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CMS bundled-payment plan seen driving up costs


An X-ray showing a right hip (left of image) has been replaced, with the ball of this ball-and-socket joint replaced by a metal head set in the femur and the socket replaced by a white plastic cup.

He writes that as “now designed, the mandatory ‘comprehensive care for joint replacement’ payment model could encourage many of the program’s 800 hospitals (and their affiliated orthopedic surgeons) in 75 metro areas to perform more of the pricey procedures on arthritic seniors, not less. If that happens, it will be a perverse twist on the old saying: What the CMS makes on each bundle will be lost on volume.”

“In fact, {the CMS plan} would provide a powerful incentive for hospitals and surgeons who make money on the bundle to do as many as possible. No wonder consultants, physician management firms and medical suppliers are touting their ability to show hospitals how to make money under the bundled-payment program. Many are even willing to share the risk.

“There is an alternative. Hospital systems could offer the ‘watchful waiting’ strategy if the CMS would give them a comprehensive payment to cover the patient’s condition—in this case, severe arthritis of the knee or hip.”

How ACO ‘triple whammy’ undermines Triple Aim


This HealthAffairs posting describes how a “triple whammy” undermined the Triple Aim. It looks at the experience of Dartmouth-Hitchcock Health, the pre-eminent academic health system in northern New England, which recently decided to bail out of  being a Pioneer Medicare Accountable Care Organization.

The “Triple Whammy” discussed in the piece include:

A Flawed Risk-Adjustment Methodology

A Moving And Flawed Target

Identical Incentives Regardless Of Baseline Performance

The authors concluded:

“DH {Dartmouth-Hitchcock} did not make the decision to leave the Pioneer program lightly. A leader in the adoption and application of ACO principles, DH is committed to pursuing high-value population-based care through continuous quality improvement and a relentless focus on cutting waste from health care delivery by engaging providers and payers, waste that is perhaps more difficult to identify and reduce from within a very low-cost environment.”

“To meet its ambitious goals, CMS must provide fair incentives that are large enough to encourage more healthcare systems to enter new reimbursement models and attract and retain providers in both high- and low-cost settings; otherwise, unrestrained fee-for-service cost growth will continue and the full promise of “accountable care” will remain unrealized.

“CMS must rectify the flaws in the Pioneer model so that high-cost ACOs are rewarded for meaningful improvement, and low-cost ACOs—that have already benefited CMS and Medicare beneficiaries by applying ACO principals over the long term and whose ability to generate cost savings is likely to be modest—are rewarded and not punished while demonstrating improvement.”




Fee-for-value leader Dr. Beauregard joins CMG


George Beauregard, D.O., has joined Cambridge Management Group (CMG) as a senior adviser. Dr. Beauregard has been a leader in moving hospitals and physicians into the new world of fee-for-value care.

He has 20 years of experience in private practice in internal medicine and vast experience with pay for performance; performance- and risk-based contracts involving commercial and Medicare payers; EMR/HIT implementation, and Accountable Care Organization and Bundled Payment development.

In his recent role as senior vice president and chief clinical officer for the PinnacleHealth System, based in Harrisburg, Pa., he worked closely with the clinical and administrative leadership to help PinnacleHealth achieve enterprise- wide success in successful CMS Accountable Care and Bundled Payment initiatives; quality and performance improvement; clinical integration, and HIT optimization. This helped lead CMS to welcome RiverHealth ACO, of which PinnacleHealth is a founding member, into the 2014 Medicare Shared Savings Program.

Prior to joining PinnacleHealth, in September 2012, Dr. Beauregard was president and chief medical officer of Southcoast Physicians Network, in Massachusetts.  His leadership helped gain Southcoast admission into the 2013 Medicare Shared Savings Program.

Before that, he was co-founder, in 1996, of Primary Care LLC, the largest independent community-based primary-care-physician network in eastern Massachusetts. Dr. Beauregard guided a merger of that entity with Tufts Medical Center in 2005 to form the New England Quality Care Alliance (NEQCA), where he then served as chairman of the board for four years. He also was trustee of Tufts Medical Center Physicians Organization Inc.

George Beauregard is a graduate of the University of New England College of Osteopathic Medicine. He has been awarded Diplomate Certificates by the American Board of Internal Medicine and the National Board of Osteopathic Medical Examiners.


Glitch in the way of pay for performance


In an  unintended consequence of federal law, some of the highest-performing Medicare Advantage (MA) plans aren’t getting the incentive payments they earned, this HealthAffairs piece reports. These plans stand to lose nearly half a billion dollars in quality incentive payments because of a cap on MA plan benchmarks.

