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AHA: Anthem-Cigna merger would hurt move to value-based reimbursement


The American Hospital Association (AHA) is urging a federal appeals court to uphold a district court decision that has blocked Anthem’s proposed $54 billion acquisition of Cigna.

The organization asserted that the combined company would reduce innovation in the health-insurance market when it’s most needed to continue shifting healthcare away from the fee-for-service model toward value-based care.

“Anthem has been less willing than Cigna to innovate and develop value-based reimbursement systems,” the AHA wrote.

Anthem has said that it is “committed to completing this value-creating merger either through a successful appeal or through settlement with the new leadership at the Department of Justice.”

However, the AHA contended that value-based reimbursement models “depend critically on the willingness of payers to experiment, innovate, and collaborate with hospitals and physicians to develop new payment methodologies that go beyond the old fee-for-service system.” And there is “substantial evidence that underscores Cigna’s particular reliance {as opposed to Anthem’s} ‘upon innovation to compete,’” the AHA added.

AHA’s brief comes days after the Department of Justice, several states and the District of Columbia also urged the appeals court to maintain the lower court’s blocking of the agreement. There is “overwhelming evidence – uncontested by Anthem on appeal” that the merger would raise prices to consumers and shrink innovation among insurers, and that “showed Anthem had no real plan to achieve” the medical-cost savings it asserted that the combined company would create.

To read the AHA’s argument please hit this link.



Many healthcare technologies are married to the fee-for-service model

Many healthcare technologies are married to America’s astronomically expensive fee-for-service model.

To read more, please hit this link.

Group pleads with Trump to maintain value-based direction


In a letter sent this week, the Health Care Transformation Task Force is asking the Trump administration to continue efforts to replace fee-for-service payment models with value-based care.

The group, which includes patients, payers, providers and purchasers, says  that payment and care-delivery innovation have been supported on a bi-partisan basis and asked that President-elect Donald Trump, Vice President-elect Mike Pence and congressional  affirm that the support will continue.

“Given the significant industry investment and strong progress to date, we urge the new Administration and Congress to send signals of support and encouragement so this transition can be sustained. This is not the time for policymakers to waver or reverse course, which would send a negative message to the industry and chill ongoing transformation efforts,” the task force wrote.

The group  said that sustainable value-based payment models depend on  “aligning private-sector and public-sector efforts.” And they lauded the Center for Medicare & Medicaid Innovation as a public-sector entity that has dramatically advanced payment and care-delivery transformation. But many Republicans have vowed to kill that institution.

A challenge: Many very highly compensated physicians, especially specialists, and other affluent providers and healthcare executives, seem to have the ear of the very rich folks who will be running the federal government under Mr. Trump. They will push back hard against anything that might reduce their personal and institutional incomes.

An example is Tom Price, M.D., a rich former orthopedic surgeon who implied that he’d fight anything that would curtail incomes of U.S. physicians, who are by far the highest paid in the world. These groups have hugely benefited from the traditional fee-for-service system — a system that encourages vast amounts of waste and duplication and produces among the worst  population-health metrics in the Developed World.

To read the letter, please hit this link.

Update on disruption in primary care


Lisa Ward, writing in Modern Healthcare, discusses the current (and sometimes hyped) “disruptive innovation” in primary care.

One example:

Retail clinics have been promoted as  a potentially disruptive innovation in healthcare that could cut overall healthcare costs.

She notes that  “the hope was that retail clinics could provide a cheaper model of healthcare to more people, especially lower income patients who often forgo preventive care and rely on emergency rooms.

“Yet that isn’t how it turned out. The potential of retail clinics hasn’t been fully realized. They are usually located in more affluent areas and their growth has plateaued. ”

But, more hopefully, she discusses

“{A} raft of new entrants like CareMore HealthPlan, Oak Street Health, IoraHealth and Aledade Inc., which, while using some of the same process-based methods championed by retail clinics, are partnering or employing primary care practitioners in a city or region. These firms are focused on coupling primary care with intensive preventive care to halt or reverse the development of chronic diseases like diabetes, heart disease and chronic obstructive pulmonary disease.

