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Top 10 Trends for 2017: Twists and Turns Ahead!

Posted by Matthew Smith on Jan 19, 2017 1:31:54 PM

By Laura P. Jacobs, MPH, President, GE Healthcare Camden Group

No one can say that the healthcare landscape is boring – and 2017 may be an especially interesting ride. Repeal/Replace? New transactions? Impact of digital? How will consumers behave? Who will the new disrupters be? How will population health models evolve? Who will merge with whom? The year will bring incremental changes in a variety of arenas, and it could deliver monumental shifts in other ways. Here’s how we size up the top trends and the related management imperatives to succeed:

1. Repeal, Replace, or Revise

The fate of the Affordable Care Act (ACA) is still uncertain, but regardless there will be changes to which healthcare organizations must respond. Major changes to Medicare, Medicaid, and individual coverage may not take effect in 2017, but financial planning will take heightened importance to identify potential scenarios for ensuing years. High deductible health plans and HSAs, price transparency, and continued focus on affordability will put pressure on providers to deliver value in order to win.

2. The March to Value Continues

Regardless of the specific changes that may come with changes to the ACA, payers (Medicare, Medicaid, employers, and commercial insurance carriers) will continue to seek ways to lower costs and improve the experience for patients. The Centers for Medicare & Medicaid Services (CMS) will continue to link payments to performance on a variety of outcomes (e.g. hospital-acquired conditions, readmits, value-based measures). The Medicare Access & CHIP Reauthorization Act of 2015 (MACRA) will have significant impact on physician reimbursement, and as a result will galvanize integrated delivery systems, physician networks, and medical groups to implement efficient ways to demonstrate quality, patient experience, effective use of electronic medical records, and overall efficient resource utilization. Medicaid is moving to managed care in many markets, and commercial carriers and employers will continue to emulate many of the CMS payment models: ACOs, bundled payment, pay-for-performance.

The lines between payer and provider will continue to blur, as payers acquire or provide services to providers (note Optum’s [United Health Group] recent announcement of its purchase of Surgical Care Affiliates [SCA], a leading ambulatory surgery center and surgical hospital provider). With the expected growth of the Medicare Advantage market, providers will evaluate their role as partners or competitors with payers in this space. We expect to see more joint venture or partnership arrangements between payers and providers to launch new health plan products or delivery models. We will also likely see more large, self-insured employers reaching out to providers seeking performance-based payment models to drive lower overall health costs and better outcomes.

Harmonizing your population health strategies with your market’s pace of movement to value-based payment may be one of the most important strategies for your organization: moving too fast or too slowly could challenge both market position and financial performance.

3. The Cost Imperative

While value-based payment models require healthcare organizations to demonstrate quality and patient experience outcomes, the predominant focus is still on cost. With governmental budget pressure, employer pressure on commercial premiums, and in some markets highly consolidated payer dynamics, providers will continue to be challenged to reduce costs and find new efficiencies in the delivery of care. The focus for providers will be to redesign patient throughput, reduce variation through defined work flows and clinical protocols, and optimize use of existing facilities. Capital preservation will be as important as operating expense management to sustain or improve financial performance. Some leading hospitals are developing capacity command centers that combine systems engineering principles, commonly seen in industries such as aviation and power, with predictive analytics to manage and optimize patient flow, safety, and experience – and avoid costly outlays for new bed towers or surgery centers. Bottom line for healthcare leaders is that traditional ways of reducing costs (across the board spending cuts or layoffs) will not create the sustainable cost or quality advantages that will be necessary to succeed either in the short- or long-term. This means re-engineering the process of care across the continuum, engaging clinicians in every aspect of redesign, and imbedding a culture that supports effective change management become increasingly critical.

4. Let’s Make a Deal

Consolidation will continue across the industry. Payers will continue to consolidate as a result of continued premium pressures and the need to defray infrastructure costs. Provider transactions in every form will continue to be active in the year ahead: hospitals, surgery centers, physician groups, post-acute providers, population health “enablement” companies, technology companies , and others will come together in a variety of combinations. Organizations will seek partnerships to serve larger populations, acquire business expertise in a new area, and find efficiencies. With some organizations at a peak in their expansion or acquisition activity, 2017 will also be a critical time to focus on integrating the components that have been acquired or merged. Unless a concerted effort is put in place to identify, structure, and activate an integration plan that is designed to realize the intended goals, many organizations may find they have over-reached or cannot achieve the expected benefits of the expansion.

5. Consumerism Continues to Strengthen

Healthcare has traditionally not been very consumer-friendly (arcane billing practices and charges, hard to make appointments, fragmented care, access on the provider’s terms and so forth). But with deductibles that will increase again in 2017, as well as new disrupters in both the digital and care delivery space, providers must pay closer attention to the consumer experience – whether or not they have actually been a “patient” yet. This means price transparency, access where, when, and how the patient desires, quality reporting, a social media strategy, and digital outreach to create consumer awareness and loyalty will be increasingly important. Determining the definition and attributes (not just the logo) of the health system’s “brand” must carry through all venues of care, whether the consumer uses an app, a website, a phone, or an in-person visit to interact with the organization.

