Friday, December 27, 2013

Medicare bundled payments

This Wednesday Rep. Diane Black (R-Tenn.) and Rep. Richard Neal (D-Mass.) proposed legislation that would expand bundled payments within the Medicare program. The Comprehensive Care Payment Innovation Act would establish a voluntary bundled payment model, building off the Bundled Payments for Care Improvement initiative, which is currently in effect. CMS has piloted BPCI and other bundled payment programs during the past 25 years. The new program would go into effect Jan. 1, 2015. Under the proposed legislation, hospitals and other providers would receive a lump payment from Medicare for all services furnished from three days prior to an inpatient admission to 90 days after discharge. Covered services include acute inpatient care, physician services, outpatient hospital services and post-acute care such as home health and skilled nursing. Providers could choose the bundled payment program from six conditions: hip/knee joint replacements, lumbar spine fusion, coronary artery bypass graft, heart valve replacement, angioplasty with a stent and colon resection. The bundled payments would also be tied to quality measures, such as mortality, patient outcomes and avoidable readmissions.

Sooner rather than later, something like this bill is going to become law. This proposal and all the pilot projects currently underway focus on specific diagnoses—most of which have little relevance to OCH; however, I believe that the bundled payment surrounding an inpatient admission will some day be the rule for all inpatient admissions. There are things both good and bad about it for OCH. Since the bundled payment will be based on a blend of costs historically incurred at all health systems for a given diagnosis and since OCH is a low cost health system, we will actually benefit from that aspect of a bundled payment. On the negative side, the bundled payment will include a number of days post discharge and a disproportionately heavy percentage of our inpatient admissions come from nursing homes and return to skilled nursing beds in those homes. We have little control over how much money Medicare spends in those thirty days post discharge. Based on current data from the Medicare hospital compare web site, OCH directly spends significantly less of each Medicare dollar than other health systems but the total cost of care for patients admitted to OCH is actually slightly higher than the nationwide average due to the amount of money being spent post discharge from our hospital. We will have to find ways to address that anomaly in the future if we are to thrive under a bundled payment system.

Monday, December 23, 2013

MINUTE RANT: On the temporary fix addressed by the senate budget deal


Last week, the U.S. Senate passed a two-year budget agreement addressing spending cuts and reducing the likelihood of a government shutdown.

What does this mean for healthcare? MHA Today shared the following overview:

By a margin of 64-36, the U.S. Senate has passed a negotiated budget agreement that was approved by the U.S. House of Representatives last week. The three-month “doc fix” in the agreement includes a 0.5 percent increase in Medicare physician payment rates through March 31, 2014.This extension was to allow the House and Senate more time to complete a comprehensive overhaul of the sustainable growth rate formula. Other provisions include extensions of the Medicare low volume and dependent hospital payment programs through March 31, 2014, and extending Medicare sequestration payment adjustments for an additional two years. The agreement also includes eliminating federal fiscal year 2014 Medicaid DSH cuts and shifting the 2015 cuts into fiscal year 2016. Medicaid DSH cuts will now be extended another year to 2023.


The devil is always in the details... except when he is openly attacking with pitchfork in hand.




Monday, November 25, 2013

Ozarks Public Television (OPT) discusses the Affordable Care Act


On Thursday, November 21, CEO Paul Taylor was featured on Ozarks Public Television (OPT) as a part of the educational series "Sense of Community." He along with panelists Eddie Marmouget of BKD and Jeremy Malarsky of Primaris offered insight about the Affordable Care Act, new marketplace exchanges, and discuss the future impact on consumers and businesses.

Ozarks Public Television is broadcast on KOZK out of Springfield, MO and KOZJ out of Joplin, MO.

