AAPM&RRochelle Archuleta – AHA Policy

San Diego, Nov 20, 2008

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Regulatory Update• The Medicare Environment

• Potential for Health Reform

• High Cost Patients

• IRF Update

• Post-Acute Update

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A Medicare ScanThe Medicare Scene

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Beneficiary Growth = Cost Growth

Source: MedPAC Data Book, June 2008

Medicare Enrollment To Grow Even Faster

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All Types of Health Spending Growing

Source: MedPAC Data Book, June 2008

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Major Segments of Medicare Growing

Source: MedPAC Data Book, June 2008

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Change Has Arrived

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A new President is chosen

But, the new administration faces serious budget challenges

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The Obama Health Plan

• Mandated coverage for kids• Pay-or-play for employers• New public plan offered• No tax credits/changes• Expansion of Medicaid/SCHIP• Invest $10 B in HIT• Cost: estimates from $50-110b/year

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Key Challenges for New President

• Many immediate challenges with high ticket fixes– Two wars – national security– Real Estate meltdown / Wall Street Woes– Record-setting Deficit– Major Industries may collapse…automakers

• Health Care Noted as a Top Priority– November 7 Press Conference– Transition Team in place and accepting resumes at

change.gov– Promised expanded coverage during campaign

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President-Elect Obama

What’s First?

• Quick victories?– SCHIP– Start small, build up confidence

• Tax, Energy, or Health?– Economy eclipses everything else; then war

• How to avoid Democratic overreaching?– Avoid Clinton missteps

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AHA Response to Election

• Looking forward to working with new administration

• New Tone• More bipartisan approach• Our current system is a non-system

with 46 million uninsured• Glaring need for reform

– We can’t afford not to reform the system– SCHIP extension expires Mar 31 2009– Doc fix expires Dec 2009

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Potential for Health Reform

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Key Factors in 1992Key Factors in 1992• Affordability concerns• Rising numbers of uninsured• Middle-class voters concerned about losing coverage• Democrats intend to make priority issue

New DriversNew Drivers• Growing public dissatisfaction… changing consumer

expectations• Recession – 1.2 million job losses in 2008• Employer terminations of retiree coverage• Increased demand for services – Baby Boomers • Fragile health care infrastructure

Health Reform: Tipping Point?

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7

40

67

90

94

77

53

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7

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Republican Delegates

Republican Voters

All Voters

Democratic Voters

Democratic Delegates

Provide Health Care Hold Down Taxes

Is it more important to provide health care coverage for all Americans or hold down taxes?

67% Favor Coverage over Tax Cuts

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AHA Prepares for Health Reform

AHA Members set the course:– 2-year discourse on health reform– Be prepared for political change– Work in coalitions beyond hospitals– Use hospital expertise to develop key

elements of reform

Des Moines, July 2008 Harrisburg PA, Aug 2008

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Health for Life• Hospitals + major stakeholders

– Business; Unions; Patient Groups; Insurers

• Goes beyond coverage• Key Principles

– Coordinated care…chronic care management– Quality…pay for performance– Clinical integration– IT standards for interoperability– Comparative effectiveness– Insurance simplification– Alternative liability reforms

• Details at www.aha.org

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Gainsharing

• Gain sharing: Sharing cost savings between hospitals and physicians through specific actions to improve efficiency of care.

• AHA Task Force: Modernize Gain Sharinghttp://www.aha.org/aha/letter/2008/080827-cl-cms1403p.pdf

Amend federal laws on hospital-physician relationships to:– Allow incentives to improve access, safety, effectiveness, patient-centeredness, timeliness,

efficiency or equity (From IOM Crossing the Quality Chasm report).– Achieve improvements in delivery system even with no immediate savings.– Sustain access to essential services that are essential, such as trauma and EDs, support

community outreach, care for the uninsured, and other hospital operations that require physician support.

– Integrate clinical care across providers, across settings, and over time.– Integrate IT systems and technology. – Enhance productivity or achieve other efficiencies.– Establish simpler, consistent rules for hospital – physician relationships– Enable hospital-physicians to contract w/health plans & purchasers as a single unit

• AHA Letter to CMS (Aug 2008): Recommends Stark Law changes on hospital-physician incentive and shared-savings programs.

