Innovative Provider Models Reveal Glimpse into Future of Care Delivery

A new topic we’ve been monitoring in the debate over healthcare spending has been the alarming shift from traditional cost centers such as inpatient care, pharmaceuticals and administration to outpatient care.

While outpatient settings appear on the surface as  more cost-effective alternatives, the limitations of the healthcare system  to establish incentives limiting utilization negates any potential for cost savings. Arguments in support of and against the shift have merit and must be considered as outpatient care is among largest and fastest growing healthcare spending categories.

In an attempt to limit the cost drivers of overutilization and overuse, various initiatives to balance care costs, quality and efficiency have been introduced. The most likely transition that will occur over the next few years will be the continued build-out of a provider capitation system designed to limit cost and utilization yet maintain quality. As the outpatient market braces for this shift, all eyes are on a few of the more progressive models where cost savings and outcome improvement under a provider capitation model are being demonstrated.

Over the past ten years, CareMorehas established itself as among the most vertically integrated Medicare Advantage plans in the country. Through its network of employed physicians and outpatient primary clinic care centers,  they are essentially “at risk” and therefore incentivized to efficiently deliver care – thus shifting the risk from health plans as in  traditional network models. Through a system of care coordination spearheaded by individual care managers who monitor primary and follow up care, Caremore has been able to generate outcomes far superior and more profitable than traditional Medicare Advantage plans.  CareMore has validated that the provider capitation model has potential to generate cost savings if operated effectively.

Perhaps the most comprehensive example of a system that has implemented a provider capitation model is the Department of Veterans Affairs (VA) health system through its network of Community-Based Outpatient Clinics (CBOCs). Over the past 20 years, the VA system has transitioned away from a pure hospital-based system to an ambulatory and primary care based model. In doing so, the VA has established CBOCs in order to improve care access and control spending by minimizing instances where non-acute conditions are treated in an ambulatory setting. Over the course of this transition, the VA has begun a process of soliciting outside groups to provide primary care to veterans in non-VA facilities on an individual capitated basis through the CBOC program. Valor Healthcare (Valor) has established itself as the leader in the contract CBOC market, both in terms of market share and clinical excellence.  Much like CareMore, key to the success of Valor has been their provider incentive system. Valor employs a robust pay-for-performance system for its physicians based on evidence-based guidelines and clinical performance. This program has driven clinical outcomes that exceed the benchmarks established by the VA. In addition to performance incentives, Valor’s use of several innovative care approaches to increase patient engagement and adoption contributed to consistent utilization levels.

With cost continuing to be a key issue across the healthcare system, it is likely that payers will continue to experiment with new incentive models aimed to improve the distribution of care yet maintain quality. As this occurs, innovative care models like CareMore and Valor will serve as building blocks as we continue to refine our delivery approaches to more effectively balance care quality, efficiency, safety, and cost.

Let us know what you think.

Joe Long

Joe Long is a Senior Analyst at TripleTree covering the healthcare industry, covering payer-focused healthcare software and service providers. You can email him at jlong@triple-tree.com.

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What About Patient Accountability?

The debate between payers and providers over the responsibility and accountability of healthcare costs certainly didn’t begin with the drafting and eventual passage of the ACA, nor will it end. Like the Hatfields and McCoys, a war of words (and figures) has been waged between these primary stakeholders in the healthcare industry for decades. There is a fundamental distrust and disagreement regarding who is responsible for the unsustainable growth in healthcare costs – and who should ultimately be responsible and held accountable for the standard “healthcare system” objectives of increasing efficiency, decreasing costs, and improving outcomes.

To bend the cost curve, many of the recent conversations and reform efforts have been focused on population health management, care coordination, compliance, and engagement. New technologies and regulations are emerging daily with a promise to increase the efficiency and effectiveness of healthcare. New business and care delivery models (and old ones with new names) are being developed and deployed, such as ACOs and Medical Homes. And, most of these new ideas and solutions are being described as “consumer-driven,” “patient-centric,” and “integrated,” yet most are failing to produce the results that politicians, employers, and consumers are aggressively demanding.

Meanwhile, the heavily scrutinized leaders of health insurance companies and hospital systems continue to blame each other for the meteoric rise in health care costs – and they should be – but not as healthcare executives but rather as healthcare consumers… and consumers of cigarettes, alcohol, hamburgers, and home entertainment.

