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What do providers need to start preparing for?

Posted on by John Toussaint

It’s been a while since I have written on this blog because we have been waiting for the democrats to sort out their differences. The passage of the Senate finance health bill is the first step in convergence on what we can expect to see from health legislation.

What do we need to prepare for?

1.  Lower reimbursement. The way the CBO plans to pay for broader insurance coverage is to pay providers less over the next ten years. If a public plan is enacted that payment will be either negotiated by government entities or the payment will be tied to a percentage of Medicare reimbursement, which is proposed at Medicare plus 5%. This is the way the insurance plan will be funded in addition to higher taxes for those individuals making 250,000 dollars per year or more. Therefore, organizations that are not focused on radically redesigning the way they deliver care to become more efficient will face an uncertain future. I would estimate that a 2-5% productivity improvement (depending on inflation) per year is the minimum to survive financially moving forward. This improvement will be required because of a flat or declining revenue stream for providers. The productivity improvement required may be much higher if a public plan is enacted and many employer sponsored plans are transitioned to a public option. With no commercial rates to rely on organizations are going to have to survive on what are considered inadequate government payments today. It appears   meaningful payment reform won’t happen for years as the only provisions in the bills for reimbursement reform are for pilots with no action recommended and no date established by which change must occur. With so many variables it really is difficult to predict the future but with any of the present scenarios plans should be put in place to begin to manage to significantly lower reimbursement. Of course this is exactly what we have been working on with the Health Care Value Leaders Network.Those interested should go to this website and sign up. We will contact you and help you get to work by learning form others who are achieving remarkable productivity improvements.

 

2.  More federal government bureaucracy. There are many new federal agencies created in all 5 of the bills on the floor (http://www.createhealthcarevalue.com/blog/post/?bid=104). Quality, performance reporting, innovation centers, comparative effectiveness centers, and more will be centralized and run from HHS. This probably  means more regulation and federal control but we don’t know for sure. We will need to prepare for more compliance programs related to federal oversight. If we aren’t freeing up staff by improving productivity from operations we won’t be in compliance and reimbursement will decline further.

 

3.  Specialists and primary care doctors are going to have to work closer together. In the legislation there is money for a number of pilots related to medical home and accountable care organizations. There are many flaws in these concepts as presently articulated but all the bills have the concepts clearly articulated as being important to pilot in forthcoming reimbursement efforts. I am in complete agreement that primary doctors and specialists need to work more closely together.  I am not in agreement that these theoretical models aggressively promoted by academicians are the appropriate solution. In fact, I am fairly certain these models will fail miserably because they are not focused on the right problem. I outlined in the September-October of Health Affairs (http://www.createhealthcarevalue.com/blog/post/?bid=102) the concept of designing a system around value to the patient vs. value to the doctors and hospitals. Accountable care organizations and medical homes create value to providers not patients.

 

4.  Universal Insurance with significant federal involvement. Whether it’s a public plan, a co-op or a different model there will be a universal insurance system. It isn’t designed to do anything differently than our existing government insurance systems including Medicare and Medicaid. This means that costs will continue to escalate and as noted above reimbursement will continue to decrease and eventually more draconian controls will need to be added to control costs. What we have proposed at this site has been a system based on provider competition, which rewards better quality and cost of care delivery. In proposed insurance options there are no specific provisions for that to happen.

 

5.  Many years of piloting all kinds of initiatives through HHS grants. Most providers will be involved in some government pilots. Whether it’s medical home demos, insurance demos, reporting demos there will be a lot of money spent trying to gather data on what works and what doesn’t for a myriad of questions. This also means that one common system administered by HHS is years away. It may mean that we opportunity here in Wisconsin to prove that many of our ideas regarding quality and efficiency can work to improve health. We will need to get in line quickly for the federal dollars available to test our approaches.

To summarize, change is going to happen. We need to prepare for lower reimbursements, greater federal oversight of care delivery, and a new insurance program administered if not by the government then with a lot of government involvement.

 

Baucus Bill Expands Federal Bureaucracy

Posted on by John Toussaint

Please read the Baucus Bill – Health Care Reform Mark Document FINAL

There are so many new federal agencies it’s hard to remember them from day. The CMS innovation center is one of the new agencies. Whether CMS and innovation constitute an oxymoron is debatable but how can innovation ever be managed in a central agency at the federal level. My concern is that the innovation that is happening in states like Wisconsin,Vermont and elsewhere is sure to get crushed with the heavy handed regulatory approach we will inevitably see from Washington. It’s not that these federal bureaucrats are bad people. to the contrary I’ve met many of them and they are trying to do the right thing. The problem is federal mandates never have worked to improve anything in health care and won’t work now.

