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.


Calling Mr. Watson

By Kim Bellard, October 24, 2011

I was going to write something about the recent controversies about the PSA test or Pap test, but the effort by the U.S. Preventive Service Task Force to use documented evidence in determining the value of periodic testing seems almost certain to be overcome by the combination of tradition, emotional responses, and self-interest by impacted parties, so I’ll let that go for another day. 

Instead I’ll turn my attention to one of my favorite topics, the use of technology to improve the delivery of health care services. 

I’m enough of a science-fiction fan to believe that I should be able to get medical advice and consultation whenever and wherever I am, from an appropriate expert (or at least a qualified person with real-time access to any necessary expertise), using real-time biomedical and other readings.  I’m glad to say that this is rapidly moving from science fiction to reality.

Earlier this month, California passed AB 415, the Telehealth Advancement Act.  The bill updates California’s prior telemedicine law, and makes various improvements to allow wider use of telehealth in California.  It allows broader use by more types of providers, removes rules requiring documentation of barriers to in-person visits, and eliminates restrictions on reimbursement for services provided by email or telephone, among other things.  The bill’s proponents claim it should save up to $1.3 billion per year to the state’s Medi-Cal program, much of which comes from electronic home monitoring programs for patients with diabetes or potential heart failure. 

Several studies (e.g., University of Texas Medical Branch and UnitedHealth Group) argue for telehealth’s particular value in care delivery for rural populations, where access to in-person services may be especially problematic.  Again, closer monitoring of patients with chronic conditions is cited as an opportunity for improved care and lower costs. 

Meanwhile, the Mercy health system has announced plans for what it calls the nation’s first “virtual care center”.  It will bring together a variety of existing and planned telehealth programs, such as the Mercy SafeWatch program.  This program is an electronic ICU, monitoring 400 beds in 10 Mercy hospitals to provide around the clock support from specialists and ICU nurses to the bedside practitioners.  Mercy plans to spend $90 million on building the center and another $590 million in technology to support their multiple initiatives. 

Similarly, Washington Health Center, in Washington D.C., announced CodeHeart, a mobile application it developed in conjunction with AT&T.  It allows cardiologists to view video and test results while a critical care patient is in transit, allowing them to better prepare for the patient’s arrival in the emergency room, where time is usually of the essence.

It’s no surprise that telehealth is a hot topic.  Manhattan Research claims that 75% of physicians own an Apple mobile device – iPhone, iPad, or iPod – and 26% of U.S. adults have used their mobile phones for health information and tools.  Mobile is rapidly becoming crucial to telehealth, supplementing prior video-conferencing capabilities.

The barriers to telehealth are no longer technological, since the increased availability of broadband connections and more robust mobile platforms have made possible a wide variety of options.  The real barriers are artifacts of historic practices, especially related to reimbursement and licensing.

Reimbursement for telehealth remains uneven.  Medicare, for example, covers some telehealth services, and is expanding its rules for 2012, but still does not do so uniformly.  For example, it is more favorable to beneficiaries in rural areas than in urban areas, and only covers live interactions, not so-called “store-and-forward” methods used for images and certain other patient information.  Fourteen states require private payors to cover telemedicine, but the rules are not consistent across states, nor do they necessarily speak to reimbursement equivalence. 

Licensing is an issue because health care practitioners are licensed by the state in which they practice.  Telehealth, of course, is not bound by geographic location, but under current laws providers in one state cannot treat patients in another state unless they are licensed in that state.  Practicing in multiple states thus is onerous

Both of these issues can be overcome, but it will not be easy.  Most private payors follow Medicare’s lead in reimbursement policies, so if and when Medicare makes progress in how aggressively it wants to use telehealth, the private sector should follow.  The reluctance of payors is understandable; the practice of telehealth is still in a relatively early stage, and many payors are concerned that paying for telehealth could lead to an explosion in costs.  In an ACO world, where ACOs have strong incentives to live within a global budget or budget target, employing the use of cost-effective telehealth services should seem entirely logical.  In a predominantly fee-for-service world, perhaps not, or at least not necessarily. 

