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Posts Tagged ‘Medicare’

CR_brandWebNovember saw the acquisition of yet another HIE vendor by a payer (Humana). An in-depth analysis of this acquisition and its implications was provided to Chilmark Advisory Service (CAS) clients at the end of November. Following are abstracts of the three research notes in our latest Monthly Update.

Humana Leaps Into the HIE Market
The health insurance industry is undergoing massive upheaval. Payers don’t need a crystal ball to see that in the near future, providers will sell services directly to employers, and that insurers need to get creative in order to stay competitive. With its acquisition of HIE vendor, Certify Data Systems, Humana joined two other payers in the HIE market: Aetna and UnitedHealth Group. Yet Humana’s strategy sets it apart from the other payers. On a single day in November, Humana announced not one but three acquisitions: Certify plus two Florida-based managed care service organizations. Humana has clearly articulated its plan to become the preferred Integrated Delivery Provider to Medicare Advantage members and dual eligibles. By adding Certify’s strong HIE capabilities to its bag of tricks, along with the ability to deliver primary care directly to a large Medicare population, Humana has positioned itself to do just that.

Taking Population Health from Claims to Clinical
As you know from past updates, the burgeoning field of healthcare analytics is a top priority here at Chilmark Research. This month, we take a look at population health management and current efforts to adapt existing claims-based risk management to clinical settings. Population health and risk management have long been the purview of health insurers and public health departments. Yet as providers take on more risk, they will need to identify populations and sub-populations that could benefit from preventive health – and ultimately cost less in healthcare services. THis research note takes a look at some of the traditional, claims-based analytics vendors and their intentions to move into analysis of real-time clinical data sets.

From Med Lists to Meds Reconciliation to Meds Adherence
Ask any home-care provider, and you’ll hear stories of medicine cabinets chock full of old, unused medications. Chronic disease and frequent hospitalizations compound the problem, because patients end up with medications from before and after each hospital stay. It’s no wonder that medication maladherence is recognized as the most important driver of preventable readmissions. But understanding the problem is much different than finding a solution. Chilmark Research reports on the current fractured state of medication adherence, and argues that without deep provider engagement and interoperability across systems, true medication adherence programs will remain a pipe dream.

Each month, subscribers to the Chilmark Advisory Services (CAS) receive an update of our research on the most transformative trends in the healthcare IT sector. Exclusive to CAS subscribers, monthly updates are part of the continuous feed of information and analysis we generate to keep subscribers on top of the rapid-fire changes in this market. Below is a summary of what we covered in the latest update, which was distributed in November.

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On March 31st, the HHS’s Center for Medicare and Medicaid Services (CMS) dropped its neutron bomb (proposed Accountable Care Organization (ACO) rules, caution PDF) on the healthcare industry. Much like the neutron bomb, the proposed rules will leave buildings standing, but any healthcare organization (HCO) planning to become a successful ACO will need to decimate cherished internal processes to create new models of care delivery. Those new models of care delivery by an ACO are intended to meet three core objectives of these proposed rules:

  1. Deliver better care for individuals
  2. Provide better health for populations and
  3. Lower growth on Medicare expenditures.

The proposed rules, which go by the overall heading of Medicare Shared Savings Plan (MSSP), provide as an incentive an ability for an ACO to share in the expected savings to CMS (it’s a rather complicated two tier structure) that also includes some downside risk should the ACO not meet some of the core objectives. To become an ACO, an HCO must have a minimum of 5,000 Medicare beneficiaries under management. The first round of applicants, who will sign-on to a three year ACO contract with CMS, will begin January 1, 2012. It is envisioned, these are proposed rules after all, that subsequent HCOs wishing to become an ACO may do so at the beginning of the calendar year.

The ACO rules have been anticipated for some time (they are an outcome of the Healthcare Reform Act) and at 429pgs, this document is quite a tome. The proposed rules are very expansive covering everything from ACO governance (a Medicare beneficiary must be on the Board), to ACO marketing (CMS wants to review ALL ACO marketing material), to quality measures & reporting, to how savings will be shared. We at Chilmark Research have reviewed a good portion of these rules and provide the briefest of summaries below focusing on the healthcare IT (HIT) aspects of these proposed rules.