What to do? The democrats now have 60 votes in the senate so health legislation will pass. The important thing to do now is to make our opinion clear that federalization of all this work is the wrong solution.It must be delegated to public private partnerships at the state level where there can be innovation and improvement.

Feel free to send your legislators this document or the pdf document are yours to distribute.

The Center for Health Care Quality and Payment Reform ACO paper

Posted on by John Toussaint

Harold Miller has recently published a detailed description of ACOs (Accountable Care Organizations) based on expert feedback.

This article describes who can form an ACO,what an ACO does,and how it gets paid.It is based on feedback from many of the experts in the field. Unfortunately,it is not the best thinking yet. The missing link is the patient. No where is the patient journey part of the discussion. As we recently published in Health Affairs, understanding the patient condition or value stream is the key to removing waste and improving quality. I am concerned that as ACOs are currently being thought of there will be no improvement in value to the customer.

There is a three page executive summary at the beginning which is well done.  HowtoCreateAccountableCareOrganizations1

 

Baucus Bill and Delivery Reform

Posted on by John Toussaint

Sen. Baucus released a draft bill yesterday which we summarize in the key areas related to delivery reform. The full bill is included – Health Care Reform Mark Document FINAL

 

This bill outlines the huge increase in federal bureaucracy, which will be required to administer this plan. I have lifted specific language around the delivery reform that is of interest. The whole bill is attached.

 

 

 Hospital Value-Based Purchasing:

Establish a Hospital Value-Based Purchasing (VBP) program in Medicare that moves beyond pay-for-reporting on quality measures, to paying for hospitals‘ actual performance on these measures.

Beginning in FY2013, hospital payments would be adjusted based on performance under the VBP program.

By FY2014, the Secretary would be required to expand categories to include efficiency measures.

Physician Value-Based Purchasing:

Beginning with the 2011 reporting period, CMS would be required to make PQRI incentive payments available for two successive years to eligible professionals who voluntarily complete the following on a biennial (every two years) basis.

Quality Infrastructure:

Building on the provision set forth in MIPPA, the Chairman‘s Mark would provide additional resources to HHS to strengthen and improve quality measure development processes for purposes of improving quality, informing patients and purchasers and guiding payment under Federal health programs. AHRQ and the Centers for Medicare and Medicaid Services (CMS) would implement the provisions in this proposal.

National Strategy to Improve Health Care Quality:

 The Chairman‘s Mark would direct the Secretary to establish a national quality improvement strategy that includes priorities to improve the delivery of health care services, patient health outcomes, and population health through a transparent and collaborative process. In developing these priorities, the Secretary would consider how the priorities would: address health care needs of those with high-cost chronic diseases; improve strategies and best practices to improve patient safety and reduce medical errors, preventable hospital admissions and readmissions, and health care-associated infections; have the greatest potential for improving the health outcomes, efficiency and patient-centeredness of health care; reduce health care disparities across populations and geographic areas; address gaps in quality, efficiency and outcomes measures and data aggregation techniques; identify areas in the delivery of health care services that have the potential for rapid improvement in the quality and efficiency of patient care; improve payment policy under Federal health programs to emphasize quality and efficiency; enhance the use of health care data to improve quality, efficiency, transparency, and outcomes; and other areas as determined appropriate by the Secretary.

Quality Measure Development:

Measures developed under this section would be applicable to all age groups, where appropriate, and focus at minimum on the following areas: (1) patient outcomes and functional status; (2) coordination of care across episodes of care and care transitions; (3) meaningful use of health information technology; (4) safety, effectiveness, patient centeredness, appropriateness and timeliness of care; (5) efficiency of care; (6) equity of health services and health disparities; (7) patient experience and satisfaction; and (8) other areas deemed appropriate by the Secretary.

Accountable Care Organizations:

The Medicare program would allow groups of providers who voluntarily meet certain statutory criteria, including quality measurements, to be recognized as ACOs and be eligible to share in the cost-savings they achieve for the Medicare program. Beginning on Jan. 1, 2012, eligible ACOs would have the opportunity to qualify for an incentive bonus.

Eligible ACOs would be defined as groups of providers and suppliers who have an established mechanism for joint decision-making, such as for capital purchases. The following groups of providers and suppliers would be eligible for participation: practitioners in group practice arrangements; networks of practices; partnerships or joint-venture arrangements between hospitals and practitioners; hospitals employing practitioners; and such other groups of providers of services and suppliers as the Secretary determines appropriate. Practitioners would be defined as physicians, nurse practitioners, physician assistants, clinical nurse specialists, and other practitioners or suppliers as the Secretary determines appropriate.

