Don McDaniel: RECs to the rescue

Many of the readers of Practice Notes are members of or affiliated with small physician practices — physician organizations of 10 physicians or less. As you are now undoubtedly aware, the U.S. government is making a significant investment, as a major component of the American Recovery and Reinvestment Act, to support the adoption of electronic health records.

EHR adoption is still very low in the United States, especially among smaller practices. Therefore, to facilitate the adoption and the achievement of meaningful use of these EHRs among small practices, the Office of National Coordination for Health Information Technology (ONC) has now designated some 60 Regional Extension Centers (REC).
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The mission of the RECs are to help primary-care physicians, small practices, and safety-net providers such as community health centers, rural health centers, and critical-access hospitals, through the provision of consultative support and advisory services to enable successful development of EHR systems, and ultimately achievement of meaningful use.

The REC program funding will create technical extension centers throughout the U.S., and each REC will target approximately 1,000 to 2,000 physicians. They are chartered to be vendor agnostic and to provide unbiased guidance — that is to say that they will not promote any specific application over others — with a goal of helping the smallest of practices manage the work flow and business process challenges of achieving meaningful use.

In total, the federal goal is to assist 100,000 physicians nationally by the end of 2012. Each REC will have access to a newly created, federally funded health IT research center — meant to act as a knowledge management hub and disseminator of best practices to the individual RECs and its clients, the physicians. The RECS will be moving to full operating status within the next six months and a list of each REC, as well as information about the REC program, can be accessed at HHS’ Web site. I encourage all practices to reach out to their assigned REC to ascertain how it can help you on your health IT journey.

CMS could get new director

After more than three years without a permanent leader, CMS might have a new administrator. Obama plans to nominate to the post Donald Berwick, MD, a pediatrician, health policy scholar, and CEO of the Institute for Healthcare Improvement.
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Berwick, who would need to be confirmed by the Senate, has challenged doctors and hospitals to provide better care at lower cost, and that payments should be based on the value of services, not the volume, according to the NY Times.

As the head of CMS, Berwick would certainly have his work cut out for him in the wake of the healthcare reform legislation.

MGMA applauded the news in a statement: “As healthcare organizations and professionals shape a reformed healthcare delivery system, his knowledge and proven leadership will be critical to success.”

Trendspotter: Health Reform Will Be Mixed Bag for Physicians

By Ken Terry

The historic reform bill that Congress passed on Sunday will immediately affect physicians, but the impact will be much greater in the long term.

First, some expansion of coverage will occur within six months of President Obama’s signature on the bill—whether or not the Senate adopts an accompanying measure that would add House-sponsored changes. The bill will immediately allow parents to cover their young adult children and will prohibit children from being denied insurance because of their health status. Adults can’t have their coverage dropped when they get sick, and people who can’t get coverage because of their health condition will be eligible for beefed-up high risk insurance pools. All of these measures, coupled with small business tax credits for buying insurance, should reduce the number of patients who can’t pay their bills by the end of this year.

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The really major impact, however, will come in 2014, when the big Medicaid expansion and the individual mandate to purchase insurance kick in. By 2019, these provisions will expand coverage to an estimated 32 million people, providing physicians with many more insured patients.

The health insurance exchanges for uninsured individuals and small businesses will also be launched in 2014. Health plans that participate in those exchanges will be required to offer a minimum level of benefits, and catastrophic plans will be available only to those under 30 and those who are exempt from the mandate to buy coverage. Moreover, people who have skimpy plans at work and/or who pay more than 10 percent of their income for it will be able to buy insurance through the exchanges. The plans offered in these government-sponsored markets will also have fairly low out of pocket maximums. All of these provisions, again, will increase the number of patients who are insured and will therefore be able to afford your services—assuming you take Medicaid.

On the other hand, the expansion of coverage will lead to a massive increase in consumer demand that physicians will be expected to handle a few years from now. The legislation does include provisions to increase the supply of primary care, and recent increases in primary-care reimbursement by Medicare—albeit at the expense of specialists—should begin to attract more doctors to the primary-care fields. But much more needs to be done. For one thing, the debt burden of new residency graduates must be reduced if we expect more of them to become, say, internists rather than endocrinologists.

