Effective Quality Incentives Remain Elusive

New study results suggest that pay-for-performance may not work sufficiently to incentivize quality improvement among some physicians. The study found that pediatricians in an accountable care organization who received small incentives did improve quality, but not as significantly as doctors employed by a hospital.

 

The study, published in JAMA Online, focused on quality performance across three physicians groups: community doctors who were offered about $40 per patient to meet targets for well-care visits, immunizations, lead screening and other quality measures, community doctors who received no incentive and a group of doctors employed by a hospital who also were not paid any incentive.

 

Results showed the following:

  • Doctors employed by the hospital improved quality more significantly on eight measures compared with community doctors who received an incentive.

 

  • Community doctors who received an incentive did better than community doctors who didn’t receive an incentive on five quality measures.

 

“The findings underscore the challenge that policymakers and the industry face finding ways to tie payment to performance. Research on how best to design incentives is limited and results are mixed, and other factors—such as introduction of electronic medical records—could also play a role.” (“Incentives for quality a challenge for ACOs,” Modern Healthcare, January 25, 2016)

 

Non-financial incentives may be effective when used in combination with financial payments. For example, quality improvement support could work in conjunction with quality payments to improve performance. The authors wrote that employed hospital physicians might have benefited from clinical decision support from electronic medical records or other hospital quality-improvement efforts.

 

“Pay for performance resulted in modest changes in physician performance in a pediatric ACO, but other interventions at the disposal of the ACO may have been even more effective. Further research is required to find methods to enhance quality improvements across large distributed pediatric health systems,” the authors wrote. (“Evaluating a Pay-for-Performance Program for Medicaid Children in an Accountable Care Organization, JAMA Online, January 25, 2016)

 

 

And of Interest: Hospitals Welcome Lower Fuel Prices

 

Fuel in general is one of the single largest expenses for a hospital, according to hospital operations experts. The significant drop in fuel prices means significant savings for hospitals on fuel for their vehicle fleets for deliveries, security and maintenance personnel; and petroleum products for heating systems. Lower petroleum costs also mitigate inflation for medical supplies that use petroleum-based plastic.

 

The price of natural gas used for heating has also been low over the past couple of months, dropping sharply in mid-December, and trending much lower than usual over the past year.

 

Hospitals use gas for boilers, which provide heat, or to power electric generator equipment. Nearly all hospitals use steam in some way or another, said a supply chain expert. (“Low gas prices fuel hospital savings,” Modern Healthcare, January 21, 2016)

 

 

iProtean subscribers, the advanced Finance course, Integrating Population Health Management into Your Strategic and Financial Plans, Part Two is in your library. This course continues the discussion by experts Marian Jennings, Mark Grube and Nathan Kaufman and covers whether population health management should be a priority for all hospitals/systems, transitioning and success indicators, risks and benefits of partnering for population health initiatives, and the population health hierarchy.

 

 

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Next Generation ACO Model Launches in 2016

Twenty-one organizations launched the Next Generation Accountable Care Organization (NGACO) Model in January, according to CMS. These organizations “have significant experience coordinating care for populations of patients through initiatives such as the Medicare Shared Savings Program and the Pioneer ACO Model,” CMS wrote in its fact sheet.

 

The new model differs from previous ACO models by including a prospective rather than retrospective benchmark, beneficiary choice about being assigned to the NGACO, beneficiary incentives for seeking care from member providers and increased availability of telehealth and care coordination services. (”First ‘Next Generation’ ACOs Announced,” HFMA Weekly News, January 15, 2016)

 

CMS noted the NGACO Model’s core principles:

  • Protect original Medicare beneficiaries’ freedom to seek the services and providers of their choice
  • Engage beneficiaries in their care through benefit enhancements designed to improve the patient experience and reward seeking care from ACOs
  • Create a financial model with long-term sustainability
  • Utilize a prospectively-set benchmark that: (1) rewards quality; (2) rewards both improvement and attainment of efficiency; and (3) ultimately transitions away from an ACO’s recent expenditures when setting and updating the benchmark
  • Mitigate fluctuations in aligned beneficiary populations and respect beneficiary preferences by supplementing a prospective claims-based alignment process with a voluntary process
  • Smooth ACO cash flow and support investment in care improvement capabilities through alternative payment mechanisms

(“Next Generation Accountable Care Organization Model (NGACO Model),” CMS Fact Sheet, January 11, 2016)

 

Participants in the NGACO model can take on up to 100 percent financial risk—more than in other Medicare ACOs. Increased financial risk allows for a greater opportunity to share in the model’s savings through better care coordination and care management.