As for licensing, state licensing agencies are not surprisingly reluctant to cede oversight.  They can justifiably claim that patients could be at risk by treatment from practitioners over whom they have no control and no assurance of competence.  While valid, we seem to be able to conduct inter-state commerce in other fields without abandoning consumer protection.  It argues for more uniform licensing practices and reporting across the states, lessening any particular state’s concerns.  Indeed, the American Telemedicine Association has launched an initiative – – to make licensure more appropriate for 21st century capabilities and practices, including telemedicine.  E.g., why should my access to the best doctors be subject to my physical location?

Licensure will become even more problematic with the evolution of expert systems or artificial intelligence.  This is starting to become real; take, for example, the recent collaboration between Wellpoint and IBM’s Watson technology.  For readers not familiar with Watson, it is the system that beat the Jeopardy champions of champions.  Wellpoint plans to use Watson to help suggest treatment options and diagnoses to doctors.  With so much medical knowledge, and with that knowledge increasing exponentially, such assistance seems inevitable, not to mention highly desirable.  Still, at what point will that kind of assistance be considered practicing medicine?

History buff may recall the apocryphal story that Alexander Graham Bell uttered, “Mr. Watson, come here – I need you” into the first working proto-telephone, launching the era of electronic voice transmission.  It seems ironic, yet somehow fitting, that Watson may again be critical to launching of another technological revolution.


I = Innovation

By Laurie Gelb, October 17, 2011

If you thought the 80's were "the Me Decade," consider these the "Me, Myself & I" years. Introspection is in, singly or in groups (witness the Occupy Wall St. Movement).

What does this have to do with managed care? Depends on who's doing the managing (or thinks they are).

A top tier disease management vendor's intake form currently includes the following question:

Do you currently have any of the following conditions:

[list of 12]

where the list includes cancer, pregnancy, poor circulation, heart attack and stroke, among others, in seemingly random order.

So just as they're signing up for a program that invites unknown strangers into their care, the first thing that [mostly seriously ill, some terminal] patients learn about their disease manager-to-be is that it's insensitive to the distinctions between acute and chronic, and between clinical and colloquial dx. There is no clue as to what, if anything, a given patient should write in the "other specify" field.

What exactly would "currently having" a heart attack or stroke mean? That you should call 911, of course. So the first thing you've learned is not to take DM communication literally. It's only a short step to take it for a joke, like most of your mail.

Nor does this invitation reminder letter explicitly mention that program signup is optional, not mandatory. In fact, it finesses the difference "introducing the program...part of your health benefits coverage..." If I were the plan sponsor's risk manager, I'd feel a bit squishy.

So the promise on the accompanying letter that "Your health is important to us" (appearing once on each side of the paper) is ringing a bit hollow, no? And our introspective, seeking-the-good member is blatantly being treated like a number, a bundle of [poorly] specified conditions, from intervention day one.

There isn't a simple declarative, personal, conversational sentence in this enrollment package. The signature is in cursive typewriter font, in the proudest tradition of 1970. I've signed thousands of letters to document I cared enough about someone's behavior to wield a pen my own self.  (And yes, there are scanners, too.)

So as you expend your resources and your members' time, goodwill and wellbeing on DM, consider that for every condition listed in a vendor's portfolio, there is a SNF, a clinic, a university program, an industry pilot, a health system, a single clinician whose DM is state-of-the-art. I'm not talking about 7-8 figure CER, AHRQ style, but the one-patient-at-a-time evidence base that can blossom into something new and improved.

For example, one psychologist (whom I'm proud to say taught me Psych101 eons ago) directs translational research into innovative Alzheimer's care that has been successful in several facilities. To what extent would moving the needle on AD progression and sequelae in any setting benefit your organization and/or anyone you care about?

The corollary question is whether you have appropriate resources allocated to find and leverage this essential intellectual capital. You know that incents -- from money to recognition -- can move the needle when little else can (and let's not pretend the wormy apples of P4P or buy-me pharma grants are the same thing).  If and when you spark something real, that helps create competitive advantage that in turn adds to brand and ally equity.

