Healthcare Economy

After the Health Care Executive consortium meeting with Obama, the number 1 action is to reduce healthcare costs! But How?

Sources of increase in cost:
 
1. Medical Errors
2. Friction with insurance
3. Shortage of skilled workers
4. Rising costs of new therapies
5. Adoption of IT systems and new technology

Medical errors lead to morbidity/mortality and maybe litigation. Adding to costs. So formula is to reduce errors.

Insurance works on the fundamental that say 100 healthy people pay for illness of say < 10 ill people. If the balance begins to tip towards the other side, then the costs begin to spiral. Then the payer wants to pay less and provider naturally wants to safeguard its income. So the formula is to keep the balance right.

Skilled workforce shortage leads to higher wages, over utilization, and increased chances of failed outcomes. So the formula is to train more workers and in the interim fill the shortfall by aliens/immigrants.

New therapies are unavoidable, because there is a constant battle going on between disease and therapies. One trying to outdo the other! So the formula is to be conservative while using new therapies.

Adoption of IT systems helps in optimizing the processes, removes silos, reduces errors and provides information at the point of care. This is exactly what the incentive package intends to do.

Cutting costs is easier said than done because cost for one stakeholder is revenue for another in the healthcare system.

Posted by Dr Pankaj Gupta at 10:04 AM | Permalink | Comments (3) | TrackBacks (0)

The American Recovery and Reinvestment Act (ARRA) 2009…
… And the band is still playing on

My dear fellow Netizens, have you picked up any nationally renowned newspaper lately and flipped to page 5A, or switched on the tube and frivolously flipped the channel through the umpteen news channels? If you have, then I am sure you could not have escaped the raging debate regarding the ARRA and its impact on the US economy and its social implications and its morality in a society that is considered as the beacon of free market and its….. You get the drift.

There have been reams written about it and I am sure it definitely possesses the second spot close behind to amount of reports that appear about first lady’s attire or the first dog’s day out. Think of the poor trees in these times of go-green… somebody? I have seen people like Rush Limbaugh and Ann Coulter turn green in the face berating the proposals and trust me you don’t want me to mention the color that some of the liberals turn while praising the reforms effusively in their nasal baritones.

So, what is at the core of the debate? Me thinks, primarily the issue of what happens to those 45 Million Americans who cant afford the mind blowing amount of dollars one has to spent on trivial things such as going for a regular annual checkup ($500+ anybody?). Or for that matter what happens to those 300+ Million Americans whose last names are not Gates, Buffet, or Madoff for that matter. Do you seriously think that the guy has turned a corner and actually came out because of any sense of deep-rooted moral dilemma? If you do, then you should immediately come out with your own retirement scheme. Wall Street is looking to fill the void. But I digress. Back to issue at hand.

A bit of history …

For ages the free-market forces have driven the healthcare industry. People will get sick, people will need medicine and care, demand will always grow in direct proportion to the population and age, and hence supply side economics will always hold the higher grounds. Simple! The attitude coupled with Government’s apathy (or possibly lack of inclination towards politically suicidal endeavor), kept on driving the inefficiencies and thereby the costs higher and higher. It reached a point wherein more than 45 million Americans were uninsured and another similar number significantly under-insured. Something had to give but who will take the “bull by the horns”, or better yet “the lobbyists by the scruff of their Armani jackets”.

… And a bit of causality logic.

In steps Barak Obama. A president who actually has the political capital (not withstanding the boastful claims of our ex in front of the Reagan building in 2004); a president who is implicitly liberal; a president who actually carries triple digit IQ score, and who actually thinks that he can change the World. Bare essentials if one wants to take on the Quagmire that is the ‘K’ street. This guy is so secured in his present and for that matter even for 2012 that he is already looking for his legacy. Combine that with a long-considered-free-market-bastion subject such as Healthcare reforms and you have a ready made recipe for lasting impressions into posterity. Therein lays the foundations of The ARRA 2009.

The sudden economic downturn of late 2008 simply expedited the process as more and more people lost their jobs and simply could not afford the healthcare premiums on their own. Another side effect of the downturn was the reduction in protestations about the growing fiscal deficit at least for the short term as every body from banks to auto manufacturers were looking for government bailout hence foregoing the immediate concern for the deficit. After all beggars can’t be screaming about traffic jams because of crowded streets. This provided the cash bin that was so needed for supporting an ambitious endeavor such as the President’s all-encompassing healthcare reform bill.

Now, now before you start reminding me of March of Ides (circa 42 BC), for suggesting that it all had to do with one man’s greater-than-life-ambition, let me state that the need and cause were always there. It just so transpired that Obama’s election turned out to be the ‘assassination of arch duke Ferdinand’ for US healthcare, and not a minute too soon.

