Just Desserts for the Queen of "Death Panels"

Sarah Palin's vanity "documentary" flick "The Undefeated" tanked at the box office over the weekend . Forgive my snickering.

It's just desserts for the woman who brought us the biggest distortion of the 2010 Presidential campaign: "death panels". Regardless of your politics, as healthcare professionals, we should be able to agree that those two words set back the entire debate on end-of-life care by a decade -- a debate we now must have given the nation's debt burden. As a result of Palin's demogoguery, policymakers' are running like scalded dogs from an issue that consumes 1 in 4 Medicare dollars already, and is now the #1 item in every state budget.

Maybe Palin will forget the Presidency and will try to win the Oscar now. Calling her puff piece "The Irresponsible" or "The Unintelligible" might have sold more tickets.

Rushing Toward Another Financial Cliff with 6th Graders Screaming in the Backseat

I'll admit I'm a geek about economics, so I'm fascinated and appalled as another weekend went by as Congressional "leaders" continue to flirt with disaster on the debt ceiling. We're rushing toward another financial cliff when we default on August 2, and politicians are acting like 6th graders screaming in the backseat. So I went into the weekend intent on getting a clearer picture about the way out, and what might happen if we don't find it.

Mark Zandi, the chief economist at Moody's (the credit rating agency that's about to nuke US creditworthiness on August 3) had a great piece in WaPo on Friday that addressed both questions. A great roadmap to the needed cuts and revenue to get our fiscal house in order, and a very clear picture of what happens if we fail.

All three major credit rating agencies have now threatened the United States' coveted status as the world's most secure economy . Moody's said that at least 7,000 top-rated municipal credits would have their ratings cut if the U.S. government loses its Aaa grade. Even if the parties agree to raise the debt ceiling, it may not be enough to avert a downgrade. The credit agencies are saying the US must implement a plan to reduce the annual budget deficit by roughly $4 trillion over 10 years, which makes the debt manageable long-term. Medicare and Medicaid will factor very heavily into those plans -- see last week's Wall Street Journal story on the subject. If global lenders lose faith that the U.S. government is the safest entity on Earth to lend money to, the fiscal situation would go from being a long-term challenge to a near-term crisis.

Let's all hope these "leaders" on the Hill come to their collective senses this week.

Going to the Mat for Capitated Pioneer ACOs

GHG is leading an effort with several of our clients to bring real-world capitation to the Pioneer ACO Demonstration. We've had several meetings with CMS to advance the idea, which AIS details in their story in Health Reform Week out last week.

Featured Health Business Daily Story, July 13, 2011
Potential ACO Sponsors Warn CMS They Need Payment, Other Changes on ‘Pioneer' Reprinted from AIS's HEALTH REFORM WEEK, the nation's leading publication on the business implications of the massive changes for the health industry mandated by reform.

By Judy Packer Tursman, Contributing Editor
July 4, 2011Volume 2Issue 23

In what one Medicare-industry consultant describes as a last-ditch effort, several potential sponsors of Medicare accountable care organizations met with CMS the week of June 27 to hash out differences on payment and other basics of CMS's proposed "Pioneer model" initiative for experienced ACO entities. The consultant, John Gorman, CEO of Gorman Health Group, LLC, insists that these potential sponsors won't participate unless they find common ground with CMS on what they consider to be a financially viable business model.

But another consultant tells HRW he knows of nearly 20 entities planning to apply by the Aug. 19 deadline for the Pioneer program, which is capped at 30 participants. Even this other consultant, however, says that unless CMS makes major revisions to controversial draft regulations for the Medicare Shared Savings Program (MSSP), on which the Pioneer program is based, many applicants might apply now and flee later.

