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Time to fix perverse incentives in Medicare physician payment

A piece in Health Affairs says:

“MACRA is indeed better than what came before, but it still leaves in place perverse incentives that threaten to undermine quality and access for Medicare beneficiaries.”

The authors describe: “what we have accomplished regarding Medicare physician payment and what still needs to be done under the new administration and Congress.”

They conclude:

”While MACRA was a step in the right direction and encourages positive practice changes and provider integration, policymakers have a long way to go in aligning payment models with high-value results. As shown above and predicted by the CMS Actuary report, MACRA can only be considered an interim fix; new legislation is needed to avoid the unintended consequences of current law. Inaction will negatively affect the entire Medicare Part B program with a corresponding impact on health care access and quality for America’s seniors.

“This is not the time for Congress to rest on the belief that its work is done, but to act now to stabilize the long-term viability of the Medicare Program.”

To read the article, please hit this link.


Looking at the new CMS-Pennsylvania model for improving rural hospitals

pafarm

Farm in Lancaster County, Penn., where many Amish people live.

CMS and Pennsylvania are  collaborating on a new model to improve health and healthcare is rural areas of the state.

Here are  Becker’s Hospital Review’s “eight things to know about the model”:

1. The Pennsylvania Rural Health Model is being administered through the CMS Innovation Center and  the state’s health department.

2. The goal  “is not only to improve health and healthcare in rural areas of Pennsylvania, but also to reduce the growth of hospital expenditures across payers — including Medicare — and improve the financial viability of the state’s rural hospitals, according to CMS.”

3. “The model is broken up into seven performance years, according to CMS. It  began  Jan. 12, 2017 and will end Dec. 31, 2023.”

4. “CMS said Pennsylvania rural hospitals participating in the model will receive all-payer global budgets — funded by all participating payers — to cover inpatient and outpatient services they provide. In exchange, these hospitals will use the money ‘to deliberately redesign the care they deliver to improve quality and meet the health needs of their local communities,’ the agency added”.

5. ”Pennsylvania, during each performance year, will prospectively set the all-payer global budget for each participating hospital, CMS said. The all-payer global budget will primarily be based on hospitals’ historical net revenue for inpatient and outpatient hospital-based services from all participating payers, according to CMS.”

6. ”Participating hospitals will also detail a plan to improve care quality by preparing a Rural Hospital Transformation Plan that must be approved by Pennsylvania and CMS.”

7. ”CMS said it will provide Pennsylvania with $25 million, which is a portion of the funding to begin implementing the model”.

8. Any critical-access hospital or acute-care hospital in rural Pennsylvania may participate in the model.

To read the CMS report on the model, please hit this link.

For more information from Becker’s, please hit this link.

 


GOP should avoid Medicare third rail

rail

Rodney Whitlock writes in Health Affairs:

“Republicans have expressed interest in repealing and replacing the Affordable Care Act (ACA), restructuring Medicare to a premium support model, and reforming Medicaid through either block grants or per capita caps. Taking on all three programs is an extremely heavy lift — both politically and legislatively. If it is improbable to do all three, Republicans should openly acknowledge that they are taking Medicare restructuring off the table. This is not meant to belittle the importance of Medicare as a fiscal issue. The reality is that this election was in no way a mandate for major Medicare restructuring, and the President-elect came out rather strongly against the concept during the campaign.

“With premium support-style Medicare reform off the table, the political calculus changes dramatically for the Democrats. The Democrats have been revving up the Medicare privatization rhetoric that has been politically beneficial since 1995. Without Medicare as a rallying point, Democrats would be forced to defend the Affordable Care Act (ACA) which is relatively unpopular and in need of reconsideration. Refusing to engage might not be in their political interest. And while the Medicaid program is critical to the people it serves, it has not been shown to be the salient political issue that drives voters the way Medicare has.”

Of course Medicare has long since become a political third rail because elderly people vote at very high rates compared to younger and/or poorer folks.

To read Mr. Whitlock’s full piece, please hit this link.


Trump’s HHS pick dislikes Medicare bundles program

hip

By RACHEL BLUTH

Kaiser Health News

A recent change in how Medicare pays for joint replacements is saving millions of dollars annually — and could save billions — without impacting patient care, a new study has found. But the man whom Donald Trump has picked to be the secretary of  the Department of Health and Human Services has vocally opposed the new mandatory payment program and is likely to revoke it.