A bit of what it is …

The core of the program is driven by a simple motto, “Affordable healthcare for all Americans”. It is definitely not a behemoth centralized government controlled healthcare system though it does give me that feeling once in a while. Nobody is talking about merging United and Aetna with CMS, at least not yet. It is primarily a program of small carrot and large stick to encourage efficiencies in the system in order to reduce unnecessary costs and use those savings to provide for those who can’t afford the healthcare insurance premiums.

Quite a lot of capital has been laid out for increasing subsidies for high risk, low income, and elderly population. At the same time curbs are imposed on commercial payers with respect to risk subsidies from CMS to ensure the public obligation for healthcare can be protected from ever-rising costs. Providers are encouraged to tighten their SOPs and quality of care through “incentivePlus” initiatives. And don’t forget that oft complaining (How can I survive on barely a couple of million dollars a year?) physician pool. They are the ones who are really going to get the message. Improve the quality of care and you get paid else, forget about those bonuses and start worrying about the penalties.

In addition, in diversion from typical democratic behavior, the execution of plans and initiatives is proposed to be a lot more distributive rather than traditional centralized approach. For example states have been earmarked with a part of the stimulus bill outlay, based on their respective populations and maturity of health care practices, that they can spend as they deem fit. But before you hard core liberals go brandishing the “traitor” placards, know this that all of this come with greater government scrutiny and expanded government. Nobody is forgetting the increase in powers vested with the Office of the National Coordinator. Go Democrats!!

And if anybody thought that the program will be focused only on subsidies and welfare, then they don’t know our Blackberry-toting president very well. How can one keep a technocrat away from focusing on technology and process streamlining to solve all evils? 36 Billion dollars worth of focus (that one is with a ‘B’). This is directly manifested in programs such as “Adopt a certified EMR by 2015 or else…”

… And a bit of what could come of it.

To be honest, it all depends upon the mood of the country by the time 2012 comes around. Majority of the provisions, due to the complexities involved, are long lead time items. They don’t come to fruition before 2014-2016 time-frame and if Obama is not around would they still find their executive sponsor? Answer is “I don’t know”. Maybe they are like the Indian open-economy reforms of 1991 that took a life of their own despite the defeat of Congress in 1996 or may be they are like Perestroika and Glasnost, which did not survive the fall of their charismatic sponsor.

But one thing is for sure that American Healthcare industry definitely needs to break the status quo. It has been languishing for far too long in the doldrums of partisan politics and conflicting interests and has become the laughing stock on the international stage. It needs a drastic and truly out-of-the-box rethink and ARRA, despite its nascent liberal tones, could be the first step in the right direction. At least with respect to the technology focus.

In my next few blogs, I will deep dive into some specific mandates of ARRA 2009, starting with the EMR mandate and what is going to be required by providers to support it (or how badly they are going to get hurt if they don’t support it).

Later.

Posted by Rajiv Sabharwal at 10:49 AM | Permalink | Comments (0) | TrackBacks (0)

Most hospitals have business intelligence (BI) systems which claim to provide a solution. However I think most BI tools provide post facto analysis and miss out on the real-time aspect. An effective BI solution is the one which accounts for analytics considering “People, Process & Systems” in a hospital.

People:
Most people want to be challenged and to prove what they can do. The human tendency is to get into a comfort zone and main the status quo.  Hospital BI tool should have effective way to set objectives at each level and track the performance against the objectives commonly referred as KPIs. A BI tool should address following needs:

Process:
• The BI tool should be able to track the workflows across hospital departments to ensure adherence to standard operating procedures (Evidence based medication).
• The tool should be able to define flexible workflows with set tolerance levels around adherence to key activities and raise alerts, escalations on breach of tolerance levels.

Systems:
• The systems providing data for BI should ensure effective usage of technology and reduction in human interventions in capture of data. The BI tool should capture/fetch data from the parent system at real time without affecting the performance of the parent system. The tool needs to allow interoperability to enable corrective action by logging into the source system of KPI data.
• The BI tool should have interface inventory around the common interfacing standards to integrate with the HIS systems. It should support seamless integration capabilities for custom interfacing needs.

Posted by Shobha Rao at 12:16 PM | Permalink | Comments (0) | TrackBacks (0)

Over the past decade, hospitals have invested their resources in automation of both the clinical and non-clinical processes. The current economic situation will force hospitals to be more cost-efficient and improve operations. Hospital leaders may be restricted to new investments in information technology and will be mandated to reap benefits from current investments. Collaborating Supply Chain and Revenue Cycle functions provide single point of visibility of key metrics for hospital leadership, which will enable efficient real-time decision making; and improve hospital-wide performance.