6. Care Everywhere

Care models will continue to evolve in 2017 thanks to the explosion of mobile technology, applications for home and self-monitoring, and the expansion of urgent care facilities and retail care centers. Private equity-backed as well as employer-backed new models for primary care, complex care, and digital tools will continue to proliferate. Telemedicine and “video-visits” will become more widely used – to improve access to complex care for remote areas as well as to provide greater convenience for consumers who would prefer not to leave their home or office for care. As an example, more than half of Kaiser Permanente’s patient visits are done virtually. Competitors will not be limited to those physically located near or in your service area; the new competitive dynamic will include those that can reach your population by cell phone or the internet. It will be imperative that management establish its access strategy and consider all of the tools available as care is being redesigned.

7. Capitalizing on Digital

After making significant investments in electronic medical records and a plethora of other information technology tools – financial systems, data warehousing, care management, predictive analytics, disease management, scheduling, and reporting among them – there’s a rallying cry to convert this mass of data points into actionable information. The call to action now is not necessarily what the next IT purchase will be, but how will the systems that have been purchased co-exist and even work with one another to optimize decision-making and forward-looking actions. The hospital, filled with “smart” equipment and systems, can be characterized now as a complex data “organism.” True transformation will come when organizations utilize artificial intelligence (AI) and the “internet of things” (digital systems “talking” to each other) to optimize patient flow, productivity, clinical decision-making, and the role of clinicians and other care team members.

8. “Outside the Box” Healthcare Cost Drivers

While inpatient and physician care still account for the majority of healthcare costs, pharmacy costs have been increasing at a faster pace, and will likely to continue to do so into 2017 and beyond. There is a rising focus on behavioral health, as individuals with mental health disorders often generate higher medical costs and greater use of emergency departments. With reimbursement for behavioral health still lagging, providers in this space will see increased demand, but will likely struggle financially unless avenues for reducing costs through care redesign or changes in reimbursement are effected. Population health programs will increase their focus on impacting the social determinants of health, as the impact that areas outside of healthcare (housing, nutrition, transportation) have on health status gains greater awareness. This will require health systems to determine how to optimize relationships with community service organizations to drive better outcomes and better health for at-risk individuals.

9. Clinical Advances Continue

Health systems such as Geisinger Health System are making headlines with their use of DNA sequencing on patients to help refine care protocols and interventions. We will see other examples of the expansion of precision medicine, using an individual’s genetic profile, although it will remain fairly limited in the near term. The Cancer Moonshot and other initiatives funded by the 21st Century Cures Act will provide an impetus for speeding up clinical advances and the introduction of new drugs in the years ahead. Watch for the use of robotics in situations both inside the operating room and at the bedside: lifting, moving, and even interacting with patients. Watch for 3D printing to augment the availability of organs for organ replacement. Academic medical centers and research institutes will have opportunities to partner with technology companies as well as community providers to explore and evaluate medical advances. Venture funding for monetizing intellectual property will continue to flow to those initiatives that make healthcare more cost effective and produce reliable outcomes.

10. Managing the Most Precious Resource

Human capital needs are changing. Workforce management is and will remain of paramount importance as the healthcare world evolves. With labor costs comprising the lion’s share of expenses, it makes sense from a purely financial perspective. But with today’s lower unemployment rate, and demand for many key roles in healthcare outstripping supply, healthcare organizations must prioritize workforce management as a cornerstone to change management and operational excellence. Generational differences demand different approaches and even policies in human resource management. Healthcare workers, including clinicians, non-clinicians, as well as the management team are increasingly facing burn-out due to constant change and ever-rising expectations. New approaches for recruitment, talent development and training, leadership coaching, and workforce management must be embraced as roles, responsibilities, and expectations evolve.

Managing an organization through these changes will not be any easier in 2017 than it was in the past years. Keeping an eye on the horizon, while staying attentive to the buffeting winds on all sides will allow healthcare leaders to maintain perspective and stay focused on making the tough decisions necessary to remain aloft. 

Strategic Planning in Uncertain Times


Jacobs.jpgMs. Jacobs is president at GE Healthcare Camden Group and has been with the firm since 1990. She has more than 30 years of experience in the areas of integrated delivery system development, payer strategy, population health management, healthcare strategic and financial planning, transactions, and governance/ management systems. She is a noted speaker and industry resource on the impact of healthcare trends, most notably the requirements for success in value-based payment models, clinical integration, and creating successful integrated delivery systems. She may be reached at laura.jacobs@ge.com.

 

Topics: Affordable Care Act, Obamacare, Trends, Mergers & Acquisitions, Laura Jacobs, Healthcare Data Analytics, Healthcare Consumerism

A View into a World without the Affordable Care Act

Posted by Matthew Smith on Nov 11, 2016 7:45:10 AM

By James Smith, MBA, FACHE, Executive Vice President, and David DiLoreto, M.D., MBA, Senior Vice President, GE Healthcare Camden Group

Healthcare changes are on the way….AGAIN. Just as providers, health plans, and consumers thought they had begun to understand the “new” rules and had developed and activated the strategies required for success in an outcomes-based world; we find ourselves facing changes once again. With a new presidency launching in January, it appears certain that The Affordable Care Act (“ACA”) (also known as “Obamacare”) will be modified, repealed, and/or replaced.

With myriad questions floating around the television networks and on social media, it’s important to not get too far out over our skis before decisions are made. But we can address some of the larger questions Americans are asking. First, let’s assume the ACA is completely repealed--and ask and propose answers to 10 of the burning questions that are top of mind.

