By Jose Lopez, Senior Consultant, The Verden Group

In our most recent issue of ViewPoint Magazine, we provided some tips on how to prepare for the reporting requirements and shift to quality payment models under the proposed Medicare Access & CHIP Reauthorization Act (MACRA). MACRA was scheduled to take effect on January 1, 2017. However, after feedback and pressure from most of the professional medical societies and specialty membership organizations, Andy Slavitt, the Acting Administrator for the Centers for Medicare and Medicaid Services (CMS), recently indicated MACRA could be delayed from the proposed January 1 start date.

The final rule for MACRA is not expected to be released until November 1, 2016, only two months prior to the current proposed effective date of January 1, 2017. This would put unbelievable pressure on providers, particularly those in small practices, to scramble to meet the requirements of MACRA in a very short period of time. The Verden Group encourages CMS to delay implementation of MACRA, and for practices to fully understand, prepare for, and implement changes in their workflows to demonstrate the cost effectiveness and high quality of care they provide to their patients.

CMS issues Final Rules for Stage 2 and Proposed Rules for Stage 3

By Jose Lopez, Senior Consultant, The Verden Group

On October 6, 2015, the Centers for Medicare and Medicaid Services (CMS) and the Office of the National Coordinator (ONC) released the final rules (click here to view) for modifications to Stage 2 and 2015 reporting requirements, as well as proposed rules for the third stage of the Meaningful Use incentive program.

Meaningful Use Stage 2 Changes

As expected, CMS finalized the modifications for the 2015 reporting period and some Stage 2 requirements (see my earlier blog post about details on those anticipated changes). CMS says it is providing a simpler, more flexible set of stage 2 regulations for 2015 through 2017 as the meaningful use regulation era gives way to CMS’s transition to value-based compensation. In summary:

  • The rules also allow for a 90-day reporting period for providers in 2015, and new providers in 2016 and 2017.
  • Many of the measures of personal health engagement have been drastically reduced (patient portal and e-messaging requirements).
  • Clinical quality measures for both hospitals and providers will remain the same.

The Verden Group applauds the relaxation of these measures to reflect the real challenges that practices and hospitals are facing. More than 60% of hospitals and about 90% of physicians have yet to attest to stage 2!

Meaningful Use Stage 3 Measures

In spite of calls from most of the major medical associations to delay the onset of Stage 3, CMS also announced that Stage 3 will go on as planned and will not be delayed. In summary, major provisions pertaining to Stage 3 meaningful use include:

  • There will be 8 objectives for eligible providers and hospitals.
  • In Stage 3, more than 60 percent of the proposed measures require interoperability, up from 33 percent in Stage 2.
  • Public health reporting will include flexible options for measure selection.
  • Clinical Quality Measures (CQM) reporting are aligned with the CMS quality reporting programs.
  • Finalizes the use of application program interfaces that enable the development of new functionalities to build bridges across systems.

In short, CMS is attempting to address the two areas in Stage 3 that have been the primary barriers for successful Stage 2 attestation: interoperability and patient engagement. In 2017, Stage 3 requirements are optional, but providers who opt to start Stage 3 in 2017 will have a 90-day reporting period. Come 2018, all providers must comply with Stage 3 regulations using a certified EHR.

Industry Reaction

Despite a public outcry from the healthcare community to delay the onset due to the lack of successful Stage 2 attestation, Stage 3 is set to begin as an optional requirement for physicians and hospitals in 2017 and a requirement in 2018. The American Medical Association applauded CMS for allowing a hardship exemption for physicians who are unable to attest in 2015 but called the final rule, as a whole, “deeply disappointing.” The American Hospital Association urged CMS to delay the implementation of Stage 3 and focus instead on “ensuring that providers could easily and efficiently share health information to support care delivery and new models of care.” The American College of Cardiology says that the program requirements “remain difficult to implement.”

The final rule for Stage 3 includes a 60-day comment period, which is longer than is typical, suggesting that there may be additional modifications or delays. As such, the political fight to delay the onset of Stage 3 of meaningful use may not be over, and we expect many changes may be coming before the rule is finalized.

