Obama Kicks the Hornet's Nest on Medicare
The President laid out his recommendations on Medicare and Medicaid to the Congressional Super-Committee on Tuesday: about $320 Billion's worth, mostly retreads of long-standing recommendations from other budget-cutting panels like Bowles-Simpson. Kaiser Health News has the details in their Wednesday story. The White House fact sheet on the President's proposal can be found here.
Obama really kicked the hornet's nest on this one -- and may have forfeited the political gift of House Budget Committee Chairman Paul Ryan's broadside to Medicare just a few months ago. Obama's taking lumps, as you'd expect, from Congressional Republicans, who in their outright refusal to look at revenue raisers, are setting up for Debt Ceiling Battle Royale Redux. But now AARP, AMA and the hospital lobby, just to name a few, are piling on.
The President gave a long-overdue impassioned plea in the Rose Garden yesterday, with the exclamation point of a veto threat for Republicans if they try to close the budget gap purely with cuts. The problem is, he's giving Democrats very little raw meat to line up for, only pain. Sure, Obama backed off the idea of raising the eligibility age for Medicare to 67, explicitly tied entitlement and tax reform, and didn't cut as much from Medicaid. That may placate his base. But not much.
I suspect he's going to have a hell of a time getting his own caucus to line up for him in the coming weeks. And my money's on an epic fail by the Super-Committee, resulting in sequestration in December -- and that's a more favorable outcome for Medicare Advantage and Part D.
P.S. I'll be talking more about this and other issues on the national stage at the Opal Medicare Advantage Strategic Business Symposium, September 26-27. Click here for more details about that event.
Marketplace snapshot: Integrating quality and risk adjustment
Just a short note about a Webinar we did last week, hosted by MCOL, and focused on the integration of quality and risk adjustment.
While discussing the relationship between risk adjustment and quality for health plans, we asked three questions during that drew some interesting answers:
First, we asked about the Star ratings of the participants. As it turned out almost all the attendees were from 4 Star or better plans. The message I took from that is the plans that are already doing well on quality measures are determined to do better.
The second insight was that 2/3 of the attendees had already integrated their Stars/HEDIS with their risk adjustment departments. The good ones have figured out that risk adjustment and quality are inseparable.
Finally, ¾ of the attendees had not yet incorporated data collection for HEDIS and Stars into their prospective member evaluations. That strikes me as a missed opportunity, but these are good plans and I suspect that will change.
So the rich get richer and work smarter. I guess that should not be too much of a surprise.
Last week at AHIP: How are you sleeping lately?
We heard a lot about STARS and compliance, about integration and collaboration. But what should be keeping you up at night? EDPS and RADV extrapolation.
Sean Creighton said that EDPS compliance and accuracy may affect your STARS rating and Jonathan Blum shared that the RADV extrapolation equation is under review but will be released soon. EDPS compliance will be extremely important but won't be a single source of information until 2013, due to the dual submission in 2012. RADV extrapolation is extremely impactful now today.
Are you confident about your program?
• Confident in your <20% HCCs submitted due to medical review chart?
• Confident in your <10% HCCs submitted due to member evaluations?
• Confident in your >70% HCCS submitted due to claims based HCC?
It is not just about revenue or suspect lists. You have to have:
• compliance plan for risk adjustment
• chart and assessment warehouse
• an annual mock-RADV audit (for charts & member evaluations)
• reconciliation step for RAPS and EDPS
• claims submission scrub
Sleep well.
Medicare Advantage Premiums Down, Enrollment Way Up in 2012
We've long said on these pages that all the predictions of the demise of Medicare Advantage following passage of the ACA and its steep cuts to the program were premature. Finally, confirmation from CMS: MA premiums will fall another 4% in 2012, and enrollment will grow by a brisk 10%.
The news was delivered Friday by Jonathan Blum, deputy administrator for the Centers for Medicare and Medicaid Services. Blum said health plans are also lowering co-payments and deductibles. He attributed the premium drop to the agency's strong negotiations with plans as well as the plans' continuing desire to serve the market.