Thursday, October 17, 2013

Quick roundup of news concerning the exchanges

There’s been a lot of information circulating in the news about the federal health exchange this week. Here are six articles I consider worth reading up on: 
  • The consumer experience at state run health exchanges appear to be much better than those at exchanges run by the federal government, according to a New York Times report last week: 
LINK: http://www.nytimes.com/2013/10/09/us/politics/uninsured-find-more-success-via-health-exchanges-run-by-states.html?_r=0
  • Experts agree that the success of the health exchanges depends, in part, on younger, less sick (lower cost) consumers signing up. According to an initial analysis of the sign up, that seems to be happening:
LINK: http://www.modernhealthcare.com/article/20131015/NEWS/310159967/large-percentages-of-young-people-signing-up-at-insurance-exchanges
  • The federal government will spend about $10,000 subsidizing health insurance costs for a poor, middle-aged man who lives in Georgia - and just $3,000 buying the same guy in nearby Tennessee a near-identical plan. The cost variation in the federal exchanges is wide: 
LINK: http://www.washingtonpost.com/blogs/wonkblog/wp/2013/10/13/the-cost-of-obamacare-varies-wildly-by-state/
  • For the past 12 days, a federal health exchange system costing more than $400 million and billed as a one-stop click-and-go hub for citizens seeking health insurance has thwarted the efforts of millions to simply log in. The growing national outcry has deeply embarrassed the White House, which has refused to say how many people have enrolled through the federal exchange:
LINK: http://www.twincities.com/national/ci_24310073/federal-health-exchange-rollout-plagued-by-delays-missteps
  • House Republicans last week called on the Obama Administration to suspend penalties for consumers because of all the trouble they continue to have signing up.
LINK: http://www.nytimes.com/news/affordable-care-act/2013/10/09/house-republicans-argue-for-delay-in-health-law-penalties/
  • If you want to put it all in perspective, the last time there was a huge rollout of a new Medicare benefit - the Part D drug program - there were huge glitches. 
LINK: http://ccf.georgetown.edu/all/how-does-acas-first-week-compare-to-medicare-part-ds/

Wednesday, October 16, 2013

Jon Stewart on Medi-can’t states


The Daily Show's Jon Stewart had harsh words this week for states that have not expanded their Medicaid programs under the Affordable Care Act. His 3-and-a-half minutes on this topic last week are very funny - regardless of your political persuasion:


Video Shortlink: http://on.cc.com/15szK4Q

DID YOU KNOW? One governor intends to bypass the legislature. After failing to gain enough support from Republican legislators, Ohio Governor John Kasich will ask a spending oversight panel to expand the state’s Medicaid program, according to reports last week. The Republican governor is expected to make the request to the Controlling Board on Oct. 21. Kasich will ask the seven-member board, made up of lawmakers, for permission to spend about $2.5 billion in federal funds to cover about 275,000 residents under Medicaid. If the Controlling Board approves the request, expanded coverage can start January 1.

Tuesday, October 8, 2013

MINUTE RANT: On the misconception surrounding the future of small health systems



There is an OCH Regional Medical Center. It is located in Starkville, Mississippi (the same town that is home to Mississippi State University. The “OCH” derives from Oktibbeha County Hospital which is what it was originally. They consider themselves a small, rural health system. They are about the same size as Ozarks Community Hospital, but with more specialty services since there is no competition from larger health systems in their market. They made $2.8 million profit in 2012 and they are doing slightly better than break even in 2013 but they are looking for a big brother to acquire them because “the future looks bleak for small health systems.”

So, my question is “What should be the OCH response to statements like that from similar health systems?” (I could have picked any of a thousand systems. I thought one with a similar name may peak your interest.) My answer is “Bring it on. If it was easy, it wouldn't be any fun.”

“Oktibbeha County” has a distinctly Faulknerian sound to it, does it not?



Monday, September 16, 2013

Outline of new growth rules for healthcare

I have to admit that I cannot improve much upon the following outline and that I agree with most of it. This kind of work is why I am going to participate in and later speak at the Becker’s Review CEO forum. Pay particular attention to #6 through #8. The other insights are interesting mostly because they are applicable to the mega systems and have been one of the ways I evaluate whether a given mega system is going to get it or get hit.

Here are eight contemporary insights for hospital and health system leaders from the Advisory Board, which collected these ideas during its CEO Special Sessions.

1. Accept the idea that price/high reimbursement is no longer a strategy for growth. Previously, hospitals consistently received price increases that outpaced inflation. Four market trends are signaling the end of this strategy, according to the Advisory Board:

• Direct and implicit reimbursement cuts from the Patient Protection and Affordable Care Act and sequestration.
• Limited offsets from coverage expansion.
• The dilution of employer-sponsored coverage and increase in high-deductible health plans.
• Patient preference for low-cost sites of care, such as retail clinics.

2. Transition from extractive to productive growth. Hospitals can no longer rely on growth strategies that focus on consolidating their market position, locking up referral streams or demanding price increases. Instead, hospitals are entering a new era of what the Advisory Board calls "productive growth" — earning market share by attracting empowered purchasers. This includes:

• Network suppliers, such as physicians, post-acute providers and capital partners.
• Wholesale buyers, such as commercial payers, employers and physician accountable care organizations.
• Clinical shoppers, or physicians and patients making decisions about individual episodes of care.

