Competition and Value Lead CMS Policy Priorities

The head of CMS outlined the agency’s policy shift to competition and choice in a recent interview.  Seema Verma noted, “Coming incentives will encourage Medicare beneficiaries to shop among providers, with those that have the lowest prices and deliver better-coordinated care gaining a competitive advantage.” (“Public Poll, Verma Reject Single-Payer,” HFMA Compass, July 27, 2018)

 

Specific points made in her interview include:

 

  • “Patients are the most valuable force in our healthcare system to create value,” emphasizing the need to cater to patients, “not providers.”
  • All levels of CMS should drive a system where providers compete for patients.
  • Pricing and clinical outcomes’ transparency is required to allow patients to shop; e.g., posting online the full chargemaster price list
  • Patients should be able to access and share their electronic health record—CMS has suggested that providers may be required to share all patient’s electronic health records as a condition of participation in Medicare.
  • CMS will “double down” on value-based payments.

 

She also noted that the president “believes competition is the key ingredient to drive down healthcare spending.” (“Public Poll, Verma Reject Single-Payer,” HFMA Compass, July 27, 2018)

 

Value-based Care Models

 

Ms. Verma criticized the Obama administration’s approach to value-based care models. She listed three specific shortfalls:

 

  1. The models overlooked the patient—providing incentives for providers but neglecting to empower the patient.
  2. Most payment models were set up to encourage consolidation in the marketplace. She noted that consolidation actually reduces competition.
  3. The models did not go far enough to make providers responsible for their own budgets.

 

She criticized one-sided risk models and claimed that “those are not the most effective way.” She said the industry needs models that will encourage the provider to take responsibility for the budget.

 

To increase Medicare provider participation in value-based payment arrangements, she said she plans to waive more program integrity rules and offer new models for primary care physicians. (“Public Poll, Verma Reject Single-Payer,” HFMA Compass, July 27, 2018)

 

 

 

The Volume to Value Paradox advanced Quality course, featuring Nate Kaufman, Marian Jennings and Dan Grauman, is in your library. These experts discuss their perspectives of moving from volume to value, the pitfalls to avoid, how to involve physicians, the impact of consolidation and scale on value and the overall challenges of inserting value into the reimbursement formula.

 

Our upcoming course focuses exclusively on costs and both traditional and innovative approaches to cost reduction. Look for it soon in your library!

 

 

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Advocates Want CMS to Increase APM Options for Clinicians

The recently released “massive” Medicare physician proposed payment rule included a “surprise” projection that alternative payment model (APM) participation may decline. Provider organizations are planning member briefings on the rule. (“Providers Examining Why APMs Are Expected to Stall,” HFMA Weekly News, July 23, 2018)

 

The proposed rule continues the implementation of revisions to physician payment including the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA). Under MACRA, physicians are paid by Medicare either through the Merit-based Incentive Payment System (MIPS), advanced APMs or an exempted class.

 

The vast majority of physicians continue in the exempted category, and MIPS participation is expected to slowly increase. “But provider advocates were surprised to see that Medicare expects clinician participation in APMs to stagnate or decline in FY19.” (“Providers Examining Why APMs Are Expected to Stall,” HFMA Weekly News, July 23, 2018)

 

CMS estimated that between 160,000 and 215,000 clinicians will earn APM bonuses of 5 percent of their Part B payments in FY19. That range was a decline from FY18 projections of 185,000 to 250,000, which CMS estimated in the previous physician payment rule.

 

“We are disappointed in the stagnation of the number of providers projected to be in Advanced APMs in 2019 compared to previous years,” said an executive for the National Association of Accountable Care Organizations

 

An executive from the Medical Group Management Association (MGMA) agreed and noted that MGMA will ask CMS to reverse the declining enrollment by creating more APM options for clinicians.

 

Although CMS officials didn’t address why they expected APM enrollment to stagnate or decline in FY19, some analysts offered possible explanations:

 

  • A combination of tightening qualifications for clinicians seeking the APM bonus and a lack of new models in which they can participate
  • A lack of new or returning accountable care organizations (ACOs); advocates have expressed concern that CMS has not issued guidance for starting the application process for ACOs to renew or launch in 2019—this typically happens in May
  • A lack of agency follow through on strengthening APMs, including ACOs
  • A lack of new physician-led models— the Physician-focused Alternative Payment Model Technical Advisory Committee was expected to review, assess and propose physician-proposed models to vastly increase the number of APMs and allow many more physicians to qualify for APM bonuses; however, no such models have been accepted or implemented by HHS

 

List of Current Models

 

Currently, physicians can qualify for the APM bonus if they meet participation requirements for the following models in FY19:

 

  • Next Generation ACO model
  • Comprehensive Primary Care Plus (CPC+) model
  • Comprehensive ESRD Care model (two-sided risk arrangement)
  • Vermont All-Payer ACO model
  • Comprehensive Care for Joint Replacement Payment model (CEHRT track)
  • Oncology Care Model (two-sided risk arrangement)
  • Medicare ACO Track 1+
  • Bundled Payments for Care Improvement Advanced
  • Maryland Total Cost of Care model (Maryland Care Redesign Program; Maryland Primary Care Program)
  • Medicare Shared Savings Program Tracks 2 and

 

 

Read rule here:

 

(Source: “Providers Examining Why APMs Are Expected to Stall,” HFMA Weekly News, July 23, 2018)

 

The Volume to Value Paradox advanced Quality course, featuring Nate Kaufman, Marian Jennings and Dan Grauman, is in your library. These experts discuss their perspectives of moving from volume to value, the pitfalls to avoid, how to involve physicians, the impact of consolidation and scale on value and the overall challenges of inserting value into the reimbursement formula.

