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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 It will disappear if the act is repealed, as President-elect Trump has promised to do.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.


CEO of Boise-based St. Luke’s Health System reports progress in drive to end fee-for-service care

David C. Pate, M.D., a physician and lawyer who has been president and CEO of St. Luke’s Health System, based in Boise, Idaho, since 2009, spoke Dec. 14 as part of the Boise Metro Chamber of Commerce’s CEO Speaker Series. These remarks are edited for length and clarity from a transcript prepared by the chamber’s public-relations director, Caroline Merritt.

There’s a lot of discussion about healthcare, a lot of fear about what’s going to be happening with healthcare from a national level. I think there are answers — answers that healthcare providers are best prepared to implement, not Washington.

For the seven years that I’ve been here, we have been working at St. Luke’s, building the capabilities and competencies necessary to manage healthcare in a very different world than has existed.

Six months after I got here, the Affordable Care Act was enacted. We at St. Luke’s did not support the Affordable Care Act. Not because it doesn’t have a lot of really good features. It does. The discussion at the time was that if we add tens of millions of people to the newly insured in what was at the time, and still is, a broken healthcare delivery system, we’re going to end up saving money. We did not believe that. We have seen with the Affordable Care Act the continued growth and cost in healthcare. Something different has to happen.

Now the discussion is, “Let’s repeal and replace the Affordable Care Act.” I think it’s going to miss the mark as well. In both cases, Republicans and Democrats are coming up with the right answers to the wrong question.

Get a service, pay a bill

Most experts in healthcare would agree that the single biggest problem is our reimbursement model. It’s what’s called fee-for-service. You go to the doctor, you get a bill. You get a lab test, you get a bill. You go to the hospital, you get a bill.

It leads to a fragmented healthcare-delivery system. Everything is being paid by this unit-of-service or episode-of-care. Regardless of whether it helped you or not. Regardless of whether it provided value. Regardless of whether there was a less costly alternative.

An ideal reimbursement system ought to align the incentives of the payment with what we say are the important objectives that we want. You go places and you’re always having to repeat the same things because nobody seems to have all the information. You get bills from all the different ones.

It’s estimated that, at minimum, 30 percent of all healthcare spending in the United States goes to low-value or no-value services. So we are spending money on things that don’t help people. With fee-for-service, we pay for a lot of duplication.

One of the consequences is that we have these consistently rising premiums, and they have outpaced the growth in incomes. In Idaho this is particularly serious, because premiums as a percentage of average income [are] about 17 percent, and even the federal government with the Affordable Care Act said affordable is less than 9.5 percent.

High-deductible health plans don’t help

What has been a response is, “Let’s create really high-deductible health plans that make the patients have skin in the game and make them a little bit resistant to buy these services unless they really need them.”

Most of us can remember the day when we thought a high deductible was a thousand dollars for an individual. These high-deductible plans now are in the neighborhood of up to $6,000 for an individual, $12,000 for a family. Nearly half of Idahoans don’t have enough liquid assets to be able to pay the deductible.

So insurance is increasingly become more like a catastrophic health plan, not something that you can really use. People do avoid getting care, but they avoid getting the care they need as well as the care that you’d like to discourage. This isn’t working.

Now imagine a new world that I’ll call pay-for-value. Imagine that I’m getting paid $500 a month for people to provide all of their healthcare, and that’s all I’m getting,

The majority of the population [accounts for] a very small amount of the healthcare spending – 4 percent. In fee-for-service, Saint Al’s {Boise-based St. Alphonsus Health System} and St. Luke’s would go broke. They just don’t use many services.

Today, in fee-for-service, what I want to know when I come to work is: Are all our hospital beds full? Are our emergency departments full? Are women lined up down the hallway to give birth? Because this is how we get paid.

When [a patient is] ready to be discharged, we’re going to wheel [her] out in a wheelchair to the front sidewalk, and her family members are going to pull up, and we’re going to put her in the car and close the door. We’re done. Now, if anything else happens to her, that’s fine, come on back. We’d be glad to have you, and we’ll do it again. Re-admissions aren’t really a problem for us under fee-for-service. It’s just an opportunity to make more money.

New financial incentives for better care

Think about pay-for-value. I’m getting $500 per month. Is there any hospitalization that you can have for under $500 that you can think of? No.

Now don’t misunderstand me. We’re still going to have hospitalizations, even under pay-for-value. But we’re looking at them differently: Could we have prevented this?

Under pay-for-value, complications are very expensive, and now they’re our expense, because we’re just getting that $500. And we’re looking at two things. How can we give the right care 100 percent of the time? And how can we get to zero complications?

