Challenges ahead for next generation of bundled payments

In late 2016, HHS announced the final models for the next group of mandatory episode-based payments. Researchers at the University of Pennsylvania in a Journal of the American Medical Association (JAMA) suggested that the next generation of bundled payments should align with population health by (1) extending the duration of the bundles, (2) expanding the accountable entities beyond hospitals, and (3) integrating bundled payments with global budget models within accountable care organizations (ACOs). All hospitals accepting Medicare patients in over 90 metropolitan areas will be required to accept new bundled payments, which include a fixed payment for hospital care plus services for the 90 days following discharge of patients with acute myocardial infarction and coronary artery bypass graft surgery (see Final rule puts quality at the heart of new Medicare payment models, Health Law Daily, December 21, 2016).

In the JAMA article, the authors noted that current bundled payment models have limitations. Namely, these models retain the fee-for-service incentive to do more, especially for conditions without well-defined criteria for intervention, and to select healthier patients, potentially increasing low-value care use that offsets efficiency savings. The researchers believe bundled payments would be more efficient if restricted with defined starting points that limit physician and patient discretion.

Bundle duration

According to the authors the central challenge of current bundles is their short duration. Most cover services up to 90 days after hospital discharge; extending the bundled payments to a year or more would allow for a broader set of conditions to be included. Extending the bundle duration could also mitigate undesirable effects, such as decreasing the incentive to avoid more complex patients who may be at higher risk for poor outcomes in the short term. The authors stressed that more importantly, bundles with a longer duration could encourage greater coordination of care between specialists and PCPs.

Bypassing hospital-centric procedures

Medicare ACOs have primarily generated savings by reducing avoidable hospitalizations. Bundled payments could generate savings in a similar manner, shifting care to non-hospital-centric procedures, such as allowing outpatient clinicians such as PCPs, outpatient health centers, and ambulatory surgery centers to take on financial accountability for performance.

ACO integration

The authors suggested that for next generation bundled payments, care should be coordinated along with ACO programs by aligning incentives and proactively disseminating information on shared beneficiaries. The current policy penalizes care organizations by attributing the high historical baseline payments for patients with poor outcomes within the bundle to the ACO’s global budget rather than the actual payments, which could be lower if an ACO improves efficiency.

Future

Regardless it was unclear to the authors whether bundles which build up the degree of financial risk a hospital or other health care organization bears is better than moving to global budgets in one step. Using bundle payment models to transition to global budgets may be the preferred strategy, giving clinicians several years to adapt and transform care delivery.

DOJ focus is on ‘egregious’ and ‘despicable’ health care fraud

In a speech on May 18, 2017, at the American Bar Association’s 27th Annual Institute on Health Care Fraud, Acting Assistant Attorney General Kenneth A. Blanco stressed that the Department of Justice (DOJ) would continue with keeping health care fraud a priority. The amount of loss to the American tax payer per year due to healthcare fraud is in the billions, with some estimates putting the number close to $100 billion per year.

Blanco stressed the importance of cooperation between the Medicare Strike Force, the U.S. Attorney’s Offices, and federal and state investigative agencies. He noted that the DOJ was employing an in-house data analytics team to review CMS billing data in order to focus on the most aggravated cases quickly. In turn this data is pushed to other federal and state investigative agencies.

Detailing examples of recent work by the Health Care Fraud Unit, Blanco highlighted that October 2016, Tenet Healthcare Corporation, a publicly-traded company and the third largest hospital chain in the United States, entered into a global resolution with the government, agreeing to resolve an investigation of a corporate bribery and fraud scheme at four Tenet-owned hospitals in Georgia and South Carolina. As part of that scheme, the hospitals paid over $12 million in bribes to a chain of prenatal care clinics in exchange for the referral of Medicaid patients.

Under the global resolution: (1) two Tenet subsidiaries pleaded guilty to conspiracy to defraud the United States and pay kickbacks and bribes in violation of the Anti-Kickback Statute, and forfeited over $146 million in Medicare and Medicaid funds; (2) Tenet entered into a non-prosecution agreement requiring, among other things, an independent compliance monitor for a period of three years over all entities owned, in whole or in part by Tenet; and (3) Tenet and its subsidiaries entered into a civil settlement agreement and paid $368 million to the United States, the State of Georgia and the State of South Carolina (see Corporations, beware: Tenet Healthcare to pay $513M to settle kickback charges, Health Law Daily, October 4, 2016). Subsequently two individuals have pleaded guilty and a former senior executive of Tenet was indicted for the scheme (see DOJ comes for executive in Tenet fraud case, Health Law Daily, February 2, 2017).