1. What are the big changes? 

A new administration may want the mandates, taxes, and regulations to go away, and individuals to be able to go to insurers and shop based on highly transparent information about providers, physicians, networks, and health plans on quality of care, service levels, and cost. Transparency, costs, and access will become the focus both for individual and group insurance premiums and healthcare provider charges. Balancing the budget will take precedence over access to insurance and healthcare services.

2. What goes away? 

The health insurance industry and providers would be released (immediately or within a short, prescribed time period) from numerous regulations, taxes, and rules connected with the ACA. The healthcare exchanges would be dismantled, or be continued as a non-subsidized option for States to administer at their discretion. Loss of minimum medical loss ratios (“MLR”) and rate oversight could lead to even larger premium increases as insurers would seek to return to profitability from the losses in their exchange business and stranded development costs.

3. What would be the most striking game changer of the economic impacts? 

According to a report with estimates from Kaiser Health Foundation, 20 million-plus people could lose their federal subsidies and tax credits that allowed them to purchase insurance, or lose eligibility as the rules change from ACA’s expansion of Medicaid eligibility. States would instead likely be provided block grants by the federal government, ending the federal-state funding partnership. The loss of the public subsidies for private insurance and reduction in Medicaid eligibility will likely increase bad debt, slow or stop cash flow, which will stretch reserves and change decision options for providers.  

4. What is NOT likely to change?

Payment reform within Medicare designed to reduce costs and promote quality (i.e. the shift from fee-for-service to fee-for-value) is not likely to change significantly. MACRA and other regulatory changes shifting the payment models have been largely bi-partisan supported, so are not likely to be significantly impacted. What would be uncertain is the continuation of initiatives sponsored by CMMI, the CMS Innovation Center, which was funded by the ACA. CMMI has launched bundled payments, and many other pilots such as CPC+ to foster faster movement to value-based care.

5. What does this do to providers? 

It could mean credit downgrades for many since recent capital investments in new service lines were made based upon volumes and service mix far different than what may occur. More high-deductible plans with low or underfunded HSAs and a return to more uninsured could lead to sicker patients, more intensive care, and hospitalizations and service line requirements and capacity needs different than planned for under ACA. The market may see a greater use of narrow networks or high-performing networks by health plans to reduce plan cost. Picture the payer mix (lower Medicaid and higher uninsured) and volumes (generally lower) you may have had in 2013, but with payers (including Medicare) putting dollars at risk for efficiency and quality.

6. Will we see more consolidation of providers and physicians? 

Yes, on both counts. The mere uncertainty of the environment if funding for the uninsured remains in flux could exacerbate a trend toward consolidation. Providers must seek every avenue of cost reductions and access to cash as they make new investment decisions in capital, equipment, buildings, service mix, management talent, and other resources. Just as today, efficiency will be the priority, but even more so. Layoffs to reduce staffing costs and strategic focus on services to increase market share and use of resources will be one of the few ways for providers to react.

7. Where would people go? 

As we have seen in the past, emergency departments will be the first site of care for many without insurance. Continued focus of providers on enabling access points to the most clinically appropriate and lowest cost site of care will continue to be a priority so consumers have viable alternatives to manage their healthcare needs with convenience.

8. What will insurers do? 

As insurers lose members, they too will react by attempting to grow market share and cut costs. Consequently, insurers would have to reallocate costs throughout their company—forcing layoffs, consolidations, and ultimately bankruptcy for those who cannot change fast enough. This cascade could accelerate consolidation with greater concentration of both health plans and providers as they respond to a necessity to grow even larger and to do it faster to absorb decreasing membership across a set of fixed costs. Remember too, that insurers will remain heavily regulated as the regulatory controls flow back to the state insurance and health departments. They may be able to return to state rules which allow experience rating and denial of coverage. The possibility of easing the sale of health plan products across state lines, a concept that candidate Trump proposed, could make managing health plan payment models and policies from the provider perspective even more complex than before--but it could provide more competition for health plans with sizable market share in certain states. Health plans may have a greater ability to increase premiums and to do these things with less oversight. Many have invested in new products, and there would no longer be controls over benefits, nor would there be limits on administrative costs and caps on profits which, in turn, could send premiums as well as out-of-pocket expenses even higher.

9. Sometimes campaign rhetoric is tempered by the political and economic realities of governing. Is there a middle ground that might be reached?

Speaker Paul Ryan released the GOP’s healthcare reform plan, “A Better Way,” in June 2016. The plan contains key initiatives that, if implemented, incrementally could increase the role of the private health insurance sector while reducing costs without wholescale withdrawal of coverage. For instance, expanding the use of consumer-directed healthcare options and removing the limits that ACA placed on HSAs, FSAs and HRAs provides more insurance options without eliminating coverage. Eliminating the taxes and fees on self-insured plans, eliminating excise taxes on medical device manufacturers as well repealing the “Cadillac” tax on high-cost plans would be consistent with campaign promises. Increasing support for portability, enabling purchasing across state lines, expanding opportunities for pooling, and advocating for meaningful medical liability reform are all contained within this plan.

