Malware Is Top Information Security Concern for Healthcare Execs

Four-fifths of executives at healthcare and payer organizations said in a 2015 KPMG survey that their IT has been compromised by cyber-attacks. Malware was the top information security concern of the 223 healthcare executives surveyed.

 

The recent cyber-attack on a California hospital highlighted ongoing malware dangers for hospitals and the need to plan accordingly, according to health IT experts.

 

Malware attacks cause significant problems for providers, the most significant being the impact on patient care. Other problems include the organization’s ability to operate electronic health records, imaging equipment and life-sustaining systems that are integrated into the information network. Malware is very difficult to detect because it lacks the fixed code of traditional bots and viruses. (“Hospital Breach Shows Malware Danger,” HFMA Weekly News, February 19, 2016)

 

IT experts expect such attacks to increase as organizations implement population health and coordinated care because these initiatives require more significant patient data pools.

 

Internal limitations in health IT systems are critical to limit the potential spread of malware within a system, as are aggressive monitoring and detection systems to identify malicious activities that have entered the system, according to one IT expert. Another noted that comprehensive and regular data backups also are critical for hospitals and other providers because even if the malware developer releases the data, that data has been compromised.

 

The consequences of weak data security could be lost data; class action lawsuits; investigations and possible penalties by state attorneys general, the Department of Justice and the Department of Health and Human Services Office of Inspector General.

 

However, preventing, detecting and mitigating malware breaches carry “large up-front and ongoing costs,” according to financial analysts. “Although some providers are banding together to minimize the costs involved . . . many hospitals have found such costs are affordable only through consolidation.” (“Hospital Breach Shows Malware Danger,” HFMA Weekly News, February 19, 2016)

 

The authors of the KPMG study found that 85 percent of healthcare providers have discussed cyber security at the board level in the past year. They noted, however that nearly one-fifth of healthcare providers do not have a leader solely responsible for information technology security. (HEALTH CARE AND CYBER SECURITY: Increasing Threats Require Increased Capabilities, KPMG, 2015)

 

To read the KPMG report, please click here.

 

 

iProtean subscribers, the advanced Governance course, Committee Effectiveness, is in your library. This course features Barry Bader and Pam Knecht, who cover committee structure and task forces, ideal committee size and composition, independent members, the committee charter, information and reports, and committee evaluation.

 

 

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Patient-Centered Medical Homes Reduce Cost and Utilization

Patient-centered medical homes generally reduce both cost and utilization, according to a new report from the Patient-Centered Primary Care Collaborative.

 

The patient-centered medical home (PCMH) is an innovation in care delivery designed to advance and achieve the Triple Aim of improved patient experience, improved population health and reduced cost of care. A medical home provides enhanced primary care services of value to patients, their families and their care teams.

 

“By investing in enhanced primary care and ensuring PCMHs are foundational to Accountable Care Organizations (ACOs) and/or other integrated health systems, the PCMH model is demonstrating that a cost-effective, accessible, more equitable, higher-quality healthcare system is possible,” wrote the authors of the report.

 

The report from the Patient-Centered Primary Care Collaborative summarizes PCMH cost and utilization results from peer-reviewed studies, state government evaluations, industry reports and independent federal program evaluations published between October 2014 and November 2015. The research review includes long-awaited developments in health system payment reform including Medicare’s transition to value-based payments. The authors found evidence that PCMH programs provide long-term savings.

 

Review Findings

 

  • 21 of 23 studies that reported on cost measures found reductions in one or more measures

 

  • 23 of 25 studies that reported on utilization measures found reductions in one or more measures

 

  • The longer the PCMH program had been implemented and subsequently evaluated, improvements in cost or utilization were demonstrated

 

  • The PCMH initiatives with the most impressive cost and utilization outcomes were generally those that participated in multi-payer collaboratives with specific incentives or performance measures linked to quality, utilization, patient engagement and/or cost savings

 

Key Points from the Review

 

Controlling Costs by Right Sizing Care: Advanced primary care is foundational to delivery system transformation—medical home initiatives continue to reduce healthcare costs and unnecessary utilization of services.

 

Aligning Payment and Performance: Payment reform is necessary to sustain delivery system changes, but alignment across payers is critical for healthcare provider buy-in.

 

Assessing and Promoting Value: Measurement for PCMHs must be aligned and focused on value for patients, providers and payers.

 

To read the full report, click here.

 

 

(Sources: The Patient-Centered Medical Home’s Impact on Cost and Quality, Annual Review of Evidence 2014-2015, Patient-Centered Primary Care Collaborative, February 2016 and “Medical Home Finances Improving: Analysis,” HFMA Weekly News, February 12, 2016)

 

 

iProtean subscribers, the advanced Governance course, Committee Effectiveness, will be in your library soon. This course features Barry Bader and Pam Knecht, who cover committee structure and task forces, ideal committee size and composition, independent members, the committee charter, information and reports, and committee evaluation.