To clarify this point, I recall my experience at the 2010 World Health Care Congress in Washington DC (April 12-14). It was the first major industry conference shortly after the ACA passed (March 23). A morning panel of shell-shocked CEOs from leading payers and providers engaged in a “healthy” yet intense discussion about conflicts of interest, cost-shifting, risk-sharing, accountability, insurance exchanges, consumerism, fee-for-service vs. value-based, supply/demand imbalances, the aging population, end-of-life, fraud and abuse, technology integration and interoperability, industry consolidation, regulations, EHRs and meaningful use, and the economy, among other timely topics.

As soon as the session ended, the industry leaders charged with creating solutions for our national healthcare crisis flooded out of the auditorium into the hallways of the convention center. I observed in dismay as many shuffled outside for a smoke break in finger-numbing temperatures while the masses consumed sugar-loaded pastries, donuts, coffee drinks, juices and soft drinks from well-catered tables. Did I mention that we had all been sitting in chairs all morning?

If we really want to get serious about “bending the cost curve,” then we need to address our society’s apathy regarding unhealthy behaviors and environments. There is overwhelming evidence that prevalent yet preventative consumer behavior, such as smoking, alcohol abuse, poor nutrition, and lack of physical activity, are imposing enormous costs on our society. Chronic conditions that are caused or worsened by unhealthy lifestyles, such as heart disease, diabetes, asthma, obesity, and cancer, account for more than seventy-five percent of U.S. healthcare expenditures. To truly solve our healthcare crisis, patients and consumers of healthcare must assume more accountability.

Surely, that is one thing payers and providers should agree upon!

Together, these key stakeholders need to redesign our healthcare system with new solutions that will drive patient accountability and reward healthy behavior. Just as banks utilize credit ratings and the automobile insurance relies upon driving records to help manage their risks, the healthcare payers and providers need a standard means to help manage their risks. It’s quite simple in these other scenarios I referenced. If we are financially irresponsible, then it costs us more to borrow money. If we drive irresponsibly, then it costs us more to purchase car insurance.

There is overwhelming evidence that individuals with unhealthy habits pay only a fraction of the costs associated with their behaviors. Most of the expenses caused by their decisions and lifestyle are passed on to the rest of society in the form of higher insurance premiums, taxpayer-funded government expenditures for healthcare, and disability benefits.

Many payers, particularly self-insured employers, are already leading the charge to shift the risk and responsibility associated with healthcare directly to individuals. A recent survey by Hewitt Associates found that nearly half (47%) of employers either already use financial incentives or plan to use financial incentives during the next three to five years to penalize and/or reward the health-related behavior of their employees.

Section 2705 of the Patient Protection and Affordable Care Act (ACA) is a provision that holds significant potential. In 2014, employers may apply up to 30% of the total amount of employees’ health insurance premiums (50% at the discretion of the Secretary of Health and Human Services) to provide performance-based wellness incentives. This represents an attempt by the government to rein in healthcare costs associated with unhealthy behaviors. The clear objective of this ACA provision and the political rhetoric behind it is to improve health-related behavior and reduce the prevalence of chronic disease caused by unhealthy lifestyles.

These incentive programs have drawn criticism from those concerned that holding individuals responsible for their health, particularly through the use of penalties, violates individual liberties and discriminates against the unhealthy. And, as someone whose mother suffered from Multiple Sclerosis, a dreadful chronic disease without a known cause or cure, I can surely understand their argument but there must be a logical set of conditions under which a new incentive-based system can be developed and deployed in a responsible, ethical manner to contain healthcare costs and encourage healthy behavior. This issue was central in the historic Supreme Court hearings on the constitutionality of ACA’s mandate that just wrapped-up.

Read our blog next week for a proposed measurement system that will help drive patient accountability and promote healthy behavior.

John Montague

John Montague is a Vice President at TripleTree focused on innovative companies and solutions that are shaping the future of healthcare. E-mail John at jmontague@triple-tree.com

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Focus, Economics and Patient Satisfaction…three keys to understanding Ambulatory Surgery Centers

Historically, surgical procedures were performed within the four walls of a hospital.  However, the past decade has seen a dramatic rise in surgery volume being performed in an outpatient setting—largely ambulatory surgery centers (ASCs).  As seen below, the number of U.S. ASCs is approaching 6,000, and overall procedure volume has shifted dramatically from inpatient to an outpatient setting.

