Gabby Giffords Is the Reality Star of US Healthcare

by Cyndy Nayer (cyndyn@vbhealth.org), January 31, 2012

I’m told that one should not mix stories in a blog, but, as a serial disruptor, I’m about to do just that.  I’m inspired by Representative Giffords and see her story as a frame for some ideas that simply won’t rest in my tired brain.

You may remember that I wrote the E Pluribus Unum blog last year just after Ms. Giffords’ near-death shooting in Arizona.  Her story took the nation to a reality-check on guns and mental health, but it also broke my heart for the family of Christina, who went with her classmates to meet the local representative of the US Government (Ms. Giffords).  Christina was one of the victims that day—she died from her wounds.

Still, the sun rose the next day, and Gabby Giffords gave hope back to America.  She began her slow recovery with the amazing care she received from a health care system that was in sync to help her recover.  She was transferred, later, to a center for the intensive therapy needed to regain skills of walking, talking, and more.  She went to Cape Canaveral to watch her astronaut husband lift off on the last space shuttle trip.  She wrote a book about her journey, and we cried with joy.  

This is the promise of America:  all hands form a team that saves a life, all hands who can’t be part of the team cheer the success.  Add the glamour of space travel and romantic love, and the TV-movie industry wishes that it had dreamed up this story—yet who would have believed it, as it was so surreal?  

So where are those everyday heroes?  Because over the last 30 days, my encounters with the health system have been less than heroic, and the stop/start/stop/ halt/restart mess of interoperability-safety-communication has not only caused me anxiety and angst, but also revealed some less-than-lovely realities.

The US health system has surely been going through enormous change.  There are stellar stories of success in electronic medical records for hospitals and physicians, for empowering patients (with personal health records on my phone or iPad), for revealing transparent pricing and quality so I can choose appropriate treatments and know my out of pocket costs.   Or…?

In the last 30 days I’ve met with a new primary care physician so I could establish a medical relationship. My previous physician left her office with no notification of where she might next appear.  No problem, I have my health history, can begin anew. I sought a physician with an electronic health record that is hooked up to a health system and that will also deliver my health information to my personal health record.  I offer to pay for my initial visit because, as I tell the scheduler, I want to interview the doctor to see if our personalities and technology will jive.  When I arrive, they charge me my copay, I remind them I’d like to pay for the visit so I can discuss what I need, and they say, “No need, this is how we do it.”  Well, ok!

We meet, we greet, no ugly paper or cloth “gowns” (may I just insert that my idea of gowns are the kinds that look fabulous in public with brilliantly crafted shoes?).  He asks me some questions about my health (completely fine, thank you, here are my records).  I ask him if he can cope with a person who has a healthy scope on the health system, understands appropriate use of the system, and is the CEO of her health.  “Oh yes, “ says the kindly doctor with the white coat and stethoscope.  We schedule my physical for 6 weeks later.

I am now in the room with Mr. Hyde.  Dr. Jekyll has left the planet.  Charmingly, he begins ordering tests I don’t need (there are no guidelines suggesting the tests), “discovers” a potential “problem” in my EKG (as in “Houston we have a problem” level of problem) and immediately schedules a cardiology visit (folks, relax, there was no problem, there was a misread).  He informs me I need these new tests because just yesterday he discovered a breast cancer in a woman my age (lovely use of calming technique).  There is more, but I will spare you the rest.

Two weeks later I’m called by the nurse and told to immediately get another blood test, it absolutely can’t wait, and no we can’t tell you the lab values but they are “high.” I spend a sleepless night worried, I call back the next day and ask that the doctor please call me as I’m leaving town.  He calls mid-afternoon, says there is no urgency, but it must be done immediately upon return.  He then gives me the values, and I remind him that the numbers he is seeing, only 6 weeks after a perfectly normal blood screen and a record of good readings for 5 years, are not in crisis zone and, (I say, deferentially) that I believe the recommendation is to wait 6 months since I have no risk factors and then retest?  “No,” says the physician, “I want it done now.”

If you’ve been reading my blogs, if you know me at all, you know I tend to not react well to that order.  In fact, the Institute of Medicinejust released a white paper on the communication between patient and doctor, with principles that include supportive environment and respect.  But I do get the requisite 2^nd blood test, and once again I get a call to schedule an immediate appointment while no lab values are shared per doctor’s orders.  I respond, as kindly as my heartbeat will allow, that I don’t make appointments without doing my research so that I’m prepared, so I need the values. “Then have him call me.”  And, of course, a part of me prepares to die.

Breathe.  The labs are not life-threatening; but the doctor’s attitude was.  He told me he simply didn’t have the time to call me with lab values, I responded that I didn’t want his call, I just wanted the values and his nurse could have told me.  He told me he’d reveal the values during our face-to-face meeting, I told him I wanted to be prepared with questions so I didn’t waste his time or mine.  He told me that wasn’t how he worked.  I reminded him of our first conversation.  He said “in the office,” I said “empowered patient,” and told him I’d get back to him.  We ended the call.  Then I fired him in my mind.

But I didn’t drop my health.  Yesterday, I made an appointment with my husband’s cardiologist because of his excellent treatment of my husband.  The scheduler said, “Let’s get your records.”  “They are on your interoperable system through the nationally-recognized health information system that you have,” I say, subtly letting her know that I’m an informed patient and I speak electronicmedicalrecord-ese.  

Wait for it.  Get a cup of herbal tea.  Breathe deeply.

“But we can’t pull up records from another doctor, even if the doctor is part of our system.”

I’m speechless, no breath, no words.  This is the second time in 60 days I’ve heard this.

So we have the picture, now, of healthcare done impeccably well through a trusted relationship of patient/family and the team of clinicians, then wrapped in a love story (Gabby Giffords).  And we have a story of healthcare wanting desperately to do it well, putting systems in place that can do the job, but human rules making it so darn difficult that access and quality and that holy grail of “consumer-directed care” are unachievable.

Will reimbursement changes make this go away?  Not likely.  Will promoting primary care make this heal?  I’m skeptical of a health quarterback that can’t hear the plays because the sound is turned off.  

That wasn’t the healthcare reality that I envisioned with all the work that you and I do to improve it.  These are all good people.  In fact, WE are all good people.  We all want to do the right thing.  They are working hard to promote health.  I am working hard to promote health.  Gabby Giffords and her team are the epitome of “Hard work, well done.”  My experience, not quite.

I shared this story with good friend and VP of the Center for Health Value Innovation, Ray Zastrow MD, CMO of QuadMed. Ray paraphrased a statement from Atul Gawande MD:  Medical care should work like the pit crews of NASCAR.  The outcome is the focus—get the car and driver back on the track.  No lag time, no computer outages, or lack of transfer of knowledge.  Diagnose, triage, heal. Seamless engagement and outstanding accountability.

This is the healthcare vision of the US.  Obviously it exists, as Representative Giffords’ teams, and many other teams, including those in our Center for Health Value Innovation, show us day after day.  

So I close another chapter in the quest for US health, with a message to Representative Gabby Giffords:  Keep up the good work, Representative Giffords.  We will miss you in DC.  But you have a grander national duty now.  I know you didn’t campaign for it, but I surely hope you’ll accept it: Show us how this is done with your NASCAR team of clinicians.  Gather your pit crews around you for a stupendous recovery.  We are cheering your success!

Thoughts on the Medicare Shared Savings Program Final Rule

By Bill DeMarco, October 31, 2011

The dynamics of the new final Medicare Shared Savings regulations are re-igniting interest by many who had passed this by because the proposed regulations were overwhelming.

Several associations including AHA, AMA and AGPA who were skeptics in reviewing the proposed regulations have come out publically and see some potential here. We see the upside opportunity being improved putting more on the physician plate to better plan for startup costs and see the reduction on the number of indicators to be reported making the medical management requirement a bit more realistic. Dropping EMR requirement has been a good decision by CMS as this was a burden for many physician networks.