10. What about Medicaid expansion? 

The most popular aspect of Obamacare was the expansion of health insurance coverage and, at least politically, it may prove hard to reverse. Over 98 million Americans are now covered by Medicaid at any point in each year. One in four dollars in the average state budget is spent on Medicaid coverage, and the total state and federal support for the program exceeds $545 billion. By 2025 the GAO projects that 108 million Americans will be covered by Medicaid, the federal share exceeding $600 billion and the combined state and federal spending in program approaching $1 trillion. Limited access to physicians and inconsistent quality remain significant obstacles to improving health outcomes for Medicaid beneficiaries. The GOP may look to expand block grants to states while relaxing the federal waiver process. This would create incentives for state governments to search for solutions to the cost and consequences of the recent expansion. Fueled by the shift toward more value-based reimbursement, considerable attention and increased scrutiny and changes in supplemental payments may be opportunities for cost reduction. As the largest payer of long-term services and support, and with continued increasing demand, states will also look to rebalance or reduce costs by shifting to home and community based services.

Changes are most definitely on their way, but as we’ve done in the past, we’ll adapt and adopt these new changes together. 2017 will be a year in which the legislative changes could be made, and in some cases Trump could use an Executive Order to defund certain provisions of the ACA. 2018 will likely be the soonest any substantive changes would be effective, given the fact that open enrollment is already underway and plans are in effect for 2017. We’ll continue to provide timely updates as we learn more in the coming weeks and months.


Jim Smith.jpgMr. Smith is an executive vice president with GE Healthcare Camden Group. He is a nationally recognized strategy and business healthcare consultant, author, and speaker. Mr. Smith has more than 30 years of experience as a leader of provider-owned, for-profit, and not-for-profit health plans, hospital, and health systems, as well as a large physician group. He has extensive experience in managed care and provider network development/operations, health system planning and development, medical group formation and operations, and direct contracting. He may be reached at jsmith@ge.com.

 

 

DiLoreto.pngDr. DiLoreto, senior vice president at GE Healthcare Camden Group, is a physician-executive who is highly experienced in executive management, strategy and operations of healthcare delivery systems, and managed care companies. He has deep management expertise in community-based and academic health systems, large group medical practices, hospitals, and managed care organizations. His areas of specialty include clinical transformation, population health, business process improvement, leadership development, medical informatics, quality improvement and patient safety, and data management and analytics. He may be reached at david.diloreto@ge.com.

Topics: ACA, Affordable Care Act, Obamacare, David DiLoreto, James Smith

The Survey Results Are In: "Walmart as a Primary Care Provider"

Posted by Matthew Smith on Aug 29, 2014 1:04:00 PM

Survey, Health Directions, WalmartA big thanks goes out to the 89 respondents to our "Walmart as a Primary Care Provider" survey that we ran this past Monday. While clearly not scientific, it generated some great responses and elicited some meaningful comments on both the HD Insights Blog and within individual LinkedIn groups where it ran.

We will continue to leave the survey open for a few more weeks to gather more information. Here are the results as of 8/29/14. Survey Says...

Question 1: What is your initial reaction to Walmart entering the primary care provider market? (n=87)

34%: Somewhat Positive

22%: Somewhat Negative

18%: Indifferent

15%: Extremely Negative

  8%: Extremely Positive

Walmart Primary Care Survey

Question 2: Which of the following scenarios describes your STRONGEST thought on Walmart's primary care clinics? (n=88)

25%: I don't see any difference between Walmart and other commercial "minute clinics" (i.e CVS, Walgreens, etc.)

21%This may be fine for well visits, but I don't think this is a proper venue for chronic conditions.

20%: I'm in favor as long as this improves access to health care in rural communities

20%: I question the qualilty of care provided by Walmart

8%:  This will negatively impact local primary care providers.

3%:  (Please select this option if you cannot strongly identify with the previous six options.)

1%:  This is of absolutely no concern to me.

Walmart, Primary Care Survey

 Survey Comments

"The real issue will be quality of their care, and the market they will be attractive to. If they have low income folks using the stores, $40 may still be too high. Not sure I want to seek health care in a Walmart."

"I think it is a wonderful idea! It will help to get the patients closer to they're providers!"
 
"Our market has this service offered at a local grocery store. My worry is not only in regard to quality standards but also infection control. What happens during flu season? What safeguards are in place to protect the healthy patients who see this clinic?"

"I am in favor of increased access to healthcare in whatever form it is. I am however concerned about how to effectively manage populations especially chronic conditions. It seems that without a good foundation for care coordination we just have established an increased route that may reduce urgent care and ED visits but without an increase in care coordination and outcomes. What role will these areas play in population health?"

"It would be greatly beneficial if a variety of affordable diagnostic tests were also available. POS testing devices are available for this purpose. Many devices provide results within minutes."

"Access to initial screening tests and exams at low cost is a big plus; BUT the key would be referral to medical providers equipped to deal with the chronic conditions that the potential patient base is likely to present. - Former NYS Director of Regulatory Affairs (retired)"

Topics: Population Health, ACA, Survey Results, Primary Care, Obamacare, Accountable Care Act, Walmart, Primary Care Provider

Two-Question Survey: Walmart Launches Primary Care Clinics

Posted by Matthew Smith on Aug 25, 2014 12:31:00 PM

Walmart, Primary Care, Primary Care ProviderWalmart has a new take on retail clinics. These newly launched clinics will charge patients $40 for a visit—but only $4 for Walmart associates. Anybody, with or without insurance, can go into one of these clinics and be seen by a qualified health professional, without the usual paperwork. Although the mega-retailer has operated clinics in its stores for a few years now, the new ones are different in a couple of ways.

