Health Care Reform Memo:
The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the administration and implications for the C-suite and various stakeholder groups.
My take: Third anniversary of the ACA: what's next?
From Paul Keckley, Executive Director, Deloitte Center for Health Solutions
I love college sports, so March Madness is high on my list of favorites. It’s about bracketology, early-round David-Goliath match-ups, improbable upsets, the tournament’s one-and-done format, Dick Vitale, and much more.
In Washington these days, we have our own version of March Madness—the Continuing Resolution to fund the federal government’s operation, sequester, debt ceiling, and grand bargain—not to mention the political odds-making now around campaigns in 2014 and 2016. And the Affordable Care Act (ACA).
This Thursday marks the third anniversary of its passage in the House of Representatives and Saturday the anniversary of its signing by President Obama. It culminated an effort dating back to Senate Committee on Finance hearings February 13, 2007, then 31 meetings with industry leaders and stakeholders in the summer of 2009 by six of its members—Baucus (D-MT), Grassley (R-IA), Conrad (D-ND), Snowe (R-ME), Bingaman (D-NM), Enzi (R-WY)—that ultimately produced the America’s Healthy Future Act and its successor, the Patient Protection and Affordable Care Act (PPACA, aka ACA), that passed the Senate December 24, 2009.
Here’s where we are:
- The implementation of the ACA is on track in some areas and lagging in others. Many insurance reforms were “effective on enactment” and have been implemented; the health insurance industry and employers were required to make almost immediate changes. By contrast, changes in the delivery system were not mandated immediately, so the demonstrations and pilot programs—like accountable care, value-based purchasing, medical homes, etc.—are now getting underway and their impact is unknown, though guidance from the U.S. Department of Health and Human Services (HHS) and the Centers for Medicare & Medicaid Services (CMS) has been provided. And clarity is lacking in key areas of the ACA—retooling of the health care workforce, how the federal government will oversee/support state efforts, and others.
- The four big bets are still the big unknowns. After reading PPACA three times in the ten days after passage, I wrote about its “four big bets.” As of today, there’s still the big unknowns, now having read it 11 times:
Will access to health insurance result in expanded access to affordable insurance coverage for 32 million newly insured? Accounting for the likely three to six million fewer enrollees in Medicaid expansion due to the Supreme Court’s decision June 28, 2012, the biggest question is “if we build it, will they come?” Will 16 million “young invincibles” purchase insurance to avoid the $95 dollar (or 1 percent of income) penalty in 2014, or will the newly insured consist only of those with health problems and no insurance who qualify for subsidies and need health care now? And how many will enroll in Medicaid? Expansion of insurance coverage is the $1 trillion bet in the ACA. Ideally, access to insurance will reduce costs by facilitating the delivery of health services in doctors’ offices instead of emergency rooms (ERs). The theory is that, by moving uninsured individuals into insurance plans, hospitals, physicians, insurance companies, and drug and device manufacturers will be paid from these funds. So bad debt should go down and revenues up. But will it happen? And will the costs of providing services offset the additional funding?
Will employers choose to pay instead of play long-term? Will the combination of higher premiums, medical inflation, new requirements for coverage that is affordable to employees (shared responsibility) and comprehensive (essential health benefits, EHBs), and penalties for companies with 50 or more full-time employees that don’t respond appropriately drive employers to rethink coverage? Might it be easier and cheaper long-term to pay the penalty and walk away from employer-sponsored benefits (especially if health exchanges are a success)? And if walking away is an option, what incentives might employers offer to secure their workforce and manage its productivity long-term? Cost is the issue: in the short-term, employers are focused on the trifecta—defined contribution benefits, narrower networks, and targeted wellness programs. But long-term, what’s next? And if the health system’s incumbents are beneficiaries of ACA funding for the newly insured, will employers see a reduction in their costs since they’ve paid the hidden tax for the uninsured historically?
Will the states be able to effectively manage and fund their expanded responsibilities? The list is formidable—health insurance exchanges (HIXs), Medicaid expansion, oversight of insurance premiums, alignment of state employee health benefits with ACA employer requirements, scope of practice for health professionals, and facilitation of care coordination between public programs and private providers? The enormity of state responsibility in the ACA can’t be understated, forcing governors to make tough choices often in conflict with skeptical state legislators. Medicaid expansion and state HIXs are at the top of the list. But teacher pay, sales and property taxes, road repairs and other items compete for state attention. And most states are required to balance their budgets, unlike the federal government. The ACA imposes huge responsibility and risk for states—financial and political.