If you have a knee or a hip replacement, one of the dangers is that the prosthesis, the artificial part of it, can get infected. We figured that if someone got an infection from their knee or hip surgery, it added about $120,000 to the cost. That’s a lot of $500 premiums to pay for that complication. So what we’ve been doing is trying to figuring out how do we get to zero complications.

With hip and knee infections — I’m going to oversimplify — there are two ways you can get infected. One is: There can be bacteria on the skin that we don’t get off, so in the operation we put the bacteria in it. But today, the bigger problem is there’s particulate material in the air. We’ve got your wound open. That particulate matter can settle in your wound.

So we partnered with Micron and Boise State University to come into our operating rooms and to study about these particulate counts. Who knew there were such things as air engineers, but there are, and Boise State has one. And what we found is that every time the OR door opened, it stirred up the particulate count in the room. Just by us making sure everything is needed is in the room, and putting in new procedures about minimizing traffic through the OR, we have cut what was already a very good infection rate in half. These are the kind of things that you have got to do in this new world.

A very small percentage of the population accounts for a lot of the healthcare spending. [A man] has diabetes and heart failure and chronic kidney disease, and he’s a couch potato and he’s not very active. He is just a mess. People in [his] category, on average, are going to have six to eight doctors. In fee-for-service, they’re not talking to each other.

‘We’re driving this forward’

In pay-for-value, that’s where we can reduce costs and make healthcare more affordable. Instead of concentrating all of my health systems’ resources on all of them, I’m going to focus my resources on this group, because there is so much we can do just by paying those doctors differently. They’re not just getting paid for the office visit. They are now paid to actually coordinate his care. You use other resources like care managers to help coordinate that care.

Starting Jan. 1,  25 percent of our revenue will be in this new model. We expect that sometime in 2018, it actually may be 50 percent. So we’re driving this transformation forward.

Now, the Boise/Meridian hospitals are five-star hospitals designated by CMS [the federal Centers for Medicare and Medicaid Services], the only one like that in the state of Idaho — in fact, in the surrounding six states. And our health system has been named, and that’s all of the hospitals, a top 15 health system for three years in a row. We’re showing that this can be done. We’re doing it.

The other piece is: Drive it at the lowest possible cost. That’s what we’ve got to deliver on.

We’re not counting on Washington to figure out how to fix healthcare.

Q: You’re talking about the transformation, but I’m wondering how that’s going to happen. You partner with SelectHealth, right? To deliver this model? Are you going to be able to work with the other insurance companies to make this happen? Or maybe it’s something bigger, like CMS changing from fee-for-service to pay-for-value. How are you going to get from 50 to 100 percent?

A: This is a great question, because the only way we can do it is if the payment system is transformed as well. It’s not going to work for us to transform the clinical model if the business model doesn’t change with it.

We have a great partnership with SelectHealth. That is certainly accelerating our efforts. One reason we went to SelectHealth was there wasn’t a lot of appetite for this in the market with the insurers at the time many years ago. Now other payers are getting aligned with this same concept.

In defense of my insurance-company colleagues, let me tell you, it’s really hard to change your business model. What we’ve gone through with our board to convince them that we should do this, and for them to understand you’re going to take 25 percent of our revenue and put it at financial risk? It’s a big step. And it’s hard for any business to transform their business when they’re doing well.

I think there’s going to be a competitive advantage to who can figure this out first. What I can do is: With the insurance companies that want to partner with us, we can now get by on a lower premium. So you can actually lower your premium, and we know that is what will shift market share.

As far as the federal government:

The current administration is all in favor of this, and they would applaud what we are doing.

I am concerned with the new pick for secretary of HHS [President-elect  Trump has chosen Rep. Tom Price,  M.D., a Georgia Republican congressman] because I’m not convinced based on what I’ve read about him that he believes in this. He’s a physician that came from the fee-for-service world and did well in that world.

I think the question is: How difficult is the new administration going to make it for us to do this? But I hope not.

This story appears in the December 21, 2016-January 17, 2017, edition of the Idaho Statesman’s Business Insider magazine.  To get to the magazine, hit this link.

 

 


Dissent in the AMA

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Dissent is increasingly roiling the American Medical Association, which once had 75 percent of physicians as members but now  has fewer than 25 percent.

The debate includes the incoming Trump administration’s vow to kill the Affordable Care Act and its nomination of vehemently anti-ACA ex-orthopedic surgeon Tom Price, M.D., a Georgia congressman, to be the next secretary of health and human services. It also includes such issues as Republican plans to turn the federal side of Medicaid into entirely a system of  block grants to the states and to defund Planned Parenthood.


