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.
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.
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.
Medicare Advantage Plans as Laboratory for Best Practices
In announcing the 2012 Chronic Care Improvement Program and Quality Improvement Projects for Medicare Advantage plans, CMS is going back to the future.
When these quality improvement programs were begun over a decade ago, CMS established national projects on priority areas for all MA plans. CMS is returning to a national project for 2012 and will focus on decreasing cardiovascular disease. The initial experience with national projects was extremely positive, with most plans reporting interventions that resulted in measurable improvement.
The 2012 projects recognize the evolution of the quality improvement field and now the reports will be standardized with reduced burden to MA plans. Because the reports will be consistent, comparisons can be made across plans. CMS is recognizing that MA plans offer a laboratory for best practices and expects that successes can be shared among all plans, thus transferring knowledge and allowing successful projects to be replicated.
Medicare's Looming Risk Transfer
Please read Dr. Jaan Sidorov's Health Affairs blog on "Medicare's Looming Risk Transfer" where he describes how the ACA and Democrat and Republican proposals to reform Medicare "transfer substantial portions of Medicare's monetized risk from the government to one or more third parties."
11th Circuit Court Strikes Down Mandate
Much of the news related to healthcare last week focused on those headlines. Those who have consistently argued that the Health Care Reform act is bad policy hailed the circuit court's decision as a victory. Those who believe in the mandate that every American have access to and be motivated to buy health insurance, decried the decision as just another example of "kicking the can down the road".
So who is the real winner? The real loser? It depends on who you ask (and whether the respondent already has insurance) and on who is taking care of the uninsureds' health needs. The provider community continues to be stuck with providing care to the uninsured, the cost of which is estimated to exceed 40 billion dollars per year, at last count. The tax payer, you and me, doesn't benefit by this ruling because ultimately that 40 plus billion comes out of our pockets in the form of higher insurance premiums and higher bills from the hospitals and the practitioners (it is called cost shifting).
And, believe it or not, it also impacts the cost of providing care under Medicare, because if I am an uninsured individual who does not seek healthcare unless it is an emergency—by the time I am eligible for Medicare I tend to be sicker than my insured counterpart and consequently my cost to Medicare will be significantly higher. Not a good situation, given that the Medicare ranks will swell by some 76 million people over time. Even if we account for a certain portion of Medicare eligibles dropping from the rolls due to death, without significant changes to how we finance and deliver healthcare, Medicare will become the single most costly program in the history of this country - and most of us will be around to see it and suffer under it.
In my last blog I talked about how a financial approach to solving the healthcare crises in the US is, at best, a short term approach akin to sweeping the problem under the rug (the "kick the can" analogy comes to mind one more time).
As an example, let's focus on the Medicare-eligible individual for the moment, to illustrate why a financial solution is not going to solve the problem. Assume that Medicare funding is cut across the board (that is exactly what is anticipated if the debt ceiling super committee cannot get its act together). The impact of such cuts? Providers are paid less (some suggest that they should be paid significantly less), which could result in primary care physicians and specialists closing patient panels to new Medicare patients; inpatient and other allied healthcare providers raising rates to balance out the cuts; and the individual Medicare-eligible exhausting their savings more quickly due to higher out of pocket costs. That in turn will lead to greater reliance by those individuals on other community services such as food stamps, Medicaid, state funded social and aging services, which will in turn drive up those expenditures and create significant budget issues in those programs.
By now you are probably thinking that this is just rambling with no real end purpose. Not really.
My point is that decisions we make in the healthcare field have far reaching consequences, whether they are made in a physician's office regarding how to treat a particular pathology, or whether they are made at the national policy level. Isolated decisions such as striking down the health insurance mandate set into motion a series of events, the impacts of which may not be felt for years, but can be very damaging once they become apparent.
No one disputes that the current health care reform has significant failings. This writer is amongst those who decried the process as well as the outcome. But irrespective of political leanings or philosophical differences, the Affordable Care Act and its emphasis on tying future provider reimbursement to better conceived approaches to patient communication, treatment and access is much better than the potential for an arbitrary cutting in healthcare financing as part of resolving this nation's debt crises.
All of us; providers, payers, healthcare industry professionals and patients, have a vested interest in reengineering our approach to health services delivery and financing through logic and rationality. After all, we will be customers of the system sooner or later. At that point in time, I for one would like a say in what I experience.
