Healthcare Economy

Regional Health Information Organizations (RHIOs) gained limelight in 2004 when President Bush called for Electronic Health Records for every American by 2014. The primary objective of RHIOs was to create an interoperability and information sharing infrastructure so that 360 degree view or complete medical history of patient’s health records can be made available for healthcare decision making. The desired outcomes were improved quality of care, prevention of clinical errors, elimination of redundant tests or care, prevention of adverse reactions, better care coordination and reduction in healthcare costs. The concept of Patient Centered Medical Homes (PCMHs), also called Medical Homes, goes back to its introduction by the American Academy of Pediatrics in 1967. However this primary care model has gained popularity over last one year as President Obama rolled out healthcare reforms. Patient Centered Medical Home is a care model where primary care physician is responsible for complete care coordination of the patient. Primary care physician collaborates with other physicians and care organizations based on the care needs of the patient and also educate the patient on self-health management. PCMHs share the same goals as RHIOs in terms of improved quality of care, better care coordination, better clinical outcomes and reduced healthcare costs.

Although there is shared objective, the key difference lies in how the RHIOs and PCMH s are organized and operate. RHIOs are collaborative organization of varied composition involving some or all of the organizations like federal agencies, state agencies, non-profit community organizations, hospitals, safety net providers, individual practitioners, pharmacies academia and insurers. PCMH are physician practice associations that follow “Medical Home” care model principles.  While RHIOs focus on building an information sharing structure and all the participating providers/insurers have the onus of sharing health information for enhanced quality of care delivery, in PCMH the primary care physicians or a personal physician of the patient carries the responsibility for care coordination and sharing health information across the care team.  
RHIOs have seen limited success. According to a survey of 109 RHIOs produced in 2005 by eHealth Initiative Foundation, top two obstacles to RHIOs were identified as sustainability/ funding and user adoption. Most RHIOs started with an initial grant for demonstration pilots but they lacked sustainable, financially viable business models. There was an unaddressed challenge of inequitable distribution of costs and benefits. While providers had to make large upfront investments in implementation of healthcare IT and development of interoperability infrastructure, financial benefits of improved outcomes and reduced inappropriate care goes to payers. Most of the providers did not have Electronic Medical Record systems and EMR adoption issues were a barrier to their participation in RHIOs. Workflows for unstructured, paper based health records sharing were not planned for in most cases.

Electronic Medical Records system adoption by physician practices has received an impetus from ARRA healthcare IT incentives for Meaningful Use of EMR. However, PCMHs continue to face the very same challenge of inequitable distribution of costs and benefits as did the RHIOs. There is no one clear winner in reimbursement strategies that physicians and payers are willing to embrace. One of the principles in "Joint Principles of the Patient-Centered Medical Home” released in 2007 by leading primary care physician organizations is: “Payment must appropriately recognize the added value provided to patients who have a patient-centered medical home. For instance, payment should reflect the value of work that falls outside of the face-to-face visit, should support adoption and use of health information technology for quality improvement, and should recognize case mix differences in the patient population being treated within the practice.”   The commonly used reimbursement models of Fee for Service and Capitation provide no incentives to primary care physicians to make additional IT investments and spend more time and effort in coordinating care.  Pay for Performance strategy of payers account for added incentives for demonstrating improved outcomes in certain clinical metrics. But are these incentives adequate to cover the cost of additional responsibilities that Medical Home physician undertakes? It is to be seen if providers and payers can find the winning reimbursement strategy to make PCMHs a great success or will PCMHs go the RHIO way?

Posted by Seema Pandey at 10:48 AM | Permalink | Comments (0) | TrackBacks (0)

The debate on Healthcare reform is going on at full throttle in Washington DC as well as the rest of the country. No one knows where this is headed to or can confirm what the outcome will be. It looks more likely that we will see Healthcare exchanges will get setup. Most probably not at the national level, but instead at the state level.

Whatever happens, one thing that seems to be certainly happening is the growth of the ndividual market.The individual searching for a viable affordable health plan is becoming more and more popular. Most of the large and medium Payers who have been focusing on groups in the past are changing their strategy to come up with innovative products and services to the individual buyer. With the changing market place, buying a health plan will look much more similar to buying auto insurance than the group business that we have seen in the past. This change presents a lot of challenges for the payers. Lot of potential new clients will be looking at comparison shopping, say on the internet or on the phone. New underwriting models will have to be developed as the group methods and models will probably not work for the new market. Also the speed at which a quote is generated will have to be increased multi fold. The new client would want to know what they need to pay with various Payers and various plans. Technologists would be scrambling to automate the current underwriting and quoting process so that they can get the quote to the prospective individual member in a matter of minutes if not seconds. The healthcare industry is faced with some unique and interesting challenges in the next few years to come.

Posted by Shinju Damodaran at 10:19 AM | Permalink | Comments (0) | TrackBacks (0)

Well, that’s where the provider community finds itself right now. I have been talking to quite a few providers (large and small, specialized and generic) and eventually I have formulated an opinion (You will never find me short of opinions). The hypothesis goes such…

There are three types of providers currently in the market space,
1) Who believe that transition to ICD10 is not going to take place at all. Statements such as ‘Not in my lifetime’ and ‘I will see ICD11 before I see ICD10’, are commonplace among the practitioners of this faith.
2)  Who believe in the fact that the transition is very simple and it is more of a media hype rather than actual issue. Statements such as ‘My vendor will take care of it all’ and ‘It is simply a matter of replacing one list of codes with another’ are the staple of this group.
3) Who believe that there is an issue but they are helpless to do anything about it because they are absolutely resource (read cash) starved and have many fires to fight. ‘Do I pick ICD10 over meaningful usage’ and ‘I don’t have any idea what is it going to cost me’ are often-heard platitudes from these industry bellwethers.

