Tag Archives: CMS

Models, Models, Have We Got Models!

FierceHealthcare.com today reported that CMS (those lovely folks with all them rules), launched three new policies Tuesday that continue the push toward value-based care, rewarding hospitals that work with physicians and other providers to avoid complications, prevent readmissions and speed recovery.

The newly finalized policies are meant to improve cardiac and orthopedic care, and also create an accountable care organization (ACO) track for small practices, according to the report.

There will be three new cardiac care payment models for hospitals and clinicians who treat patients  for heart attacks, heart surgery to bypass blocked coronary arteries, or cardiac rehabilitation following a heart attack or heart surgery.

Federal officials said that the cost of their care…varied by 50% across hospitals and the share of patients readmitted to the hospital within 30 days also varied by 50%. Medicare, the article points out, spent more than $6 billion in 2014 for care provided to 200,000 Medicare patients who were hospitalized for heart attack treatment or underwent bypass surgery.

As for orthopedic care, the new payment model is for physicians and hospitals that provide care to patients who receive surgery after a hip fracture, other than hip replacement.

They also finalized updates to the Comprehensive Care for Joint Replacement Model, which began earlier this year.

So far, that’s three models. But wait, there are more where those came from.

There’s the new Medicare ACO Track 1+ Model, that has a more limited downside risk than other tracks in the Medicare Shared Savings Program (another model I discussed a while back in the post, “Shared Savings ACO Program reaps the most for Primary-care Physicians“).

These new five-year models provide clinicians with other ways to qualify for a 5% incentive payment through the Advanced Alternative Payment Model (APM) path under the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and the Quality Payment Program. (three more models — so many, in fact, I am losing count)

Why am I pointing out the problem with the release of new payment models?

I’ll tell you why. When I began my MHA (Masters in Health Administration) degree program, I took an online elective on Healthcare Quality. The textbook we read discussed how CMS over a period of several decades, created and instituted so many models and programs, that it made me wonder why our health care system was so complex, expensive and so out of whack compared to health care systems of other industrialized countries.

The answer was simple. Too many models, programs, rules, and so on that only gum up the works and make real reform not only impossible, but even more remote a possibility as more of these inane models are added to what is already a broken system.

Winston Churchill said that you can always count on Americans to do the right thing, after all the other things were tried. We are still on the trying part, and I am afraid we will never get to where Sir Winston said we would.

 

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I’m Back

To quote Michael Corleone, in the Godfather, Part III, “just when I thought I was out…they pull me back in.” To blogging again, that is; not joining the Mob.

There is so much to catch up on in my absence, that I decided to apprise you, my loyal readers, of a subject I discussed earlier this year, the proposed Amendment 69 in the state of Colorado.

To refresh your memories, Amendment 69 (couldn’t they come up with another number?), also called “ColoradoCare”, was an attempt to create a single-payer system in the Rockies.

My previous three posts, “Colorado Gets Real on Workers’ Comp and Health Care”, “Colorado “Single Payer” in Health Care Industry’s Sights”, and “A Little Disruption is a Good Thing” outlined the plan for single-payer, the opposition to single-payer from the health care industry, and how it would be a good thing to have some disruption, especially in workers’ comp.

My writing on the subject also got the notice of a fellow writer, Katie Kuehner-Hebert, of Workers Comp Forum, a sister publication of Risk & Insurance magazine. Her article discussed whether the proposed amendment would be helpful or harmful for workers’ comp payers.

Last month, the voters in Colorado defeated the measure by a wide margin. On election night, at 8:30 p.m., with nearly 1.8 million votes counted across the state, the amendment was trailing 79.6% to 20.4%. Vote totals at 7 a.m., the next morning, with 86 percent of the vote counted, the measure continued trailing at roughly the same percentage or 1,833,879 to 467,424.

As reported in the Denver Post by John Ingold, throughout the campaign, the measure had polled better with Democrats than Republicans, and even in left-leaning Denver, the amendment lost by 2-to-1.

What does the defeat of the single-payer measure mean for the future of health care and possibly workers’ comp?