Will it reduce costs? More than half of the ACA’s funding comes from industry: new excise taxes on medical devices, prescription drugs, and insurance plans; cuts in reimbursement to hospitals and long-term care providers; and expansion of drug discounts and closure of the Part D donut hole. Each of these is a cost that the industry is likely to pass through via higher prices in the supply chain, provider fees, and insurance premiums. Only time will tell if expanded coverage will result in lower levels of uncompensated care for providers and increased revenues for its suppliers, and the myriad of demonstrations and pilots in the law—medical homes, accountable care organizations (ACOs), bundled payments, value-based purchasing, et al—will they bend the cost curve? Per the Congressional Budget Office (CBO), the ACA will reduce health costs more than $100 billion over the decade versus what would have been spent without its passage, but no one knows for sure what its impact on health costs will be.
- The ACA is controversial and that’s not likely to change: opinions are sharply divided about the ACA. Physicians are evenly split between those favoring and those opposed. Consumers like certain features of the ACA (i.e., restrictions on insurance companies and increased transparency) but are split on the magnitude of the government’s role. And a majority of employers think the ACA is a step in the wrong direction, believing it does not address health costs adequately—their chief concern (see Fact File below for recent data from the Deloitte Center for Health Solutions). Three years after its passage, opinions are widely divergent, marginally informed, but no less strong. Since its passage, opinions have changed little and the decibel level of rhetoric for and against it has not gone down.
The ACA is a law whose implementation spans five election cycles at a time marked by a tepid economic recovery, vigorous debate about federal spending priorities pitting entitlements—Medicare and Medicaid—against other necessary expenditures, and political dysfunction marked by all-time low approval ratings for Congress.
My favorites in March Madness rarely make it through to the finals, but I quickly recover. It’s not life or death. My bracketology is rarely worth betting on.
Health care is different. Like college sports, it’s deeply personal and subject to strong opinion. But unlike March Madness, it’s not a game and its season spans generations.
Every one of us is a shareholder in the U.S. system as a user, taxpayer, and citizen. And the ACA is our legal architecture intended to improve care, increase access, and reduce costs. It’s not going away anytime soon, but it’s certain to change as we resolve the uncertainty about its four big bets.
Paul Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions
PS – Tomorrow, we will release the 2013 Deloitte Survey of U.S. Physicians. They’re concerned about the profession, resolute in accepting its future is decidedly different than its past, and determined to navigate the new normal that rewards their clinical acumen financially and emotionally. To access the study, click here.
Status of implementation: ACA
Through today, March 18, the following provisions of the ACA have been implemented:
Please click here to download the PDF version.
White House Economic Report: ACA slowing health care spending growth
Friday, the White House issued its 2013 Economic Report that included a 27-page analysis of the impact of ACA implementation efforts on health care spending. Per the report, the ACA is controlling health spending through provisions enacted to coordinate care, control costs, and reduce waste. Highlights:
- Recent decline in health spending growth may be attributed in part to the ACA, including programs such as the hospital readmission reduction program (established in October 2012) and other infrastructure investments and care process changes.
- There are 860,000 beneficiaries are enrolled in 32 Pioneer ACOs that “seem to be making substantial investments in infrastructure and care processes.” These investments are expected to result in reduced cost. Note: ACOs are groups of providers (i.e., doctors, hospitals, long-term care facilities, etc.) that work together to deliver highly coordinated care. The ACA established the Pioneer ACO program alongside the Medicare Shared Savings Program (MSSP, Section 3022 of the ACA) to give provider organizations with experience in risk-based contracts with Medicare not only a potential for greater share of Medicare savings than the MSSP, but also greater risk for losses if spending benchmarks are not met. To date, over 250 MSSP ACOs are operating serving over 4 million beneficiaries.
(Source: 2013 Economic Report of the President, March 2013)
My take: part of the slowdown in health spending is attributable to the economic slowdown that reduced consumer discretionary spending for elective health care. Most of the potential health costs savings attributable to the ACA are changes in the delivery system via ACOs, bundled payments, medical homes, value-based purchasing, et al. These demonstrations and pilot efforts are just now starting. It’s too soon to know their full impact on costs.
