Medicare Releases Timeline for Penalty and Bonus Program

Medicare has announced that the quality care model for doctor reimbursement, formerly known as the value based purchasing plan, will go into effect over the next few years. The program will shift medicine away from its current payment system in which doctors are most often paid for each service regardless of their performance. Instead, Medicare will begin to gradually factor quality of care into reimbursement payments for hospitals, nursing homes, physicians, and most other medical providers.

Medicare has already decided that large physician groups, classified as those with 100 or more doctors, nurses, social workers or other health professionals, will gain or lose as much as 1 percent of their pay starting in 2015. Those incentives would double to 2 percent the following year under draft regulations Medicare released this month.

The proposal also would phase mid-sized physicians groups, those with between 10 and 99 health professionals, into the program in 2016 instead of in 2017 as previously proposed. While they would be eligible for bonuses up to 2 percent, they would be shielded from any penalties for that first year.

In 2017, the program would add the remaining doctors in practices of nine or fewer professionals, about 350,000 doctors, according to Medicare’s estimates.

The program would alter quality measures by specialty but many of the of the measures will check to see how often doctors follow basic medical approaches. At least at the start, physicians will be able to select which of Medicare’s measures they want to be judged by. In determining bonuses and penalties, the government also plans to take into account how much each doctor’s average patient costs Medicare, in order to encourage a more judicious use of testing and more aggressive efforts to avert hospitalizations.

Many hospital and medical groups have been advocating for Congress to repeal the provision over fears that the two percent penalty will harm doctors, while the two percent bonus will not provide enough incentive. Groups are also watching movement on the fight to repeal the Sustainable Grown Rate formula, which is supposed to calculate the annual payment rate before the penalties and bonuses. Congress passes a “patch” each year to avoid the SGR cuts.

The original article by Kaiser Health News in collaboration with The Washington Post can be found here. 

Committee Questions Data Security in Insurance Marketplaces

The House Oversight and Government Reform Subcommittee on Energy Policy, Health Care and Entitlements expressed concerns over security systems that will accompany the healthcare insurance marketplaces in October. The committee is referencing the marketplaces extensive data hubs, but according to the Obama administration, the hubs will not contain customers’ personal data.

Centers for Medicare and Medicaid Services (CMS) Administrator Marilyn Tavenner told lawmakers that the hub is a routing tool, not a database, and also noted that the application for insurance in the marketplaces does not ask for personal health information. The marketplace IT system will not access or store health information beyond what is routinely used when someone applies for Medicaid, for example. Further, the deputy chief information officer at CMS emphasized that data would only be stores in the hub for a matter of minutes.

The concerns of committee members also extended to how the administration is setting up and testing the hub before it goes live. While the Department of the Treasury is testing the hubs, Alan Duncan, assistant inspector general for security and information technology services, expressed some concerns that the final round of testing would not be done by the launch date of October 1, 2013.

Committee Chairman Darrell Issa (R-CA) also questioned a CMS contract with a British company, the Serco Group, to help handle applications for health coverage in the federally run exchanges. The group is being investigated by the British government in connection with its billing practices, and Issa said the Federal Bureau of Investigation found that the company’s computer system has been hacked, putting Social Security numbers at risk.

The full article is available via CQ here.

House Ways and Means Committee Asks for Input on Medicare Proposals

In their continued focus on Medicare, the House Ways and Means committee asked for public comment Friday on draft legislation prosing three modifications to Medicare’s benefits system that were made by the Obama administration. The committee, which has a Republican majority, didn’t necessarily endorse the proposals, but still published them for comments until August 16^th.

As reported by CQ, the Congressional Budget Office estimates that the three proposed changes would save more than $60 billion over 10 years. The changes would increase premiums that wealthier beneficiaries pay for services under Medicare Parts B and D, increase the deductible for Part B services, and create a copayment for home health services. Without and changes, the Medicare Trustee Report projects that the trust fund will become insolvent by 2026.