There are also cost control provisions in the bill—mainly pilots of new Medicare payment approaches--that could lead to lower reimbursement for physicians. Whether it’s accountable care organizations, payment bundling, or value-based purchasing, the days of unrestricted fee for service are drawing to a close. Many physicians will be unhappy about this. They don’t want to take financial risk, either alone or in tandem with other physicians and hospitals. But some kind of quality-based or budget-based approach to reimbursement, both by government and private payers, is inevitable, because the current level of cost growth is unsustainable. This will probably mean that more physicians will go to work for hospitals, and that small private practices will become less viable. But market forces are already pushing health care in both of those directions.

Meanwhile, Congressional leaders have promised the AMA that they will enact some kind of “fix” to prevent physician Medicare payments from being cut 21 percent this year and more later on. Presumably, they will find some savings in the overall national budget to cover the $200 billion plus cost of that fix over 10 years. But that is isn’t part of the reform legislation that just passed or the reconciliation bill that is now before the Senate.

Obviously, the payment method that has Medicare has used to reimburse physicians for the past decade is not viable and must be replaced. Congress’s last-minute passage of bills to prevent pay cuts to doctors, year after year, is ample proof of that. But there’s no chance that Congress will simply decide to give physicians what they want under fee-for-service Medicare. So get ready for changes in how you’re paid by both Medicare and private payers. This is no longer going to be your father’s healthcare system.

Health reform happening

Finally, after months of political wrangling, the House passed the healthcare bill approved by the Senate on Christmas Eve. The 219-212 vote last night sent the bill to President Obama. After the vote, the House also adopted a package of changes to it, which were agreed to in negotiations among House and Senate Democrats the White House, the NT Times explains, which now goes to the Senate for action this week.

The bill requires most Americans to have health insurance, adds 16 million people to Medicaid, subsidizes coverage to low- to middle-income people, and sets up an insurance exchange.

So eventually, an estimated 32 million more Americans will have health insurance, which means you could be seeing more patients in your office. Are you ready for that? Check out our recent story about how to prep your practice for reform’s new patients.

Gerald O'Malley, DO: Some thoughts on the healthcare summit

Today, I worked a 7-3 shift in the ER while our political leaders were meeting to talk about what to do with healthcare. Ironic, considering there are roughly two dozen physicians in Congress and not one was seated at the table. Can you have a serious summit on energy policy without engineers? Can you have a serious summit on national security without law enforcement experts? The only members of the government that actually have any experience with the actual delivery of healthcare were absent, which should tell you everything you need to know about the healthcare summit of 2010.

As the snow swirled around outside in the most recent snowpocalypse to affect the city this winter, we struggled to get our patients out of the waiting room and into an exam room as quickly as possible. We waded through their poorly described complaints and tried to identify any life threatening problems quickly and efficiently.

We probably saved a half-dozen lives in eight hours; an acute myocardial infarction and a stroke, an ectopic pregnancy, an acute appendicitis, and a septic old lady were all “rocked and locked” — a euphemism for getting the job done quickly and expeditiously. In addition, we treated a number of “non-life threats” — broken bones and lacerations and asthma attacks and strep throats.
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We tried to follow the proceedings on TV and online whenever we could, but I had to wait to get home to watch the news in order to digest the proceedings.

I heard a lot of sound bites (mostly from Republicans) asking for tort reform, but beyond the sound bite, there was no follow-up discussion. The trial lawyers have spent so much money buying access and influence that I doubt any meaningful tort reform is possible.

Some idiot congressman actually suggested that a plan for “stealth patients” be written into the bill in order to “root out Medicare fraud.” He said that we should send “fake patients claiming to have broken legs” to MRI centers and if “they continue to treat them like broken legs, then we know there is fraud going on.” There are so many things wrong with that statement, including the fact that broken legs are not diagnosed by MRI, that I don’t know where to begin, and what’s worse is that this half-wit congressman was actually describing something that had been proposed by Senator Tom Coburn, who is an obstetrician! Maybe the physicians shouldn’t be at the table, if they are going to make ridiculous suggestions like that!

After work I picked up my kids and was driving home when I received a “remember that patient you saw the other day” phone calls from my vice chairman: “Gerry, you need to meet with risk management next week to talk about this case.” You don’t actually need malpractice to be sued — all you need is a bad outcome.