Expatriate health plans don’t have to comply with ACA until 2016
According to FAQs published by the U.S. Department of Labor (DOL), expatriate health plans—plans offered to individuals living outside of the U.S.—will have a one-year transition period to implement the insurance market provisions effective January 1, 2014 per the ACA. This means expatriate health plans will not have to comply with the majority of ACA insurance provisions until plan years beginning in January 2016. Reasoning: other countries’ health care systems do not parallel the U.S., which will make it difficult for expatriate health plans to comply by 2014 (i.e., definitions of preventive services, independent review organizations, code sets, and medical terminology may vary depending on the country).
White House, Democratic leaders make appointments to Commission on Long-Term Care
As part of the American Taxpayer Relief Act of 2012 (H.R. 8) that passed January 1, 2013, averting the fiscal cliff for two months, the Community Living Assistance Services and Support (CLASS) Act (Sections 8001 and 8002 of the ACA) was replaced with a new 15-member Commission on Long-Term Care tasked to create a national plan to address long-term care services in the U.S. Three Commissioners were to be appointed by President Obama and 12 by the House and Senate (50/50 Republican/Democrat appointees from Congressional leadership).
Last week the White House appointed its designees to the Commission. In February, U.S. Senate Majority Leader Harry Reid (D-NV) and U.S. House of Representatives Minority Leader Nancy Pelosi (D-CA) submitted their nominees. Nominees from Speaker John Boehner (R-OH) and Senate Minority Leader Mitch McConnell (R-KY) have not been announced.
My take: long term care—skilled nursing, long-term acute, home care, hospice, et al—will be increasingly important in health reform requiring follow-on legislation to align these with improved coordination of care for seniors, and especially for seniors also eligible for Medicaid.
Congressional leaders introduce FY 2014 budget proposals: vast differences
Last week, both the U.S. House of Representatives and U.S. Senate issued budget proposals for fiscal year (FY) 2014, which also include strategies for long-term federal deficit reduction. The President is expected to submit his budget in early-April. The Senate is scheduled to vote on its budget this week. Key highlights:
|Issue||U.S. House of Representatives: “The Path to Prosperity,” introduced by Representative Paul Ryan (R-WI)||U.S. Senate: “Foundation for Growth: Restoring the Promise of American Opportunity,” introduced by Senator Patty Murray (D-WA)|
|Federal deficit (ten-year impact)||
(Source: Deloitte Center for Health Solutions analysis of House and Senate budget proposals)
Senate introduces legislation to avoid government shutdown
Monday, Senator Barbara Mikulski (D-MD) introduced legislation to amend the Department of Defense, Military Construction and Veterans Affairs, and Full-Year Continuing Appropriations Act, 2013 passed in the House March 6, 2013, that would avert a government shutdown later this month.
If both houses of Congress agree on the bill, health care expenditures are included in FY 2013:
- National Institutes of Health (NIH): $71 million increase for NIH funding over FY 2012 levels. Senator Tom Harkin (D-IA) proposed an amendment on Wednesday that would allocate a $211 million increase, but the amendment fell short of 60 votes (54-45).
- ACA: denied the Office of Management and Budget’s (OMB) request for $949 million for HIX implementation and $567 million for programs such as the Health Care Fraud and Abuse Account (Section 6402 of the ACA)—similar to the House bill.
- Senator Ted Cruz (R-TX) proposed an amendment to repeal the ACA, but the amendment was rejected by the Senate 52-45 along party lines.
- U.S. Food and Drug Administration (FDA): user fees derived from prescription drug, medical device, animal drug, and animal generic drug assessments in FY 2013 will be subject to the FY 2013 limitations. Note: user fees were set at FY 2012 levels per the Continuing Resolution passed in 2012—a difference of $40 million.
Note: by March 27, 2013, to avoid a government shutdown, Congress must pass a spending bill to authorize federal spending for the remainder of FY 2013.