A Post-HITECH World

When Congress passed the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA), it essentially sunset the meaningful use payment adjustments (penalties for noncompliance) at the end of 2018. Instead, Congress has called for the establishment of a Merit-Based Incentive Payment System (MIPS), of which the meaningful use program will form one component. CMS will continue to consolidate its current incentive/adjustment programs under the umbrella of MIPS as it further transitions from encounter-based payments to value-based compensation. The Verden Group will continue to monitor industry reaction and comments submitted to CMS on the final Stage 3 rule in order to guide our clients through successful Meaningful Use Attestation and beyond.


CMS Proposes Updates to Medicaid Managed Care Organizations

By Jose Lopez, Senior Consultant, The Verden Group

On May 26th, the Centers for Medicare and Medicaid Services (CMS) issued a proposed rule aimed at “improving the quality and performance of Medicaid Managed Care Organizations (MCOs).” The proposed rule is vast, with more than 650 pages of proposed reforms that attempt to align MCOs with existing regulations for other private and public payers. More than half of all Medicaid beneficiaries (at least 39 million individuals in 39 states and the District of Columbia) have coverage through MCOs.

Amongst the proposed provisions are:

  1. Application of a Minimum Loss Ratio (MLR) to Medicaid and CHIP. The most sweeping change is the application of a federal 85% minimum MLR to MCOs beginning in 2017. MLRs measure how much a managed care plan spends on the provision of covered services compared to the total revenue it receives in capitation payments from the state. Applying a common national standard for calculating MLR is intended to allow comparability across states, facilitate more accurate rate setting, and reduce the administrative burden on managed care plans that operate in multiple states or have multiple product lines.
  2. Greater transparency in how states determine plan payment rates. States will be required to give CMS enough information for the agency to understand the data and the reasoning for the rate.
  3. Apply minimum standards to screen and enroll providers.
  4. Increase Provider Network Access by decreasing time and distance limitations for beneficiaries, particularly from services for Pediatric CHIP providers, OB/GYNs, behavioral health providers, and dentists.
  5. Expanding health plans’ responsibilities in program integrity efforts through administrative and managerial procedures that prevent, monitor, identify, and respond to suspected provider fraud.
  6. Establish a Quality Rating System for Medicaid Plans, based on quality factors including clinical effectiveness, patient safety, care coordination, prevention, member experience, plan efficiency, affordability, and management.
  7. Strengthen encounter data submissions from managed care plans to states, and from states to CMS.
  8. Allow Long-Term Care Beneficiaries to change plans or cancel enrollment and move to standard Medicaid coverage if their preferred providers are out of the managed care networks.

The Verden Group applauds these much-needed reforms. The proposed rule will provide greater access for Managed Medicaid beneficiaries located in rural areas, especially for at-risk children enrolled in CHIP. With greater transparency and provider choice, patients will be able to select plans that include practices that have differentiated themselves through innovative and high quality programs.

The two trade groups representing insurers, America’s Health Insurance Plans and Medicaid Health Plans of America, are generally supportive of the regulatory modernization and the thrust of CMS’ proposals, except for the national 85% minimum MLR. However, there is little evidence to suggest it will negatively impact their profits as many states already mandate MLR requirements.

The Verden Group is concerned the MLR mandate may create difficulties for not-for-profit safety-net insurers, which usually cover large numbers of Medicaid beneficiaries with serious and chronic health issues. These plans have profit margins that vary year over year, meaning a large profit surplus one year could be needed to offset significant losses in another year. In addition, state Medicaid agencies may not have enough resources to implement the proposed regulations. As with all regulations, it is important that sufficient resources are provided to ensure the proposed rule does not become an unfunded mandate where the fiscal responsibility falls to those it is intended to help.

The Verden Group encourages our clients to share their thoughts on the proposed rule by commenting publicly at: before the deadline of July 27, 2015.


Supreme Court Ruling

I needed a reason to get blogging again. Well, it’s not that I haven’t been offering my opinion out here in cyberspace, but between Facebook, Twitter and writing for Physicians Practice Pearls column, I’ve been neglecting the official blog terribly. Time to change that and no better material than today’s Supreme Court ruling in favor of ‘Obamacare’.