Source: VMG Intellimarker 2011 and 2010

ASCs are outpatient facilities at which surgical procedures are performed on patients who do not require an overnight stay.  ASCs were originally established in 1970 and most commonly perform elective procedures with short anesthesia and operating times.  Typical procedures include eye, orthopedic, hand, plastic surgery, pain management, podiatry, ear-nose-and-throat, endoscopy, and laparoscopy at facilities usually ‘free-standing’ (not part of a hospital campus).  ASCs operate within a highly regulated industry with each facility being required to comply with rigorous oversight and certification.  Many of the same standards, constraints and requirements as inpatient hospital operating rooms apply to ASCs.

ASCs receive less of their total payments from Medicare/Medicaid than an average hospital – 37% for ASCs vs 61% for an average hospital which reduces some of the reimbursement pressure.  This makes sense as most of the procedures performed in this setting are elective in nature, which tend to come from the population not utilizing government health benefits.  We’ve assessed three key advantages offered by with the ASC approach to care:

• Compelling economics:  ASCs are able to provide lower-priced procedures because they have a lower cost structure than a traditional hospital setting along with a “focused factory” approach which creates efficiencies.
  • By shifting just half of all eligible outpatient surgeries to the ASC setting, Medicare could save an additional $2.3 billion annually (Ambulatory Surgery Center Advocacy Committee, 2010)
• Consumer appeal:  ASCs are generally free standing and located in the suburbs, which provide patients with better access.  Also, ASC schedules are better maintained because there is no possibility of emergency surgeries preempting a scheduled procedure.
• Focus, specialization and quality:  It’s difficult to track the quality of care provided in ASCs compared to hospitals because ASCs are not yet required to report comparable outcomes data – which will likely change in the near future.  We do know, however, that ASCs focus on a select number of procedures at a high volume, which allows doctors to perfect their craft and deliver high quality results to patients.

The advantages are not only for patients, but also for payers and providers.  Payers are able to negotiate more favorable rates for procedures performed in the ASC which lowers their overall costs of care.  Providers which are part of the ASCs have seen large economic gains as they’re able to take economic stakes in the operations.  Overall, ASCs have grown to become an important part of the care delivery landscape and as the three advantages listed above might dictate, this an area we predict will have an increasing relevance in the healthcare landscape.

Let me know what you think.

Judd Stevens

Judd Stevens is an associate at TripleTree covering the healthcare industry, specializing in the impacts and transformation of health plans in a post-reform world.  Follow Judd on Twitter or e-mail him at jstevens@triple-tree.com.

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A Look at Oncology Medication Management

Each day, in the U.S. alone, over 4000 more people are diagnosed with cancer. In 2010, there were 13.8 million cancer survivors alive and some 18.1 million people in the U.S. are expected to be living with cancer by 2020 (Journal of the National Cancer Institute).

Of the nation’s 10 most expensive medical conditions, cancer is the highest per-person price medical condition.  Medicare data and other sources show that in 2010, care for the 16 most common types of cancers in U.S. women and 13 common types of cancers in U.S. men costs the healthcare system $124.6 billion.

Correlating Cost Increases and Survival Rates:

With the escalating cost of living with cancer and the increase in cancer survivors, technologies and services are evolving to help individuals live with cancer longer, happier, and cheaper.  Cancer is becoming an area of focus for payers to lower the cost of care and improve patient outcomes.

Health plans have begun pilot programs with Biological Management Companies (BMCs) to assist in oncology treatment.  The traditional oncology medication management approaches are evolving and payers are looking to reduce inappropriate drug utilizations and inefficiencies in distribution without impacting quality.

According to market research company HIRC, two-thirds of plans will have clinical pathways for high incidence cancer conditions by 2012.  There are numerous payers currently piloting with BMCs to help develop decision tools, medication management, and physician reimbursement schemes. A few recent pilots include:

• Aetna with US Oncology and P4 Healthcare
• BCBS of Florida and Coventry with iCore Healthcare
• BCBS of NJ with Via Oncology / PathForward
• CoreSource and Employee Benefit Management Corp with Biologics
• Highmark and AmeriHealth with P4 Healthcare
• Humana with New Century Health

Payers aren’t the only ones concerned about cancer costs.  Employers rated cancer as the number one specialty area of concern in a recent survey by HIRC.  Specialty Pharmacy Programs for the management of oncology medications continue to rise with 60% expecting to use them by 2015.  Specialty pharmacy providers (SPPs) have begun to offer oncology-specific services, including oversight of distribution and tighter management of supportive care products.