It means that until there is a nation-wide push for single-payer, state-specific measures such as Amendment 69 will either go down to defeat, or be scraped altogether, as happened in Bernie Sanders’ home state of Vermont. Amendment 69 was an attempt to get there, but as I followed up some weeks later, it was targeted by the health care industry, and never had a chance.

That brings me to my next topic. The recent political campaign that witnessed a misogynistic, egomaniacal, sexist, racist, Corporatist/Fascist bully and demagogue elected president, and a Congress of like-minded semi-demagogues.

Now this capitalist clown is appointing men to his cabinet who stand in opposition to many things the American people believe in, and one man, Representative Tom Price, R-GA , an ardent opponent of the ACA, is to be Secretary of the Department of Health and Human Services, the department which oversees the Centers for Medicare and Medicaid Services (CMS), who makes the rules for the health care law and the other medical insurance programs of the government.

Folks, that’s like putting the fox in charge of the hen house. Sooner or later, the chickens are going to be devoured, except it won’t be dead chickens lying around, but millions of Americans who will lose their health care newly won, and who may die because of it.

We still don’t know what will happen to the ACA after January 20th, because that man refuses to release his tax returns, refuses to commit to anything and goes off on tirades on Twitter to anyone who gets in his way. But I believe that this idiot and Congress will take away not only health care for millions, but eliminate Medicare and Medicaid, which is what Speaker Paul Ryan wants to do, but may be forced to back down once opposition gets wind of it.

Either way, health care in this country will get worse, not better.

That moron soon to occupy the White House has even nominated the CEO of a fast food chain to be Secretary of Labor. This guy, Andy Pudzer (or is it Putzer?, or just plain Putz?) wants to replace fast food workers with robots. Methinks he is one.

True, by 2025, it is predicted that 50% of all occupations will be replaced by automation, but the reason Pudzer wants to replace fast food workers with robots is so that the companies won’t have to pay living wages of $15 an hour to their workers.

I guess this putz would like to see workers thrown out into the street, especially younger minority workers who generally take these jobs to give themselves some work experience, and older workers left out of the changing economy.

You know what 50% less workers mean for workers’ comp? 50% less claims adjusters, physical therapists, durable medical equipment companies, pharmacy benefit management personnel, etc.

It also means that there will be more unease, anger, and maybe even violence. The kind of violence that has been avoided for decades, and that was predicted more than one hundred and fifty years ago by a certain German writer. And what if that 50% goes to 75%? What then?

One idea is to give these permanently unemployed a universal basic income (UBI), but with this Congress, that too will not happen.

There is an old Chinese curse that is appropriate now: “May you live in interesting times.” Interesting, possibly; dangerous, most definitely.

CMS to Require Bundling of Reimbursements for Hip and Knee Surgery

The Centers for Medicare & Medicaid Services (CMS) announced last week that they will soon require the bundling of reimbursements for hip and knee surgeries, according to an article yesterday on Health Leaders Media.com.

The article, by Gregory A. Freeman, stated that hospitals and health systems will respond quickly and ruthlessly to the CMS announcement.

According to a former CMS official cited in the article, mandatory bundled payments for hip and knee surgeries would shutter one in four skilled nursing facilities and trigger “demand destruction in areas such as diagnostic testing, hospital stays, and avoidable readmissions.”

The move by CMS is not surprising, says Mark Bogen senior vice president of finance and CFO at South Nassau Communities Hospital on New York’s Long Island.

Bogen referenced the initial demonstration project set up through CMS whereby many providers selected the DRG’s (Diagnostic Related Groups) 469 and470 (major joint replacement or reattachment of lower extremities, with or without major complications or comorbities), as a way to test moving forward to a value-based payment system.

CMS demonstrated through this project that more than half of the cost of providing care for joint replacement occurred post-surgery, Bogen stated, and that the bulk of the cost occurred in either the acute inpatient rehab units or sub-acute rehab units of skilled nursing facilities (SNF’s).

Deidre Baggot, former lead of CMS’s Acute Care Episode Demonstration (ACE) Bundled Payment Pilot, said the evidence to support bundled payments as a more cost-effective alternative to traditional fee-for-service is clear.