The piece says: “The Center for Medicare and Medicaid Services (CMS) has used quality measurements to adjust its payments to Medicare Advantage plans since 2012. The program, known as the Star Rating System, is intended to provide bonus payments to high quality plans. These bonuses allow plans to provide additional benefits that then attract more enrollees, increasing market penetration for those high performing plans. The impact is clear:

  • “Since Congress attached star ratings to payment, the average rating per contract has increased by almost 1.5 stars — from 2.56 in 2012 to 3.92 in 2015.
  • “Today, 60 percent of Medicare Advantage beneficiaries are enrolled in a 4+ star plan.
  • “Among first-time enrollees, there is a 5 percent increase in likelihood to enroll per 1 star increase in plan rating.”

“However, under a cap that is also part of the law, benchmarks cannot exceed the amount that would have been calculated under the previous methodology. CMS has interpreted this cap to include cuts to quality incentive payments despite clear congressional intent to establish a quality structure that rewards rather than penalizes high performing MA plans.”

The Centers for Medicare & Medicaid Services is being pressed to fix this glitch.




Income implications of new ICD-10 and HCCs

This Medscape piece by Greg A. Hood, M.D., looks at the need for providers to better understand the income implications of the new ICD-10 codes as they relate to hierarchical condition categories (HCCs).

Dr. Hood notes:

“HCC codes have been affecting insurance products and physician reimbursements for years, though most clinicians have under-appreciated them at best or more plainly ignored them. They’ve been a cornerstone of` reimbursement for Medicare Advantage plans for over a decade.

“Because HCCs, which are gathered from encounter claims data, are used to estimate predicted costs for plan members in the year to come, they’re integral in calculating benchmarks for (ACOs) as well as for the hospital value-based purchasing program.”

He goes on:

“CMS and other insurers that incorporate HCC methodology into reimbursement will probably exclude codes that lack the relative degree of specificity achievable with many ICD-10 codes. This means that providers will probably be unable to avoid coding in extreme … detail. It’s important to note that the ICD-10 codes that do venture into highly detailed specificity do not necessarily connote a meaningful HCC score. In other words, it’s not the degree of detail that predicts expenses, but rather the severity of the condition represented by the diagnosis code.”


Big mental-health-reform bill is filed

Senators Bill Cassidy (R.-La.) and Chris Murphy (D.-Conn.) have proposed a bipartisan mental-health reform bill with an eight-point agenda intended to shore up the U.S.  mental-health system ( Among other measures, the bill proposes to designate an Assistant Secretary for Mental Health and Substance Use in the U.S. Department of Health and Human Services, require audits on mental- and physical-health-parity law implementation, and establish new grants for early mental-health intervention.

Of course, given the close connections among behavioral health, mental heath and “physical health” (as if the brain isn’t an organ!) such a bill, if it becomes law, could have a huge impact across the healthcare system.

Senator Murphy’s office sent us this summary of the bill:

The Cassidy-Murphy Mental Health Reform Act will do the following:

Integrate Physical and Mental Health

  • Encourages states to break down walls between physical and mental health care systems by requiring states to identify barriers to integration. States would be eligible for grants of up to $2 million for five years, prioritizing those states that have already taken action. States taking part are eligible with additional federal funds to treat low-income individuals who have chronic conditions or serious and persistent mental illness. 

Designate an Assistant Secretary for Mental Health and Substance Use

  • Elevates the issue of mental health by establishing an Assistant Secretary for Mental Health and Substance Use Disorder within the U.S. Department of Health and Human Services who will be responsible for overseeing grants and promoting best practices in early diagnosis, treatment, and rehabilitation. The Assistant Secretary will work with other federal agencies and key stakeholders to coordinate mental health services across the federal system and help them to identify and implement effective and promising models of care.

Establish New Grant Programs for Early Intervention

  • Establishes a grant program focused on intensive early intervention for children as young as 3 years of age who demonstrate significant risk factors recognized as related to mental illness in adolescence and adulthood. A second grant program supports pediatrician consultation with mental health teams, which has seen great success in states like Massachusetts and Connecticut.

Establish Interagency Serious Mental Illness Coordinating Committee

  • Establishes a Serious Mental Illness (SMI) Coordination Committee under the Assistant Secretary to ensure documentation and promotion of research and treatment related to SMI and evaluate efficiency of government programs for individuals.