CMS amends Medicare Part B billing policies to allow hospitals to recover funds denied by RAC audits for inpatient services
Last week, CMS released an administrative ruling and proposed rule that would amend Medicare Part B billing policies effective immediately for new denials, prior denials eligible for appeal, and appeals still in process. The administrative ruling will serve as the interim policy until a final rule is released. Comments will be accepted on the proposed rule through May 17, 2013. Highlights:
- Under the administrative ruling and proposed rule, if a hospital is denied reimbursement under Part A (i.e., hospital coverage) because a Recovery Audit Contractor (RAC) determined that the services should have been provided in an outpatient setting (Part B) vs. an inpatient setting, the hospital can rebill under Part B inpatient as long as the services were medically reasonable and necessary. Certain services specifically requiring outpatient status are exempted (i.e., outpatient visits, ER visits, and observation services). Note: prior to this ruling, there were a very limited number of services hospitals could bill for under Part B inpatient.
- Hospitals must rebill within one calendar year to receive reimbursement; the one year rule does not apply to the administrative ruling.
Background: in November 2012, the American Hospital Association (AHA) and four hospitals filed a lawsuit against CMS objecting to RACs denial of medically necessary and appropriate claims on the basis that the services were provided in an inpatient vs. outpatient setting. The lawsuit is ongoing and in a press release issued last week AHA stated: “[we are] pleased that CMS…has recognized that its existing rebilling policy is not consistent with Medicare law and provided relief for current appeals. However, we remain concerned that CMS’s proposed long-term solution would limit the ability of hospitals to rebill and would not fully reimburse them for all reasonable and necessary services provided. We plan to press ahead with the litigation we initiated last year on this issue unless and until a final rule provides full Part B reimbursement without unreasonable restrictions… [the one year rebilling] limitation is particularly problematic considering that RACs audit claims for services provided during the previous three years.”
MedPAC submits biannual report to Congress
Friday, the Medicare Payment Advisory Commission (MedPAC) released its March 2013 recommendations to Congress on Medicare payment policies for Medicare FFS, Medicare Advantage (MA), and the Medicare prescription drug benefit program (Part D). Among the more notable recommendations: immediate repeal of the Sustainable Growth Rate (SGR) payment model used by Medicare to calculate physician payments, a 1 percent increase for hospital services, recommended overhaul of long-term care payment policies and encouragement of bundled payments to providers. Highlights of the 435-page report:
|Provider type||Recommendations for 2014|
|Payment adequacy in fee-for-service (FFS) Medicare||
|FFS hospital inpatient and outpatient services||
|FFS physician and other health professional services||
|FFS ambulatory surgical center services||
|FFS outpatient dialysis services||
|FFS post-acute care providers||
|FFS skilled nursing facility services||
|FFS home health care services||
|FFS inpatient rehabilitation facility services||
|FFS long-term care hospital services||
|FFS hospice services||
|Other Medicare programs||Key findings|
|MA special needs plans||
Source: MedPAC Biannual Report to the Congress: Medicare Payment Policy, March 2013
Background: MedPAC is a 17-member advisory commission established by the Balanced Budget Act of 1997 to submit recommendations to Congress surrounding Medicare payment policies. MedPAC analyzes traditional FFS, MA, and issues surrounding access and quality of care, issuing two reports annually. Congress is not required to implement its recommendations and the Commission has no independent authority. The ACA established the Independent Payment Advisory Board (IPAB), which is a 15-member commission appointed by Congress and the President to make recommendations on how to control Medicare spending. The recommendations made by IPAB must be implemented by the Secretary of HHS unless Congress adopts alternative policies that achieve the same level of cost savings. Its first recommendations will be made in 2014 with the proviso its recommendations cannot reduce productivity adjustments. The IPAB does not replace MedPAC; the Commission will continue to serve as an advisory commission to Congress.
Study: states that don’t expand Medicaid may increase employer health costs
A Jackson Hewitt study concluded that a state’s decision not to participate in Medicaid expansion could cause employers to incur higher shared responsibility payments costing anywhere between $876 million to $1.3 billion each year. In Texas alone, foregoing Medicaid expansion may increase federal tax penalties for businesses in the state by $299 to $448 million each year.
Background: beginning in 2014, employers that do not provide affordable health insurance coverage for employees will be subject to a penalty. However, if an employee is enrolled in Medicaid, the penalty will not be triggered.