– http://www.aha.org/aha/letter/2008/080827-cl-cms1403p.pdf

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AHA Strategy Offense

– Keep focus on reform– Coalitions– Provide leadership/expertise– Offer solutions

Defense– Frame cost/value issues– “What’s Right with Health

in America” Project Anticipate criticisms; rapid response

– Prevent federal budget cuts

Health Reform Dialogue Steering Committee

Other Partners

Facilitator

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Connecting the Dots

• Major stakeholders in support of care coordination due to wide recognition of need to:

– Improve qualityAND

– Cut costs

• To meaningfully achieve these goals, Medicare must address chronic disease population.

• An episode of care approach also contributes to these goals.

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On the Table in 2009• Likely 2009 Health Reform/Cost Saving

Measures:– Care Coordination for chronic illness – Episode Payment– Bundled Payment– Avoidable Re-hospitalizations– Return of SNF+ Payment Cuts – Budget cuts by Congress

BNA, Nov 17: Congressional Democrats Signal Intention to Enact Deep Medicare Managed Care Cuts

• Senator Baucus– Nov 12: Release H Reform blueprint

• Senator Kennedy– To release plan by inauguration in Jan.

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Health Reform in 2009? 2010?The Baucus Plan• Major Provisions

– Expand SCHIP– Overhaul physician payments under Medicare, – Reduce Medicare Advantage payments (paid 13% more than FFS

Medicare)– Cuts to various Medicare providers

• Sample of Medicare system reforms – Gradual transition to more pay-for-performance, including docs;– Align hospital and physician quality goals;– Comparative effectiveness research;– Transparency for physician - healthcare manufacturer relationships;– Build on Physician Quality Reporting Initiative for more frequent, more

aggressive recertification and outcomes assessment by medical boards;– Encourage collaboration and accountability among physician offices,

inpatient hospitals, post-acute care settings, and others.

SOURCE: http://finance.senate.gov/press/Bpress/2008press/prb111208.pdf

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PolicymakersTo Target

High Cost Patients

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Chronic Disease PatientsChronic disease patients using disproportionate share of resources

– 15% of Medicare FFS account for 75% of total Medicare expenditures per year

– Yet, Medicare does not cover care coordination for these patients

– Patients bouncing around health system and receiving fragmented care

– Patients unable to manage careMultiple conditions, specialists, meds, etc.

– Post-acute usage up from 1997-2006 (AHRQ, Oct 08) 53% increase in HH use (1997-2006)30% increase in SNF + other post acute svcs

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Trillions Spent on Chronic DiseaseUnited States:• 1 out of 2 Americans have at least one chronic

disease (2005)• Chronic diseases account for 70% of all deaths• Chronic diseases patients drive 75% of $2 trillion in

annual costs

• Diabetes: Direct and indirect costs of $174 billion/year. • Arthritis: Estimated medical costs of nearly $81 billion; estimated total

costs (medical + lost productivity) of $128 billion. • Smoking: Estimated direct and indirect costs exceed $193 billion/year. • Heart Disease and Stroke: Projected to be $448 billion in 2008.• Obesity: Estimated total costs of nearly $117 billion in 2000. • Cancer: Estimated direct medical costs of $89 billion/year.

SOURCE: U.S. Centers for Disease Control

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OIG on “Consecutive Stays”

• June 2007 Report on high-utilization Episodes of Care• Approx 500,000 Consecutive Stay Sequences in CY 2004

– Definition: Cases with 3 or more inpatient and SNF stays with admissions within 1 day of preceding stay, during CY 2004.

• Case Review: 3 docs assessed med. necessity of 140 sequences• Findings for 2004 Medicare payments (extrapolated fr sample)

– $4.5b for consecutive stay sequences associated with fragmentation or quality problems; 35% of cases had these problems

– $1.4b for medically unnecessary care– $3.1b for stays with insufficient documentation– In addition to IPPS and SNF care, patients received– These patients received 2 million individual stays

Inpatient, IRF, SNF, Psych, LTCH, CAH, Other• Recommendation:

– Provider education on Medicare coverage– More Medical Necessity review

STUDY: http://www.oig.hhs.gov/oei/reports/oei-07-06-00340.pdf

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Episode Payment• Major Paradigm Shift

– Would move from silos to episode framework• Key Questions about Episode Payments

– Who defines the episode?– What is included in the episode? – How long is the episode? 15 days? 30 days? 6 months?

• Today, no incentives for – Care management during transitions from one

setting to the next– Care coordination among multiple providers treating

the same beneficiary.• Many CMS demos exploring this approach

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Bundling• Bundled payment being discussed as likely

method for paying for episodes of care• Benefits:

– Encourage providers to coordinate care;– Reduce fragmented care for patients; and– Control volume and cost of care during episode.

