Do Stars Matter?
I have occasionally made the point that MA can have a positive impact on members' lives in a way that fee for service Medicare can never replicate. Over the weekend, I was catching up on old journals and ran across a nice case in point. If you are like me, you have wondered from time to time whether there was a real point in some of the Stars and HEDIS data you collect (particularly some of the survey questions) or whether it was just filler to make a bureaucrat feel more useful. Well, here is a reassuring answer to that question:
You are probably aware that one of the HEDIS/HOS indicators is "the percent of sampled Medicare enrollees 65 years of age or older who had a doctor's visit in the past 12 months and who received advice to start, increase, or maintain their level of exercise or physical activity." (It takes at least a 60% positive from the sample to get a plan to four stars.) Another requirement (HEDIS) is that you measure BMI at least yearly in members less than 74 years old. Does all that really matter?
It will probably come as no surprise to you that 20% of adults over 65 are obese (BMI>30) and that the number is rising every year. What you may not have thought about is that obesity is now one of the major causes of frailty in the elderly. The archetypal "little old lady" slowly maneuvering across the room with her cane has been replaced by the very big old lady (or old man) maneuvering through a grocery store on a scooter.
A group led by the geriatricians at Washington University in Saint Louis looked at the problem: they did a one year controlled study of the effects of diet and exercise in the obese elderly.[1] One study group did what they had always done (or not done), a second group dieted, a third group exercised, and a fourth group dieted and exercised. Each group that did something did better than the group that did nothing but the fourth group did best of all. Their strength went up 35%; their gait speed increased 23%; the rate at which they lost bone decreased; their peak oxygen consumption (a reflection of the ability to be active) increased; their balance improved and their risk of falling decreased.
We are accustomed to thinking about weight loss and exercise programs in younger adults as ways to prevent hypertension, diabetes, and other chronic illnesses. It is a different matter in the elderly. For them it is a way to directly and significantly improve the quality of life.
So should MA plans take pride in the fact that they are collecting data about exercise and weight loss and that the good ones are finding better ways to use that data to help their members get thinner and more active? You bet they should.
[1] Villareal, Dennis et al, "Weight Loss, Exercise, or Both and Physical Function in Obese Older Adults" NEJM:364, 1218-1229, March 31, 2011
Alternatives to the Individual Mandate
Kaiser Health News is doing some tremendous reporting these days. Today they offered some perspectives from a number of experts on alternatives to the individual mandate, recognizing the unlikely chance the US Supreme Court will strike it down when it considers the issue next year. We think the mandate will be upheld given other precedents that allow the Congress to regulate interstate commerce and tax economic inactivity like refusing to buy health insurance.
Granted, if the Supremes kill the individual mandate, legislative prospects for these alternatives may be slim. Democrats are in peril of losing both the White House and the US Senate in 2012 (see the current futures markets outlook on these outcomes at InTrade.com here). Still it's encouraging to see so many potential options, and even the perspectives that ACA implementation could proceed without it.
Medicaid Managed Care = Risky (BIG) Business
The Washington Post printed a recent expose on the coming explosion in Medicaid managed care opportunities, coupled with the tremendous challenges of caring for lower-income, vulnerable beneficiaries, especially dual eligibles.
Texas is moving some 425,000 beneficiaries into health plans this year. California began moving 380,000 older and disabled patients into private plans in June. Louisiana debuted managed-care contracts in July, affecting 875,000 enrollees. In October, New York plans to begin moving about 1.5 million patients into managed care. Florida is negotiating with the federal government to move most of its 3 million Medicaid enrollees into private plans. With the expansion of Medicaid managed care underway in at least 20 states and the surge of enrollment in 2014, thanks to the ACA, insurers expect $60 billion in new annual revenue.
We've long said that by 2015 we expect the entire TANF population (Temporary Assistance to Needy Families -- the "moms and kids") population to be in health plans, with millions of dual eligibles to follow suit. With a new office in the CMS Innovation Center dedicated to Federal/state collaboration on the duals, that segment will transition to managed care quickly as states desperately try to reduce the #1 item in every state budget: long-term care for the elderly and disabled. The "A/B/Ds" (Aged/Blind/Disabled) are the "final frontier" for health plans, and worth upwards of $300B annually -- but not without their perils in this climate of austerity.
America's Hospital Patient Safety Problem in 1 Awesome Graphic
The graphics geniuses at MedicalBillingandCodingCertification.net have come out with another of their charticles examining the American health-care system. The quick takeaway? "The United States ranks dead last out of 19 developed nations in preventable deaths at hospitals." The problem is preventable and the solutions pretty straightforward. The charticle is fascinating and scary. Enjoy.