3. Re-position growth as an output instead of as an input. Traditionally, hospital leaders often justified growth as an input. Growth advanced a larger cause, such as funding innovation or extending the hospital's mission. But under productive growth, in which purchasers selectively buy care in a competitive market, the Advisory Board says leaders should re-position their understanding of growth as output rather than an input. Hospitals that grow are doing something right; hospitals that don't are failing.

4. Create three complementary care models. Savvy hospital leaders understand the subgroups within population health. The Advisory Board says there are three:

• High-risk patients with complex diseases and co-morbidities. This subgroup makes up about 5 percent of patients. Hospitals should take a comprehensive and proactive approach to care management to avoid high-cost acute-care services when possible.
• Rising-risk patients who may have medical conditions that are not under control. This subgroup makes up about 15 percent to 35 percent of patients. Providers should avoid unnecessary spending on these patients and keep them from becoming high-risk.
• Low-risk patients, who have minor conditions that are easily managed and account for 60 percent to 80 percent of patient populations. Hospitals should keep these patients healthy but loyal to the system when they need care.

5. Define population health goals. Develop a short list of actionable and measurable goals. They should be narrowly defined and unambiguous. Ensure each member of the organization understands how they contribute to the goals.

6. Ensure high-risk patients have care managers. The Advisory Board says high-risk patients' most important relationship is that with their care managers, not primary care physicians. Dedicated care managers can coordinate the diverse needs of high-risk patients, which span from clinical to nonclinical and may demand more help than PCPs can offer.

7. Manage "rising-risk" patients in the medical home. Nine risk factors, such as obesity and smoking, make a patient a fit in the rising-risk category. Hospitals should identify these patients and connect them to a medical home, which offers a balance of customized support and scale necessary to manage this population with limited resources.

8. Ensure access for healthy patients. Hospitals don't want too many encounters with their low-risk patients, but they must offer accessibility when the time for care comes. Hospitals also need to foster loyalty among these patients. "Mainly, you need to provide timely access to evidence-based preventative care," wrote the Advisory Board. "We've also seen organizations turning to patient portals to offer convenient options such as online scheduling and the ability to email a physician."

Friday, September 6, 2013

Hospital cuts are hitting fast and furious

I am not trying to scare everyone, but we all need to stay informed about what is going on in our industry. It is not pretty out there. If you have been listening to me rant, you know the healthcare industry is no longer the inflationary spending beast hell bent on wrecking the economy that it was according to the talking heads urging reform. For more than a generation, healthcare spending was increasing faster than the rest of the U.S. economy by a factor of two or three times. Beginning in 2009 and continuing through the first half of 2013, nation-wide healthcare spending was keeping pace with growth in the gross domestic product—but no more than that. In fact, spending per person is actually down. The 2.7% annual increase in overall spending is due to population increase.

Despite that fact, the pace of reform has not abated—if anything, it has increased. Modern Healthcare recently ran a cover story entitled, “Death by a Thousand Cuts.” The title says it all. Change is coming fast and furious. The healthcare industry needs a chance to catch its collective breath. I am afraid that we are all going to wake up in a year or two and discover that we have effectively disabled one of the few significant sectors of the U.S. economy that had been thriving. As weak as the “recovery” has been, it is a good way to trigger a second recession.

So, I will continue to pass along information as I receive it about facilities closing, cutting costs and laying off employees. According to the most recent seasonally adjusted data from the Bureau of Labor Statistics, hospitals cut 4,400 jobs during July. Becker’s Review reported the following on August 1, August 15 and September 4:

August 1:

1. Sound Shore Health System to Lay Off Nearly 2,000
Sound Shore Health System in New Rochelle, N.Y., which filed for bankruptcy in May, plans to lay off 1,993 employees. The system notified the New York State Labor Department of its layoff plans. The cuts will affect employees at Sound Shore Medical Center in New Rochelle, Mount Vernon (N.Y.) Hospital, the Helen and Michael Schaffer Extended Care Center in New Rochelle, Mount Vernon Housing Corp. in Mount Vernon and New Rochelle Sound Shore Housing.

2. Interfaith Medical Center in Brooklyn Sends Layoff Notices to All 1,544 Employees
Financially beleaguered Interfaith Medical Center in Brooklyn, N.Y., sent layoff notices to all 1,544 of its employees and asked a bankruptcy court to approve its closing. A hearing on the closing of the hospital will be held Aug. 15.

3. Denver Health to Slash 300 Jobs
Denver Health will cut roughly 300 jobs in the next year through layoffs, attrition and reduction in new hires. In all, the workforce reduction will shrink Denver Health's workforce by 5 percent.

