CMS may release as soon as this summer new rules for Medicare's gainsharing programs and a decision on whether to launch a second round of Pioneer ACO participant recruitment.
The Pioneer Accountable Care Organization Model program, one of the most ambitious federal value-based healthcare delivery initiatives, is at a crossroads.
Since launching in 2012 with 32 inaugural participants, the program has dwindled to 23 pioneers. The first year of gainsharing data shows more pain than gain for early Pioneer ACO participants.
Now federal officials appear poised to inject some energy into the initiative, with new rules in the works designed to optimize the program and a second round of participant recruitment on the horizon.
The Pioneer ACO program is one of two gainsharing Medicare payment models; the other is the Medicare Shared Savings Program. From the healthcare provider perspective, the former is a higher risk proposition than the latter.
In the Pioneer ACO program, providers can gain revenue for delivering value, but they lose revenue if they fall short of the program's accountable care standards. The level of gainsharing for MSSP participants is relatively low, but there is no risk of losing revenue through the program.
"Pioneer doesn't have a one-sided gainshare approach. You have up and downside risk," says Nyum Gandhi, a partner at Oliver Wyman Group based in Chicago. "Most of the commercial models and even MSSP are upside only. That's why people view MSSP as a learning opportunity. There's low risk."
He says the relatively high-risk nature of the Pioneer ACO program was a major reason that several of the organizations dropped out. "The majority dropped into MSSP, which has a little less upside and no downside," he says.
The Pioneer ACO program is best suited for hospitals, health systems, and physician organizations that have laid the groundwork for the switch from fee-for-service healthcare delivery to a value-based approach, Gahndi says.
His Pioneer ACO clients have a positive long-term view of the program. "The first year is for them to learn. They're not really looking for a lot of shared savings in the first year."
They probably wouldn't have found it. Last summer, the federal Centers for Medicare & Medicaid Services released early data on the gainsharing results from the Pioneer ACO program showing that 13 out of the 32 pioneer ACOs produced shared savings with CMS in 2012, generating a gross savings of $87.6 million.
Providers Not Impressed
In an April 17 letter sent to CMS on proposed rule changes to Medicare's gainsharing programs, the American Hospital Association urged the federal agency to sweeten the deals by "[ensuring] that more ACOs are able to receive a bonus – and a larger bonus – so that they can continue to invest in the program," the AHA letter states.
Ashley Thompson, vice president and deputy director of policy at the AHA, says the Pioneer ACO and MSSP programs are promising, but need to be revised if they are going to "survive and thrive into the future."
"We see ACOs as a path to move forward," Thompson says. "There's a lot of experimentation out there. The Pioneer ACO is one of those of experiments. I don't know whether it has the scope to become the leading or dominant model. It's too early to tell."
A CMS spokesperson says the agency is committed to building up its accountable care initiatives: "The Affordable Care Act offers new ways to identify and test new models of care that realign payment incentives that increase the quality of care for patients and also keep costs in check. We intend to continue testing accountable care organizations to give doctors, hospitals and other healthcare providers new ways to manage to deliver care within federal health programs in innovative and cost-effective ways."
CMS declined to provide a timeline for the release of new rules for Medicare's gainsharing programs. Gandhi and others expect that the new rules and a decision on whether to launch a second round of Pioneer ACO participant recruitment will likely come no later than this summer.
They cite pressure on the agency to make changes in the program well ahead of the beginning of the next program year on Jan. 1, 2015.
Participant Perspectives
Whether they have realized gainsharing revenue yet or not, several active Pioneer ACO participants are bullish on the program and looking forward to 2015.
Officials at Newton, MA-based Atrius Health said they lost a little revenue in the program in 2012 and gained a little revenue in 2013, but both results were not considered statistically significant. "For 2014, we expect to have more statistically significant savings," the officials said in a statement.
Atrius said participating in the Pioneer ACO program has generated benefits for the organization beyond gainsharing. "The first two years of the Pioneer ACO program engaged our clinicians and staff in better care for our patients and brought us in closer alignment. We have already seen coordinated care improvements and a decrease in our utilization trends," they said.
Lebanon, NH-based Dartmouth-Hitchcock Medical Center officials said they were able to generate gainsharing revenue in their first year of participation in the Pioneer ACO program, and they are optimistic about the future.
"We were able to achieve positive results in our rate of growth as our expenditures were less than our comparison group, and we were able to report on all quality metrics as required by Medicare," officials said in a statement. "Overall, we are satisfied with our participation and plan to continue participating in 2015."
A community hospital on the edge of Appalachia is becoming a leader in diabetes management and prevention. It's found a way to shorten patients' length of stay, boost prevention efforts, and help train endocrinology specialists.
Jay H. Shubrook, DO, FACOFP, FAAFP
The fight against diabetes is being fought hard in places as far flung as school lunch rooms and large academic medical centers. But there's one place that's in the vanguard: a community hospital in Athens, OH.
OhioHealth O'Bleness Hospital, a 132-bed acute care facility is on the front lines of the battle against diabetes, a killer that claims thousands of American lives every year.
