One of the greatest technological achievements in the 21st Century was is the creation of the Internet.  Its formation has effectively changed almost every aspect of business and personal communication.

The newest threat to cybersecurity is the proliferation of Internet of Things (IoT)—connected physical and smart devices that have embedded technologies including electronics, software or sensors that allow for network connectivity.  IoT enables objects to collect and exchange data to anything connected to the internet.  With healthcare’s increasing reliance on connected devices that leverage IoT and the growth of Telehealth, providers and facilities are more vulnerable than ever to cyber-attacks.

Internet connectivity has created the potential for IoT.  In 1990, John Romkey created the first IoT device (a toaster that could be turned on and off over the Internet), even before the first web page was ever created.  IoT is spreading faster than expected.  Gartner Inc., an IT research company, reports that beginning in 2017, more than 6.4 billion devices will have IoT connections and they estimate it to rise to more than 20 billion by 2020.

Recently, healthcare security has become the lead story in the news because of its data breaches, major software attacks and a stream of reports about new vulnerabilities in cybersecurity.  These growing problems have catapulted the healthcare industry into the top spot surpassing the financial services sector as the industry with the most number of security incidents.  IBM X-Force named healthcare as the number one industry segment for cyber-attacks in their 2016 IBM X-Force Research Cyber Security Intelligence Index Report.  To base their conclusions, they evaluated billions of security incidents in over 100 countries.

The increasing use of IoT will only add fuel to the industry’s current cybersecurity problems.  Nevertheless, the potential benefits of IoT outweigh the security risks.  Networked IoT devices, such as wearable sensors and home monitoring systems, will increase access to diagnostic testing, comparative treatment, and could significantly reduce medical errors.  These and other attributes are the driving force for the growth of IoT.  Allied Market Research predicts IoT to reach $136.8 billion by 2021, up from $60.4 billion in 2014.

Historically, cybersecurity’s focus in the healthcare industry has been to protect against breaches of patients’ protected health information and most recently, on preventing ransomware attacks.  (Cyber-criminals have been using ransomware to lock health professionals out of their systems and make electronic medical records inaccessible.)  Technology professionals need to be concerned with these threats as well as a host of rapidly developing criminal tactics.

Cyber-crimes Across All Industry Sectors

Cyber-crimes are rising at an unprecedented rate and have affected every industry sector, with healthcare having the largest number of security incidents.  Recently, the exploitation of human vulnerabilities through attacks on systems via email and social media has become rampant.  Hackers use shared information to construct effective spearphishing emails that can be used to socially engineer people into doing things that put computer systems and data at risk.  No industry is immune to hacking.  Even the social media industry-one that employs highly skilled developers and security personnel has experienced serious hacking incidents with worldwide repercussions.  In May 2012, a Russian hacker was responsible for a massive LinkedIn data breach in 2012 where account details of 117 million users were as stolen and leaked online.  The breach allowed a cyber-criminal to buy and use the stolen passwords to hack social media accounts for Google’s CEO Sundar Pichai and Facebook’s CEO Mark Zuckerberg.  In an interesting twist, Facebook exposed over six million users’ personal information that eventually was leaked to the hacking community.  Hackers pounced on the opportunity for financial gain when Facebook decided to buy back the information on the black market to plug holes in their security.  They combined the stolen information with their encrypted data to build in safeguards to eliminate further breaches.

Newfound vulnerabilities such as ransomware have hit numerous industries, with healthcare being the most frequent.  Current estimates from the Cyber Threat Alliance estimated the damage caused by ransomware at $325 million, up 1,800 percent since the Federal Bureau of Investigation’s (FBI) ransomware report in June 2015.

Today, sophisticated hackers do not just steal information; they can access data and change it.  For example, cyber-criminals can take actions such as changing data used in public company reporting that can materially affect business strategies, financial performance and stock prices.

Cyber-attacks containing personal and financial information are concerning but, they pale in comparison to the threat of breaching IoT in healthcare.  As wearable, implantable and connected medical devices are developed and used, the potential to harm patients through hacking IoT devices is becoming a top concern for cybersecurity professionals.

IoT Threats for Healthcare

Healthcare’s IoT security remains a critical issue, with new attacks and vulnerabilities uncovered every day.  As IoT gains traction and acceptance, the capabilities of web-enabled and network-connected products and systems will increase exponentially.  While the rise of connected devices may provide better monitoring and safety for patients, the proliferation of risks associated with IoT increase in tandem.

IoT devices have major security risks because developers and manufacturers are not prepared to handle the issues associated with healthcare cybersecurity and have not created necessary safeguards.  IoT threats offer a different set of challenges because they can have real-life, physical repercussions for patients offering greater and more lethal risks than any other cyber-threat.

The number of cyber-attacks is growing, and so is the cleverness of these attackers.  Therefore, it is vital to evaluate IoT devices and systems for cybersecurity flaws to ensure dependability, decrease downtime and improve security to maintain the health and safety of patients.

IoT Security and Cyber-Defense Readiness

In a February 2016 report, Securing Hospitals; A Research Study and Blueprint, the group Independent Security Evaluators outlined four steps health organizations can take to ensure effective IoT cybersecurity.  They are:

  1. Incident Response

Security breaches will occur, and it is important that the facility staff be prepared to deal with these situations.  The procedures for organizations should include what to do in the event of a security breach and to make sure that the organization’s research and mitigation plans are put in place.

  1. Disaster Recovery

Cybersecurity needs to be a key component to all existing facility’s disaster recovery plan.  These plans need to be reviewed and assessed as a part of an overall preparedness plan.  While disasters are unlikely, they need to be simulated so that the security team has adequate practice in how to respond to these incidents.

  1. Red Teaming

From time to time, it is valuable to test the actual effectiveness of facility and systems security and its teams’ readiness to mitigate its negative effects.  Red teaming is the act of performing announced (or unannounced) attacks to see how teams respond, thereby eradicating failures and other problems that may occur.

  1. Contingency Plans

The typical course of business itself can set events in motion that cause security to fail.  For instance, the turnover of key personnel, the rapid reduction or reallocation of budgets, lawsuits and audits can all drain personnel resources that can adversely affect the security posture of an entire organizational infrastructure.  It is important to have these contingencies identified and contingency plans in place in the event they occur.

Summary

IoT devices have the potential to benefit device manufacturers, patients and healthcare professionals.  These devices will make it easier for providers to monitor and treat patients remotely, which means patients will spend less time in hospitals and experience better clinical results.  Healthcare organizations can increase successful IoT use by creating and continually updating a multilayer cybersecurity program designed to safeguard their patients.

________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Marketing Strategy for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

photo credit: Tumitu Design

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OIG Report Reveals Two-Midnight Rule Vulnerabilities

A study by the Office of Inspector General (OIG) has revealed “vulnerabilities” under the Two-Midnight hospital policy that initially went into effect on October 1, 2013.  In response to the findings, OIG has recommended that the Centers for Medicare and Medicaid Services (CMS) improve oversight of hospital billing under the policy and take steps to increase protections for beneficiaries.  As a result, hospitals are likely to see closer scrutiny to determine whether they are appropriately characterizing inpatient and outpatient stays.

According to the study report, released in December 2016, “Hospitals are billing for many short inpatient stays that are potentially inappropriate under the Two-Midnight policy and some of them indicate that Medicare—and beneficiaries—may be paying differently for similar care.”  The study also found that “An increased number of beneficiaries in outpatient stays pay more and have limited access to [skilled nursing facility] services than they would as inpatients.”

Based on a comparison of Medicare hospital claims for FY 2013 and FY 2014, the study identified inpatient stays using Medicare Part A hospital claims and outpatient stays using Part B claims.  A “short stay” was defined as a stay lasting fewer than two midnights and a “long stay” as one lasting two or more midnights.  Claims for short inpatient stays were evaluated to determine whether they adhered to CMS’s criteria for payment under the Two-Midnight policy.

Cost Savings and Patient Benefits

The Two-Midnight rule was initially created as a strategy for controlling healthcare costs and protecting beneficiaries by reducing the number of long outpatient hospital stays.  The rule requires that patients who stay in the hospital longer than 24 hours be admitted as inpatients for medically necessary reasons.  (For additional background, also see CMS Proposes Eliminating Payback Reduction Under Two-Midnight Rule and New Patient Notification of Observation Status Law and the Extension of Two-Midnight Rule, the Enforcement Delay.)

The policy was designed to address three vulnerabilities in the ways hospitals use inpatient and outpatient stays:  1) improper payments for short inpatient stays; 2) adverse consequences for patients with long outpatient stays, including the inability to meet the requirement of three nights as an inpatient in order to qualify for care in a skilled nursing facility; and 3) inconsistencies across hospitals in the designation of admissions as inpatient or outpatient.

CMS expected that the Two-Midnight policy would accomplish three outcomes:  1) decrease the use of short inpatient stays; 2) decrease the use of long outpatient stays; and 3) promote more appropriate and consistent use of inpatient and outpatient stays among hospitals.

Under the rule, the treating physician is responsible for making the decision to admit a beneficiary to the hospital based on such factors as medical history, symptom severity and anticipated care.

Inpatient stays are generally covered if physicians reasonably expect that the beneficiary’s care will last at least two midnights.  Stays expected to last fewer than two midnights are generally paid on an outpatient basis.  Hospitals are paid for inpatient stays under the Inpatient Prospective Payment System (IPPS), in which each stay is classified according to Medicare Severity Diagnosis and Related Group (MS-DRG).  Outpatient stays are paid for under the Outpatient Prospective Payment System (OPPS).  In 2015, CMS began implementing “comprehensive ambulatory payment classifications,” which provide a single payment rate for a primary service and any related secondary services.  Beneficiaries in these circumstances are responsible for 20 percent of a single amount rather than for 20 percent of the amount for each service.

Under the rule, inpatient stays lasting at least two midnights from the date of admission are presumed appropriate for payment; however, those lasting fewer than two midnights are considered open to review for compliance.  The rule also delineates circumstances under which a short inpatient stay can be considered compliant, including stays with:

  • Inpatient-only procedures
  • Mechanical ventilation initiated during the visit
  • An unforeseen circumstance, such as the beneficiary’s death, transfer to another hospital or leaving against medical advice
  • Two or more midnights in the hospital in which outpatient time prior to admission is added to inpatient time.

CMS made two changes in 2016 that loosened requirements under the rule.  It began to allow case-by-case exceptions for inpatient stays that were shorter than at least two midnights.  It also changed enforcement procedures to consist of small sample reviews of medical records by CMS’s Quality Improvement Organizations, rather than reviews by CMS’s Medicare Administrative Contractors.  Previously, compliance issues were addressed with education and follow-up reviews.  Currently, deficiencies are addressed with education, followed by referral to Recovery Auditors for further review if deficiencies persist.