CMS has estimated that the total health care spending in the United States in 2015 reached $3.2 trillion, or 17.8 percent of the gross domestic product. As such, the DOJ considered health care fraud as “egregious,” and from Blanco’s viewpoint, “despicable,” because it resulted in depriving medical care for those in actual need. Blanco noted that health care fraud impacts the public’s access to medical care, even the most basic forms, because fraud increases the costs for all.

Hospices see modest payment increase, new clinical doc reporting for FY 2018

Hospices serving Medicare beneficiaries would hospices would generally see a $180 million or 1 percent increase in their payments for fiscal year (FY) 2018 under a Proposed rule updating the hospice wage index, payment rates, and cap amounts. In an advance release of the Proposed rule, CMS also detailed new quality measure concepts under consideration for future years, solicited feedback on an enhanced data collection instrument, and described plans to publicly display quality measure data via the Hospice Compare website in 2017. CMS also seeks comments regarding the sources of clinical information for certifying terminal illness and would change the Hospice Quality Reporting Program (Hospice QRP), including adding new quality measures utilizing data collected in the Hospice Consumer Assessment of Healthcare Providers and Systems (CAHPS®) Survey. The Proposed rule is set to publish May 3, 2017.

Annual rates

Section 411(d) of the Medicare Access and CHIP Reauthorization Act of 2015 (P.L. 114-10) (MACRA) amends section 1814(i) of the Social Security Act setting the market basket percentage for hospices in FY 2018 to 1 percent. This translates to about $180 million for hospices in the next fiscal year. In addition to the basket percentage increase, the cap amount for accounting years that end after September 30, 2016, and before October 1, 2025, must be updated by the hospice payment update percentage, rather than the Consumer Price Index (CPI). Therefore, the cap amount for FY 2018 will be $28,689.04 compared to the 2017 cap amount of $28,404.99.

Hospice CAHPS Survey

The Hospice CAHPS® Survey is a component of the Hospice Quality Reporting Program and is important for the hospice community because the results of the survey will allow for comparisons on a national basis. CMS noted that the data would help beneficiaries to select a hospice program, as well as encourage hospices to improve quality of care. Under the Proposed rule, two global CAHPS measures would be adopted. CMS expects to begin public reporting via a Hospice Compare Site in CY 2017 to help customers make informed choices.

Terminal illnesses

CMS’ expectation is that a referring physician/acute/post-acute care facility’s clinical documentation serves as the basis of the certification of terminal illness. As such, the agency is seeking comments on a clarifying proposal that would identify the source of clinical information, whether a referring physician or acute care facility, when certifying that life expectancy in a hospice situation is six months or less. CMS also wants to explore whether the use of clinical documentation from an in-person visit from the hospice medical director or the hospice physician member of the interdisciplinary group could support the certification of terminal illness and whether such documentation is needed to augment the clinical information from the referring physician/facility’s medical records.

Measures under consideration

CMS offered no new proposed measures, but did seek additional feedback on two claims-based measures under future consideration: (1) avoiding hospice care transitions and (2) accessing levels of hospice care. The agency noted it would be detailing the measures in future rulemaking.

Highlight on Pennsylvania: Better Medicaid spending through technology

Pennsylvania lawmakers introduced legislation attempting to reduce spending and improve patient care within the state’s Medicaid program. Under the proposed legislation, Senate Bill 600, the state would adopt new technology to monitor and identify areas of unnecessary or wasteful health care services and procedures. The state would have 90 days within enactment of the bill to pick a technology company and implement the monitoring. Lawmakers noted that by providing more information, patients and providers, alike, could make better health care decisions. Consequently, this would reduce Medicaid spending. Pennsylvania is one of the highest spenders per Medicaid enrollee in the U.S., with one out of every four dollars in the state’s annual budget accounted for by Medicaid.

The lawmakers have started to review tech companies with prior experience in collecting and monitoring patients to improve care, notably companies that have worked with Alaska’s Medicaid program. The tech company involved  reduced misdiagnosis rates, improved outpatient care, cut waste, and reduced Medicaid expenditures in Alaska by over 14 percent. According to Pennsylvania lawmakers, a similar program could generate between $2 billion and $4 billion in annual savings.

In fiscal year 2015-16, the federal government spent about $15.3 billion on Medicaid in Pennsylvania, while the state spent about $10.6 billion, bringing the total to $25.9 billion; the state’s Department of Health and Human Services budget over the past few years has increased by about $500 million annually. The influx of approximately 700,000 new patients into the Medicaid system is a 20 percent increase and has cost an additional $4.6 billion. State lawmakers are concerned that the push for health care reform by the federal government will result in a cut in the federal portion of Medicaid to the state.