It's facing a diabetes epidemic, says Jay H. Shubrook, DO, FACOFP, FAAFP. Shubrook is director of the clinical division of The Diabetes Institute at the Ohio University Heritage College of Osteopathic Medicine, and he serves in leadership positions at O'Bleness Hospital including director of diabetes services.
The southeastern Ohio community around the hospital is economically disadvantaged and in poor health. The incidence of diabetes in the area is 40 percent, which is more than four times the national average, according to the American Diabetes Association.
"They get diagnosed early and have complications early," says Shubrook.
The Athens rate even exceeds the projection for the US population in 2050. It's expected that about one third of the adult US population will have the illness by then.
Inpatient Management
Shubrook identifies several chronic disease management initiatives at O'Bleness Hospital that have led have improved clinical outcomes and cut treatment costs.
Efforts to improve the management of patients' glucose levels at the hospital, such as a standardized insulin protocol, have reduced the length of hospital stays, he says.
"We went to IV drips on the floor when only 10 percent of the other hospitals nationwide had done so. That was significant for a small community hospital," he says, noting that research he conducted on the impact of improved glucose-level management showed a shortening of hospital stays by 1.6 days.
O'Bleness evaluates the effectiveness of its glucose-level management efforts regularly, Shubrook says. "This year, we have found our hyperglycemia rates have gone up," he said. "We think this active reassessment of quality measures benefits our patients."
In fact, the inpatient glucose-control protocols Shubrook helped develop are now a standard recommended by the American College of Endocrinology.
Prevention Efforts
O'Blenness Hospital doesn't stop at trying to improve management of diabetes as a chronic illness. The hospital also provides diabetes education and patient support services through a navigator program for adult and child diabetes patients. It is boosting prevention efforts, which in turn improve quality of life and cut treatment costs, Shubrook says.
The navigator who works with young Type 1 diabetes patients in local schools has been a key player in launching early interventions before children experience serious complications, says the physician leader. "We have been able to reduce the number of hospitalizations, reduce the number of missed days of school, [and] reduce the number of parents' missed days of work," he says.
O'Bleness Hospital is also participating in a diabetes prevention program developed by the Centers for Disease Control and Prevention that could cut billions of dollars off the nation's annual spending on diabetes treatment, Shubrook says. Patients enrolled in the year-long program are screened for pre-diabetes conditions and commit themselves to lifestyle and behavior changes.
A national study conducted on YMCA members who participated in the CDC program found a 50 percent reduction in the rate of people with pre-diabetic conditions developing a full diabetes diagnosis.
At O'Bleness, 45 people with pre-diabetic conditions have participated in the prevention program, with none of them receiving a diabetes diagnosis so far. "It appears to be doing the right thing, two years into it," Shubrook says of the hospital's prevention program.
Specialist Training
O'Bleness is also co-sponsoring a year-long fellowship program with a West Virginia hospital to prepare primary care physicians to play an active role in managing their patients' diabetes. It is estimated that there are not enough endocrinology specialists in the United States to handle the inundation of diabetes cases nationwide.
One of the goals of the fellowship program is to spread the use of glucose monitor "downloading stations" at primary care physician offices. The technology provides primary care staff access to the full records of a home glucose monitor. "It really makes our visits more efficient," Shubrook says "All you have to do is have a computer in your office, and the software is free."
Shubrook says the O'Bleness diabetes care fellowship program can and should be replicated at hospitals across the country. "This is something we need to nationalize and have all over."
As change continues to reverberate throughout the healthcare industry, health insurers are well-positioned to influence greater cost efficiencies.
For millennia, divinity was the guiding force in medicine, through the healing hands of the local priest and shaman.
Then 2,500 years ago, the Greek physician Hippocrates helped launch the Scientific Revolution, which transformed Western medicine. A pledge "to do no harm" became the first patient-centered medical maxim and scientific diagnosis was elevated over the divine.
Now, at least in the United States, medical advances based on the laws of science appear to be butting up against the laws of economics.
With some medications costing $1,000 per pill and inpatient hospital bills often breaking the $100,000 mark, healthcare payers from Medicare to insurance companies to private citizens are finding ever-increasing medical costs unbearable.
"There are finite resources. Economics is the study of finite resources," David Friend, who holds a medical degree from the University of Connecticut and an MBA from The Wharton School at UPenn, told me recently.
"Healthcare is part of the finite resources the country has… Everything else is going to get crowded out. Something has to give if you can't raise taxes and roads and bridges are falling apart. The answer is to become more efficient."
Friend, who was recently namedleader of clinical strategy at BDO's Center for Healthcare Excellence and Innovation in New York, told me the growing influence of consumers is sealing the deal for a more cost-effective approach to the practice of medicine. "The population will demand more accountability," he says. "Most people are going to be paying out of their own pocket… That's going to force the discussion dramatically."
One consequence: Patients who can't pay will forego care. Under that scenario, everyone loses. So across the US healthcare industry, payers are exercising their power to prod cost efficiencies out of providers.