Major Findings

The study report presents three key findings:

Hospital inpatient stays decreased and outpatient stays increased since the implementation of the Two-Midnight policy.

Hospital inpatient stays decreased by about three percent and outpatient stays increased by about eight percent since the policy’s implementation.  Despite these improvements, the findings continue to raise concerns about the cost of these hospitalizations to Medicare and beneficiaries.

More specifically, short inpatient stays decreased more than long outpatient stays from 2013 to 2014 (by about 10 percent and three percent, respectively).  In addition, long inpatient stays decreased by about two percent and short outpatient stays by 11.6 percent.

Despite the changes in hospital billing, vulnerabilities still exist.

  • Hospitals are billing for many potentially inappropriate short inpatient stays under the Two-Midnight policy. Of the total of approximately 1,000,075,000 short inpatient stays in 2014, 39 percent were potentially inappropriate for payment because the claims did not appear to meet the criteria for an appropriate short inpatient stay.  Although short inpatient stays decreased by almost a third from 2013, there were more than 420,000 of them in 2014, and Medicare paid nearly $2.9 billion for potentially inappropriate short inpatient stays.
  • Medicare pays more for some short inpatient stays than for short outpatient stays, although the stays are for similar reasons. There was significant overlap between the reasons for short inpatient stays and short outpatient stays, although they all lasted fewer than two midnights.  The average paid for short inpatient stays and short outpatient stays related to digestive disorders, for example, was approximately $4,500 and $790, respectively.  The large gaps raise concerns that Medicare is paying differently for similar care.
  • Hospitals continue to bill for a large number of long outpatient stays. Many of these stays likely would have met criteria for inpatient admission.  Because providers have a financial incentive to admit patients as inpatients, the large number of outpatient stays suggests other factors at work.  These factors could include difficulty with safe discharges, confusion about the Two-Midnight rule or delays in care.
  • An increased number of beneficiaries in outpatient stays pay more and have limited access to SNF services following hospitalization than they would as inpatients. 2014 saw an increase of almost 16 percent (50,000 cases) from 2013 in outpatient stays that paid more than the inpatient deductible.  Coronary stent insertion accounted for more than one-quarter of these cases.  In addition, an increased number of these patients did not qualify for SNF services in 2014 compared with 2013.

Hospitals continue to vary in how they use inpatient and outpatient stays.

The Two-Midnight rule’s goal of fostering consistent, appropriate use of inpatient and outpatient stays remains a work in progress.  Although about three percent of all hospital stays were short inpatient stays, the range among hospitals was from about one percent to more than five percent (compared with two and eight percent in 2013).  The variation decreased, but inconsistencies among hospitals persisted.  At six percent of all stays in 2014 (a range of two to almost 11 percent), long outpatient stays remained virtually unchanged from the previous year.

In a departure from the goals of the Two-Midnight policy, some hospitals actually increased their use of short inpatient and long outpatient stays between 2013 and 2014.  In some areas, the gap between the policy’s stated goals and the reality in hospitals was even more stark.  For chest pain, for example, the use of short inpatient stays decreased substantially in 2014 and even dropped to zero at some institutions.  At the same time, 29 percent of hospitals increased their use of short inpatient stays for chest pain.

Next Steps

OIG made the following specific recommendations to CMS, with which the agency agreed:

  • As part of routine analysis of hospital billing, target for review the hospitals with high or increasing numbers of potentially inappropriate short inpatient stays.  “We found that hospitals billed for a large number of potentially inappropriate short inpatient stays; for these stays, Medicare paid a total of almost $2.9 billion.  We also found that hospitals may have financial incentives to use short inpatient stays, and that some hospitals increased their use of these stays, which is inconsistent with the stated goals of the Two-Midnight policy,” the report states.
  • Identify and target for review the short inpatient stays that are potentially inappropriate.  Based on recommendations from OIG, CMS will develop tools to effectively identify these short inpatient stays for review.  “In addition, CMS should encourage and expand hospitals use of an existing code that allows them to indicate on Medicare claims a beneficiary’s time spent as an outpatient prior to inpatient admission.  CMS should use this code to add together the beneficiary’s time as an outpatient and time as an inpatient to determine whether the beneficiary spent at least two midnights in hospital in total,” according to the report.  This code, along with the inpatient-only procedure codes and discharge codes on claims will enable CMS to distinguish potentially inappropriate and appropriate stays.
  • Analyze the potential impacts of counting time spent as an outpatient toward the three-night requirement for SNF services so that beneficiaries receiving similar hospital care have similar access to these services.  CMS will review the impact of counting time spent as an outpatient toward the three-night requirement to qualify for SNF services in order to give beneficiaries access to SNF services whether they are inpatients or outpatients.
  • Explore ways of protecting beneficiaries in outpatient stays from paying more than they would have paid as inpatients.  CMS will assess the extent to which beneficiaries in outpatient stays pay more than they would as inpatients and explore methods and policy changes to ensure more equitable cost-sharing with beneficiaries with similar care needs regardless of whether they are inpatients or outpatients.

Summary

The Two-Midnight rule is here to stay, and the work of hospitals to comply with the policy continues.  It’s not too soon to give some critical thought to where your organization might fit in relation to some of these new findings, identify trouble spots and start taking corrective action.

For more interesting posts about healthcare business, visit our website at www.miramedgs.com

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Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Marketing Strategy for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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Trump’s executive order on the ACA: 5 things to know

This is an excellent summary written by Emily Rappleye of Beckers Hospital Review about President Trump’s position on the ACA and how he and his Cabinet are going to pursue repealing the ACA.

President Donald Trump signed an executive order Friday evening aimed at immediately lessening the economic burden of the ACA as Republican lawmakers work on a repeal and replacement plan. Here are five things to know about the scope of the executive order.

1. The order offers broad guidance. It authorizes states and agencies to make changes “to the maximum extent permitted by the law,” which is somewhat limiting. Not much can be done until the heads of the federal departments that oversee the ACA are officially appointed, according to Timothy Jost, a professor at Lexington, Va.-based Washington and Lee University School of Law. Mr. Jost wrote in a Health Affairs blog, “In sum, nothing happens yet, nor is it likely to happen until the heads of HHS, Treasury, and probably Labor, as well as the CMS Administration and IRS Commissioner are in place; even then it will take a while for changes to be put into motion.”

2. The executive order could end the individual mandate. According to Mr. Jost’s blog, the main way the order can undo the individual mandate is by creating new types of hardship exemptions from the penalty. If this were to happen, it could kill the individual insurance markets, which rely on healthy enrollees to help fund coverage for those with pre-existing conditions. Kellyanne Conway, the counselor to the president, told ABC News Saturday President Trump may stop enforcing the mandate. “[H]e wants to get rid of that Obamacare penalty almost immediately, because that is something that is really strangling a lot of Americans to have to pay a penalty,” she said told George Stephanolopoulos on ABC’s “This Week.”

3. It could also expand Medicaid waivers under the ACA, giving states more flexibility in how they implement the law. In particular, the executive order signals “Section 1115 Medicaid waivers will be granted more liberally, but that was expected, and until they are changed, 1115 waiver regulations promulgated by the Obama administration will continue to apply,” according to Mr. Jost. Section 1115 Medicaid waivers allow states to implement their own budget-neutral expansions of Medicaid and CHIP coverage and determine who and what the programs cover.

4. It encourages the creation of interstate insurance markets. This is one of the main goals listed in the order to be executed to “the maximum extent permitted by law.” The sale of insurance across state lines is allowed under the ACA, according to Mr. Jost’s blog, so it is likely we will see this change. Ms. Conway confirmed this in her interview with ABC Saturday. “[H]e’s going to replace this with a plan that allows you to buy insurance across state lines, that is much more centered around the patient and [improves] access to healthcare,” she said.

5. The order could also undo some taxes under the ACA, according to Politico. These include the tax on health insurers and taxes on pharmaceutical companies. It encourages agencies to delay or waive taxes, fees and penalties created under the law. Many of the revenue-generating taxes of the ACA are already on the chopping block in Congress as it works on drafting a reconciliation bill aimed at axing budget-related parts of the ACA.

_____________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Global Services for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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The passage of the Medicare Access and Children’s Health Insurance Program (CHIP) Reauthorization Act of 2015 (MACRA)1  has contributed to changes in healthcare delivery by redesigning Medicare’s payment and delivery methods for physicians and other clinicians.

MACRA repealed the highly debated sustainable growth rate (SGR) formula which eliminates the 21 percent across-the-board cut in Medicare’s provider payments.  This legislation supports Medicare’s efforts to move rapidly from the current fee-for-service (FFS) reimbursement model toward value-based payments for physician services.

Healthcare in the United States is in the midst of a financial and clinical overhaul driven by new legislation that attempts to improve outcomes and cut costs.  Reinventing our healthcare system across the entire care continuum and getting over 16 million healthcare workers2 to follow new rules and regulations is about as complicated as putting a man on the moon.  Luckily we were successful in that endeavor and we expect to be equally successful implementing healthcare’s sweeping changes.

Industry leaders and policymakers have tried countless incremental fixes designed at improving care and reducing costs—but none has had much impact.  In 2010, the catalyst for reform became law with the passage of the Patient Protection and Affordable Care Act also known as the Affordable Care Act (ACA).The law established a Health Insurance Marketplace4 designed to improve consumer access to affordable healthcare through private payers and provided strong financial incentives in publicly financed healthcare programs tying provider payment to quality of care and efficiency.

Building on the principles set by the ACA and the passing of MACRA, the Centers for Medicare and Medicaid Services (CMS) has targeted 30 percent of Medicare payments to be tied to the quality of care or value through alternative payment models by the end of 2016 and 50 percent by the end of 2018.

As our population ages, it is more important than ever to have the proper provider incentives in place to care for the almost 60 million Americans that are eligible for Medicare today and the projected 80 million beneficiaries that are estimated by 2030.4,5

The MACRA Program  

MACRA provides CMS the leverage required to drive quality measure development with the aim of providing patients with better care while spending more intelligently and improving clinical outcomes.   With the passing of MACRA, there are five significant changes to the Medicare payment system:

  1. Ending the sustainable growth rate formula;
  2. Establishing a new framework for rewarding value;
  3. Creating a built-in period of financial stability for providers;
  4. Combining existing quality reporting programs into one system; and
  5. Providing support for physician practice transformation.

