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For an MSSP ACO to succeed, it must deliver care to its attributed Medicare fee-for-service population for less than it costs CMS. Comparing an ACO’s actual cost of care to CMS’ pre-determined value of what it is expected to cost them ─ or the ACO’s “hurdle rate” ─ determines if an MSSP ACO will be able to participate in gain. But as of now, CMS hasn’t released these hurdle rates ─ making it very difficult for an MSSP ACO to ascertain whether success is possible under these parameters, and therefore to decide with any confidence whether or not to proceed to contract with CMS.
Like many folks in the healthcare industry, the “light reading” that has graced my nightstand over this past week or two has consisted of 700 pages of the Department of Health and Human Services’ Final Rule on Medicare Accountable Care Organizations (ACOs). Overall, the changes from the draft proposal, aimed at nudging providers away from a fee-for-service model and into one of shared savings and risk, are both substantial and encouraging, with a number of key improvements in three key areas:
I commented several months ago about how the hurried healthcare reform bill became so imperfect that there was no way it would not add to already escalating costs. But in accordance with the rule of unintended consequences, all the debate around the bill, along with the fear that some of its most onerous provisions like large cuts in Medicare for hospitals, has spurned a tidal wave in thinking and planning about new models of care that will be more efficient. We now hear the words “accountable care organization,” or ACO, more often than you heard “web strategy” during the dot.com boom. ACO is a technical term originated by the Brookings think-tank and adopted by CMS to cover the rules around ACO eligibility and qualification. However, the term “Sustainable Health Communities” (SHC) is a more descriptive term with the obvious connotation that left to our present course, the current system is unsustainable, and the addition of “community” extends all the way into all the pre- and post-acute care entities.
It’s not news to most that with increasing regulations, an aging population, rising healthcare costs and dwindling numbers of nurses and certain medical specialists, U.S. hospitals are finding themselves scrambling to do more with less. Most hospitals today are focused on trying to meet Meaningful Use requirements, to avoid penalties and secure financial incentives. But many are missing the bigger, longer term picture of this country’s financial situation: how half a trillion (or more) in Medicare cuts over the next 10 years will impact the industry.
Those of you who read my previous posts on health care reform know where I stand – that while its creators had the best of intentions, the bill ultimately failed to accomplish two key goals: increase quality and decrease costs. The most critical pieces that legislators missed include tort reform, competitive insurance across state lines and much more aggressive pay-for-performance measures and disease management-based incentives. With these additions, health care reform would have been viewed as much more cost-conscious and quality-focused. Instead, we’re now left with a “Frankenstein” system that was cobbled together with, in many ways, the best of the worst – one that’s expensive to maintain and challenging for physicians, providers and ultimately patients.
A recent article in the Pittsburgh Tribune–Review speaks to a growing problem for hospitals: not getting paid for the complex medical care they provide. This is happening at an increasing and alarming degree as a result of insurance auditors determining that when a patient is admitted to the hospital from the emergency department (ED), “medical necessity was not met” – meaning the patient should have been treated under “Observation” status rather than “Admission” status. Federal regulations driving these audits speak to the growing need for proper medical necessity documentation at the time of “patient disposition” – when a physician decides whether a patient should go home, be admitted or held in observation. As a result, emergency doctor admissions are now closely scrutinized.
A maddening Medicare rule is responsible for this increasing incidence of post-payment audits and physician scrutiny. This rule, often enforced by Recovery Audit Contractors (RAC), is based in congressional law. The Medicare Modernization Act of 2003 established the RAC program to identify improper Medicare overpayments and underpayments, and RACs are paid on a contingency fee, receiving a percentage of the improper overpayments and underpayments collected from providers. From March 2005 to March 2008, a government demonstration project in several states found $993 million in overpayments. Hospitals were found liable for 94 percent of the total overpayments. Of the inpatient admissions, 40 percent were deemed medically unnecessary and an additional 35 percent were targeted due to incorrect coding. What does this mean for hospitals and physicians? Medical necessity is 100 percent determined by physician documentation.
I’m very torn about healthcare reform. As a business owner smack dab at the epicenter of the effects of healthcare reform, it’s a very timely boon to our business. As a taxpayer, although I think a lot of the reforms are necessary, I’m very skeptical about how we go about implementing and paying for it. And in many ways, I think so much more could have been done.
Good for business, but good for patients?
For Picis, healthcare reform and its companion legislation, the ARRA HITECH stimulus money, are going to spur tremendous growth opportunities. Today, the 32 million people that will soon be insured will end up going to the hospital emergency room for care under the EMTALA law (where hospitals aren’t allowed to turn away ER patients). The only problem is the hospital ends up footing the bill, putting pressure on their margins and reducing their ability to invest capital in IT and other systems. After covering 4 million more lives here in Massachusetts, we actually saw ER visits go up by 7 percent. Why? We didn’t add any more primary care doctors, and these newly insured patients swelled the offices of the existing general practitioner population to the point where 56 percent are no longer taking new patients. So where do these patient go? You guessed it – back to the ER, but for an entirely different reason. They’re not going to the hospital to get the only free care they can get – they’ve now got insurance – they’re going because they can’t find a doctor to see them in the ambulatory setting.
One of the most important issues this year for emergency medicine physicians — audits — seems to be slipping by without a lot of notice. How is cost containment going to impact emergency physicians? Well, it could put us “up on a RAC,” for starters.
Recovery Audit Contractor (RAC) programs that examine physician documentation for signs that an admission was not justified have “corrected” $1.03 billion in “improper payments” by Medicare in Florida, California and New York. In other words, if you (the physician) have not documented how sick the patient is and how long you intend to treat them, your hospital could be denied the admission, have to pay fines and a third-party auditor could be reimbursed a percentage for finding the problem.
