Category Archives: Healthcare Payment Reform

Payer reforms; payer initiatives; pay for performance; P4P; Center for Medicaid & Medicare Services; CMS rules; CMS rulings: CMS regulations; RACs program; recovery audit contractors; HACs; hospital-acquired conditions; quality-based; quality of care; quality outcomes; state payment reforms; federal payment reforms

The Real Impact of DRGs: Meaningful Data that Changed Hospital Management

A recent blog by François de Brantes, executive director of HCI3, titled “Letting the Facts Get in the Way of So-called Truths,” is highly critical of the DRG based Medicare inpatient prospective payment system (PPS). He urges readers to discover the facts about DRGs, a system he describes as endorsed by “agents of the status quo” that produces “meaningless comparisons” of patient data, with hospitals “being hurt more than helped by false truths.” As a member of the research team that developed Diagnosis Related Groups in the late 1970s, I want to respond to his assertions. Mr. de Brantes’ blog is rife with errors and distortions of fact; any valid points are lost in a barrage of misinformation. Continue reading

Medical Homes: It’s not “Do they work?” but “How do they work?”

Earlier this year, The Journal of the American Medical Association (JAMA) published a widely publicized but limited article on medical homes in Pennsylvania that found little improvements in quality and no improvements in costs or utilization associated with medical homes. The authors concluded medical homes may generally “need further refinement” — a phrase that was taken by many in the press to mean that medical homes “don’t work.”

Subsequently, there has been much debate and little clarity around the promise of medical homes. Continue reading

What Will Patients Do When They See Your Prices?

Two trends are forcing greater consumerism and price sensitivity in health care. One is that Medicare, Medicaid, and some commercial insurance carriers, are starting to show patients and employers the prices facilities charge for common procedures. Another factor is that patients with high-deductible health and account-based plans have an incentive to consider cost when choosing services and providers.

How consumer-savvy are patients? They can search for providers by quality measures on a number of websites including HealthGrades.com and QualityCheck.org. But it’s not as easy to find out what providers charge for, say, an MRI or sinus surgery and compare prices to quality measures. Continue reading

Three Reasons Not to Model Health Care after Trader Joe’s

The AHIP conference in Seattle this month includes three consumer retail executives on the agenda. In leading up to the event, the media cited one of the speakers, the former president of Trader Joe’s, and suggested that health care should take some cues from the retail grocer.

Stop right there. Health care should not imitate the business model of Trader Joe’s, known for its folksy story-telling and unique selection of private label foodstuffs. The healthcare market is significantly different from grocery stores in ways that make it difficult to be consumer friendly: Continue reading

Regulatory Updates: Changes to Billing for Laboratory Services

It is the Ides of May (not quite as famous as the Ides of March), but a good time to think about changes to billing for laboratory services and what to expect in the CMS July 2014 OPPS update. It has been a topic of discussion since the beginning of the year, and continues to create questions given what we know will be coming this summer.

Before this year, clinical laboratory services were assigned a status indicator of A and paid based on the clinical laboratory fee schedule whenever they were present on a claim, even if there was a medical visit APC or a procedure APC also present on the claim. This changed with the January 2014 update to OPPS. CMS decided to package clinical laboratory, with two major exceptions. Meaning, if a lab service is billed with a medical visit APC or with a procedure APC on the claim, it will be packaged (not paid separately). The exceptions are: Continue reading

Payment policy bias against high Disproportionate Share Hospitals (DSH)

In its June 2013 report to Congress, MedPAC offered ways to refine the CMS Hospital Readmissions Reduction Program (HRRP). These included issues of stability (and efficiency) due to dealing with multiple condition-specific measures, the calculation of the existing CMS payment penalty, the inverse relationship between readmission and mortality for heart failure rates, and the topic of socioeconomic status (SES) and risk adjustment.