I have a different reaction to the three groups. I usually shudder involuntarily in the company of the representatives of the first group and am reminded of the age old adage ‘Ignorance is bliss’. In the company of the second group, I am not sure why, but I start seeing the images of Titanic hitting the iceberg (obviously the James Cameroon version). But it is the third group that I really empathize with.

These are a set of people who are not only well aware of the impending doom but are also the selected few who want to do something about it. These are the people who deserve every possible break and support that they can get to overcome this potential mess. And these are the people who sleep the lightest (if they can sleep at all).

Look at it this way, we have a provider system in this country which is working at less than 3% average margins (there are people who will contradict that statement and I have seen numbers as high as 15% but I go with the multitude here and discard the outliers). More than half of these systems are actually working at less than 1% or infact in negative margins. Their reimbursement rates are already way down, close to 60%, i.e., every dollar they bill, they get around 60 cents. On top of that, if they don’t fulfill their commitments to meaningful usage, they are in line for penalties ranging up to 10% in some cases. And, please don’t tell me that the government has earmarked significant dollars for getting meaningful usage compliant and hence that should be a wash for the providers. Has anybody ever implemented a decent (or for that matter any kind) of EMR for 44 thousand dollars? Throw up the transition to ICD10 on top of that and you have the classic case of good intentions gone haywire.

That is where this hapless group finds itself. They understand the urgency of the situation. They even understand the potential impact of the transition on the quality of care. But… what do they do? Where do they get the 100-500k dollars to get an assessment done? And God-forbid, if they get an assessment consulting vendor, who charges them an arm and a leg and comes out with a 70 page PowerPoint presentation which not only states the obvious (i.e., all your processes and systems are going to be impacted) but also puts in the fear of God into them in regards to the fact that they better upgrade all their 3rd party systems at exorbitant fees and fully remediate all their custom systems, lest the wrath of God rains down on them, come 1st October 2013.

These are troubled times for this group. They want to do the right thing but face following challenges, in no specific order,
• The very top level executives are not in tune with the people who actually understand the problem. The execs still believe that the issue is either non-existent or simply vendor-driven switch.
• The struggle for limited resources between I10 transition and other ARRA mandates that actually have tangible monitory significance attached to them either through incentives or through punitive measures.
• The lack of education with respect to scope and cost of the effort, which makes them susceptible to the high level (read lacking substance), generic consulting efforts.
• Lack of understanding of where the payers are going, e.g., are they going to deny I9 based claims post 10/1/2013 or will they still entertain them? That lack of understanding directly leads to reduction in commitment.

So what is the solution?
Simple answer is nobody knows for sure. I can try to address the technical aspects of it by introducing the concept of a low-cost shrink-wrapped package to do baseline assessment (not just a high level PPT) and core scope and effort estimation, but still the process impact falls outside of it. What does one have to do to handle that sort of BPM consulting with its inherent ‘no-guarantee’ disclaimers? A crosswalk, that is much beyond what GEM proposes, is a must, not only for training purposes but also for post-transition production phase. Some kind of a tool to support contract renegotiation is a must too. In addition automated training and tools to support productivity are essential. But they all cost money, which is not there to begin with.

So whichever you look at it, it is not a situation I would fancy being in. ‘Rock and a Hard place’, anybody?

Posted by Rajiv Sabharwal at 7:42 AM | Permalink | Comments (0) | TrackBacks (0)

ICD-10 codes are ten times as granular as their predecessors. This opens up whole new opportunities to improve patient safety, care delivery and streamline provider reimbursements – but all that is possible, if and only if I-10 codes are captured at the point of service (or the provider’s billing department).  If the provider continues to capture I-9 codes and that’s what is going to be sent to the payer, then there’s a subtle chance that the benefits will be fully realized. But nonetheless that’s going to be the situation. Based on the market feedback, most providers will continue to capture, store and send I-9 codes for a long period post the compliance date. The transition period will be long, may be very long.

So, there’s going to be interoperability challenges for many years. Payers will expect I-10 codes, but providers will send I-9. Had it been the other way round, things would have been less complex, but still not simple. Converting an I-9 code to I-10 on the other hand is a very complex issue and a crosswalk will be required.

The major shortcoming of an I9 to I-10 crosswalk will be its effectiveness. As with any one-to-many mapping you’ll need additional data to be able to make an accurate judgment. Now this additional data might be there in the PWK (paperwork) segment – but it’s still unreliable to the extent that it’s optional in 5010 transactions.

Then, deciphering the PWK segment and make enough sense out of the physician’s notes to be able to zero in on the ICD-10 code is a complex issue. One could also look at the entire claim to determine the I-10 code that matches the scenario. But the rules will be complex and will need to be constantly reviewed for accuracy.

With any luck, effectiveness of the I9-I10 crosswalk will be in the 80% range. So that would mean 20% of the cases will need to be manually evaluated to determine the I-10 code. Assuming that 50% of the providers will continue to be on I-9 codes, that’s about 10% drop in automation. This will translate to significant backlogging and delay in claim payments.

Add to that, the doubts around accuracy. Firstly, there will need to be manual intervention to verify the accuracy of the crosswalk and secondly, manual intervention to process the old and current records that were inaccurately mapped. This will be significant cost overhead on the payer side.

All in all, payers will end up bearing the cost for providers not capturing the I-10 code. Providers will lose on cash-flow because of the delays in reimbursements. This is an ecosystem level problem. To reduce the transition period, payers and providers will need to move in the same direction, hand in hand and at almost the same pace. Otherwise, the industry will need to be prepared to deal with significant drop in automation, and delays and overhead costs.

Posted by Vijay Kumar B at 4:14 AM | Permalink | Comments (1) | TrackBacks (0)