One area that's ripe for a cost-efficiency makeover is spinal surgeries. More specifically, as I've reported, public and private payers are seeking to rein in explosive growth in spine fusion surgery. Medicare officials claim that more reliance on conservative approaches to treat back pain such as physical therapy could save taxpayers millions of dollars on avoidable spine fusion procedures.
Joseph Gregory, an analyst at London-based GlobalData who has been researching the growth in spine fusion surgery over the past decade, told me payers are essential players in the push for less costly spine treatments. "The financial incentives really need to be in there to stop unnecessary procedures," he told me.
In many areas of the United States, the drive for cost containment and payment reform is reaching far beyond individual medical procedures. In some places, economics are fundamentally transforming the practice of medicine in a way that only science could before.
Primary care medical homes are a prime example of payment policies driving healthcare reform down to the physician level. Whether you are a salaried doctor at an insurance co-operative's medical home in suburban Maryland or a physician leading one of the new gain-sharing medical homes in Arkansas, cost is a bigger factor than ever in the mental calculus that physicians perform when treating patients.
Arkansas, which is set to release more first-in-the-nation gain-sharing data next month, is using medical homes as part of a payment-driven effort to recast physician practices throughout the state.
With Medicare waiting in the wings, most payers in the state are participating in the Arkansas Payment Improvement Initiative, which is built on medical homes and a gain-sharing program that is setting cost standards for "episodes of care" ranging from upper respiratory infection to congestive heart failure.
Last week, Arkansas Surgeon General Joseph Thompson MD told me that economic considerations are playing an appropriately crucial role in US healthcare reform initiatives.
The architect of the Arkansas Payment Improvement Initiative says the study of finite resources is among "the major influencers on the medical profession: data, which exposes causative agents for bad health; economics exposing the cost of both success and failure; and advancing science that empowers us with new tools for judicious use. These things will transform medicine."
And Arkansas physicians are generally supportive of the state's ambitious payment reform effort because they were invited to help design the new system, David Wroten, executive vice president of the Arkansas Medical Society, told me this week.
"We've included physicians in the ground floor of these programs," he says. "The Medicaid program sought out physician input early on… It's made a difference."
While acknowledging that economics are along for the healthcare reform ride, Wroten insists medicine is in the driver's seat. From the physicians' point of view, the top goal of healthcare reform efforts should be "changing the payment incentives to incentivize the right care," he says. "The end result is better patient care and lower costs."
Investments in outpatient facilities and health information technology systems are helping not-for-profit hospitals overcome revenue setbacks, says a Moody's report.
Not-for-profit hospitals that are investing in ways to deliver value to their patients are shoring up revenues and staving off competitors, according to a Moody Investors Service report released last week.
Value-oriented investments such as in outpatient facilities and fully integrated electronic health record systems are helping not-for-profit providers overcome recent revenue setbacks, including payment rate cuts, reduced inpatient service volume and competition from new entrants in the healthcare market, an author of the Moody's report says.
"A lot of it is about trying to minimize the losses and trying to capture where those volumes are going," says Brad Spielman, vice president and senior credit officer at Moody's. "A lot of this is by necessity… Hospitals are competing with each other and with new competitors."
Addressing the long-term trend of rising numbers of medical procedures being conducted on an outpatient basis, Spielman described explosive growth in hospital-affiliated outpatient facilities. "These outpatient facilities are looking a lot more sophisticated. They're looking a lot more like hospitals," he said. "We're seeing facilities in the hundreds of millions of dollars."
Convenience is a key factor for hospitals to consider as they face competition from new entrants to the healthcare market, Spielman says. "If I can get flu shots and blood pressure tests and have other types of services performed at my pharmacy, that's a more satisfactory office visit… than if I have to take a significant part of my day out for these procedures," he says. "It completely changes the model of healthcare delivery. It's not on the doctor's schedule; it's on the patient's schedule."
In New York, Memorial Sloan Kettering Cancer Center has been investing heavily in outpatient facilities. "They are doing everything but housing patients," Spielman said.
In partnership with The City University of New York, not-for-profit Sloan Kettering has launched an ambitious project in Manhattan to build a 1.15 million-square-foot building on East 74th Streetthat is slated to include a 750,000-square-foot outpatient cancer center. The purchase price of the land for the project was $215 million, according to city officials.
"Many hospital systems began preparing for this shift several years ago by investing in outpatient service centers and urgent care centers," the Moody's report says. "Several communities have seen a marked increase in the number of urgent care centers, large full-service outpatient centers and even stand-alone emergency departments."
Spielman says hospitals, particularly large NFP facilities and health systems, are under tremendous competitive pressure to upgrade their information technology systems.
"In order to be competitive in the future, they need to implement electronic health record systems," he says, adding that a range of benefits can flow from IT investment such as the lower costs of a paperless business environment and quality improvements for patients. "There's one record that follows you. The potential for quality improvement is substantial."
But hospitals need to beware of IT upgrade risks, Spielman says. "You don't actually see an immediate return on these investments," he said, noting it takes time to realize IT gains such as reduced administrative costs and better clinical outcomes.
Successful IT projects have a solid foundation in the culture and medical practices of a hospital, Spielman says. "[EHR] needs to be truly integrated into the way the organization does business…This goes down to the physician level. You have to have buy-in."