The MACRA legislation is intended to advance CMS’s goal for a value-based payment system.  Called by CMS as the “Path to Value”6 from 2015 through 2021 and beyond, MACRA allows healthcare providers to participate in one of two new quality incentive programs:

  1. Merit-Based Incentive Payment System (MIPS)
  2. Alternative Payment Models (APMs)

With MACRA, a new payment framework consisting of annual fee updates and incentives will be implemented for MIPS and APMs. The schedule for the program is:

  • 1/1/2015 through 6/30/2015: 0 percent update
  • 7/1/2015 through 12/21/2015: 0.5 percent update
  • 2016 through 2019: 0.5 percent update each year (subject to MIPS adjustment beginning in 2019)
  • 2020 through 2025: 0 percent update each year (subject to MIPS and APM adjustment)
  • 2026 and beyond: Annual updates during this period consist of:
  1. A “qualifying APM conversion factor” for professionals participating in qualified APMs is set at 0.75 percent; and
  2. A “non-qualifying APM conversion factor” for all other professionals, set at 0.25 percent.

The Merit-Based Incentive Payment System (MIPS)

The MIPS7 is a new program that combines parts of:

The basis of the program has four fundamental attributes:

  1. Quality: Includes existing measures for quality performance programs, in addition to new measures developed through notice and comment rulemaking by CMS, and actions used by qualified clinical data registries and population-based measures;
  2. Resource Use: Includes measures used in the current VBM program, with other enhancements based on public comments. These refinements must ascertain specific clinical criteria and patient characteristics to include patients in care episode and patient condition groups for resource use measurement purposes.  The process also must develop patient relationship categories and codes that distinguish the relationship with a physician toward a patient at the time of furnishing an item or service;
  3. Clinical Practice Improvement Activities (CPIA): Reflects professionals’ efforts to improve clinical practice or care delivery resulting in improved outcomes that include at least the following: Expanded practice access population management; Care coordination; Beneficiary engagement; and Patient safety and practice assessments in an alternative payment model.
  1. Meaningful Use (MU): Includes meeting current EHR MU requirements, as demonstrated by the utilization of a certified system.

The MIPS program that adjusts payments to providers is entirely voluntary. The fee-for-service8 payment model is still available to those providers who want to follow it.

Beginning in 2017, MIPS will annually measure Medicare Part B providers in four performance categories to derive a “MIPS score” (0 to 100), which can significantly change a provider’s yearly Medicare reimbursement.

MIPS measurements will be updated yearly through public notice, and the results are available on the CMS Physician Compare website.  While it was not the intention of the program, making this data available to consumers is a giant leap in the right direction for more consumer transparency.

Those who are participating in the MIPS program will be eligible for positive, negative or no payment adjustments, plus an opportunity to be awarded additional incentive payment adjustments based on composite performance scores.  Payment adjustment criteria are:

  • Positive Adjustments: Eligible professionals whose composite performance scores are above the threshold will receive a positive payment adjustment, with higher performance scores receiving proportionally larger incentive payments.  The magnitude of positive payment adjustments will vary and will maintain budget neutrality considering the amount of negative payment adjustments (except in certain limited circumstances), with a cap of three times the annual cap for negative payment adjustments.
  • Negative Adjustments: The maximum negative adjustment will be as follows: four percent in 2019, five percent in 2020, seven percent in 2021, and zero percent in 2022 and subsequent years.  The maximum negative adjustment will apply to eligible professionals whose composite performance score falls between zero and one-fourth of the performance threshold and smaller negative adjustments will apply to composite performance scores closer to the limit.  Such negative adjustments will fund positive payment adjustments for professionals with composite performance scores above the threshold.
  • Zero Adjustments: Composite performance scores at the threshold will receive no MIPS payment adjustment.
  • Additional Incentive Payment Adjustment: An additional adjustment will be available for exceptional performance on a linear distribution basis, with better performers receiving larger incentive payments.  The aggregated incentive payments will equal $500 million annually from 2019 through 2024.

 

The Alternative Payment Models (APM)

MACRA provides incentive payments for EPs participating in certain types of APMs.9  The program is for qualified providers who derive a significant portion of their patients and payments from APMs that include both risk for financial losses and quality measurement.  MACRA requires quality measures used in APMs to be comparable to the quality measures used in MIPS.

Medicare defines any of the following as an APM:

  • An innovative payment model expanded under the Center for Medicare & Medicaid Innovation (CMMI), including Comprehensive Primary Care (CPC) initiative participants;
  • A Medicare Shared Savings Program accountable care organization (ACO);
  • Patient-centered medical homes and bundled payment models; and
  • Medicare Health Care Quality Demonstration Program or Medicare Acute Care Episode Demonstration Program, or another demonstration program required by federal law.

Becoming APM-qualified isn’t easy. Providers must meet additional qualifying principles for APMs.  They require participants to meet all of the following criteria:

  • Uses quality measures comparable to measures under the MIPS;
  • Uses certified electronic health record (EHR) technology;
  • Bears more than minimal financial risk OR is a medical home expanded under the CMMI; and
  • Has increasing percentage of payments linked to value through Medicare or all-payer APMs.

 

If a provider chooses, they can opt to stay in the fee-for-service program until at least 2025.  That said, CMS is encouraging industry stakeholders to move into the APM program because it incentivizes the delivery of value-based care.  The difference between the fee-for-service program and APM model is:

Category One:  Fee-for-service payment – no link to quality and value;

Category Two:  Fee-for-service payment – link to quality and value; and

  1. Foundational payments for infrastructure and operations
  2. Pay for reporting
  3. Rewards for performance
  4. Penalties for performance

Category Three:  APM built on quality and value fee-for-service architecture; and

  1. APMs with upside gainsharing
  2. APMs with downside risk

Category Four:  Population-based payment (future program); and

  1. Condition-specific population-based- payment
  2. Comprehensive population-based payment

MACRA Countdown to Go-Live

Many changes must occur before the 2019 go-live date.  The illustration below compares high-level implementation milestones and timeframes of the MIPS and APM programs.

Source: Making Way for MACRA: Positioning Your Organization for Payment Reform, http://www.ecgmc.com/thought-leadership/articles/making-way-for-macra-positioning-your-organization-for-payment-reform

Before the kickoff of MACRA, the completion of many mandated tasks for measurement, development, processes, design and reporting must be in place, including:

  • Policy discussion period for MIPS and APM;
  • Consideration planning and measurement development;
  • Reporting and financial adjustments; and
  • Annual updating of program measures.

The Effects of MACRA for Providers and Healthcare Stakeholders

In his article, Making Way for MACRA Positioning Your Organization for Payment Reform,10 Dave Wofford, a senior manager at ECG Healthcare Management Consultants, highlighted six areas that providers should consider between now and when MACRA kicks-off in 2019:

  1. Changes to CMS’s payment methodologies for nonphysician services should be expected as well.

CMS’s decision to measure and pay differently for physician resource utilization will affect costs in every setting where physicians provide services.  Real changes in physician behavior regarding ordered services will transform services payment.  We anticipate changes will begin to occur around 2022, once CMS has several years of data from this program.

  1. Understanding the relationship between Medicare Parts A and B will become more complicated.

Providers will need to become more sophisticated in understanding how performance under Part B—particularly the resource utilization incentive—will impact reimbursement under Part A.  Therefore, providers must evaluate their Medicare strategy and participation in various programs (e.g., MIPS, APMs, Medicare Advantage) as it may not be effective simply to be a passive participant in Medicare FFS.

  1. Physician practice consolidation and acquisitions will continue.

Many smaller physician practices are unlikely to have the internal resources necessary to take full advantage of, and manage their performance against, MIPS or participate in an APM.  This will likely accelerate consolidation into larger freestanding physician practices or integrated delivery systems.  Additionally, given the impact that MIPS’s resource utilization feature will have on hospital reimbursement, health systems may be even more motivated to employ physicians to shape their incentives appropriately.

  1. Physician compensation and service agreements will need to evolve.

Physician compensation arrangements, as well as professional services agreements, will need to include physician incentives that reflect those being implemented by CMS.  There will need to be a strategy to address the disparate performances from different physicians; certain physicians will have the potential for much lower or higher reimbursement rates.  The question of who (i.e., the physician or the health system) bears the risk and reaps the reward will be a hot topic, especially considering the cost associated with ramping up technology capabilities for tracking the quality metrics built into MIPS.

While these changes will not happen overnight, they will begin to take place within just a few years.  Therefore, assessing the implications of MACRA upon any long-term physician contracts that are currently in negotiation or up for renegotiation should happen shortly.  If necessary, flexibility should be built into the contract language to accommodate future payment incentives.

  1. Commercial contracts will need to be amended.

Many commercial payor contracts contain language that defines reimbursement regarding a percentage of Medicare.  While that has worked well in the traditional FFS world, it will not translate with the introduction of MIPS, and many commercial contracts do not have sufficient flexibility in them to accommodate this new feature.  Therefore, commercial payor contracts should be reviewed to determine their compatibility with MACRA and language should be adjusted as necessary.

  1. Providers can have a voice in shaping the final product.

MACRA involves an extraordinary degree of delegation to CMS in fleshing out the details of the plan and it mandates that stakeholder input is considered in developing these finer points. Therefore, providers should take advantage of the opportunity to make their voices heard during the stakeholder comment and review process.

Summary

The passing of MACRA transcends the repealing of the SGR formula and signals the government’s continued desire to evolve payment models that incentivize providers to improve patient care, reduce healthcare costs and make a significant step toward an industry-wide value-based payment system.

Healthcare leaders should stay ahead of the juggernaut of information by monitoring CMS’ release of information detailing how the agency will implement MIPS and the APM incentive payments, including the creation of composite scoring criteria and performance thresholds.

References

  1. R.2 – Medicare Access and CHIP Reauthorization Act of 2015, 114th Congress (2015-2016) https://www.congress.gov/bill/114th-congress/house-bill/2/text
  2. S. Bureau of Labor Statistics states that there are 16 million medical-related jobs, http://www.exploremedicalcareers.com/1-in-8-americans-employed-by-u-s-healthcare-industry/
  3. Patient Protection and Affordable Care Act, https://democrats.senate.gov/pdfs/reform/patient-protection-affordable-care-act-as-passed.pdf
  4. Health Insurance Marketplace, http://obamacarefacts.com/insurance-exchange/health-insurance-marketplace/
  5. The next generation of Medicare beneficiaries, http://www.medpac.gov/documents/reports/chapter-2-the-next-generation-of-medicare-beneficiaries-(june-2015-report).pdf?sfvrsn=0
  6. CMS, Path to Value, https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-LAN-PPT.pdf
  7. The Merit-Based Incentive Payment System (MIPS), https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs.html
  8. CMS fee-for-service payment model, https://www.medicaid.gov/medicaid-chip-program-information/by-topics/delivery-systems/fee-for-service.html
  9. Alternative Payment Models, https://www.cms.gov/Medicare/Quality-Initiatives-Patient-Assessment-Instruments/Value-Based-Programs/MACRA-MIPS-and-APMs/MACRA-MIPS-and-APMs.html
  10. Making Way for MACRA: Positioning Your Organization for Payment Reform, http://www.ecgmc.com/thought-leadership/articles/making-way-for-macra-positioning-your-organization-for-payment-reform

________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Global Services for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

 

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Consumerism and Personal Debt Accumulation

Merriam-Webster defines consumerism as the promotion of the consumer’s interests and the theory that an increasing consumption of goods is economically desirable.  The United States (U.S.) has become a society of increasing consumerism, where individuals are making increasing levels of purchases for a variety of consumer goods.