Some color commentary on Blum's announcement:
- Government programs (Medicare and Medicaid in particular) are the only segments of the insured that are growing. MA, for instance, will grow over 7% this year, topping 12.5 million beneficiaries. Part D is approaching 20 million enrollees;
- Publicly-traded companies like MA leaders Humana and United are now dependent on Medicare, deriving twice their earnings from the program than they did a decade ago (average publicly-traded health plan earnings from Medicare in 1999: 13%; today, 26%, with some like HealthSpring and Universal American over 70%. Bottom line: the big boys ain't going anywhere.);
- Over 40% of beneficiaries aging into Medicare have enrolled in MA plans the last two years, indicating the Boomers are a much more plan-friendly population than the World War II generation given managed care trends in the commercial market (HMOs, PPOs and POS plans represent more than 90% of all insured Americans).;
- Market-leading plans are adapting to the challenges of the ACA by offsetting its payment cuts with intense focus on Star Ratings quality bonuses and mastering the new state of the art in risk adjustment: the prospective home advanced evaluation. It's working, enabling plans to hold the line on benefits and premiums, and maintaining the attractiveness of these products vs. Medigap or traditional Medicare.
As long as the Congressional deficit Super-Committee doesn't fire another broadside at MA plan payment rates this fall, 2012 is shaping up to be a VERY good year.
Obama Submits (Medicare) Proposal to Super-Committee Today
The Congressional deficit "Super-Committee" formally began its work last week, and President Obama is expected to release his deficit reduction proposal today at 10am EDT. The President's plan is expected to seek as much as $3 Trillion in savings -- including, most notably, the new "Buffett Rule" establishing a new tax bracket for millionaires. The plan also includes $320 Billion in health savings over the next decade including $248 Billion in Medicare (would add 3 years to the trust fund) and $72 Billion in Medicaid cuts. The plan calls for exempting existing enrollees from some changes.
Proposed changes to Medicare are not expected to take place until 2017, and would only kick in if Republicans agree on certain revenue raisers. The President's proposal is no longer expected to include an increase in the eligibility age. Medicare cuts would mainly come from providers (reduce bad debt and graduate medical education payments, align rural providers payments with the cost of care, encourage efficient post-acute care) and by increasing Part B and D payments for higher-income beneficiaries, and discouraging certain Medigap plans. Details to come following the announcement.
We remain convinced that the best-case scenario for Medicare Advantage and Part D plans is that the Super-Committee fails to vote out a proposal (7/12 margin required), or that Congress fails to pass the plan by at least a majority vote. This would trigger sequestration, an across-the-board 2% cut to Medicare payments to providers and plans. Those cuts would hit 2013-2017, and are likely less severe than any proposal voted out of the Super-Committee.
And what about the "doc fix" -- reform of the Sustainable Growth Rate? It remains the biggest indirect threat to MA rates. Docs are facing a 29.5% cut in their fee-for-service Medicare payments starting January 1 unless Congress intervenes. Failure to address it could mean MA rates take a 7-8% hit beginning in 2013. The Medicare Payment Advisory Commission (MedPAC) plans to make recommendations for payment cuts to the health care sector that would help offset the cost of a long-term Medicare physician payment reform plan. At its meeting in Washington last week MedPAC outlined the plan, which included a freeze in reimbursements for primary care physicians and reimbursement reductions for specialists.
Stay tuned and watch this closely as the Super-Committee reconvenes on September 22nd. While MA plans "gave at the office" in health reform with around $130 Billion in cuts, we're not out of the woods yet for a second round of payment reductions.
My Talk at AHIP's Medicare Conference
I had the pleasure of addressing a standing-room-only crowd at the AHIP Medicare conference yesterday, sponsored by our friends at TMG Health, our 4th year together there. That speech always keeps me on my toes, especially this year -- a tough, smart audience that demands a tough, smart message on how to survive in the new Age of American Austerity. Here are the main points of what I said:
- Volatility and Accountability will define the sext several years in Medicare. Volatility: rates, the Medicaid dual eligible explosion, the Congressional "Super-Committee", industry consolidation, and the 2012 elections. Accountability: it's already here. Star Ratings bonuses, minimum MLR regulations, compliance, rate reviews, RADV audits, and Accountable Care Organizations.
- The State of the Union in Medicare Advantage (MA) and Part D is strong. All predictions of the demise of the program following health reform were wildly premature. MA will grow about 7% this year, and over 40% of beneficiaries aging into Medicare have chosen MA in the last two years. Local PPOs with the drug benefit integrated remain the product of the future in MA, as do Special Needs Plans given the tsunami of dual eligibles -- a $300 Billion market alone. We think MA will pass 15 million members by the end of 2015.
- Medicaid managed care is risky (BIG) business. We've already seen major awards this year in TX, LA and KY. CA is prepping the biggest RFP in US history: 150,000 duals in plans by end of 2012; all duals in plans by end of 2015: a $21 Billion opportunity. WA, FL, NH, NE, MI and HI are all preparing to move duals into plans.