Finally, the concern over attribution looks like it has been replaced with a more solid assignment process of patients so physicians know who they are accountable for. Several points that are missed in these comments are:

1) Value based purchasing and all that it has become is the over arching goral of this shared savings process and we see that for private or public payers that this is a good framework to start with.

2) This is truly a BIG opportunity for Primary care to band together and manage at a higher level both clinical care improvements and financial integration of their practices in a manner that makes care delivery scalable.

3  This ACO evolution gives health plans and physician something positive to discuss with the knowledge by most plans that if the providers should become dissatisfied they, the physicians, may start their own plan.

A Penny (Or More) For Your Thoughts

By Kim Bellard, September 13, 2011

Let’s start with the non-news: a primary care physician association – in this case, the American Academy of Family Physicians – thinks primary care physicians aren’t being paid enough fairly and wants CMS to change the Medicare payment system.   It would be a surprise if any primary care physician organization argued any other position, and there is a lot of sympathy for the argument that primary care physicians are undervalued compared to specialists.   I’m sympathetic myself.

On the other hand, a new study in Health Affairs asserts that primary care physicians in the U.S. both are paid higher fees than primary care physicians in several other countries and also have higher incomes as a result.  The study, by Laugesen and Glied, further asserts that the higher incomes are simply the function of the higher fees, not due to higher practice costs, higher volumes, or medical school tuitions, as some have theorized.  The study also notes that the same type of gap exists for orthopedists in the U.S. versus in other countries, and that the income gap between U.S. primary care physicians and orthopedists is wider than in other countries. 

The fact of higher physician fees and physician incomes for U.S. physicians compared to their international peers is nothing new, and I’ve blogged about this previously.   With the ongoing and increasing pressures on Medicare and Medicaid spending, we can expect even more pressure on how we pay which physicians.  No one seems to be stepping up to say that they are overpaid.

A few other recent studies give me pause about this topic.  On of the most interesting was a study from Israel that concluded medical history and examination were more important than extra tests, particularly CT scans, in making a diagnosis.  The authors found that added tests only helped in about one-third of the cases, while adding significant costs and exposing patients to additional radiation and its attendant risks (see, for example, this nice summary).  This was in Israel, mind you, and one can only imagine how many more “extra” tests are performed in the U.S., given our culture to always do more and patients’ demand that everything possible be done, regardless of cost-benefit.  It’s nice to have it confirmed empirically that cognitive skills still trump technology most of the time. 

An example that dramatically illustrates this is a recent study about the effectiveness of “brain stents” to prevent strokes.  The study not only found the costly procedure was not more effective, but actually was worse for patients than those treated conservatively with drugs and advice.  Patients with the stents had more strokes and more deaths, to the extent that the study was halted prematurely once the results became clear.  Interestingly, this study is on the heels of another recent study indicating that heart stents were not more effective than medication, yet the number of such stents being performed hadn’t gone down once those results had become widely known.  The U.S. health system just seems to be in love with procedures and testing, not always to be benefit of its patients.

Now, some observers might view the results from Israel and claim that, well, if it was your mother/spouse/child, surely you would want those extra tests as well, just to make sure, since in one of three times they did prove to be useful.  It isn’t easy, after all, to tell which of the three will benefit before the fact.  It’s a valid argument, and this attitude is typical of our health care system, where doing more is usually seen as better.  We don’t seem to have this attitude in all aspects of our life.  If, say, it turned out that police routinely arrested three people to find the one person who was guilty, there would be cries of outrage across the board.  We’d argue indignantly that the police need to take a little more time to be sure they had the right person before making arrests.  We seem to hold our policemen to higher standards than we do our health care practitioners, and I’m not quite sure why.

I enjoy watching the television show House, in which it’s grumpy, damaged lead physician plays Sherlock Holmes with baffling diseases, eventually putting together all the clues to (usually) save the patients’ lives.  Every time I watch it, though, I have two reactions – first, those poor patients, who are put through a bewildering and often painful array of tests and procedures before the Dr. House reaches his miraculous conclusion, and, second, who is paying for all this?  There’s never any real sense that Dr. House and his team ever worry about how much their efforts are costing, and there seems scant concern for what they put the patients through.  All House cares about is getting to the right diagnosis.  It’s great TV but a horrible patient experience.

So here’s my thought.  Let’s pay physicians more for the cognitive work, the so-called Evaluation and Management codes (“E&M”).  All doctors, any doctors, plus nurse practitioners and other physician extenders.  It’s less important which doctors get it than what we incent them to do, and what we should want them to do first and foremost is to use their intellect, training and experience to figure out what is or might be wrong with us.  “First do no harm” and all that.

We should give them not just a token increase but a major one – double, triple, pick a number, but make it a very noticeable one.  I would assert that the health care system won’t go bankrupt – well, more bankrupt – because of too many office visits, even if we start paying for e-visits and telemedicine visits, as we should.  It’s what happens from those office visits that we have to worry about – the prescriptions, the tests, the procedures and treatments that result.  Of course, we’d need to find a way to ensure that those added payments for E&M visits aren’t just additive, but actually help deter other inventions that are not truly necessary.

The pot of money available in health care is, for practical purposes, a zero-sum game.  Pretty soon employees are going to realize that their “employer contributions” for health care is their own money, and pretty soon the federal government is going to have a harder time paying for its health programs using deficit financing.  So whatever we increase in E&M payments will need to come from elsewhere in the existing spending.  For example, could we use “thinking time” as the unit of measure, so that a procedure which takes an hour to perform should get paid the same as seeing patients for an hour?  Alternatively, perhaps many tests and procedures should end up getting paid more like a commodity – more expensive initially as people learn how to do them and as the initial development costs get paid for, then rapidly dropping the price as volume increases and people get used to doing them.  We have a tendency to start out high and never drop payment levels.   Smarter people than me can figure out exactly how to make the offset, although the lobbying opposition will be very intense as every specialty fights to protect its turf.

We all like to think that the patient-physician relationship is sacrosanct.  So why not pay for it like we actually believed that?

Results from Health Plan Contracting e-Poll: Value Based Payment Models

By Clive Riddle, May 25, 2011

With respect to contracting opportunities, insiders say that value based and newer payment models continue to offer the most promise, analytics advances are this year’s darlings, and ACOs hold less hope.

Meanwhile, insiders think cost pressures from the economic downturn are even more of a challenge than last year, and they’re not quite as concerned about market consolidation as they were a year ago.

In conjunction with the 2011 Health Plan Contracting Web Summit, MCOL conducted an e-poll on contracting issues. Participants were asked “what are the greatest opportunities from a contracting perspective” and “what are the greatest challenges from a contracting perspective” in addition to if their organization is a provider, plan or other. These same questions were asked in conjunction with last year’s Health Plan Contracting Web Summit, allowing for comparison to last year’s results.

Here’s a summary of e-poll results for the past two years:

Greatest Opportunities	2011	2010
Emergence of value based and newer payment models	29.6%	26.7%
Advancements in analytics capabilities	19.4%	7.5%
Increased covered population due to health reform	13.9%	17.5%
Consumer engagement initiatives	12.0%	10.8%
Advancements in electronic health records and transactions	10.2%	16.7%
Formation of Accountable Care Organizations	7.4%	16.7%
Potential growth in patient centered medical homes	3.7%	3.3%
Other	3.7%	0.8%
Total	100.0%	100.0%

Greatest Challenges	2011	2010
Cost pressures due to economic downturn	33.3%	28.1%
Increased mix of government program vs. commercial covered populations	16.7%	14.9%
Issues related to new health reform provisions	15.7%	14.1%
Increased complexities of benefit design	11.1%	8.3%
Other	8.3%	4.1%
Continued market consolidation	7.4%	14.1%
Consumer engagement Initiatives	6.5%	9.9%
ICD-10 transition	0.9%	6.6%
Total	100.0%	100.0%

Here are the top two responses for 2011 broken down by type of organizational category:

Top Response
Provider	Emergence of value based & other applicable newer payment models (26.4%)
Purchaser	Emergence of value based & other applicable newer payment models (38.7%)
Vendor/Other	Emergence of value based & other applicable newer payment models (25%)

2nd Highest Response
Provider	Advancements in analytics capabilities (24.5%)
Purchaser	Increased covered population due to health reform (22.6%)
Vendor/Other	Tie: Analytics and ACOs (20.8%)

What, Us Measure?