Under the new program, Medicare effectively agrees to pay hospitals a set fee — a bundled payment — for all care related to hip- or knee-replacement surgery, from the time of the surgery until 90 days after. Traditionally hospitals collect payments for many components of care and rehabilitation individually.

Tom Price, M.D., the president elect’s HHS nominee, a congressman from Georgia and a very affluent orthopedic surgeon, has actively opposed the idea of mandating bundled payments for these orthopedic operations, calling it “experimenting with Americans’ health,” in a letter to the Medicare agency just last September. In addition, the agency which designed and implemented the experiment, the Center for Medicare and Medicaid Innovation, was created by the Affordable Care Act to devise new methods for encouraging cost-effective care. It will disappear if the act is repealed, as President-elect Trump has promised to do.

The study appeared Jan. 3 in the Journal of the American Medical Association. Though one of its authors is Ezekiel Emanuel, M.D., a professor at the University of Pennsylvania who helped design the ACA, the research relies on Medicare claims data from 2008 through mid-2015, long before the presidential election.

Starting in April 2016, CMS required around 800 hospitals in 67 cities to use the bundled payment model for joint replacements and 90 days of care after the surgery as part of the Comprehensive Care for Joint Replacement program. The program had previously been road-tested on a smaller number of hospitals on a voluntary basis, which formed the focus of the research.

The study found that hospitals saved an average of 8 percent under the program, and some saved much more. Price has been skeptical that bundled payments did save money, but the researchers estimate that if every hospital used this model, it would save Medicare $2 billion annually.

The bundled payment program works like this: For some specific kinds of medical procedures, including joint replacements or some heart surgeries, the Centers for Medicare & Medicaid Services will add up the costs for the entire episode, from the hospital stay and medical supplies to the rehabilitation afterwards. If the total costs are below a target set by CMS, the hospital gets to keep the savings. If not, the hospital has to pay Medicare the difference. It’s supposed to incentivize more efficient spending and better care coordination between providers, so they can lower costs.

In practice, it seems to be working. Baptist Health System, a network of five hospitals in San Antonio, saved an average of $5,577 on each joint replacement without sacrificing the quality of care, according to the study. Baptist was an early adopter of bundled payments; it began experimenting with them in 2008. Over seven years, the hospital system has cut Medicare’s costs on knee replacements by almost 21 percent.

The savings came without impacting quality. Patients at Baptist Health System were just as likely to be readmitted to the hospital or end up in the emergency room as patients nationally. There was some indication that quality of care may be better, fewer patients under bundled payments had long, extended hospital stays.

In Price’s letter from September, he said that Medicare had exceeded its powers in imposing such bundled payments, which he said took decisions out of the hands of doctors and patients.

That doesn’t seem to be the case, according to Amol Navathe, M.D., an assistant professor of medicine and health policy at the University of Pennsylvania, and one of the authors of the JAMA study. Instead, Navathe and his colleagues suggest that the bundled payments actually fostered greater collaboration between surgeons, administrators and patients because programs could only succeed in saving money if physicians were engaged in creating standardized pathways for care.

For example, the Baptist Health System saved about 30 percent on implant costs, around $2,000 on each artificial joint, by using the least expensive medically equivalent implants as determined by the hospitals’ surgeons.

Usually, physicians are prevented from benefitting when hospitals save money because of anti-kickback laws. Waivers under bundled-payment models mean that surgeons can put in the time to find the best, most cost-effective implants, and share in some of that savings.

“It takes that extra level of effort and coordination, and proactively communicate with [patients],” Navathe said. “Preplanning, setting of expectations and communicating up-front is resource intensive, when they have the incentive to do that they were willing to expend the extra resources to make that happen.”

When bundles included care after a patient’s hospital stay, spending on rehabilitation went down 54 percent. That’s because hospitals took the time to match patients to the right level of care, Navathe said.

Patients who didn’t need to stay in a nursing home or rehab center were set up with home health care or physical therapy.

Price has objected to CMS making bundled payments mandatory, calling it an instance of federal overreach. But bundled payments only work if everyone has to participate, according to Darshak Sanghavi, M.D., the former director of prevention and population health at the Center for Medicare and Medicaid Innovation.