The bias against high Disproportionate Share Hospitals (DSH) apparent in the CMS payment policy is particularly concerning. This comes at a time when Medicare DSH payments are being directly adjusted as part of ongoing reforms and Medicaid DSH payments are being cut nationally in accordance with the Affordable Care Act. This heightened sensitivity brings urgency to the discussion of how to correct for the perceived SES bias, specifically whether measures reflecting SES should be included in the current risk-adjustment formula. If additional measures reflecting SES are to be considered, it will be important to separate the effects that may be attributed to generally lower performance in low income areas from those attributable to the complexities of treating a challenging population. In other words, can the risk adjustment method help us distinguish whether hospitals that care for poorer patients perform worse because they don’t do a good job, or because their patients are more difficult to care for?

Is it advisable to assign providers to risk groups for the purposes of risk adjustment? This blog hopes to answer that question.  Continue reading

Want to Improve Safety? Choose the Right Metrics for Avoidable Readmissions and Complications

In January the Minnesota RARE campaign received the prestigious Eisenberg Award for reducing avoidable readmissions. Over an 18-month period, the campaign helped hospitals and community partners prevent more than six thousand hospital readmissions.

Although each hospital faces its own unique challenges in managing readmissions, the RARE campaign demonstrates what a supportive and collaborative effort can achieve. It involves 82 hospitals, 100 community partners, and 3 operating partners, including the Minnesota Hospital Association. Continue reading

The Healthcare Provider Relay: Why We Need a Patient-focused Episode Payment System

An alien watching a 500 meter relay would think the race is all about the baton. Why else would these beings dedicate themselves to getting this object to its destination as quickly and flawlessly as possible? A relay race would not exist without the baton to bind the individuals together and create a team event. Although each team member’s leg of the race is important, the requirement that the baton be handed from one team member to the next turns four separate runs into a single, unified performance that can be evaluated and rewarded for its overall excellence.

In the relay that is the U.S. healthcare system, the patient is the baton—and the patient baton is not as fortunate as the white plastic one. In the current healthcare set-up, the hospital discharges its responsibility for the patient’s care once it discharges the patient. Then the patient is passed like a baton from one set of provider hands to the next, wobbles and all. Continue reading

Staying Ahead of the Puck: Six Trends to Follow in Population Health and Payment

Yes, this blog post is about population health, accountable care and the changing economics of healthcare payment. But first, a little bit about ice hockey from Walter Gretzky, father of Wayne “The Great One” Gretzky.

When Wayne was a young boy, Walter encouraged his son’s interest in hockey. In the family’s back yard he built an ice rink, the Wally Coliseum, where he taught Wayne and the neighbor kids to skate. Wayne was obsessed with hockey. Walter recalls seven-year-old Wayne’s fascination during a televised hockey match. On a pad of paper, the boy traced the path of the puck as it careened across the ice. To Walter, the lines on the notepad were scribbles. But to Wayne the pattern showed the places on the ice where the puck was most likely to be at any given time. The intersections, as he called them.

That was part of the Great One’s strategy, to know where the puck was most of the time.

In a way, the same strategy applies to accountable care and population health management. Continue reading

Medicare’s Hospital Readmissions Reduction Program: What Happened to Clinical Credibility?

I believe my intentions are good—but probably not. When I download articles from healthcare journals—the meaty ones that can’t be skimmed—to my iPad to read some evening/weekend/plane trip when I run out of other stuff to do, do I really intend to read them? More likely I hope that by some digital alchemy between my documents app and the Amazon Windowshop app next to it I will magically become better informed about my profession.

If you are like me, sort of well intentioned but short on time and motivation to slog through articles that you don’t absolutely have to read, I’ll make you a New Year’s resolution type deal. Each new blog I write, I am going to choose a good-for-you article, read it myself, and tell you about it.

Hopefully this will be good for you and good for me. Good for me since now I have to actually read and understand those articles I never get around to. Good for you since you (if I do my part) will get a decent return on your blog-reading investment: a complex topic made more comprehensible. Continue reading