Source: Haile, Brian, “The Supreme Court’s ACA Decision and Its Hidden Surprise for Employers: Without Medicaid Expansion, Employers Face Higher Tax Penalties Under ACA,” Jackson Hewitt, March 13, 2013
Medicaid expansion update
Twenty-five states and D.C. have said they will or are in support of expanding their Medicaid programs; 16 states have indicated they are highly unlikely to expand their program:
|Announced or Governor in support of expansion||Not participating or highly unlikely to participate||Undecided or undeclared|
|AR, AZ, CA, CO, CT, DC, DE, FL, HI, IL, MA, MD, MI, MN, MO, MT, ND, NJ, NM, NV, NY, OH, OR, RI, VT, WA||AL, GA, IA, ID, IN, LA, ME, MS, NC, NE, OK, SC, TX, UT, VA, WI||AK, KS, KY, NH, PA, SD, TN, WV, WY|
■ Democratic ■ Republican ■ Independent
Source: Kaiser Family Foundation
Note: states do not have a deadline to make a decision on Medicaid expansion and may opt in or out of participation at any time. This chart was compiled using publicly available information (as of March 3, 2013) and is subject to change.
Other recent announcements:
- Last week, the Florida Senate Committee on Patient Protection and Affordable Care Act rejected (7-4) the Medicaid expansion purposed by Governor Rick Scott (R) last month, voting along party lines. The Committee Chairman, Senator Joe Negron (R), recommended the state create its own expansion plan, similar to the framework proposed by Arkansas.
Background: Arkansas is considering using federal Medicaid expansion funds to subsidize Medicaid beneficiaries’ purchase of private health insurance coverage through the HIX.
Periodicals discussing the Medicaid expansion:
"These supposed sunset clauses (that would allow a state that expands its Medicaid program to leave) are really a roach motel. Once states check into new Medicaid, the almost certain legal reality is that they can never check out. The ACA mandated that states convert this joint state-federal program in to a new, larger and far more expensive project in perpetuity. ….But there’s no evidence in the original law or the Supreme Court opinion that states can join or leave at their own whim. The logic of Justice Roberts’s opinion suggests that once states adopt new Medicaid, the program immediately becomes the old program for the purposes of the law and then states can’t leave…We wouldn’t be surprised if HHS is promising flexibility now only to revoke it later as a deliberate bait and switch.” (Source: Editorial, “New Medicaid’s Roach Motel,” The Wall Street Journal, March 15, 2013)
State round-up: HIX
Seventeen states—12 led by Democratic Governors, four led by Republicans, and one Independent—and the Democratic mayor of D.C. have announced plans to operate state-based exchanges. Seven states—four led by Democratic Governors and three led by Republicans—will participate in state-partnership exchanges with HHS. The remaining 26 states will default to a federally-facilitated exchange.
|State-based exchange||State-partnership exchange||Federally-facilitated exchange|
|CA, CO, CT, DC, HI, ID, KY, MA, MD, MN, NM, NV, NY, OR, RI, UT, VT, WA||AR, DE, IA, IL, MI, NH, WV||AK, AL, AZ, FL, GA, IN, KS, LA, ME, MO, MS, MT, NC, ND, NE, NJ, OH, OK, PA, SC, SD, TN, TX, VA, WI, WY|
■ Democratic ■ Republican ■ Independent
Recent HIX announcements:
- Last week, at the America’s Health Insurance Plans (AHIP) Exchange Conference in Washington, DC, Director of the Center for Consumer Information and Insurance Oversight (CCIIO) Gary Cohen and Deputy Director Henry Chao clarified that the qualified health plan (QHP) application is final and that stand alone dental plans interested in participating on the federally-facilitated exchanges may be provided additional time to apply for QHP certification. All other health insurance plans interested in participating in the federally-facilitated exchanges are required to submit their application to HHS by the end of April. Health insurance plans interested in participating in state-partnership exchanges will be expected to submit applications beginning April 1, 2013.
- Wednesday, the Idaho state House passed legislation to establish a state-based, nonprofit insurance exchange (41-29). The bill will go to the Senate, which has approved similar legislation in the past. The exchange is expected to enroll 177,000 state residents.
- Mississippi legislators passed the “Anti-Bloomberg Bill” that prohibits counties or towns from requiring calorie counts on menus, limiting portion sizes, or restricting toys in kids’ meals. The bill passed the Senate 50-1 and the House 92-26. Note: according to the Centers for Disease Control and Prevention (CDC), Mississippi has the highest rate of obesity in the nation with 34.9 percent of residents that are overweight or obese.
Related: last week, a New York City judge struck down a law enacted in July 2012 by Mayor Michael Bloomberg prohibiting the sale of sugary drinks larger than 16 ounces in certain establishments.