First, Walmart’s previous clinics were collaborations with local hospitals, which are described as having mixed success. It appears the Walmart is embarking in the primary care market alone at this time. In line with its usual branding, Walmart's touted the low prices available in its clinics: $40 to get a walk-in check-up, and even lower costs (possibly $4) for employees. "For our associates and dependents on the health plan, you can come and see a provider in the Wal-Mart Care Clinic for $4. Four dollars!" Jennifer LaPerre, a company official, said earlier this month. "That is setting a new retail price in the health care industry," she added.

Second, Walmart looks to be rolling out these clinics in states that have not expanded the number of residents dependent on Medicaid (such as South Carolina). Insurance is irrelevant to these clinics, which accept cash payments directly. 

And unlike most primary care providers, they will be open 12 hours a day on weekdays and at least eight hours a day on weekends, Forbes reports. 

What's your take? Please answer the following 2-question survey (make sure to scroll down for Question #2 and submit). Once you submit your answers, you will be directed to a link to see live polling results. If you choose to share comments on the blog, please be respectful and keep the conversation moving forward. Thank you for your feedback. We will publish the results at the end of the week.

Topics: Population Health, ACA, Survey, Primary Care, Obamacare, Accountable Care Act, Walmart, Primary Care Provider

Infographic: State of Emergency--Overcrowding in the ER

Posted by Matthew Smith on Aug 20, 2014 1:51:00 PM

Infographic, Health Directions, HD Insights Blog, When the ACA was enacted, ER visits were expected to decrease. Instead, the inverse is happening. What happens when an ER is faced with more patients than it can accommodate? Between 1995 and 2010, annual ER visits in the U.S. grew by 34%, while the number of hospitals with ERs declined by 11%. From long wait times to sky-high medical costs, overcrowding puts undue pressure on patients, providers and administrators when efficient, high-quality care matters most.

The Miken Institute School of Public Health at George Washington University created this infographic to show the impact of overcrowding on U.S. emergency rooms. The graphic looks at some of the major causes of congested ERs, examines the impact on care delivery and explores proposed solutions to the problem of overcrowding. 

The infographic highlights crucial areas for administrators, communicators, and physicians, nurses, and other ER staff:

  • The increase (national averages) in wait times for ER patients, broken down by urban/rural locations and other factors.

  • Boarding and ambulance diversion statistics.

  • Case urgency percentages.

  • Risks and costs of overcrowding, including uncompensated care figures.

 

George Washington University, ER, Emergency Room, Infographic

 

Brought to you by MHA@GW: MHA degree

Topics: Infographic, ACA, Affordable Care Act, Obamacare, ER, Emergency Room

Hospitals Seek To Help Consumers With Obamacare Premiums

Posted by Matthew Smith on Aug 15, 2014 12:02:00 PM
Article courtesy of Kaiser Health News.
Obamacare, Affordable Care Act, Finance

Low-income consumers struggling to pay their premiums may soon be able to get help from their local hospital or United Way. Some hospitals in New York, Florida and Wisconsin are exploring ways to help individuals and families pay their share of the costs of government-subsidized policies purchased though the health law’s marketplaces – at least partly to guarantee the hospitals get paid when the consumers seek care.

But the hospitals’ efforts have set up a conflict with insurers, who worry that premium assistance programs will skew their enrollee pools by expanding the number of sicker people who need more services.

“Entities acting in their [own] financial interest” could drive up costs for everyone and discourage healthier people from buying coverage, insurers wrote recently to the Obama administration.

Insurers are asking the federal government, which regulates the health insurance marketplaces, to restrict the practice.  

To date, regulators have sent mixed messages about whether they will permit such programs—even as providers across the country are moving to set them up.

“We saw the need in our community,” said Sarah Listug, spokeswoman for United Way of Dane County, a Wisconsin group that is using $2 million donated by a local hospital system to help more than 650 near-poverty-level policyholders pay their premiums. “We have had calls from all over the U.S. asking how to set up partnerships like this.”

The South Florida Hospital and Healthcare Association is seeking at least $5 million in donations from its 45 member hospitals toward premiums for first-time insurance buyers next year.

And members of the Healthcare Association of New York State, which represents 500 hospitals and nursing homes, are considering expanding existing consumer assistance programs to help people pay their premiums “to the extent that is legal and proper,” said Jeffrey Gold, senior vice president and special counsel.

Providers Have Financial Incentive

Hospitals or their foundations have long paid premiums for some patients— often those who fell behind after leaving their jobs and taking on the entire cost of coverage under a 1986 law known as COBRA.

But the issue of “third-party payments” has taken on new urgency because of a provision in the federal health law that could leave providers on the hook for unpaid bills.  Under the law, insurers must give subsidy-eligible enrollees who fall behind on payments a 90-day “grace period” before cancelling their policies. 

While insurers must cover bills for the first 30 days, they may hold off paying those bills for the next 60 -- and ultimately, deny payment if the patient doesn't catch up on premiums. That means doctors and hospitals face the prospect of not getting paid for their services, or having to seek payment directly from their patients.