The bill would also increase the lowest income-related premium from 35 percent to 40 percent, and increase the premiums for other income brackets, with a cap of 90 percent at the highest tier. Income thresholds associated with those premiums until 25 percent of beneficiaries are subject to the higher premiums would also be maintained. The proposal would apply a $25 increase to the Part B deductible in 2017, 2019, and 2021 for new Medicare beneficiaries, and would add a new $100 copayment for home health episodes for new beneficiaries beginning in 2017.

Currently, beneficiaries are not required to make a copayment for home health services, which are paid based on a pre-determined daily rate for each 60-day episode of care. The copayment would be preempted if the home health episode was directly preceded by a hospital stay or inpatient post-acute care stay.

Committee Holds SGR Replacement Mark Up

After stating last month that his committee would take up legislation replacing Medicare’s Sustainable Growth Rate formula (SGR), House Energy and Commerce Committee Chairman Fred Upton (R-MI) has scheduled a meeting on the matter. The Energy and Commerce Health Subcommittee has set a markup for a new bill addressing the SGR for next Monday.

According to CQ, the subcommittee markup will be the first in several years on a plan to repeal the SGR and institute a new system for Medicare reimbursements to doctors. Upton confirmed the markup Monday in an interview.

The sustainable growth rate, or SGR, was enacted by the Balanced Budget Act of 1997. The formula is intended to ensure that the yearly increase in expense per Medicare beneficiary doesn’t exceed the volume increase of the country’s gross domestic product (GDP). Four factors are taken into account, including the estimated percent change in fees for physicians’ services, the estimated percent change in the average number of Medicare fee-for-service beneficiaries, the estimated 10-year average annual percentage change in real GDP per capita, and the estimated percentage change in expenditures due to changes in laws or regulations. According to ModernHealthcare, the formula also includes a “clawback” mechanism that reduces Medicare fees if overall spending targets were exceeded the previous year.

Each year, Congress passes a ‘patch’ or ‘doc fix’ to avoid the cuts required by the SGR. This bill framework would totally replace the current SGR with an enhanced fee-for-service system, while allowing providers to opt out and participate in alternative payment models. In the fee-for-service program, providers would get payment updates and incentives based on how they met specified quality measurements.

The House Ways and Means Committee may also take up possible fixes, as they have direct jurisdiction over a number of potential payment offsets. 

EHR Savings?

Nearly half of all physicians in America still rely on paper records for most patient care, according to Kaiser Health News, and time is running out to take advantage of the government incentive payments. Even with the payments and the administration touting the increased efficiency and portability of EHRs, a new study shows that the savings may take years.

The study, reported on by MedPage Today, found that using electronic health records (EHRs) saved a little more than 3% in ambulatory health costs 18 months after adoption, but didn't reduce overall inpatient costs.

Researchers examined monthly costs in commercial payers from 15 months before implementation to 18 months after implementation, with a total of 48,000 patients in the EHR group and 130,000 in the control group. Practices involved were mostly small and a mixture of primary care and specialty.

Providers with the EHRs saved an average of $5.14 per member per month over the 18 months after implementation, representing a 3.40% savings. Ambulatory cost savings accounted for $4.69 of that amount. Health costs rose with both the EHR and non-EHR groups, but they did not rise as fast with the EHR group. Critics argue that the study only looked at 18 months after implementation, and that the savings builds with increased time.

Even with incentive payments and cost savings, no matter how small, buying an EHR system is challenging. The market exploded when the federal government started offering doctors those incentive payments. There’s closer to a thousand products out there to sort through in order to find the right system, and time is running out. The government said that those who don’t go digital will face payment penalties in the future.

CMS Releases Guidance on Marketplace Navigators

As the Affordable Care Act progresses, health insurance marketplaces are set to open for citizens in all states in two and half months. Last week, the Centers for Medicaid and Medicare Services (CMS) released the final rule that outlines the training and duties of a marketplace “navigator.” You can read more about the navigators in the May NAHAM New article “Healthcare Assisters verses Navigators.”