Bottom-line:
Without a robust HIT infrastructure already in place, an HCO simply will not cross the chasm to becoming an ACO.

The above statement is about as brief and simple as we can make it regarding these proposed rules. CMS, along with its sister agencies that helped draft these rules, have set a very high bar for HCOs to leap over to meet these requirements. We predict that exceedingly few HCOs will make that leap in the inaugural year for the following reasons:

The ACO will need to report on 65 quality measures in five categories. Even though the quality measures chosen are well-known, accepted standards, few HIT systems today can automatically produce such reports. Thus the overhead burden of manually creating such reports may result in little upside gain for an HCO.

Core to the ACO model that CMS proposes is facilitating transitions in care via use of HIT (e.g., summary of care record) not only within the ACO but also beyond the ACO to whomever a beneficiary cares to see. This requires a level of local/regional health information exchange (HIE, the verb) that simply does not exist today in most communities. Sure, its coming but it won’t be ready in 2012.

An ACO must have at least 50% of its primary care physicians (PCPs) be “meaningful EHR users” as defined by the HITECH Act. The big challenge with EHR adoption under the HITECH Act has always been the small PCP practice. Will an ACO be able to aggregate enough of these practices to meet the 50% threshold?

Patient-centered care is a hallmark of these proposed rules with the term mentioned on nearly every page. A core objective that an ACO will need to meet is:

“…ACOs must have systems in place to identify high-risk individuals and processes to develop individualized care plans for targeted patient populations.”  And goes on to state: “The individualized care plans should include identification of community and other resources to support the beneficiary in following the plan.”

A robust HIT infrastructure will be required to facilitate and automate many of the processes required to identify at-risk populations and create and share those beneficiary-specific care plans. Very few HCOs today have the systems and processes in place to enable the creation and distribution of such care plans.

After reviewing these proposed rules the first thing that came to us was:

From an HIT perspective, meeting meaningful use criteria is a cakewalk in comparison to meeting these proposed ACOs rules, they are that big, that much of a game changer.

Clearly, CMS is taking this somewhat unique opportunity to create a future model for healthcare delivery that will meet those three core objectives mentioned at the beginning of this post. But in doing so, there is the very real danger that CMS has bitten off far more than it can chew, which will ultimately result in an even bigger bureaucracy at HHS than the one we have today and subsequently higher administrative costs. (Seriously, review all marketing material that an ACO proposes to use? What were they thinking?).

There is also the issue of HIT maturity in this sector and the woeful lack of process maturity that we discussed in a previous post. Exceedingly few HCOs will rise to the ACO challenge in the early years. Therefore, are we setting ourselves up for a colossal failure or more likely, a nation of haves and have nots wherein those communities with skilled, IT savvy HCOs will ultimately be able to capitalize on the MSSP at the expense of their smaller rivals? There is plenty of language in the proposed rules to prevent predatory and monopolistic practices but the threat is there just the same should one HCO, by becoming an ACO, become more profitable than their competitors down the street or across town squeezing them out of business.

But not to end on a sour note, we are quite pleased by some of the language we saw in the proposed rules. Specifically we like:

The strong focus on processes to enable an ACO. Process change is put right out front as core to the metrics that CMS will use to evaluate an ACO, which frankly is right where it should be. Technology is just an enabler of process change.

Openness to innovative approaches and new models of care delivery including the use of telemedicine and remote monitoring.  This has the potential to finally crack open the telemedicine/telehealth market.

The strong focus on patient-centric care. Finally, the lightbulb has gone on in DC that to truly bend that proverbial cost curve, the patient (beneficiary), their community and their personal care team (family, friends, loved ones) all need to be an integral part of the care team. This is visionary and for that we applaud CMS’s efforts to create a new model of care for this country.