4. Vanderbilt University Medical Center Braces for More Staff, Budget Cuts
Nashville, Tenn.-based Vanderbilt University Medical Center recently cut more than 300 members from its staff, and further budget and staff cuts are on their way at VUMC. VUMC officials have set a goal of saving $100 million in its new fiscal year, and an additional $150 million in the following fiscal year. These cost savings will be achieved through cutting costs in areas like supplies, facilities and contract improvements, and also through labor cuts like offering early retirement, leaving vacant positions empty, implementing a hiring freeze and instituting layoffs.

5. Baptist Health in Arkansas to Lay Off 170
Little Rock, Ark.-based Baptist Health laid off 170 employees. The system cited lower reimbursement, increasing charity care and bad debt as the reasons for the cuts.

6. Danbury, New Milford Hospitals Cut 116 Jobs
Danbury (Conn.) Hospital and New Milford (Conn.) Hospital's parent network, Western Connecticut Health Network, cut 116 jobs, resulting in 65 layoffs.

7. Excela Health to Lay Off 78
Greensburg, Pa.-based Excela Health is laying off 78 and leaving an additional 58 positions empty. Excela attributed the workforce reduction to lower patient volumes and revenue.

8. St. Joseph Health to Lay Off 37
Orange, Calif.-based St. Joseph Health plans to lay off 37 employees across two hospitals. The layoffs will affect 26 employees at Santa Rosa (Calif.) Memorial Hospital and 11 employees at Petaluma (Calif.) Valley Hospital.

9. Blue Mountain Health System Lays Off 16
Blue Mountain Health System, a two-hospital system with campuses in Palmerton, Pa., and Lehighton, Pa., laid off 16 employees and eliminated 13 empty positions. Additionally, the system cut the hours of seven employees, and senior management and department directors took a pay cut.

10. Providence St. Peter Hospital Cuts Number of Licensed Practical Nurses
Olympia, Wash.-based Providence St. Peter Hospital is laying off nine licensed practical nurses. The layoffs are part of an internal restructuring at the hospital. Officials decided a registered nurse with a certified nursing assistant could handle patient care in certain units.

August 15:

1. Maine Medical Center to Slash 225 Positions
Portland-based Maine Medical Center announced it will lay off 50 employees and eliminate 175 other positions. In addition to the eliminated positions and layoffs, 120 employees took an early retirement package.

2. Mountain States Health Alliance to Chop 200 Jobs
Mountain States Health Alliance in Johnson City, Tenn., is cutting 200 jobs through attrition. System officials pointed to shrinking revenues, tied to the federal sequester and lack of state officials' agreement over Medicaid expansion, as the reason for the workforce reduction.

3. WakeMed to Lay Off Hundreds, Close Nursing Home
WakeMed Health & Hospitals in Raleigh, N.C., is laying off more than 100 employees, mostly through the closure of a nursing home in Fuquay-Varina, N.C. WakeMed will also cut the jobs of 14 staff interpreters as it outsources its interpretation services. All together, WakeMed will lay off 111 employees.

4. Northside Medical Center in Ohio to Lay Off 77
Northside Medical Center in Youngstown, Ohio, an affiliate of ValleyCare Health System of Ohio in Youngstown, is laying off 77 employees.

5. Alameda Health System to Lay Off Dozens
Oakland, Calif.-based Alameda Health System prepared to lay off about 57 workers. The layoffs will affect employees at all seven of the system's locations, including a psychiatric hospital and wellness clinics.

6. Lowell General Lays Off 34
Lowell (Mass.) General Hospital laid off 34 workers. Twenty-nine of the affected employees held administrative positions, while the remaining five were nurses and caregivers.

7. Samaritan Medical Center Lays Off 23
Samaritan Medical Center in Watertown, N.Y., announced a workforce restructuring plan that will lead to 23 layoffs. Of the 23 employees who will be laid off, six are in management and 17 are in non-management positions. In addition to the layoffs, about 42 staff members will be reassigned to other jobs that are currently vacant.

8. Ukiah Valley Medical Center Cuts Jobs, Employee Hours
Ukiah (Calif.) Valley Medical Center eliminated six positions and is leaving five positions vacant. Additionally, five positions will have a reduction in hours.

9. Anna Jaques Hospital Lays Off 9 Workers
Newburyport, Mass.-based Anna Jaques Hospital laid off nine employees. The layoffs represent the loss of roughly six full-time equivalent positions.

10. Hancock Medical Center in Mississippi Lays Off 8
Bay St. Louis, Miss.-based Hancock Medical Center laid off eight employees and cut the hours of an unspecified number of other employees.