In short, the navigators will be charged with providing expert advice on a wide range of issues to people signing up for insurance coverage under the health law. According to CQ, the rule requires navigators in the federally run marketplaces to go through 30 hours of training before they can start helping consumers. The rule also outlines standards for certified application counselors, who will also help people with their questions about how to get coverage. Navigators and certified application counselors will be providing help in the 33 states that will be served by the federal insurance exchange or that will be partnering with that exchange. The remaining 17 states are setting up their own such marketplaces and will provide help, at least initially, through what are known as “in-person assisters.”

Navigators, certified application counselors, and in-person assisters must be knowledgeable about qualified health plans, insurance affordability programs, tax implications of enrollment decisions, eligibility for premium tax credits and cost-sharing reductions, and other topics.

The states running their own exchanges can establish their own, more rigorous qualifications and requirements is they choose. 

New Smartphone Apps for Mental Health

There has been a wave of new medical smartphone apps released recently, designed for purposes from electronic health records management to patient self-diagnosis. Going forward, the Boston Globe is reporting that developers are testing the waters with apps that are designed for treatment, especially designed around mental health.

So far, most of the apps released have been games that are largely focused on the ability to be mindful, aware, and alert. One game called “Project Eco” allows players to explore new worlds with the goal of helping to sharpen cognitive functions, including being more mindful and engaged. The game simultaneously rewards players by having them collect stars, gems, and alien specimens as they play, enticing them to play again.

In another game, called “DepressionQuest,” players click through the deeply realistic narrative of a first-person character, making choices for the character about work, friends, and family. The game shows options for dealing with depression, such as seeking therapy, medication, or reaching out to friends. Still other games keep track of a player’s attention span, reaction times, and decisions to assist in diagnosis.

Developers hope that these apps might one day supplement therapy and support groups by putting mental health care into patients’ homes or pockets.

But not all psychologists are accepting the new diagnostic and support tools. Critics point out that most of the games haven’t gone through rigorous testing to see whether they work, or whether they might inadvertently harm patients. They also say that the makers aren’t yet allowed to make health claims for their products.

Drugs must be approved by the federal government and states license many therapists, but games are unregulated.  According to a spokeswoman, the US Food and Drug Administration plans to require approval for only a small subset of Web or mobile medical apps that may present potential harm to consumers.

Still, as NAHAM News reported last month (The Wave of Smartphone EHR Apps), the medical app trend doesn’t seem to be subsiding any time soon.

EHR Adoption Steady but Slow

Physicians are continuing to adopt electronic health records at a steady pace, but more work is needed to have those systems communicate with each other. This is according to two studies published Tuesday in Health Affairs magazine.

The first study used data about EHR adoption from the National Ambulatory Medical Care Survey. The sample size was 10,302 physicians with a response rate of more than 89%. Researchers found that solo practitioners' EHR adoption rate grew by more than 127% from 2010 to 2012, but that they were still half as likely to have a basic EHRs as those in groups with 11 or more physicians. Specialists were less likely than primary care physicians to have adopted basic EHRs in 2012, unchanged from 2 years prior. Finally, basic EHR adoption among physicians 65 and older doubled between 2010 and 2012, but that age group was still the least likely to have a basic EHR. The study defined a basic EHR as having seven capabilities including recording patient history and clinical notes, viewing lab results and imaging reports, and using computerized prescription ordering. Overall, the study found that the number of EHR adopters was up from just over 25% in 2010.

The second report, also published online in Health Affairs, focused on information exchange. Researchers found that 30% of hospitals and 10% of ambulatory practices participated in one of 119 health information exchanges in 2012. These numbers were more than double the 2010 statistics. For this study, researchers surveyed 322 organizations who could potentially engage in a health information exchange. The exchanges promote interoperability, or the ability of EHR systems to throw and catch patient data between health systems or between hospitals and physician offices, or between physician offices and labs or pharmacies.