Did you notice Wendy Schmidt's contest to find better tech to clean up oil spills? The winning team tripled the "industry standard." When they asked the contestants why they hadn't tried these new approaches before, the responses boiled down to, "No one else [e.g. oil company clients] cared. Everyone felt they were doing OK."

What's in your MCO's wallet? Maybe the down payment on improved outcomes for millions.  All it takes is an I for innovation.


Top 5 reasons that members ignore disease management messaging

By Laurie Gelb, October 10, 2011

1.  It's inaccurate and/or inapplicable. "Our records indicate that you have not filled a prescription for ... [recently sent to pt continuously on drug for 8Y w/ no sampling] Reverse-gender content is common. 

Variable data printing is a wonderful thing! Information can be stratified by database variables such as gender, age, zip, fills, dx and more. And it's much better to present the information standing free than the usually-unnecessary but still Orwellian "our records [about you]."

If VDP won't work, segregate stratified info and ID it with a revealing heading, so members can skip past it easily. A general newsletter directed toward all household members can do this, although it's time to question the ROI of this approach. PR, podcasts, videos, etc. should be target-specific and clearly titled, for the same reason. 

2.  It's wordy. Most Americans do not read a daily newspaper, nor read extensively in their daily activities. Data suggest the reading ability and habits of even college grads have declined. A full-page, single-spaced letter is seldom digested in full, let alone acted on. 

Use active verbs and state the facts, using gradual reveals even in print.  "For recipes and tips, call 800 VEG 4NOW or go to" Footnote or link the legalities rather than filling the page body.

3.  It's condescending. "You may feel that eating five servings of vegetables is too difficult, but did you know that a 6 oz glass of tomato juice is one full serving?"

Best practice: a sidebar or callout with examples of popular, little-known or tasty veg choices, without airing your assumptions about people you've never met. 

Stock photos of happy, multiracial people clusters, whether in print or on line, are a similar turnoff. Perfect people can't get sick. Picture something from real life that matters (examples in our next installment). 

4.  It's impersonal. "Some patients may..." 

Best practice: Use "you" if/when it makes sense. "You may feel dizzy, nauseated and even vomit after your first dose of an x drug."

5.  It's contradictory. Messaging about the high sodium in tomato juice has appeared adjacent to praise for vegetables and their juices. Fruit juice often suffers from the same fate. 

Choose your core objectives based on member and epi data and follow through. One well-supported message makes more impact than four throwdowns. And "lower-sodium" can modify every mention of tomato juice. As for fruit juices, recent evidence is more positive, apart from drug interactions to avoid, so why not give them their due?


Each of these reasons is a way to ice the dialogue before it begins. Does the car salesman approach you and say "You look like a luxury buyer" or "I'll bet you can barely afford a beater"? No, she generally asks what you have in mind, because that's her quickest path to a sale. The more interaction, the more specific the stimuli you can present. Content that's personalized, urgent, relevant and engaging (PURE) drives behavioral change.


More, Please

By Kim Bellard, October 2, 2011

Private health plans – everyone’s favorite scapegoat – are getting rolled.  They might as well get used to it.

Kaiser Family Foundation released its annual Kaiser/HRET Health Benefits Survey, which showed that health insurance costs increased 9% for family coverage – over $15,000 per family annually.  This compares to last year’s more promising 3%.  Single coverage was up by an equally daunting 8%.

What struck me was Kaiser’s estimate that health care reform accounted for 1-2 percentage points of the increase.  It’s a good thing for the Administration, then, that the overall increase was as large as it was, so that the effects of health reform couldn’t be blamed for a larger share of the private sector health spending increases.  Whether that proportion is one-ninth or one-third of the total, though, it’s still a lot of money.  Private health insurance expenditures are on the order of $850 billion, so that 1-2% increase is a cool $8.5 - $17 billion hidden tax increase annually.  And it’s only starting. 

Just a few days ago, there were various news reports trumpeting the success of Affordable Care Act (ACA) in getting more young adults coverage, via the requirement to cover dependent children up to age 26.  Both the CDC and Gallop released findings validating the increase in coverage, estimated at some 900,000 more young people with health insurance.  But insuring these young adults has a cost.  The Kaiser study reported 20% of firms have covered young adults due to the law, an estimated 2.3 million adult children.  The difference between the 900,000 and the 2.3 million suggests a majority of those adult children might have obtained coverage on their own rather than through their parent’s insurance.  If I were an employer trying to cover my health insurance costs, I might be kind of mad about that.