While I would love to spend the time addressing the fallacy of the term ‘Obamacare’ and all of the nonsense that has been written about ‘socialized medicine’, I will instead keep my focus on the present and the importance of this ruling. First, thank goodness common sense prevailed! Yes, some will take me to task for over-simplifying the event by referring to common sense, but I believe that is precisely what we are looking at here.

Now, the reasoning for upholding the individual mandate has been based not on the Commerce Clause, but on Congress’ taxing authority. From the majority on the mandate: “Our precedent demonstrates that Congress had the power to impose the exaction in Section 5000A under the taxing power, and that Section 5000A need not be read to do more than impose a tax. This is sufficient to sustain it.” Politically that gives Republican a hammer with which to bang on about raising taxes, but really, will that matter much?

The important thing here is not the politics though. It is the ability of the average citizen to actually purchase affordable insurance in the market without having to be tied to an employer group plan. This is a HUGE win for THE PEOPLE. As someone who pays more than $2000 a month for healthcare insurance for a two healthy adults and an infant, I for one am delighted at the ruling. And 30 million other people like me, who now may be able to purchase insurance (or pay a ‘tax’ to be able to participate in coverage in some way).

Throughout the course of this whole process – from the initial proposal through today’s ruling – consideration for our fellow man has been largely missing from the debate. Which is, quite frankly, ridiculous. We are the only first world country that does not provide healthcare for its citizens. Instead, we leave them to fend for themselves, and when sick and incapacitated, at the mercy of the profit-making machine that we call ‘healthcare’. That’s shameful. So today’s ruling is FINALLY a step in the right direction in SUPPORTING THE PEOPLE.

If you are interested in the mechanics of the ruling, go here to the SCOTUS blog

Now that we can finally move forward, it will be interesting to see how quickly. Payers and providers alike have already moved on providing value and better controlling costs, what was needed to be able to have AFFORDABLE insurance. Now we can. And market forces can actually go to work. Alleluia!

ACOs: Are Things Finally Moving in the Right Direction for Physicians?

by Susanne Madden

I was recently a ‘Guest Expert’ for the Sermo community and engaged the physicians there on a discussion about Accountable Care Organizations (or ACOs): Physician Friend or Foe?. The general consensus was that with the advent of this PPACA-based model, hospitals would hold all the power going forward and physicians would lose what little steerage they have left over their own destinies. With anti-trust laws and physician self-referral limitations in place, it is hard to see how physicians could have any opportunity to own and operate ACOs themselves.

On Thursday, CMS finally released a (429-page!) draft detailing how CMS would implement Medicare payments to providers who participate in ACOs. But that’s not all. The HHS Office of Inspector General followed through on vague-until-now proposals for waivers of certain Federal laws. These cover the physician self-referral law, the anti-kickback statute and specific provisions of the civil monetary penalty law.

This will certainly help to shift some of the brokering back into physicians hands. Add to that the jointly issued  Antitrust Policy Statement from the Federal Trade Commission and the Department of Justice and maybe, just maybe, things are finally moving in the right direction for physicians to take control of the health care delivery model once again.

Looking Forward

by Susanne Madden

Many bloggers have used the New Year as an opportunity to reflect on 2010. It was a big year for health care, certainly, and there is much to write about in looking back. However, I believe that 2011 will be the year that we begin to see and feel the results of the passing of the PPACA (both the impact of legislation and the maneuvering of the insurers), and as such, think it’s worth taking a look at what lies ahead instead.

Think of 2011 as the year of the ‘medical cost ratio’ or MCR (also known as ‘medical loss ratio’, or MLR), the advent of ‘value-based payments’ (VBP), and the demise of the primary care physician.

MCR is the amount of premium dollars that insurers spend on medical costs, the amount they pay out to providers of medical care. Or is it? Due to PPACA, insurers now have to spend at least 80-85% of premiums on care, but to date there has been little definition of what can actually be counted toward that ‘cost’.  For example, Wellpoint informed its shareholders in early 2010 that it would simply re-classify certain administrative costs in order to reach the required MCR number.  Thanks to that memo, the issue got some attention, with the NAIC (National Association of Insurance Commissioners) regulators in August rejecting many of the procedures that the insurance industry wanted to include as counting under the MCR. It is hoped that some clear definitions of MCR will be forth-coming early this year.