Unlike other enterprises, hospitals have a unique revenue generation pattern; we will notice that the costs, utilization and revenues are mostly de-linked and many times increased cost does not proportionately translate into increased revenues/reimbursement. This takes us to the very basics of understanding factors that would push or pull revenue. There are many questions that needs to be addressed. However, the biggest question is - “Can we manage an enterprise where we understand the cost of product and service; have no control on utilization of resources and have a little visibility on expected revenues?”
Of the three factors that are mentioned above, only supply cost seems to have clear visibility and hence is being questioned time and again; and utilization and reimbursement linkage to supply cost is neglected.
Comparison between HFMA’s 2005 and 2008 supply chain benchmarking survey reveals that
1. Physician buy-in and Automation, are still persistent challenges over last three years
2. New improvement opportunities are emerging; such as Supply-Revenue integration, Data standardization and management of supplier contracts
Challenges/Improvement opportunities – Supply Chain Leaders

Performance in isolation – Challenges for Hospital Supply Chain
Hospitals currently boast of department achievements. For instance, Supply chain uses an ERP solution that reduces supply cost and monitors fulfillment SLA’s at 100%; Case management monitors patient outcomes and benchmarks at par with its peer group; Patient satisfaction is improving by every survey, at the cost of increased services utilization that many times are not reimbursed by payer. Hospital AR can only be as good as its charge capture methods and systems.
However, all these micro successes don’t seem to translate into an overall macro level success. Despite improved performances by individual hospital functions, many hospital report negative margins. One of the key challenges for hospital leadership is visibility of hospital-wide information at a single point

Collaborative Performance: Supply chain – Revenue cycle integration
Reducing supply chain costs is an organization-wide responsibility. Integrating supply chain and revenue cycle systems can help track cost, utilization and reimbursement metrics effectively.

Supply chain need to transform from fulfillment partner of the physicians to role in supply utilization. A collaborative dashboard like the sample below will help each department in the value chain to proactively reduce the costs. The collaboration should aim at not just reducing cost, but also make all the departments responsible for profitability of the hospital.

Illustration of transforming isolated performance to collaborative performance

Moment of truth
A collaboration dashboard will provide real-time alerts for each member of the value chain.

Supply chain – Participates in utilization decision making and is aware of real-time payer reimbursement
Physician offices – Is aware of reimbursement trends and supply alternatives, which effectively reduces denials and reduces cost , yet focused on providing best of patient care
Revenue Cycle – Keeps payer contracts updated, by accessing real-time utilization information and supply costs

Posted by Venu Tirumala at 11:55 AM | Permalink | Comments (1) | TrackBacks (0)

In India, a leading hsopital conceptualized the program to lead Outpatient chronic care market and to some extent, extend brand in outpatient care – By offering a comprehensive chronic care model. Here is the evolution of disease management in India:

1999 Patient specific information portal– Pure online model
2001 Online Wellness Channels – Pure Online model
2002 Branded Wellness Channels and Information Kiosks – Brick and Click model
2003  First Disease Management Program called “BreatheEazy” – Program to manage asthma.
2005  Second Disease Management Program called “Healthy Heart “ – Program to manage  chronic Cardio Vascular diseases.
Role of Stakeholders in the program:
Pharmaceutical companies
• Patient education material
• Physician resources for treatment of Asthma and COPD; and co-morbidities
• Advertisement and marketing resources
• Sale of drugs at a discount
• Primary market research to identify program components
Healthcare Provider
• Program deployment
• Patient care
• Call center support
Physicians
• Patient care
• Education sessions
• Participation in camps (Corporate, school and community)
Patients / Corporate
• Receive care and adhere to program guidelines
• Feedback to call center
• Provide testimonials
IT/BPO companies
• Develop software for data management and health monitors
• Call center support
• Outcomes reporting and data analytics
• Presentations at key seminars – DMAA
Health Insurance
• No role as of now
• No data on actuary on out-patient care
• Out-patient care still not promoted by health insurance plans in India

