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The ACO proposed rules: A party starter or a party killer?

We all anxiously, and many hopefully, waited and watched as the CMS proposed rules for the accountable care organizations (ACO) were being prepared. Now that the rules have been released and many have had a chance to read them, what I’m hearing from hospitalists and administrators alike is a collective state of disappointment.

Some common observations that surround the ACO new rules: too much regulation, not enough potential or risk sharing and too much investment involved. The general feeling among those I’ve been talking to is that there will be muted participation in the ACO program because of all the barriers to entry.

For example, there are 65 quality measures that all must be met to qualify for any shared savings. How many practices can accurately collect and report data on even just a few Physician Quality Reporting Initiative (PQRI) metric? Another challenge is that 50% of providers in an ACO must meet the meaningful use definition for electronic health records. This represents a very large investment by physician practices regardless of size, many of which are not prepared to take on this burden. In addition, the rules call for a 25% holdback on funds earned in the shared savings program. This withhold is to protect against underperformance in future years when a repayment might be required of the ACO. However, as currently written, the withhold is never released! A successful ACO could accumulate several years of shared savings that they will never receive.

These are just a few of the elements of the proposed ACO rules that are taking the wind out of the sails of some in hospital medicine. It seems that the rules have not energized or empowered the potential participant organizations to embark on the effort to create ACOs. Instead, they seem to create barriers and skepticism. I am certain that large health systems that have already made most of the required investment in EHR, etc., will proceed with their plans, but I wonder how many smaller systems will view the return as being worth the risk and take the plunge.

What to do you think? What have you heard? Have the proposed rules put a damper on the ACO party? I am eager to hear from others on this topic.

Will accountable care organizations create restraint of trade?

A key element in healthcare reform is the accountable care organization (ACO). Proponents argue that ACOs will provide and manage care across the continuum of care settings, helping to contain costs and create reporting processes that lead to high-quality, efficient care. But what is the possible downside to ACOs?

How will the major players—large regional healthcare systems etc.—control ACOs? Will they see ACOs as an opportunity to drive other provider organizations out of a particular market?

I have visited recently with several hospitalists that have expressed this concern to me. In the past, the hospitalists have seen these “market share bullies” restrict their hospital privileges and the privileges of referring physicians, and they have a real fear that the implementation of ACOs makes constrained opportunity bound to happen. Many are waiting to see what rules the Centers for Medicare & Medicaid announce for models of mandatory or voluntary ACOs.

There have been highly successful, productive models for ACOs, for example, Geisinger Health System. ACOs have worked well in some smaller markets where alignment does help to control cost and deliver quality results, but will highly-structured ACOs also result in anti-trust, self-referral, and anti-kickback issues in larger markets? I am eager to see if the published rules will lead to or provide for relaxed Stark rules and regulations. What happens to that group of six hospitalists at the local hospital when it becomes part of an ACO? Will those hospitalists still be able to provide care? Will the primary care and specialty physicians still have privileges at the hospital?

It is important to understand that there is a difference between accountable care and accountable care organizations. I believe that accountable care can be created without requiring physicians to be restricted to a single ACO, and I believe that “virtual” ACOs can achieve the results we all look for. However, I’d like to hear from you! Are you concerned about ACOs imposing restraint of trade? Are you concerned that the major health systems in your market will use an ACO as a vehicle to drive out competition?

The ‘S’ word

As value-based purchasing approaches, hospitalists are going to feel the heat from hospital administrators. I believe that this is largely a shell game played by the Centers for Medicare & Medicaid Services to give hospitals the idea that they can win at this game, when all but a few will lose. The reality is that Medicare needs to reduce payments to hospitals to avoid impossible deficits. There will be pressure in all areas to reduce costs, and I can’t help but believe that hospitalist subsidies will be a prime target.


Most Americans against Medicare cut, AMA says

The majority of Americans do not support Medicare’s pending payment cuts to physicians, according to a new American Medical Association (AMA) poll released this week. Ninety-four percent of 1,000 adult respondents in the online poll said that a payment cut would negatively affect seniors’ health.

Medicare and TRICARE plans to reduce payments to physicians by about 25% by then of the year.

“The American Medical Association believes patients should have access to the physician of their choice—and physicians should be able to count on payments that cover the cost of providing care,” states an AMA flyer that urges Medicare and TRICARE patients to call their congressional members. “Congress needs to fix this problem once and for all,” it states.

Congress delayed payment cuts to the controversial reimbursement changes earlier this year. AMA calls for a 13-month reprieve of payment cuts, allowing time for a longer-term solution, according to a Nov. 8 press release.

What budget conscious bundled payments mean for hospitalists

Yesterday, Kirk Mathews, MBA, discussed the Society of Hospital Medicine’s (SHM) developments in public policy work, particularly on talks with DC legislators about the prospect of bundled payments.

We spoke with contributing blogger Richard Rohr, MD, MMM, FACP, FHM, during the 2010 SHM annual meeting, about how bundling will affect hospitalists’ treatment and patient care.

Q: With broader access to healthcare, more patients could mean an overwhelmed system that already suffers from physician shortages. What’s the solution?

A: The key is we’ve got to figure out how to provide more care more efficiently. The hospitalists themselves need to be more self-reliant. We need to have more people who are confident in their diagnostic and treatment abilities, relying perhaps on resources like UpToDate rather than relying on a specialty consult for every problem.