But that’s only a part of the story. Regardless of how the MCR is defined, it is still a highly elastic number that insurers can play with. Medical costs get too high to meet Wall Street targets and the insurers simply adjust payment rates (downward) to providers of care. In 2010, there were many public battles between hospitals and insurance company negotiations. But there are far more ‘providers’ (physicians, nurse practitioners, etc) than there are hospitals. For example, there may be as many as 500,000 providers in Wellpoint’s network, a large percentage of which are not employed by hospitals. They are in private practice. In fact, 78% of private practices have less than 5 providers. In primary care, two-thirds of practices are 2 providers or less. As you can imagine, these groups do not have the same sort of negotiating power as the hospitals do.  That makes them an easy target for decreasing payments for care (see the Physicians Practice fee surveys 2009 here and 2010 here note: 2010 link is to year-to-year comparison of average commercial ‘reimbursement’ to illustrate my point).

In addition to putting downward pressure on physician rates, insurers also change medical policies constantly. Medical policies determine what gets paid and how, rather than how much. For example, a preventive medicine policy may be changed to state that hearing and vision screening is “considered part of, but not separately reimburseable to,” a preventive care visit. That means that the payment that used to be given for those services is paid no longer. But as a covered service, providers cannot bill their patients for it either. (For more information on this please see my Testimony to State Senate Affairs Committee, Texas, May 2008, page 7, Fig. 4).

Therefore, regardless of how well MCR is defined, insurers can adjust payment and policies anytime to ensure that their profits remain up. And that’s critical to the next trend – value-based payments. Employers have had enough of sky-rocketing premiums. The pressure is on insurers to show how they are controlling costs and ensuring better health outcomes for the dollars spent. In reality, insurers serve little purpose, except as cost drivers and for building share-holder wealth (but I’ll save that topic for another day). Regardless of the moniker ‘managed care’, up until recently insurers were simply managing dollars, not managing care. Now they need to justify their premiums and somehow prove that they add value to the health care equation. They can do this by incentivizing health care providers to follow evidence-based medicine, pay for adoption of better patient safety guidelines, and provide bonuses to providers to meet certain targets or benchmarks in compliance and outcomes.

In primary care, patient-centered medical home (PCMH) accreditation is one of the ways in which we see this playing out. Some (certainly not all) insurers are providing additional dollars to help primary care practices move to a better care-coordination (or patient-centered) model. These schemes are in the form of helping to pay for the initial transition, adding a percentage to practices’ routine payment schedule (such as 10% above), and/or providing pay-outs to practices to reach certain qualifiers, such as having 80% or more of a pediatric practices’ patients immunized on time.

But there is so much further development needed here. And I, for one, worry that these incentives will be short-lived. The few dollars ponied up for PCMH schemes may only last a year or two – by the time the market has caught up, there will be penalties rather incentives faced by practices who have yet to make the transition. And yet this concern pales next to the emerging trend we are observing through insurers advertising and conferences attended – the demise of the primary care physician altogether.

Last spring, I wrote a Pearls piece about a conference I attended where insurers were showcasing direct-to-consumer wellness plans. At that time, I expressed concerns about how insurers were simply cutting providers out of the equation when it came to delivering certain services. Well, now that time has come.

Last night I watched a UnitedHealthcare ad – one of its recent ‘strength in numbers’ pieces – which had a member discussing how he was struggling with a recent cancer diagnosis. The line goes something like this ‘speaking with my doctor was okay, but UHC’s nurse assigned to my care helped me understand my disease and my options’. Subtle enough to fly under the radar but the message (in the context of their campaign and policy-making) is clear enough to me – UHC is taking over certain aspects of the patient-physician relationship and care delivery model. Why?

It’s simple. Physicians are an insurers’ largest cost. If insurers provide clinical teams to provide various care services, that cost gets booked under their MCR and the value and quality of that care can be completely controlled by the insurer. . .