- Thursday, California Senator Ed Hernandez (D) introduced legislation to address the state's anticipated physician shortage. The bills (SB491, SB492, and SB493) would allow nurse practitioners to see Medicaid and Medicare patients even if the doctors they work for do not. Background: according to the National Conference of State Legislatures (NCSL) at least 144 “scope-of-practice” bills have been proposed in 33 states since February 10, 2013. NSCL defines “scope-of-practice” legislation as bills regarding commissions and boards, licensure and credentialing, Medicaid/health insurance plan reimbursement, practice autonomy, prescriptive authority, truth in medical education, and truth in advertising for distinct health care professions.
Physicians not satisfied with EHRs
The American College of Physicians (ACP) and AmericanEHR Partners surveyed 4,279 physicians on electronic health records (EHRs) satisfaction. Highlights:
- EHR impact on work load: 34 percent of respondents were very dissatisfied with the ability of their EHRs to decrease work load, a 19 percent increase from 2010.
- Percent who would not recommend EHRs: 39 percent of respondents would not recommend EHRs to a colleague—up from 24 percent in 2010.
- EHRs impact on quality of care: clinicians reporting “very satisfied” with the ability of their EHR system to improve care decreased by 6 percent from 2010; those who were “very dissatisfied” increased 10 percent.
- Satisfaction by specialty: surgical specialists were the least satisfied, while primary care physicians (PCPs) were more satisfied than medical subspecialists.
(Source: ACP, “Survey of Clinicians: User satisfaction with electronic health records has decreased since 2010,” March 2013)
Study: 80 percent of physicians would prescribe cheaper drugs if they had access to patients’ formularies and co-pay information
The study examined how providing access to a patient’s formulary and co-pay information might impact a physician’s prescribing patterns. Result: currently, 60 percent of the physicians surveyed have access through their e-prescribing programs to see the patients’ full list of medicines, or formularies; of those surveyed, 80 percent said if given the information about their patients’ formularies and co-pays, they would choose a less expensive or better-reimbursed option. (Source: Modern Healthcare, “Docs mindful of prescription costs when given electronic access: study,” March 14, 2013)
Report: U.S. drug manufacturers shift patents to lower tax rate countries
U.S. drug manufacturers paid $7 billion less in taxes in 2012, compared to $3.9 billion in 2003, by shifting more patents and trademarks to subsidiaries in low- or no-tax countries. In 2012, 83 large U.S. companies reported $1.43 trillion in untaxed profits in foreign countries. (Source: Bloomberg Business Analytics)
Report: medical student debt climbs to $170,000
The medical school class of 2012 had $1.7 billion in debt—a median of $170,000 per graduate. Key findings:
- Prevalence of debt: 86 percent of graduates report having education debt.
- Tuition costs: median in-state four-year cost of attendance (COA) across all schools is $228,200. The average annual increase in the COA is 5.8 percent for public schools and 4.5 percent for private schools.
- Private medical schools: graduates from private medical schools are slightly less likely to have debt, but those with debt have higher levels than public medical school graduates.
- Gender: there were virtually no differences between men and women graduates in the rate and levels of 2012 education debt.
- Rate of inflation: debt levels for medical school graduates and medical school COA have both increased faster than inflation over the last 20 years increased—6.3 percent per year since 1992 compared with 2.5 percent for the Consumer Price Index (CPI).
(Source: Association of American Medical Colleges, “Physician Education Debt and the Cost to Attend Medical School, 2012 update,” March 2013)
AHA: provider payment cuts will not curb health care spending
In a report released last week, AHA expressed concern regarding the federal government’s strategy to reduce national health care expenditures by focusing on reducing provider payments. AHA proposed the following recommendations to ensure that the Medicaid and Medicare programs are sustainable in the long-term. Highlights:
Strategy 1: promote and reward accountability
- Accelerate payment and delivery system reforms
- Eliminate preventable infections and complication
- Engage individuals in their health and health care
- Better manage advanced illness
- Advance the see of health information technology (IT) and EHRs
- Promote transparency of quality and pricing information
Strategy 2: use limited health care dollars wisely
- Eliminate non-value added treatments
- Revamp care for vulnerable populations
- Promote population health
- Modernize federal health programs
- Simplify administrative and regulatory processes
- Reform the medical liability system
(Source: AHA, “Ensuring a Healthier Tomorrow: Actions to Strengthen Our Health Care System and Our Nation's Finances”, March 2012)
CDC: “Nightmare bacteria” increasing in hospitals
Last week, the CDC alerted hospitals and providers that deadly infections non-responsive to the most powerful antibiotics are on the rise. It noted that the infections caused by carbapenem-resistent bacteria rose to 4 percent in 2012, up from 1 percent in 2001, and Klebsiella bacteria-related infections rose to 10 percent in 2012 from 2 percent in 2001. But both appear confined to hospitals to date.