Welcome to Lake Wobegon

The advent of Medicare’s Value-based Purchasing program next year is going to present significant challenges for hospitals and hospitalists. The Centers for Medicare and Medicaid (CMS) will be holding back 10% of hospital payments. The top 10% of hospitals achieving high scores on a composite measure combining core measures, HCAHPS, and readmission rates will get full payment. The next 40% of hospitals will get a portion of the holdback. The bottom half of hospitals will get nothing and will be losing 10% of Medicare revenue. Many of these hospitals would be forced to close, as they are barely surviving now.

I don’t think that Congress is really prepared to close half the hospitals in this country, and we may see something similar to the continuing debacle of the Sustainable Growth Rate system, which has been postponed every year since it was enacted. Hospital administrators have been extremely skilled at exploiting loopholes in Medicare reimbursement. As I write this, Garrison Keillor is on the radio telling a story about his mythologized hometown, Lake Wobegon, “where all the children are above average.” I suspect that hospitals will find ways to all be above average, with some complicity from CMS. I once lived in a college dormitory that was legally declared to be a ship in the US Navy, even though it was on dry land and had no capacity for flotation, so do not discount the ability of the government to torture a definition if it suits a purpose.

Regardless of any sleight of hand that may occur, we will need to bring the performance of our hospitals to a higher level. Patient satisfaction, readmission rates, and core measure compliance will be pocketbook issues for hospitalists. I think that there are significant opportunities for those of us who are able to form effective interdisciplinary teams in our hospitals and improve the efficiency of care.

Medicare coding changes give hospitalists more to remember

I recently spoke on the phone with Leslie Flores, MHA, partner at Nelson Flores Hospital Medicine Consultants in La Quinta, CA for an article in the upcoming issue of Hospitalist Leadership Advisor, a supplement to Medical Staff Briefing. We discussed CMS’s recent decision to stop reimbursing physicians for consulting codes and requiring that physicians bill an initial or subsequent care code for activities that were previously considered consultations. Admitting physicians will have to add the modifier -AI to the codes they submit to distinguish them from other physicians caring for the same patient. Flores brings up a good point:

“To distinguish the admitting physician from the consulting physicians, the admitting physician has to add a modifier. One of the things that worries me is that the billing office is going to get initial hospital care codes from several physicians, and if the admitting doctor forgets to append the code, the billing office is going to have to go around asking all the physicians who admitted the patient. It is not so hard to do if all the docs are in the same group, but if they are not, it could get tricky.”

Share how your hospitalist program is managing the recent coding changes in the comment box below.

Q&A with Richard Rohr: How Medicare coding changes affect hospitalists

CMS’s recent decision to stop reimbursing physicians for consult codes has hospitalists everywhere wondering how their practices will be affected. I spoke with Richard E. Rohr, MD, MMM, FACP, FHM, director of hospitalist programs at Guthrie Healthcare System in Sayre, PA, to find out what the buzz is about and get some background on the recent changes. 

LJ: Why are hospitalists concerned about the new coding changes? 

RR: Up until now, there have been a set of codes for services that are provided by physicians who see their own patients, and then there is a set of codes for consultations. Traditionally, those codes have carried a somewhat higher payment than the codes one would use for seeing your own patient, even for the same level of complexity of examination and record keeping. 

LJ: Why were consulting codes historically reimbursed at a higher rate? 

RR: Back in the 1960s when Medicare was created, consultations were a big deal and they weren’t done very often, [more]

Greeley Medical Staff Institute and bundled payments

By Kirk Mathews, MBA

I recently had the privilege of speaking at the Greeley Medical Staff Institute Symposium in Naples, Florida, November 8-9, and found the experience to be both very enjoyable and educational.  I really enjoyed serving on the opening plenary session panel discussion regarding healthcare reform. I was amazed at the prophetic abilities of the organizers in having the panel speak about reform exactly nine hours after the House of Representatives passed the 1,990-page bill! I had the honor of sharing the podium with Dr. Jon Burroughs of the Greeley Company and Dr. John Maa, one of the nations thought leaders on surgicalists. The session was moderated by Dr. Rick Sheff, executive director of the Greeley Company.

One of the questions posed was regarding the effect of the proposed “bundled payments.” Predictably, this has proven to be a very volatile topic amongst physicians. The Phoenix Group, of which I am a member, published a white paper earlier this year on the topic. The first draft stated that “healthcare reform legislation holds the potential for a cataclysmic uprooting of the traditional fee-for-service payment system.” In final form the word cataclysmic was removed. I suppose “cataclysmic” is in the eye of the beholder, but one thing is clear: The current bill is designed to change how providers get paid, and even how their businesses are structured and aligned and, ultimately, how care is rationed. Consider the following:


Bundling to hit hospitalists, says new white paper

DollarSignsYou may have already heard that the hospitalist think tank Phoenix Group recently released a white paper, “Hospitalists Assess the Impact of Bundled Fees.” The white paper makes a bold statement, calling the proposed payment restructuring in the form of bundling fees the “cataclysmic uprooting of the traditional fee-for-service payment system.”

Although the Society of Medicine at its annual 2009 meeting declared that it has no official stance on bundling, The Phoenix Group has been vocal in assessing the effects of bundling.


Inpatient quality data deadline this week

Hospitals in the Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) 2010 fiscal year program have until the end of this week to submit their quality data for Medicare’s pay-for-reporting program. RHQDAPU-participating hospitals must report inpatient data regarding the new measure of cardiac surgery by Aug. 15.

All other hospitals that are not participating in the RHQDAPU program can voluntarily submit data but are not required to.

The My Quality Net Web site provides a tool to help with data collection.