What are the odds that this patient was a “stealth patient” or someone that is already talking with a lawyer?

After the healthcare summit, now what?

Perhaps it’s little surprise that little was accomplished yesterday at Obama’s healthcare summit. The issue has become far too partisan. I thought the NY Times summed it up nicely here:

“If there was any question about how deeply divided Republicans and Democrats are about how to reshape the American health care system, consider that they spent the first few hours of President Obama’s much-anticipated health care forum on Thursday arguing over whether they were in fact deeply divided.”

In the end, Republicans rejected the idea of voting for Obama’s bill, and Democrats are considering pushing it through without their support. (I tend to think this is a path they should have taken a long time ago. Some issues should be legislated without all the bipartisan wrangling for votes. Why not just rely on the simple majority and pass some form of reform? Had they taken that route far sooner, perhaps the bill wouldn’t be the weaker version of insurance reform it is now.)

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The Times does note a few things the Republicans and Democrats agree on: the need for more regulation of insurers, and the idea that government should help individuals and small businesses pool purchasing power for insurance. How to accomplish these things? Now that’s where they disagree.

Americans similarly agree on certain elements of reform (tax credits to small businesses, a health insurance exchange, financial help for low to middle income), according to the latest Kaiser Family Foundation poll. The same poll shows Americans split (43 percent to 43 percent) on the healthcare reform legislation, though.

And another interesting point in the poll is that most Americans — 59 percent — say the delays are “more about both sides playing politics,” and 25 percent say they are “more about Republicans and Democrats having disagreements.”

Twenty-two percent want Congress to put healthcare on hold, and 19 want to see them pull the plug on the effort for 2010.

Obama's healthcare compromise

President Obama presented his compromise healthcare legislation today (in advance of Thursday's healthcare summit in Washington), in an attempt to bridge the differences between the House and Senate versions that have stalled.

According to the White House’s announcement, Obama’s legislation:
• Provides a middle class tax cut for health care and reduces premium costs, to help make coverage more affordable for 31 million Americans.
• It sets up a health insurance market through state-based insurance exchanges
• Gives the government authority to block premiums rate hikes and claim denials

It also closes the Medicare prescription drug “donut hole,” increases the threshold for a tax on high-end insurance plans, and eliminates the Senate provision that exempted Nebraska from paying increased Medicaid expenses, according to CNN. And it does not include the public option.

Thoughts on his proposal?

WellPoint's possible effect on reform

Health insurer WellPoint’s obscene rate hike has some onlookers speculating that the move could revive the stalled healthcare reform legislation.

The 39 percent rate hike for some California customers (in light of the insurer’s $2.7 billion profit last quarter) is a good example to President Obama for why reform is necessary. A White House spokesman said, “You’d be hard-pressed to find a better example of why reform is so urgent, and it’s going to continue to be part of the case the president makes,” according to the Washington Post.
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The bills are stalled because, as the Post puts it “Democrats in the house can’t accept the health care bill that Democrats in the Senate have produced, and vice versa.” But the rate hike news might help make a case for the need to at least give the reform efforts a try again.

And meanwhile, that 21 percent Medicare physician payment cut is scheduled to take effect in a couple weeks, unless of course Congress takes action again. The AMA has stepped up its lobbying efforts to persuade lawmakers to permanently repeal the SGR formula.

Obama's mention of healthcare reform

Where is that healthcare reform bill?

In his State of the Union address last night, President Obama waited more than half an hour in before mentioning healthcare, and as the NT Times puts it, it was then “wedged into a catalog of presidential priorities, which included jobs, the economy, education, bank regulation, energy independence, deficit reduction and the war in Afghanistan.” This suggests the outlook is grim for the legislation.
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In fact, about seven paragraphs of the 70-minute speech was dedicated to healthcare, Politico reports. That's after spending a year on it.

Obama did call on Congress not to give up the effort, the Hill reports. “Don’t walk away from reform. Let us find a way to come together and finish the job for the American people.”

But he didn’t offer much guidance on how to break the impasse, and meanwhile Democrats have been debating the best approach for the stalled legislation. House Speaker Nancy Pelosi said yesterday that the Senate would have to make changes to the bill before the House would act again, the NY Times reports.

So once again, the fate of the reform effort remains unclear, but grim.