If hospitals can choose whether or not to participate, only the ones that are already delivering care efficiently –and coming in under CMS’s cost target — will use bundles and Medicare will constantly be paying out bonuses. The system needs to be mandatory, Sanghavi said, to pull in less efficient hospitals and give them incentive to change.

“Stopping the programs for ideological reasons I think impedes innovation in a way that is going to consign us to having really, really high costs of care that’s going to continue in the future,” Sanghavi said.

Bundled payments aren’t just for hip and knee replacements. On Dec. 20, CMS announced it would expand mandatory bundled payments to treatments for heart attacks, bypass surgery and cardiac rehab beginning in July 2017. In its waning days, the Obama administration is effectively throwing down the gauntlet to the incoming administration on bundled payments, one of its signature reforms.


How would GOP pay for an ACA replacement?

By JULIE ROVNER

For Kaiser Health News

Leading Republicans have vowed that even if they repeal most of the Affordable Care Act early in 2017, a replacement will not hurt those currently receiving benefits.

Republicans will seek to ensure that “no one is worse off,” said House Speaker Paul Ryan, R-Wis., in an interview with a Wisconsin newspaper earlier this month. “The purpose here is to bring relief to people who are suffering from Obamacare so that they can get something better.”

But that may be difficult for one big reason — Republicans have also pledged to repeal the taxes that Democrats used to pay for their health law. Without that funding, Republicans will have far less money to spend on whatever they opt for as a replacement.

“It will be hard to have comparable coverage if they start with less money,” Gail Wilensky, a health economist who ran the Medicare and Medicaid programs under President George H.W. Bush, said in an interview.

“Repealing all the ACA’s taxes as part of repeal and delay only makes a true replacement harder,” wrote Loren Adler and Paul Ginsburg of the Brookings Institution in a white paper out this week. It “would make it much more difficult to achieve a sustainable replacement plan that provides meaningful coverage without increasing deficits.”

The health law’s subsidies to individuals buying insurance and the Medicaid expansion are funded by two big pots of money..

The first is a series of taxes, including levies on individuals with incomes greater than $200,000, health insurers, makers of medical devices, brand-name drugmakers, people who use tanning salons, and employer plans that are so generous they trigger the much-maligned “Cadillac Tax.” Some of those measures have not yet taken effect.

However, the Congressional Budget Office estimated in early 2016 that repealing those provisions would reduce taxes by an estimated $1 trillion over the decade from 2016-2025.

The other big pot of money that funds the benefits in the health law comes from reductions in federal spending for Medicare (and to a lesser extent, Medicaid). Those include trims in the scheduled payments to hospitals, insurance companies and other health care providers, as well as increased premiums for higher-income Medicare beneficiaries.

CBO estimated in 2015 that cancelling the cuts would boost federal spending by $879 billion from 2016 to 2025.

The GOP, in the partial repeal bill that passed in January and was vetoed by President  Obama, proposed to cancel the tax increases in the health law, as well as the health premium subsidies and Medicaid expansion. But it would have kept the Medicare and Medicaid payment reductions. Because the benefits that would be repealed cost more than the revenue being lost through the repeal of the taxes, the result would have been net savings to the federal government — to the tune of about $317.5 billion over 10 years, said  the CBO.

But those savings — even if Republicans could find a way to apply them to a new bill — would not be enough to fund the broad expansion of coverage offered under the ACA.

If Republicans follow that playbook again, their plans for replacement could be hampered because they will still lose access to tax revenues. That means they cannot fund equivalent benefits unless they find some other source of revenue.

Some analysts fear those dollars may come from still more cuts to Medicare and Medicaid.

“Medicare and Medicaid face fundamental threats, perhaps the most since they were established in the 1960s,” said Edwin Park of the liberal Center on Budget and Policy Priorities, in a webinar last week.

Republicans in the House, however, have identified one other potential source of funding. “Our plan caps the open-ended tax break on employer-based premiums,” said their proposal, called “A Better Way.”

House Republicans say that would be preferable to the Cadillac Tax in the ACA, which is scheduled to go into effect in 2020 and taxes only the most generous plans.

But health-policy analysts say ending the employer tax break could be even more controversial.