Baggot also said that on the hospital side, we can expect to see demand destruction in areas such as diagnostic testing, hospital stays, and avoidable readmissions, which she says is a good thing.

“Post-acute providers will see a significant hit to inpatient rehab and skilled nursing facility utilization as providers search for lower cost alternatives such as home health services.

David Friend, consulting managing director with the Center for Healthcare Excellence and Innovation at BDO Consulting, said that hospitals are likely going to cut their one- and two-star SNFs to mitigate the risk of penalties during the post-discharge period.

Twenty-five percent of the SNFs are expected to close soon, Friend noted, while medically advanced SNFs will flourish.

Another way the bundling of reimbursements will be disruptive is that rather than having a “blank check for services”, reimbursements will be based on a fixed amount of money, says Mike Lessila, director of business development with Vestica Healthcare.

Lessila said that if hospital systems successfully complete the episode of care for less than the contracted cost, they gain financial profit, but if problems arise due to poor episode management, a preventable hospital readmission, or another complication such as a hospital-acquired infection, the provider will bear the cost of fixing them as well as penalties from CMS.

Finally, bundled payments introduce several complexities to care that hospital systems must deal with, said Lessila. One complexity is that hospital systems must think through its care coordination for these procedures, or the likelihood of failure is high.

Additional resources will be required to ensure the patients’ experiences are good and they follow all of the recommended steps to ensure a successful episode. Bundling will also motivate providers and facilities performing the services to streamline and improve communication.

Lessila said that “financial administration of the bundle becomes far more difficult since a single bundle procedure will involve payments to one or many physicians, medical devices and hospital facility charges. The hospital system must understand who gets paid how much and in what form, and be able to track all of the details to determine whether the bundle is profitable or not in the end.”

What does this mean to you?

The closing of skilled nursing facilities, even one- or two-star facilities will back up the rehab process, not only for general health care, but for workers’ comp, since hip and knee surgeries are common procedures in workers’ comp claims.

Diagnostic testing, hospital stays and avoidable readmissions will also impact the claims process for workers’ comp, and may add more costs to the total hospital bill that employers and insurers will pay.

The confusion that may result from basing the reimbursement on a fixed amount rather than a blank check will force the hospital systems taking a greater financial risk and guaranteeing the outcome of the surgery.

Lastly, the complexities of bundling will impact the financial administration of hospital systems, with most legacy billing systems unable to administer these contracts and aggregate the data, according to Lessila.

What does this mean for medical travel?

The disruptive effects of bundled payments may make it possible to implement medical travel into workers’ comp since there is a clear beginning, middle and end to the episode that can be better managed by facilities not covered by CMS rules that will bottleneck the process of adjudicating and settling claims.

But this will only happen when the medical travel industry convinces the workers’ comp industry and employers that they can provide the required procedures at a lower cost than even bundled payments can offer, and with a better guarantee of positive outcomes.

In my article, “What Role Can Medical Tourism Play in Physical Therapy and Rehabilitation for Workers’ Compensation?”, I said that medical tourism can package rehabilitation and physical therapy services the same way the other medical services are packaged, along with the cost of treatment, airfare and accommodations.

Medical travel facilities can take up the slack from the shuttered skilled nursing facilities that may result from the implementation of bundled payments. The medical travel industry and their destination partners should consider offering their services as a better alternative.

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I am willing to work with any broker, carrier, or employer interested in saving money on expensive surgeries, and to provide the best care for their injured workers or their client’s employees.

Call me for more information, next steps, or connection strategies at (561) 738-0458 or (561) 603-1685, cell. Email me at: richard_krasner@hotmail.com.

Ask me any questions you may have on how to save money on expensive surgeries under workers’ comp.

Connect with me on LinkedIn, check out my website, FutureComp Consulting, and follow my blog at: richardkrasner.wordpress.com. Share this article, or leave a comment below.

A View from the Bench: Medical Tourism and its Implementation into Workers’ Compensation

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Last week, in response to my post, Knee Surgery in Costa Rica — A Less Expensive Alternative, I received a comment from David Langham, Deputy Chief Judge of Compensation Claims for the Florida Office of Judges of Compensation Claims and Division of Administrative Hearings.