As payers and employers continue to form strategies and evolve payment methodologies for cancer, healthcare IT companies are making their bets on this high cost area:

• In late 2010, McKesson acquired US Oncology Holdings, a services, resources, and tools for cancer care delivery system for more than $2 billion.
• Following McKesson, in September 2011 AmerisourceBergen acquired IntrinsiQ, a medical data and business analysis solutions for the oncology market for $35m

The potential costs continue to escalate with direct cancer care expenditures expected to reach $158 billion in 2020.  We are continuing to watch this market as new players emerge and global healthcare services and technology vendors seek to lower cost and improve outcomes for cancer patients.

Let us know what you think!

Joanna Roth

Joanna Roth is a Senior Analyst at TripleTree covering the healthcare and technology industry, specializing in education solutions. Follow Joanna on Twitter or e-mail her at jroth@triple-tree.com.

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ACOs: Good News for Skeptics

As TripleTree continues to cover the rapidly evolving opportunities associated with health reform, I have remained an optimist about the potential for the many health reform experiments included in the healthcare reform bill to create meaningful healthcare savings in the long term.   In particular, I have been hopeful about the various shared savings programs to meaningfully impact cost and quality in the healthcare system, and momentum has continued to build, with CMS naming 32 organizations to the Pioneer ACO program in December.

This is what makes the recent news from CBO disheartening.  Last month, they released an analysis showing that ten different demonstration programs – six disease management and four value-based payment approaches – have usually not had any meaningful impact on reducing Medicare spending.    One of these value-based demonstrations “allowed large multispecialty physician groups to share in estimated savings if they reduced total Medicare spending for their patients.”

Sound familiar?  Troublingly, this program had little to no effect on Medicare expenditures.  (The only program of the four that did have an effect on costs used bundled payments for heart bypass surgeries.)

Adding to the bad news, Leavitt Partners released a study late last year showing that of the 164 accountable care organizations (ACOs) they have identified (note that the Leavitt definition of ACO overlaps with – but doesn’t perfectly align with – the CMS definition), were somewhat evenly distributed across 41 of 50 states.  However, these same 164 were found in just 144 of the 306 hospital referring regions (HRRs) – a benchmark of regional health care markets where patients are referred for care.   While a number of these HRRs had three or more ACOs, large swaths of the country had yet to see even one yet suggesting that perhaps ACOs are springing up largely to compete with each other, rather than focusing on finding geographic areas where a new care delivery model could meaningfully reduce costs.  This is one of the issues that skeptics of the model are concerned about, as my colleague highlighted recently.

In any case, critics of the healthcare reform have certainly gotten some new ammunition in the past few weeks – we’ll be keeping an eye out for some good news to highlight in a future post.   As before, I still remain optimistic about the change in mentality that CMS’s ACO program seems to have brought in how payers and providers are rethinking the traditional and rigid zero sum game of treatment and reimbursement, allowing new ways for commercial payers and care delivery organizations to partner to deliver quality care.

Let us know what you think.

Conor Green

Conor Green is a Vice President at TripleTree covering the healthcare industry, and specializing in revenue cycle management and tech-enabled business services. You can email Conor at cgreen@triple-tree.com.

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Consumer Directed Health to Social Media…’Consumerism’ Has Become the Undeniable Force in Healthcare

Healthcare can no longer deny nor ignore the importance of social media.  As a communication platform, it’s being used to educate, engage and empower consumers about topics ranging from legislation, hospital rankings, and ER wait times, to patient satisfaction, chronic illness management and health improvement.  Collaborative applications around seeking, sorting, assessing and ranking health information and experience have become part of our connected culture.

As “consumerism” increasingly impacts the healthcare landscape – payers, providers and other healthcare stakeholders are investing in technologies ranging from collaboration and contact center tools, to next generation video and self service platforms.  Consumerism is forcing these organizations to change their cultural barriers to how customer interactions need to be supported, and the pace of legislative mandates is exposing the healthcare information systems that can’t nimbly react to creating new products, or support online conversations.