Kaiser also reports that the ACA impacts are just starting to be felt.  Seventy-two percent of employers still had “grandfathered” plans, which have not yet been fully subject to ACA requirements.  Among those requirements are coverage for specified preventive care services without deductibles or cost-sharing.  Last month we saw one shoe drop in this regard, when HHS announced the list of services considered preventive for women’s health.  The services include not just birth control, but also, among others, HIV screening and counseling, breastfeeding support and supplies, and domestic violence screening and counseling – all very worthwhile services, but not all ones traditionally seen as either preventive in nature or covered by health insurance.  Then again, the federal government is requiring the private sector to pick up the costs, so serving political or social justice goals becomes part of the equation.  The Wall Street Journal reports that Catholic organizations are, not surprisingly, already upset with the requirements about contraception, and it will be interesting to see how special interests play out against other special interests in achieving ACA’s goals.

It’s going to be very tempting – too tempting – as ACA moves forward, for more special interest groups to lobby to get their services covered at no cost-sharing to the consumers.  No cost-sharing to consumers, of course, doesn’t mean no cost; it all has to get paid for somehow, and it all adds up.  We’ve been down that road with state mandates for health insurance, except that under ACA there are no jurisdictional escape routes for employers or health plans. 

Critics of health insurers, of whom there is no shortage, blame the 9% increase on health insurers trying to make their money before they are required to hit the loss ratio and disclosure requirements of AAPCA.  Those critics might want to note that Kaiser also reports that 60% of covered workers are in self-insured plans, so their argument loses much of its force, as these firms have no incentive to raise their costs any higher than necessary.  Self-insured or not, employers provide the vast majority of private health insurance, and they are struggling to afford it.  They are not an endless piggybank to be used for political purposes. 

The only “good” news about ACA I’ve seen lately is that the Administration is finally being forced to be more honest about the CLASS long term care program.  Skeptics of this program, including me, argued that the program was not structured to be sustainable. It was included as a tribute to Senator Ted Kennedy and as a way to count the program’s initial years’ premiums as revenue in the bill’s cost – rather than reserving them to pay for promised benefits.  Now it appears that HHS may try to not implement the program, having gotten rid of the actuary assigned to work on it and reportedly planning to close down the CLASS Office.   I feel bad for the people who might have benefited from CLASS, but as a taxpayer I’m relieved that we might not have jumped off this particular cliff yet.  

It remains to be seen if the 9% increase in costs is an aberration or the start of an ominous trend.  As the various ACA changes more fully impose direct costs on private health plans, and as providers continue to cost-shift to private payors due to worsening Medicare and Medicaid payment shortfalls, the prospects for holding costs down are grim.

Bad as they are, the cost increases could be worse.  Consumer Reports found that 48% of consumers are skimping on prescription drugs or other forms of medical care, up from 39% last year.  Presumably costs might be higher if patients didn’t “skimp” on health care, which included delaying a doctor’s visit or declining a test.  Of course, this concern about “skimping” on health care should be counterbalanced by questioning whether all of the recommended care was needed.  A recent study found that 42% of primary care physicians think their patients get too much medical care, driven in part by malpractice concerns and ordering tests rather than spending more time with patients (see my previous blog on addressing this).  They thought sub-specialists were even worse in this regard; 61% thought sub-specialists provided too much care.

The fact of the matter is that we still don’t know how to tell what care is needed and what isn’t, and ACA hasn’t helped accomplish that.  Yet.

Perhaps HHS will get the ACO regs right, and ACOs will flourish.  Perhaps EMRs and meaningful use will quickly yield the desired paybacks.  Perhaps the exchanges will be a boon for consumers and health plans alike.  Perhaps, perhaps, perhaps; the big problem with ACA was that it focused primarily on how health insurance is financed, not on making structural changes to how we deliver and pay for health care.  Until we do the latter – health plans, better open your wallets (and by “your wallets,” I mean “spend our money…”)!