11. Orlando Health Layoffs Continue
Orlando Health confirmed more employees will be laid off as part of a restructuring the system announced in November. No specifics on how many employees would be laid off in this phase have been released.

September 4:

1. PeaceHealth to Slash 500 Jobs: Vancouver, Wash.-based PeaceHealth plans to eliminate 500 jobs throughout its system through layoffs, attrition and reduced hours. Most of the jobs being cut will be from two hospitals in southwest Washington State: Southwest Medical Center in Vancouver and St. John Medical Center in Longview. Of the 340 positions being eliminated from the two hospitals, 177 will be lost through layoffs.

2. King's Daughters Medical Center Lays Off 148: Ashland, Ky.-based King's Daughters Medical Center laid off 148 workers in support, administrative and supervisory positions. The workforce cuts were made due to declining patient volumes and reimbursement cuts.

3. Centra Notifies 124 Employees Affected by Layoffs: Lynchburg, Va.-based Centra notified 124 employees they will be laid off. By Sept. 5, 112 employees will have been laid off, and 12 more will be gone by the end of the year.

4. NorthShore to Lay Off About 100 Workers: Evanston, Ill.-based NorthShore University HealthSystem announced plans to lay off 1 percent of its workforce, roughly 100 people. The layoffs are part of an effort to "address redundancies and realign staff," according to a NorthShore memo.

5. Baptist Memorial Health Care Lays Off 23, With More Layoffs Coming: Memphis, Tenn.-based Baptist Memorial Health Care laid off 23 managers, and announced a second round of layoffs affecting 61 additional employees. Baptist pointed to increased charity care and lower reimbursements from the government as the reason for the first round of layoffs.

6. Arnot Health to Eliminate 83 Positions at St. Joseph's Hospital: Elmira, N.Y.-based Arnot Health announced it will eliminate 83 full-time equivalent positions at St. Joseph's Hospital in Elmira in September. Arnot Health is transitioning St. Joseph's to focus more on outpatient care, psychiatric and alcohol/drug addiction treatment, long-term care and chronic care. Some units will be closed or consolidated as part of the transition, leading to the elimination of positions.

7. HMA's Tennova to Cut 75 Jobs: Tennova Healthcare, based in Knoxville, Tenn., plans to lay off 75 employees in October. Affected employees work in one of the system's regional service centers in the Physicians Regional Hospital in Knoxville. Naples, Fla.-based Health Management Associates owns Tennova, and is consolidating the Knoxville regional service center into a center in Arkansas.

8. Mission Health to Lay Off Dozens, Cut Budget: Asheville, N.C.-based Mission Health plans to lay off about 70 employees and make other employee-related budget cuts. In addition to the layoffs, the system eliminated three vice president positions, did away with merit increases for 2014 and froze paid time off accruals, among other cuts.

9. Covenant Health to Lay Off 49: Covenant Health in Lubbock, Texas, plans to lay off 49 employees as part of a workforce reduction strategy. The layoffs stem from reduced reimbursements due to healthcare reform and the sequester's cuts to Medicare.

10. Columbus Regional Healthcare System Axes 4% of Workforce: Columbus Regional Healthcare System in Whiteville, N.C., eliminated 28 jobs, or 4 percent of its workforce. Ten of the 28 positions were vacant.

11. Windber Medical Center Restructures Workforce, Lays Off 19: Windber (Pa.) Medical Center laid off 19 employees and is leaving 11 positions vacant in an effort to reorganize its workforce in order to prepare for the future of healthcare. The layoffs are not linked to lower patient volumes. The workforce reorganization will create four new positions at WMC.

12. CHS' Crestwood Medical Center Lays Off 13: Huntsville, Ala.-based Crestwood Medical Center laid off 13 employees, about 1 percent of its total workforce. Affected employees were in administrative and support positions. Crestwood is owned by Franklin, Tenn.-based Community Health Systems.

Friday, August 23, 2013

Why a "Medicare for all" plan is necessary

Here is a great explanation for why a "Medicare for all" plan is necessary:


Video: Why Are American Health Care Costs So High?
YouTube URL: http://youtu.be/qSjGouBmo0M

Thursday, August 22, 2013

Minute Rant: On Healthcare Executive Compensation


Did you know the total compensation paid to the top 25 executives of not-for-profit healthcare organizations in 2011 was about $100 million? Some of the guys at the bottom were only getting $3 million but the ones at the top made $8 million. Of course, the nonprofits aren’t paying the big bucks that the for-profits are paying.