Capping the amount of health benefits that workers can accept tax-free “would reduce incentives for employers to continue to offer coverage,” said Georgetown University’s Sabrina Corlette.

James Klein, president of the American Benefits Council, which represents large employers, said they would look on such a proposal as potentially more damaging to the future of employer-provided insurance than the Cadillac Tax, which his group has lobbied hard against.

“This is not a time one wants to disrupt the employer marketplace,” said Klein in an interview. “It seems perplexing to think that if the ACA is going to be repealed, either in large part or altogether, it would be succeeded by a proposal imposing a tax on people who get health coverage from their employer.”

Wilensky said that as an economist, getting rid of the tax exclusion for employer-provided health insurance would put her “and all the other economists in seventh heaven.” Economists have argued for years that having the tax code favor benefits over cash wages encourages overly generous insurance and overuse of health services.

But at the same time, she added, “I am painfully aware of how unpopular my most favored change would be.”

Republicans will have one other option if and when they try to replace the ACA’s benefits — not paying for them at all, thus adding to the federal deficit.

While that sounds unlikely for a party dedicated to fiscal responsibility, it wouldn’t be unprecedented. In 2003 the huge Medicare prescription drug law was passed by a Republican Congress — with no specified funding to pay for the benefits.


Bridging the care-management gap

gap

Joe McDonald, co-founder of Epharmix, writes in Med City News:

“{S}uccess for health systems will require a recognition on their part that a gap exists between population health and current care management. And in the efforts taken to narrow that divide.

“In an Advisory Board study, experts analyzed a modeled capitated Medicare contract in which 5 percent of patients were high-risk, 20 percent were rising-risk, and the other 75 percent were moderate- to low-risk. The study calculated that if no care management were used on these patients, the organization would suffer a negative 8 percent margin.

”Solid care management — particularly for the highest-risk patients — helps mitigate some of that profit-loss equation. According to the Advisory Board model, hiring a care-management team to focus on the top 5 percent of the panel will slightly improve the margin, but the organization will still be in the red with a negative 3 to 4 percent margin. It makes sense that most groups focus their initial care-management efforts on the high-risk patients because it’s the most concentrated group of high-cost individuals. However, there’s still a gap.

Among Mr. McDonald’s suggestions for bridging it:

Invest in tools and management: The first step is to invest in a risk- stratification tool and begin to build a centralized care-management team. As more dollars become at-risk and based on performance, a care manager’s role and importance will continue to expand.

“Expand your focus to rising-risk patients: Focus on expanding your care- management efforts to include rising-risk and high-risk patients — the top 25 percent of your panel. Including patients who are rising-risk makes your strategy more proactive than reactive, and as the Advisory Board’s study pointed out, it’s this strategy that creates a positive margin.’’

“Invest in remote patient-monitoring: Use a remote patient-monitoring solution to automate repetitive care-management tasks. This is especially useful for expanding your focus to the rising-risk population. The real-time monitoring insight enables care managers to operate at the top of their respective licenses and make the most significant impact instead of wasting time cold-calling patients.’’

To read Mr. McDonald’s piece, please hit this link.

To read the Advisory Board report, please hit this link.

 


New ACO model for small rural hospitals

CMS has come out with  details of its newest Accountable Care Organization (ACO) offering in the Medicare Shared Savings Program — Track 1+ — intended to push more small physician practices and small rural hospitals to adopt risk-based systems.

Becker’s Hospital Review has come up with five things to know about the Track 1+ Model. Here’s our edited version of the list.

1. “The Track 1+ Model is a hybrid of Tracks 1 and 3 of the MSSP. It lets practices begin to take on some downside risk, but limits exposure. The downside risk in Track 1+ is more limited than that of Tracks 2 or 3. ”

2. “It qualifies as an advanced alternative payment model under the Medicare Access and CHIP Reauthorization Act. Clinicians can enroll in the program to start in 2018. Those who participate may be eligible to earn the lump sum incentive payment for Medicare Part B payments under the advanced APM track beginning in the 2018 performance year. By adding this option as an advanced APM under MACRA, the agency expects an additional 70,000 physicians to qualify for incentive payments in 2018.

