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Nursing-home companies entering insurance business

By JORDAN RAU

For Kaiser Health News

Around the country, a handful of nursing-home companies have begun selling their own private Medicare insurance policies, pledging close coordination and promising to give clinicians more authority to decide what treatments they will cover for each patient.

These plans are recent additions to the Medicare Advantage market, where private plans have become an increasingly popular alternative to traditional fee-for-service coverage. Unlike other plans, these policies offered by long-term care companies often place a nurse in the skilled-nursing facility or retirement village, where they can talk directly to staff and assess patients’ conditions. Some provide primary-care doctors and nurses to residents in the homes or in affiliated assisted living facilities or retirement villages with the aim of staving off hospitalizations.

“The traditional model is making decisions based on paper, and in our model, these decisions are being made by clinicians who are really talking to the staff and seeing the patient,” said Angie Tolbert, a vice president of quality at PruittHealth, which began offering its plan to residents in 10 of its nursing homes in Georgia last year. “It’s a big shift in mindset.”).

Not everyone finds such plans superior. Some patients who are in disputes with the insurers have faulted the nursing home staff — who work for the same company — for not helping challenge decisions about coverage. They complain that the company holds an unfair advantage over Medicare beneficiaries.

“There’s a conflict there,” said Toby Edelman, a senior attorney with the Center for Medicare Advocacy.

In an Erickson Living retirement village in Silver Spring, Md., Faith Daiak signed up for an Erickson Advantage plan sold by a nurse whose office was in the main village building, according to her son, J.J. Daiak. After a bout with the flu last February weakened her enough to need a 10-day hospitalization, she was sent to her village’s skilled-nursing facility. There, the insurer repeatedly tried to cut short her stay.

Erickson Advantage first said it would stop paying for Daiak, 88, because she wasn’t getting healthier in the nursing facility. Her son appealed by pointing out that Medicare explicitly said as part of the 2014 settlement of a class-action lawsuit that patients do not have to be improving to qualify for skilled-nursing care.

Daiak’s appeal was denied, but the issue was sidelined in March when her rapid weight loss in the nursing home sent her back to the hospital, he said.

After Daiak returned to the nursing home with a feeding tube in her stomach, the insurer again tried to curtail her time there, saying she did not need that level of care. The family successfully appealed that decision after noting that Medicare’s manual said feeding-tube maintenance required the skilled care of a nursing facility.

In April, Erickson Advantage again said it would not continue paying for Daiak’s stay. It reversed that decision after Kaiser Health News asked the company about the case, J.J. Daiak said. He said the plan did not explain its turnaround.

Dolphine Williams (left) and Rita Coopersmith visit Faith Daiak in the Riderwood-ArborRidge Skilled Nursing Facility in Silver Spring, Md., on May 12, 2017. (Courtesy of the Daiak family)

While this Medicare Advantage plan touts its “team that knows you personally and wants to help,” J.J. Daiak said he found the registered nurse at Erickson’s Silver Spring community not helpful. “All I see is her trying to get Erickson out of having to pay for the nursing home,” he said. He subsequently switched his mother to traditional Medicare coverage with a supplemental Medigap policy, which she had until this year.

Erickson Living, the parent company of the nursing home and insurer, declined to discuss individual cases but noted that Medicare has given its insurance plans the best quality rating of five stars. In a written statement, the company said that “medical service determinations for Erickson Advantage members are based on reviews by licensed clinical staff and clinical guideline criteria. Our primary focus is always on ensuring that the healthcare being provided for our residents matches a patient’s needs and established clinical treatment protocols.”

Edelman said the dispute was particularly troubling because Erickson’s retirement villages are marketed on the promise that the company will care for seniors in all stages of aging. “They don’t tell you what they won’t pay for,” she said.

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There are nearly 18 million enrollees in the overall Medicare Advantage market. Medicare pays private insurers a set amount to care for each beneficiary. In theory, this payment method gives the insurers motivation to keep patients from needing costly medical services such as hospitalizations.

A subset of Medicare Advantage plans are designed exclusively for people who either require or are expected to require at least 90 days of skilled services from nursing homes, assisted living facilities or other long-term care institutions. UnitedHealthcare directly offers three-quarters of these plans with about 40,000 enrollees, far more than those offered by nursing-home companies. Matthew Burns, a UnitedHealth spokesman, said the majority of the company’s plans are rated four stars or better on Medicare’s five-star quality scale.

“Our plans offer members quality and peace of mind — and they are considered above average to excellent by CMS quality and performance standards,” he said in a statement.

United also underwrites Erickson’s policies, which have around 200 enrollees, and were the first Advantage plans offered by a long-term care operator. Under the arrangement, Erickson Advantage decides when a nursing home stay is covered.

Nick Williams, PruittHealth’s care integration officer, said its Medicare insurance plan has resulted in 30 percent fewer hospitalizations among residents since it began last year. The company intends to expand the insurance coverage to residents at 42 of its other nursing homes in Georgia. Other nursing-home chains are experimenting with this model in Missouri, South Carolina, Virginia and elsewhere.

Anne Tumlinson, a Washington healthcare industry consultant who specializes in long-term care, said that when a nursing home’s company is on the hook for the cost of hospitalizations of their patients, it is more likely to make efforts to prevent them.

“It gets them out of hospitalizing people at the drop of the hat,” she said. “If you live in a nursing home or are living in assisted living and they have one of these plans going, they’re going to be investing heavily in 24/7 access to primary care.”

She said big insurers have so many different types of enrollees that they are less focused on the particular needs of nursing-home patients. “They’re too big, they’re bureaucratic, and they are insurers, not providers,” she said.

The Costs Patients Face

In Hingham, Mass., Suzanne Carmick has been frustrated with the Erickson plan’s unwillingness to pay for most of her mother’s prolonged stay. Last October, 98-year-old Lorraine Carmick went into Erickson’s nursing home after a hospitalization. Eleven days later, Erickson Advantage notified Suzanne Carmick it would stop paying for the facility because it said her mother was strong enough to move with the help of a rolling walker. Under Medicare’s rules, nursing home stays are not covered if a patient does not need daily physical therapy. Erickson said two or three days was sufficient for Carmick.

Suzanne Carmick appealed the decision, saying Erickson exaggerated her mother’s recovery, noting that she had dementia, an infection and was wearing two stiff leg braces. She said getting therapy five days a week provided in the nursing home would help her mother recover faster.

“She still cannot stand up or sit down or go anywhere … without an aide helping her by pulling her up or setting her in a chair,” Carmick wrote. “She is improving but is now supposed to stop or decrease PT [physical therapy], and she must start paying out-of-pocket?”

After a week’s extension, the nursing home began billing her mother at its daily rate of $463, which rose to $483 this year as Lorraine Carmick remained in the nursing home. A Medicare appeals judge subsequently ruled Erickson’s action was justified, based on the testimony from the nursing-home staff — all Erickson employees. If the insurer had covered a maximum stay, Carmick would have avoided more than $30,000 in bills she now owes. Suzanne Carmick said her mother has been on a wait list for six months for a bed on a less expensive floor in the nursing facility.

“It is a closed system where the skilled-nursing facility, physicians and Medicare Advantage plan are all one and the same,” she said. “The Erickson Advantage plan is turning out to be quite a disadvantage at this point.”

 


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

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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

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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

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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.

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3 big areas for new, profitable healthcare investment

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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

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 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

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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

 

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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.


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