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.

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.

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.

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/

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.

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?

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."