alter or limit their practice.

The 2011 study is the Society’s 10th annual comprehensive look at the physician workforce in Massachusetts and includes responses from 1,071 practicing physicians. Among the topics surveyed were the labor supply of physicians by specialties; physician recruitment and retention; satisfaction with the profession and practice environment; willingness to participate in global payment programs and accountable care organizations; opinions of the U.S. health care system; and the impact of professional liability concerns on the practice of medicine.

To download complete ‘2011 Patient Access to Health Care Study’, click here.

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.