By Kim Bellard, May 18, 2011

I read with some interest an article in the Wall Street Journal outlining Wellpoint’s new approach to hospital payments, in which future payment increases would be tied to performance on 51 quality measures.  As interesting as that is in itself, what fascinated me even more was the reaction of Chip Kahn, the President of the Federation of American Hospitals.  Mr. Kahn did not appear too excited about the approach.  As he told the Journal: “We don’t have good outcomes measures yet.”

I don’t mean to take a shot at Chip Kahn or the Federation.  They are strong advocates for their members.  To its credit, the Federation has actively been involved in quality efforts for many years, including the Hospital Quality Alliance.  But, seriously – we pay hospitals some $800 billion per year, and we don’t have good outcome measures yet?  What are we waiting for?

A recent study by the Beryl Institute, whose mission is to improve the patient experience, indicated that 31% of hospital executives listed quality/patient safely as their organization’s top priority over the next three years, followed by 21% who cited patient experience/satisfaction.  The Beryl Institute seems to view this as good news, and I suppose it is good that no other single priority topped these two, but I have to wonder: so, almost half of respondents did think something else was their top priority?  

“Adverse events” – injuries caused by medical errors -- have been one of the open secrets in the health care system, and a recent study indicated that the problem may be as much as ten times worse than thought – impacting up to one third of hospitalized patients.   With those kinds of problems, if I ran a hospital, I might not want to track outcomes either, or at least not report them.

Wellpoint isn’t alone in targeting hospital quality.  Many health plans have implemented some version of pay-for-performance, although they tend to be paid as incentives rather than core to reimbursement.  Last month CMS announced the final rules for its Value Based Purchasing Program, which begins in 2012.  Medicare will also pay based on performance, initially as incentives but rapidly moving to reductions for hospitals that do not perform well.  The CMS measures are oriented towards process and patient satisfaction indicators, whereas 55% of Wellpoint’s measures are based on health outcomes, 35% on patient safety measures, and 10% on patient satisfaction.

Of course, quality measures are not just a problem for hospital performance.  Hospital quality measures are more evolved than physician quality measures, and both are far ahead of other parts of the health care system.  As Kenneth Kizer, founder of the National Quality Forum (NQF), said: “There are many areas of medicine where there simply are no measures – or there are, but they aren’t as good as they should be.” 

There certainly is no shortage of organizations working on the issue.  In addition to NQF, one could cite The Leapfrog Group, NCQA, CMS, the Physician Consortium for Performance Improvement, and several medical specialty associations, among others.   Still, the sense from the provider community seems to be that we’re not quite there, certainly not to the point where consumers should be making judgments based on the various indicators, nor having reimbursements materially impacted by performance on the measures.  They like the measures to be voluntary, although the recent CMS report on the Physician Reporting Quality System indicate only one in five health care professionals who are eligible to participate actually do – and only slightly more than half of those earned satisfactory scores which merited bonuses. 

It’s too bad, because it appears that the “standard” measures that consumers tend to look at to evaluate physicians, such as education or board certification, don’t appear to actually distinguish quality performance very well, according to a study by Rachel Reid and colleagues.  As the authors concluded:  “Few characteristics of individual physicians were associated with higher performance on measures of quality, and observed associations were small in magnitude. Publicly available characteristics of individual physicians are poor proxies for performance on clinical quality measures.”

Similarly, a study by Lauren Nicholas and colleagues published last fall indicated that the “process” measures currently reported by CMS on its Hospital Compare website don’t correlate with actual patient outcomes, such as mortality rates or surgical complications. 

How in the world did we get to the point of spending so much money on health care without even being able to measure if we’re doing it well?

I’ve complained about the lack of data in health care in previous blogs (such as in Gambling on Health Care), but it still disturbs me.  Maybe when – or if – we get to a world of electronic medical records and fully realized health information exchange we’ll have a better job of getting the right data; that is the point of “meaningful use.”  Still, I go back to another quote from Kenneth Kizer: “Nothing makes a performance measure better than when it starts being used.”  We need to start using the existing measures more now.

Putting performance data out there is half the battle, and I applaud the many people and organizations working to make that happen, hopefully sooner rather than later.  The other half of the battle – and one that, frankly, worries me even more -- is getting people to use it.

Prescribing Profits

By Kim Bellard, November 10, 2010

Marcus Welby pushing more expensive drugs on his patients in order to increase his income?  Impossible to imagine!  Of course, Marcus Welby was a family physician not given to costly treatments, and is now almost entirely unknown to anyone under 50, but one has to wonder what’s become of our health system given what some physicians are doing with their prescribing pads. 

The New York Times recently broke a story that Genetech was giving eye doctors “secret rebates” to use the more expensive Lucentis instead of Avastin to treat age-related macular degeneration (AMD).  Ironically, Avastin is also made by Genetech, and has been used for AMD for several years, although it was not designed or approved to treat that condition.  Lucentis can be more than ten times the cost per dose, the bulk of which is usually paid for by Medicare and private insurance.  However, there is yet no data to suggest that Lucentis is more effective than Avastin; even if equally clinically effective, it certainly would be much less cost-effective at its current pricing.  The rebates can reportedly amount to tens of thousands of dollars for a physician practice each quarter.  The Times quoted one retinal specialist as saying “There’s no way to look at that without calling it bribery.” 

Alas, the influence of financial considerations on prescribing costlier care appears not to be an isolated problem.  In 2006 Mirelle Jacobson and colleagues asked the question “Does Reimbursement Influence Chemotherapy treatment for Cancer treatment” in Health Affairs.  The good news is that reimbursement did not appear to impact the initial decision to administer treatment, but the bad news is that physicians who received more generous reimbursement did, in fact, administer more costly drugs. 

Medicare has attempted to address the cancer treatment reimbursement issue – to neither side’s evident satisfaction – and recently United Healthcare has initiated a program of its own.  It announced a pilot program that pays oncologists for the entire treatment program, regardless of the drugs administered.  It deliberately tries to remove – or at least limit the continued growth of – the portion of the physicians’ income based on profits from chemotherapy drugs.  In its coverage of the program, The New York Times quotes an oncologist as saying “A lot of us want to get out of selling drugs.”  Aetna and several other payers are developing their own programs.

Of course, one doesn’t have to work too hard to find studies demonstrating disturbing impacts of other perverse financial incentives within our fee-for-service system.  For example, studies indicate the clear impact of physician ownership of ambulatory surgical centers on number of surgeries performed (see, for example, Hollingsworth or Mitchell.  Similar results exist for imaging.  Then there is the oft-cited New Yorker article by Atul Gawande on the peculiarly high cost of care in McAllen, Texas.  There are both anti-kickback and self-referral (aka Stark) laws to prevent such apparent abuses or conflicts of interests, but one would have to conclude they are not having quite their intended effects. 

So what’s the big deal?  If patients want to buy services from physicians, why should they – or we – care about how much money those physicians might be making on those services?  Isn’t that capitalism?