Interoperability within the industry remains a challenge for the healthcare industry, according to the National Coordinator for Health IT at the Centers for Medicare and Medicaid Services. A survey last year found 71% cited interoperability as a major barrier to further EHR implementation.

You can view the original article from MedpageToday here, with links to both studies. 

Administration Delays Employer Insurance Mandate

Last week the Obama administration announced that it will delay implementation of a part of the Affordable Care Act that requires businesses with 50 or more employees to offer their workers health insurance coverage. Instead of going into effect starting in 2014, employers will now have until 2015.

According to Kaiser Health News, administration officials said that the delay was in response to employers’ concerns about the law’s reporting requirements. A statement by an IRS official said that delaying the law’s "employer responsibility" provision would give employers more time to comply, and would give the government more time to consider ways to simplify the new reporting requirements consistent with implementation the law.

As of now, 94 percent of companies with over 50 employees already offer health insurance, but the scope and costs of the plans can vary widely from company to company.

Most people are taking the announcement in stride. Families USA, a pro healthcare non-profit, said that they don’t expect the change to have a major impact on the overall expansion of health insurance coverage. Other employer groups were pleased with the decision.  The National Retail Federation, the U.S. Chamber of Commerce, and the National Federation of Independent Business all praised the announcement, making statements saying that the delay will allow businesses to have more time for rule clarification before being fined for non-compliance.

On the Hill, Democrats have been slow to respond. Some of the health care reform law’s strongest supporters are treading carefully before making any statements. A spokesman for Senate Majority Leader Harry Reid (D-NV) said that “flexibility is a good thing. Both the administration and Senate Democrats have shown -- and continue to show -- a willingness to be flexible and work with all interested parties to make sure that implementation of the Affordable Care Act is as beneficial as possible to all involved. It is better to do this right than fast." Valerie Jarrett, a senior advisor to the President, echoed that mentality in a White House blog post.

Republicans are using the delay to point out flaws they see in the law. House Speaker John Boehner (R-OH) said that the delay was "a clear acknowledgment that the law is unworkable, and it underscores the need to repeal the law and replace it with effective, patient-centered reforms."

Sen. Orrin Hatch (R-UT), the ranking member of the Senate Finance Committee, meanwhile noted that the delay takes the issue past the 2014 congressional elections.

Preparation led to Effective Treatment after the Boston Bombings

Preparation for unexpected events is crucial in a hospital setting. Early last month, NAHAM News wrote about the role that Electronic Health Records played in maintaining consistency and aiding treatment in the aftermath of the Moore, Oklahoma tornados (Electronic Health Records Prove Useful in a Disaster). In this week’s Physician’s Blog, the Joint Commission emphasized that point in an article where emergency medical physician Dr. Daniel Castillo writes about how physician’s preparations before, and actions after the Boston bombings can be applied to other emergencies.

Dr. Castillo pointed to Dr. Paul Biddinger, the medical director for emergency preparedness at Massachusetts General, who happened to be working at one of the medical tents set up along the marathon. In an interview with Bloomberg Businessweek, Dr. Biddinger stated that “[For] a couple of people who went to the operating room first, truly minutes mattered. If this hadn’t gone smoothly – from the marathon itself, to the transport, to the care in the hospital – had not every single step been perfect, they would have died…we have a couple of people that lived because the system worked the way it did.’’ 

From this real world emergency situation, Dr. Castillo concluded that simulated exercises are necessary so that all involved are familiar with procedures and ready to go in the event of an emergency.

The Joint Commission outlines processes that must be in place to help manage these rare, yet catastrophic events. They report that their Emergency Management chapter has been built over the years by gathering experts in the field as well as communicating with, and learning from, organizations that have previously had to mitigate these disasters. Their emphasis is always on planning. Planning allows the organization, along with its community, to put together a comprehensive Emergency Operations Plan (EOP) that can then be tested several times each year.