And the Survey Says... Claims based submissions are scary
During our September 1st webinar, Risk Adjustment: Vulnerabilities in Claim Based HCC Codes, we asked our health plan attendees a few questions about claims-based HCC codes. Here are the answers.
What percentage of your HCC submissions comes from claims?
- 25% of the health plans answered 45-60%
- 21% of the health plans answered 61-80%
- 44% of the health plans answered 81-100%
Studies indicate that between 60-80% of all HCCs comes from claims submissions. However, we also know that between 17-44% of all claims-based HCCs fail a CMS RADV audit. We must verify the validity and accuracy of health plans' claims-based submissions. How can we do that?
CenseoHealth's CareCurrent provides continuous data analysis, reporting and production management designed to mitigate HCC risk. This analysis not only supports a health plan in determining the confidence levels of the ICD-9s that trigger HCCs; the service also indicates how to remediate high-risk codes with chart review or a member evaluation.
Next we asked —
Do you filter your claims based HCCs?
- 50% answered yes and 50% answered no
That is a little scary and the health plan's next RADV audit may be even scarier. Scrubbing your claims based HCCs is a critical part of the mock RADV audit process and the foundation of RADV "proofing" your risk adjustment program.
Finally we asked —
How frequently would you or should you scrub your claims based HCCs?
- 55% of the health plans answered monthly
- 45% of the health plans answered quarterly
Both are good answers. We recommend running a claims based filter in late September so you can resolve any low confidence codes with chart review or member evaluations prior to the end of the calendar year. We also suggest running a claims based code analysis at the end of December to ensure the health plan deletes any unsubstantiated codes before the January 2012 sweeps.
Debt Crisis Hangover: 'Scary Erosion in Confidence'
Politico had a terrific story last week on the lingering hangover from the debt crisis. New data from The Conference Board suggest that the bitter debt ceiling debate in DC 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 may tip the economy back into recession.
The Conference Board this week reported the biggest monthly decline in consumer confidence since the height of the financial crisis in 2008, its consumer confidence index falling from a reading of 59.2 to 44.5, the lowest in two years. Nearly every poll shows Americans lacking any confidence in the ability of political leaders to agree on significant steps to boost the economy or deal with other significant legislative matters.
GOP pollster Bill McInturff suggested that we are now "entering a new phase of the American political dialogue that has been irrevocably shifted in a way that will prove difficult to predict" and is likely to lead to "unstable and unpredictable political outcomes."
We're indeed sailing into some very scary uncharted partisan waters, to McInturff's point. We got the worst monthly jobs report in years this week, possibly indicating a "double-dip" recession. This will further weaken the President and his standing. Obama and Speaker Boehner can't even agree on the timing of a Presidential address to Congress on another stimulus package, much less what should be in it. Stimulus is usually comprised of some combination of infrastructure spending and tax cuts. Republicans in this Congress will never agree to the former, and Democrats will never agree to the latter. So I'm not expecting much progress on that front, and the economy will continue to stagger along.
Next up in intractable issues: the Congressional "supercommittee" that's supposed to figure our way out of the debt crisis. 7 of its 12 members must agree on recommendations to Congress, which must vote up or down. A simple majority in the House and Senate can send those recommendations to the President. But 7 out of 12 seems a stretch, as does even getting a simple majority in either this House or Senate. That means "sequestration": across the board cuts, including 2% to Medicare provider payments, likely on top of the 29% cut physicians will take in Medicare payments at year end due to the continued inability of Congress to fix the Sustainable Growth Rate methodology. And that's likely a better scenario than any specific cuts the Supercommittee may come up with. That all adds up to a horrible, no good, very bad day for our favorite program.
Listen to me, it sounds like my confidence is eroded, and I just got back from vacation. It is. I get it that Americans voted for divided government in the 2010 midterms, but I don't think they voted for dysfunctional government. Like McInturff said, we're sailing into some very big "unpredictable political outcomes." And the stakes for Medicare couldn't be higher.
I'll be speaking on this and related topics at AHIP's Medicare conference here in DC on September 13, and again September 26-27 at the Opal Events 3rd Annual Medicare Advantage Strategic Business Symposium. For more information, click here. Hope to see you there.
Consolidation in Medicare Advantage and Prospects for Regional/Local Plans
In the past 12 months three health insurers have each acquired a Medicare Advantage HMO: HealthSpring (Bravo), WellPoint (CareMore), and Humana (Arcadian). Large plans are finding that acquisitions make more sense than investments in organic growth in certain markets, and that enrollment will be driven by millions of plan-friendly Baby Boomers and employers seeking to transfer risk for retirees to Medicare. Investors that sat on the sidelines the last couple years during the financial crisis now need to invest, many large players are sitting on piles of cash, and there are many opportunities in the fragmented MA market. So consolidation will intensify -- what does that mean to regional or local MA plans?
