$87M in IT enhancements to ‘unlock’ data, improve health center quality

HHS will provide $87 million in funding to support information technology (IT) enhancements in 1,310 health centers throughout the United States and its territories. The funding is intended to support the health centers’ transition to value-based models of care, promote information-sharing to improve quality of care, allow the centers to use information to support better decisions, and increase their engagement in transforming delivery systems. HHS Secretary Sylvia Burwell stated that the funding “will help unlock health care data and put it to work.”

Health Resources and Services Administration (HRSA) health centers provide comprehensive preventive and primary health care to patients regardless of their ability to pay, adjusting fees based on that ability. Section 10503 of the Patient Protection and Affordable Care Act (ACA) (P.L. 111-148) established an $11 billion, five-year Community Health Center (CHC) Fund to strengthen the centers, which was extended by the Medicare Access and CHIP Reauthorization Act (MACRA) (P.L. 114-10) of 2015. Funding for the IT enhancements comes from the CHC Fund.

Health centers that use the funding to purchase or upgrade electronic health record (EHR) systems must ensure that the technology is certified by the Office of the National Coordinator for Health Information Technology (ONC).

Analysts say block grants, per capita caps an ineffective, problematic strategy

Block grants and per capita caps that have been proposed to replace the current Medicaid funding model have sparked concerns about states’ inability to effectively manage their programs by limiting enrollment and reducing benefits. An Urban Institute publication focuses on a slightly different issue, pointing out that the amount of federal funding each state receives varies significantly, and that basing allotments on historical spending would lock states in to these relative amounts. This strategy could limit states’ ability to expand benefits and coverage.

How they work

States currently receive federal matching based on a certain percentage of expenditures. If Medicaid were to be financed through block grants, states would receive a fixed payment based on historical spending levels, adjusted for growth. Per capita caps would similarly set allotments for specific group based on historical rates of spending per enrollee, adjusted for growth. Per capita income affects the percentage of federal match, favoring low-income states, and state benefit design (which populations are covered and which additional benefits are provided) impacts spending levels.

Block grants would essentially base allocation on the current level of expenditures, which is intended to give state programs a fixed budget leading to additional efficiency and federal savings. Per capita caps would impact spending per enrollee instead of overall, and would provide additional funding if the number of Medicaid enrollees increases. However, the predetermined cap may not be sufficient to provide current services, and in such a case the burdens would be passed on to the state government, patients, and providers.

Data

The Urban Institute assessed current spending levels in the aggregate, per low-income resident, and for subgroups. The results emphasized the differences in spending and federal funding. In the District of Columbia, almost $12,000 is spent per low-income resident, and the federal spending comes out to $2.4 million. In New York, spending per low-income resident was about $5600, while federal spending was almost $38 million. Ultimately, spending per low-income person varied by a factor of almost 10 to 1 (cut roughly in half by excluding the District of Columbia).

Analysis

Freezing aggregate payments and growing them at the same rate would make such stark federal spending differences permanent. Although applying different growth rates to states based on different spending levels could help, analysts believe that this approach would not have a significant impact for some time. Similarly, applying per capita caps would vary significantly by state. The Urban Institute believes that applying either of these approaches to Medicaid programs would be problematic, and noted that Medicaid spending is not a significant issue when compared to other types of spending.

Innovative payment models may reduce Part B spending

Some of CMS’ payment plan proposals may have the effect of reducing Part B drug costs, even if not specifically designed to do so. Avalere Health reviewed three categories of programs and found that episode payment models (EPMs), a disease-specific model, and accountable care organizations (ACOs), incentivize providers to reduce Part B spending due to the financial responsibilities imposed. The Center for Medicare and Medicaid Innovation (CMMI) is continually developing and testing new models with the goal of offering higher quality care while minimizing costs.