Typical IT systems/modules involved in program:
The IT systems used in a DM program achieve 4 objectives:
•  Program compliance
•  Patient compliance
•  Data analytics
•  Reporting
The modules, which a typical DM system should have are:
1. Program management module – Scheduling visit, program health etc.
2. Call Center module – In bound and out bound
3. Physician module – PHR, Prescriptions etc
4. MIS – Reporting, data analytics, program support  
Pros:
•  Relieved patients – Testimonials, challenge camps, group session leaders etc
•  Camps conducted for schools, corporates (Includes Infosys Hyderabad)
•  Very effective database gathering model – Camps, advertisements, primary research, pharmacy coupons, referral centers etc.
•  Outcomes presented at DMAA Annual 2003, 2004
Cons/Bottlenecks:
• Lack of health insurance
• Lack of focus on chronic care by leading hospitals – The focus still on critical care – big bucks!!
• Lack of physician support – Physicians in India doesn’t believe in team work compared to a group practice in US.
• One of the leading physician comment was “I do not want to loose my patient to the system. This is a good program, and it will suck in all my patients”
• Only GSK drug need to be prescribed , which limited the quality of treatment.
Going forward :
• In the US, DM programs are driven by Insurance companies to contain cost, control chronic conditions and reduce emergency visits. Health Insurance in India need to follow the model.
• As the cost of chronic care escalates, patients will realize value in DM program. Patients are happy taking SOS medications to preventive care (Salbutamol @ Rs.100 to Salmeterol/Fluticasone @ Rs.500 – Rs.1000)
• Encourage physician’s belief in team work to ‘lone’ care provider.

Posted by Venu Tirumala at 10:52 AM | Permalink | Comments (0) | TrackBacks (0)

These times are tough for everyone considering the state of the world’s economy. But this is also an exciting time because of all the focus on healthcare and IT.

Be it HIPAA 5010 conversions, or ICD10 or Obama’s plans for Healthcare and focus on improving the state of Health IT. The focus on IT as a means to improve the quality of care and efficiency, reduce the cost of care and errors has never been so much. Obama’s plan to invest in Health IT as well as transforming the current healthcare system to reduce the number of uninsured is not only going to improve the general level of health of the population, but also going to create a lot of new jobs. This in turn will help recover the economy from the current crisis situation.

The HIPAA 5010 and ICD10 conversions are not very straight forward or easy to implement. They are complex and will require the existing systems in Providers, Payers, PBMs, labs, clearing houses and software vendors to change their systems to adapt to the new regulations and code sets. Interoperability between the various platforms that exist today will also be a very big challenge. Even though most of these changes are seen by many as regulatory changes which are non discretionary in nature, one should not forget the business benefits these changes are going to bring in the long term. The ability to have all the medical information in an electronic form and to capture details that are not captured today will open the windows to a lot of possibilities and innovations. A lot of human errors can be avoided, a lot of unnecessary spend can be eliminated. If executed smartly and efficiently, Health IT can improve the healthcare system tremendously.

Posted by Shinju Damodaran at 10:48 AM | Permalink | Comments (3) | TrackBacks (0)

The analyst firms are predicting the healthcare sector to be almost recession proof, yet I am aware of layoff announcements in healthcare organizations in recent weeks.

As an astute leader in your healthcare organization, you’re scanning the headlines to find beacons to guide you through the economic doldrums.  One can’t help but notice that the messages for the healthcare sector span the spectrum from hopeful and encouraging to dire.

Here’s my survival kit for health care payers: Efficiency, Accuracy, and Agility.

Efficiency: During lean economic times, it becomes critical that your organization focuses on its core business—and that it do so in the most efficient, cost effective manner. Inefficiencies should be squeezed out of every process to maximize what are undoubtedly thin operating margins. Pay attention to what you do, and do it well.

This is a terrific time to review administrative processes to ensure hard-won revenues are not eroded through redundant or bloated processes.  You’ve been thinking about business process improvements, implementing best practices, finding opportunities to streamline, automate, or right-source your operations. Now is the time to follow-through on these plans.
 
Accuracy: Pursuing efficiency and forgoing accuracy will backfire. It may cost your organization $1.50 - $3.00 to adjudicate a claim on first pass (depending upon electronic or manual receipt, and whether the claim requires any pended and manual steps); but it will cost five to ten times that much to re-adjudicate that claim on grievance or appeal. The additional costs for re-work will be highly manual investigation and audit, and may result in no change to the claim payment status if you can justify and document the processing steps.

The old cubicle complaint echoes here: If we didn’t have any money in the budget to do it right the first time, how come we have five to ten times that amount to re-do it?  Often-times, because the re-do will be mandated by regulatory or contractual compliance requirements (in addition to the need to restore the good will of our customers). 

Now is the time that the costs incurred improving efficiency and accuracy will be more than repaid in reduced administrative overhead.
 
Agility: In addition to ‘sticking to our knitting,’ health payers should prepare to quickly adopt and administer new requirements for eligibility, benefits, and network contracting. Under the current administration, it is highly likely that each of these components may change in the near future.

Congress is already considering legislation that will change Medicaid eligibility requirements, lifting poverty-level guidelines to make Medicaid available to any laid-off workers. Benefit packages and products may also be re-defined to meet changing definitions of minimum required healthcare. CMS has recently expanded approved drugs for treating cancer patients.  Provider reimbursement may change to encourage an interest among practitioners to pursue roles in primary care. 