3. “The model follows that of MSSP Track 1 with a few key differences. The elements of Track 3 included in the new model are as follows:

  • Prospective beneficiary assignment.
  • Option for symmetrical thresholds for shared savings and losses.
  • Option to use the three-day skilled nursing facility. waiver, allowing ACOs to admit patients to SNFs without a minimum three-day inpatient hospital stay.

4. “The program has a 50 percent maximum shared savings rate. For perspective, Track 2 has a 60 percent MSR and Track 3 has a 75 percent MSR. Track 1+ has a fixed 30 percent loss sharing rate and the maximum level of downside risk will vary. Depending on the ACO composition, the maximum loss limit will be capped at 8 percent of Medicare fee-for-service revenue or 4 percent of the updated historical benchmark. Lower levels of risk may be offered for ACOs with independent physicians or small rural hospitals.”

5. “The application process will follow the same timeline as all other MSSP applications. CMS has not yet finalized application details, but interested ACOs will need to submit a letter of intent in May 2017. New ACOs and Track 1 ACOs will be eligible to apply. In addition to 2018, CMS plans to offer the model in 2019 and 2020.”

To read the whole article on this, please hit this link.


Feds cracking down on hospitals over infections

bacteria

By JORDAN RAU

For Kaiser Health News

The federal government has cut payments to 769 hospitals with high rates of patient injuries, for the first time counting the spread of antibiotic-resistant germs in assessing penalties.

The punishments come in the third year of Medicare penalties for hospitals with patients most frequently suffering from potentially avoidable complications, including various types of infections, blood clots, bed sores and falls. This year the government also examined the prevalence of two types of bacteria impervious to drugs.

Based on rates of all these complications, the hospitals identified by federal officials this week will lose 1 percent of all Medicare payments for a year — with that time frame beginning this past October.  While the government did not release the dollar amount of the penalties, they will exceed a million dollars for many larger hospitals. In total, hospitals will lose about $430 million, 18 percent more than they lost last year, according to an estimate from the Association of American Medical Colleges.

The reductions apply not only to patient stays but also will reduce the amount of money hospitals get to teach medical residents and care for low-income people.

Forty percent of the hospitals penalized this year escaped punishment in the first two years of the program, a Kaiser Health News analysis shows. Those 306 hospitals include the University of Miami Hospital in Florida, Cambridge Health Alliance in Massachusetts, the University of Michigan Health System in Ann Arbor and Mount Sinai Hospital in New York City.

Nationally, hospital-acquired conditions declined by 21 percent between 2010 and 2015, according to the federal Agency for Healthcare Research and Quality, or AHRQ. The biggest reductions were for bad reactions to medicines, catheter infections and post-surgical blood clots.

Still, hospital harm remains a threat. AHRQ estimates there were 3.8 million hospital injuries last year, which translates to 115 injuries during every 1,000 patient hospital stays during that period.

Each year, at least 2 million people become infected with bacteria that are resistant to antibiotics, including nearly a quarter million cases in hospitals. The Centers for Disease Control and Prevention estimates 23,000 people die from them.

Infection experts fear that soon patients may face new strains of germs that are resistant to all existing antibiotics. Between 20 and 50 percent of all antibiotics prescribed in hospitals are either not needed or inappropriate, studies have found. Their proliferation — inside the hospital, in doctor’s prescriptions and in farm animals sold for food — have hastened new strains of bacteria that are resistant to many drugs.

One resistant bacteria that Medicare included into its formula for determining financial penalties for hospitals is methicillin-resistant Staphylococcus aureus, or MRSA, which can cause pneumonia and bloodstream and skin infections. MRSA is prevalent outside of hospitals and sometimes people with it show no signs of disease. But these people can bring the germ into a hospital, where it can be spread by healthcare providers and be especially dangerous for older or sick patients whose immune system cannot fight the infection.

Hospitals have had some success in reducing MRSA infections, which dropped by 13 percent between 2011 and 2014, according to the CDC. AHRQ estimates there were 6,300 cases in hospitals last year.

The second bacteria measured for the penalties is Clostridium difficile, known as C. diff, a germ that can multiply in the gut and colon when patients take some antibiotics to kill off other germs. It can also spread through contaminated surfaces or hands.

While it can be treated by antibiotics, C. diff can also become so serious that some patients need to have part of their intestines surgically removed. C. diff can cause diarrhea and can be deadly for the elderly and other vulnerable patients.