Blogger Ed Bennet tracks 1,188 hospitals which are proving their seriousness about social media usage as they update:

• 548 YouTube Channels
• 1018 Facebook pages
• 788 Twitter Accounts
• 458 LinkedIn Accounts
• 913 Foursquare
• 137 Blogs

The impact of social media in healthcare goes beyond just an inexpensive channel that targets consumers.  Social media is fundamentally changing how payers, providers, and healthcare stakeholders manage their brand and influence purchasing decisions.

• For payers its managing customer service touch points through insurance exchanges, one of the few ways for them to maintain loyalty.

• For providers its connecting care providers with patients and is no longer about a gadget or app, but for measurable opportunities to share knowledge, build loyalty and improve processes that can influence how they manage care and patient relationships.

• For other healthcare stakeholders it’s supporting their brand and customer interactions with thoughtful, engaged support allowing for the ability to listen in on conversations already occurring about the industry, products, news, issues, etc.

Social media is a powerful source of information for consumers, and an equally powerful communication channel for providers of health information and support services.  For payers, providers and other healthcare stakeholders, TripleTree considers social media the lowest cost enabler of consumerism with a technical heritage linking it to cloud-based CRM and collaboration platforms.  In addition, social media is a cornerstone for marketing and branding initiatives in many industries.   With social media in healthcare, the old models for marketing, sales and service have been transformed.

Let us know what you think.

Chris Hoffmann

Chris Hoffmann is a Senior Director at TripleTree covering Cloud, SaaS and enterprise applications and specializes in CRM, loyalty and collaboration solutions across numerous industries. Follow Chris on Twitter or e-mail him at choffmann@triple-tree.com.

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Why Healthcare is Finally Going Green

Whether it’s paying a cable bill, mortgage, cell phone bill or other monthly recurring payment, consumers have been increasingly replacing paper check payments with online bill pay technologies for the past decade.  Healthcare, often dubbed as being ten years behind other industries technologically, had a recent breakthrough in the adoption of electronic payments.  The Department of Health and Human Services (HHS) recently released new rules on the electronic fund transfer (EFT) standards, a move that is projected to save the system billions of dollars and pounds of paper.

The new rules establish common interchange standards to streamline the format and data content of a transaction from a health plan (or payer) to a provider’s bank for claim payment and issuance of an electronic remittance advice (ERA).  The ERA is a notice of payment sent to providers to help reconcile electronic payments with the associated claim(s).  Historically, with minimal EFT volume, providers struggled with the reconciliation function, but the new regulations will require the use of a trace number that automatically matches the two.

Why has EFT payment adoption been slow to date and how does future adoption increase?  Despite the majority of payers possessing EFT capabilities today, providers have been slow on the uptake because payments are submitted in varying data formats making the processing and reconciliation very difficult.  With the new HHS rules, a standard data set will allow providers to rely on one system and/or format to take in and reconcile payments.  Payers are motivated to implement electronic payments for a variety of reasons, but most predicated on the associated cost savings.  I believe we will increasingly see payers forcing the transition within their provider network – perhaps even charging providers fees to cut a check.

Benefits of transitioning to electronic payments:

• Faster revenue cycle, reduced AR, and improved collection metrics for providers
• Increased productivity – more claims with less staff
• Reduced potential manual errors
• Increased business intelligence opportunities

Perhaps the most important benefit is increased business intelligence.  Traditional paper checks limit payers (and providers) ability to mine data as there really isn’t much data associated with a paper check or image.  However, EFT payments create new and unique opportunities to layer business intelligence and analytic solutions on the payment data sets.  Some of the obvious low hanging fruit is Fraud, Waste and Abuse analytics which is a huge issue in healthcare with large opportunities for savings.

The healthcare system is finally closing the payment technology gap which will save billions of dollars, increase efficiency, and create new business opportunities to make healthcare smarter.  Let me know what you think.

Judd Stevens

Judd Stevens is an associate at TripleTree covering the healthcare industry, specializing in the impacts and transformation of health plans in a post-reform world.  Follow Judd on Twitter or e-mail him at jstevens@triple-tree.com.

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Wireless Health Innovators…“Where are they now?”