Even without mandates, the pool of the uninsured may grow as workers continue to be laid off. These remain a source of new revenues if you can out-enroll your competitors for the additional lives while reaching deeply enough into this pool to ensure you appeal to more than the most needy enrollees. 

Marketing and sales messages and channels will need to adjust to address individuals in a more consumer-oriented market-place. Back-office business logic and work flow will need to support new benefits packages, products, and reimbursement arrangements.
 
Now—while large projects such as HIPAA transaction code set 5010 and ICD-10 implementation dates have been pushed further into the future—Now is the time to address your most pressing needs through Efficiency, Accuracy, and Agility. Often, funding for these kinds of projects can be built from their attendant cost-reductions.

Posted by Rob Eichler at 10:40 AM | Permalink | Comments (0) | TrackBacks (0)

So, here we are, in early 2009, worried out of our wits regarding an event that is supposed to take place towards the end of 2013. Any other industry, any other event (with due reverence to the Y2K paranoia) and we would have been calling the alert-raisers as nothing more than rabble-rousers, worse yet, fear mongers. But not with ICD10 transition. No name calling here. In fact the worried lot is definitely in majority this time around.

What happened?

Has the healthcare industry become far-sighted overnight with regards to HIPAA mandates? Don’t think so. They are still worried a lot more about the upcoming enrollment season or next year’s contract negotiations with in-network providers.

Has the new administration opened another of its pockets, specifically for this transition? Not really. Last I checked there were no Billions (for that matter even Millions) of dollars allocated for ICD10. Neither does the administration think that transitioning to ICD10 is something that should be incentivized. After all, hasn’t everybody else accepted this cost of doing business and moved on?

The possibility of pride (US being the last developed country using ICD9 codes) over-riding the potential high-value expense associated with the transition can definitely not be the reason. Neither can pure and unadulterated urge to improve the quality of care without any accompanying financial motives.

So, what could it be?

Yours truly believe that the slick ones in the industry (especially those encumbered with mundane IT support works) have figured out the ultimate escape clause. Why transition 20 legacy systems to the new coding scheme, when one can benchmark the cost-of-20-individual-transitions against the cost of consolidation + cost of say 2-3 transitions. Huh!! Let me think. I guess, if you can give me a lower total cost for consolidation (rip and replace or virtual, who cares) and transition with an added bonus of reducing my going-forward MIPS (or FLOPS or whatever IBM is calling it these days) and reduced labor to support consolidated platform…sure, why not. And in the process if I look like the knight in shining armor for having adopted a HIPAA mandate without undue fuss and within stipulated time frame, even better. Giddy Up!! I still have the “Dallas influence” on me despite having left the city 15 years ago.

As recent as a year ago, NPI mandate was attempted to be solved using a quick and dirty crosswalk solution. Though its success is questionable but so is its failure. So why not attempt something similar for ICD10 also? Granted those are two drastically different beasts, but I am sure the differential in costs between a basic crosswalk and a comprehensive remediation solution, will sway the staunchest of the purists, especially under today’s economic scenario.

Why not create a reverse map from ICD10 to ICD9 codes (the one to many issue will be resolved that way) and continue to let run the existing systems as is? So why not too many upper echelon people talking about it (I hear about the crosswalk being the panacea, once in a blue moon)? The reason is that they see a much bigger play here, more of an opportunity than a necessity: Bring forward the decommissioning dates for identified-sun-set apps, externalize and consolidate the business rules for applications that perform similar functions and retire most of the redundant ones, remediate the leftover apps for ICD10, and voila, you have a nice streamlined IT shop with a lot of surplus labor capacity to devote to all those projects that you could not pay attention to over the last several years. That is, till the ICD11 transition at least.

This, ladies and gentlemen, is the primary reason, at least so I believe today. It was not my thinking 7 months ago when we started on the iTransform path. Heck, I did not think on these lines even 3 months ago, but more and more I talk to people in power at various US payers and more I try to read between the lines (or hear between the sentences, whatever), the more I get convinced that the thing that is attracting the top-tier IT folks is more to do with consolidation and streamlining rather than just managing a mandate.

That brings me to the titular question… so is it a healthcare meltdown scenario? I guess, if you don’t take any remedial action and wait for your platform vendor to provide a nifty little upgrade version that not only plugs the ICD10 related gaps within the vendor application but also streamline your associated business process, then sure, it is a potential meltdown situation for you. But most, if not all, execs are thinking on the aforementioned lines of ‘treat it as an opportunity, especially given the extended date’ and that definitely does not sound like ‘Meltdown’ to my untrained ears. Stressful, yes. Requiring urgent and careful planning, yes. Diligent and focused execution, yes. Meltdown, no.