The Moody's report suggests that NFP health systems have no choice but to invest in a good-quality health IT system. It is, says the report, "a minimum requirement for organizational success, especially among larger systems."
A surge in spinal fusion procedures has brought mounting scrutiny on providers. Now payers appear poised to crack down on needless procedures by applying coverage pressure on physicians.
Annual US spine fusion surgeries have skyrocketed over the last decade, rising from about 260,000 in 2002 to about 460,000 in 2011, according to federal data. And recent media reports have raised alarms over the proliferation and overuse of spine fusion procedures.
Now CMS officials are cracking down and leading a backlash against unnecessary spine fusion procedures, according to Joseph Gregory, a surgical devices analyst at London-based GlobalData.
"The financial incentives really need to be in there to stop unnecessary procedures," says Gregory, who is the lead author on a spine fusion report GlobalData is set to release soon.
CMS has gotten involved because of "money going to procedures that shouldn't have been done in the first place," he says.
Spine Studies Fuel Millions in Revenue, and Controversy
To receive Medicare payment for spine fusion procedures, physicians are facing several requirements, such as providing imaging results to regulators and documenting three to six months of consecutive therapy before surgery is performed, Gregory said. "If they don't have the documentation, they basically won't be paid by the payer."
GlobalData, in a statement issued recently, forecasts that the coverage pressure from Medicare and other payers will cut into spine surgery growth over the next six years and that "these measures will tamper with the spinal fusion procedural growth rate and subsequently impact the overall market valuation over the coming years."
"While these procedures have experienced Compound Annual Growth Rates of close to 10 percent in the past, this rate is expected to be reduced to 5 percent throughout the forecast period until 2020."
NASS Recommendations
For its part, the North American Spine Society is advising members on best practices. Earlier this month, the group released insurance policy recommendations for 13 spine treatments, surgical procedures, and diagnostics, including lumbar fusion.
The NASS recommendations say lumbar fusion is an indicated treatment for nine conditions such as traumatic injuries. And three conditions—stenosis, disc-related lower back pain and disc herniation—can be treated with lumbar fusion, although some of those cases have contraindicating factors.
Targeting payers and their coverage rules will have a positive impact in helping to ensure spine surgeries are conducted when warranted, says Christopher Bono MD, a Boston-based orthopedic surgeon and second vice president of NASS.
"The NASS coverage recommendations do not directly address any relationships between industry and a surgeon. They do, however, address the indications for surgery," he said.
"If the NASS recommendations are followed, the rates of so-called unnecessary or contraindicated [procedures] should be dramatically lessened. The key determinant is what the spine community, via NASS, have deemed 'unnecessary.' This will likely be a subject of ongoing debate."
Debate about spinal fusion procedures has been simmering for years at the federal Centers for Medicare & Medicaid Services.
According to the Federal Register, the Medicare Coverage Advisory Committee, which makes recommendations to CMS on clinical issues, launched the effort to answer hard questions about spine fusion procedures in the summer of 2006.
At one meeting, the panel sought to review evidence including:
What are the most informative measures of clinical outcomes;
Indications;
Clinical outcomes for the different surgical techniques and components;
Complications;
Harms and adverse events;
Persistence of benefits and harms over time; and, general applicability to the Medicare population in routine practice
A notice on the CMS website shows the federal agency is well aware of the financial impact spine surgery is having on Medicare's bottom line.
Surgeries Will Continue
But Gregory identifies several factors he says will ensure continued growth in spine fusion procedures:
The relatively high number of conditions that have become indicated for spine fusion,
Advances in noninvasive spine surgery, and
Demographics
"Now it's expanded to about 14 conditions," he says. "There were very few when this first started."
Advances in surgical techniques and technology have made spine surgery more attractive than ever to back pain patients, Gregory said, adding the innovations include new medical devices and faster recovery times. "It's a good driver for patients that didn't consider it in the past," he says.
And demographics are a dominant factor, Gregory said: "The aging population is really having an effect. As the population ages, you're going to see a lot more cases of this."
Insurers operating on the public insurance exchanges for individuals will be filing proposed 2015 premium rates over the next month. Early data out of Washington State indicates that anxiety over double-digit rate increases may be unfounded.
In at least one state, 2015 health insurance premium increases on the new public exchanges for individuals will be below rate increases experienced in recent years.
Washington State released proposed premium rates last week. The average proposed rate increase for individual health insurance policies offered inside and outside the state's exchange, Washington Healthplanfinder, is 8.25 percent. The average proposed rate increase for the eight insurers operating on the exchange is 5.4 percent.
The proposed premium rate increase for the state's entire individual market is the lowest requested rate hike in seven years, according to the Washington State Office of the Insurance Commissioner. And there will be more insurers offering health plans through Washington Healthplanfinder next year, with at least three new carriers vying to offer policies on the exchange.
"I'm pleased to see the health insurers show an increased interest in the individual market and to see rates come in relatively low," Insurance Commissioner Mike Kreidler said in a media statement last week. "Consumers certainly deserve more choices, but we will scrutinize the proposed rate changes very carefully."