That’s a big incentive for providers to help pay those premiums.

“It’s a situation where patients will be better off and the providers are better off as well if patients are able to maintain coverage,” said Mark Rukavina, a Massachusetts-based expert on medical debt who consults for the hospital industry. “But it does raise questions.”

Insurers argue that if federal regulators permit such programs, they should bar hospitals from selecting participants based on their health, or from directly paying the premiums.

"If third parties provide incentives to gain coverage only once someone is sick, that will -- as the administration has warned -- clearly lead to a less healthy risk pool and put upward pressure on premiums for everyone,” said Brendan Buck, a spokesman for the trade group, America’s Health Insurance Plans (AHIP).

But Gold of the New York hospital group thinks insurers’ concerns are overblown. He says insurers have already calculated into their rates that a certain percentage of policyholders will be sicker than average.

“If a couple of people who show up at hospitals or other providers have a premium lapse, I don’t understand why someone making them whole [by paying their premiums] would skew the risk pool,” he said.

Hospitals Try To Allay Fears

To avoid problems, hospitals are drafting selection criteria tied to income level -- and are paying consumers’ premiums for an entire year, rather than simply when they lapse.

In the Wisconsin program, for example, eligible residents must live in Dane County, earn between 100 percent and 150 percent of the federal poverty level – about $11,490 to $17,235 for an individual— and enroll in a subsidized silver plan.

The program, called HealthConnect, pays the difference between the subsidy and the cost of the plan for the entire year, which could be as little as $20 to $50 a month for individuals, although it runs higher for families. Money for the program comes from the University of Wisconsin-Madison health system.

In South Florida, meanwhile, “we’re not talking about making premium payments for those who enrolled, then fell behind, but only [for] first-time buyers,” said Linda Quick of hospital group, which has not yet finalized its plans.  

The association plans to enlist several local United Way chapters to help find and enroll eligible residents.

Still, Quick acknowledges that getting the program off the ground may be difficult because of the cost to hospitals.

“I have a couple of systems where we’re talking about half a million dollars” in contributions, she said.

And the enrollees who are helped may never need hospital care, in which case those facilities would see no return on their investment.

Regulators Send Mixed Messages

To date, the administration has said insurers must accept payments toward premiums and other costs from government programs such as the Ryan White HIV/AIDS Program, which helps provide medical services and defrays costs for people living with HIV/AIDS.

But it has been less clear about the role hospitals and other health care providers might play.

Last October, a letter from the administration to Rep. Jim McDermott, D-Wash., indicated that hospitals and drugmakers could help subsidized policyholders pay their premiums.

But that was quickly followed by a Nov. 4 online FAQ discouraging such “third party payments” by hospitals and others because they could “skew the risk pool.”

After protests by patient groups, another advisory said insurers could also accept premium payments from not-for-profit foundations which set financial eligibility criteria and do not consider enrollees’ health status.

An interim final rule in March left out any mention of payments by charitable foundations, although it reiterated concern about payments made directly by hospitals.

Both the insurance industry and hospital groups are seeking clarification.

AHIP, the insurers’ trade lobby, has asked the government not to allow hospital-affiliated foundations to run aid programs. The funds “must be donated to a legally independent foundation that is separate from the organization with a potential financial interest,” AHIP said.

The hospital industry, meanwhile, wants insurers to be required to accept premium payments made by health systems as well as by their foundations.

“Any effort to limit the ability of hospitals or hospital-affiliated foundations to help individuals in need to obtain access to health insurance coverage is bad public policy,” wrote Rich Umbdenstock, president and CEO of the American Hospital Association. 

Topics: ACA, Affordable Care Act, Obamacare

100% of Pioneer ACOs Improved Patient Quality; 56% Lowered Costs

Posted by Matthew Smith on Jul 16, 2013 12:42:00 PM

ACO, Pioneer ACO, Accountable Care OrganizationNOTE: This article originally appeared at Project Millennial, a site focusing on American health policy. 

After a slew of disheartening press releases from the Center for Medicare and Medicaid Services (CMS) about the Affordable Care Act’s growing pains, the Obama administration is probably quite happy to see the initial results of one of the law’s most important provisions: Accountable Care Organizations (ACOs). You should be too.

But the framing of the results may give the typical reader a false impression of what’s actually transpired. From an article by Melinda Beck in the Wall Street Journal titled “Mixed Results in Health Pilot Plan”:

All of the 32 health systems in the so-called Pioneer Accountable Care Organization program improved patient care on quality measures such as cancer screenings and controlling blood pressure, according to data to be released Tuesday by the Centers for Medicare and Medicaid Services. But only 18 of the 32 managed to lower costs for the Medicare patients they treated — a major goal of the effort. Two hospitals lost money on the program in the first year. ”

Does that sound mixed to you? Let’s restate it a bit: All of the 32 health systems in the so-called Pioneer Accountable Care Organization (PACO) program improved patient care on quality measures such as cancer screenings and controlling blood pressure. Eighteen (56% of PACOs) managed to lower costs for the Medicare patients they treated, saving $140 million in costs. Of that, they’ll receive $76 million, and $33 million will be returned to the Medicare Trust Fund. Only two of the 32 PACOs lost money in the first year.

Or, in charts:

Put that way, the program sounds a bit more successful, right?