- Volatility: many of us thought we "gave at the office" in health reform when the ACA whacked over $120 Billion from MA rates over a 7-year period. There's more austerity to come from the Congressional "Super-Committee" on the debt. Best case scenario? The Super-Committee fails, sequestration occurs, and we get hit with a 2% cut in 2013, 2014 and 2015, compounded. And what about the "doc fix"? If they don't fix the SGR and docs take a 29.5% cut in Medicare reimbursement in 2012, MA gets hit by about 7% in 2013, and the beneficiaries take it in the shorts. Bar the exits! Consolidation is intensifying in both payer-payer transactions, and payer-provider deals like United/Monarch (CA). And then there's the elections. My money as of today is that Obama gets re-elected by the narrowest of margins, Democrats lose the Senate, and we have another 4 years of economic doldrums with the HUGE exception of the ACA's implementation in 2014.
- Accountability: it's already here, a cornerstone of the ACA. It's embodied throughout, in Star Ratings bonuses, Accountable Care Organizations, with growing incentives for chronic care improvement, member satisfaction, and compliance. The cornerstone is transparent data reporting. Berwick's legacy will be his embedding the "Triple Aim" in the DNA of CMS. And CMS says it will terminate MA plans with less than 3 stars for 3 years running. A "good" star rating is not a hedge against the rate cut: it is an existential issue -- and a management revolution.
- What to Do?
- Aggressive revenue management in the near term. Master risk adjustment and audit-proof the function by embedding it where it belongs in Medical Management, move from claims extracts and chart reviews to Prospective in-home Evaluations, and be a Star Czar.
- Care coordination and chronic care management over the mid-term (3 years). It will take years to see results, but this is what it's all about in the mid-to-long-term. High-touch with the frequent flyers.
- Commit to a Culture of Compliance. The regulator is the purchaser, and you keep this account happy by following their rules. To. The. Letter.
- Revisit the service model and move from reactive to proactive. Health care is still a service business and Boomers are tough customers.
- Establish and Invest in Medical Homes, Accountable Care Organizations, and Exclusive Provider Organizations. In the end, it's all about the docs.
Questions? You can always reach our team at ghg@ghgadvisors.com.
PS Join me for another talk September 25-26 in Arlington at the Opal Events MA Strategic Business Symposium. Complimentary passes are still available today.
Get your money's worth
When I was a kid, we would jump on those tiny merry-go-arounds outside of stores or those little goofy race cars in Toys R Us and my dad would shake them. Yes, it is true.
He refused to put the 25 cents in to move them mechanically. He would just shake them and after a while we'd jump out. It wasn't worth the 25 cents to him.
Well, what would my dad (or your dad for that matter) say if he knew you were paying $300, $400, or even $500 for a member evaluation and not linking it to gaps in care to improve your HEDIS, STARS, and member plan of treatment, or using they to trigger medical management? In a recent webinar we asked health plans the following questions:
Question #1: Does your health plan use your member evaluation findings to do member outreach to reduce gaps in care?
The Answer: 30% Yes
70% No
Question #2: Do you utilize your member evaluation findings to trigger referral to complex, case, or disease management?
The Answer: 60% Yes
40% No
The member evaluation is a great way to collect clinical, demographic, administrative, and quality of care information. You are paying for it; make sure you are getting your money's worth. We hope next time we asked this question the answers are 100% Yes.
Note: CenseoHealth CEO Jack McCallum is speaking on September 13th on a webinar hosted by MCOL that addresses this topic even further. Register here to join us for this event: Integrating Risk Adjustment and Quality of Care Initiatives
GHG hosting Revenue Forum Oct 6-7 in Las Vegas
Your payment is coming down. Your blood pressure is going up.
• How are you planning to mitigate the coming payment reductions?
• Can we make the difference up through efficiencies alone or do we need to look to top-line solutions, too?
• What strategy have you developed to integrate revenue management into operations?
• When will we know if what we're doing is working?
Join Gorman Health Group Oct 6-7 in Las Vegas, for an exclusive event for MA health plan senior leadership, with responsibilities for finance, revenue management, and risk adjustment. We will share the best ideas we've heard from around the industry as well as our own thoughts for practical strategies for driving revenue.
This forum will offer actionable insight regarding:
• Performance optimization and efficiency
• Must-have investments in your STARS programs (that are often overlooked)
• A redesigned risk adjustment program that drivers higher, more compliant revenue
• A moving target: The components of capitation
This program is designed for senior-level finance decision makers with leadership responsibilities for Medicare Advantage programs. This event will be advanced, but highly practical and action-oriented. As with our previous events, this program is open to health plans only.