Interpreting Washington State Data The proposed 2015 premium rate changes from insurers operating through Washington Healthplanfinder are as follows:
Bridgespan Health Company: +1.7 percent
Community Health Plan of Washington: +8.4%
Coordinated Care Corporation: +11.2%
Group Health Cooperative: +11.2%
Kaiser Foundation Health Plan of the Northwest: +0.57%
LifeWise Health Plan of Washington: +8.9%
Molina Healthcare of Washington Inc.: -6.8%
Premera Blue Cross: +8.1%
Downward Pressure
Molina Healthcare of Washington is the only insurer operating on Washington Healthplanfinder that proposed a premium rate decrease for 2015. In Molina's premium rate filing with the insurance commissioner's office, the carrier said two factors were responsible for downward pressure on its rates: the expectation of a rosier exchange risk pool in 2015 and the slowing pace of medical inflation.
"Molina expects the overall acuity of the 2015 Marketplace risk pool to improve relative to the acuity Molina assumed for the 2014 Marketplace risk pool," the carrier states in its premium rate filing.
"The increase in penalties for not purchasing health insurance as well as more public familiarity with the Marketplace should lead to improvements in the acuity of the risk pool in 2015 compared to 2014."
Molina, which is a managed care organization that provides healthcare services for more than 400,000 Washington state residents eligible for Medicaid, Medicare, and Washington Healthplanfinder, says it anticipates a reduction in 2015 medical inflation based on its "Medicaid claims experience."
Upward Pressure Coordinated Care Corporation and Group Health Cooperative requested the largest 2015 premium rate increases on the Washington state exchange, with each seeking an 11.2 percent hike.
In its proposed premium rate filing, Coordinated Care cited several factors that are expected to create upward pressure on 2015 premium rates, including increased utilization of medical services, new taxes and fees on insurers set to go into effect in 2015, and changes in the reinsurance program for the individual exchanges.
"Both the fee charged and the expected benefits will be reduced from 2014 to 2015," Coordinated Care said of the reinsurance program changes.
National Premium Rate Expectations
From the national perspective, premium rate hikes in the public individual exchanges will likely be moderate in 2015, according to John Holahan, PhD, a fellow at the Urban Institute in Washington, DC.
"There will be more plans, not less, and more enrollees. As the numbers increase, the risk pool looks better," Holahan said, adding insurers have strong incentives to offer policies on the individual exchanges next year. "If you were attracted to it in 2014, there's even more reason to be attracted to it in 2015."
He also said fears that previously uninsured exchange beneficiaries would have high medical service utilization rates appear to be overblown. "Deductibles are fairly high, so you're not likely to see a spike in utilization."
Exchanges in states such as New Hampshire, Vermont, and West Virginia are at risk of double-digit premium rate increases due to a lack of competition, he said: "There are a number of markets that aren't particularly competitive that you worry about."
Cori Uccello, senior health fellow at the American Academy of Actuaries, said exchanges nationwide face underlying upward pressure on premium rates. "Every year, health spending goes up, with or without the Affordable Care Act. That's going to be factored in and put upward pressure on rates."
While inflation in medical service costs will affect all insurers operating on the exchanges, there are a host of state-specific market factors that will result in a wide variation of HIX rate increases nationwide, Uccello said. "Overall, rates are going to vary by state and by insurers in states. I really think there's going to be a lot of variation."
CMS officials say they are making changes to the HIX risk corridors program to account for "unexpected administrative costs and pricing uncertainties."
Federal officials have released market standards and regulations for the PPACA exchanges. The final 2015 rule, released last week, includes risk program adjustments crafted to ease upward pressure on premium rates, more robust collection of quality information from insurers, and tighter standards for "navigators" who help people pick the HIX health plan that best suits their needs.
In addition to those changes, the final rule requires health plans to make coverage decisions within 24 hours on essential prescription drugs that are not covered by the plan. It also provides flexibility to states in the administration of the Small Business Health Options Program, within which PPACA exchanges offer group insurance coverage to small employers.
"This rule will help to improve consumer protections, keep premiums affordable, and make additional information available to consumers in the future, such as quality ratings that will help them to better compare and choose plans," CMS officials said in a blog postFriday.
Accounting for HIX Risk
In a fact sheet accompanying the rule's release, CMS officials said they are making changes to the HIX risk corridors program to account for "unexpected administrative costs and pricing uncertainties." The risk corridor changes feature raising the ceiling on administrative costs by two percentage points and raising the floor on profits by two percent.
"Health plans can have more administrative costs and more profits in 2015," says Jenn Kowalski, a vice president at DC-based Avalere Health who leads the company's healthcare reform practice.
She says the final rule also sets new regulations for the exchanges' reinsurance fund. Under the PPACA, reinsurance fees are collected from all health plans to fund the HIX reinsurance fund, which helps health plans offering individual policies on the exchanges pay for costly patient cases. "That's a positive for the plans," Kowalski said.