Tele-ICU: new guidelines from AACN
The American Association of Clinical Care Nurses (AACN) issued new guidelines for tele-intensive care unit (ICU) nurses, an emerging specialty of nurses who monitor acutely and critically ill patients from a remote location using audiovisual technology and health information technology to identify trends in patient data and stability. AACN recommended principles:
- Establish and sustain an environment that promotes effective communication, collaboration, and collegiality to ensure optimal quality outcomes by standardizing procedures and policy and establishing staffing models.
- Demonstrate proficiency in specific knowledge, skills, and competencies to contribute maximally to patient outcomes and nursing practice.
- Actively engage in measuring and analyzing outcomes to ensure ongoing improvement in patient care and tele-ICU nurses’ contribution to care.
Brand and generic drug manufacturers challenge FTC pay to delay position
Brand-name and generic drug companies are challenging the Federal Trade Commission (FTC) later this month when the Supreme Court hears oral arguments about the industry’s “pay to delay” practice in which the branded manufacturer pays the manufacturer of the generic substitute to delay market entry. The agreement typically runs out before the brand-name drug’s patent expires. The Supreme Court is expected to rule this summer.
New industry and peer-reviewed studies of note to health system transformers…
ROI for EHR use is primarily driven by increased physician income, reduction in transcription costs
Objective: to assess the return on investment (ROI) for use of EHRs in medical practices
Methodology: survey data from 49 community practices in a EHR pilot, the Massachusetts eHealth Collaborative funded by Blue Cross and Blue Shield of Massachusetts that ran from 2006-2007 to project five-year returns on investment
Key findings: “We found that the average physician would lose $43,743 over five years; just 27 percent of practices would have achieved a positive return on investment; and only an additional 14 percent of practices would have come out ahead had they received the $44,000 federal meaningful-use incentive. The largest difference between practices with a positive return on investment and those with a negative return was the extent to which they used their EHRs to increase revenue, primarily by seeing more patients per day or by improved billing that resulted in fewer rejected claims and more accurate coding. Almost half of the practices did not realize savings in paper medical records because they continued to keep records on paper.” Primary care practices fared better than specialty practices, and larger practices (those with six or more doctors) did better than smaller practices. The major differential between positive and negative returns: on average, positive ROI practices increased revenue by $114,613 per physician over five years—12 times the average for those with a negative ROI.
(Source: Julia Adler-Milstein, Carol E. Green, and David W. Bates, “A Survey Analysis Suggests That Electronic Health Records Will Yield Revenue Gains For Some Practices And Losses For Many,” Health Affairs, March 2013 (32:3562-570))
My take: the cost effectiveness (ROI) for the meaningful use of EHRs in medical practices is certainly a worthwhile discussion, but the medical profession should justify its use primarily on the basis of improved outcomes: improvements in the accuracy of diagnoses and appropriateness of treatment plans based on more and better information about a patient’s signs, symptoms, risk factors, and co-morbidities combined with clinical decision support tools to augment the clinician’s judgment. In a market increasingly demanding transparency about safety, outcomes, conflicts of interest, prices and service delivery, it would seem a reasonable physician would see value in optimizing their clinical performance using a certified EHR as a competitive reality. It’s not about the ROI; it’s about being professionals that use tools that better equip them to deliver value to their customers, the patients.
“Today’s passage of health reform means Americans will not have to wait any longer for meaningful health reform that will end insurance company abuses, lower costs and increase choice and competition for consumers. Today’s House vote is not the end, but it is a momentous step forward. We have now enacted into law the affordable health system America needs to be competitive in the 21st century global economy. Working with President Obama, this Congress has made tremendous progress to build consensus on how to make our health care system more affordable and sustainable for families, businesses and the federal budget. I am confident we can enact into law legislation to improve the bill.”