To qualify as an ACO, an organization would have to meet at least the following criteria: (1) agree to become accountable for the overall care of their Medicare fee-for-service beneficiaries; (2) agree to a minimum three-year participation; (3) have a formal legal structure that would allow the organization to receive and distribute bonuses to participating providers; (4) include the primary care physicians for at least 5,000 Medicare fee-for-service beneficiaries; (5) provide CMS with information regarding primary care and specialist physicians participating in the ACO as the Secretary deems appropriate; (6) have arrangements in place with a core group of specialist physicians; (7) have in place a leadership and management structure, including with regard to clinical and administrative systems; (8) define processes to promote evidence-based medicine, report on quality and costs measure, and coordinate care; and (9) demonstrate to the Secretary that it meets patient-centeredness criteria determined by the Secretary, such as use of patient and caregiver assessments or the use of individualized care plans.

 CMS Innovation Center:

Section 646 of the MMA mandates that CMS conduct a five-year demonstration program to test ways to improve health outcomes while increasing efficiency. This demonstration, called the Medicare Health Care Quality demonstration, aims to improve patient safety, enhance quality, and reduce variation in medical practice that often in higher costs. One of the major goals of this demonstration is to see if Medicare can improve outcomes while simultaneously achieving cost savings. Improvements in care coordination are one strategy that CMS anticipates providers will attempt as they strive to improve quality but reduce costs. Two demonstration projects under this demonstration are scheduled to begin in 2009 with two others to begin soon thereafter.The Chairman‘s Mark would require the Secretary to create an Innovation Center within the Centers for Medicaid and Medicare Services (CMS). The Innovation Center will be a new office established within CMS that is authorized to test, evaluate, and expand different payment 91 structures and methodologies which aim to foster patient-centered care, improve quality, and slow the rate of Medicare cost growth. The Mark would also make permanent the authority granted to the Secretary under Section 646 of the MMA (section 1866C of the Social Security Act).

The Center would be required to conduct an evaluation of each model tested, including an analysis of the extent to which the model results in: (1) coordination of health care services across treatment settings; (2) reduction of preventable hospitalizations; (3) prevention of hospital readmissions; (4) reduction of emergency room visits; (5) improvement in quality and health outcomes; (6) improvement in the efficiency of care; (7) reduction in the cost of health care services covered under this title; and (8) achievement of beneficiary and family-caregiver satisfaction.

National Pilot Program on Payment Bundling:

The Secretary would be required to develop, test and evaluate alternative payment methodologies through a national, voluntary pilot program that is designed to provide incentives for providers to coordinate patient care across the continuum and to be jointly accountable for the entire episode of care starting in 2013. If evaluations find that the pilot program achieves goals of improving patient outcomes, reducing costs and improving efficiency, then the Secretary would be required to submit an implementation plan to Congress on making the pilot a permanent part of the Medicare program.

Reducing Avoidable Hospital Readmissions:

 CMS would calculate national and hospital-specific data on the readmission rates of Medicare participating subsection (d) hospitals and for hospitals paid under section 1814 (b)(3) for eight conditions that the Secretary selects based on spending and readmission rates. Starting in FY 2012, the Secretary would share these data with hospitals, and the data would be publicly reported on the Hospital Compare website. Starting in FY 2013, hospitals with readmission rates above a certain threshold would have payments for the original hospitalization reduced by 20 percent if a patient with a selected condition is re-hospitalized with a preventable readmission within seven days and by ten percent if a patient with a selected condition is re-hospitalized with a preventable readmission within 15 days.

Preventable readmissions would be defined as all readmissions that could have been reasonably prevented, as determined by the Secretary. Certain readmissions that would be excluded from the definition as follows: (1) readmissions associated with metastasic malignancies, trauma, and burns; (2) planned readmissions; (3) readmissions for patients with discharge status of ―left against medical advice; ‖ and (4) patients who are transferred to another short-term acute care hospital.

Medicare Commission:

The Chairman‘s Mark would establish an independent Medicare Commission (hereafter the Commission) that would develop and submit proposals to Congress aimed at extending the solvency of Medicare, slowing Medicare cost-growth, and improving the quality of care delivered to Medicare beneficiaries. The Commission would be composed of 15 members, who would be appointed by the President and confirmed by the Senate. The Senate Majority Leader, the Speaker of the House, the Senate Minority Leader, and the House Minority Leader would each present three recommendations for appointees to the President; however, these recommendations in no way would limit the President‘s ultimate responsibility to present Congress with qualified nominees. Qualifications for members of the Commission would be similar to the qualifications required for members of the Medicare Payment Advisory Commission (MedPAC). Members of the Commission would serve six-year, staggered terms and would continue to serve until replaced. MedPAC would continue to exist in its current form as an advisory body to Congress.