Michelle Oxman, a health law analyst at Wolters Kluwer's Health Reform KnowlEDGE Center in Illinois, says CMS officials have signaled strong support for the HIX reinsurance program. "In the preamble [of the Final 2015 rule], the agency says that it intends to retain any excess collections to safeguard against shortfalls in future years and that if collections are not sufficient to make the required payments in one year, the amounts due to issuers will be paid from the next year's collections."
Quality Reporting
The final rule boosts quality reporting requirements for health plans. CMS plans to require publication of quality rating information on all PPACA exchange websites before the open enrollment period for the 2017 plan year.Metrics for gauging health plan enrollee satisfaction are among the quality measures to be added.
"It probably will look a lot like the Medicare Advantage stars system," Kowalski says of quality ratings for health plans offered on the exchanges. "It will be organized into domains of related measures, then the individual measures themselves."
Oxman says CMS will be collecting quality data from state and federally operated exchanges to "ensure consistency," but many details of the quality reporting effort have not been finalized. "The agency is still trying to figure out how 'granular' the reporting/rating should be," she says. "For example, should plans be sorted by metal level, as well as PPO vs. HMO?"
Navigator Standards
The HIX rules for 2015 include new regulations "to ensure that Navigators and other assisters are able to carry out their responsibilities to help consumers enroll in insurance coverage while meeting federal requirements for assister programs," CMS fact sheet says.
When the proposed Final 2015 rule for the exchanges was released in March, a CMS spokeswoman confirmed that the navigator regulations were aimed at states such as Missouri and Tennessee that had passed laws to restrict the activities of people assigned to assist HIX enrollees.
Oxman says the final rule strengthens the navigator program internally and externally: "Navigators and consumer assistance providers may be required to produce corrective action plans and pay civil money penalties if the Department of Health and Human Services finds they have violated federal requirements. The limits on states' power to regulate navigators are spelled out a bit more because of the turf war."
Exchange 'Growing Pains'
While CMS officials appear pleased with the evolution of the PPACA exchanges, the Medical Group Management Association raised a red flag on Tuesday.
MGMA conducted research in April to assess the impact PPACA exchanges have been having on group medical practices. The research includes responses from more than 700 medical groups that employ a total of 40,000 physicians.
"Physician group practices are expressing dissatisfaction with the complexity and lack of information associated with insurance products sold on ACA exchanges," MGMA President and CEO Susan Turney, MD, said Tuesday in a media statement.
In a phone interview Tuesday, MGMA Senior VP Anders Gilberg said "there are some definite growing pains" on the exchanges that are affecting physicians. In particular, he said, medical practices are struggling to get information from insurers operating on the exchanges and are facing problems linked to the so-called narrow networks that many insurance carriers established for exchange patients as a cost-containment measure.
Medical practices are being forced to allocate limited administrative resources in often fruitless efforts to contact insurers about health plan deductibles and insurance eligibility verification, he added. "It's critical for the providers to talk with patients about cost sharing," Anders said, explaining that many exchange participants have opted to purchase health plans with deductibles that result in high out-of-pocket expenses.
Anders said narrow networks have been a major source of frustration for MGMA members. "Even if you are in a network, the referrals you used to make are much harder. Our groups and physicians are not denying care, but they want their patients to get the most out of their insurance."
MGMA plans to conduct another survey of its members in the fall to see whether the growing pains on the exchanges are persistent or improving.
Evergreen Health is the only health insurance cooperative that employs physicians itself rather than link to provider networks. Evergreen embraces telemedicine and offers a wide range of services through primary care medical homes.
Peter Beilenson, MD, MPH
CEO of Evergreen Health Photo: Har Sinai Congregation (Facebook)
Innovation is the central issue in economic prosperity.—Michael E. Porter
For many years, Peter Beilenson, MD, MPH, has advocated for single-payer financing of US healthcare.
Now, he runs an insurance company.
Beilenson is president and CEO of Evergreen Health, one of two dozen insurance cooperatives formed with support of the Patient Protection and Affordable Care Act. Evergreen is the only PPACA-spawned cooperative with a health services delivery network.
The health plan business model at Evergreen is closely tied to the PPACA individual and group exchanges. Doctors are salaried in Evergreen's healthcare delivery system, which has been formed with the primary care medical home model. Evergreen medical homes embrace telemedicine and offer a wide range of services including primary care, wellness programs, home monitoring of chronic diseases such as diabetes, and preventative services.
The average size of an Evergreen primary care physician's patient panel is about 1,400. Nationally, the average is 2,200, according the Center for Excellence in Primary Care at the University of California, San Francisco.
Evergreen has its roots in the Healthy Howard Plan, which Beilenson helped launch in 2008 as the top health officer in Howard County, MD. Healthy Howard targeted 2,000 uninsured individuals. The plan offers primary care with a monthly premium of about $65. In addition to affordable rates, the plan features face-to-face health coaching.
Beilenson, who earned his medical degree at Emory University and master's degree at Johns Hopkins, schooled me on Evergreen and its sister co-ops in an interview earlier this month.
HLM: How does a health insurance cooperative work?
