Tea Party Losing Stranglehold on GOP is Good News for Medicare
As Washington, DC's sports team suck so badly, this time of year politics is our smashmouth football, and I am loving this GOP primary season! It's had everything so far: a thorough vetting of the candidates (hasta la vista, Govs. Perry, Huntsman and Pawlenty), high drama (Palin and Christie indecision; the Iowa caucuses squeaker), sex (awesome Cain and Gingrich salaciousness), some crazies (Ron Paul, Bachmann -- especially her husband), and even Medicare fraud (see the Gingrich Super PAC slam piece on Romney, "Blood Money")! And now: after a stunner in the SC primary, Newt Gingrich's fast fade in Florida is the latest indication that the Tea Party is losing its grip on the GOP. And that's good news for Medicare, with a monster deficit reduction package looming in 2013.
Endorsements this weekend from Tea Party darlings Cain and Palin and the support of the Tea Party Express have not lifted Gingrich back over Mitt Romney in the Florida polls, where as of a day before the primary Gingrich trails by 5-20 points. If Romney wins Florida and goes on to clinch the nomination in the coming weeks, it will serve as further proof of the declining fortunes of the far-right wing of the party: many of the Tea Party freshmen House members are struggling to make their fundraising goals, and several are behind in their own reelections. They'll always be noisy, irrational, anti-establishment problem children for the GOP, and now it looks as if there will be many fewer of them next year. House Speaker John Boehner, in a private moment, must be weeping Merlot-induced tears of joy for a change -- he can start looking forward to a more governable caucus next year.
The implications for Medicare of a declining Tea Party faction in the House are clear. Medicare is the single-largest contributor to the national deficit, and if there's a cohesive cause among Tea Party members it must be deficit reduction. Less influence for the Tea Party means less pressure for draconian cuts and systemic reforms to Medicare.
Maybe we can have a sane debate on the merits of the Ryan or Wyden proposals next year -- and a permanent fix to Medicare physician reimbursement, instead of a replay of the fiscal kamikaze mission the Tea Party forced the GOP into during last summer's debt ceiling debate. That episode not only drove the US to the edge of default and cost the nation its triple-A credit rating, but crushed American confidence like few recent events and nearly tipped the economy back into recession.
There's no chance we'll see a substantive deficit reduction package in an election year, which means the voters will decide national budget priorities at the ballot box this November. That means a monster deficit bill in 2013, where we hope cooler heads will prevail with fewer tri-corner hats on the House floor.
Health Care Innovation Challenge
Today applications for the Center for Medicare and Medicaid Innovation (CMMI) Health Care Innovation Challenge grants are due. There is a lot of money on the table --- $1 billion. And many health care organizations are in the final stages of writing detailed proposals that describe innovative programs that will add new jobs and improve the quality of Medicare and Medicaid services at a lower cost. It is huge job to prepare these applications and applicants are not paid. The proposals must provide a blueprint of how a fragmented and inefficient health care system can be transformed. And right in the middle of the grant writing process the Congressional Budget Office released an issue brief describing how difficult it is to change the health care system. The CBO report concluded that most of the past Medicare demonstrations on Disease Management, Care Coordination and Value-Based Payment have failed.
It takes leaders with vision and optimism to undertake the huge task of trying to turn the Titanic of Medicare spending around. There is definitely an opportunity to achieve success since we know that there are huge inefficiencies that result in unnecessary spending, possibly up to 30 percent of costs. We also know that quality can be improved. The CBO report found some programs succeeded in reducing costs, for example through reduced hospital admissions and bundled payments. The Innovation Challenge grants are designed to be rapidly deployed and begin improvements within six months. Hopefully this challenge will be more successful.
The Cost of Care: "How high can premiums go?"
One of the less publicized requirements of the Accountable Care Act is the requirement of health plans to spend at least 80-85% of the premium dollar on medical services. Aside from the expected discussion of what qualifies as a medical expense, under the previously mentioned medical expense target, health plans that submit "excessive" rate increases will be required to justify any premium increases that are viewed excessive in light of the 80-85 percent MLR target, and will run the risk of State or federal government regulating or rolling back the premium increases.
So why am I blogging about this? What does this have to do with ACOs or redefining how health care is priced and delivered? Well, think about it. If as a health plan I am now required to spend 80 or 85 cents out of every dollar collected on "medical expenses", then I have 20 to 15 cents to pay for everything else. Depending on my profit margins set by my board or others I have to:
a) operate very efficiently;
b) have a very cooperative relationship, (clinically and financially) with my providers;
c) have the tools necessary to properly risk profile my members, to ensure that the member receives the right services from the right practitioner without excessive cost, and
d) create a customer service environment which not only attracts new members to my plan, but retains those members year after year once I have them in the plan.
Getting all that accomplished requires decision support tools (such as a the risk assessment tool), closely alligned provider relationships, clinical and financial integration and appropriate broker, consumer and provider education.