Nominations open next week for the 2012 TripleTree I Award, our annual recognition of innovations in wireless health.  Messaging from new market entrants to physicians, payers, and most notably consumers is fueling a strong venture capital appetite, and looking back at the I Award finalists since 2009, we thought it was useful to list a few notable accomplishments.

Public Markets

• Epocrates – The first mobile healthcare company to successfully go public in early 2011 raising $86m

Funding

• Airstrip Technologies – Received an undisclosed amount of funding from Sequoia Capital
• IntelliDOT – Raised $30m+ from leading investors including Psilos Group, TPG Growth, Camden Partners, Integral Capital Partners, J.F. Shea Ventures, Menlo Ventures and American River Ventures
• Proteus Biomedical – Raised $25m from Medtronic, Novartis, and ON Semiconductor Corp
• TelaDoc – Raised $18m from Cardinal Partners, HLM Venture Partners, Kleiner, Perkins, Caufield & Byers, New Capital Partners, and Trident Capital

FDA Approval

• Calgary Scientific – ResolutionMD^TM  after 23 months received 510(k) clearance from the FDA
• Telcare – Wireless blood glucose meter received 510(k) clearance from the FDA for its device, Telcare BGM

Acquisition

• CellTrak Technologies – Expanded into Canada through its acquisition of MedShare mobile technology for home health care
• Healthagen – Patient access software to providers acquired by Aetna

Since TripleTree’s I Award inception in 2009, one company has gone public, one has been acquired, numerous rounds of funding have been raised, multiple FDA approvals granted, and some businesses have scaled nicely.  As the market continues to mature and awareness and user adoption grow, questions loom…

• Is “connected health” on the verge of a breakout?
• Are wireless health solutions the answer for reduced healthcare costs and improved quality of care?
• Will innovation be driven by non-traditional healthcare vendors (ie device vendors and mobile service providers)?
• How are the ramifications of reform influencing innovation?

As we consider these questions, a few key indicators are influencing the market:

• Four out of five physicians use smartphones, computer tablets, and other mobile devices (Jackson & Coker industry report)
• More than $600m has been invested in the wireless health space since January 2010
• 89% of healthcare decision makers believe telehealth will transform healthcare in the next 10 years (Penn Schoen Berland Study)

Below is the honor roll of past I Award finalists.  Look for more information from TripleTree in the coming weeks as the nomination process commences and we plan for the WLSA Wireless Health Convergence Summit scheduled for May 22-24 in San Diego.

2011 Finalists
BodyMedia*	Wearable body monitoring device
Cambridge Temp Con*	Wireless physiological monitor for infertility
Cardiocom –	Clinical telehealth services
Cellnovo	Mobile diabetes management system
Healthagen	Patient access software to providers
Mobisante	Mobile ultrasound imaging system
Palomar Pomerado Health	Real-time mobile software patient electronic health information
Phreesia*	Touch-screen mobile tablet
TelaDoc	On-demand patient access solution to ERs and urgent care
Telcare	Wireless bloodglucose meter
Vitality	Mobile medication adherence
Wound Technology Network	Telehealth- based wound services
2010 Finalists
AirStrip Technologies	Mobile patient information
Calgary Scientific*	Medical imaging
CellTrak Technologies*	Homecare with GPS cell phones
Corticare	Critical care patient monitoring
Great Connection	Mobile imaging communications
Hopskipconnect	Motivational self management tools
InnerWireless	In-building wireless solutions
Ocutronics	Retinal camera
PerfectServe	Physician and patient care communication
PharmaSecure	Pharmacy brand protection solutions
Zeo, Inc.*	Sleep monitoring
ZMQ Software Systems	Sustainable development
2009 Finalists
BeWell Mobile	Disease management applications via text messaging on cell phone
CellTrak Technologies	Homecare automation with GPS cell phones
Diversinet	Health information transparency in partnership with AllOne Mobile
Epocrates	Rx Drug and formulary reference
GreatCall*	Jitterbug; simple cell phone with 24-hour live service
IntelliDOT*	Workflow manager connecting caregivers with information systems
MedApps	Mobile wireless health monitoring
MicroCHIPS	Continuous glucose management system
PhiloMetron	Passive weight management platform
Proteus Biomedical*	Electronically observed therapy platform
Tagnos	Patient flow management applications
Triage Wireless	Wireless telemetry/vital signs monitoring

*Denotes I Award Winner

 

Joanna Roth

Joanna Roth is a Senior Analyst at TripleTree covering the healthcare and technology industry, specializing in education solutions. Follow Joanna on Twitter or e-mail her at jroth@triple-tree.com.