C. diff has challenged infection control efforts. While hospital infections dropped 8 percent from 2008 to 2014, there was a “significant increase” in C. diff that final year, the CDC says. AHRQ estimated there were 100,000 hospital cases last year.

“The reality is we don’t know how to prevent all these infections,” said  Louise Dembry, M.D., a professor at the Yale School of Medicine and president of the Society for Healthcare Epidemiology of America.

The Hospital-Acquired Condition Reduction Program also factors in rates of infections from hysterectomies, colon surgeries, urinary tract catheters and central line tubs. Those infections carry the most weight in determining penalties, but the formula also takes into account the frequency of bed sores, hip fractures, blood clots and four other complications.

Specialized hospitals, such as those that treat psychiatric patients, veterans and children, are exempted from the penalties, as are hospitals with the “critical access” designation for being the only provider in an area. Of the remaining hospitals, the Affordable Care Act requires that Medicare penalize the 25 percent that perform the worst on these measures, even if they have reduced infection rates from previous years.

That inflexible quota is one objection the hospital industry has with the penalties. In addition, many hospitals complain that they are penalized because of their vigilance in detecting infections, even ones that do not cause any symptoms in patients. Academic medical centers in particular have been frequently punished.

“The HAC penalty payment program is regarded as rather arbitrary, so other than people getting upset when they incur a penalty, it is not in and of itself changing behavior,” said Nancy Foster, vice president for quality and patient safety at the American Hospital Association.

Federal records show that 347 hospitals penalized last year will not have payments reduced because their performance was better than others. Those include Harbor-UCLA Medical Center in Los Angeles, the Johns Hopkins Hospital in Baltimore and the University of Tennessee Medical Center in Knoxville.

Over the lifetime of the penalty program, 241 hospitals have been punished in all three years, including the Cleveland Clinic; Intermountain Medical Center in Murray, Utah; Ronald Reagan UCLA Medical Center in Los Angeles; Grady Memorial Hospital in Atlanta; Northwestern Memorial Hospital in Chicago; and Brigham & Women’s Hospital in Boston.

The penalties come as the Centers for Medicare & Medicaid Services also launches new requirements for hospitals to ensure that the use of antibiotics is limited to cases where they are necessary and be circumspect in determining which of the drugs are most likely to work for a given infection. Hospitals will have to establish these antibiotic stewardship programs as a condition of receiving Medicare funding under a regulation the government drafted last summer.

Lisa McGiffert, who directs Consumers Union’s Safe Patient Project, said that as a result of Medicare’s penalties and other efforts, “more hospitals are thinking more about appropriate use of antibiotics.” However, she said, “I think most hospitals do not have effective antibiotic stewardship programs yet.”

 


OIG details over-billing under the 2-midnight rule

moon

Healthcare Dive reports that hospitals wrongly billed for as much as 39 percent of short inpatient stays under Medicare’s two-midnight policy in 2014, according to HHS Office of the Inspector General.

The news service reported that “OIG recommended CMS conduct routine analyses of hospital billing to identify organizations that may be billing inappropriately and to explore ways of protecting Medicare beneficiaries from adverse consequences of inappropriate billing.

“While inpatient stays have decreased since the two-midnight rule was implemented, the report highlights there are vulnerabilities to the policy that allow inappropriate billing to occur. In some instances, inappropriate billing can make it more difficult for patients to qualify for skilled nursing facility (SNF) services.’’

To read more, please hit this link.


Study: Female internists in hospitals better for patients than male ones

 

If you’re an  elderly patient in the hospital, maybe you’d better ask to have a female internist overseeing your care.

A Medicare  date analysis discussed in JAMA Internal Medicine shows that patients overseen by female internists were less likely to die or be readmitted in the short run than those treated by male physicians

“These findings suggest that the differences in practice patterns between male and female physicians, as suggested in previous studies, may have important clinical implications for patient outcomes,” the authors wrote.

 “There is evidence in the primary care setting suggesting that, compared with male physicians, female physicians are more likely to practice evidence-based medicine, perform as well or better on standardized examinations, and provide more patient-centered care. Patients of female primary care physicians also experience fewer emergency department visits compared with patients of male primary care physicians.”

To read the report in JAMA Internal Medicine, please hit this link.


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