Fortunately, these tragic events are uncommon, but it is only through training that hospitals can be prepared, and preparedness is crucial when every second counts. 

House Committees Eye SGR Replacement

It’s looking likely that at least one committee in the House will take up the issue of the replacing the SGR before the August recess.

The sustainable growth rate, or SGR, was enacted by the Balanced Budget Act of 1997. The formula is intended to ensure that the yearly increase in expense per Medicare beneficiary doesn’t exceed the volume increase of the country’s gross domestic product (GDP). Four factors are taken into account, including the estimated percent change in fees for physicians’ services, the estimated percent change in the average number of Medicare fee-for-service beneficiaries, the estimated 10-year average annual percentage change in real GDP per capita, and the estimated percentage change in expenditures due to changes in laws or regulations. According to ModernHealthcare, the formula also includes a “clawback” mechanism that reduces Medicare fees if overall spending targets were exceeded the previous year.

The SGR formula produced a 4.8% pay cut to physicians in 2002, resulting in an outcry from providers. Since that time, Congress has suspended the SGR, or passed a patch for all Medicare physician fee cuts required by the formula. The repeated delays in payment reductions have produced the need for a larger and larger reduction each year. The latest required cut is 24.4% from Medicare physician fees, set to take effect Jan. 1, 2014. The increasingly large cuts needed according to the SGR, and the repeated patches or suspensions that Congress has had to pass, has resulted in many lawmakers talking about repealing the SGR and replacing it with a different formula.

At a conference last month, House Energy and Commerce Committee Chairman Fred Upton (R-MI) confirmed that his committee intends to take up the issue. The Energy and Commerce Committee and the Ways and Means Committees are both pivotal to overhauling the payment system. CQ reported that at the conference, Chairman Upton told reporters that the committees were on the same page.

This comment may soothe some rising concerns that the committees are moving on different timelines, at least temporarily. Ways and Means has direct jurisdiction over a number of potential payment offsets, which likely won’t be decided until much later this year when Congress considers debt limit legislation. However, Ways and Means Health Subcommittee Chairman Kevin Brady (R-TX) has said that his subcommittee will have a “laser focus” over the next month on finding the right replacement. Energy and Commerce aims to report out a bill soon resolving the policy details concerning what reimbursement approach should replace the SGR.

Neither committee has made public any specifics on what would replace the SGR. 

A Year After, States still Undecided on Medicaid

It’s been one year since the Supreme Court struck down the provision in the Affordable Care Act (Obamacare) requiring states to expand their Medicare programs. As a result of the ruling, expansion became a state by state decision, and the federal government could only offer incentives to entice states to participate. Expansion, according to the law, would open up coverage to seniors with an income of up to 138 percent of the poverty level. After a year, and with many states entering their new fiscal year on July 1, there are still a number that have not yet decided on expansion.

There is no deadline for states to decide, so the remaining states can decide to expand coverage at any time, or states that decided not to expand coverage can change their mind. The longer a state waits, however, the more federal dollars they lose out on. According to CQ, the Centers for Medicare and Medicaid Services will cover all of the costs for newly eligible adults for the first three years, but that rate phases down afterwards. In 2020, the federal matching rate will decline to 90 percent for all states, where it is supposed to remain.

This map from the Advisory Board Company shows where each state has come down on expansion. As of mid-June, there were 26 states participating in the coverage expansion, and one state (New York) leaning toward participating. Of the remaining states, 13 have actively said that they will not expand coverage, and six more are leaning that way. Four states are pursuing alternative models.

Advocates for expansion have not given up yet, and are hoping to see more states come on board or change their minds in the next few years. They point to states like Ohio, where the legislature seems likely to pass an expansion. State officials in Ohio have warned that implementation can take six months, but some advocates believe that implementation can happen by January 1, 2014.

The other states that seem likely to implement the expansion, or reverse their decision not to, include Florida, Indiana, New Hampshire, Michigan, Pennsylvania, and Tennessee.