• Key Questions on the Bundle:– Who controls payment? Real or virtual bundle– Which conditions? Chronic disease only?– Which providers?

MedPAC initially looking at hospital and physicians Include Post-acute?

– Link to P4P?

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CMS Demos on Care Mgmt

• Many CMS Demonstrations– Medicare Care Management Performance Demonstration.

Bonus payments to docs using IT to manage care for chronically ill pts.

– Care Management for High Cost Beneficiaries Demonstration. Intensive care management for benes with one or more chronic diseases.

– Medicare Medical Home Demonstration. Physicians paid to provide basic or advanced care management. 3 yrs; 8 states.

• Demos to make case for Medicare coverage for care management– Requires Congressional Approval

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AHA Care Coordination Task Force• Convened in Summer 2008• Care Coordination Definition: Individualized,

integrated, interdisciplinary management of wellness and health services across settings and over time, that engage, educate, and support patient and family in their efforts to pursue health.

• Task Force: Policymakers need strategies to rapidly deploy

– Value based purchasing – Bundled payments– Accountable care entities – Avoidable readmissions

• Recommendations:1. Speed the adoption of health IT2. Incentivize and reward care coordination3. Remove legal and regulatory barriers to care coordination4. Enhance provider education and training

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Avoidable Readmissions• Significant spending: $15b per year (18% or benes)• Some hospitals already taking proactive steps• Proposals use Episode framework• MedPAC Recommendation:

– Report readmissions rates to hospitals for 2 yrs, then publicly– Reduce payments for hospitals with relatively high rates– Allow for hospitals and physicians to share accountability and

incentives/penalties.

• CMS Recommendation:– Reduce DRG payment for avoidable readmissions– Hospital payment cut based on facility outcome measure/s– Publicly report hospital readmissions rates

• Key Specs Unknown:– Same diagnosis? – Episode timeframe?– Same hospital? – Which claim is adjusted?– Transfer patients? – “Potentially avoidable” definition

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Readmissions from SNFs• MedPAC October 2008• Concerns:

– Frequent re-hospitalization from SNFs (no payment disincentive)

– Frequent readmissions to SNFs Are patients being re-qualified for Part A SNF care?

• Analysis– 2+ hospital to SNF transitions in 2-year window (2004-06)

1/3+ of cases – Majority of hospital readmissions were “potentially avoidable

“Potentially avoidable:” Certain conditions shown to potentially avoidable, e.g., sepsis, UTI, electrolyte imbalance, etc. (Univ of CO)

• Possible Policy– Payment cut for facilities with excessive rates of “potentially

avoidable” hospital readmissions Cut SNFs or hospitals?

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Post-Acute Discharge Demo

• Deficit Reduction Act of 2005; report to Congress in 2011• Collect, compare consistent health and care data.• Continuity Assessment Record and Evaluation (CARE)

25-page tool. • CARE tool to be used in STACHs, HH, SNF, IRF & LTCHs• Approx 150 providers in 10 markets

– Collect data through CARE assessments & staff time logs• Better information on the acuity of Medicare beneficiaries

– Uniform patient assessment and quality measurement – Refine case mix measurement– Information on regional variations in case-mix; and– Ultimately refine Medicare payment systems.

• May lead to unified post-acute payment system• CARE demo to be used in CMS’ LTCH criteria study

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Impact for Hospitals & Doctors

• Growing focus on episodes of care, bundled payment, and care coordination place greater spotlight on:– Hospital case management – Discharge planning– Physician orders at admission and discharge

• CMS has little awareness of these functions.– E.G. 2006 and 2007 Proposals on discharge

notification show basic misunderstanding of: Hospital vs. physician role in patient care decisions, and Timing and physician role in discharge planning.