Yes and no.  I cling to belief in a market-based structure for our health system, with appropriate protections for low-income and other disadvantaged individuals.  I have no problem with people making money in the health care system, and think it is great when individuals and institutions that achieve better results for their patients get more patients and make more money. 

Unfortunately, our system doesn’t make it easy for that to happen the way one might want it to.  The above examples highlight two key missing pieces that are needed for a truly market-based health care system:

• Performance: for the most part, patients don’t have good information on the efficacy or relative performance of the treatments they are “buying” or on the providers from whom they are receiving them.  They certainly can’t be viewed as making informed decisions.  It’s hard to say who to blame more for not caring more about making such information readily available – patients or health care providers – but there can be no real health care reform without that kind of information, comparing treatment options and providers. 
• Other People’s Money: if consumers want to spend their own money on frivolous or overpriced goods, well, that’s their right in a capitalist economy.  Most health care spending, though, is paid for via public or private insurance, which is a little bit of the patient’s own money and a lot of other people’s money.  As a result, they spend it differently, sort of like a college student using his/her parents’ credit card.  We can’t bend the cost curve unless both patients and health care professionals stop thinking of health care spending as other people’s money. 

Let’s get this straight: I think most physicians are good people trying to do a good job for the patient in a hopelessly complex, fragmented, and frustrating health care system.  Nor would I point the finger (at least not singularly) at health insurance companies, pharmaceutical companies, or hospitals, the entities who are most often cited by the public as the culprits.  It is the structure of the system that is failing us, with the various incentives either explicitly or implicitly built into it that don’t reward the best performance. 

Health plans, include Medicare, are working hard on “pay-for-performance” (“P4P”) programs that reward physicians for appropriate performance, particularly in terms of quality and sometimes cost-effectiveness.  Lester and colleagues studied the impact of both addition and subsequent removal of financial incentives on four clinical indicators.  They found that scores did increase with the incentives, but unfortunately fell again once they were removed.  It’s good that physicians improved their performance given targeted financial incentives, but it is troubling that they reduced that clinically appropriate behavior when no longer paid “extra” for it.  Such programs are certainly a start in the right direction, but at this point are still only a small step.

George Bernard Shaw, writing in a different time and about a different health care system, summed the problem very well: “That any sane nation, having observed that you could provide for the supply of bread by giving bakers a pecuniary interest in baking for you, should go on to give a surgeon a pecuniary interest in cutting off your leg, is enough to make one despair of political humanity. But that is precisely what we have done. And the more appalling the mutilation, the more the mutilator is paid.” 

It’s a prescription for disaster.

Primary Care Access During this Decade

by William J. DeMarco MA CMC, President, Pendelum Health Corporation, July 1, 2010

In the current issue of MCOL’s Thought Leaders newsletter, I was asked: How big of an issue will primary care access become during this decade- what are its implications- and what initiatives (such as medical homes, retail clinics, employer on site clinics, etc) if any, do you think will bring about improvement?" Here is what I replied:

What we continue to learn is that primary care doctors graduate with hopes of becoming the family practice doctor in a smaller town, something we desperately need, but the economics do not permit this new MD to move forward with their career. Because of the large loans and debts of medical school and subhuman conditions of an internship doctors really start out very poor and in debt. The actual earning of a salary does not occur for several years and the salaries for primary care are not rising as fast as specialist salaries. So many are forced to decide to sub-specialize in a more lucrative area where they can make the dollars they want as surgeons of super specialists and join a private practice as a respected member of the medical group.

This drives demand for primary care but until the salary cap blows off or the economics of medical school costs are altered we see the logical overpopulation of specialty practitioners while PCPs are treated as an aside by both hospital’s and physicians. When one calculates the revenue from referrals to specialist and hospitals that a single PCP makes the numbers can be astounding. True the specialists has a higher revenue per patient but the volume of PCP referrals to specialists and hospitals are far greater yet hospitals have been able to keep PCP compensation low and , in some markets, threaten PCPs that they must join the ranks of employed physician or be replaced.

In this vacuum we are seeing innovation. First by remaking primary care as a retail almost impulse buy the for the consumer retailers like Walgreen’s, Target, CVS Wal-Mart and K Mart and even some grocery store chains have brought Primary care to the patient. This is packaged as a Nurse practitioners and offered for common un-complicated illnesses which , for some, is less expensive and less intrusive than the Emergency room and certainly easier than waiting for 4 to 6 weeks for a PCP visit . While this transition occurred Nurse Practitioners and Physicians Assistant salaries shot up some 27% over their colleagues who were still stuck in public health or working as a medical assistant in a practice where physicians did not make full use of their talents.

As Dr Don Berwick ,Nominated CMS chief, has said the best way to manage costs in the delivery of care is to have the most efficient person downstream from the doctors do the work. So you have NPs PAs and RNs doing more of what they are trained to do thereby making the PCP more productive at less cost. In this regard the Employer owned medical practice is gathering steam as more and more employers see the value of designing benefits around the use of early detection and health promotion and less use of unnecessary specialty care unless the PCP has approved it as necessary. A well equipped PCP group practice with NPs and PAs seeing the right patients at the right level of service can be very successful in attracting volume because of its convenience and flexibility for follow-up.

The cost of such a medical group owned by an employer can quickly be paid back in terms of savings to emergency rooms, early detection of serious disease and better coordination of admissions and discharges to avoid readmissions and reduce length of stay for illness or injury. This kind of commitment by management also can create a positive attitude in the employees who feel their employer is not only offering them a way to pay for care through an indemnity insurance plan but also guaranteeing them a place to get it in the workplace. This guarantee is becoming more and more important as less primary care are available and few insurance companies will pay for ER rooms to replace PCP visits.

These various roles of Primary care emphasize team work and coordination of care. Some of the retail clinics are picking up on this as are the hospitals who once feared these competitors have encourage discussion and referrals to assure continuity and communication between patient and practitioners as well as practitioners to practitioners dialogue. Turning this delivery system on its head by having Primary care driven medicine is slowly at work at the federal level with ACOs and MA plans requiring PCP advocates be assigned or selected by each patient. This constant pressure of demand for PCP will, we believe, force hospitals and clinics to rethink their compensation strategies but also put the pressure back on policymakers to revisit funding for primary care spots in rural and urban settings by subsidizing broadly the medical school experience.  By encouraging more newly graduating Physicians, Physicians Assistants and Nurse Practitioners to advance their education with a promise of being that family practice doctor we all want and need

An interview with Brian C. Smith on Prospective Overpayment and Fraud Prevention

by Clive Riddle, June 18, 2010 

This week, MCOL conducted a podcast interview with Brian C. Smith, an Executive Vice President with HealthCare Insight as a part of the 2010 Predictive Modeling Web Summit. Brian addressed a predictive approach to health care fraud and abuse. Below are some selected statements from Brian during the interview. 

“It’s a sad fact that particularly such areas as Durable Medical Equipment and HIV testing are wide open for abuse. For example, in South Florida with over a couple of years of focus just on the DME problem, they've seen the amount of DME submitted bills go down $1.7 billion dollars, meaning that upwards of 50-60% of prior claims were pure fraud.” 

“If you're going to defraud a payor, you're going to go where the easiest, most likely, and highest dollars are, and those are in federal and states programs like Medicare and Medicaid, as opposed to commercial health insurers who are investing a fair amount of dollars and really getting after fighting fraud and abuse.” 