Judge Langham stated that: “Medical Tourism is a reality. How far will it go?” and then referred me to an article he wrote in the December issue of Lex and Verum, published by the National Association of Workers’ Compensation Judiciary. Judge Langham serves as a Board Member of NAWCJ.

In his article entitled, On Fee Schedules, Medicare, and Medical Tourism, Judge Langham discusses two studies that I previously mentioned in earlier posts this year. The first post, published on February 1st, was called Outpatient Facility Costs Rising Could Benefit Medical Tourism Industry and discussed a study by the Workers’ Compensation Research Institute (WCRI) that analyzed the outpatient facility costs, cost drivers, regulatory mechanisms, and trends in 20 states.

The second post, published on May 23rd, was called If You Have to Ask…Fuggedaboutit!, in which I mentioned that the Centers for Medicare and Medicaid Services (CMS) had studied various inpatient surgical procedures performed in the US and found that inpatient hospital charges varied considerably from state to state, within the same state, and within the same city, which was noted by Judge Langham in his article. He even went on to cite a Washington Post report that said a hospital in Dallas charged an average of $160,832 for a lower joint replacement, while a hospital five miles away charged an average of $42,632, a difference of $118,200.

But what fascinated me about Judge Langham’s article was not the discussion about fee schedules, Medicare and payments; it was that he mentions medical tourism as a possible solution to high cost surgeries. However, the form of medical tourism Judge Langham refers to in his article, is domestic medical tourism.

Citing the two studies above, and describing the disparities in costs from states that have a fee schedule and those that don’t, Judge Langham suggests that sending patients from high cost states such as Illinois to a low cost state like Massachusetts, will save insurance companies money.

“With the vast disparity in reimbursements demonstrated in the WCRI study released last January and the Medicare data released last May, payors such as insurance companies may find savings in sending injured workers to states or localities with greater cost control for outpatient surgery. Such travel may represent a cost in itself, if not within the same city (see Medicare examples above), but may pale in comparison with the savings gained. Taking the example above, with a cost of $10,000 in the average state, and sending the injured worker to Massachusetts First Class ($1,000) and putting her or him up in a nice hotel for a few days ($1,000) to prepare and recuperate would add only $2,000.00 to the $3,900.00 cost of the procedure there. The $10,000 procedure in the average state might be performed in Massachusetts for an overall cost, including travel and lodging, of $5,900.00. This still represents a significant savings compared to the $10,000.00 cost. More persuasive, this same procedure would cost $15,100 in Illinois. An Illinois employer sending their patient to Massachusetts would potentially save over $9,000.00 on the procedure.”

Judge Langham also stated that there are those who dismiss this potential out of hand, and cites data from a medical tourism facilitator company called New World Medical Tourism. Judge Langham explains that medical tourism is a relatively new industry, and that there are a multitude of firms that arrange healthcare in countries like India, Costa Rica, Mexico, the Philippines and others. They advertise, he states, that medical care in foreign countries can cost 70% to 80% less than in the US.

Judge Langham goes on to say that New World Medical states on their website that a spine surgery in the US might cost $80,000 to $100,000, and the same procedure in India would cost as little as $8,000 to $14,000, a savings of 82% to 92%. New World Medical concedes he adds, that travel and lodging costs must be deducted, but that these costs are generally around $2,500. As for knee replacement surgery, New World Medical says, according to Judge Langham, is estimated at $50,000 in the US, compared to $8,000 in India.

According to Judge Langham, medical tourism has an established foothold in the medical industry, but states that physicians in the US recommend against medical tourism. They caution, he adds, that treatments, implants, and medications provided outside of the US may not be approved of by the Food and Drug Administration (FDA), and that follow-up care after surgery may be substandard. Also, verification of the foreign surgeon’s qualifications may also be difficult.

The Judge says that these are all valid concerns, and as many of us already know, these issues are paramount in solving if medical tourism is to be a viable alternative to high-cost surgery. Judge Langham also states that any patient considering surgery would be interested in reassurance on such questions before agreeing to undergo surgery.