Tuesday, August 20, 2013

Minute Rant: On Healthcare Insurance Company Profits


Healthcare insurance companies are making enormous profits this year and they are all forecasting good times in 2014—at the same moment in time when providers are laying off employees or closing. Why are none of the talking heads yelling about that on television and radio? Here are the second quarter PROFIT numbers for the big five insurance companies: Aetna $536 million; Cigna $505 million; Humana $420 million; United $1.436 billion; and Wellpoint $1.231 billion. I say we all have a drink and celebrate their good fortune and then get back to work trying not to lay off a few more employees.

Monday, August 19, 2013

Reform Rant

Want to fix the ACA? Harry Reid admitted recently that the long term goal should be a Medicare for all, single payor system. If we had done so back in 2008, I believe the backlash would have been no worse and we would have a system worth fighting to preserve.

I've included a study (click here to view PDF) analyzing the economic impact of a universal Medicare program. It is based on HR 676—the Expanded and Improved Medicare for All Act—a bill introduced by Rep. John Conyers Jr. (D-Mich.). The bill has been proposed for 11 straight years. The bill is a mess. It gets involved on the provider side too much and, for that reason, would never pass—not should we want it. Reform can be accomplished solely on the payor side. Payment reform will drive provider reform without draconian and “socialistic” re-engineering providers (e.g., the bill would convert all providers to nonprofits—as if that status makes the provider less susceptible to greed?).

According to the study, the expansion of Medicare would save the U.S. healthcare system $592 billion in 2014 alone. The main savings would come from slashing "administrative waste" (profit) in the private health insurance industry and by using the government’s bargaining power to obtain cheaper pharmaceuticals. Over the next decade, the study said savings could reach $1.8 trillion.
Under HR 676, a single-payer system would be financed through several factors: increasing the personal income tax on the top 5 percent of income earners, instituting a progressive tax on payroll and self-employment, taxing capital gains and other unearned income, instituting a 0.5 percent tax on stock trades and other "progressive tax" financing efforts, according to the study.

Single-payer healthcare bills have generally been opposed by Congress. According to a recent polling data, a majority of physicians now support a single-payer system.

Friday, August 9, 2013

RAC from HDI

This summer, Ozarks Community Hospital was forced to restructure its inpatient behavioral health services (originally known as OCH Resolutions) due to RAC audits. While the hospital is still actively combating these claims, OCH no longer has the resources to continue providing the service through Resolutions. OCH now provides care to geriatric patients through OCH Inpatient Services.

In light of what happened to Resolutions, our inpatient geriatric psych service, you may be asking yourself:

What is a RAC and who the hell is HDI? 


A RAC is a Recovery Audit Contractor, a private, for-profit company empowered by the federal government to “recover” funds paid by Medicare to healthcare providers in the event the RAC computer or RAC “auditor” (whose last job may have been phone solicitor or bank teller) decides there was something wrong with the claim. The RAC gets to keep a percentage of all the money it recovers. The thing you need to know is that hospitals are winning over 75% of the appeals when reviewed by a neutral administrative law judge—a percentage which might lead one to conclude that the RACs are recovering more money than they should.

HealthDataInsights (When did businesses first start running their names together into one name with interior capital letters? I assume it is an outgrowth of web site naming conventions that eliminate spaces between words. It just looks silly to me and I wish they would stop.) HDI is a wholly owned subsidiary of HMS Holdings Corp. HDI began life as an entrepreneurial venture-backed company. HDI investors included Redhills Ventures, GRP Partners and Ticonderoga Capital. In other words, a bunch of venture capitalists with political connections but ZERO healthcare expertise helped create a company for the sole purpose of getting a government contract to make millions of dollars by “recovering” it from healthcare providers. The “word on the street” back then was getting one of the RAC contracts would be a license to print money—there was literally no way to lose.

Once the venture capitalists got the bid to be a RAC, they got HDI up and running until it was printing money as expected and then they sold it to HMS.

Who the hell is HMS?

HMS Holdings Corp. (NASDAQ: HMSY) operates through its subsidiaries including Health Management Systems, Inc. (HMS), AMG-SIU, IntegriGuard LLC, Reimbursement Services Group, Inc. (RSG) and HealthDataInsights, Inc. (HDI). It is the nation's leader in cost containment, program integrity, and coordination of benefits solutions for government-funded, commercial, and private entities. HMS is focused exclusively on the healthcare industry.

For the first half of 2013, HMS reported revenue of $242.4 million, an increase of 6.6% compared to revenue of $227.4 million for the same period a year ago. Net income for the first half was $17.4 million. You can pretty much double those numbers to see what they make in a year.