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IRF Update

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The 60% RuleMMSEA Legislation, Dec 2007• 60% Rule Finalized by Congress in

– Long-fought battle– Success due to sustained, industry-wide effort– Comorbidities provisions also made permanent– Medicare payments to IRFs frozen for 18 months (Apr 08 to Sept

09); $40m cut for FY 2009.– 60% for cost report periods beginning on or after July 1, 2005

• CMS Report to Congress due June 2009– Topics: 75% Rule impact on access; 75% Rule

alternatives/refinements– RTI to conduct this study -- yet another post-acute study for RTI– Expected to issue an interim report next summer;

to be followed by new analysis?– CMS only now meeting with RTI for a kick-off meeting

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IRF UpdatePhysican Fee Schedule Final Rule for CH 2007• Changes definition for therapists

– Transmittal 88 took effect Jan 1, 2008 http://www.cms.hhs.gov/transmittals/downloads/r88bp.pdf

– MedLearn Matters Article http://www.cms.hhs.gov/MLNMattersArticles/downloads/MM5921.pdf

• CMS institutes consistent standard for Parts A & B• IRFs:

– No longer able to bill therapy provided by PT aides– Therapy by PT aides no longer counts toward the 75% Rule

• IRF Field to collaborate to fight IRF application– IRFs provide hospital-level, integrated therapy– IRF PPS structure includes aides – change raises IRF costs– Change should be subject to IRF PPS rulemaking

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IRF Review by CMS• 2009: Multiple CMS contractors reviewing IRFs

– RAC, FI, Carrier, MAC, PSC (to become ZPIC), OIG, CERT• FI/MAC reviews reviewing IRFs in 33 states• Aggressive reviews/denials likely to cause major

problems in 2009• Hospitals must be organized and diligent in

appealing Medicare denials• AHA resources:

– aha.org/rac– racinfo@aha.org– AHA RAC Education Series– Pending member advisories on

Medicare Appeals Appeals Strategies Hospital Review by FIs

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CA RAC Experience

• Significant IRF denials– 94% Medically unnecessary

• Initially no medical director• Case example: 500 reviews → 495 denials• CMS Reviewer: 40% error rate for IRF reviews• Training on IRF criteria in January 2008 • 5-6,000 denials re-reviewed (~25% reversed)• Significant appeals activity still in process• PRG Schultz not selected as a national RAC

– Formally protesting CMS’ selection of other bidders

• More RAC information at aha.org/rac– Attend 1:30 session on RACs! (# 313)

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Other Post Acute

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SNF PPS for FY 2009

• CMS FY 2009 Final Rule increases payments by $780 million– 3.4 percent payment update

• CMS postpones proposed $770m cut to adjust for greater use of new RUGs

• Major Changes for 2010– STRIVE data to update elements of RUGs– MDS 3.0 replaces current pt. assessment tool

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LTCH PPS• Third CMS study by RTI underway

– Field working to collaborate on mirror study• 2009: $110 million increase over 2008 Medicare

payments; $39,1146.36 standard payments• Medical Review transitioning from QIOs → FIs• MMSEA Legislation

– 3-years of relief on 25% Rule– 3-years of relief on SSO cut– 3-year moratorium on new facilities and beds– 3-year postponement of one-time cut– New patient/facility criteria added– 1 Qtr payment freeze – Additional study needed

• Congress may revisit technical corrections to MMSEA to extend 25% Rule relief and moratorium exceptions to all LTCHS

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Therapy Caps• Congress extended T Caps exceptions to Dec 31, 2009• CY 2008 caps

– PT/ST: $1810– OT: $1810

• Permanent fix too costly• Caps reduced utilization by 15% from 2005 to 2006

– REMEDY: Savings help make case to make exceptions permanent• T Caps Exceptions:

– Non-Part A SNF patients may obtain medically necessary therapy services that exceed the caps in hospital outpatient department

– In other settings, outpatient therapy services in excess of the caps are not covered, and the therapy provider may charge for those services. 

• CMS – two studies underway to develop alternatives– CSC – short-term study– RTI – long-term study– Hospital carve-out to be eliminated

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DMEPOS• CMS was phasing in DMEPOS competitive bidding

– July 2008: 10 major markets 325 of 1,005 bidders awarded

– Additional 70 sites planned for Jan 09– Projected to “save” Medicare $3.5 billion in 1 year; overall cut of 9.5%– New vendor accreditation standards by Sept 30, 2009– Shuts out small and hospital-based providers– CMS: Opportunity to create savings and reduce Medicare fraud

• Congress: 18-month postponement on DME competitive bidding

• Following 18-month moratorium, Hospital DMEPOS suppliers would be able to provide basic DME– Provide canes, crutches, glucose monitors, walkers at admission and discharge

• Hospital coalition (60 hospital companies in 23 states) working with AHA’s support to expand eligible DMEPOS

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Rochelle ArchuletaAmerican Hospital Association

202-638-1100

These slides available at: http://www.aha.org/aha/issues/Medicare/Rehabilitation/resources.html