Meanwhile the provider community is faced with increasing consumer and payer demand for efficiency, accountability for quality, and timely and convenient access to services at a reasonable price. All necessary - but difficult to achieve objectives - given the prevailing practice patterns. Programs like ACO development, innovative payment approaches like bundled payment, and "cross over" provider payer initiatives like the Consumer Operated and Oriented Program and the CMS Health Initiatives program, are some of the tools available to Providers by which to achieve healthcare delivery redesign.
Come and talk to us about how we can help you strategize, identify tools and create strategic partnership with providers, vendors and other health industry stakeholders to meet your financial and medical service provision goals and to apply for and implement the programs mentioned above. We always have opinions and suggestions, and more importantly considerable expertise in the areas discussed based on successful client interactions that have spanned all aspects of the healthcare industry.
Our approach to providing the healthcare industry with business and strategic solutions is guided by a belief that there is a solution for every problem encountered --some might even be out of the box and unconventional ... but that's the idea. Think about it.
Election vs. Supreme Court on Health Reform
In my travels many I've spoken with about health reform's future seem to have the impression that the Supreme Court's consideration of the individual mandate is where the law will live or die. Think again -- the American electorate will have far more sway over the future of the ACA than the 9 Supremes ever will.
Think of it this way: the Justices are only considering the constitutionality of the mandate; voters are considering the whole shebang, and every GOP candidate has sworn to scrap the entire law. In many ways, November 2 is a referendum on whether to implement the ACA, even though it's barely registering as a campaign issue. As a general proposition, if Obama gets re-elected, the ACA moves forward in 2014; if he loses, it's dead.
Front-runner Mitt Romney has pledged to repeal the law, and his advisors are figuring out just how much dismantling could be done through the White House and HHS, without congressional action. A new president and HHS secretary would have enormous power to slow-walk the law during their first year in office. That's when HHS will have to finalize all the regulatory details for the state or federal health insurance exchanges where many consumers will buy coverage after 2014.
It's unknown whether the Senate or House will be controlled by Democrats, who could hinder legislative efforts to repeal or defund the law. Even if they lose control of the Senate, Democrats may still have enough votes to be able to slow down or block efforts to repeal ACA.
If Democrats retain the White House and control both chambers of Congress, implementation could move forward, and they could even pass a law amending the health care reform legislation to make the mandate a tax, which would largely clear it of its constitutional hurdles.
It appears that even if the Supreme Court ruled against the individual mandate in June, the damage probably would be limited. The 26 states are asking the court to strike the entire law, but most legal experts think that's unlikely. Most analysts say that if the court strikes down anything, it would either get rid of the mandate alone or, at most, the mandate with some of the insurance industry reforms and regulations.
The court's ruling could have an impact on state implementation, however: states have to prove to HHS by early 2013 that they have the basics in place if they want to run their own health exchanges; otherwise the federal government would do it. Some states have said they won't do anything on an exchange until they know whether the law is constitutional. "If it is upheld, the states that have been reluctant may look at this and say, ‘You know the odds of the Republicans winning the presidency as well as [both chambers of Congress] is not so high that we should stop all implementation efforts,'" said Tevi Troy, an adviser to the Romney campaign and a former deputy HHS secretary who opposes the law. If a state were to get started after a ruling in June, it might have time to meet the deadline. But the states can't wait until November to decide.
So the Court's upcoming ruling certainly matters to the future of health reform -- it's just that the election matters a lot more. Stay tuned.
Welcome to Another Year of Gridlock in DC
- Obama is narrowly re-elected and Democrats maintain leadership of the Senate: weakened President, weakened Democratic margins (Dems are defending 23 Senate seats this year vs. 10 for the GOP, so they'll certainly lose seats) = more gridlock.
- Obama is narrowly re-elected but Republicans win the Senate: badly weakened President with no control over legislature: worse gridlock. For the record, I 'm thinking this is the most likely outcome this year.
- Obama defeated and Republicans win the Senate: Democrats throw themselves on the partisan hand grenade to prevent GOP from undoing Obama's legacy like health reform -- worse gridlock. I consider this to be the least-likely outcome this year.
All of this argues that no matter what happens in November, the partisan divide in Washington is likely to widen -- and that signals this may be our "Lost Decade" like the Japanese suffered in the 90s, with a political class unwilling and unable to meet their legislative responsibilities as the country goes further into the economic ditch. That means Medicare and Medicaid continue to run amok as uncontrolled entitlements, further depressing US creditworthiness and pouring fuel on the national deficit fire. Not a pretty picture, no matter who's getting inaugurated a year and a week from now.
It seems the only safe bet these days is to count on Congress producing another goose egg in solutions to what ails our nation.
Your Risk Adjustment Road Map
Where are you going? And how quickly are you getting there?
The risk adjustment model is evolving rapidly because of RADV, EDPS, and your health plan competitors.