—Senator, Max Baucus (D-MT), March 21, 2010
“It is with great humility and with great pride that we tonight will make history for our country and progress for the American people…Just think—we will be joining those who established Social Security, Medicare, and now tonight health care for all Americans…In doing so, we will honor the vows of our founders, who in the Declaration of Independence said that we are ‘endowed by our Creator with certain unalienable rights, that among these are life, liberty and the pursuit of happiness.’ This legislation will lead to healthier lives, more liberty to pursue hopes and dreams and happiness for the American people. This is an American proposal that honors the traditions of our country.”
—Minority Leader and Representative Nancy Pelosi (D-CA), “Making History, Making Progress, and Restoring the American Dream,” March 21, 2010
- Public opinion about the ACA
A good start A step in the wrong direction Don't' know 2012 2011 2012 2011 2012 2011 Total 49% 38% 30% 29% 21% 34% Millennials
55% 41% 22% 20% 24% 39% Generation X
49% 37% 28% 27% 23% 36% Baby Boomers
49% 36% 34% 32% 17% 32% Seniors
49% 36% 35% 38% 20% 26%
(Source: Deloitte Survey of U.S. Health Care Consumers, Deloitte Center for Health Solutions)
- Physician perceptions of the ACA: 2012 vs. 2011
A good start A step in the wrong direction Don't' know 2012 2011 2012 2011 2012 2011 Total 44% 44% 38% 44% 18% 12% PCP 45% 45% 32% 39% 23% 16% Surgical specialist 38% 28% 48% 60% 14% 12% Non-surgical specialist 47% 53% 34% 36% 19% 11% Other 49% 68% 31% 32% 20% 0%
(Source: Deloitte Survey of U.S. Physicians, Deloitte Center for Health Solutions)
- Employer perceptions of the ACA: 2012
Employer size A good start A step in the wrong direction Don't know Total 30% 59% 11% 50-100 employees 25% 66% 9% 101-999 employees 37% 50% 14% 1,000-2,499 employees 39% 54% 7% 2,500+ employees 35% 57% 8%
(Source: 2012 Deloitte Survey of U.S. Employers, Deloitte Center for Health Solutions)
- Changes in CBO projections of ACA Impact: 2010 vs. 2013 (in billions)
ACA provision Dec-2010
Difference Medicaid and CHIP outlays $437 $312 ($125) Exchange subsidies $460 $585 $125 Small-employer tax credits $29 $17 ($12) Gross cost of provisions $926 $914 ($12) Penalty payments by uninsured individuals ($17) ($26) ($9) Penalty payments by employers ($52) ($74) ($22) Excise tax on high premium insurance plans ($32) ($27) $5 Other effects on tax revenues and outlays ($56) ($83) ($27) Net cost of coverage provisions $769 $704 ($65)
(Sources: CBO, “The Budget and Economic Outlook: Fiscal Years 2013 to 2023,” Table A-2, February 2013; “Selected CBO Publications Related to Health Care Legislation, 2009–2010,” December 2010)
- CBO projections 2010 vs. 2013: changes in insurance coverage by insurance type (millions), 2013-2019
* = between 0.5 million and -0.5 million people
(Source: CBO, “Estimate of the Effects of the Affordable Care Act on Health Insurance Coverage,” February 2013)
- Possible Coverage Scenarios resulting from Changes in the ACA
Scenarios A — “Intended results”: Baseline D2 — Employer penalty tripled (from $2,000 to $6,000) B1 — 5% of large and 10% of small employers drop coverage D3 — Combination of D1 and D2 with exchanges and mandates delayed until 2016 B2 — 10% of large and 25% of small employers drop coverage E1 — Six states (FL, LA, MS, SC, TX and WI) reject Medicaid expansion B3 — 25% of large and 50% of small employers drop coverage E2 — Twenty-nine states reject Medicaid expansion C — Individual mandate repealed F1 — National Health Expenditures growth averages 4.5% per year through 2021 D1 — Individual penalty tripled (from 1% to 3% of income) and faster phase-in (from 3 years to 2) F2 — National Health Expenditures growth averages 8.5% per year through 2021
(Source: The Impact of Health Care Reform on Insurance Coverage: Update 2012, Deloitte Center for Health Solutions)
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