“The Federal side has about a $1.8 billion investment in fraud, waste and abuse on an annual basis that primarily goes to the DOJ Office of Inspector General and Medicaid Fraud units, and has recaptured in the $2.5 - 2.8 billion range. In contrast, the Blues, for example, which have reported recently that across their 100 million members, that their 39 plans represent, they recovered $516 million, which works out to $0.43 pmpm. Apply that to the much larger federal population, and it would be a much higher yield. “ 

“We're seeing our customers move away from the idea of pay and chase [retrospective identification of overpayments or fraud] to a prospective basis. We're looking at literally all of their claims, upfront, overnight. We have history of flagged providers as well, from a couple of years for up to five years, and we can identify various schemes and profiles of these providers, and stop these payments up front. That produces a tremendously higher yield, and those dollars never leave the claims shop. The Federal side has generally not embraced this technology. “ 

“The predominant tactic today, particularly on the Federal side, is pay and chase. The Federal side uses fiscal intermediaries who generally have no incentive, or capability, for that matter, to stop the payment before it leaves the door. Many self insured administrators are also just doing a cursory job at looking backwards, retrospectively, at these schemes. The best, most efficient way, is when clients and payor customers, before they send these payments out, look at patterns with these particular providers, comparing those providers to other specialists within that provider range. What you can see is that these particular providers are often unbundling their services for what should be a global procedure, and bill continually in a manner fraught with unbundling, overcoding, upcoding, and incorrect coding. That's a pattern. Our customers are stopping those claims from being paid, and have the claims clinically verified. Once our system identifies a pattern, we have clinical investigators that drill down into those particular providers, and provide a detailed report with recommended actions to take.” 

“1 to 2 percent of the 1 million+ providers might have been involved in actual fraud at some point in time. There's far more dollars in the abuse area, where there's aggressive billing habits, compared to normal billing patterns, where the particular providers are 2 to 3 standard deviations more aggressive in how they bill, with areas such as modifier abuse with the codes. That's where we see hundreds and hundreds of millions of dollars of abuseful practices.” 

Click here to listen to the full podcast interview with Brian C. Smith, Executive Vice President, Sales, HealthCare Insight, discussing "Prospective Overpayment and Fraud Prevention.

Inside the Mind of Managed Care Contracting Executives

by Clive Riddle, May 5, 2010

MCOL, in conjunction with the Health Plan Contracting Web Summit, just concluded an e-poll on contracting issues. Respondents were asked “What are the greatest opportunities from a contracting perspective?” and chose accordingly from the following answers:

Response	Percent
Advancements in analytics capabilities	7.5%
Advancements in electronic health records and transactions	16.7%
Consumer engagement initiatives	10.8%
Emergence of value based and newer payment models	26.7%
Formation of Accountable Care Organizations	16.7%
Increased covered population due to health reform	17.5%
Potential growth in patient centered medical homes	3.3%
Other	0.8%
Total	100.0%

Respondents were also asked “What are the greatest challenges from a contracting perspective” and chose as indicated from the following answers:

Response	Percent
Consumer engagement Initiatives	9.9%
Continued market consolidation	14.1%
Cost pressures due to economic downturn	28.1%
ICD-10 transition	6.6%
Increased complexities of benefit design	8.3%
Increased mix of government program vs. commercial covered populations	14.9%
Issues related to new health reform provisions	14.0%
Other	4.1%
Total	100.0%

121 professionals responded to this e-poll, and indicated the following perspectives:

Purchaser                               24.0%

Provider                                 55.4%

Vendor/Other                          20.6%

So, while respondents indicated there is clearly a mixture of factors, and not just one single opportunity or challenge that requires their focus, the emergence of value based and newer payment models, and cost pressures due to the economic downturn are certainly the front runners commanding their attention.

The Impact of Accountable Care Organizations During the Next Few Years

by William J DeMarco, April 27, 2010

I was asked to address the following question for the current issue of MCOL’s Thought Leaders newsletter: "How large of an impact will the emergence of Accountable Care Organizations have during the next few years, and what are some of the implications we might expect as a result?”  

I supplied a brief summary statement for Thought Leaders. Here are my expanded thoughts on this topic:

We believe that ACOs will have a tremendous impact on lowering costs and improving quality long term because these initiatives will be operated at the local level and therefore make quality improvement an ongoing process versus a short term discount approach to value improvement.

The concept of having local providers competing as integrated systems has long been a scholarly supported and business researched model that theoretically should work. The problem has always been in the reimbursement at the practice level. Money and care delivery have been separated from the care coordination making payment a barrier versus the bridge it should be to better patient management.

We have spent millions of dollars as health plans, medical groups, and hospitals to come up with reporting systems that are just now yielding some patterns of care that we know offer positive solutions in the area of chronic care and general prevention.  However, the savings from this more effective care outcome has always gone to the payers. The providers, patients, and most employers never really see these savings in the form of better benefits or lower premium costs so there has never been an incentive for physicians and hospitals to work together to better coordinate inpatient and outpatient care.

We think that the bundled payment opportunities will change this and, as Medicare continues to reduce or flatten its fee increases, bundled payments will become more attractive.

By having risked adjusted patient care guidelines tied to payments for hospital, physician and drug costs for each episode of care, well planned care management protocols will yield a margin IN ADDITION to billed charges to Medicare.  Therefore, there may be a way for many providers to actually see Medicare revenue start to come closer to commercial revenue.

Managed care companies handling commercial payers would also have an interest in seeing hospitals and physicians work together to improve everything from coding to clinical outcomes in order to secure a share of the savings created by their innovation and discipline. There is talk that delegated models of medical management as seen in Florida and California may offer an even more lucrative opportunity to participate by taking 85% of premiums through global or bundled payment structures. This would represent an outsourcing of medical management to hospitals and physicians who, we have always thought, should explore this as a business opportunity to leverage care AND management of care. Health plans and insurance companies would pay a nominal fee to have this management done, but that would only enhance the ability of the caregivers to hire navigators to assist people within and outside the care system so discharges are followed up and preventive services explored before admissions.

The ACO structure will truly be following the integrated care guidelines to improve care with an incentive versus just avoiding anti trust issues. Perhaps we will see different physician driven governance and locally based quality and utilization feedback to physicians and hospital staff whose compensation is dependent upon not just delivering more services but delivering more of the right services at the right levels within the delivery system. We reaffirm this point by saying if physician are incented to deliver top quality and share the savings but the hospital staff operates business as usual to load beds and get paid based upon gross revenue, we have created a monster in terms of two factions in the delivery system going in opposite directions. This happened under early bundled and capitation payments where doctors were starting to see serious gains in income while the hospital’s losses were mounting due to reduced lengths of stay.

Finally, the long term impact here will be collaboration between hospitals in an area where they were competing against one another in a small market. The larger delivery system and its primary care referral system offer great coverage of a larger Medicare and commercial population. This allows PCPs and specialty practices to grow and align better benchmarks and communication with other MSO services that share expense and allows a network of small practices to operate as a large multi-speciliaty group practice. This group without walls can achieve some of the economies of scale but would need to be linked by Health Information Exchange making patient records, ordering of tests, and recommending follow-up care more efficient than much of the paperwork and patient chasing by phone done now.

Assuming the demonstration projects give CMS some good feedback on key performance indicators and that many hospitals and physicians arrive at the conclusion that indeed there is an opportunity to perform better and be paid better under this ACO framework, we would say the government’s estimate of savings from ACO development is largely understated.  The costs curve will bend regionally which will create even more savings than projected for Medicare.

Even now states are talking about ACOs for Medicaid and some employer coalitions are attempting to encourage ACOs around centers of excellence to push providers to compete more on quality and less on discounts.  We have told these large, self funded employers that they need to stop being passive players in the health insurance arena and take an active interest in designing benefits that offer incentives to patients who see the ACO aligned doctors versus the non aligned doctors, who may be part of a discount network but have no real accountability when it comes to performance. Then the employer or health plan must also offer some sort of shared savings plan to continue to incent doctors and hospitals to improve quality and outcomes. This additional amount shared from savings costs employers and health plans nothing more than what they normally pay, but it opens the door to seeing waste removed from the system permanently and better coordination of services for the employee. This levels off premiums and reduces employee out of pocket costs.