 

The Healthcare Financial Management Association noted that, “Establishing prospective budgets—in advance of the performance year—would allow the ACOs to plan and manage care around these financial targets from the outset. Also available are flexible payment options, such as infrastructure payments that support ACO investments in care.” (”First ‘Next Generation’ ACOs Announced,” HFMA Weekly News, January 15, 2016)

 

Analysts note that the new program will give providers stronger financial incentives and tools to engage beneficiaries and provide care outside the customary requirements of Medicare fee-for-service. Medicare beneficiaries enrolled in NGACOs will have enhanced access to skilled nursing facilities, which will not require Medicare’s customary three-day inpatient stay.

 

Investment Model

CMS also announced that 39 Medicare Shared Savings Program (MSSP) ACOs will participate in the ACO Investment Model (AIM), bringing the number of participants to 41. The new model will provide prepaid shared savings to encourage new ACOs to form in rural and underserved areas and to encourage existing MSSP ACOs to transition to a performance-based risk arrangement. (”First ‘Next Generation’ ACOs Announced,” HFMA Weekly News, January 15, 2016)

 

Growth of ACOs

CMS reported 100 new MSSP ACOs and Pioneer ACOs, which also launched on January 1. Nearly 150 renewed their participation. The increase, including the NGACOs, means approximately 15,000 more physicians will be participating in ACOs in 2016.

 

However, data indicate one-third of the 220 MSSP ACOs launched in 2012 and 2013 have left the program.

 

To read the full CMS fact sheet, click here.

 

 

 

iProtean subscribers, the advanced Finance course, Integrating Population Health Management into Your Strategic and Financial Plans, Part Two is in your library. This course continues the discussion by experts Marian Jennings, Mark Grube and Nathan Kaufman and covers whether population health management should be a priority for all hospitals/systems, transitioning and success indicators, risks and benefits of partnering for population health initiatives, and the population health hierarchy.

 

 

For a complete list of iProtean courses, click here.

 

 

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Cost of New Discharge Rule Will Be Above CMS Estimates, Hospitals Say

CMS issued a proposed rule revising discharge-planning requirements in late October, estimating that the changes would cost $22,000 per hospital annually and $6,400 for critical access hospitals. The American Hospital Association, the Healthcare Financial Management Association (HFMA) and others have challenged the cost estimates, claiming the revisions will cost nearly 10 times as much as the CMS estimates. Hospitals must meet the discharge-planning requirements to participate in Medicare and Medicaid.

 

HFMA estimates the proposed requirements will cost $965 million, or an average of $200,000 per hospital annually. The estimate is based on the experience of hospitals already conducting discharge planning.

 

In its proposed rule, CMS wrote it assumed that private payers, estimated to cover half of all patients, would offset much of the additional cost of the new requirements. However, advocates take issue with that assumption. For example, according to the California Hospital Association, many of its hospitals primarily serve Medicare, Medicaid, undocumented and uninsured patients. An association spokesperson said that many facilities do not have the payer mix to balance the increased costs associated with compliance with the new regulations. (“Hospitals Raise Discharge-Rule Cost Concerns, Urge Delay,” HFMA Weekly, January 8, 2016)

 

HFMA wrote in a letter to CMS that:

 

“. . . we are deeply concerned with its [CMS} estimate of the time required to create a discharge plan such as the one envisioned in the proposed rule. Based on our members’ experience, on average it requires 45 minutes to create a discharge plan. Inserting this estimate of time into CMS’s estimate yields a cost of approximately $965 million or $200,000 per hospital (13,000,000 patients x $99 per hour fully loaded staffing cost x .75 hours = $965 million).”