Addendum:
Other good sources of ACO information we have found include:

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One of my favorite sites is the Wall Street Journal’s Healthcare Blog.  You can almost always find any health-related topic that the WSJ publishes in its regular print edition here, which is nice.  But what I like is the ability to comment on specific articles or posts.  And what I like even more, is reading the comments of others which as a general rule are thoughtful and informative.

This week provides a particularly fine example.

On Feb 4th, the WSJ Health Blog had a short post discussing President Bush’s budget proposal and its impact on Medicare and Medicaid spending.  The posting is typical of WSJ’s high quality reporting standards and the comments…

Well, go see for yourself.   You’ll more than likely get quite an education.

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This week, the LA Times has an interesting article on how major insurers Cigna and Aetna will be reimbursing physicians for providing online consultations.  It is encouraging to see these major payers step-up and support such practices. Other payers will likely follow as this could become a key service differentiator that would be attractive not only to just patients and physicians, but more importantly to these payer’s customers – employers.

Employers are aggressively looking to reign in healthcare costs, which continue to grow faster than just about any other cost an employer may have. This has led to a dramatic up-tick in interest by employers for employee health and wellness solutions including among others, PHRs. Some forward-thinking employers, however, are looking beyond just healthcare insurance costs. For example, enabling an employee to meet with their doctor online from the comfort (I use that term loosely) of their office at work rather than having to spend an hour or more driving to and from a doctor’s office is a nice productivity boost for that employer.

Taking it to the next level of embedding such physician-patient communication/consultation within the context of an employee’s PHR just adds to the value proposition (of course the PHR is absolutely secure and the employer has absolutely no access to identifiable employee data contained therein). The value here is that not only does the employee/patient share their PHR with a physician online but together, they can go over such things as recent lab results, review images, discuss action plans and keep a record of all communications right there within the PHR.

Since its inception, PHR vendor Medem has always felt that physician-patient communication was critical to the success of PHR adoption by both patients and physicians and structured their solution around that fundamental belief. In a conversation with Medem’s Chief Medical Office, Henry DesPhillips, last week as part or our PHR Research Study, DePhillips’s stated that they are seeing increasing interest for their solution from payers.  Medem traditionally has  marketed and sold their solution almost exclusively to physicians, pitching it as a platform physicians could use to  improve patient services and retention.  In light of the rapid changes now occurring among payers such as reimbursing physicians for online consultations, Medem expanded its marketing efforts in early 2007 directly targeting payers.  They are getting some traction in the market having landed Medical Mutual of Ohio in 2007. If more payers follow Aetna and Cigna’s lead, Medem is in a good position to experience some healthy growth as they are one of the few independent PHRs now in the market with strong patient-physician communications capabilities.  While Medem certainly has an early jump on its competitors, many who I’ve spoken with are currently developing similar capabilities that they plan to release in 2008.

Another, slightly different example is Kaiser-Permanente. Awhile back I did a post on their big PHR roll-out, though I was not all that enthused at the time as I am not a big fan of tethered PHR solutions. Despite my own reservations, Kaiser is seeing very strong adoption among its membership, upwards of 50,000 new users/month. And what is one of the key features of this PHR that all those customers are most excited about? Yup, online consultations and appointment scheduling with their doctor(s).  (Note: At the top of that LA Times article in a picture of a Kaiser physician providing an online consultation.)

To date, I have not come across any independent studies (if you know of any please enlighten me) that point to the efficacy of online consultations, be it improved outcomes, better quality of care, lower total costs of care, etc. Regardless, intuitively I believe there are significant savings here. Unfortunately, as that LA Times article points out, the big payer elephant in the room is the federal government (Medicare) who are loathed to adopt anything new and have no plans to adopt online consultation at this time.