As President and Chief Executive Officer at HMS HOLDINGS CORP, William C. Lucia made $1,860,000 in total compensation according to proxy statements filed for the 2012 fiscal year.
It is nice to know we are helping with someone’s bottom line.

Monday, July 22, 2013

Why Missouri should expand the Medicaid program

Paul is hosting a series of community forums this July & August on Medicaid Expansion throughout Southwest Missouri. These forums will provide community members with an overview of what’s currently going on with Medicaid expansion and give real answers as to how the actions of the state legislature will directly impact Missouri employers, the local economy and individuals. For additional tour dates and details, visit: www.OCHonline.com. 

I strongly favor expansion of the Medicaid program in Missouri under the Affordable Care Act. I do not have the luxury of taking a principled position on purely political or philosophical grounds, but, if I did, I would still favor expansion. Expansion of the Medicaid program in Missouri will help people. It will help OCH care for more people. It will provide an economic benefit for OCH so that we can continue paying taxes and employing Missourians. Without it, due to reductions in payments from Medicare and Medicaid, OCH will struggle to survive, and if OCH fails, thousands of Missourians will struggle to find similar access to primary care.

The healthcare payment system in this country should not work this way. It should not be impossible to run a healthcare business on what the government pays for healthcare services, but it is. The few healthcare systems that manage to do it with a predominantly governmental patient mix depend on grants, donations or taxpayer support (in the case of government owned hospitals). Most healthcare systems manage to limit the percentage of governmental patients they treat so that they can shift cost to better paying commercial insurance patients. OCH cannot do so, because we have so few commercial insurance patients. In a way, OCH will serve as a test case for reform (or perhaps as the canary in the mine): we have no sources of income or revenue other than payments for services; and we almost exclusively care for governmental patients. If “reform” leaves government healthcare programs in a cockeyed mess, OCH will suffer disproportionately.

As I indicated, OCH favors expansion of Medicaid in Missouri because it is obviously in our interest. Why should anyone else? Before getting “redirected” by political posturing and economic rationalizations, I believe it is important to begin with certain fundamental principles on which we should all agree.

First, good health for everyone is a good thing for Missouri. We can only be a strong nation if we are a nation of healthy people—both physically and mentally. A healthy economy requires healthy workers. The consequence of poor physical health is too obvious to warrant discussion. The consequence of poor mental health to individuals and society at large should be just as obvious, but, in case it has escaped anyone’s attention, recent events have reinforced the point.

Second, regular access to healthcare promotes good health. I doubt anyone will object to that statement, but it gets a little tricky when the focus is regular access to healthcare for Medicaid and uninsured people. Let me put it this way: if regular access to healthcare will not improve the health of people on Medicaid, then there is little reason to believe that regular access to healthcare will improve the health of any other segment of the population—and we should start closing all our hospitals, clinics and doctors’ offices.

Third, healthcare insurance (including government programs like Medicare and Medicaid) improves access to healthcare. There should be little debate about this point. Without spreading the risk through insurance, the cost of healthcare would strain the pockets of all but the wealthy few. Since all people share the risk that they will experience an expensive health event some time in their lives, insurance works best if all people are included in the risk pool. Given the self-evident truth of the first two principles, one might expect the strongest nation on earth would want to protect and preserve that strength by ensuring regular access to healthcare for its people by requiring everyone to get into the “pool.” In point of fact, we did pass a law doing just that… sort of.

Most conversations about healthcare place people in one of three “coverage” groups: people covered by commercial insurance, people covered under a governmental program and people without insurance. We need to redraw that Venn diagram. People without insurance should be classified as people covered under a government benefit program. The federal government long-ago mandated universal access to care for anyone presenting at a hospital with an emergency medical condition (a mandate which, in most hospitals, has evolved into universal access to care for anyone with a medical condition who shows up in the ER); however, the mandate did not come with a corresponding mechanism for mandating payment. Some have referred to EMTALA as the equivalent of a universal healthcare program. If so, it is the worst kind of universal healthcare program one could imagine. In fact, it is one of the fundamental reasons the healthcare payment system in this country was so broken it needed something like the Affordable Care Act to try to fix it.

EMTALA has no reimbursement provision. Hospitals are required to guarantee the service but there is no guarantee of payment. This asymmetry has had a profound ripple effect on our national healthcare system. It created a culture of entitlement. It is my position that healthcare is an essential service; we can debate the issue in abstract terms, but the reality is the government has already established a universal “right” to healthcare. Furthermore, the government says we are entitled to it regardless of whether we pay for it. EMTALA conditioned people to see healthcare fundamentally in that light. Is it any wonder so many people feel conflicted about paying their medical bills and that so many are filing bankruptcy? As a private attorney many years ago, I counseled clients on personal bankruptcies. Though they seldom thought about why they felt that way, people with large medical bills were much more likely to feel justified in filing bankruptcy. They felt they had been saddled with a debt that was somehow really not fair. If healthcare coverage is a right and if that coverage is not “provided” through employment or otherwise, people do not feel pressure to buy insurance since there is “coverage” (through EMTALA) that does not cost anything.