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HHS Reform Timelines…Wiggle Room In Sight?

Aggressive IT deadlines have left the healthcare industry scrambling to meet a host of regulatory mandates spanning HIT adoption, payment transaction methodologies, coding standards, and state-run health insurance exchanges.  Hundreds of new regulations have been implemented over the past couple of years, leaving the industry torn in how limited time and resources are utilized among care delivery, quality and cost reduction initiatives, process/infrastructure modernization, and increasingly stringent regulatory reporting requirements.

Hospitals and doctors have been especially overwhelmed with regulations and have been reprioritizing investments to support EMR implementation, Meaningful Use qualification, and what is expected to be a tidal wave of new entrants into the system once the 2014 health reform mandates become effective.

The American Medical Association (AMA) set newswires and the blogosphere abuzz last week when they publically voiced opposition to the transition to ICD-10 coding stating “the implementation of ICD-10 will create significant burdens on the practice of medicine with no direct benefit to individual patients’ care.”  Some dispute the AMA’s move as self-serving given their interests in maintaining the stature and importance of the Current Procedural Terminology (CPT) code set.  Nevertheless, whether the AMA’s move was defensive or not is irrelevant – the vast majority of providers and a meaningful cross-section of payers are ill-prepared to meet the ICD-10 transition deadlines that CMS currently has in place.

To the relief of payers, providers, vendors, and states, the department of Health and Human Services (HHS) and the Center for Medicare and Medicaid Services (CMS) have recently backed off from a few key deadlines.  While these announcements by no means cancel any existing mandates, at a minimum they buy the industry some time to comply with the overarching legislative intent of increasing coverage among the uninsured population, incentivizing IT adoption, and driving improved levels of care delivery.  Of note:

1. HIPAA 5010– CMS announced that it would hold off enforcing the HIPAA 5010 transaction sets until March 31, 2012, a 90-day extension to the original enforcement date. While the compliance date will technically remain intact, relaxing the enforcement date “encourages all covered entities to continue working with their trading partners to become compliant with the new HIPAA standards and to determine their readiness to accept the new standards as of Jan. 1, 2012,” as stated in a release by CMS’ Office of E-Health Standards and Services (OESS).HIPAA 5010 is widely viewed as a precursor to the impending transition to ICD-10 in October 2013. The enormity of that effort will dwarf HIPAA 5010. This week’s announcement foreshadows further delays yet to come.
2. Stage 2 Meaningful Use– HHS announced this week that it would delay its compliance date for Stage 2 Meaningful Use from 2013 to 2014. The extension specifically impacts eligible providers that qualified for Stage 1 Meaningful Use in 2011. Providers, vendors, and government work groups alike have noted the timing issues and inherent disincentive posed on early adopters attempting to adhere to criteria that have yet to be finalized. The Health IT Policy Committee, a federally-chartered advisory panel to HHS, recommended these changes earlier this year to the endorsement of Farzad Mostashari, M.D., ONC’s National Coordinator for Health Information Technology.HHS Secretary Kathleen Sebelius acknowledged the progress to date, referring to the reported doubling of HIT adoption over the past two years. In its move to extend the Stage 2 deadline HHS has smartly protected its initial success by attentively listening and responding to the needs of an overwhelmed provider community.
3. Health Insurance Exchanges – HHS (though the Center for Consumer Information and Insurance Oversight – CCIIO) has seemingly relaxed (or at least clarified) a critical deadline for the states to stand-up their Insurance Exchanges. This week, CCIIO extended a grant deadline by six months until June 2012 from December 2011. Also CCIIO has committed funding for the establishment exchanges beyond the previous January 1, 2014 deadline. Now states have until December 2014 to apply for grants for continued exchange development provided that at least a portion of the exchange is operational by January 1, 2014.

While it is not entirely clear why these significant changes coincided in timing – perhaps it had to do with the resignation of controversial CMS chief Don Berwick – these reprieves are no doubt welcomed within the industry. The extra time will give payers, providers, and states some extra time to meet their compliance mandates.