EHR stimulus update

Do you have meaningful use on the brain? In a follow up to the primer on EHR stimulus incentives, Ken Terry's EHR Incentives Update in the February journal digs deeper into the meaningful use criteria.

There's a good chance you've got some confusion or anxiety about acquiring and learning to use an EHR. But if you want to get the maximum federal dollars, you can't really hesitate. Ken's article will help clear up some confusions and get you on the right path for the EHR incentives.

I also welcome your comments here about what you're doing to acquire and meaningfully use an EHR.

After Mass. race, is healthcare reform dead?

Republicans took the Massachusetts Senate seat last night, reducing the majority the Democrats needed to blog GOP filibusters and signaling a bumpy road ahead for Obama’s agenda.

So what does Scott Brown’s win mean for the healthcare reform efforts?
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Brown campaigned on his opposition to the legislation and he promised to kill the bill when he got to Washington. His vote as the 41st Republican senator was just the number the GOP needs to blog the legislation, the LA Times reports.

It’s not entirely clear yet what will happen with the bill. Speaker Nancy Pelosi tried to be optimistic about it, but other Dems said it’s back to the drawing board for healthcare reform, according to the Washington Post.

Perhaps the most obvious option is for the House to pass the bill cleared by the Senate, because the chances are slim that they can salvage “the full scope of the current legislation.” The Democrats could also start over in the Senate with a scaled-back bill, or they could shelve it entirely and only try to pass a few of the popular initiatives in the existing bills. Either way, what looked like a sure-thing to pass is now hanging by a thread.

Perhaps that’s not a bad thing. Even those who want healthcare reform and were at one time very optimistic of real reform will be glad to start over. The legislation has surely been watered down over the months of debate, and in many ways fails to achieve meaningful reform. Sure, it was a step – but maybe it wasn’t the best way to go about healthcare reform? Maybe starting over will yeild a better result in the end?

Healthcare reform game changers

By Don McDaniel

There’s so much discussion about health reform – how to bend the cost curve, how to drive a higher take-up of insurance coverage, etc. All of the banter seems to ignore, or worse, disabuse any notion that the virtues of free enterprise and competitive markets can free our health care system of its run-away costs, marginal quality, and opportunistic innovation.

They say, “Markets have been tried and don’t work in healthcare; look at the evidence.” Well, as complex as healthcare is, there are a small handful of changes that, if implemented, could be game changers.
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Of course, probably the biggest single game changer of them all would be true payment system reform – moving third-party payments away from evil fee-for-service to a payment system focused on paying for the care of a population or true outcomes-based payments.

Don’t get me wrong, there is still room for fee-for-service payments in medicine – especially in cases where the diagnosis of the ailment is highly speculative, requiring a necessarily iterative problem-solving approach. However, as science evolves, and as diagnosis becomes more predictable, we should need less and less of fee-for-service and more fee-for-outcomes.

That being said, following payment reform, my list of game changers is as follows: reforming medical malpractice; eliminating state’s coverage mandates on health insurers; allowing individuals to purchase health insurance in any jurisdiction; either eliminating the tax deduction for employer-sponsored plans or extending the deduction to individuals as well; and only providing tax deductibility for “true” insurance policies.

Malpractice reform will eliminate most or all of the costs of the practice of defensive medicine – most experts peg this at 10 percent of total health system expenditures or about $250 billion per year, predominantly in over-ordered procedures and diagnostics to protect from frivolous lawsuits.

Many states mandate that insurers cover certain procedures or services regardless of the size or class of the employer purchasing the insurance. This creates an artificial cost floor that places health insurance out of the reach of many employers. To add insult to injury, large employers are typically not impacted by mandates as they are self-insured and exempted by the ERISA law. These mandates can add at much as 5 percent, 10 percent, or more to premiums in many states – and I thought the goal was to innovate products to provide coverage to more folks, not less!

According to the Council for Affordable Health Insurance, my home state of Maryland mandates over 60 benefit requirements, which add at least 15 percent to the insurance premiums of health plan subscribers.

President Obama’s administration claims there’s not enough competition? There are well over 1,000 insurers in the domestic U.S. But I do agree on one thing, there’s not enough competition among differentiated products, payment methodologies, and benefit designs. To nip this in the bud, we ought to allow those seeking the purchase of health insurance to buy it from any insurer sanctioned in any state. This would create significant competition not only among insurance products, but among states that want to become a haven for health insurers.