Retailers and service providers are enjoying increased consumer spending, but that growth has come at a cost for all Americans.  The U.S. population carries a substantial amount of debt.  The typical American owns 3.5 credit cards and their household average balance-carry of credit card debt is $16,048.

ValuePenguin estimated that households with a negative or zero net worth have over $10,000 in credit card debt and families with a net worth over $500,000 average $8,139.  In 2010, the average outstanding revolving debt in the U.S. was $841 billion.  As of March 2016, that number had risen to $952 billion and the total of outstanding debt was $3.4 trillion. These economic factors have contributed to the growing challenge families are facing paying for their healthcare.

Healthcare reform is not the only major change the health industry is experiencing.  The concept of healthcare consumerism is unfolding right in front of our eyes.

The Rise in Healthcare Consumerism

Today, the term healthcare consumerism has become a popular way to describe the shift of payments and the delivery of services as the industry moves from a fee-for-service economic model to value-based care.  Government programs and commercial insurance have largely been responsible for administering consumer payments and care authorization.  Their programs have stymied the effort for the industry to become more consumer friendly.  Nevertheless, that has not dissuaded consumer advocates from promulgating the concept of consumerism.  The quote “win the day” by Samuel Butler in 1754 best describes the results that supporters of healthcare consumerism have achieved. In reality, healthcare consumerism has “won the day.”

There are two main considerations for consumerism in healthcare.  They are:

  1. The moral imperative for consumerism
    1. Save lives with increased quality of care and better population health
  1. The economic imperative for consumerism
    1. Save money by lowering operating cost and service prices
    2. Create more jobs

The Patient Protection and Affordable Care Act has accelerated the current state of consumerism because it left many consumers with large deductibles that put pressure on them to find the most cost-effective care for the out-of-pocket dollars they are spending.

Consumers now have more control over their care than ever before and are better able to evaluate the pricing and quality of the various providers they may consider engaging.  The industry is moving toward full consumer transparency but it is not there yet.

Previously, patients seeking information about a doctor or hospital were only able to uncover the most basic data, leaving them to make treatment decisions based on the limited amount of data they could understand—their insurance coverage and the availability of the care they needed.  Now many of those patients can access detailed information about important aspects of their care such as a physician’s experience with a particular procedure or a hospital’s outcome track-record and readmission rates.

Increasingly, consumers have access to information, which is helping them decide who will deliver their care and what they will pay for it.  Patients are slowly slipping into the healthcare driver’s seat.  They are now less likely to follow the provider’s old paradigm of “doctor says and the patient does” as they transition into a new culture of consumer choice.  With checkbooks in hand, consumers are now demanding more pricing transparency and better data so they can make informed healthcare decisions.

Do Patients Know What They Want From Healthcare Companies?  

Consumers tend to have strong opinions about what matters most to them when making healthcare decisions or receiving healthcare services.  McKinsey & Company (McKinsey), a research consultancy firm conducted a study on healthcare consumerism from 2007 to 2015 where they surveyed over 11,000 people about how they perceive their healthcare needs and desires, how they select providers and how they make other healthcare decisions.  Their results suggest that many assumptions about healthcare consumerism are inaccurate.

The evidence is surprising as it suggests there is a disconnect that exists between what consumers believe matters most and what influences their opinions.  It appears that some factors play a greater role than most consumers realize.  For example, a 2014 McKinsey Consumer Health Insights survey indicated that more than 90 percent of participants said they were somewhat satisfied with the care they received, and most of them rated the outcome achieved as the most important influence on their satisfaction.  However, they found that empathy and support provided by health professionals (especially nurses) had a stronger impact than did outcomes.  Also, the information participants received during and after treatment had a remarkable influence on patient satisfaction.

What consumers say is important does not always correlate with actual satisfaction levels.  In general, the results suggest that people:

Overstate tangible factors such as:

  • New/updated facility building
  • A quiet environment and room appearance
  • Cleanliness of room
  • Simplicity of administration
  • Availability and success to parking

Understate factors that are more emotional:

  • Keeping them informed about treatment before and after
  • Doctor and nurse empathy
  • Outcome of procedure or care

Taking these results into consideration and other factors, expanding consumerism in healthcare “is easier said than done.”  Shopping for healthcare is not like shopping for clothes, cars or appliances.  Unlike retail purchases, where information on products and services is readily available, healthcare consumers do not have access to accurate pricing before they receive care.  The complexity of healthcare pricing is the culprit for growing consumer confusion and frustration.  Understanding the basic terminology of healthcare is a challenge for most consumers.  There are many technical terms that consumers must understand to evaluate and purchase healthcare services.  Here are some examples:

  • In-network/out-of-network
  • Reasonable and customary charges
  • Billed charges
  • Contracted pricing
  • Global pricing
  • Co-pay and deductible
  • Procedural pricing
  • Non-essential health benefits cost

With all of the overlapping reimbursement methodologies involved in current pricing practices and the way patients are charged for their healthcare services, it is no wonder why they are exasperated and confused.

What You See Isn’t Always What you Get

So, how will patients make an informed choice to select a provider?  In traditional retail markets, pricing and feature richness determine how consumers choose products and services.  In healthcare, high priced medical procedures may not be the best value or produce the best outcomes.  Since consumers often cannot get the comparative cost and quality data they need to make smart purchasing decisions, they have to ‘fly blind‘ by choosing a provider by referral or selecting them from a list of approved providers.

Consumers want to know what it will cost to see a physician or have a procedure.  Regrettably, providers find it almost impossible to give patients true estimates for the cost of care.  They can offer ballpark estimates created from inexact information, but not much more.

Comparing healthcare pricing is not a simple task.  It is analogously comparing apples to oranges.  It is not as simple as formulating pricing from a list of gross charges or average reimbursements from Medicare or commercial insurance payers.  They do not indicate what the patient will have to pay.  The guesswork patients go through is frustrating, but they are not alone.  Providers also need accurate pricing data to help them effectively compete in the marketplace.

Healthcare costs and quality can differ widely from one provider to another in the same network and even in the same city.  In some areas, in-network prices can vary by 300-500 percent in the same town for the same service (e.g. endoscopy, CT scan, lab test, surgery).  Many people do not realize there is such a massive variation in the prices providers charge.  For instance, most consumers would be excited to save $100 or $200 on the purchase of a product or service like a magnetic resonance imaging (MRI) exam by just choosing a different provider.  What they do not realize is that an MRI might cost $600 at one provider and $5,000 at another just a few miles away.  In the end, even with a discount, the total cost of the procedure could still be much higher and the patient would never know it.  Surgeries can have thousands of dollars difference in pricing from provider to provider and their equipment capabilities can vary widely, which can have a dramatic effect on outcomes.  With the availability of accurate data, consumers can save thousands of dollars by shopping for healthcare services.  The example, below illustrates the differences in pricing for a knee arthroscopy procedure at three Baton Rouge, Louisiana hospitals.

 

Knee Arthroscopy: Baton Rouge, Louisiana (2010)

Medical Provider  Lake Surgery Center  Baton Rouge General Medical Center  Our Lady of                   the Lake                 Regional                 Medical Center 
Total Price  $4,500 $7,500 $14,000
Discount rate 20% 20% 20%
Actual discount $900 $1,500 $2,800
Discounted balance $3,600 $6,000 $11,200
Applied to deductible $500 $500 $500
Member co-insurance (20%) $620 $1,100 $1,500
Member responsibility $1,120 $1,600 $2,000
Employer Cost  $2,480 $4,400 $9,200

Source: Patient Care

Selecting the Right Provider is Not Easy

As the changeover to a consumer-based model gains steam and more pricing data becomes available, patients will attempt to improve their healthcare decisions by selecting the right provider at the right price.  To stay competitive, providers must begin to provide real pricing, not just estimates.

A well-informed patient will shop multiple healthcare providers for the best price.  When the perception of quality is equal, the consumer will most often choose the provider who offers the lowest price.  The recent trend toward enhancing the accuracy of provider quality comparisons is positive as it helps patients make decisions other than by price alone.  There are no other service industries where the stakes are higher than in healthcare.  Selecting the wrong healthcare provider can mean the difference between life and death.

Healthcare technologies that provide cost estimates for patient financial responsibility are rapidly becoming available.  Once a healthcare provider knows the type and scope of services a patient requires, these new software platforms can combine previous average charges, expected payer reimbursement, and transactional data from commercial or governmental payers to provide relatively accurate pricing estimates.  Previously, owning this type of technology was nice to have.  Today it is a strategic imperative.

In a consumer-based market, if providers cannot provide estimates for the cost to the patient, they are at a competitive disadvantage.  It is a good bet that healthcare providers that operate with open transparency will win over patients and become a market leader.

Healthcare Pricing:  The Good, the Bad and the Ugly

If you read any newspaper in the U.S., you will eventually find a story about the irrationality of healthcare charges.  Unfortunately, these stories erroneously report that aggregated gross charges make up the price for services when the amount a patient pays is much lower.  While this reporting is not accurate, it does shed light on healthcare pricing in general which has helped build momentum toward full price transparency.

Today, charges for healthcare services are the byproduct of decades of payer contract negotiations and changes in reimbursement approaches.  Over time, the disorderly modification of reimbursement methods has distorted charges making them much harder for the average consumer to understand.

Since providers have such wide disparities between their costs to charge ratios compared to their competitors it perpetuates the perception that healthcare pricing is irrational and consumers doubt its validity.

Why don’t providers just reduce their charges?  It is because it’s no easy task. There are currently payment mechanisms in use such as Medicare fee schedules that reimburse based on charges, therefore negating the ability to simplify provider-charging practices.  For accurate reimbursement, a provider’s charges must be equal to or greater than the fee schedule amount.  Also, to mitigate any financial loss, the provider must have the ability to model the effect of changing charges on reimbursement.  That requires owning a sophisticated contract modeling system to evaluate the effect of changing charges on reimbursement.  The fact that many health systems have different contracts for commercial payers and different charge masters for each hospital only serves to complicate the effort.  Ultimately, any sweeping change in pricing hinges on having an agreement from commercial and government payers about how they will view and evaluate charges.