“In a world moving to value-based reimbursement, the strategy makes a lot of sense, especially because this new primary care model tends to use capitated payments, rather than traditional fee for service. They take responsibility for the financial cost of patients’ primary, specialty, acute, and post-acute care and the overall quality of clinical care with the understanding that they will be rewarded for providing better outcomes at a lower cost.

“Not surprisingly, large healthcare organizations, which are increasingly using capitated or bundled payments, are starting to pay close attention to the model.”

To read her entire article, please hit his link.

Humana’s happy news about value-based MA programs


Humana, the giant health-insurance company, reports that its Medicare Advantage members enrolled in value-based programs get better care and healthier outcomes than in  traditional fee-for-service programs — while helping to cut costs.

The company said it had 20 percent lower costs last year for members affiliated with providers in value-based reimbursement models compared with estimated  fee-for-service  Medicare costs.

Members with chronic conditions in value-based MA plans had better health outcomes on average than those not in such plans.  The Centers for Disease Control and Prevention has said  that chronic ailments are responsible for 86 percent of U.S. healthcare costs.

Humana, which manages the plans of 3.1 of the 18.5 million MA enrollees, said that 1.2 million of its MA members are affiliated with providers in value-based reimbursement models.

Humana also reported:

  • Providers  in value-based payment models had 19 percent greater care-quality scores than those in standard fee-for-service programs.
  • Emergency room visits were 6 percent lower for patients in value-based programs than in fee-for-service programs.

To read more, please hit this link.


3 big areas for new, profitable healthcare investment


Kapila Ratnam,  a partner at NewSpring Capital and NewSpring Healthcare, identifies and discusses  in MedCity News three areas of healthcare with big investment potential:

Behavioral Health

“According to the National Institute of Mental Health, approximately 10 million people experience a serious mental illness in a given year that substantially interferes with or limits one or more major life activities – evidence that behavioral health services are becoming increasingly necessary. While financing options for these services continue to improve,…the lack of available behavioral health service options is creating a growing demand. In fact, many people today with mental health issues are not receiving the proper treatment they require.”

“The  space has continued to see a number of growing opportunities since the introduction of legislative moves…. Additionally, regardless of this year’s election outcome, many aspects of the behavioral health market won’t change, making it appealing for prime investments in the near future.”

Home Health

“To combat the high cost of healthcare, we are starting to see a much-needed shift from a fee-for-service to a, which focuses on the quality of care that patients receive, rather than the number of services billed. Therefore, many providers are now being rewarded for keeping patients out of the hospital, which is the most expensive point of medical intervention, whereas the home is the cheapest. As this shift takes effect, providers are now incurring more risk, so it’s critical to establish home health networks that are efficient, safe, and convenient for patients out of treatment.”

“As investors, we are interested in the most cost-effective and care-effective home health services. Specifically, connected health technologies such as mobile apps, sensors and wearables that help patients proactively manage their health, offer tremendous investment opportunities.”

Big Pharma Outsourcing

“The pharmaceutical industry is currently battling a mounting number of issues, including shrinking profit margins, heavy competition, a cost-heavy structure, increased regulatory pressure, growing expenses, and more. Faced with these challenges, Big Pharma has shifted their business models. More specifically, they have embraced outsourcing as a way to drive economies of scale without hindering their operations. ”

As private equity investors, {we find that} the explosion of outsourcing over the last 10 years has created promising opportunities. We find the most value in companies that focus on cost saving initiatives for big pharma companies, provide a niche service — such as software — that either allows sponsors to access real-time data on clinical trials, or better manages patients or data or both. ”

To read the full article, please hit this link.

Warning to labs: Shift to value-based payments faster than expected


 Bundles News reports on the faster than expected move from fee for service  to fee for value. The publication says that nearly a third of  Medicare payments involve value-based reimbursement and other alternative payment values.
The publication reports:

Clinical laboratory executives should take note of a key financial fact. The transition from fee-for-service healthcare to value-based reimbursement is occurring at a faster clip than theDepartment of Health and Human Services (HHS) anticipated last year when federal officials announced a plan to tie 30 percent of traditional Medicare spending to alternative payments models by the end of 2016.

“That means the transition away from fee-for-service payment for medical laboratory tests and other healthcare services is moving ahead of schedule. As evidence, HHS recently announced it reached the 30 percent target at the start of 2016, nearly a year ahead of the schedule laid out when the Obama administration outlined a plan to reward healthcare providers based on quality of care rather than the volume of services they provide.”