Posted by Rajiv Sabharwal at 10:34 AM | Permalink | Comments (1) | TrackBacks (0)

Some more predictions/extrapolations:

Obama’s incentives package has put power in the hands of Physicians.

So what is expected to change:
1. Pharma co: Physician’s reliance on pharma companies for drug education updates will reduce because they will get direct access to latest version of electronic drug databases in the EMR. Many EMR will have CPOE and Medication Management built into it, which will guard against unnecessary/incorrect prescriptions. Cross-selling and Up-selling of drugs will get minimized. However the drug compliance will go up in chronic disease management.
2. Insurance: Private sector Health Plans will have to compete with Public sector Health Plans for their bread-and-butter. US has a very large aging population [Baby Boomers].
3. Hospitals: Will have to figure out how they can increase their Medicare and Medicaid practice. They will also have to depend more on Physicians that already have a greater mix of Medicare and Medicaid practice.
4. CDC: Public Health initiatives and Disease Surveillance will gain power because they will start getting valuable Public Health data through Medicare and Medicaid. So far private enterprises didn’t want to share member/patient/outcomes data.
5. Healthcare Economics: will shift towards measuring clinical outcomes rather than business value. Public Health, Disease Management and Preventive Medicine will gain because US has a very large aging population [Baby Boomers].
6. M&A: New business models and major consolidations should be expected. I can see Pharma companies [maybe JnJ??] and Insurance companies [maybe UHG??] buying out EMR/EHRS, Healthcare-IT companies [which one, I keep guessing..].

Initially I was skeptical about what 1 President can change. However Obama is surely exercising the power vested in the highest office of US. This looks like the dawn of a new era in US Healthcare. I can see US moving towards a Social Medicine practice i.e. Canada eHealth and NHS UK model.

Posted by Dr Pankaj Gupta at 10:29 AM | Permalink | Comments (0) | TrackBacks (0)

As per my study here is a summary of Obama’s EMR and EHRS Incentive package:

1. $ 2B for developing standards, EMR installation grants and EHRS @ RHIR [I guess new name for RHIO]
2. $ 21B as incentives on EMR adoption. This is the net cost after anticipated savings of $ 15B are subtracted from the total spend of $ 36B on incentive payments.

Incentives will be given to providers with:
1. Use of a certified EMR product complete with ePrescribing capability as determined appropriate by the Secretary of HHS
2. The EMR is connected to the EHRS/ HIE for the electronic exchange of PHI
3. Complies with submission of reports on clinical quality measures

The incentives are for the ambulatory space and are paid on a per Physician basis. Hospitals are not eligible with certain exceptions. Provider can claim this incentive thru Medicare or Medicaid depending on their practice mix.

MEDICARE:

1. Physicians operating in a "provider shortage area" will be eligible for an incremental increase of 10% in their bonus payments.
2. Physicians operating entirely in a hospital environment, such as anesthesiologists, pathologists and ED physicians, are ineligible.
3. Beginning in 2015, physicians not demonstrating meaningful use will have their Medicare fee schedule reduced.

MEDICAID: 

A healthcare provider is eligible for incentive payments from Medicaid who:
1. is not hospital-based and has at least 30 percent of the professional’s patient volume coming from Medicaid patients;
2. who is a pediatrician, who is not hospital-based, and who has at least 20 percent of the patient volume coming from Medicaid patients;
3. practices predominantly in a FQHC or rural health clinic and has at least 30 percent of the professional’s patient volume coming from Medicaid patients;
4. is a children’s hospital, or an acute-care hospital that is not described in clause (1) and that has at least 10 percent of the hospital’s patient volume coming from Medicaid patients.

Incentive payments will be based on a calculation that factors the physician’s Medicaid mix in combination with up to $25,000 the first year and $10,000 each subsequent year for five years, all multiplied by 85%. The highest potential for Medicaid payments is $63,750. Additionally, physicians filing under Medicaid must first demonstrate EHR usage by 2015 and will not be eligible for payments after 2021.

HOSPITALS:

$2 million base payment plus a figure derived from the discharge volume.

Critical Care Hospitals are not eligible for the incentives described above. Instead, they will be allowed to expense the acquisition cost of Health-IT in a single year for Medicare payment instead of depreciating it over a number of years.