Summary

Consumerism in healthcare is here to stay and this trend will have a material impact on the way healthcare is perceived and delivered for the foreseeable future.  Providers must develop a flexible approach so they can respond to the new consumer-centric economic landscape.  They need to meet the demands of consumerism by designing products and delivering services that address patient needs and expectations.  Patient education must advance to address the differences in patient health conditions and motivations.  The days of the typical ’one size fits all‘ educational approach are long gone.

Driving behavioral changes require a deep understanding of individual patient needs and how to influence their choices.  Pursuing qualitative analysis such as focus groups and evaluating quantitative data found in surveys offers some valuable insights however; consumer participants do not represent a uniform population with similar views, beliefs, and attitudes.

Improving patient satisfaction is a critical component for optimizing financial outcomes.  With a solid consumer-based strategy, providers can make a significant impact on the health of an entire community while creating a resilient and more financially sound healthcare organization.

_______________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Global Services for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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dime-picThe Centers for Medicare and Medicaid Service’s (CMS) Hierarchical Condition Category (HCC) risk adjustment model calculates risk scores, which will adjust capitated payments made for aged and disabled beneficiaries enrolled in Medicare Advantage (MA) and other plans.

The CMS-HCC model design uses two risk segments with separate coefficients to reflect the cost patterns of beneficiaries.  The community model represents those who live in the community less than 90 days as opposed to an institution.  Beneficiaries residing in an institution for 90 days or more fall into the long-term care category, which incurs an additional risk adjustment.  By design, both models predict healthcare costs for beneficiaries.

The CMS-HCC risk adjustment model looks at prospective data to predetermine the cost for the next year.  CMS pays a per-member per-month fee to the payer based on the prospective years risk scores.  Providers must identify all chronic conditions and/or severe diagnoses their patients have in a given year to substantiate a “base year” health profile for each patient that predicts costs in the following year.

The Path to Gaining Incremental Revenue

Few providers have the resources and are proficient enough in risk adjustment modeling to mitigate all of the compliance risks that they face.  This creates a problem for providers because there are significant dollars at risk for their enterprises.  In order to reduce risks, providers either hire expert HCC auditors as an internal resource or look to outside firms who are experts at executing risk adjustment and HCC auditing.  Many companies are capable of providing this service however; the best practice approach is to work with a company who can guide provider’s to keep up with CMS’s requirements for compliance while monitoring healthcare outcomes.

The following is an example of a provider leaving money on the table.

Risk Adjusted HCC Case Example

HPI: 86-year-old diabetic female patient presents to the office complaining of weakness. Patient also has COPD and CHF, which are managed by Dr. Smith. Patient is accompanied by daughter. She states that patient complained last night of weakness, shortness of breath and this morning she seems confused and decided to bring her in to be seen. PE: General: patient in distress appears weak Chest: clear, no wheezes, rales or rhonchi Cardio: no murmurs, rubs, click or gallop

Assessment/Plan:

  • Diabetes, Type 2, with ketosis, BS 425mg/dl, patient is being transported to ER for further evaluation possible admission
  • COPD, stable, continue current meds
  • CHF, Dr. Smith will be notified of patient’s condition and possible admission

Electronically signed by John Doe, MD 1/1/2001

Factors Scenario Coding 1(Less specific coding) Scenario Coding 2 (More Specific Coding)
Age/Sex 0.677 0.677
Medicaid 0.151 0.151
HCC-19- Diabetes (DM) 0.118
HCC 17- DM with acute complications 0.368
HCC 85 Congestive Heart Failure (CHF)   0.368
HCC 111 Chronic obstructive pulmonary Disease (COPD) .0346 0.346
DM + CHF Interaction   0.182
CHF+ COPD Interaction   0.259
Risk Score 1.292 2.351
Bid Rate (approx.) $753.69 $753.69
100% Risk Premium $973.77 $1,771.93

Scenario 1- Incomplete and not specific with Diabetes, Did not code Congestive Heart Failure which would take away both interactions with CHF w/ DM and COPDScenario 2- More complete accurate status profile

Increase the Bottom Line

It is important to maximize revenue and increase the bottom line.  HCCs are one area that can have an immediate positive financial impact for a provider.  I recommend you look into HCC coding to be sure you are being reimbursed accurately.  If you have questions, I can be reached at phil.solomon@miramedgs.com or at 404-849-8065.

________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Global Services for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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consumer-shoppingHealthcare consumerism isn’t defined by Merriam-Webster. The traditional definition of consumerism is the promotion of the consumer’s interests and it states that an increasing consumption of goods is economically desirable.  The United States has become a society of increasing consumerism, where individuals are making increasing levels of purchases for a variety of consumer goods.

Retailers and service providers are enjoying increased consumer spending, but that spending has come at a cost for all Americans.  The U.S. population carries a substantial amount of debt.  The typical American owns 3.5 credit cards, and their household average balance-carry of credit card debt is $16,048.

In the chart below, ValuePenguin estimated that households with a negative or zero net worth have over $10,000 in credit card debt and families with a net worth over $500,000 average $8,139 in credit card debt.  In 2010, the average outstanding revolving debt in the U.S. was $841 billion.  As of March 2016, that number had risen to $952 billion and the total of outstanding U.S. consumer debt was $3.4 trillion.

consumerism-article-chart

These current economic factors have contributed to the growing challenge families are facing paying for their healthcare. Healthcare reform is not the only major change the health industry is experiencing.  The concept of healthcare consumerism is unfolding right in front of our eyes.

The Rise in Healthcare Consumerism

Today, the term healthcare consumerism has become a popular way to describe the shift of payments and the delivery of services as the industry moves from a fee-for-service economic model to value-based care.  Government programs and commercial insurance have largely been responsible for administering consumer payments and care authorization.  That economic model is changing and it is the driving force behind healthcare consumerism.

Consumers have more control over their care than ever before and are better able to evaluate the pricing and quality of the various providers they may consider engaging.  The industry is moving toward full consumer transparency, but it is not there yet.  Increasingly, consumers have access to information, which is helping them decide who will deliver their care and how they will pay for it.  Patients are slowly slipping into the healthcare driver’s seat.  They are now less likely to follow the provider’s old paradigm of “the doctor says and the patient does” as they transition into a new culture of consumer choice.  With checkbooks in hand, consumers are now demanding more pricing transparency and better data so they can make informed healthcare decisions.

Expanding consumerism in healthcare is easier said than done.  Shopping for healthcare is not like shopping for clothes, cars or appliances.  Unlike retail purchases, where information on products and services is readily available, healthcare consumers do not have access to accurate pricing before they receive care.  The complexity of healthcare pricing is the culprit for growing consumer confusion and frustration.  Understanding the basic terminology of healthcare is a challenge for most consumers.  There are many technical terms that consumers must understand before being able to purchase healthcare services in an educated, informed manner.  Here are some examples:

  • In network/out of network
  • Reasonable and customary charges
  • Billed charges
  • Contracted pricing
  • Global pricing
  • Co-pay and deductible
  • Procedural pricing
  • Non-essential health benefits cost

With all of the overlapping reimbursement methodologies involved in current pricing practices and the way patients are charged for their healthcare services, it is no wonder they are exasperated and confused.

What You See Isn’t Always What you Get

So, how will patients make an informed choice to select a provider?  In traditional retail markets, pricing and feature richness determine how consumers choose products and services.  In healthcare, high-priced medical procedures may not be the best value or produce the best outcomes for patients.  Since consumers often cannot get the comparative cost and quality data they need to make smart purchasing decisions, they are forced to “fly blind” by choosing a provider by referral or selecting them from a list of approved providers.

Consumers want to know what it will cost to see a physician or have a procedure.  Regrettably, providers find it almost impossible to give patients true estimates for the cost of care.  They can offer ballpark estimates created from inexact information, but not much more.

Comparing healthcare pricing is not a simple task.  It is analogous to attempting to compare apples to oranges.  It is not as simple as formulating pricing from a list of gross charges or average reimbursements from Medicare or commercial insurance payers.  They do not indicate what the patient will have to pay.  The guesswork patients go through is frustrating, but they are not alone.  Providers also need accurate pricing data to help them effectively compete in the marketplace.

Healthcare costs and quality can differ widely from one provider to another in the same network and even in the same city.  In some areas, in-network prices can vary by 300-500 percent in the same town for the same service (e.g., endoscopy, CT scan, lab test, surgery).  Many people do not realize there is such a massive variation in the prices providers charge.  For instance, most consumers would be excited to save $100 or $200 on the purchase of a product or service like a magnetic resonance imaging (MRI) exam by just choosing a different provider.  What they do not realize is that an MRI might cost $600 at one provider and $5,000 at another just a few miles away.  In the end, even with a discount, the total cost of the procedure could still be much higher and the patient would never know it.

Surgeries can have thousands of dollars difference in pricing from provider to provider and their equipment capabilities can vary widely, which can have a dramatic effect on outcomes.  With the availability of accurate data, consumers can save thousands of dollars by shopping for healthcare services.  The example, below illustrates the differences in pricing for a knee arthroscopy procedure at three Baton Rouge, Louisiana hospitals.

Knee Arthroscopy: Baton Rouge, Louisiana (2010)
Medical Provider  Lake Surgery Center  Baton Rouge General Medical Center  Our Lady of the               Lake Regional  Medical Center 
Total Price $4,500 $7,500 $14,000
Discount rate 20% 20% 20%
Actual discount $900 $1,500 $2,800
Discounted balance $3,600 $6,000 $11,200
Applied to deductible ($500) $500 $500 $500
Member co-insurance (20%) $620 $1,100 $1,500
Member responsibility $1,120 $1,600 $2,000
Employer Cost  $2,480 $4,400 $9,200

 

Selecting the Right Provider is Not an Easy Process

As the changeover to a consumer-based model gains steam and more pricing data becomes available, patients will attempt to improve their healthcare decisions by selecting the right provider at the right price.  To stay competitive, providers must begin to provide real pricing, not just estimates.

A well-informed patient will shop multiple healthcare providers for the best price.  When the perception of quality is equal, the consumer will most often choose the provider who offers the lowest price.  The recent trend toward enhancing the accuracy of provider quality comparisons is positive as it helps patients make decisions other than by price alone.  There are no other service industries where the stakes are higher than in healthcare.  Selecting the wrong healthcare provider can mean the difference between life and death.

Healthcare technologies that provide cost estimates for patient financial responsibility are rapidly becoming available.  Once a healthcare provider knows the type and scope of services a patient requires, these new software platforms can combine previous average charges, expected payer reimbursement and transactional data from commercial or governmental payers to provide relatively accurate estimates.  Previously, owning this type of technology was nice to have.  Today it is a strategic imperative.

In a consumer-based market, if providers cannot provide estimates for the cost to the patient, they are at a competitive disadvantage.  It is a good bet that healthcare providers that operate with open transparency will win over patients.