First, there's plenty of room in MA's pantheon for regional and local plans. It doesn't take much enrollment to make the Top 25 in Medicare Advantage given revenues for MA members typically run 4-6x what commercial members pay -- take Independence Blue Cross in Philadelphia. They have about 85,000 members and they're among that hallowed group. 10,000-12,000 members is generally thought to be the "magic number" in MA, where a plan achieves actuarial stability with an enrolled pool big enough to weather the inevitable million-dollar babies at end-stage.
If you're above that number today, you can likely endure and thrive through the next several years of ACA transition and consolidation by following some specific best practices, especially around risk adjustment and Star Ratings management. If you're not there yet, this is going to be a very challenging couple of years ahead.
The best ways for local/regional plans to offset the rate cuts in ACA is on the revenue side. Risk adjustment and Star Ratings management best practices are the keys to survival for local and regional plans, and the methodologies of each actually favor these organizations. The new state of the art in risk adjustment is the advanced prospective evaluation -- a health risk assessment on steroids, conducted in the beneficiary's home by a trained physician (see the many posts by my colleagues Dr. Jack McCallum and RaeAnn Grossman on this subject). It's a complex process, arranging the scheduling, executing the visits, reporting the data to CMS -- but one managed more easily by local/regional plans with assets on the ground than large nationals.
Star Ratings quality bonuses from CMS actually favor local/regional plans as they're calculated at the contract ("H-number") level. Large national insurers typically have sprawling MA service areas: United in California, for example, has an MA contract for the entire state, requiring United to coordinate with literally dozens of physician groups to improve their Star Ratings. By contrast, tiny GEMCare Health Plan in Bakersfield, with a 5-county service area and only a handful of provider groups, is far better positioned to secure its Star bonus than United.
On the downside, minimum Medical Loss Ratio (MLR) regulations can be harder for local/regional plans to contend with. Beginning this year the ACA requires health plans to spend 80% to 85% of premium revenue on reimbursements for clinical services and activities that improve health care quality. Further, costs associated with conversion to ICD-10 coding, EMRs and e-prescribing are harder for smaller firms to absorb. But harder doesn't mean impossible, especially with effective planning and local leadership.
In the end, I think we're probably looking at one-third fewer contracts in MA by 2016 -- 671 today, down to about 400 by then, driven by acquisitions and a hard-nosed CMS pushing weak performers out of the program. That leaves plenty of room for local/regional plans -- if they can execute as well or better than the big dogs, especially on the revenue side of the ledger.
I'll be speaking on this and related topics at AHIP's Medicare conference here in DC on September 13, and again September 26-27 at the Opal Events 3rd Annual Medicare Advantage Strategic Business Symposium. For more information, click here. Hope to see you there.
United Acquisition of Monarch Healthcare (CA): Marx Meets Managed Care, Again
The Wall Street Journal reported this morning that United Healthcare is acquiring our longtime client, Monarch Healthcare in Irvine, CA. The transaction is further evidence that Marx (Karl, not Groucho) has met managed care: a payer controlling the means of production in an intensely competitive market.
There have been several other payer/provider deals in the last few months confirming the trend: WellPoint recently closed its acquisition of provider-owned Medicare Advantage plan CareMore; in June, Highmark bought West Penn Allegheny Health System; last December, Humana bought Concentra.
Expect to see many more of these kinds of deals, for clear strategic reasons: with greater emphasis on performance-based risk contracting arrangements in the future of healthcare financing, and an emerging focus on the patient's experience of care, in many markets it just makes sense for payers to own their supply chain -- and the day-to-day faces of the health plan with its members.
CMS Innovations: Bundled Payments for Care Improvement Program
CMS Innovations: Bundled Payments for Care Improvement Program
On August 23, 2011 CMC/CMMI unveiled its most recent tool in its arsenal to reduce cost and impact quality and access to healthcare services for Medicare beneficiaries. Referred to as the Bundled Payments for Care Improvement Initiative, it is a variation on the theme first employed in healthcare financing back in the late eighties and early nineties known at the time as either global payments, episode of care payments or case rates. The difference is that the current CMMI initiative requests providers to submit competitive bids with built in discounted pricing thus putting the burden on the bidder to get the numbers right or suffer the consequences of cost exceeding income.
As CMS states on its website, "The Bundled Payments for Care Improvement" initiative seeks to improve patient care through payment innovation that fosters improved coordination and quality through a patient-centered approach. The CMS Innovation Center is seeking applications for four broadly defined models of care. Three models involve a retrospective bundled payment arrangement, and one model would pay providers prospectively. Through the Bundled Payments initiative, providers have great flexibility in selecting conditions to bundle, developing the health care delivery structure, and determining how payments will be allocated among participating providers".