Good health for everyone is a good thing for Missouri; regular access to healthcare promotes good health; and healthcare insurance promotes regular access to healthcare. Therefore, healthcare insurance for everyone would be a good thing for Missouri. The logic is inescapable; unfortunately, logic and politics are poor bedfellows, and political reality, to this point at least, dominates all other considerations. The expansion of Medicaid in Missouri will confer a number of significant economic benefits on the State of Missouri. Those benefits were disclosed, debated and not seriously denied during the last legislative session; so, I see little wisdom in repeating them yet again. The economic benefits are undeniably real; yet, they were not deemed sufficient to override political considerations—and the political landscape has not changed in Missouri.

However, the political landscape has changed outside Missouri, and that change presents a problem for Missouri. The Missouri legislation passed a dramatic tax cut while deferring debate on expansion of Medicaid. Supporters of the tax cut often cite competition from neighboring states as motivation for the tax cut: businesses will relocate to neighboring states with a more favorable business environment. Those who make that argument should recognize that the same rationale applies in favor of expanding Medicaid. Missouri is going to lose businesses and jobs to Arkansas which has adopted a program expanding healthcare insurance to those who qualify under the ACA.

OCH has a small hospital in northwest Arkansas, and I have spoken at a number of public events about Medicaid expansion in Arkansas. Businessmen who were adamantly opposed to the ACA in Arkansas have already begun making plans based on the fact that their employees will be getting insurance paid by the government. These employers are typically paying their employees $10-$12/hour. Their employees will qualify for coverage under 138% of the federal poverty level. Many employers who were worried about compliance with the ACA mandate are now realizing the expanded Medicaid provision will provide coverage at no cost to the employer. Arkansas will be attracting businesses and workers away from Missouri—at no expense to Arkansas. The economic boon Missouri missed by refusing to expand Medicaid will improve the economic vitality of Arkansas both within the healthcare industry and beyond it. It is already reality for OCH.

One of the rationales for delaying or declining the Medicaid expansion begins by stating that the Missouri Medicaid system is broken and that it makes no sense to expand a broken system. OCH is in a better position than most to know whether the Medicaid system is broken, and I can testify that it works. It does not work as well as I would like, but it is not broken. From my perspective, the commercial insurance “system” in our market is far more broken than Missouri Medicaid; yet, no one seems inclined to fix it. If there is a sincere desire to fix the Medicaid program in Missouri and not mere political gamesmanship to avoid adopting something that came from “Obamacare,” I believe the repair can be made quickly and efficiently. Contract with Medicare to process and pay claims for Medicaid beneficiaries as though Missouri Medicaid was Medicare. The ACA essentially requires that states provide the equivalent of Medicare coverage in order to qualify for 100% federal funding of the expanded Medicaid program. Why not simply adopt a Medicare look-alike? Anyone who suggests that Medicare is also a broken healthcare delivery and payment system is either being disingenuous or is simply uninformed. Medicare may not be perfect, but it is the backbone of American healthcare. Almost all commercial insurance companies now follow the Medicare reimbursement methodology by basing payments on a percentage of the Medicare fee schedule.

Wisconsin Provider Services (WPS) is the Medicare Administrative Contractor (MAC) which processes and pays all Medicare claims for a multi-state region that includes Missouri. Missouri could contract with WPS to pay Medicaid claims following Medicare methodology with funds provided by the federal government. The efficiency of such an arrangement should be immediately apparent. Hospitals and physicians have great familiarity with the Medicare system. In reforming Medicaid, the Missouri legislature should avoid at all cost any attempt to create a new, one-of-a-kind healthcare payment system from the ground up. Now is not the time to make healthcare in Missouri more complicated, and we should all fear the unintended consequences of legislative reforms of systems as complex as healthcare.

If the desire to reform the Missouri Medicaid program is sincere, there exists a quick, efficient “fix.” The real issue is whether Missouri should opt to expand Medicaid under the ACA. If the should is a moral, ethical, legal, logical or economic should, there is no question Missouri should expand the Medicaid program. If the should involves a political imperative, I urge politicians to consider the political consequences of losing momentum to neighboring states who acted when Missouri failed to act.