Healthcare Pricing—The Good, the Bad and the Ugly

If you read any newspaper in the U.S., you will eventually find a story about the irrationality of healthcare charges.  Unfortunately, these stories erroneously report that aggregated gross charges make up the price for services when the amount a patient pays is much lower.  While this reporting is not accurate, it does shed light on healthcare pricing, in general, which has helped build momentum toward full price transparency.

Today, charges for healthcare services are the byproduct of decades of payer contract negotiations and changes in reimbursement approaches.  Over time, the disorderly modification of reimbursement methods has distorted charges making them much harder for the average consumer to understand.

Since providers have such wide disparities between their costs-to-charge ratios compared to their competitors, it perpetuates the perception that healthcare pricing is irrational and consumers doubt its validity.

Why don’t providers just reduce their charges?  This is not an easy task.  There are currently payment mechanisms in use such as Medicare fee schedules that reimburse based on charges, therefore negating the ability to simplify provider-charging practices.  For accurate reimbursement, a provider’s charges must be equal to or greater than the fee schedule amount.  Also, to mitigate any financial loss, the provider must have the ability to model the effect of changing charges on reimbursement.  That requires owning a sophisticated contract modeling system to evaluate the effect of changing charges on reimbursement.

The fact that many health systems have different contracts for commercial payers and different charge masters for each hospital only serves to complicate the effort.  Ultimately, any sweeping change in pricing hinges on having an agreement from commercial and government payers about how they will view and evaluate charges.

Summary

Consumerism in healthcare is here to stay and this trend will have a material impact on the way healthcare is perceived and delivered for the foreseeable future.  Providers need to develop a flexible approach so they can respond to the new consumer-centric economic landscape.  They must continue enhancing their patient satisfaction efforts while optimizing their financial outcomes.  With a solid consumer-based strategy, providers can make a significant impact on the health of an entire community while creating a stronger and more financially sound healthcare organization.

________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Global Services for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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WikiLeaks; The Hacker’s Hacker

healthcare-hacking-computerYou would have to be living entirely off the grid to be unfamiliar with WikiLeaks, the multi-national media organization founded by Julian Assange.  WikiLeaks has elevated itself as the most well-known name in hacking, exposing classified, censored or otherwise restricted official materials involving war, spying, and corruption.  The organization is despised for uncovering secrets that were not meant for public consumption and applauded by millions who believe that the world’s most persecuted documents should be available to everyone.  Who would have thought that hacking could land someone on the cover of TIME Magazine as the coveted Person of the Year?  Mr. Assange held that distinction in 2010.

WikiLeaks is not the only hacking organization keeping Information Technology (IT) stakeholders up at night.  Recently in healthcare, hackers have locked down provider databases, essentially putting them out of business until they pay a ransom to regain access to their data.  Hospitals and health systems have more to lose than organizations in other sectors when it comes to hacks.  According to the Becker’s Health IT & CIO Review, patient data now sells for more money than any other kind of information on the black market and the healthcare industry experiences more ransomware breaches than in any other amounting to over 88 percent of all attacks.

The Ransomware Epidemic

One reason hospitals may be particularly vulnerable to ransomware is the multitude of systems and devices in use.  There are many more entry and axis points for cybercriminals to exploit.  Recent innovations in the hacker community make it difficult to guard against new strains of ransomware.  Once patient data is infected, hospitals and clinics are locked-out of their system.  Unlike other industries where access to data is not as time critical, not having access to patient data could mean the difference between life and death.

Ransomware breaches represent a big payoff for criminals, and it’s quite clear why healthcare is the primary target.  According to the 2016 IBM X-Force Cyber Security Intelligence Index, a stolen medical record is worth more than 10 times that of a stolen credit card.

In a prepared statement, Jocelyn Samuels, director of the U.S. Department of Health and Human Services Office for Civil Rights, said, “One of the biggest current threats to health information privacy is the serious compromise of the integrity and availability of data caused by malicious cyberattacks on electronic health information systems, such as through ransomware.”

In a ransomware attack, how do cyber criminals attack the healthcare infrastructure?  Typically, the standard method is malicious email attachments with the most common being Microsoft Word documents, Adobe files, and JavaScript.  Other schemes include links to booby-trapped and compromised websites, malicious web advertisements, malware links in social media posts and unpatched versions of Microsoft Office and Adobe Reader or Flash.  Once an organization is infected, cybercriminals exchange a decryption key to regaining access and in return receive an untraceable Bitcoin payment.

Medical Data Hacking on the Rise

According to X-Force research, healthcare record theft is up 1,100 percent in 2016, with more than 140 million medical records compromised worldwide.  Out of the 249 incidents submitted to the Office for Civil Rights (OCR) through October 26, 2016, 83 were caused by hacking or IT incident.  While hacking incidences garner the most attention, there were 104 unauthorized access or disclosure breaches, 46 cases of theft, 12 incidents involving loss and four caused by improper disposal.

The top five unauthorized breaches in 2016 were Banner Health, Newkirk Products, 21st Century Oncology, Valley Anesthesiology and Pain Consultants and Hollywood Presbyterian Medical Center.  Banner, a large Arizona-based health system discovered an incident on July 7, 2016, that affected approximately 3.6 million patients, members and beneficiaries, providers and food and beverage outlet customers.  Newkirk Products, a New York-based service provider that issues healthcare ID cards for health insurance plans announced in August 2016 that it experienced a data breach potentially compromising approximately 3.4 million plan members.  21st Century Oncology notified the OCR of a data breach in March 2016 that may have affected an estimated 2.2 million individuals and Valley Anesthesiology and Pain Consultants announced in August 2016 that 882,590 patients might have had their information exposed when an unauthorized party inappropriately accessed one of its computer systems.

The highest profile medical data breach in 2016 happened to Hollywood Presbyterian Medical Center in California.  In March, the hospital was locked-out of its Electronic Health Records system for over a week.  During that time, providers reverted to operating via pen and paper until they made a decision to pay the hackers $17,000.

The advent of medical data hacking appears to have no end in sight.  No one is immune to having his or her medical records compromised.  It is troubling to think that even with best security protocols in place, one out of every three people had a healthcare record compromised in 2015.

Medical Devices Also Pose a Security Threat

Most people do not realize that medical devices are often mini-computers linked to a corporate network.  Without having an embedded encryption capability, hackers are easily able to gain access to the core network or other networks throughout the organization, including the electronic health records.

Hackers have one of two motives for what they do, says Stephanie Domas, an ethical hacker and lead medical device security engineer at Battelle, a research, and development firm.  She hacks organization and is paid for it.  Some devices hold a sizable amount of hackable data that others don’t contain much data but are a gateway to the network for hackers.  Medical devices can include fetal monitors and other monitoring machines, ventilators, anesthesia machines, bypass machines, electrocardiographs, lasers, gamma cameras, medical apps, diagnostic imaging systems, powered wheelchairs, and implantable defibrillators and pacemakers, and much more.

Derek Jones, a senior security advisor at the consulting firm Impact Advisors offers his advice how to protect medical device data.  In an article published by Health Data Management, he said, “Many hospitals only use a perimeter firewall to provide protection for moving in and out of the core network, with no other firewalls protecting internal systems.  Multiple firewalls across the organization—to the greatest extent possible, given available resources—represents a good start toward improving device security.”

“Layered security is important because we can’t trust the Internet” he explains.  “All these devices that get plugged into the network, like security cameras, cash registers, and biomedical devices are a risk to data security.  Network access makes it easier to use the devices, but we often forget they are mini-computers and must be protected.”

Too often, Jones adds, the built-in firewall that comes with Microsoft Windows and it is viewed as adequate, and as a result, more advanced software with better scanning and reporting features is not deployed.  A more sophisticated firewall will remove the Windows firewall, which does not have the capacity that enables a network administrator to know that malware has infected a computer or a device.

New and old medical devices alike can be a security threat.  Both require the addition of embedded security, which includes the encryption of data at all access points.  The U.S. Food and Drug Administration have provided guidance for manufacturers to follow to reduce medical device hacking risks. However, there are no penalties for non-compliance.

The Human Element in Medical Data Security

The biggest threat to healthcare IT security is the human element.  According to the 2016 HIMSS Cybersecurity Survey, the two primary healthcare IT security concerns from healthcare organizations (hospitals and physician practices) are phishing attacks (a concern for 77 percent of respondents) and viruses/malware (67 percent).  Both events require human interaction for hackers to access patient data.

Training clinicians and staff one time is not enough to guard against attacks.  Continuing education is the key.  A study by Wombat Security Technologies and the Aberdeen Group suggests that upgrading employee mindfulness can lessen security risk by anywhere from 45 to 70 percent.  There is no such thing as a 100 percent secure IT system if people use it.  It certainly makes no sense to make significant investments securing a technology if system users are not trained properly.

Steps for Prevention and Protection

healthcare data securityThe number one rule in securing medical data is to never assume you are completed protected.  There is no “one size fits all” protections against security breaches.  When implementing an effective prevention and protection strategy, you should consider these 12 points:

  1. Initially, train users about the risk;
  2. Implement consistent high-frequency data backups;
  3. Block all executable attachments that do not pass your security software assessment;
  4. Keep systems patched (especially J-Boss web servers, which are common in healthcare); and
  5. Maintain updated antivirus solutions;
  6. Maintaining strong passwords;
  7. Ensure that active accounts connect to a current staff member;
  8. Make sure departing staff members return laptops and other mobile technology;
  9. Allow only the minimum necessary access to sensitive information;
  10. Secure medical devices by encrypting data and securing access points;
  11. Audit the system regularly; and
  12. Provide consistent ongoing security training for every staff member.

Summary

Leveraging robust user training, including an investment in preparedness, and implementing key security controls and protocols will go a long way in securing an organization’s medical data. It doesn’t end there.  Health Enterprises must also ensure that they have an all-encompassing backup and recovery process that allows them to get back to business as usual quickly after a breach or attack.

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Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Global Services for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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Buy A New Technology or Further Develop Legacy Systems

Lately, technology security has taken center stage as health organizations face increased challenges of maintaining the security of patient health information (PHI).  While securing data is of concern, determining the most applicable and cost-efficient technology is the most important priority.

Accelerating digital transformation and leveraging emerging technologies have become a fundamental imperative for hospitals, health systems and physician groups.  Technology executives seek to leverage today’s disruptive technology applications to improve the performance of legacy systems or purchase enhancing technologies to reduce cost or improve operational performance.

Provider organizations are pursuing strategies for reimagining their core systems that involve modernizing and revitalizing, while also being on the lookout for less expensive and more efficient new technologies.   The overarching objective of any Information Technology (IT) initiative is to transform the foundation of technology to be more agile, intuitive and responsive to meet today’s clinical and financial needs while laying the foundation for tomorrow.