While it won't be known for months how many organizations will participate in Medicare ACOs, one thing is clear: Of 1,200 comments submitted to CMS by the June 6 deadline, many are harshly critical of CMS's notice of proposed rulemaking on MSSP published April 7 in the Federal Register (HRW 4/11/11, p. 1). Under CMS's proposal, entities setting up Medicare ACOs would continue to receive Medicare fee-for-service payments and qualify for additional payments by meeting quality and savings requirements. Stakeholders' reaction to CMS's Pioneer ACO program is also largely unfavorable thus far, industry consultants tell HRW.

‘Pioneer' ACO Program Hits Snags
The timetable is short: The Pioneer program is expected to begin this fall, and MSSP is set to launch Jan. 1, 2012. But only 17% of 140 hospitals and health systems and 10% of payer organizations responding to a survey by consulting firm KPMG LLP released June 28 said they intend to be "first-wave players" in MSSP and expect to file with CMS in time for Jan. 1 implementation. (The survey didn't specifically ask about the Pioneer program since KPMG's webcasts focused on MSSP and ACOs in general.)

While the findings were drawn from participants in three ACO webinars run by KPMG this spring, Joe Kuehn, a partner in KPMG's health care advisory practice, says the results are indicative of what the firm is hearing from its broad array of clients. "I'm not hearing a lot of interest at all in the MSSP," he tells HRW. "I've heard from CEOs saying it was dead on arrival [because of antitrust issues, the challenge of physician buy-in and the like]….We're not hearing of anyone who's ready to run." However, he says organizations seem to want to be "accountable care ‘capable.' They want to have the operational components and structures in place to focus on specific populations to bring about improved care at a reduced cost, and they are seeking ways to clinically integrate with their physicians and other potential partners, but they aren't there yet," he tells HRW.

KPMG estimates it could take up to 24 months to develop an ACO infrastructure from scratch, and Kuehn says the short application/implementation timeline may lead some stakeholders to think MSSP — not just Pioneer — was designed, at least initially, for experienced entities.

Attorney Bruce Merlin Fried, a partner in the Washington, D.C., office of law firm SNR Denton US LLP, says MSSP "is not an any-willing-ACO program," and was intended from its statutory inception to require a certain level of skill and commitment that not all providers can meet. CMS's apparent target, as indicated in the draft MSSP regulations, is to get 75 to 150 Medicare ACOs into the program. If the final regulations end up being the same as what was proposed, "it will be a much smaller number," he says, but if MSSP is designed "so policy objectives are in sync with the business realities of running [an ACO], then there should be a good uptick."

Fried said June 28 that spring 2012 is a realistic start date for MSSP. Final regulations "hopefully" will be issued in the early fall, he says, followed by an application process, organizations' decisions on whether to participate, and then CMS's review of applications. He notes that CMS's draft rule offers an optional later start date of July 1, 2012, in recognition that it could take more time for organizations to launch Medicare ACOs.

CMS Is Said to Be ‘Working Through' Issues
Does CMS "understand the MSSP regulations did not engender the enthusiastic response they were looking for? They get that message very clearly," Fried says. Yet he says CMS is holding regular Monday meetings "with senior decision-makers, and they're methodically working through the issues."

Consultant Gorman, who, like Fried, is a former official at HCFA (the predecessor agency to CMS), told HRW June 27 that his firm and several clients are talking to Richard Gilfillan, M.D., who directs CMS's Center for Medicare Innovation, and his staff about operational issues related to the Pioneer program. According to Gorman, CMS says it cannot administer capitated ACO payments for at least the first two years of the program, but his clients — "very sophisticated organizations that are familiar with capitation or have their own Medicare Advantage plans" — disagree and are seeking revisions. Unless this occurs, CMS "could lose marquee players," he says. "If it [i.e., Pioneer] doesn't have some capitation to it, these organizations will pursue commercial and Medicaid opportunities instead."

Fried responds that he, too, has clients that are "marquee players who say they realize [Pioneer] isn't perfect, but they will pursue this." Indeed, he says CMS will get "substantially more than 30 applications for Pioneer contracts. I'm aware of almost 20." That includes four to seven of his clients, he adds, "but people are still deciding." Plus, Fried says another consultant's firm is handling Pioneer applications for 11 Midwestern entities.