 

 

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Survey Highlights CEOs’ Top Concerns for 2016

The American College of Healthcare Executives’ third annual survey found that the chief concerns of community hospital CEOs involve financial issues, especially transition from volume to value (risk-based payment) and Medicaid payment. Financial concerns trumped other areas such as quality, patient safety, government mandates and personnel shortages.

 

A former chairman of the Medicare Payment Advisory Commission (MedPAC), noted the ongoing aversion of providers to risk-based payment in a recent post in Health Affairs, citing the low percentage of accountable care organizations that have volunteered to accept risk. He noted that policymakers should make alternative payment models mandatory; make alternative payment models and risk bearing more attractive; make fee for service less attractive; or strengthen incentives for Medicare beneficiaries to seek out low-cost/high-value providers. (“Medicaid, Value Transition Lead Hospital Financial Concerns: Survey,” HFMA Weekly News, February 5, 2016)

 

The survey findings came soon after the Healthcare Financial Management Association (HFMA) issued an analysis of healthcare provider accounting for revenues, expenses and accruing losses in risk contracts.

 

“Providers, payers, and other organizations are increasingly entering into contracts or assuming new payment models that expose the parties to the uncertainty of financial gain or loss. All organizations that are involved in risk-bearing arrangements must ensure that their accounting practices keep pace with their contractual obligations as they evolve,” said the president and CEO of HFMA in a written statement. (“Medicaid, Value Transition Lead Hospital Financial Concerns: Survey,” HFMA Weekly News, February 5, 2016)

 

Medicaid Expansion

 

CEO concerns about Medicaid payment appear to be related to a recent finding that Medicare and Medicaid underpayments totaled $51 billion in 2014, far more than the total national hospital uncompensated care costs which decreased to $42.8 billion in 2014 (see last week’s blog post).

 

Hospitals received payment of only 90 cents for every dollar spent caring for Medicaid patients, and 61 percent of hospitals received Medicaid payments that were less than cost in 2014, according to a Medicare and Medicaid report published by the American Hospital Association.

 

Finance experts have expressed concerns that the Affordable Care Act’s Medicaid eligibility expansion will reduce the numbers of uninsured but exacerbate hospital financial shortfalls in other areas. The recent Medicaid cost data appears to support those concerns.

 

Medicaid Changes

 

Upcoming funding changes related to Medicaid also worry hospital executives. Medicaid disproportionate share hospital (DSH) payments, intended to offset uncompensated care costs for Medicaid and uninsured patients, totaled $18 billion ($8 billion in state funds and $10 billion in federal funds) in 2014. The Medicaid DSH payments cuts are scheduled to begin with a $2 billion reduction in FY 2018. The cuts were legislated as an offset for ACA funding.

 

A report from the Medicaid and CHIP Payment and Access Commission (MACPAC) found that more than one-third of DSH payments go to hospitals that do not meet the federal standard for their numbers of Medicaid and uninsured patients. MACPAC recommended that Congress shift more DSH allotments to states and hospitals that serve a disproportionate share of Medicaid and low-income patients and that have higher levels of uncompensated care.

 

 

iProtean subscribers, the advanced Governance course, Committee Effectiveness, will be in your library soon. This course features Barry Bader and Pam Knecht, who cover committee structure and task forces, ideal committee size and composition, independent members, the committee charter, information and reports, and committee evaluation.

 

 

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Uncompensated Care Costs Decline the First Time Since 2001

During 2014, the first full year of the Affordable Care Act’s (ACA’s) insurance coverage expansion, total hospital uncompensated care costs (UCC) decreased to the lowest level since 2001. The decrease was only the second since 1990, according to the annual UCC report from the American Hospital Association.

 

UCC dropped from $46.4 billion in 2013 to $42.8 billion in 2014. The 2014 costs represented 5.3 percent of total expenses in 2014, the smallest since 1990.

 

Total national hospital UCC is defined as a hospital’s bad debt charges and financial assistance charges multiplied by its cost-to-charge ratio.

 

A new study published in Health Affairs credited Medicaid expansion, one of the features of the ACA, with immediately changing the payer mix for states with expanded eligibility in the first two quarters of 2014. The study’s authors noted that expansion states increased their share of Medicaid discharges, while concurrently reducing uninsured discharges. “These changes should reduce hospitals’ burden of uncompensated care,” the authors wrote. (“Affordable Care Act Medicaid Expansion Reduced Uninsured Hospital Stays In 2014,” Health Affairs, January 2016.)

 

Hospitals with lower demand for financial assistance and charity care should consider reallocating that funding to other areas of community benefit such as preventive care, wellness services or other activities outlined in their community health needs assessment. The IRS likely will monitor this reallocation, noted a private healthcare consulting firm.

 

ACA-related health insurance coverage expansions were noted by debt ratings agencies to drive hospital revenue sharply higher in 2014 and 2015. However, continued UCC reductions remain in doubt. For example, a November report highlighted an increase in UCC in the latter half of 2015. The finding raised questions about the sustainability of hospitals’ financial benefits from the ACA coverage expansion. (“Hospital Uncompensated Care Drops in 2014,” HFMA Weekly, January 29, 2016)

 

To read the American Hospital Association report, 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.

 

 

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