Another point Judge Langham makes is the following:

“These quality of care concerns are not as persuasive in the argument for medical tourism to Massachusetts. Certainly, the quality of care concerns are also a more difficult argument in the distinction between the two Dallas hospitals cited above. The savings may not be as persuasive either, but the Medicare data cited by the Washington Post and others may drive payors to analyze the selection of provider facilities and perhaps even the benefits of medical tourism in or outside the United States.

In the conclusion of his article, Judge Langham says that both the WCRI data and the Medicare data support the idea that medical tourism within the US may become increasingly attractive to payors in coming years. States like MA, MD, and CA that have lower outpatient costs may attracts workers’ compensation medical tourists from IL, VA, or FL. There are some states, the Judge says, that have statutory or regulatory restrictions that confine any attempt to force an insurance carrier to provide medical services outside the state in which the injured workers lives or was injured in, but that these restrictions are generally limited to the injured worker, and does not preclude the insurance carrier from voluntarily providing such care and the travel costs associated with it.

In my blog post, Medical Tourism and Workers’ Compensation: What are the barriers? and in three other posts that summarize, or link to my White Paper, or are the paper itself, I highlighted many of these and other barriers to implementing medical tourism into workers’ compensation as Judge Langham points out. My paper’s conclusion stated that “the courts are willing to allow some measure of medical tourism in workers’ compensation; how future courts will decide is unclear, but there is at least some precedent for ruling in favor of medical tourism.” It is clear by his article that Judge Langham is concurring with my conclusion. Having someone of his stature in the workers’ comp judiciary sharing my idea is very encouraging, to say the least. It is a sign that there are others who share my thoughts on the subject.

It is also a sign that the “crowd” is beginning to catch up to my idea for medical tourism in workers’ comp, which was why I titled my blog post Far In Front of the Crowd back in August, when Joe Paduda commented on a prior post that I was ‘far in front of the crowd’ on medical tourism and workers’ comp.

In a recent article posted on Insurance Thought Leadership.com by Kevin Bingham, et al., called Workers’ Compensation Comes of Age, the authors wrote that:

“Medical tourism continues to grow as an option for patients all across America. An airline magazine recently had advertisements from hospitals outside the United States showing savings of 50% to 80% on procedures such as knee and hip replacements that are common in workers’ compensation. The general cost in the United States for a knee replacement was shown at $34,000, versus the overseas cost of just $10,000. A hip replacement was listed as $35,000 versus the overseas cost of just $11,000. Even with the cost of airfare, transportation, and hotel accommodations, the potential savings are significant (acknowledging that we aren’t attempting to control for quality or safety differences). With several companies and health insurers investigating offering medical tourism options to their employees and insureds, there could come a day when workers’ compensation insurers could leverage these tremendous savings to help drive down severity for certain procedures. While businesses may welcome the cost savings, we recognize that persuading state legislatures and injured workers to agree to these practices could be difficult.

Mr. Bingham is a principal with Deloitte Consulting’s Advanced Analytics & Modeling practice, and his fellow authors have a diverse background, ranging from Actuaries to a Registered Nurse. The last statement by the authors was another point I raised in my White Paper, but in the case of injured workers, could be handled by offering them a financial incentive of between $2,000 and $2,500 from the savings realized by medical tourism, provided the savings was greater than $5,000, as was pointed out to me some months ago by the president of a health care company that negotiates lower costs for their clients’ workers’ compensation claims.

But despite the difficulties involved at this time getting medical tourism accepted, the medical tourism industry itself needs to do a whole lot of work before they can expand into the workers’ compensation market. As Judge Langham noted, the treatments, implants and medications provided outside the US must be approved by the FDA. It is true that many patients go abroad because certain treatments and procedures are not currently approved by the FDA, such as experimental treatments and procedures for cancer and heart disease, etc. But, for those more routine treatments and procedures that are either too expensive, or for which the patient does not have adequate insurance, complying with the FDA or even surpassing them, should be another goal of the industry.

Also, the industry must find a way to guarantee superior aftercare and follow-up care, which is crucial for the patient’s speedy and successful recovery. This will go a long way in making medical tourism a reliable and safe alternative to medical care at home. And finally, the qualifications and credentials of the surgeons must be known well in advance of surgery and verified. But above all, transparency on cost, on quality of care, on travel arrangements and on the reputation of the medical personnel and facility must be provided to the patient before any decision is made to leave the country. It is the duty and the job of the medical facilitator to guarantee this both verbally and in writing, and to make all necessary arrangements and preparations for the patient.