We are excited about the ACO opportunity.  While there will be a large education process needed to implement these approaches in some markets, most agree this beats the alternative of price controls and further mandates on payers and providers.

The Reimbursement and Value Based Purchasing Revolution

By William DeMarco, December 21, 2009

MCOL asked me to respond to the following question for their current issue of “Thought Leaders”: Outside of pending national health care reform legislation, what trend(s) or issue(s) do you think will have the greatest impact on health care for 2010?" My abbreviated summary response is included in the newsletter, but what follows is my detailed response.

I think the entire revolution of reimbursement and value based purchasing is changing health care with or without reform.

First, consider the shift to for profit for so many organizations: Blue Cross plans that are consolidating under Well Point; not for profit hospitals that are aligning with or being bought by for profit hospitals;  and finally physicians who came out of the Physician Practice Management ( PPM) environment only to find they did need to invest in other for profit businesses or sell out to the hospital. Ambulatory care centers or buying a bone density scan to make revenue to keep ahead of the rising cost of managing the practice is new for most doctors. These were unheard of a decade ago.

All of these enterprises are having difficulty getting the asset valued that would permit them in some way to get some meaningful equity out of their hard work. That equity could be turned into cash or at least a cushion for future transactions. The new reality is bond houses are just as stingy as traditional investors and financing cost centers like facilities is increasingly difficult

At the same time reimbursement is shifting to a more sophisticated level with ICD 10 and MS DRGS and additional changes that will reveal just where the care and dollars are going. New innovations for treatment at less cost is a hoped for outcome but the ability to police more services and eventually go to a bundled payment system will put both doctors and hospital at risk for living on a budget for each episode.

This new integration is more cohesive than before and as more consolidation occurs collaboration not competition will be a key to survival. How the detail in each of these new expanded payment codes must be reported and tracked. This will be impossible with our current machines that barely report receivable and payables even for the most sophisticated practice. Collecting for managed care, now the majority payer has spawned a new business of revenue cycle management but now a new dimension of reporting utilization is also a requirement under pay for performance.

This disremediation of the old payment and billing systems physicians’ practices and hospitals used is making many rethink their “falling apart” systems.

The “new integration” brings this billing and payment all together again but not through a centralized structure. “Meaningful use” has arrived and that means web based connections to physicians hospitals employers insurance companies and even patients  is a requirement to get at bundled payment, report episodes of care and invoke some accountability into the definitions of necessary and unnecessary care.

Our point is that without the data, the payment will be reduced and where insurance companies had all the data for years its now time for providers to also invest in data driven strategies to better their reimbursements but , more importantly , begin to innovate and test methods to improve quality without increasing costs. This means permanently removing wasted effort and procedures that are inconsistent in their outcomes from the practice, but also, and this is what physicians and hospitals are most afraid of, changing behavior to make a living through more precise and frugal use of insurance and consumer dollars.

This underlying structure is shifting all at the same time reform is being discussed. Like two tectonic plates that shift causing an earthquake and then settle until the next large change. The results are unstable sections of land, tsunamis and new opportunities for growth What we see is slowly the components of value based purchasing are becoming a clear and present danger to the provider that waits too long to take action.

The providers waiting out the rules of reform right now are behind. That means for them 2010 will be remedial instruction on integration. Organizations that have the discipline to prepare the plan A and plan B of strategy are already ahead.

They are not waiting for rules to develop strategies to get around rules they are already making their own rules and slowly and consistently changing all their substructures to accommodate change with intelligent human capital, strong organizational culture and the confidence that their growth plans will eventually succeed.

Others are still cost cutting to make money. They are waiting for a bail out and telling their boards they will respond to the market AFTER an event has occurred. Henry Kissinger would often say that a crisis is a group of untreated issues that people knew they needed to change but did not change and now the cumulative effect is a crisis.

The reason we did not change them is often times because if fear or denial. We kept saying the health care delivery system is falling apart, the Institute of Medicine gave us evidence as to what was falling apart and then offered us a solution to bring these parts back together. But the understanding of what integration was supposed to look like was not clear and many organizations failed in an attempt to use it as a strategy to control doctors and or control managed care.

We now have a second chance with or without reform to re engineer our business process, right size our medical staff organizations and join together reimbursement and quality initiatives to get to the point of being able to reward superior performance with better payments and differentiate ourselves in the marketplace as providers and health plans with distinction. This may be a long road back for some which is why getting started now is the best strategy for 2010.

Health Plan Coverage of H1N1 Virus Administration Varies

by Clive Riddle, September 17, 2009

Earlier this week, the FDA announced approval of four vaccines against the H1N1 virus. As we await the expected spread of the H1N1 virus this fall, health plans around the country are announcing their policy regarding coverage. Of course, the H1N1 vaccine itself is being covered by the government, once it becomes available. So the coverage issue is with respect to payment to providers for their administration of the shot.

Is it a no-brainer that health plans will provide coverage for administration of the H1N1 virus? It is as long as their specific plan of benefits cover immunizations. But typically, health plans offer a wide menu of benefit plans, including some that do not provide immunization coverage.

However, some health plans have announced they will take the extra step to provide administration coverage for all their members, even those whose benefit plans do not offer immunization coverage. Such health plans are taking the public health policy approach that by removing barriers to the vaccine, they are doing their part to reduce the potential spread of the virus, which should provide the indirect benefit of reduced overall incidence and corresponding cost of treatment for their member population as well.

A survey of recent health plan coverage announcements indicates health plans uniformly will cover H1N1 administration costs for member benefit plans that cover immunizations, but are split on providing H1N1 administration coverage when their benefit plans do not cover vaccines.

Those who will provide administration coverage to all members include:

• CIGNA has just stated they will provide coverage of H1N1 vaccine administration for all insured members without application of any deductible or copay requirement.

• United Health Group has announced they will on a corporate-wide basis provide coverage of H1N1 vaccine administration even for members whose benefit plans exclude immunization coverage.    

• Likewise, Independence Blue Cross in Pennsylvania issued a release that they will provide coverage of H1N1 vaccine administration including for members whose benefit plans exclude immunization coverage

•  Blue Cross Blue Shield of Arizona issued a statement that they will provide coverage of H1N1 vaccine administration including for all members

• Blue Cross and Blue Shield of Florida also will provide coverage of H1N1 vaccine administration including for members whose benefit plans exclude immunization coverage. BCBS Florida also announced its operational continuity preparedness plans in case of a significant disruption due to pandemic influenza.

Those who will limit administration coverage to members with vaccine coverage benefits include:

• WellPoint some time ago announced they will provide H1N1 vaccine administration coverage only for members with benefit plans covering vaccines.

• Aetna sent notices to providers that they will provide H1N1 vaccine administration coverage only for members with benefit plans covering vaccines.

•  Wellmark Blue Cross and Blue Shield in Iowa and South Dakota issued a statement they provide H1N1 vaccine administration coverage only for members with benefit plans covering vaccines.

• Blue Cross and Blue Shield of Nebraska also announced they will provide H1N1 vaccine administration coverage only for members with benefit plans covering vaccines.

The AAFP news yesterday published a story providing details on how physicians should code and bill major health plans and Medicare  for H1N1 administration fees. Interestingly, there is not a standard approach for coding by the health plans. The administration fee cannot exceed the regional Medicare vaccine administration fee.

Doctors and Hospitals Revisit a New Definition of Clinical Integration

By William DeMarco, August 25, 2009

I was just asked to provide a brief comment on the question for MCOL’s Thought Leaders newsletter on the question - "Have you observed any emerging trends, developments or initiatives of note with Integrated Health Care Delivery Systems?"

Here’s my more complete response:

In my travels observing workshops and client work and in my general reading I am seeing a change in the definition of what was once called integration.