Partners Healthcare, the Boston-area hospital conglomerate, was one of the winners, and will get a check for $7 million from CMS. Of the two PACOs to lose money, one did so, its executive director said, because its cost baseline was artificially low. It will cut a check to CMS for $2 million. Even so, it isn’t one of the nine that are reported to be leaving the program — it’s sticking around.

Make no mistake: These aren’t mixed results. These are unambiguously positive results for one of the most important provisions in the Affordable Care Act.

Should we have expected all 32 PACOs to save money in the first year of a nascent program? Probably not. And they didn’t — 44% either failed to reduce costs or lost money on the program. But, as the director of CMS’s Innovation Center put it, we shouldn’t have expected all 32 to improve patient care, either: “It’s very rare that 100% of the participants outperform benchmarks.” And they did.

This is only the first year of a program that is reinventing the way the American health care system operates. And it worked. Full stop.

Three-quarters stop, actually: It’s important to keep in mind that the PACOs are, well, weird. For starters, they are Pioneer ACOs because they already had ACO-like qualities, so they have a head start on other hospital systems and are perhaps uniquely qualified to initially succeed. Then there’s the fact that they self-selected into a brand-new program that could cost them millions in missed Medicare reimbursements. Their finance departments crunched the numbers and guessed that they could make money (or at least wouldn’t lose money). Most were right. And PACOs operate under slightly different rules than the average ACO will, starting in 2014. For the first two years, for example, PACOs are playing under the old fee-for-service rules, then will move to global payments, and only PACOs have two-sided risk — they can share in savings and losses, while typical Medicare ACOs will only share in savings.

In other words, PACOs aren’t “average” health systems, and they aren’t “average” ACOs, so it’s obviously premature to say that all ACOs will work.

Still, that doesn’t invalidate these results, and it doesn’t invalidate the hope that ACOs are one policy innovation that can help bend the cost curve in a real, significant way.

Topics: Accountable Care, ACO, Accountable Care Organization, Obamacare, Pioneer ACO

Employers Get Extra Year To Implement Affordable Care Act Coverage

Posted by Matthew Smith on Jul 3, 2013 9:32:00 AM

ACA, ObamacareThe Obama administration Tuesday announced a one-year delay in the Affordable Care Act’s requirement that businesses with 50 or more employees offer coverage to their workers or pay a penalty.

Administration officials said the delay was in response to employers’ concerns about the law’s reporting requirements. Delaying the law’s "employer responsibility" provision would give employers more time to comply and give the government more time to consider ways to "simplify the new reporting requirements consistent with the law," according to a blog post from Mark J. Mazur, the assistant secretary for tax policy at the Department of Treasury.

Most of the employers impacted by the delay already offer coverage to workers, Mazur said. He added that the announcement did not delay the Oct. 1 scheduled start of the online marketplaces, or exchanges, or the subsidies intended to help individuals with low to middle incomes purchase coverage or the requirement that most individuals purchase coverage or pay a fine.

It’s unclear what effect the announcement will have on the health law's goal of providing coverage to millions of American who do not now have it. Although many large employers do provide insurance, the benefits packages vary widely. Workers whose employers do not offer coverage, and now have an additional year to do so, will be forced to go to the exchanges to get coverage.

Ron Pollack, executive director of Families USA, which has supported the health law, said he didn’t think the change would have a major impact on expanding health coverage, noting that 94 percent of employers with more than 50 workers offer health insurance. But he did say the decision could delay some employers' decision to start offering coverage or upgrading it to meet minimum benefits of the law. "The decision, I think, will result in some people not getting coverage who would have received coverage if the employer responsibility provision had not been delayed."

Employer groups were pleased. “This one year delay will provide employers and businesses more time to update their health care coverage without threat of arbitrary punishment,” Neil Trautwein, the vice president and employee benefits policy counsel for the National Retail Federation, said in a statement.

Randy Johnson, a senior vice president of the U.S. Chamber of Commerce, took a similar tack: "The administration has finally recognized the obvious – employers need more time and clarification of the rules of the road before implementing the employer mandate. The Chamber has testified numerous times about the problems with the mandate, and we applaud the administration’s step to delay this provision. We will continue to work to alleviate this and other problems with ObamaCare."

The National Federation of Independent Business, which unsuccessfully sued to overturn the health law, praised the announcement.

In a statement, Amanda Austin, the group’s director of federal public policy, said the move “is simply the latest evidence that implementation of this terrible law is going to be difficult if not impossible, and the burden is going to fall on the people who create American jobs.”

Democratic lawmakers and some of the law’s strongest advocates were slow to respond but Adam Jentleson, a spokesman for Senate Majority Leader Harry Reid, D-Nev., said in a statement, "Flexibility is a good thing. Both the administration and Senate Democrats have shown -- and continue to show -- a willingness to be flexible and work with all interested parties to make sure that implementation of the Affordable Care Act is as beneficial as possible to all involved. It is better to do this right than fast."

But Republicans pounced on it, declaring it further evidence that the law will cost jobs and increase health care costs.

"This announcement means even the Obama administration knows the 'train wreck' will only get worse," said House Speaker John Boehner, R-Ohio. "This is a clear acknowledgment that the law is unworkable, and it underscores the need to repeal the law and replace it with effective, patient-centered reforms."