 

HFMA also noted in its letter, “Given that Medicare payment for outpatient services doesn’t come close to covering the cost to provide services (-12.4 percent margin in 2013), we ask that if CMS finalizes this proposed rule, they increase OPPS payments to cover the costs of this new mandate.” (“Hospitals Raise Discharge-Rule Cost Concerns, Urge Delay,” HFMA Weekly, January 8, 2016)

 

The American Hospital Association asked CMS that the rules not become effective until two years after the final rule is issued. The extra time would help hospitals:

 

  • Work with electronic health record vendors to incorporate needed changes
  • Implement labor, training and work-flow changes
  • Incorporate elements of the discharge evaluation and transfer criteria into records
  • Align those records with modified clinician work flow

 

There is a 60-day comment period on the proposed rule.

 

 

iProtean subscribers, the advanced Finance course, Integrating Population Health Management into Your Strategic and Financial Plans, Part Two is in your library. This course continues the discussion by experts Marian Jennings, Mark Grube and Nathan Kaufman and covers whether population health management should be a priority for all hospitals/systems, transitioning and success indicators, risks and benefits of partnering for population health initiatives, and the population health hierarchy.

 

 

For a complete list of iProtean courses, click here.

 

 

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Moody’s Weighs In On Cyber Risk

Cyber risk figures into the credit rating for many companies and organizations, said Moody’s Investors Service analysts in a recent cross sector global report. Assessing cyber preparedness for credit rating purposes “is challenging because the risk is complex and evolving very quickly.” Moody’s considers the risk of a widespread, material cyber event similar to how it views major storms or natural disasters, in that the timing and consequences of a successful attack are uncertain.

 

The National Institute for Standards and Technology defines a cyber incident as:

“ . . . an occurrence that actually or potentially jeopardizes the confidentiality, integrity or availability of an information system or the information the system processes, stores or transmits or that constitutes a violation or imminent threat of violation of security policies, security procedures or acceptable use policies.”

 

The analysts noted that for some sectors, including the not-for-profit healthcare sector, cyber risk is not explicitly incorporated into Moody’s credit analysis because hospitals tend to tend to:

 

  • Maintain large absolute and relative cash positions for unexpected events
  • Have high risk awareness (considered a credit positive)
  • Have already installed or are in the process of installing new, expansive patient information systems that likely have better safeguarding features than prior technology
  • Have a growing portion of the budget dedicated to IT needs including upgrades, warranties, security and training
  • Have a heightened priority for strong internal protocols

 

Areas of Risk for Hospitals

 

Not-for-profit hospitals face cyber risk in two particular areas: breach of patient information/data such as social security numbers, date of birth, insurance information and medical records; and disruption of medical technology that could lead to harmful clinical events.

 

An information breach would likely not materially disrupt services and the financial impact would be limited, according to the report’s authors. However, a breach in medical technology security would present more immediate risk and impair the hospital’s reputation, volumes and financial performance. At this time, it isn’t clear whether such a cyber-event would be covered by a hospital’s medical malpractice insurance.

 

Moody’s noted that it considers cyber risk “an enterprise-wide strategic issue,” so mitigation and defense resides with the organization’s board of directors or trustees. Health system boards should consider steps such as:

 

  • Hiring a chief information security officer who reports directly to senior management
  • Incorporating cyber security into the organization’s enterprise-risk management plan
  • Ensuring the organization has adequate systems and controls in place to safeguard their own data and that of their patients

 

 

(Source: Cyber Risk of Growing Importance to Credit Analysis, Moody’s Investors Service Sector In-Depth, November 3, 2015.)

 

iProtean again thanks Moody’s Investors Service for allowing us to provide this information to our subscribers.

 

 

iProtean subscribers, the advanced Finance course, Integrating Population Health Management into Your Strategic and Financial Plans, Part Two is in your library. This course continues the discussion by experts Marian Jennings, Mark Grube and Nathan Kaufman and covers whether population health management should be a priority for all hospitals/systems, transitioning and success indicators, risks and benefits of partnering for population health initiatives, and the population health hierarchy.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.