PB: It's a nonprofit health insurance company with the majority of the board made of members. … We are unique among the 23 co-ops in that we have a health system. We raised several million dollars on our own to create our primary care system. … The other 22 basically have networks of providers.
HLM: Where do co-ops fit in the patchwork quilt of reform efforts under the PPACA and other federally driven healthcare reforms?
PB: I think of it more as a Rube Goldberg cartoon, but the quilt analogy works. … Where there is a co-op in a state with an exchange, co-ops are driving down costs 10 to 15% because of competition. The market presence of another competitor has reduced costs.
HLM: Before Evergreen, you formed the Healthy Howard Health Plan. What did you learn that you have applied at Evergreen?
PB: We didn't know that healthcare reform was even going to happen in 2007. … Using the patient-centered model is clearly the way to go. … Access to doctors up to midnight made a huge difference in triaging people away from the emergency room. At Evergreen, we've had a tiny number of emergency room visits.
HLM: Are co-ops such as Evergreen good fits with particular markets or can they thrive in the broader, national health insurance market?
PB: We definitely feel our model is replicable regionally and nationally. … The states should be the incubator of change, and the federal role is to support and kick-start what's happening at the state level.
HLM: Can a patchwork quilt approach to transforming US healthcare succeed? What happens if it fails?
PB: I would guess this will eventually lead to a single-payer system. They really didn't bend the cost curve. … The federal government and states will either bend the cost curve or the system will move to a single-payer model because the costs will just be too difficult to sustain. … A single-payer system is the most equitable.
HLM: What are the benefits of establishing medical homes?
PB: Basically, you want someone to coordinate your care. Primary and preventive care are not provided by specialists. … Specialists are very important but they focus on one part of the body. Our primary care medical homes are actually more robust than a primary care center.
HLM: Are you confident or cautious about the 2014 beneficiary pool at Evergreen?
A multidisciplinary medical task force of the North American Spine Society is recommending best clinical practices for more than a dozen spinal treatments, surgical procedures, and diagnostics. The information is being shared with health plans.
"These are coverage recommendations that have been vetted extensively," says Christopher Bono, MD, an orthopedic surgeon and second vice president of NASS.
The recommendations, released this month, cover 13 treatments, surgical procedures, and diagnostics, such as cervical artificial disc replacement (CADR) and lumbar fusion. They include clinical criteria that indicate whether or not a particular kind of spine care is indicated for a patient with specific diagnoses and symptoms. NASS is expecting to release 14 more coverage policy recommendations.
The Burr Ridge, IL-based organization's coverage task force, which helped craft the recommendations featured "the whole gamut" of spine health professionals including surgeons and radiologists. "It's a product that's different than anything NASS has done before," says Bono.
The chief of spine service at Brigham and Women's Hospital in Boston, Bono says improving transparency in spine care is a top goal of the NASS recommendations. "The status quo has been insurance companies developing their own coverage policies," he said, characterizing NASS's traditional role in the process as reactive. "NASS would see a draft and it was not always clear how the policies were set."
A key directive to the NASS coverage task force was to apply the principles of evidence-based medicine. "For most things that we do, fair coverage will be based on published data," Bono says.
In the past, when the evidence was not available or not clear, the task force followed the "reasonable man theory" of the US justice system as its guide. "We tried to strike that balance on those procedures where data was absent," he said. "We tried to present what a reasonable spine surgeon would think is appropriate."
For example, the NASS recommendations portray cervical artificial disk replacement as an "emerging/emerged technology" that appears capable of achieving results similar to cervical fusion procedures.
"Though not currently to be considered the standard of care for treatment of degenerative cervical disorders, [CADR] has shown promising results in the available data, indicating at least equivalence to cervical fusion following adequate decompression," The NASS guidelines say.
Bono said it will take time for the NASS recommendations to have an impact in the marketplace. "I would anticipate this is a five- to ten-year project," he said. "It's going to take multiple patients and multiple years to see if this makes a difference."
The Boston-based surgeon says early contacts with payers about the recommendations have been encouraging. NASS shared the organization's lumbar fusion recommendations with United Healthcare officials about seven months ago. "The feeling was quite positive," he said. "They made some requests to make it more useable."
Another payer, Cigna, is also weighing in on the NASS recommendations. David H. Finley MD, Cigna's national medical officer for enterprise affordability and policy, says the NASS guidelines should help the insurer set insurance coverage guidelines.
"Cigna appreciates the recommendations from NASS and will take them into consideration," he said. "Most of Cigna's coverage policies are reviewed annually and our decisions are based on a thorough study and analysis of the latest scientific evidence. We also consider guidance from medical societies."
Joseph Gregory, a surgical devices analyst at London-based GlobalData, says the NASS recommendations are a positive contribution to the spine surgery field, which has drawn scrutiny over explosive growth in spine fusion procedures. From 2002 to 2011, the annual number of US spine fusion procedures increased 77 percent, rising from 260,000 surgeries to 460,000, according to the federal Agency for Healthcare Research and Quality.
"They're a fantastic initiative by NASS," Gregory says of the new recommendations, adding the International Association of Spine Surgeons has released similar guidelines to "promote education on payment."