This is unfortunate as the most recent budget proposal by President Bush looks to simple, across the board cuts in Medicare reimbursements rather than how technologies such as this may contribute to lowering the total costs of care delivery but that is another story…

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eRx Taking Off

Last week, the big eRx (electronic prescription) clearing house, Sure Scripts, released a comprehensive report on the growth of eRx. Astounding numbers presented, as well as some nice graphics/metrics for anyone who is putting together a presentation on the subject

Based on their research, which goes back to 2004, Sure Scripts has seen eRx more than triple in the first 3 quarters of 2007 compared to the the previous 3 years (2004, 2005, 2006) combined. Despite that kind of growth, the report claims that eRx still only represents some 5% of all prescriptions filled.

Could we see another tripling, or more in 2008? Potential is certainly there with a new legislative push in Washington requiring eRx for Medicare.

While many will state that eRx will help improve outcomes by lowering medication errors, the evidence is simply not there. What eRx is really about is saving money and such savings come from the transactions such as:

  • Simplified routing of prescriptions to both pharmacy and payer for processing.
  • Significant reduction in time for providers to determine patient eligibility.
  • And an oft-stated comment that it makes it easier to prescribe appropriate generics as substitutes.

Despite these advantages, eRx is still new and continues to suffer growth pains. The solutions available today still require a fair level of effort to implement and support within a provider’s healthcare IT (HIT) platform, not all pharmacies are set-up to support eRx and there is always the challenge, as with any IT solution of seamless integration into an existing practice’s workflow.

But these issues are not big enough to slow adoption, especially when the biggest spender on prescriptions, Uncle Sam who is footing the bill on Medicare, starts telling providers their reimbursements will be cut if they don’t adopt eRx by 2011.

Addendum:

For all those providers looking for examples of Best Practices, well you may want to start in the fine state of Massachusetts, which according to the Sure Scripts report, ranked #1.  So in addition to the Red Sox, the Patriots, the Revolution and the Celtics, we have one more thing to be proud of! 

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Yesterday, Medicare released its 104 page proposal for moving to a partial pay for performance (P4P) model.  The Wall Street Journal Health Blog has a direct link to the proposal in their posting.  As the WSJ points out, what is unique here is that Medicare is proposing to withhold a certain percentage of reimbursement across the board then reward those who perform well with a rebate of sorts.  Sounds good in theory but with most hospitals getting a significant portion of funding from Medicare in the first place and secondly most are operating on razor thin margins, it’s difficult to see how this will actually pass Congressional review.

But what is most disturbing is that this proposal from Medicare does not look to really change how healthcare is delivered.  Rather, this proposal more or less maintains the status quo delivery model, one that is notably flawed  and inefficient.  Would not it be a wiser choice by Medicare to propose trials of new care delivery models with potential for broad roll-out once their efficacy was demonstrated.  As mentioned previously on this site, telehealth is one such delivery model that has enormous potential for dramatically reducing costs of care while concurrently contributing to better outcomes.

So, instead of creating a 100-plus, page proposals such as this for Congress on something that may never see the light of day, why not focus energies in areas where there is some real potential for change?

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At the recently held Connected for Health symposium, which I reported on previously, a widely held belief among participants was that telehealth would not see substantial growth until the largest potential market, seniors, start receiving Medicare benefits that covered telehealth programs.

Coming close on the heels of this conference is a report released this week by the Advanced Medical Technology Association (AdvaMed) providing some pretty compelling results on patient outcomes via telehealth.  AdvaMed is using this report in support of a bill now before the Senate that would require Medicare to reimburse physicians for remotely monitoring patients with chronic diseases.

Seems pretty logical to me.

Keep chronic care patients at home where they are comfortable (and it’s certainly cheaper than a hospital). Do keep tabs on them to insure they are relatively healthy by the judicious use of technology that is now available.  Reimburse physicians for providing such a service that in both the short and long term saves everyone time and money.

Really, what is there not to like about telehealth?  Off the top of my head, there is the lack of interoperability across the multitude of remote monitoring devices in the market today.  But that should be resolved in the near future with the promulgation of standards by the Continua Alliance.  It is difficult to fnd anything not to like  other than the sticky issue of reimbursement.  Maybe the Senate, in its infinite wisdom will pass this bill.  But from what I’ve seen lately coming out of Washington, I’m not holding my breath.

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