Finally, with respect to true insurance market reform, there’s a valid argument that the tax-advantage of employer sponsored plans ought to be eliminated, for many reasons. It would raise almost $200 billion in tax revenue, individual purchasers lose out, and the system is regressive in that lower wage earners gain less of a benefit. Let’s create a market for true insurance in healthcare by allowing deductibility only for policies that provide insurance for events that are uncertain, infrequent, and financially significant, forcing Americans to become true consumers of healthcare – and provide that deduction to both individual market consumers and those purchasing through an employer group.

The current lack of consumer sovereignty and prevalence of third-party payments, even for mundane services, creates an artificial supply/demand dynamic that undervalues health care services, thus creating an incentive for overconsumption. We need to pressure of the consummate to truly reform healthcare.

Don McDaniel, president and CEO of Sage Growth Partners, LLC, is an entrepreneur, economist, technologist, educator, speaker, and writer. He is a skeptical contrarian, and writes about the power of free markets, disruption, innovation, and technology in healthcare.

Trendspotter: Obama campaign against Medicare fraud emboldens RACs

By Ken Terry


Since last March, the domain of Medicare’s new Recovery Audit Contractors (RACs) has expanded from four states to nearly the whole country.

During the three-year pilot that preceded this expansion, the RACs focused mostly on hospitals, and 85 percent of the $900 million-plus in overpayments that were returned to the Medicare trust fund from 2005 to 2008 came from hospitals. Nevertheless, some experts warn that the RACs will eventually pay more attention to physician practices. And, with the Obama administration ramping up its rhetoric against Medicare “fraud and abuse,” the RACs are getting plenty of encouragement.
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President Obama announced the new direction in his healthcare address to Congress in September. “The only thing this [reform] plan would eliminate [from Medicare] is the hundreds of billions of dollars in waste and fraud, as well as unwarranted subsidies in Medicare that go to insurance companies,” he said.

Then, in November, the White House announced that the Centers for Medicare and Medicaid Services (CMS) had made $54.1 billion in improper payments in fiscal 2009, and that the number of erroneous payments by the fee for service Medicare program had roughly doubled to $24.1 billion from the previous year’s level. As a percentage of total Medicare fee for service payments, that represented 7.8 percent, compared with 3.6 percent in 2008. The implication was that if these improper payments could be eliminated, the galloping rise in Medicare costs could be curtailed.

However, as White House Budget Director Peter Orszag quickly acknowledged, the apparent increase in Medicare overpayments was largely due to a change in accounting methods. For example, he said, payments on claims supported by poor documentation or illegible signatures were now being regarded as errors; before, they had generally been disregarded. And this is where the RACs may see an opening to harass physicians who have submitted Medicare claims in good faith for services they actually performed.

According to David Glaser, a Minneapolis attorney who specializes in defending physicians against Medicare audits, the RACs “are nailing people on things like unsigned notes that don’t necessarily take a lot of work. It’s clearly unfair to the doctors, because you’re fighting over that stuff even though there’s no doubt the service was provided. And recently, the RACs have been hinting that if your signature is illegible, that’s a basis for a denial.”

Then there’s the small matter of the RACs’ contingency fees for recovering government money. Those range from 9 percent to 12.5 percent of the funds they collect, depending on the region. This bounty hunting, which Glaser calls a “legitimate concern” for doctors, reflects another new approach of the Obama Administration. For example, the Office of Civil Rights in the Health and Human Services Administration is now empowered to support its investigation of HIPAA privacy violations with a portion of the fines it imposes on physicians and hospitals.

The RACs’ bounty hunting may have one positive aspect, Glaser notes. If the RACs go after physicians for minor rule violations and most of the doctors win on appeal, the RACs won’t get any money in those cases. “So that holds out some hope that they’ll be more rational than the past Medicare audits have been,” he says.

In any case, you should remember that Medicare carriers are still actively auditing physician claims, as well. So, even if the RACs don’t aggressively pursue physicians for some time, you could still feel the sting of an auditor’s letter. And, if the government continues its aggressive campaign against Medicare fraud, those audits might occur more frequently. So mind your Ps and Qs.