 

Our upcoming course focuses exclusively on costs and both traditional and innovative approaches to cost reduction. Look for it soon in your library!

 

 

For a complete list of iProtean courses, click here.

 

 

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Executives’ Increasing Concerns About Hospital Costs Suggest Innovative Cost Control Measures

A recent survey of hospital/health system CEOs by a national healthcare consulting company reported that cost control is their top priority. CEOs responding to the survey noted “innovative approaches to expense reduction” as the second leading priority.

 

The survey results supported an April report from Moody’s Investors Service that the median operating cash flow margin for its hospitals in 2017 declined to 8.1 percent—below levels recorded during the 2008-2009 recession. (Click here for iProtean blog/newsletter, May 29, 2018, Moody’s: Preliminary Medians Show Declining Hospital Profitability.)

 

Moody’s noted that the decline in median operating cash flow margin came amid accelerating expenses and reduced revenue growth, with expense growth in FY17 outpacing revenue growth for the second year in a row. Its analysts referred to an increase in operating expenses of not-for-profit and public hospitals, with the increase stemming at least partly from the tight labor market.

 

Similarly, the American Hospital Association’s 2018 chartbook found the percentage of hospitals with negative total and operating margins had increased by the end of 2016 to recession-era levels. (Click here for the report.)

 

 

These reports and others emphasized increased hiring and high labor costs as major contributors to escalating costs. Hospitals have talked about reducing labor costs for years, even as hiring has steadily increased. Total hospital employment rose from 3.7 million workers in 1995 to nearly 5 million in 2016, according to AHA data.

 

Health consultants and analysts have made several observations on potential innovative solutions. For example:

  • Rather than absolute labor force cuts, focus on slowing labor expense growth
  • Focus on administrative costs including achieving economies of scale when consolidating
  • Consider decreasing corporate overhead
  • Divest and outsource non-core functions
  • Undertake a critical analysis of costs incurred by acquired physician practices, and refocus on reducing tasks that detract from clinical productivity of these physicians
  • Hire more non-physician clinicians to relieve time constraints on physicians who currently are concerned that documentation requirements overshadow time for patient care

 

(Source: “What’s Driving Increased Hospital Cost Concerns?” HFMA Weekly News, July 13, 2018)

 

 

 

The Volume to Value Paradox advanced Quality course, featuring Nate Kaufman, Marian Jennings and Dan Grauman, is in your library. These experts discuss their perspectives of moving from volume to value, the pitfalls to avoid, how to involve physicians, the impact of consolidation and scale on value and the overall challenges of inserting value into the reimbursement formula.

 

Our upcoming course focuses exclusively on costs and both traditional and innovative approaches to cost reduction. Look for it soon in your library!

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.

An Argument for Growing High-Value Service Lines

Hospitals/systems may be considering the pro’s and con’s of growing their service lines, even as they grapple with cost reduction strategies. Experts have noted the many benefits including increased patient volumes, improved health outcomes, increased market share and improved physician loyalty. If hospitals/systems focus on high-value service lines, a key benefit would be a significant return on investment and financial growth.

 

Objectives of high-value service line growth include:

 

Optimizing limited resources.  By focusing on specific services lines that show the greatest growth potential, hospitals/systems can allocate resources to achieve the greatest effect in driving revenue. The best candidates for growth potential would be identified. Then, through use of data analytics, specific strategies could be developed to improve and market the service line.

 

Driving patient satisfaction. Most U.S. cities have multiple hospitals vying for “healthcare provider of choice” for the community. To compete effectively, hospitals/systems should have effective, even aggressive strategies for attracting the consumers they want and providing them “with an exemplary experience.” Patients want “prompt service tailored precisely to their specific needs, with personalized customer service.” (“How to Grow High-Value Service Lines Effectively,” hfm Magazine, July 2018)

 

Healthcare organizations that achieve high rates of patient satisfaction realize financial benefits, according to a 2016 study by Deloitte. The authors reported that hospitals whose patients rate their experience as “excellent” have higher profitability than those with lower ratings. (Engaging with Tomorrow’s Patients: The New Health Care Customer, Deloitte, 2016)

 

Achieving lifelong relationships with patients. Marketing experts note that it’s costlier to acquire new customers than retain them. Patients who remain involved with a healthcare organization over long periods of time are for all intents and purposes repeat customers. (“How to Grow High-Value Service Lines Effectively,” hfm Magazine, July 2018)

 

Having a reputation for service-line excellence is one of the best ways to foster patient loyalty. Expertise in high-value fields often is the initial draw for patients. It creates the opportunities for the organization to engage patients and, through service excellence, high satisfaction that ensures they will continue to bring business into the organization. (“How to Grow High-Value Service Lines Effectively,” hfm Magazine, July 2018)

 

 

 

The Volume to Value Paradox advanced Quality course, featuring Nate Kaufman, Marian Jennings and Dan Grauman, is in your library. These experts discuss their perspectives of moving from volume to value, the pitfalls to avoid, how to involve physicians, the impact of consolidation and scale on value and the overall challenges of inserting value into the reimbursement formula.

 

 

For a complete list of iProtean courses, click here.

 

 

For more information about iProtean, click here.