Early on integration was defined as a means for physicians and hospitals to deal with capitation as a joint inpatient/outpatient service center versus having insurance companies pit providers against each other. This step towards a joint PHO framework involved legal issues of antitrust and market power and community benefit, but once structured, people had the idea that demanding more money because they offered comprehensive services was the goal. What was NOT discussed was reimbursement and gain sharing, which would have led to discussions on what we now call lean engineering to make sure that what the PHO charged the insurer was higher than the actual cost to provide services. In other words they were able to share savings with the insurance company. But integration usually stopped at the legal step and many PHOs failed as capitation was not the norm and hospitals got out of the risk business.

Now I am seeing a resurgence of interest in this, partly brought on by the scrutiny of the Federal Trade Commission who is reviewing many false PHOs who are operating under the assumption that they can still collectively bargain with payers without taking risk. This is an incorrect assumption for both PHOs and IPAs who must either be financially at risk or clinically integrated to proceed with any kind of collective negations with plans. Any other options may be seen as non competitive behavior and there are still IPAs and Super PHOs losing out because they do not have a fundamental understanding of what the federal government means by integration.

This reason, along with several others, is now motivating doctors and hospitals to revisit a new definition of clinical integration.

For example:

Payment Integration  

Many of these hospitals are reading the recent MedPac report that is recommending physician and hospital payments be combined like a Global payment based upon diagnosis. Medicare is going in this direction, as are some of the newer Pay for Performance models being developed. . By using episodes of care versus fee for service or traditional capitation, providers can start matching populations and identify gaps in process. To accept this global payment means there needs to be payment integration and a billing capability for both hospital and physicians as part of their managed care agreements.

Clinical measurement and reporting  

There continues to be discussion that P4P programs can be considered by the FTC as partial clinical integration and will make an organization exempt for an antitrust challenge as long as they are participating in Clinical measurement programs. This is also a platform for lean engineering by, again, allowing savings for the efficiency and effectiveness improvement to stream back to the providers IN ADDITION to their normal pay.

Value Based Purchasing

As employers begin revisiting direct contracting or discovering benchmarking information from “Leapfrog” and/or “Bridges to Excellence”, these larger employers are looking for reports on quality and safety from the health plans. Providers want to make sure their efforts are not mis-reported so they are preparing basic reporting data for employers to see as well as using HealthCare Compare data to begin their internal Performance based contracting efforts. Smart Health plans are helping the providers achieve the goals in basic process compliance for diabetes and heart treatments but are also able to report to hospitals valuable data on readmissions and other normative data based upon regional paid claims data.

Probably the biggest change is the understanding that most of the IT information systems in hospitals are obsolete under the new “ meaningful user” definition. Meaningful user requires web based practice management and hospital billing to permit payers and providers to do immediate real time link ups for billing and reporting. Current systems are closed systems, meaning they are designed to create data in-house only and do not connect to the community at large.

Patient and community demands

Many of us believe that the biggest trigger will not be in physician EMRs but consumer Personal Medical Records (PMRs). As more and more patients ask for their x-rays on digital CD and their medical records be put on a thumb drive, and ask that the doctors use the internet to correspond lab values and other updates to their medical history, doctors are truly beginning to understand that the real definition of integration is connecting with the patients and outside community, not just data reporting in their practice. As Health Vault and Revolution Health sell these services through insurance companies and provider organizations, we see this will change the use of data and redefine the relationship between providers and payers who have this capability versus those who are behind the curve in adopting integration as a community value.

ICD10: The Impact on P4P, Global Care, Billing and HIEs

by William DeMarco, April 28, 2009

ICD10 will have a major impact on future planning by providers and health plans. I would like to address examples relating to Pay for Performance, global care initiatives, billing documentation and health Information exchanges.

I was giving a lecture to a wonderful HFMA audience in New Hampshire on pay for performance and this topic came up, asking how will ICD10 affect P4P.

It was clear, in my opinion, that all of the use of severity DRGS and now severity levels within ICD codes that ICD 10 offered, were deliberately trying to get at the kind of detailed reporting that Medicare and many purchasers wanted. This was intended to define what process improvement s could be made to develop a better delivery system.

Benchmarking was too broad with the current system and was not fair because it could not get at the root cause without the examination of charts and abstracted medical records that offered such great detail but were labor intensive to obtain.

This statement produced several hundred nodding heads until another panelist from a well respected billing and systems firm said ICD 10 will not be implemented until 2012. When asked why she just said the insurance companies cannot even do APC reconciliation how will they ever do ICD10.

Well, many heads again nodded, probably the ones sweating bullets right now: hospitals that own PCPs and need to quickly find a way to get into ICD10 billing.

The real challenge here is not so much the electronic billing, there are crosswalks out there, but rather documentation at the physician end.

ICD10 requires a major departure from the two or three categories in an ICD 9, and will demand some documentation from physicians and physician mangers who will need to be adamant about both the precision, to avoid audits and also the electronic billing capability to get paid on time as all Medicare and Commercial will move to this system.

Of equal importance is the traveling executive whose emergency visit in Thailand will be billed using ICD 10 or ICD11. Or the family that is told if they go to India for Johnnie’s surgery ,it will be covered in full, but if they get the surgery done here it will only be 60% covered.

We are not seeing the medical tourism momentum stop, and as Blue Cross South Carolina adds Hospitals to its PPO network in Panama and Costa Rica and other employers demand credentialed professionals to see their employees overseas, the conversion to this new system is also key to success.

What we are all missing is the why?

Why are we making this so complicated?

The current system has a majority of docs using the same codes over and over.

In our work with Pendulum HealthCare Development Corporation we see level 3 office visits for a majority of doctors and patients, and yet when we compare level 1 visits of similar docs in the same region with a case mix adjusted diagnosed population, we see the end result is the same.

Why are we paying more?

In this case there were 12,000 children accessing:780 pediatricians. 1,300 pediatric specialists,60 in network hospitals.

They were generating 21,000 admissions, 190,900 clinic visits, 79,319 ED and 19,785 surgeries. The client’s goals were to integrate financial and clinical reporting capabilities to make good decisions as to how best to manage the plans medical loss ratio. When we extracted data there were many holes such as Misaligned fields for lines of business, and Claim adjustment errors.

Office Visit Level	% Medicaid Claims	% Commercial Claims
1	0.3%	2.3%
2	6.5%	35.0%
3	59.9%	58.8%
4	30.0%	3.6%
5	3.3%	0.3%

The solution was to reconfigure reports to be useable by departments and management.

For example, by aligning financial and clinic reports into 30 summaries the providers and the health plan received reporting by line of business, specific drugs, service codes, and disease condition by provider. This allowed them to have a real time cost per patient per 1,000 and PMPM by service and set the foundation for implementing HEDIS measures and other custom quality measures for operational improvement and compliance.

What this analysis also found was providers offset lower reimbursement by increasing complexity of office visit level. For example focusing on a single procedure Otitis Media for 62,000 Medicaid patients and 400,000 Commercial patients, we found over-reliance on level 4 and 5 office visits

In looking at outcomes, variances between Commercial and Medicaid is not clinically justified, so the plan allowed physician and hospitals to look at the financial impact of reducing office payments by 21%.

This got EVERYONE’S attention.

By showing drill down reports, the Client was able to look at the practice mix compared to specialty averages for each condition. This led to a timely discussion on proper use of level 1 versus level 5 billing benchmarks

The physicians and hospital were able to identify the providers who billed 90% or greater of their visits at level 5 and show them where they stand next to their peers.

I point this out to demonstrate that having severity adjustment and having risk adjusters for the elderly will all require more and more use of ICD 10 to get at providers who often unknowingly burn more resources with some diagnosis than others.

I also wanted to point out that by sharing this data with providers the health plan allowed the peer pressure of physician and hospital to create AWARENESS of the problem and the potential fee reduction consequences if behavior did not change.