Ken Terry is a New Jersey-based freelance writer and the author of the book "Rx for Health Care Reform." In his weekly Trendspotter column, Ken is looking out for trends and changes that may affect your practice.

Obama rallies physicians for reform

It was a sea of white coats Monday in the White House Rose Garden as President Obama hosted a photo op with 150 doctors from around the country.

“Nobody has more credibility with the American people on this issue than you do,” Obama told the doctors, saying the “people who are most supportive of reform are the very medical professionals who know the health care system best.”
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Doctors surely see the need for reform every day. Obama noted, “They’ve seen far too much of the time they want to devote to taking care of patients spent filling out forms and haggling with insurance companies about payments. These doctors know what need to be fixed about our health care system and they know what health insurance reform will do.”

Besides taking a few minutes to reiterate what is in the proposals coming out of congressional committees, Obama was rallying support from the medical community. Last week, his campaign network Organizing for America, started raising money for doctor-themed ads.

A June poll found that almost 75 percent of Americans said they trust doctors to recommend the right course for reform, according to Politico. And Obama is counting on docs to speak out in support.

But clearly, not everyone in the healthcare community supports his plans, and there doesn’t seem to be consensus on what health reform should look like. In our own Great American Physician survey, we found most docs agree the system needs fixing, but the solutions varied.

What do you think of Obama's approach to rally physician support?

Another blow to the public option

It’s more bad news for the so-called public option.

Even though Obama made a case for it during his address to Congress last week, the push for a government-sponsored health insurance option has appeared doomed for a while. And now a poll out shows that many people would be more amenable to reform if that piece were dropped.
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The public has been skeptical of healthcare reform efforts, to say the least. But the Washington Post is reporting that opposition may be easing somewhat, according to a Washington Post-ABC News poll.

I thought Obama made a pretty concise and compelling arguement in favor of the public option - as well as a concession for opponents, stating that people with private insurance wouldn't be eligible for the public option. But he did also hint that that portion wouldn’t be what stands in the way of passing a bill.

The poll found that if the public option was removed, opposition to the overall package drops by six percentage points. Without the public option, 50 percent back the changes and 42 percent are opposed.

Further, if it is indeed limited to those unable to get private insurance, support would rise to 76 percent.

But I have to agree with Bob on this one: Why not extend the choice and competition to all Americans? Why not let us decide if we want to opt for the public option? Well, it might all be a moot point now.

Will Congress have to give up Medicare payment control?

It’s quite a perk and a campaign tool for Congress: setting Medicare reimbursement rates for their local hospitals, doctors and home healthcare centers. (Take, for example, Alaska Republican Ted Stevens who managed to secure a permanent 35 percent increase in Medicare payments for Alaska physicians. How’s that for constituent services?)

Now, President Obama is considering taking that power away from Congress, potentially shifting the control to an independent entity, according to the Washington Post.

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An advisory group might be better willing and able to tackle the skyrocketing Medicare spending. The House’s healthcare proposal announced this week, which Bob blogged about yesterday, doesn’t include ways to stem future Medicare costs.

But opponents argue that Congress will be held accountable, even if the power is taken away, so they should be able to protect the interests of their constituents. What do you think?

(Of course, Medicare reimbursement and reform has been a never-ending debate. In the meantime, check out our story on how to actually make it work for you.)

Time for clear talk on reform

When Obama visited the Middle East, pundits marveled at how he swept aside political platitudes for straight talk. For example, he called for an end to Israeli settlements while still insisting that Israel has a right to exist.
No duh.

That has long been the assumed basis of policy change in the Middle East, it's just that no one has wanted to say so out loud.
However, similar clarity seems to be lacking in debates around healthcare reform.

To wit, the "hospital industry" agreed this week to $155 billion in Medicare and Medicaid cuts over the next decade to pay for health reform.
Really?
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CMS can cut payments if it wants without the hospital industry's agreement. They've been doing it for years.

And it's not true that the hospital industry is accepting cuts. That makes them sound very nice and all that, but they expect to make the losses up as more uninsured patients get coverage under a government-supported health insurance plan.

For physicians to really buy in to health reform, I think they need to see that it will really mean better health for their patients. Not just a shift in how hospitals get paid and some sort of "kumbaya" posturing.