Struggling Over Claims
Gorman notes that CMS has regulations to govern how Medicare Advantage (MA) plans pay claims, and how the Medicare Administrative Contractors (i.e., MACs, which used to be called fiscal intermediaries) pay claims. However, he tells HRW: "They don't have regs for ACOs to pay claims, and they want all of the provider and beneficiary protections to be in place before the program goes live, but that could take months."

Gorman says his firm, in a June 27 meeting with CMS, described a model "in which a capitated ACO pays claims it gets from its participating providers, the MACs pay all claims they get from any Medicare provider, and the ACO reconciles and pays CMS on a monthly basis for all claims paid by MACs for services that are covered under the capitated services."

He explains that CMS already has figured out how to send ACOs claim dumps each month, and the claim reports will provide the ACO with the data it needs to do the reconciliation. "The beauty of having the ACO do the reconciliations is that CMS doesn't have to change anything that the MACs do, and the nonparticipating provider claims all get paid under the current MAC regulatory structure," he says, adding that the model could be strengthened if the claims payments are managed by a current MA plan or delegated agent that already is meeting CMS regulations.

"This is a new idea for them, and to CMS's credit, they're open to it and are thinking it through. We have our fingers crossed," Gorman says. He terms this a major issue for ACOs that see capitation with performance metrics "as the best financial fit."

Gorman describes the Pioneer program's application as "a monster," and says interested organizations need answers soon — by early July — in order to get the application completed in time. He asserts that CMS "has a lot of work to do in the next couple weeks to get a couple dozen participants" for Pioneer. Moreover, he contends that "at the moment, unless they come out with a dramatically revised [final] regulation, the MSSP…is dead."

At a national ACO conference held June 27-28 in Washington, both HHS Sec. Kathleen Sebelius and CMS Center for Medicare Director Jonathan Blum "alluded to the fact that they had heard from the community, carefully digested the 1,200 comments submitted, and the implications were they were looking at significant adjustments to address concerns," Fried says. He notes Blum suggested there would continue to be a substantial number of quality measurements for Medicare ACOs; 65 measures are listed in the draft rule. Fried says that CMS left itself "a good deal of wiggle room" with respect to this and other matters in the draft rule.

CMS isn't developing the ACO regulations in a vacuum, Fried points out. He says a big question is to what degree the Office of Management and Budget (OMB) recognizes that achieved savings must be shared with ACOs to make Medicare ACOs a viable business proposition. "The 70-80 [% provider share] split in Pioneer is a more realistic split than the 50-60 split in MSSP," he says. "CMS does not control OMB, but I've got to presume OMB will recognize that while the government wants as much savings as possible, the government runs the risk of killing the program."

HHS Secretary Sebelius and Rep. Paul Ryan are Both Right on IPAB

It's "IPAB Beat-Down Week" in DC with no fewer than 4 Congressional hearings scheduled on the Independent Payment Advisory Board (IPAB), the controversial Medicare cost-cutting group established in health reform.

IPAB was established as an expert "backstop" in case Congress couldn't agree on methods to contain Medicare costs in the future. The 15-member board will recommend cuts in Medicare payments to doctors, which will take effect automatically unless Congress votes to block them. The idea of some shadowy unelected group that could "ration" services to Medicare beneficiaries drives Congressional Republicans guano-insane.

The Hill reports on last week's fireworks between HHS Secretary Kathleen Sebelius and Rep. Paul Ryan (R-WI), Chairman of the House Budget Committee and author of the equally-controversial GOP proposal to reform Medicare into a sort of voucher program that passed the House but failed in the Senate:

"IPAB's power is only triggered if Medicare spending exceeds a certain rate. So lawmakers worried about handing over control of Medicare payments to an unelected board can avoid that scenario by controlling Medicare costs before the IPAB is in place, Sebelius said. "If Congress is actually paying attention to the bottom line of Medicare, IPAB is irrelevant."