This extra time should not be squandered. Industry participants must continue to plan for and implement systems that support new EDI standards within 5010, the reporting requirements of Stage 2 Meaningful Use, and the complexities of insurance exchanges. Furthermore, the real value in any of these mandates is not meeting the minimum requirements of the mandate itself, but rather the powerful and compelling capabilities that each enables in terms of improved communication and workflow automation that will enable entirely new quality and cost initiatives.

We’re optimistic that the timeline flexibility of HHS regarding timelines will promote more thoughtful approaches, investments and implementations across all impacted organizations, let us know what you think.

Scott Donahue

Scott Donahue is a Vice President at TripleTree covering infrastructure and application technologies across numerous industries and specializes in assessing the “master brands” of IT and Healthcare. Follow Scott on Twitter or e-mail him at sdonahue@triple-tree.com

Seth Kneller

Seth Kneller is an Associate at TripleTree covering the healthcare industry, specializing in revenue cycle management, clinical software solutions, geriatric care and healthcare analytics. Follow Seth on Twitter or e-mail him at skneller@triple-tree.com.

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Can a New Approach to a Healthcare Claims Database Help Control Costs?

As congressmen and stakeholders across the country continue to debate the best methods for quality improvement and cost containment in the U.S. healthcare system, four of the nation’s largest health insurers have come together to provide access to data that has the potential to significantly bend the cost curve.

A long awaited announcement came last week from  Aetna, Humana, Kaiser Permanente and UnitedHealth Group  revealing that they will be providing access to over 5 billion de-identified claims from over 5,000 U.S. hospitals totaling $1 trillion of healthcare costs incurred since 2000. This data will be made available to researchers and distinguished healthcare economists via the newly formed nonprofit group, Health Care Cost Institute (HCCI).

According to the HCCI web site, its mission is to promote independent research and analysis on the causes of rising US health spending, to provide policy makers, consumers, and researchers with better, more transparent information on what is driving health care costs, to help ensure that, over time, the nation is able to get greater value from its health spending.

Last week I spoke with Dr. Stephen T. Parente, PhD., Professor in the Carlson School of Management at the University of Minnesota and member of the governing board of HCCI. He described the multi-stage approach of the HCCI which includes collecting and aggregating data from the participating private insurers and establishing a database for entities interested in getting a handle on health care costs and utilization.  The HCCI is also designing “rules of the road” related to research protocols, access and review..

Until now, claims data has been limited to federally provided data on Medicare. But with over half of healthcare expenditures coming from private pay insurers, this restricted view hasn’t been broad enough to draw meaningful conclusions.   As its content evolves, the HCCI will publish a bi-annual scorecard to help researchers identify trending information at levels of detail rarely (if ever) seen before.

We’re actively working with healthcare innovators, many of which are working toward the same healthcare cost-saving goal,, and thought it would be useful to list our view of where  we predict the HCCI could (in the near term) positively impact payers, providers and patients related to healthcare cost and quality:

• Develop evidence-based care recommendations and best practices (Providers and patients)
• Design multi-payer quality improvement strategies and evaluate their effectiveness (Payers and patients)
• Understand key bottlenecks along the care continuum where patients spend the most time and dollars (Payers and patients)
• Determine specific diseases, conditions and treatments that are driving the largest cost trends (Payers and patients)
• Identify the most cost-effective providers and medical procedures as well as geographical variations (Payers and patients)
• Isolate cost variances between Medicare/Medicaid and private health plans and help appropriately align pricing with private pay (Taxpayers)
• Analyze healthcare cost trends over time at an heightened level of specificity (Everyone)
• Evaluate the effectiveness and draw comparisons between different types of disease management programs and treatment procedures(Payers, providers and patients)

Our long term outlook on the value of this data is that it can create new metrics of clinical and care performance standards based largely on historical and real-time reporting on claims. We’re hopeful that as such analyses are developed and recognized on a broader stage, they will be used to inform policy on a much more direct basis and make a huge impact on the costs of healthcare.

Have a great week.

Emma Daugherty

Emma Daugherty is a Senior Analyst at TripleTree covering the life sciences sector with a focus on provider technologies and patient safety.  You can contact her at edaugherty@triple-tree.com.

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