Health plans and medical groups are moving from a chart review model to the premier member knowledge & engagement model. Your transformation should look like this if you have PFFS, PPO, or HMO products:
• Early Model: 1.7 charts reviewed per member with no member evaluations
• Next Model: 0.65 charts reviewed per member with 5-15% member evaluations targeting
• Goal Model: 0.30 charts reviewed per member with 60-85% member evaluations targeting
• SNP Goal Model: 0.50 charts reviewed per member with 100% member evaluation targeting (we will blog more about SNPs soon, due to their unique nature)
This not only offers you more timely and accurate revenue but, more importantly, member information for a comprehensive plan of treatment which should reduce gaps in care and highlight care management needs for the patient population.
If you have questions or need to remodel your strategic plan or budget, we have a client roadmap module to transition your risk adjustment program without impacting accurate revenue or blowing your budget.
Berwick Redux? Recess Appointments Could Derail Tavenner Nomination at CMS
A Risk Adjustment Road Map
Where are you going? And how quickly are you getting there?
The risk adjustment model is evolving rapidly because of RADV, EDPS, and your health plan competitors. Health plans and medical groups are moving from a chart review model to the premier member knowledge & engagement model. Your transformation should look like this if you have PFFS, PPO, or HMO products:
• Early Model: 1.7 charts reviewed per member with no member evaluations
• Next Model: 0.65 charts reviewed per member with 5-15% member evaluations targeting
• Goal Model: 0.30 charts reviewed per member with 60-85% member evaluations targeting
• SNP Goal Model: 0.50 charts reviewed per member with 100% member evaluation targeting (we will blog more about SNPs soon, due to their unique nature)
This not only offers you accurate, more timely revenue but, more importantly, member information for a comprehensive plan of treatment which should reduce gaps in care and highlight care management needs for the patient population.
If you have questions or need to remodel your strategic plan or budget, we have a client roadmap module to transition your risk adjustment program without impacting accurate revenue or blowing your budget.
2012 has a lot in store
2012 will be a busy year for GHG and our clients. The first Legislative agenda item will be the Medicare physician Sustainable Growth Rate (SGR) fix. The 27 percent physician fee schedule cut has only been postponed for the first 2 months in 2012. The big question is how the Congress will choose to pay for the doc fix. Medicare Advantage cuts were on the table briefly as part of the House discussion, but the House ended up cutting Medicare payments to hospitals to cover their one year fix.
The Innovation Center has a lot of activities on the docket for 2012. 32 Accountable Care Organization (ACO) Pioneers are starting this month and organizations that are interested in the ACO Shared Savings model must submit their applications by January 20, 2012 for an April 1, 2012 start date or March 30 for a July 1, 2012 start date. Some of the applicants for the Shared Savings program will also be submitting an application for the Advanced Payment ACO model. Applications for the Health Care Innovation Challenge grants are due January 27 for the first round and if the $1 billion is not fully awarded there will be a second round of applications due in the summer. Due to the large provider response, CMS has extended the deadline until April 30, 2012 for applications for the Bundled Payments for Care Improvement program for models 2 — 4.
CMS will release the Advance Notice of MA and Part D Payment changes and the Call Letter around February 17 with final rates and the final Call Letter issued in April. We would also expect CMS to issue final regulations for MA and Part D Benefit Programs for CY 2013 in the first quarter of 2012.
Applications for new Medicare Advantage plans and service area expansions for CY 2013 are due February 23, 2012 followed by bids on June 4, 2012.
Work will continue on implementing meaningful use and the Medicare Advantage and provider value based purchasing initiatives that reward quality and penalize failure to meet targets.
On the Health Care Reform front the first six months of 2012 will focus on the Supreme Court review of the ACA. Oral arguments will begin March 26 and a decision is expected in late June. States will continue their work on developing the infrastructure for the Exchanges. CMS must certify that sates have made sufficient progress by January 2013. The Exchanges will go live in October 2013 for coverage and subsidies to begin January 1, 2014.
HHS will develop a back up federal Exchange for states that aren't certified. The federal government is also building a data hub to support the Exchanges that will link Social Security, IRS and Medicaid data to facilitate eligibility and subsidies.
CMS will have to issue final regulations and guidance on policies that will govern the Exchanges. While states will have flexibility on the Essential Benefits that plans must offer in the first two years, additional regulatory guidance is expected from HHS.
The presidential election in November will underscore future changes that we can expect, especially in the area of Medicare reform and additional budget cuts. Most observers expect the big cuts to start in 2013. The conventional wisdom is that it won't be the 2 percent sequester for Medicare that was passed in the Budget Control Act of 2011 but substantially higher cuts to both the public and private Medicare plans.
Capitation in Accountable Care Organizations
If you don't already subscribe, we suggest you check out Accountable Care News, an online publication focused specifically on Accountable Care Organizations.
I published an article in the December 2011 Issue that covers capitation in accountable care organizations. A sample issue of the publication is here. For a full copy of the article, click here.
Enjoy!