Sebelius defended IPAB against charges of rationing, noting that the ACA prohibits IPAB from cutting benefits or shifting costs to seniors.

Ryan said as IPAB cuts payment for particular services, fewer doctors will offer them to Medicare patients, and eventually care will become unavailable. "Isn't that effectively rationing in and of itself?" Ryan asked.

Sebelius conceded Ryan's argument that Medicare spending is unsustainable on its current trajectory, a problem he says calls for a major overhaul, such as his plan to reform the program. Letting seniors choose among private health insurance plans is better than empowering the IPAB to cut doctors' rates, Ryan argued."

They're both right. But will Congress have the will to reform Medicare and avoid IPAB's intervention? Probably not, if the ongoing saga of the Sustainable Growth Rate for physicians or the sorry state of negotiations on the debt ceiling are any indication.

Are We Fixing or Destroying Health Care in America?

The short answer….."who knows yet"?   I don't.   Having led provider groups, health plans, and hospitals over nearly 30 years in healthcare management, I would have hoped that I could have answered that question definitively by now.  Apparently, to add to my education, about 6 months ago I encountered the system as a patient for a very serious tumor condition. 

So far post surgical care has gone well and the MRIs have remained clear.  However, being on the getting-billed and getting-EOBs side of healthcare has been an interesting and frustrating experience.  I had never sat in that role before.  And of course I have the experience of running provider side and insurer business, so it is interesting to assess how complicated the billing and EOB side must be for the average consumer without such experience.

Thus, as I share perspectives on healthcare in this country as we encounter Exchanges, and ACOs, and other ventures I will try to do so from two perspectives: that being as a patient in the system, and also that of a person with experience in operating healthcare organizations. 

One easy question.  From a clinical standpoint would I have wanted to be in any other country for the care I needed?  NO WAY.

Cuts Would Only Shift Healthcare Costs

I was quoted in Tom Burton's nice piece in today's Wall Street Journal along with friends of the firm Gail Wilensky, Bob Laszewski, and Sara Rosenbaum.

The story focuses on how Medicare cuts proposed by House Majority Leader Eric Cantor (R-VA) could impact Medicare beneficiaries and others without addressing long-term costs. At all. It's the worst kind of budget meat-axe that's being deployed as we near the default deadline of August 2nd.

First, Medicare already gave at the office. The ACA was funded in large part by cuts to Medicare Advantage and provider payments. If Congressional Republicans are going to continue their dogmatic refusal to look at revenue increases like closing tax loopholes on corporate jets, and we're going to the Medicare well again on the debt ceiling, then we should at least be thoughtful about it.

We can't come close to achieving long-term savings in Medicare without structural reforms to the program. The President has put his Deficit Reduction Committee's recommendation of an increase in the Medicare eligibility age to 67 on the table, to the irritation of his own party. That's a good start, and he should be commended for it.

Beyond that, we need to look at addressing the root causes of the explosion in Medicare expenditures -- primarily, chronic disease and the perverse culture fostered by fee-for-service Medicare payments to providers. Accountable Care Organizations (ACOs) hold some promise here if CMS would get out of its own way, especially on the Pioneer ACO Demonstration, where sophisticated providers like GHG clients Sharp Healthcare and North Texas Specialty Physicians stand ready to lead the way in performance-based capitation.

More capitation in Medicare is a critical structural reform as it brings budget stability. For every beneficiary that's capitated -- whether in Medicare Advantage or an ACO -- the government knows exactly what it's spending, and then CMS shifts the deficits into the private sector via performance-based risk contracts closer to the point of care where that risk can be better managed by skilled providers. It's political short-sightedness on the Hill and bureaucratic inertia at CMS that stands in the way.