For eligible hospitals not demonstrating meaningful EHR use by 2015, three-quarters of the anticipated percentage increase in the fee schedule shall instead be reduced by 33 1/3 percent for fiscal year 2015, 66 2/3 percent for fiscal year 2016, and 100 percent for fiscal year 2017 and each subsequent fiscal year. This reduction will be reevaluated each year, and a hospital can return to a normal fee schedule as soon as EHR use is demonstrated.

ADVANTAGES:

1. Therefore the Small Physicians suddenly have become the largest Healthcare-IT market in USA! The power base has shifted. I remember the book ‘Power Shift’ by Alvin Toffler.
2. Obama has put life back into Public Sector Health plans - Medicare and Medicaid! WOW This is the work of a genius.

Above is a simplified version of the incentive package. However there is more devil in the detail.

Posted by Dr Pankaj Gupta at 10:01 AM | Permalink | Comments (0) | TrackBacks (0)

To support the quality and patient safety requirements of pay-for performance programs, secure information in data systems will need to be available in standardized electronic formats. Advanced business and clinical intelligence applications that compile discrete arrays of outcome and performance data must be developed.

What are some of the Technology challenges of implementing a pay-for-performance system?
1. EHR Adoption: Health care providers will need to move from manual, paper-based processes to the adoption of longitudinal electronic health records (EHRs) that enable them to collect access and analyze patients’ information at the point of care.
EHRs also provide tools and decision support to manage care. The availability of patient-level clinical data and information to care providers in multiple settings like skilled nursing, home care and the doctor’s office can decrease duplication of services and errors, and improve coordination of care.
2. Interoperability: Seamless data exchange and unified standards between Hospital systems containing master data around quality measures is biggest challenge to capture one version of truth around the clinical data. Majority of hospitals invest in products like EMR, LIMS, ADT etc which are from different vendors. Since these vendors compete with each other, the exchange of data is not that easy between these systems. Moreover the BI or analytics capabilities of one product works best with its suite of products in other departments of the hospitals and provides little usability across any other competition product. Hence hospitals would need to invest separately on BI & data ware housing apart from the transactional HIS products.
3. Predictive and Real time BI instead of post facto reporting: Majority of care givers are reactive to the performance against quality measures. The BI and analytics reports generated for the care events are post facto and it takes around 4-6 months for hospitals to know around there bonus and penalty details from CMS.  The postfacto reporting tool, if does not have the ability to analyze these learning’s around pay out trends would help little in improving the quality of care.
The need of the hour is to have real time reporting tool, which has built in intelligence based on the past payouts to report present compliance levels and raise alerts, where ever, there’s a chance of breaching the compliance. It should also be able to predict the amount of payouts that a hospital can expect.
4. Flexible and scalable Reporting tool: Most P4p programs are in pilot phase and hence have evolving quality measures. Hence the IT tools deployed should be flexible and scalable to support these changing measures.
5. Key stakeholder empowerment: The intentions of the P4p programs are to improve quality of care and make payments based on the clinical outcomes rather than utilizations. The Physicians and the nurses are the key stakeholders for hospitals to realize this objective. Hence a technology should empower these stakeholders by providing them with all the information needed at their finger tips. It could mean, clinical decision support by means of allergy alerts, medication suggestions, benchmark work flows around treatment of particular disease conditions, real time access to systems over mobile, role based dashboards around key performance KPIs, remote patient monitoring.

Posted by Nilesh S Pai at 8:53 AM | Permalink | Comments (2) | TrackBacks (0)

The Obama Administration’s effort to get healthcare providers to acquire/adopt EHRs in “meaningful use” is certainly an ambitious dream supported with  more than $21 billion of which about $17.2 billion consists of direct incentives that will be paid through Medicare and Medicaid. Physicians who show “meaningful use” of qualified EHRs will be eligible for $44,000 to $64,000 in subsidies over a five-year period, starting in 2011. Physicians who don’t use start using EHRs meaningfully by 2015 will start to see reductions in their Medicare payments.