Patient-Centered Outcomes Research Act of 2009:

Patient-Centered Outcomes Research Institute (the “Institute”).  The Chairman‘s Mark would authorize the establishment of a private, non-profit corporation that would be known as the ―Patient-Centered Outcomes Research Institute. The purpose of the Institute would be to assist patients, clinicians, purchasers, and policy makers in making informed health decisions by advancing the quality and relevance of clinical evidence through research and evidence synthesis. The research would focus on the manner in which diseases, disorders, and other health conditions can effectively and appropriately be prevented, diagnosed, treated, monitored, and managed, and would consider variations in patient subpopulations. Research conducted would compare the clinical effectiveness, risk and benefits of two or more medical treatments, services or items. The Mark would define treatment, services and items as: health care interventions, protocols for treatment, care management and delivery, procedures, medical devices, diagnostics tools, pharmaceuticals (including drugs and biological), and any strategies or items used in the treatment, management, and diagnosis of, or prevention of illness or injury, in patients.

The Institute would also disseminate their research findings. The Institute would be subject to the provisions specified below and, to the extent consistent with the Chairman‘s Mark, to the District of Columbia Non-Profit Corporation Act.

 

Response to President Obama

Posted on by John Toussaint

President Obama suggested he is willing to talk about compromises to the reform proposals.The article attached here describes what the Center would like him to focus on.

The following  article  was delivered to a crowd of around one thousand people at the Fox Cities stadium last Tuesday night. The response was overwhelmingly positive probably due to the fact that we are talking about health care reform that everyone can agree on. Let’s get back to a bi-partisan discussion on the important components of needed health care reform.

These are the three key elements the President should be focused on:

1.             Mandate that each state establish consumer reports for health care cost and quality. It must report measures that are meaningful for patients such as medication errors and infection rates. Allow existing regional public reporting collaboratives to publicly report the data such as the Wisconsin Collaborative for Health Care Quality and Wisconsin Hospital Association.

2.         Change government payment processes to reward better quality and lower cost. Medicare and any other public plans should be in the business of stimulating competition among providers to achieve what The Health Care Value Leaders Network members www.createvalue.org,  have achieved using the lean methodology. Provider competition needs to be based on which organization does the best at treating the patient condition in terms of cost and quality.

3.         Any new insurance plan should be paid for by taking cost out of the existing health system. The federal role is to assure all state residents are covered and quality performance is met. Most importantly, any new insurance plan or plans should be administered at the state level because local public-private partnerships work best when radical change is required.

An expert advisory panel should be established by the Institute of Medicine or another non-partisan entity to act in guiding the government in the above policies.

To read the letter, please click here – Fundamentally_Flawed_Toussaint

 

Health Affairs publishing article on lean at ThedaCare

Posted on by John Toussaint

The September/October edition of Health Affairs is dubbed “Bending the Cost Curve in Health Spending”. There are many articles that focus on managing the cost of American medicine. One of those articles features the remarkable improvements that ThedaCare and others have achieved using the methodology of “lean”. This methodology which has been derived from manufacturing and applied to health care is radically improving both the cost and the quality of health care delivery. The Health Affairs article documents the types of improvement organizations can expect by adopting these principles.

The Health Care Value Leaders Network is the first group of health care organizations around the U.S. and Canada that have all committed to transforming their organizations using lean principles as described in the Health Affairs article.  If you are interested in joining us please go to our web site and click on “network” and then “how to join”. You will be prompted to fill out a one page document describing your organization. Once that is submitted we will contact you and describe the types of activities you can immediately get involved in.

To read the abstract, click here – http://content.healthaffairs.org/content/28/5/1256.extract?sid=a87a67ca-c6e0-4407-9d45-3b334756e892

 

 

John Torinus Summarizes Reform Issues

Posted on by John Toussaint

This article in the Milwaukee Journal Sentinel by John Torinus explains what many Wisconsin residents are concerned about regarding the present legislation pending in Congress.

View Torinus article here: http://www.jsonline.com/business/55948507.html

The Center believes health care reform is a non-partisan issue. There are a number of problems with the existing system which have been clearly pointed out on this blog and other media. However, this can be addressed and improved if we focus on a few core principles as outlined in our white paper on reform.

John Torinus outlines what needs to be included in legislation for health care reform to actually create the outcomes we are looking for.Transparency of price and quality, continuous improvement using lean, competition at the level of the providers delivering care, and insurance benefits that incent employees to get healthy and shop for cost effective services are all part of the equation.

As I said on Fox News, I stand ready(as many others do) to work with both democrats and republicans on the important components of a bill that is focused on health care reform that will work. I’m waiting for a call.