The Journal story concludes with a whopper: the $100 billion Cantor and others think can be wrung out of Federal matching funds for Medicaid. I can't wait to see how that flies with the 29 Republican governors . It's the "Red States" that have the most to lose from cuts to the Medicaid match -- states like Florida, Arizona, Maine and Mississippi all are dependent on Federal matching funds for Medicaid. Here, too, some thoughtful discourse on the role of performance-based capitation in Medicaid, especially for the "final frontier" of the aged, blind and disabled and managed long-term care, would show a better path to budget stability for these critical entitlements than the meat-axe Cantor is swinging these days.

We're racing toward another financial cliff on August 2nd. But with supposedly fiscally-conservative Congressional Republicans acting like 6th graders in the back seat, "thoughtful discourse" may be asking too much.

The Debt Ceiling Impasse Explained in One Chart

Negotiations on the Debt Ceiling ground to a halt after weekend negotiations.  President Obama laid out a $4 trillion package his own party is getting upset about, especially his latest proposal to raise Medicare eligibility to 67.  Congressional Republicans are calling for a debt reduction plan half that size, but have a drawn a line in the sand: no tax increases, period. 

Want to understand why we're playing chicken with a national default? It's complicated, but the guys at YouGov encapsulate it one chart. Brilliant. 

Want to read more?  We invite you to Check out Nathan's thoughts on the debt ceiling debate in his blog post from earlier today.

CMS Oversight Goes into Hyperdrive

In recent weeks, CMS has sent word to plans of two extraordinary changes in their audit practices.
The first is a notice to certain low-rated (plans with contracts <  3 stars) indicating that they expect the plans to develop a corrective action plan to address the low rating: "CMS is requesting that your organization develop and implement a corrective action plan designed to ensure that it will achieve at least a "good" plan rating."
They do so with the following rationale: "CMS considers a low Part C or D Summary Plan Rating to be evidence that the sponsor has in place insufficient administrative and management arrangements to meet its obligations as a Medicare plan sponsor."  CMS is also taking care to mention that organizations with a < 3 star rating for three consecutive years may also have its contract terminated, a statement it made first in this year's Call Letter.
Second, in an extraordinary development, it has come to our attention that certain Regional Offices are initiating monitoring reviews of health plans, independent of Central Office activity. While the reasons for this can only been speculated, it certainly will add to the already challenging environment for plans, particularly those that are already at risk for a bad audit.
It is absolutely critical that plans ensure that they 1) have a plan of action for their star ratings and 2) ensure that they are audit-ready at a moment's notice.

High-Wire Act on Entitlements as Debt Negotiations Stretch into the Weekend

President Obama and Congressional Democratic leaders are walking a high-wire going into weekend negotiations on the debt ceiling with their Republican counterparts. Discussions center around Medicare, Medicaid and Social Security, and the concern is that the President could cut a deal that his Democratic colleagues may not support. The Wall Street Journal has a nice overview out today on the front page.

Exchange Regs Released!

Is that steamy summer novel not quite holding your interest? Luckily, CMS has stepped in with its latest publication, "Patient Protection and Affordable Care Act; Establishment of Exchanges and Qualified Health Plans." While this work may not make the New York Times best seller list, this initial attempt at defining the exchanges at a Federal level will be one of the most important pieces of regulation released this year. From the summary:

"This proposed rule would implement the new Affordable Insurance Exchanges
("Exchanges"), consistent with title I of the Patient Protection and Affordable Care Act of 2010
(P.L. 111-148) as amended by the Health Care and Education Reconciliation Act of 2010 (P.L.
111-152), referred to collectively as the Affordable Care Act. The Exchanges will provide
competitive marketplaces for individuals and small employers to directly compare available
private health insurance options on the basis of price, quality, and other factors. The Exchanges,
which will become operational by January 1, 2014, will help enhance competition in the health
insurance market, improve choice of affordable health insurance, and give small businesses the
same purchasing clout as large businesses."

Stay tuned for analysis by the GHG policy team in the coming days. Until then, happy reading.


As always, we welcome your comments, feedback and questions.