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.


Trying to make sense of Ryan’s Medicare reform

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Herewith some points to help understand House Speaker Paul Ryan’s proposal to overhaul Medicare:

His plan calls changing the program so that individuals eligible for Medicare would get a fixed contribution from the Feds to put toward buying private insurance.

The idea is to boost payer competition and encourage more cost- consciousness in beneficiaries as they select plans.  The hope is that giving beneficiaries  a choice of various health plans will lead payers to offer more competitive prices, leading to lower premiums.

Many Republican senators have said that they want to focus on “repealing” the Affordable Care Act and not touch Medicare for a year.  But the tricky thing is that the ACA is interwoven with Medicare.

Meanwhile, Democrats senators strongly oppose privatizing  Medicare.

And President-elect Trump  himself may also present an obstacle for Medicare changes, which could be very, very unpopular with many voters. In the past, he has said that he would not cut Medicare, Social Security or Medicaid. Of course, he says wildly conflicting things all the time, so who knows?

His transition Web site includes a promise to “modernize Medicare, so that it will be ready for the challenges with the coming {it is actually already underway} retirement of the Baby Boom generation — and beyond.” His nomination of Tom Price, M.D., as secretary of health and human services, might signal Medicare reform; Dr. Price has said that Republicans could push Medicare reform through a “fast-track budget procedure” to  would void a Democratic filibuster.

But are they willing to take the heat from millions of elderly people if they do?

 


5 reactions to HHS and CMS nominees

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Becker’s Hospital Review asked five figures in the healthcare industry for their reactions to President-elect Trump’s selection of Georgia Congressman Tom Price, M.D., to be secretary of the Department of Health & Human Services and Seema Verma, founder and CEO of health-policy consultancy SVC, to be administrator of the Centers for Medicare & Medicaid Services (CMS).

Ted Shaw, president and CEO of the Texas Hospital Association:


Trump’s nominees to lead the national conversation on healthcare both have long careers in health policy. Their depth of understanding of complex health policy issues will be essential as Congress debates the future of healthcare reform and states continue their work to more effectively manage their Medicaid programs.”

Chip Kahn, president and CEO of the Federation of American Hospitals:


The Federation of American Hospitals congratulates Chairman Tom Price on his nomination to be HHS Secretary.

“His decades of experience in the medical field make him uniquely qualified to confront the challenges facing patients, families, and caregivers. As chairman of the Budget Committee, he has proven to be a thoughtful, detail-oriented legislator who cares deeply about public policy. In light of expected legislative action on the ACA, it is noteworthy that his repeal and replace proposal recognizes the need to protect access to hospital care for millions of Americans by restoring deep Medicare and Medicaid cuts. ”

“President-elect Trump’s selection to lead CMS, Seema Verma, has a solid reputation as an effective innovator in assisting states in reforming and modernizing Medicaid programs for low-income Americans.”

To read the whole piece, please hit this link.

Donald W. Fisher, president and CEO of AMGA:
“AMGA offers its congratulations to Rep. Tom Price (R-Ga.) on his nomination to become the next secretary of the United States Department of Health and Human Services. From his experience as a practicing physician for nearly 20 years and his leadership on the House Ways and Means Committee, House Budget Committee, and the House GOP Doctors Caucus, he brings a wealth of clinical and policy expertise.”

Bruce Siegel, M.D., President and CEO of America’s Essential Hospitals:


Ms. Verma “offers a deep understanding of healthcare delivery and policymaking and can contribute an important state-level perspective on Medicaid, insurance and public health.”

Jodi Magee, president of Physicians for Reproductive Health:


“President-elect Trump’s plan to nominate Rep. Tom Price (R-Ga.) to be the Secretary of Health & Human Services (HHS) signals an alarming direction for reproductive health. Price has been a staunch opponent of women’s health and the Affordable Care Act during his time in Congress.

“Although Price has insisted that ‘patients, families and doctors should be making health decisions, not Washington, D.C.,’ he has directly contradicted that by supporting legislative efforts that interfere in the patient-doctor relationship. For example, Price has voted for anti-choice legislation that would harm our doctor’s patients, including bans on abortion, defunding Planned Parenthood and repealing the Affordable Care Act. We are deeply troubled that Price, though he is a physician, seems to disregard the strong medical evidence that access to safe and legal abortion and contraception protects not just a woman’s health, but that of her family and community.”

To read the whole piece, please hit this link.


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