With the rapid advancement of supportive technologies such as web and cloud computing gaining increased visibility as an  enterprise initiative, there lies a question for healthcare leaders: should providers develop new technology capabilities as an internal project, or should they be sourced from a specialized external vendor—or both?

The classic method for evaluating the pros and cons of a technology “buy-versus-build decision” are outlined below by Michael Dunne, Senior Vice President of Creative Executions.1

The Pros and Cons of Internal Development 

Pros: The advantages of building:

Satisfy unique needs—The main benefit of building a custom solution is that you are free to build whatever you want and can accommodate very specific requirements of stakeholders.  You are not dependent on a vendor’s choices and direction in product development.

Employ insider insight—A homegrown solution also makes it easy to capitalize on your IT department’s familiarity with the principal lines of businesses, stakeholders and processes to expedite delivery of a solution that meets expectations.

Utilize familiar tools—When building an internal technology, there may be opportunities to leverage technologies already in place.  This can lower costs and time-to-deployment for IT, and help end users get accustomed to systems (by resembling standard tools).

Maintain control and accountability—When the system breaks down, you know how to fix it.

Cons: The issues with building:

Resource constraints—Without expertise, many mistakes can be made throughout the development process, monopolizing resources and causing headaches. Building robust rules and constraint engines can be very demanding for non-experts. Many well-intentioned teams that utilize the homegrown route end up with no system at all.

Trailing innovation—Insufficient time and focus make it nearly impossible to build a solution that incorporates all the latest technological advances, so you may end up missing out on must-haves and latest developments in mobility, analytics, knowledge management or rich visualization.

Limited tactical solutions—Many solutions built by internal teams are designed to address specific and current realities.  These solutions can be difficult to grow and evolve when new requirements arise down the road from existing or different sets of stakeholders.

Maintenance costs—with all the time and effort required to maintain a solution internally, it can be challenging—if not impossible—to upgrade features adequately in a way that satisfies changing business needs in a timely fashion.

The Pros and Cons of Working With a Technology Solution Vendor 

Pros: The advantages of buying:

Access critical technologies—Technology vendors live and breathe their specialty, so they are better equipped to deliver a system that promotes scalable growth by leveraging expertise in their particularl fields (e.g., constraint engines, rules engines, knowledge and content management and pricing execution).

Enjoy the latest innovations—Taking advantage of the latest technology developments is a no-brainer, especially if they’ve been tested by large, demanding enterprise organizations.

Expand functional breadth—Working with a technology vendor means you profit from the ability to bundle key, complementary features with your configuration solution, like connectivity with other systems.

Improve system growth potential—A well-built, prepackaged solution that comfortably covers existing business practices is also likely to be flexible and receiving enhancements to keep abreast of the most recent trends.  Hence, you can do more than solve just a set of current problems and be better prepared for future contingencies.

Offload maintenance burden—Let your software vendors and contractors take care of upgrades and maintenance so that you can focus on your core business issues.

Utilize expert resources—Independent technology and integration vendors possess a wealth of institutional knowledge and skills, both technical and business best practices that make it much simpler to expand and modernize your solution over time.

Cons: Issues with buying:

Loss of control—When you work with a vendor, the vendor manages the process for making changes or updates to the system.  Also, a vendor may assume a significant proportion of responsibility for the initial implementation.  Be sure to get a clear understanding of the solution roadmap and enhancement schedule before committing to a vendor.

End-user acceptance—As with any new solution, it is important to get buy-in from all affected stakeholders before you implement, otherwise getting adoption can be a challenge.  Look and feel, system usability and intuitiveness of features to end users are all important issues to explore.

Vendor lock-in—Changing vendors after deployment is not an easy task, so it is important to weigh your options carefully and make the right choice upfront.

Vendor instability—A vendor’s viability should be determined before a commitment is made.  Ideally, you want someone who can demonstrate longevity, a good track record and can provide references.

The most important measure in a buy-versus-build decision is the degree of customization required.  Each organization needs to decide their unique tipping-point where the customization of a pre-built technology will take more time or be more expensive than internal or contracted development.

When a technology application must meet unique needs, like those that exist in a healthcare provider’s organization, a purchased solution typically is the preferred approach.  However, even with a purchased solution, the degree of customization required to make it usable ultimately creates a custom application.  This emerging design has evolved into a buy-plus-build scenario.

Over the last 15 years, healthcare computing technology has suitably changed to address most of the traditional reasons for not building internally.  Therefore, the purchased technology methods have transformed into a buy plus build process.   In their article in Healthcare Informatics titled Is it really “Buy vs. Build”?  Jason Kreuter Ph.D., Allison Stover, and Peter Basch M.D. outline five reasons why to buy plus build has become so prevalent.2

  1. Integration — New technologies have eased the formerly complicated integration among different healthcare applications. For example, web services and XML (the basis for HL7 version 3) provide a mechanism for developers to design applications that can independently utilize, and be used by, other applications now or in the future.  Inter-application integration is easier with custom-developed systems, whereas integrating packaged systems can be difficult because of their proprietary design.  Also, custom applications can evolve as clinical practice changes or as the hospital adds new systems.
  2. Knowledge transfer — In modern standards-compliant development, knowledge transfer is not as labor intensive as in the past. Keeping track of changes in a custom application is facilitated with code tracking tools such as Visual Source Safe or the open-source Concurrent Versions System.  If open-source applications are capable of combining the efforts of thousands of independent developers into one coherent product, it is clearly possible to successfully transfer application knowledge in a funded organization.  Knowledge transfer can be eased by defining a development mindset that employs detailed documentation and re-usable code, and discourages programmers from “falling in love” with their own
  3. Core competency — The concern that application development is not currently a hospital’s core competency is correct. However, the field of medical informatics was created by, and in, the hospital.  Over time, the field transitioned out of the hospital and to the vendor.  Why shouldn’t healthcare systems leverage their vast clinical and organizational knowledge base to make some clinical application development a core competency?  In fact, vendors have purchased hospital-developed software in the past. McKesson Horizon Expert Orders, for example, was developed by Vanderbilt University Hospital and Microsoft’s recent purchase of Azyxxi from MedStar Health proves that a hospital system can develop a quality product (build plus build).
  4. Total Cost of Ownership (TCO) — Mark Twain popularized Benjamin Disraeli’s statement, “There are three kinds of lies: lies, damn lies, and statistics.” TCO studies are no exception.  It is well known that the time period dramatically affects the cost analysis.  What will be the savings in 10 to 15 years—a scale easily obtainable given the lifespan of healthcare IT systems?  What is the cost when the organization wants to change clinical practice workflow that necessitates vendor customization to the system?  What happens to a system that is no longer actively maintained if the vendor goes out of business?
  5. Application Maintenance — Diverse healthcare organizations need to constantly innovate and adapt to stay ahead in their marketplace. It stands to reason that an application will need to be updated to reflect the practice and practice workflow changes.  A custom application is capable of changing in-step with the hospital’s changes—an evolutionary process rather than an abrupt process, which can be a dramatic and disruptive shock to a hospital.  A packaged product seldom makes timely and dramatic shifts in the application because they cannot; the product is used by other hospitals who may not want to change their practice workflows.

The buy versus build methodology has morphed into more of a buy-plus-build process. This is due to the scope and complexity of launching purchased software that must meet the requirements for rapidly changing rules and regulations, driving patient satisfaction and improving bottom line financial performance.

The long-term impact on a provider’s organization warrants careful consideration so that technology decisions are made with the strategy that ultimately will have the most positive effect on the entire enterprise.  While it takes substantial time and effort from technology leaders and stakeholders to make the most appropriate decision buy, build or both, the costs of making a poor decision can be catastrophic.  On the other hand, the benefits of making the right decision can positively affect a hospital’s bottom line for decades to come.

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Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Global Services for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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References:

  1. Adopting CPQ? Does it make more sense to build or buy? Michael Dunne, Senior Vice President of Creative Executions http://webcache.googleusercontent.com/search?q=cache:5wfREbIJLAQJ:www.determine.com/blog/entry/do-you-build-or-buy-when-adopting-cpq+&cd=2&hl=en&ct=clnk&gl=us#.V0W5bDUrLVc
  2. Healthcare Informatics, Is it really “Buy vs. Build”? Jason Kreuter Ph.D., Allison Stover, and Peter Basch M.D. http://www.healthcare-informatics.com/article/it-really-buy-vs-build?page=2

 

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The Distinction Between Telemedicine and Telehealth

telemedicineThe American Telemedicine Association (ATA) defines telemedicine as the remote delivery of healthcare services and clinical information using telecommunications technology. Today, as telemedicine crosses the chasm of innovation, it leverages a wide array of clinical services using internet, wireless, satellite and telephone media to deliver clinical care.

What is the distinction between telemedicine and telehealth? Some industry pundits use the terms “telemedicine” and “telehealth” interchangeably. The more popular definition is that telehealth is explicitly defined in law and/or policy and regulations. In some cases, “telehealth” is used to reflect a broader definition, while “telemedicine” is used mainly to define the delivery of clinical services. Both have one thing in common. They are setting a new “gold standard” in the delivery of healthcare services. For the purpose of simplicity, the term telehealth will be used to describe both terms.

Lawmakers, Providers and Consumers Strike Telehealth Gold

Telehealth is booming! The growth of this medical sector is happening so rapidly that it can be compared to the astonishing progression of the California Gold Rush in 1848. The gold seekers of yesteryear can be compared with today’s providers and medical technologists. Due to telehealth, the delivery of care is advancing swiftly in the U.S. In comparison, gold miners progressed from using simple techniques to “pan” for gold to adopting sophisticated methods to uncover millions of dollars of gold. The “gold” healthcare providers will receive in the telehealth rush will be the opportunity to develop a healthier and better-served patient.

Unlike the gold rush that was over almost as soon as it started (1848–1855), telehealth’s growth seems to have no end in sight. That said, the technological delivery of clinical care is not without its challenges. There is ongoing legal wrangling and discussions between attorneys, legislators, lobbyists and industry groups about how each state will handle telehealth’s evolution and reimbursement.

The “tug of war” about how to implement telehealth began over 40 years ago with hospitals attempting to extend care to patients in remote areas. According to the ATA, the use of telehealth has spread rapidly and now is used in some form by over 50 percent of American hospitals. It has been so successful at improving a patient’s clinical health status that the technologies are advancing to include a growing variety of applications and services using two-way video, email, smart phones, wireless tools and other forms of telecommunications technology.

Policymakers Grapple with State Telehealth Laws

In March 2016, the Center for Connected Health Policy (CCHP), a program of the Public Health Institute, released the fourth annual edition of the State Telehealth Laws and Medicaid Program Policies report.1 This guide provides policymakers, health advocates and other professionals the most current information on telehealth-related policies, laws and regulations for all 50 states and the District of Columbia.