The cost of this event is $995; Space is limited for this exclusive event. Pre-register now to secure your plan's attendance.
Click here to pre-register
Click here to view the preliminary agenda
Using What You Know to Improve Care for Your Members
In the current issue of the New England Journal of Medicine , a group of physicians from Harvard Medical School describe an unfortunate and instructive case.[1] One of the system's patients had her spleen removed after an automobile accident. I would venture to guess that just about every sophomore medical student knows that people without a spleen are more likely to have infections, especially with streptococcus pneumonia, and that those infections can lead to death or, as in this poor lady's case, severe, permanent complications. Anyone who has had a splenectomy should be vaccinated against pneumococcus. So far so good, but the vaccine was never given in this case because the problem list in her electronic medical record was never updated to include the fact that her spleen had been removed.
When these doctors looked at the records in their practice (over 1.7 million of them), they found 7125 patients who had had their spleens removed and only 5028 (29%) had the diagnosis on their problem list. And it gets worse from there. Of the ones who had the diagnosis on their problem list, only 54% had been vaccinated; of those without the diagnosis, only 17% had been vaccinated. (Remember, the guideline is vaccination for 100 %.) And this is at one of the very best medical care delivery systems in the United States (probably in the world) and these patients all have electronic medical records. You can guess what the numbers would be like out in the real world where solo practitioners are working with paper charts.
So we have two problems. First, the list of diagnoses was incomplete. Second, there was a clear and unaddressed gap in care. How do you fix a problem like that? The first impulse would be simply to better educate the doctors. These authors conclude (and I agree with them) that "education alone is not a highly reliable intervention." Remember, these are some of the best doctors we have and they are using some of our best clinical tools. The solution has to be in redesigning the system. And that is where Medicare Advantage plans have something really important to offer.
These authors recommend "tools such as reminders and patient-level reports about guideline compliance" as the best way to change the system. I would suggest that carefully designed and targeted member evaluations of Medicare Advantage members organized by the plans can bring together a wealth of clinical information from claims with directed face to face evaluations to yield accurate and complete diagnostic information and to identify gaps in care. If that information is collected in a proper open access data base, actionable reminders can be generated for the member, for the member's treating physician, and for plan case management—just the sort of tool the authors recommend.
And, once again, we have an impact that cannot be replicated by fee for service Medicare.
Note: You can join Jack at a MCOL-hosted webinar event on September 13th, as he discusses further more powerful ways of addressing gaps in care, and integrating risk adjustment and medical management. Click here for details on that event.
[1] Gandhi, Tejal K., Zuccotti, Gianna, and, Lee, Thomas, "Incomplete Care—On the Trail of Flaws in the System" New England Journal of Medicine, 365:486-488, August 11, 2011.
Law of Averages: How does it add up to a complete health picture of your members?
I attend a number of industry conferences, and at a recent event hosted by Opal in San Diego, I heard the following:
- The average 75 year old has three chronic conditions and takes five medications
- The average 75 year old Medicare Advantage (MA) member spends 12 hours a year in doctor visits
- The average amount of time a patient actually spends with the doctor during one of his visits is only 13 minutes
- The average 75 year old Medicare members sees between five to seven different doctors a year (whether primary care, covering physicians, urgent care, hospitalists, or specialists)
- To conduct a comprehensive health assessment, a physician needs to spend between 45 to 65 minutes with a MA member
This highlights the need for EMR, collaborative care models, and medical homes. It also illustrates the need for annual comprehensive exams and an engaged model around medical management.
If you do the math, a MA member is spending a mere 156 minutes with physicians each year. And 55 of those minutes should be spent with some clinician who will collect and record an accurate and updated health picture. Whether it's a primary care physician, a specialist acting as a primary care physician, or a physician evaluator in the home, some clinician has to collect this information for each health plan MA member each year. The challenge is the time differential.
How does the physician morph 13 minutes into 55 minutes? This is probably not a case for efficiency, but a change in scheduling or approach. Whether in the home or in the office, we need to create an environment at least once a year that allows Physicians to do that complete wellness exam or health status evaluation in which they ask questions about everything, from activities of daily living to nutrition to chronic condition to medications to behavioral health.
The next step in beating the averages is using this picture. This health status report needs to be integrated, not only with all the member's doctors' plan of treatment, but also with health plan medical management or perhaps even in the member services department. We need to find new ways to help the member navigate the healthcare system to survive the law of averages.
Note: You can join CenseoHealth September 13th to hear more thoughts on integrating risk adjustment and quality of care initiatives during an MCOL-hosted webinar event. Click here for more details.