It seems to me that the "Bundled Payments for Care Initiative approach" emphasis once again is less about improving care and more about changing the financing for that care. As you will see the focus of the program is to offer four different payment models as described in detail in the RFA. As I have opined in previous blogs, substantive reenginnering of how healthcare is accessed and delivered requires fundamental realignment in provider behavior and patient behavior as well as changes to how healthcare is financed. At best this program may be an effective component in the effort to reengineer healthcare, if in fact the program becomes part of a coordinated approach.
CMMI goes on to explain on the website referenced above that "Applicants would propose the target price, which would be set by applying a discount to total costs for a similar episode of care as determined from historical data. Participants in these models would be paid for their services under the traditional fee-for-service (FFS) system. After the conclusion of the episode, the total payments would be compared with the target price. Participating providers may then be able to share in those savings.
Applicants for these models would also decide whether to define the episode of care as the acute care hospital stay only (Model 1), the acute care hospital stay plus post-acute care associated with the stay (Model 2), or just the post-acute care, beginning with the initiation of post-acute care services after discharge from an acute inpatient stay (Model 3). Under the fourth model, CMS would make a single, prospective bundled payment that would encompass all services furnished during an inpatient stay by the hospital, physicians and other practitioners."
For detailed information on each model, I suggest interested parties access the website referenced above and click on one of the four links provided for more detailed information. Also available on the website is a link for accessing a copy of the RFA.
As you can see from the deadlines for LOI filings and proposal submission, (see below), there is limited time for providers to create the network, arrive at a bundled price and create the payment schedule for each provider. What may be problematic for more than a few provider systems interested in applying for this program is the reality that in order to submit a discounted bundled price for a specific DRG or episode of care, the system must gain acceptance from all providers involved in the episode of care on the value assigned to each part of the episode of care—in other words agreement to their individual piece of the bundled payment pie. Anyone who tried global or episode of care pricing in the past knows from experience that achieving such agreement from individual providers is not an easy or time efficient task.
So after each potential applicant has filed the requisite Letter of Intent, consideration should be given to the following: prior to filing an application:
- Selection of the DRG or DRG's that would be considered;
- Selection of the providers that will be involved in the episodes of care identified;
- Development of participation agreements with selected providers;
- Clear definition of what is included in the episode or care and the associated costs;
- A financial formula that assigns value to each component of the episode or care;
- An analysis of the avoidable costs for the DRG's under consideration;
- A provider specific fee schedule which rewards for performance, on a consolidated basis is below the discounted rate proposed to CMS and fairly distributes the savings based on quality outcomes and financial efficiency benchmarks.
Per CMS/CMMI, organizations interested in applying for the program must submit a nonbinding letter of intent by September 22, 2011 for Model 1 and November 4, 2011 for Models 2-4 as described in the Bundled Payments for Care Improvement initiative RFA. Those applicants thinking of submitting a proposal for models 2-4 will want to receive historical Medicare claims data in in order to develop benchmark pricing. That will require submitting a separate research request packet and data use agreement along with the Letter of Intent. Final applications must be received on or before October 21, 2011 for Model 1 and March 15, 2012 for Models 2-4.
Let us know your views on this most recent CMS/CMMI initiative. We are here to help whether your needs relate to better understanding the requirements set by CMS/CMMI; require assistance in filing the proposal, require assistance with establishing financial feasibility or helping in achieving support and participation from select providers.
Prices in Healthcare
For months now the national and local news has focused on the price of gas. $3.79 per gallon this week in my part of the San Francisco Bay area. At Costco it is $3.59 per gallon, if you are willing to wait in line. Of course there is a website that will tell you gas prices and map them by location. Need to price a new television? Go online and price shop. Interested in quality of the television? Check out Consumers Reports or another such source. Standing in the audio store? Pull out your iPhone, bring up the RedLaser application and scan the bar code. It will give you the price of that television in some other nearby stores.
So how about healthcare? Well I shopped my Lasix eye surgery years ago for price and quality. I of course paid for all of it. I also get my dental care from a great, but not cheap, dentist. I need a crown, his staff quotes me the price. I have dental insurance, which pays a part of the price and they tell me that amount and the amount of the price I pay. I can shop if I need to for better prices, but I don't for another dentist.
So let's take a simple healthcare procedure. I need my appendix out. (Not really, and I still have mine....but an example.) I want to know the price from hospital choices in the area. Can the hospital tell me? Can anyone tell me? My neighbors know the gas prices, but could they answer a question on healthcare price? Can I get the info online? Can I get much info about which surgeon is the best person to take out my appendix, let alone his price for doing so?
So think about it. How well does this type of purchase work when we don't know the prices, let alone the typical quality of the service we are buying? More on this subject next blog when I get into: prices vs. costs, the impact of insurance, and other such fun areas of healthcare.