Establish New National Mental Health Policy Laboratory

  • New entity will fund innovation grants that identify new and effective models of care and demonstration grants to bring effective models to scale for adults and children.

Reauthorize Successful Research & Grant Programs

  • Reauthorizes key programs like the Community Mental Health Block Grants and state-based data collection. The bill also increases funding for critical biomedical research on mental health.

Strengthen Transparency and Enforcement of Mental Health Parity

  • Requires the U.S. Department of Labor, the U.S. Department of Health and Human Services, and the U.S. Department of the Treasury to conduct audits on Mental Health Parity implementation and issue guidance on how determinations are made regarding comparability mental health services and physical health services.

Improve Mental Health Services within Medicare/Medicaid

  • Makes critical reforms to allow for patients to use mental health services and primary care services at the same location, on the same day. Repeals the current Medicaid exclusion on inpatient care for individuals between the ages of 22 and 64 if the CMS actuary certifies that it would not lead to a net increase of federal spending.


CMS ratings said to lack key socio-economic data


The groups says that Medicare’s five-star scale that rates the quality of care doesn’t offer a complete picture because it fails to reflect these distinct  factors.

One way to address the problem, the groups say, is for CMS to add  income-related information into its ranking calculations. The star-rating system currently uses patient-satisfaction data from the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey to determine the scores.

Beth Feldpush, senior vice president for policy and advocacy for America’s Essential Hospitals, told CMS that research warns  that larger hospitals, teaching hospitals and hospitals serving many low-income patients could well receive lower star ratings even though they provide quality care to the most vulnerable populations. She also complains  the system  oversimplifies complex and individualized choices that patients must make about their health.

She urged the agency to use  measures endorsed by the National Quality Forum that clearly  account for these socio-economic and demographic factors.


Hospitals play the ‘observation’ vs. readmission game


David Himmelstein and Steffie Woolhandler write in HealthAffairs:

The Centers for Medicare and Medicaid Services (CMS) has trumpeted the recent drop in hospital readmissions among Medicare patients as a major advance for patient safety. But lost amidst the celebration is the fact that hospitals are increasingly ‘observing’ patients (or treating returning patients in the emergency department) rather than ‘readmitting’ them. But while re-labeling helps hospitals meet CMS’s quality standards (and avoid costly fines), it probably signals little real quality gain and often leaves patients worse off financially.”

Safety-net hospital execs complain about new rating system


The Centers for Medicare and Medicaid Services is developing a hospital-quality star-rating system for the Hospital Compare Web site to provide currently available data on quality measurement to help inform healthcare decisions.The new  system will pull data from several sources, “which is different than the current system that’s based on the Hospital Consumer Assessment of Healthcare Providers and Systems Survey, according to the CMS,” reports the publication.

“America’s Essential Hospitals, which represents 250 safety net hospitals around the country, said it’s concerned about the proposed methodology for the new system released by the agency earlier this year.

“We are not confident that the measures currently available on Hospital Compare enable CMS to create a single, methodologically sound rating of all aspects of hospital quality.”

“Although the intent of CMS, in developing an overall star-ratings system, is to provide patients with a simplified assessment of how hospitals perform overall on quality, each patient’s circumstances are different and the quality measures most relevant to their care will differ.”

“Also of concern is whether the system will take into account if a hospital serves more of a high-risk population. The trade group believes the CMS methodology should incorporate risk adjustment for socio-economic factors so results reflect differences in treatment across hospitals. ”


Seeming success in a CMS bundled-care pilot


Although the jury remains out on many bundled-payment programs, the success of a Centers for Medicare & Medicaid Services pilot program at Baptist Health on San Antonio in saving $1 million in its first year while improving outcomes has led 360 more providers to  try the program. Further,  a total of 1,755 other providers will partner with them and assume the same financial risk for care episodes.

The project was centered on joint replacements. Under the pilot with CMS, Baptist received a lump sum for each procedure priced at 3 percent below what it normally received from Medicare to perform the procedures.  “If it kept costs below that threshold and maintained high-quality outcomes, Baptist got to keep the difference,” FierceHealthFinance reported.

CMS reported that changes to in-hospital processes saved nearly $300 per patient, saving about $1.1 million based on the number of patients that received treatment through the  bundle.

“Baptist Health also took hard looks at nearly automatic referrals for physical therapy, home nurse visits and nursing homes. Such referrals account for nearly half the cost of a joint replacement procedure. Instead, under the pilot program the patient was more likely to receive therapy at home. The health system also re-examined the use of particular blood thinners, compression stockings and canes for each patient, ” Fierce reported.



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