Sen. Orrin Hatch, R-Utah, the ranking member of the Senate Finance Committee, noted that the delay takes the issue past the 2014 congressional elections.  Hatch also said the fact that the administration was not also giving individuals or families a one-year extension from coverage requirements "shows how deeply flawed the President's signature domestic policy achievement is."

In a White House blog post, Valerie B. Jarrett, a senior adviser to President Barack Obama, said the delay would give employers time to test the new reporting systems and make any necessary  adjustments to health benefits. She said the administration has changed implementation details before, noting that it previously decided to simplify its original exchange application from 21 to three pages.

 

Article courtesy of Kaiser Health News.

Topics: ACA, Affordable Care Act, Obamacare

Early Signs That ACOs Are Boosting Care, Saving Money

Posted by Matthew Smith on Jun 13, 2013 12:02:00 PM

ACO, Accountable Care OrganizationsBloomberg reports that hospitals across the U.S. are improving care and saving millions by creating accountable care organizations, one of the least-touted provisions of the health care law. In other news, Politico reports on a town hall meeting on the health law in Baltimore. Also, the Wall Street Journal details the steps one company is taking in anticipation of the 2014 coverage mandate.

Bloomberg: Obamacare Shows Hospital Savings As Patients Make Gains
Less than five months before the Affordable Care Act fully kicks in, hospitals are improving care and saving millions of dollars with one of the least touted but potentially most effective provisions of the law. While much of the focus on Obamacare has been on the government rush to open insurance exchanges by Oct. 1, 252 hospitals and physician groups across the U.S. have signed up to join the administration's accountable care program, in which they share the financial risk of keeping patients healthy (Wayne, 6/12).

Politico: Baltimore Holds Town Meeting On ACA
All those polls on just how little Americans understand about the health law sprung to life an hour north of Washington one evening this week, as Baltimore County held one of the first public forums to try to explain the new health care options and how to sign up for them. About 100 people, most middle-age adults to seniors, attended the session at a temple here Monday. Their questions provided a glimpse of the public's perceptions of Obamacare enrollment and underscored the challenge facing the law’s backers: Before people can sign up, they have to understand it (Haberkorn, 6/12).

The Wall Street Journal: At Work: What Makes Employees Stick Around? One Company Has an Answer
Now that the Jan. 1, 2014 deadline is getting closer, firms with many part-time or hourly workers are beginning to finalize their decisions on eligibility and workforce scheduling, with a number of employers choosing to cut employees’ hours and skirt coverage requirements. But not every company is choosing that route. The Cumberland Gulf Group is expected to announce Tuesday that it is maintaining or expanding some workers' schedules to make them eligible for company-sponsored care. Its reasoning: The increased costs for care will pay off in the long run, with better employee retention and customer service (Weber, 6/10).

courtesy of Kaiser Health News

Topics: Accountable Care, ACO, ACA, Affordable Care Act, Obamacare

Study: Americans Still Don’t Understand Affordable Care Health Law

Posted by Matthew Smith on Mar 21, 2013 9:41:00 AM

Affordable Care ActIt’s been three years since President Barack Obama signed the Affordable Care Act into law, yet two-thirds of uninsured adults — the very people the law sets out to help — say they still don’t know what it means for them.

Sixty-seven percent of the uninsured younger than age 65 — and 57 percent of the overall population — say they do not understand how the ACA will impact them, according to a poll released Wednesday by the Kaiser Family Foundation (KHN is an editorially independent program of the foundation). The poll also found that Americans’ expectations of how the law will affect health care costs, quality and consumer protections are more negative than positive.

Enrollment for new coverage in the exchanges and Medicaid expansion is set to begin on October 1. That gives states and the federal government less than a year to educate consumers about signing up for coverage through online portals, by phone or with the help of in-person assistance.

But the public does not seem to be focusing on state implementation efforts.

Specifically, 48 percent say they have heard nothing at all about whether their state will run its own exchange. Seventy-eight percent say they haven’t heard enough to say whether their state plans to expand Medicaid, a decision the Supreme Court made optional in its landmark ACA decision last year. “This is equally true in states where the governor has states they will expand Medicaid and in those whose governor has said they will not move forward with the expansion,” the pollsters note.

In fact, the public seems actually to be even less knowledgeable about the health law’s more popular provisions than they were three years ago, including tax credits to small business to buy insurance, subsidy assistance for individuals and guaranteed issue of health insurance.

Many also continue to hold false impressions of the law: 57 percent incorrectly believe that the ACA includes a public option. Nearly half believe the law provides financial assistance for illegal immigrants to buy insurance. And 40 percent — including 35 percent of seniors —  still believe that the government will have “death panels” make decisions about end-of-life care for Medicare beneficiaries.

Overall, the evidence suggests that the Obama administration, state governments, advocates and the health care industry have a big job ahead of them to educate the public by 2014.  The stakes are high: In order for the financial structure of the ACA to hold up, a healthy cross-section of Americans must sign up for both Medicaid and the new exchanges. If they don’t, the pool will likely be filled with sicker individuals, and premium rates could skyrocket.

The poll was conducted March 5 through March 10 and surveyed 1,204 adults. The poll has a margin of error of +/- 3 percentage points.

via Kaiser Health News

Topics: ACA, Medicaid, Affordable Care Act, Obamacare

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