But the industry itself must work with each and every country that seeks medical tourist dollars to bring about standards and regulations and legal frameworks that will make medical tourism more attractive to patients, employers and insurance carriers in both general health care and workers’ compensation. To do anything less imperils the entire industry.

So, it would seem that medical tourism in workers’ comp is not so far-fetched an idea now as it once was over a year ago when I first started writing my blog. As I said above, the crowd is catching up to me, and I welcome the company, especially when it comes from the second highest workers’ comp judge in the State of Florida and a principal from a major consulting firm. HAPPY NEW YEAR!

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The Rip-off Continues

Once again, Joe Paduda comes up with a post that sheds light on the problems of the US health care system and its impact on Workers’ Compensation. Today’s blog post looks at the way Medicare-based fee schedules have caused Workers’ Compensation carriers to pay more for medical care because the RBRVS (Resource Based Relative Value System) that Medicare uses, estimates the time it takes for physicians to do certain tasks, which in turn determines their bill for the procedures and treatments they perform (you see, I did learn something in my MHA degree program).

According to Joe, time estimates are (generally) way overstated, resulting in higher compensation for docs, higher costs for taxpayers, and a whole raft of downstream unintended effects – including higher costs for work comp payers.

The estimating is conducted by the AMA’s Resource Based Relative Value System Update Committee (RUC). Joe mentions a piece in the Washington Post that said the AMA’s estimates of the time involved in many procedures are exaggerated, sometimes by as much as 100 percent …If the time estimates are to be believed, some doctors would have to be averaging more than 24 hours a day to perform all of the procedures that they are reporting. This volume of work does not mean these doctors are doing anything wrong. They are just getting paid at the rates set by the government, under the guidance of the AMA.

Over thirty states with fee schedules, Joe points out, uses RBRVS as the basis of their fee schedule. California is adopting RBRVS, Joe goes on to say. It is also important to state, that CMS set the dollars per time unit, so the ultimate cost is also based on that as well.

What this means to the Worker’ Comp industry is this, Joe says, there’s no getting around that the AMA’s RUC is inflating the time, and thereby inflating their members’ income, and employers’ and taxpayers’ work comp costs.

The question that the Work Comp industry must ask itself is this, how much longer are you going to stand by and allow the American health care system to rob you, cheat you and steal you blind (pardon the pun). When is the industry going to accept the fact that whatever means you employ to lower the cost of medical care for work comp claimants, the health care system is going to charge you more and more.

You are avoiding a simple economic reality that goods and services always flow to those who can produce those goods and services faster and cheaper. You are causing your own misery by relying on the health care system here to provide you with lower cost care.

The fact that the AMA, CMS, and hospitals (see my last post) are charging the industry more for medical care than what should be charged is proof positive that there is something terribly wrong here.

The refusal of the industry to see reality reminds me of the play I just saw this past Sunday. It was a local production of ‘Man of La Mancha’ in a concert format, and as anyone who has ever seen it, or read the original novel by Cervantes knows, Don Quixote is brought to his senses when his niece’s fiance disguised as the evil “Enchanter” or “Knight of Mirrors” forces Quixote to look into a mirror and see his real face.

That’s where the workers’ comp industry needs to be. It needs to look in the mirror and see what fools they are for trusting the AMA, CMS and hospitals and doctors to provide them with lower costs for medical care.

Medical tourism will offer that, not for everything, but for most surgeries that are by now recognized to be overly inflated and based on a value system that is governed by the practitioners, and not the payers. It won’t be easy to implement medical tourism into workers’ comp, as I have said before, and it is not without its complications and risks, but what is more risky, trusting physicians and government agencies that over-inflate estimates of physician’s time units, or sending a claimant to a medical tourism facility that is the best facility in that destination country and spending a fraction of the cost of care that you would here in the US?

The choice is yours, of course, but like Don Quixote, only you can come to your senses.