Gregory, who has been working on a spine fusion report that GlobalData is set to release soon, says the "The level of detail [in the NASS recommendations] is really great. "The breadth is definitely there."
In a prepared statement released with the spine care coverage recommendations, NASS President William Watter III, MD, MMS, MS, said better guidance is needed in the field for several reasons. "Maintaining patient access to high-quality, evidenced-based and ethical spine care is the single most important part of NASS' mission," he said.
"It is our hope that payers, spine specialists, and their patients will use these evidence-based coverage recommendations as a reference to advocate for appropriate care for patients."
At least $42 billion of the $2.8 trillion US healthcare industry is up for grabs as new market entrants from Walmart to technology start-ups seek a slice of the pie, according to a new study.
In a trend that threatens to upend the healthcare industry, new market players are capitalizing on freshly empowered consumers and the drive to create a value-based medical services delivery system, according to a new PricewaterhouseCoopers study, "Healthcare's new entrants: Who will be healthcare's Amazon.com?"
"There are huge openings for these new entrants to disrupt the healthcare sector," Ceci Connolly, managing director of PwC's Health Research Institute, said Tuesday during a webinar on the study. "In overwhelming numbers, consumers are willing to abandon old models for more efficient, convenient care. … We are seeing this go far beyond flu shots."
The key findings of the study are:
Two dozen of last year's Fortune 50 companies are new entrants to the healthcare market
New entrants are driving "democratization and decentralization" of healthcare, which is boosting access to medical services
Consumers' growing insistence on price and transparency presents an opportunity to new entrants and a risk to traditional healthcare organizations
New entrants are not only seeking a share of the $2.8 trillion medical services market but also "reshaping and expanding the $267 billion US fitness and wellness industry"
The new entrant study's lead author, Trine Tsouderos, a director at PwC's Health Research Institute, says a consumer survey served as "the heart of our report." The survey asked consumers whether they would be comfortable receiving medical services outside of a traditional setting or with new "virtual technology" options such as smartphone apps and telemedicine. The medical services in the survey ranged from a routine electrocardiogram to dialysis.
A significant finding of the survey is that 45% of respondents said they were likely to choose the new options for outpatient care and services historically obtained in physician offices. "People were very open to doing these in new ways," said the study's lead author, Trine Tsouderos, a director at PwC's Health Research Institute, during the webcast.
New dialysis options drew the most tepid consumer response, with 26% of respondents embracing options such as home dialysis.
Tsouderos says the consumer survey also gauged "the money at stake" for traditional healthcare organizations. She said $42 billion is a "conservative number," noting 2011 data indicates new entrants had the potential to vie for more than $64 billion in medical services.
New entrants, new payment models
Lack of experience in the healthcare industry—particularly with complex payment systems—is the largest obstacle for nontraditional players trying to establish niches in the market, Connolly says. Some new entrants are building their business models without public and commercial healthcare payers in the mix, she says. Other new entrants are establishing partnerships with traditional players.
An example of a new entrant is San Francisco-based CellScope Inc., which markets technology that turns a smartphone into a digital otoscope. The technology allows parents to conduct diagnostics at home to determine whether a child has an ear infection.
Connolly says CellScope decided against working with payers entirely on its CellScope Oto product. "They are hoping to market that directly with consumers," she says.
An intriguing new-entrant partnership has been formed between Oakland, CA-based Kaiser Permanente and retailer giant Walmart. In California, the companies are opening Kaiser Permanente Care Corners, where patients can have a private teleconference with a doctor or nurse, with a vocational nurse on-site to collect vital signs and other data that can be sent to Kaiser Permanente physicians. The Care Corners sites also generate referrals and offer medical advice for conditions including asthma, diabetes, and joint pain.
Kauffman said providers and payers alike should take notice of the way new entrants are utilizing telemedicine. "This is here to stay," he said. "It's important for all the stakeholders to get together and figure out how … to deliver some of these telemedicine solutions."
Meeting new capacity and expectations
Brian Kim, senior vice president of account management at Southboro, MA-based ikaSystems, says the PwC report's findings reflect what he is seeing in the marketplace. "Of course there are going to be these new entrants. People want to get into this business because there is tremendous opportunity."
Kim says the millions of people who have gained health insurance over the past year represent not only a new pool of customers but also a chance for new entrants to help address an anticipated capacity shortfall. "There's going to be incredible stress on the delivery system," he says. "You need additional capacity to serve the population. … The key disruption is the uninsured."
For example, the Kaiser Permanente Care Corners at Walmart are "about increasing capacity for a population that probably didn't have coverage before and probably went to the emergency room to get care," he says.
David Schultz, president of Albany, NY-based Media Logic, a healthcare marketing firm, believes the enhanced role of the consumer in healthcare is the key that has opened the door for new entrants. "The entire industry is due for a major upheaval," he said after Tuesday's webinar. "Once you've made consumers actual buyers, their whole set of expectations has changed."
US consumers are still learning the healthcare industry ropes, but their interest in price and transparency is a game-changer, Schultz said. "Their needs will be met by entrepreneurs," he says.