“The 30 percent milestone represents an estimated 10 million Medicare patients receiving value-based care.”

Bundles News says that “the faster-than-expected shift to alternative payment models and value-based reimbursement should serve as a wake-up call to pathologists and clinical laboratory executives who soon may find that fee-for-service reimbursement is no longer the primary payment method for anatomic pathology services and medical laboratory tests.”

Survey finds physician support for new payment models


A survey of 500 physicians by Fidelity Investments and the National Business Group on Health (NBGH) found that while only 55 percent of respondents take part in an alternative-payment model now, some 80 percent would consider participating in the future.

The survey suggested that most physicians approve of the the shift away from fee for service. Only 41 percent of physicians surveyed  believed that fee for service was an optimal way to deliver positive patient outcomes. Among physicians under age 35 confidence in fee for service was only 28 percent,

The survey indicated that physicians rank “positive impact on patient health” as the top benefit of alternative payment models.

“At the end of the day, physician buy-in and support are crucial to the success of these new delivery models,” Brian Marcotte, president and CEO of NBGH, said. “We are asking physicians to change how they engage their patients, manage their practice and get paid. The right resources, technology and analytics have to be in place to help physicians make this transition to deliver on the promise of improved patient outcomes and lower costs.”

Chargemaster focus needed in transition to value payments



Jon Melling, a partner and IT consultant at Pivot Point Consulting, spoke with  Becker’s Hospital Review about how hospitals are transitioning from fee-for-service to value-based billing.

“The two [systems] are so fundamentally different that you can’t just flick a switch and move from one to the other,”  noted Mr. Melling, and hospitals and health systems face many challenges in bridging the gap.

The reimbursement that hospitals are getting now has  fallen, in part because of the the rise in popularity of high-deductible health plans, Mr. Melling told Becker’s. “And under value-based billing there is likely to be a further decline in the level of revenue accrued.”

Becker’s noted: “The onus is on hospitals to find other avenues of revenue to mitigate loss, and successfully manage the health of their patient populations in a cost-effective way.”

Becker’s paraphrases Mr. Melling as saying: “To successfully manage their patient populations, providers will need to seriously invest in powerful, quality analytics engines as well as market-particular wellness initiatives, such as requiring mammograms and prostate exams for those over a certain age.”

This financial incentive to better identify and manage at-risk populations has sparked new conversations between insurance plans and care providers. “There is and will be a substantially increased amount of crossover between physician groups, payers and hospitals,” Mr. Melling added.

“If you’re a provider in a network, you have to work very closely with the payer to make sure you’re clear about the parameters and the criteria for care, and come to an agreement about the level of reimbursement for specific conditions, or what the overall payment will be if you are taking on a population,” he said.

As hospitals  navigate between volume and value, Mr. Melling pointed out  core revenue-cycle areas demanding provider attention.

Becker’s summarized his views on this point as: “Hospitals will need to pay increased attention to their chargemaster, potentially managing separate chargemasters where one cannot manage both value-based and fee-for-service charges….{and} Denials management will continue to be a key indicator of revenue cycle performance, with an increased focus to denial prevention.”

He added: “{I}t surprises me sometimes the level of understanding within organizations surrounding revenue cycle processes.”  Executives and staff will need lots of education as they move deeper into the payment-for-value world.

When will/can sector ditch fee for service?


She notes that a new  PwC Health Research Institute (HRI) report  says while healthcare executives publicly praise the move to value-based care, “they privately drag their feet while they wait for a successful model to emerge before they take on the risk.”

Ms. MacDonald says that “One reason for their hesitancy–or what the authors described in the report as a ‘go-slow, dip-the-toe-in-the-water approach’–is the legitimate concern that revenue will decline in the early years of the transition.”

Ceci Connolly, HRI director, holds  out  hope, however. In Ms. MacDonald’s words, she says:

“It will take investment in strong data analytics, improvements in the care they provide and a culture change so all doctors, nurses and healthcare professionals truly operate as a team. But the organizations that have made these front-end investments and stuck with it are beginning to see their efforts pay off.”

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