Stayed tuned. We’ll be watching to see how things unfold in 2011.

Telemedicine & Licensure – Will the Law Allow Changes to the Way Medicine is Practiced in the 21st Century?

By Jason E. Lopata, Esq.   There can be no question that the internet has changed the way most of society operates, from our homes and offices, to each and everyone’s smart phone located in their pocket or purse.  Medicine is not immune from the use and development of technologies to bridge the gap in physical distance between two non-electronic parties.  We may have to soon get used to the idea of a physician on one end of teleconferencing or video technology, and a patient on the other end.  Whether that physician is at a video screen at his office desk or holding a hand held device while vacationing in another part of the country, a physician’s office can be boundless in today’s world.

But how does a physician know that he is properly licensed to practice medicine by way of these new technologies?  Does the location of the doctor or the patient (or both) dictate what jurisdiction is relevant to any licensure questions?  While telemedicine has the potential to overcome barriers of distance and improve access to needed health care services, the current state-by-state licensure laws pose an obstacle to achieving this goal.  Requiring licensure in each state where patients may receive care is a disincentive to utilize the new technology and provide specialty care to rural and underserved areas of the country.  As a physician, one must stay informed of your jurisdiction’s regulations, as well as any neighboring states where your patients may be traveling to receive your care and treatment.

With limited exceptions, most states still require full in-state licensure for out-of-state telemedicine providers.  But in New York, like many other jurisdictions that do not specifically address the practice of telemedicine, there are some exceptions that allow out-of-state practice.   These may be applied to telemedicine, such as a physician who is either (1) licensed in a bordering state and who resides near a border of this state, provided such practice is limited in this state to the vicinity of such border and provided such physician does not maintain an office or place to meet patients or receive calls within this state, or (2) Is licensed in another state or country and who is meeting a physician licensed in this state, for purposes of consultation, provided such practice is limited to such consultation.  Most current regulations allow for this doctor to doctor contact, but do not address doctor to patient relationships in the consultation or specialty realm.

On the other hand, states such as Illinois, Mississippi, and Texas all have regulations specifically to deal with the practice of telemedicine, giving specific guidance as to what constitutes telemedicine. An example is Illinois’ definition that  “telemedicine”” means the “rendering written or oral opinions concerning diagnosis or treatment of a patient in Illinois by a person located outside the State of Illinois as a result of transmission of individual patient data by telephonic, electronic, or other means of communication from within this State.”  When regulations exist, specific requirements are spelled out for out-of-state physicians to treat their in-state population.  Physicians who practice telemedicine “without a license” risk criminal and civil penalties, state disciplinary proceedings, and denial of coverage under medical malpractice insurance policies which generally require licensure as a condition of coverage.  This occurs despite the fact that most state licensure procedures have become fairly uniform from jurisdiction to jurisdiction.

The American Bar Association (ABA), in a August 2008 report on telemedicine, believes that the most straightforward method to reduce such barriers to telemedicine is to institute a system of mutual licensure recognition whereby a physician with a current, valid and unencumbered license in any state could file a single application which would permit the physician to practice telemedicine in some or all other states.  The physician would be subject to continuing compliance with those states’ licensure fees, discipline, and other applicable laws and regulations, and adherence to professional standards of medical care.  The ABA further recommends any federal legislation set a uniform definition of “out-of-state telemedicine practice” (e.g., that the physician does not set up an office, appoint a place for meeting patients, or routinely receive calls within the state), the requisite procedures for telemedical licensure, and a requirement that the telemedicine provider must agree to the jurisdiction of the patient’s home state for medical malpractice actions.  But even amidst all the federal legislation affecting the health care industry, uniform telemedicine licensure issues have not yet been proposed.

While a good idea, I don’t yet see a federal standard evolving, as states are going to maintain their regulatory control of the industry.   So as a physician, one must still be prepared for these licensure and liability questions to emerge as you start to adopt technologies that widen the scope and “footprint” of your practice.  Physicians should consult an attorney with any questions whether borders are being “virtually” or literally crossed for purposes of your licensure.