Hospitals will also receive substantial bonuses for meaningful EHR use. A $2 million base payment + their incentives will depend on a formula that includes the number of discharges, the number of inpatient days for Medicare patients, and total inpatient days and hospital charges. Hospitals that don’t adopt will lose a portion of their annual Medicare payment raises.
There are 800,000 clinicians in the US. 17% have EHRs today. This leaves 664,000 who need EHRs. Over the next 5 years the early to mid-adopters will work hard to gain the full stimulus incentive amounts available in 2011-2012. Late adopters will gain the reduced stimulus available in 2013-2014. Resistors will begin receiving penalties in 2015.
The caveat here is that there’s little funding available to acquire the technology and there are two major decisions which the EHR and healthcare world are waiting to learn about: What will be defined as a “certified EHR?” and how will they measure “meaningful use?”
However the broader consensus is that congress apparently sees health information technology(HIT) as a means of improving the quality of healthcare, the health of populations, ease information sharing and the efficiency of health care systems. With this as the goal, meaningful use of EHR would includes showcasing effective use of following to improve the quality of care and outcome.
1. Health care information exchange and Interoperability
Through health care information exchange and interoperability, clinicians everywhere can have a longitudinal medical record with full information about each patient. Patients will have better information about their health status. They can move more easily between and among clinicians without fear of their information being lost. Payers can benefit from the economic efficiencies, fewer errors, and reduced duplication around clinical procedures. Without interoperability, health information will remain in proprietary silos, in which the health care enterprise hopes to gain comparative advantage by imposing high costs on patient switchover and by exercising market leverage over small-niche players such as solo physicians and community hospitals.
2. CPOE & CDSS :
Improving patient safety is the real intent of CPOE. With CPOE, physicians enter orders directly, eliminating clerical intervention along with transcription errors.The CPOE system allows real-time patient identification, drug dose recommendations; adverse drug reaction reviews, and checks on allergies and test or treatment conflicts. Moreover the physician orders are standardized across the organization.

3. Reporting around quality measures:
Electronic exchange of quality measures including process and outcome metrics. Population health data sets submitted to public health departments, and other government agencies.
4. Other:
Tools that support the choice of therapy , that bring evidence-based guidelines to the point of care, that help disseminate best practice, tools that detect HAI in real time and allow for prompt intervention, and tools that allow for monitoring and tracking one's outcomes

What will be defined as a “certified EHR?”
The EHR would be certified by some entity similar to the Certification Commission for Health Information Technology (CCHIT) guidelines. The guidelines will be similar to what is used during CCHIT certification of an EHR.
To Conclude:
It seems intentional that the “meaningful use” and “certified EHR" is not defined by the congress yet and is awaiting for reactions from the healthcare community both big (Hospitals, Payers) and small (Physician practice). Each year, the definition of meaningful use will be expanded, setting the bar higher and requiring more features and more data exchange. I do not believe clinicians should wait for all the details before investing. They should begin EHR implementation now

Posted by Nilesh S Pai at 8:44 AM | Permalink | Comments (1) | TrackBacks (0)

Revenue Issues; Many physicians are treating more patients yet making less money; similarly, hospitals and other providers are seeing their profitability decline. This is due primarily to managed care models and the changes in entitlement programs. As the complexities of managing care increase, providers shoulder the weight of more administrative activities, thus increasing costs. Many are struggling to maintain operations. Processes required for authorization impact the length of the revenue cycle, and manual intervention is often needed on the back end in order to determine why claims are not paid. This forces the healthcare provider to be a creditor for a much longer time than is necessary.
 Industry Regulations: The healthcare industry is one of the most highly regulated in the U.S. Government regulatory effects on healthcare cause the providers to have to do more with less money. Medicare burdens alone are overwhelming. The providers face a growing dilemma of not sacrificing quality and safety while they are forced to reduce costs.
Technology Skills Shortage: The healthcare industry traditionally has a high technology skills shortage. The industry pays the lowest IT compensation among other industries, which causes an increase in competition for resources. The Internet has transformed patients into consumers. This fundamental change redefines the role that industry providers must play, and puts relationship management (CRM) as a top priority for most healthcare providers. This is a function that the healthcare industry struggles to provide, especially when it requires acquisition and retention of high level technology resources that compete with leading technology companies. Outsourcing is a valuable business tool that is playing an increasing role in providing solutions to the healthcare industry. Outsourcing allows organizations to obtain the maximum value by implementing performance measurement tools that control costs while maximizing quality standards. By turning over non-core processes to an outsourcing supplier, organizations achieve high-quality services and reduced costs. Both of these results enable provider and payer organizations to focus on their core activity of providing quality patient care eliminating inefficiencies: Healthcare providers generate a huge amount of patient data, as well as administrative data, on a daily basis. Where there is a squeeze on profitability, front-end costs must be reduced as much as possible. One way to accomplish that is to outsource data entry and take advantage of the Internet. Access to resources drives some healthcare providers in remote regions to outsource.
 CONCLUSION: Although the healthcare industry faces a process of transforming its business model, outsourcing suppliers and consultants are at the forefront of innovative solutions for each challenge. This presents an opportunity for Suppliers of Outsourcing Services, Technology Innovators and Consulting companies with the skills necessary to assist. Additionally; that same opportunity is available for those healthcare organizations that seek a more quality controlled provision of technology services that improve quality of business services and patient care delivery while reducing medical errors and technology.”

Posted by Gary O. Claytor at 8:34 AM | Permalink | Comments (2) | TrackBacks (0)