As plans have this data so will Medicare and a scoring process using ICD 10 is underway at the top of the payer’s mindset using tiering and reconfiguring networks.

Finally the discovery that was made at the HIMSS conference last month and that is that the government’s stimulus program checks for EMR are going to go to reimburse providers who create ‘Meaningful User” data.

This means data must be able to be communicated from office to office, hospital to hospital and payer to payer and especially provider to payer.

Many practice management companies will be shut down as their system operates in a vacuum. Many hospitals, we have discovered in our pay for performance work, have a large system but they cannot get their large system to cross over departments and they cannot communicate electronically with payers except for billing information. This is inadequate and ICD10 will require more data fields and therefore more complex billings but also offer the opportunity for payers and providers to construct bridge reports on performance and someday outcomes.

By having a national severity distinction and preparing the data links to both internal and external customers ( A BIG LEAP) we will see regional data bases begin to form and these collections of data will form a local practice pattern form which providers and payers can better evaluate changes and watch change happen.

In all my work with doctors for the past 30 years, I can say once the doctors actually see that improvement needle move, they suddenly feel like they are back in control and this is a wonderful thing.

We have been lacking precise data to see this behavior change, which is always been the source of the argument” my patients are sicker”. We can see this shift to performance based contracting now be supported by physicians and specialty societies using ICD10.

So ICD 10 will be a major change for us as well as the health plans, hospitals and physicians. If payers are demanding value but there is no way to prove it then the data is useless and will not produce needed change. If there is a regional data base of practice patterns that can be used by payers and providers we will have less cause for acrimony and more time spent competing on quality. This was the original intention of health plans in the 1970s. Perhaps this is a second chance to make these local plans flourish.

Capitation and Medical Homes Or Is this the return of the Staff Model HMO?

By William DeMarco

While Primary Care seeks new ground as medical homes and insurers look for ways to share risk between providers and insurers using global/tied to episodes of care, we are reminded of the original foundation of HMOs in the early 1970s.

In the original HMO Act of 1973 the federal government intended to encourage formation of group practices through grants and loans. The promise of assembling these efficient prepaid group practices was to have them paid on a capitated basis allowing for a margin if these groups came in under the capitation rate. The intention was to have PCP groups receive full cap and “provide or arrange to provide care for a voluntarily enrolled patient population in exchange for a fixed periodic payment.”

Thus, the original definition of an HMO in the early 1970s applied to a broad variety of delivery systems sponsored by new and existing medical groups.

In today’s world, Primary Care salaries are flagging and capitation is split to sub cap for PCP, specialty and hospitals. So instead of a full payment per episode PCPs get a small amount for a couple of office calls.

Once reimbursement split, it was further split by parts A, B, C and D of Medicare, and then the original value of PCPs was also split. The Primary Care services became a commodity as PCPs were convinced over time that they had no hope of effectively managing primary, specialty, hospital and ancillary services.

They did not have knowledge of claims and information systems, severity measurement tools or care standards and guidelines to shoot for.

In short they were flying blind and this meant they would eventually lose money unless they had a health plan partner to manage all this for them. The successful plans (Marshfield, Gisenger, Lovelace, Kaiser and Harvard and Tufts) all built an insurance partner that they owned and, as such, were able to turn this process into an asset to build market share and compete with other insurers who eventually entered the market with loose-knit networks and PPO arrangements that were HMOs – but in name only.

These anti risk models failed one after another, while those that truly did manage care, reorganized and did the work to build a care system that was fully integrated with the reimbursement system. These made whole dollars for successful care and redeployed savings into these medical groups to hire staff, buy equipment and expand the reach of their practices.

Medical Home

So where do we go from here? Medical homes, a new conceptual formation of a medical practice, recently emerged in the literature.

These homes are hailed by government and practitioners as a more comprehensive approach to Primary Care and Primary Care management. Some of these homes emerged as practices newly forming out of old hospital owned practices and some are forming with insurers as sponsors, seeing the need and the opportunity to truly change care delivery but only by becoming a provider.

This is a switch away from the IPA and network models. Employed physicians exclusively work for the health plan, and are indeed employees, insulated to the extent possible by employer-employee relationships, or in some cases by the medical group that the insurer partly owns. Insurer owned medical groups have been around in the worker comp area and also with the resurgence of interest by manufacturers owning PCPs as the company doctor.

The savings for insurers and employers is obvious when the PCP builds a referral network of specialists and hospital services that are only needed when and if the PCP cannot perform the service directly.

Recent expansion of CVS, Target and Wal-Mart into the Primary Care area shows how needed the services are. But again these professionals treated as a commodity leaves much to be desired in terms of continuity of care, so the medical home has been created and is a new definition...

• Each patient receives care from a personal physician
• The personal physician leads a team of providers who are responsible for a patient's ongoing care
• The personal physician is responsible for the "whole person"
• A patient's care is coordinated across the health system and community
• Quality and safety are hallmarks of the practice
• Enhanced access to care is offered through open scheduling, expanded hours, and new care options such as group visits
• The payment structure recognizes the enhanced value provided to patients

Newly developed NCQA standards for these homes as credentialed contractors for Bridges has furthered the interest by payers to link up with PCP.

Capitation

On January 22nd the Boston Globe announced that Blue Cross would be returning to capitation. The spokesperson for the Blue Cross organizations stated that it was more of a globally packaged program but, as with most reimbursement schemes, there needs to be a top line and a bottom line of reimbursable dollars to make the cost predictable for insurers to construct premiums.

Although the “one size fits all” capitation calculation of the past created large controversies over what to do with sicker patients, the direction capitation has been going is much more towards a flexible dollar amount tied to diagnosis.

This risk adjusted amount based upon the patient’s health status, diagnosis, overall age and complications, seems to make more sense as patients with a greater burden of care needs are given a budget for their providers that reflects this greater need.

This amount also reflects the broader variety of services from diagnosis to a plateau of healing following generally accepted guidelines. These episodes of care are gradually replacing the word capitation but in fact represent a risk model and not to exceed cost for providers. So, again the providers do have some risk to make sure they are prescribing necessary outpatient care and hospital services.

The follow-up care in many of these episodes is a tremendous value as physicians, both primary and specialty, are financially rewarded for follow-up care and a form of case management reporting that goes back to the insurer and the attending physician.

As we see further risk adjustment play an important role in performance payment systems, we see PCPs being able to operate medical homes on a salary plus performance incentive thereby sharing in savings created through their own accurate diagnosis and care management skills.

To date FFS and former capitation models offered little savings back to PCPs, especially for seniors who took the physicians and staff extra time with care and administration. As Medicare experiments with risk adjusters for the chronically ill population and private insurers begin using a form of episodes of care to manage the commercial population, we see that research on guidelines will improve as will outcomes analysis using comparative economics.

End result

What this means for health plans and underwriting is that, with some work, their analysis of health assessments and patients’ previous illnesses will allow plans to forecast with some certainty the potential ailments of a prospective population. Rather than exclude this population for coverage, reallocating care management resources in the direction of stabilizing theses patient or, in some cases, reversing the disease course as is being done in heart disease and diabetes, will be the norm.

For providers, especially PCPs, this means a welcome source of additional payments for the fragile and chronically ill population of Medicare eligibles and a return to a vital role as the front entry point for most care. This role is expanded in the medical home, and a certification as a home differentiates these professionals in the marketplace.

For patients who seek more transparency in their doctor’s pricing and performance, the distinction as a medical home is again a meaningful message to send to new and existing patients that this practice is certified as best practices for Primary Care. Further, this is important as the package or episode of care is driven off of accurate diagnoses.

Payment and structure can come together under this medical home concept, but we still have much to learn about how consumers must also see the Primary Care physician as the essential key to open the delivery system in a productive but prudent manner.