Obama and Boehner Have Forever Changed the Medicare Debate
President Obama and House Speaker Boehner may have failed to strike a "grand bargain" on the nation's deficit, but they have accomplished one thing in our world: they have forever changed the terms of the Medicare debate. There is an air of inevitability about some of the proposals they have put forth brewing here in DC.
Obama says he could accept "means testing" the program, which would require affluent seniors to pay more for services. Obama used himself as an example of someone who would pay a higher rate. Obama has also been open to other proposals, including charging co-pays for home health services and for lab work.
Obama also floated on several occasions a provision that would raise Medicare's eligibility age from 65 to 67 -- one that Boehner agrees with him on. In doing so, they gave a controversial idea legitimacy and high political cover. The concept is now likely going to be a fixture in the Medicare debate.
The idea has drawn some support from the GOP in the past. Senators Tom Coburn (R-OK) and Joe Lieberman (I-CT) introduced a bill last month moving the eligibility age up by two years, and Democrats ran from it like scalded dogs. Senate GOP Leader Mitch McConnell didn't endorse the proposal but applauded the effort. Grover Norquist -- the guy behind the GOP's stalwart refusal to move one inch on taxes in this debate -- backed it too.
Under the ACA, in 2014 insurers are banned from turning down any patient — and that could make increasing the eligibility age an easier pill to swallow because 65-66 year-olds would ostensibly have access to coverage in the exchanges. It also means that any increase in eligibility age is unlikely to pass until the exchanges and subsidies are in place in 2014.
The "agreement" between Obama and Boehner -- before talks collapsed last week -- bumped up the eligibility age from 65 to 67 over about two decades. One approach called for increasing the age by one month per year beginning in 2017 until it reached 66 in 2029. In 2030, it would increase two months each year until it hit 67.
The Congressional Budget Office said raising the eligibility age to 67 would save $125 billion over 10 years, adding that the savings would be somewhat reduced by new spending on Medicaid and insurance subsidies to cover the uninsured 65- and 66-year-olds. It's still too big a number to ignore when the bills come due next month.
Expect to see a lot more discussion about these ideas in the coming weeks as we hopefully find our way out of this looming mess. I'm turning 43 next week -- and my retirement plan assumes no Medicare or Social Security for me or my wife by the time we're ready for it. Our generation should be prepared for a very different look to Medicare now that the once unthinkable has become a fixture of the debate.
What If the Individual Mandate is Overturned?
If the individual mandate is overturned, what will happen next will largely depend on the outcome of the 2012 elections. At the moment, it is hard to imagine that the Congress could compromise on any legislation related to health care reform. But that could change.
The biggest problem will be the issue of adverse selection in the individual market with the result that premiums will skyrocket. Even with federal subsidies, the premiums in the individual exchange may not be affordable. Congress might consider delaying the insurance market reforms to see if competition and transparency in the exchanges impacts affordability. Or Congress could consider allowing insurers to return to the practice of waiting periods.
Congress might also consider enacting tax policies that would be more effective than penalties in the ACA to encourage healthy individuals to buy insurance, e.g. allowing full tax credit when individuals purchase qualifying policies or imposing higher taxes on everyone that will go away when purchasing qualifying policies. Or the Congress could do nothing and allow states to consider enacting an individual mandate. And of course insurers will undertake marketing campaigns to remind individuals of limited open enrollment periods and the consequences of failure to buy coverage or lobby for smaller essential benefit policies.
Without an individual mandate, incremental reform will still continue with the addition of 16 million new Medicaid beneficiaries. States will operate exchanges for small groups that will offer more affordable choices for employers and employees. In the meantime states that are moving forward with implementing the individual exchange like Maryland will continue to proceed without regard to the fate of the individual mandate. The federal government will continue to urge states on, fill in the gaps where states need help, and proceed to develop the federal fallback plan for states that are opposed to health care reform or who run out of time while they wait on the fence for the Supreme Court decision.
President Ryan?
Washington is abuzz this week that Paul Ryan is considering a run for President. Remember him? He reportedly is in Colorado with his family at this time discussing their position on turning their life into a 24/7 freakshow. Say what you will about the Roadmap--- a Ryan candidacy would put Medicare solvency and Government-sponsored health care in the middle of what has been shaping up to be a jobs election. Can you mount and sustain a campaign based on deficit reduction?
Stephen Hayes of the Weekly Standard gets credit for the scoop... Or rather, his editors get the credit for putting virtual ink to what has simply been cocktail party chatter since last Friday. Not that I go to those sorts of parties.