The key findings of the report determined that no two states are alike in how telehealth is defined and regulated. While there are some similarities in language, perhaps indicating states may have utilized existing verbiage from other states, noticeable differences still exist. These differences create a confusing environment for telehealth participants to navigate, particularly when a health system provides healthcare services in multiple states.

The report focused on ten specific telehealth-related policy areas:

  1. Medicaid reimbursement– Forty-nine states have some form of reimbursement for telehealth in their public program.
  2. Reimbursement for live video– The most predominantly reimbursed form of telehealth modality is live video, with every state coverage law offering some type of live video reimbursement.
  3. Reimbursement for remote patient monitoring (RPM)– Only 16 states have some form of reimbursement for RPM in their Medicaid programs RPM.
  4. Reimbursement for email/ phone/fax– Email, telephone and fax are rarely acceptable forms of delivery unless they are in conjunction with some other type of system.
  5. Reimbursement for transmission/facility fee– Thirty states will reimburse either a transmission, facility fee or both.
  6. Location of service provided– Although the practice of restricting reimbursable telehealth services to rural or underserved areas, as is done in the Medicare program, is decreasing, some states continue to maintain this policy.
  7. Consent issues– Twenty-nine states include some sort of informed consent requirement in their statutes, administrative code and/or Medicaid policies.
  8. Licensure– Nine state medical boards issue special licenses or certificates related to telehealth.
  9. Online prescribing– There are a number of nuances and differences across the states. However, most states consider using only an internet/online questionnaire to establish a patient-provider relationship (needed to write a prescription in most states) as inadequate.
  10. Private payer laws– Currently, 31 states and the District of Columbia have laws that govern private payer reimbursement policies.

It is not a shock to discover wide differences of opinion between state legislators and policymakers regarding the future of telehealth. Some states are expanding telehealth reimbursement, while others continue to restrict and place limitations on delivered services. The differing implementation of telehealth is no surprise. Coming to a universal agreement about any healthcare legislation is about as easy as finding a gold nugget at an abandoned gold mine.

According to the National Conference of State Legislatures (NCSL) report, in 2015 there were 200 telehealth bills introduced in all but eight states, and in the current legislation session in the 2016 legislative session over 150 bills have landed on state lawmakers’ desks. Because of this, there are no shortages of legal questions and issues healthcare providers, hospitals and other enterprises need to be aware of regarding telehealth services.

A Legal Expert Weighs In on Telehealth’s Future

Nathaniel Lacktman, head of the law firm Foley & Lardner’s telemedicine and virtual care practice and a leading authority on the latest legal and policy issues surrounding the telehealth market, provides answers to seven key questions about the emergence of telehealth and how it is affecting lawmakers, providers and consumers.2

  1. Question:What are your thoughts regarding telemedicine policy?

Nathaniel Lacktman: Some of the most interesting policy activity concerns payment for telemedicine-based services and socalled telehealth coverage statutes. These laws require a health insurance plan to cover a service delivered via telehealth if that service would be covered if delivered in person. In this way, telehealth coverage statutes are like consumer rights laws. An individual has no choice as to what insurance company his or her employer selects to administer his or her benefits, no choice as to what specific health plan is offered under that benefit plan and no choice as to which providers are contracted in that plan’s network. So, even insured patients feel a sense of disenfranchisement in the health insurance industry. And health coverage is arguably the most important insurance coverage a person might carry. Consumers have far more ability to flex their spending power when buying life insurance, disability insurance or car insurance. Yet, health insurance is a very different process, and the individual consumer really cannot speak with his or her dollars.

Telemedicine is well established and utilized by patients and doctors in all 50 states. But, by and large, unless a state passes a telehealth coverage law requiring health plans to cover these services, they do not cover it. An insurance company might have operations across the country, with a variety of different health plans underneath it. The insurer will cover telehealth services when it has a health plan in a state with a telehealth coverage law, but in states without these laws, the insurer will not offer telehealth as a covered benefit. I find this disappointing and frustrating, as do many healthcare providers and patients. We see a much more robust and meaningful utilization and enjoyment of telehealth services in those states that have passed telehealth insurance coverage laws.

  1. Question:How much are differences in state laws and insurance barriers affecting the telehealth industry?

NL: Variances across states in multi-state arrangements are definitely a barrier. Much of the traditional healthcare delivery system relies on Medicare payments, and a large amount of our overall health costs are paid by that program. The Centers for Medicare & Medicaid Services (CMS) sometimes is unfairly criticized because people “demand” CMS change the Medicare telehealth coverage rules and allow reimbursement for patients in urban areas as well as rural. But these restrictions were imposed by Congress and contained in the Social Security Act. CMS cannot override these federal statutes. However, CMS has made many outreach efforts to eliminate restrictions and promote the meaningful use of telemedicine in healthcare delivery, and it should be recognized for those efforts. A number of bipartisan bills have been proposed over the years, but they will need federal action. By April 2017, the U.S. Government Accountability Office (GAO) will issue two reports on telehealth studies and the Medicare program to see if eliminating the restrictions would represent a big financial burden or not. Those reports were required to be created as part of the “doc fix” bill in April 2015 and could be a catalyst for legislative movement by Congress.

  1. Question:How are state variances affecting the telemedicine market?

NL: I do believe we will eventually reach a point where health plans are meaningfully covering telehealth services, whether it is through legislative efforts or sheer enrollee demand. Until then, we need these coverage statutes because so many providers participate in managed care programs. Changing that environment will catalyze utilization, adoption and people’s enjoyment of these services.

  1. Question:How are the variances in state telemedicine laws creating issues when it comes to interstate medical licensing?

NL: Primarily, it is an administrative paperwork burden, but nothing insurmountable. Here’s an easy scenario: the doctor is located in New York, the patient is in Miami, and the patient receives a consult, diagnosis and prescription from that doctor via telemedicine. The default rule is that the New York doctor must have a license to practice medicine in Florida because the doctor is delivering care into the state of Florida. There are exceptions to this rule. Licensing is not a show-stopper; it’s more of an operational or administrative burden. But there are a multitude of solutions and ways to approach licensing and scale up to have regional and national coverage of a telehealth-based medical group.

  1. Question:What other challenges do you see in the industry that might be preventing telemedicine from taking that next “leap?”NL:Like anything new, it takes time for buzz to build and for people to become comfortable. Historically, telemedicine has been focused in the academic medical center and university environment, if only because that’s traditionally the domain of pilot programs and research studies to prove clinical efficacy. But the clinical efficacy and safety have been established. Now, we have been seeing studies trying to prove telemedicine’s ROI. People are looking to scalability and sustainability: how to structure service offerings with operational homogeneity so there aren’t variances on a state-by-state basis. I think there’s a better understanding of why providers are using telemedicine, how they plan to use it and a desire to build a model that does not rely solely on cost savings or shoestring grant-funded budgets. Rather, the service itself should generate revenue and improve quality. That’s the next level of sophistication in telehealth business arrangements. In our practice, we aren’t just papering the legal documents, but we frequently advise clients on the business models and structures that will offer these benefits. Some people love the flashy and exciting technology but have no idea about how to turn it into a viable business or service line.
  2. Question:Are doctors more comfortable with providing these services compared to years past?

NL: Yes, they are more on board and it continues to grow. The American Medical Association approved new ethical guidelines on telemedicine use after three years of back-and-forth. At this point, it is pretty irrefutable. People are doing amazing things with telehealth and doing it with confidence. As with anything, you need education and exposure before doing it with comfort.

  1. Question:What will it take for telemedicine programs to integrate themselves more fully into health systems?

NL: The biggest driver that will fuel overall growth is the move toward population health. That’s a concept a lot of hospitals are driving for as providers will be paid more on a risk-based system with quality of care implications and penalties or risk if the cost of care gets out of control. Already, the smart health systems are looking for ways to reach out to patients to make care more accessible and convenient. The second part is the increasing amount of information available to the doctors by using tools such as remote patient monitoring and patient-centered apps where the goal is to get more information coming from the patient to the doctor. That’s the idea: make care more accessible to the patient and get more (and better) information to the caregivers. If that is achieved, providers will be in a much better position to be successful under these risk-based models, which is the future of healthcare.

Telehealth — Gold Will Be the Consumer’s Reward

Telehealth has become the healthcare delivery model of the 21st Century and a powerful application to help achieve better healthcare, enhanced health outcomes and reduced healthcare costs. By developing efficiencies and spreading the reach of existing care providers, telehealth has the capability to improve healthcare workforce issues and overcome access obstacles, thus decreasing costs and burdens for patients.

The future of telehealth now relies on lawmakers and policy influencers to continue to push the telemedicine narrative by eliminating regulatory barriers to telehealth delivery models, including policies around reimbursement, licensure and credentialing. History reveals that sometimes progress and success can be as fleeting as it was during the gold boom of the 1800s. As long as state and federal regulations keep pace with the technological advances in the practice of clinical care and telehealth, then gold will be the consumer’s reward.

________________

Phil C. Solomon is the publisher of Revenue Cycle News, a healthcare business information blog and serves as the Vice President of Global Services for MiraMed, a healthcare revenue cycle outsourcing company.  As an executive leader, he is responsible for creating and executing sales and marketing strategies which drive new business development and client engagement. Phil has over 25 years’ experience consulting on a broad range of healthcare initiatives for clinical and revenue cycle performance improvement.  He has worked with industry’s largest health systems developing executable strategies for revenue enhancement, expense reduction, and clinical transformation. He can be reached at philcsolomon@gmail.com

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1Healthcare Informatics, For Telemedicine Providers, the Policy Landscape Continues to Have Both Gains and Losses, Report,http://www.healthcare-informatics.com/news-item/telemedicine-providers-policy-landscape-continues-have-bothgains-and-losses-report-says
2 Healthcare Informatics Managing Editor Rajiv Leventhal – Q&A discussing the challenges and opportunities facing the telehealth market, https://www.healthcarelawtoday.com/2016/07/11/the-state-of-telehealth-policy-and-reimbursement-qa/

 

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Compare 7 Key Healthcare Positions – Trump vs. Clinton

by Phil C. Solomon October 3, 2016

KEEP IT OR DITCH IT – That is the question – You be the judge Side-by-Side Comparison of the Candidates’ Health Care Positions provided by Kaiser Family Foundation – kff.org Hillary Clinton Donald Trump Position on the ACA Maintain and build upon the ACA. Repeal the ACA in its entirety. Repealing the law would rollback many […]

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Don’t Text PHI While Driving

by Phil C. Solomon September 13, 2016

Article is a 4-minute read We all know we shouldn’t text and drive, don’t we? That said, now let’s explore how texting has evolved in healthcare. The Rise of Text Messaging in America On June 19, 1934, United States (U.S.) President, Franklin D. Roosevelt, signed the Communications Act of 1934 into law.1  This act established […]

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