EPMs

EPMs include the Bundled Payments for Care Improvement (BCPI) demonstration and the mandatory (for metropolitan area hospitals) Comprehensive Care for Joint Replacement (CJR) model. Providers are held accountable for costs incurred over a patient’s episode of care, bearing risk for Part A and B expenditures that begin with a hospital stay. A target is provided based on historical expenditures, and providers are financially responsible for excess spending. Over 1,300 providers now participate in BPCI. CJR covers the initial hospital stay and 90-days after discharge for major joint replacements in the lower extremity, including Part B spending. A proposal has been issued to include non-joint replacement hip and femur treatments.

Similarly, the Oncology Care Model (OCM) provides a fixed monthly payment to providers for management and coordination of patient care for six months while a patient is receiving chemotherapy. This model includes payments for novel oncology therapies to ensure that there is no disincentive to use expensive new treatments.

Disease-specific and ACOs

End stage renal disease (ESRD) beneficiaries are often excluded from payment model demonstrations, so CMMI created the Comprehensive ESRD Care (CEC) model to determine whether improved outcomes and savings are possible for these patients. Providers are accountable for Part A and B spending per beneficiary, per year, including dialysis treatments.

The Medicare Shared Savings Program (MSSP), Next Generation ACOs, and Pioneer ACOs all place risk on providers in various ways, allowing them to share in savings and losses. This includes responsibility Part B spending and the opportunity to receive savings based on low-cost decision-making.

Off-campus outpatient department payment proposal meets industry criticism

CMS’ proposal to revise the outpatient prospective payment system’s (OPPS) method for reimbursing hospitals and physicians for services performed at off-campus locations has received harsh critiques from the industry. Hospitals are concerned that as written, the Proposed rule would require them to enter into financial arrangements with physicians that may otherwise violate fraud and abuse laws. Yet without making such arrangements, hospitals would be required to pay for these off-campus facilities but receive no reimbursement for services.

Proposed rule

The Proposed rule (81 FR 45603) in question is a lengthy one that concerns several programs and entities. One of the many things proposed is implementation of section 603 of the Bipartisan Budget Act, which mandated that certain services furnished off-campus will not be considered outpatient department (OPD) services, but paid under the applicable Part B system. For new off-campus departments that billed for Medicare outpatient services under the OPPS after November 2, 2015, the physician fee schedule will be applied in 2017 for most services.

Hospitals often have multiple departments and facilities spread across an area, and these must meet certain criteria to be considered provider-based. An off-campus outpatient department must be located within a 35 mile radius of the hospital, be held out to the public as part of the hospital, operate its finances fully integrated with the hospital, and provide clinical services integrated with the main hospital.

Objections

The American Hospital Association recently published a letter stating its objection, accompanied by a legal memorandum. Calling the policies “short-sighted and unworkable,” the letter states that hospitals will not be provided reimbursement for some Medicare services under the site-neutral policies. The AHA reasons that off-campus departments that have existing financial arrangements with physicians may run afoul of the Stark law (42 U.S.C. §1395nn) and the Anti-kickback Statute (AKS) (42 U.S.C. § 1320a-7b). The AHA believes that CMS must delay site-neutral policy implementation for at least one year in order to address the significant compliance risks.

The accompanying legal memorandum provided by Hogan Lowells dives deeper into the policy implications. The memorandum finds that the new policy may result in physicians receiving payment for expenses to own and operate the facility, even though it is an off-campus department of a hospital. Hospitals are prohibited from providing free goods and services to referring physicians under the AKS and Stark law. Even furnishing items for a physician to use in his practice may be implicated under these laws, if the items reduce a physician’s cost of doing business and are offered with intent to induce referrals. Under the new policy, physicians would receive a benefit of reimbursement for services when they paid nothing for the location in which the services were provided.

Other comments

Lawrence Vernaglia, Foley & Lardner health attorney, offered the opinion that implementing these new payments would impose unreasonable difficulties on outpatient departments that wanted to add new services. He suggested that CMS alter the requirement that grandfathered facilities remain exactly the same as before the rule was implemented and allow departments to make necessary changes. In addition, because site-neutral payments are unlikely, in his opinion, to reduce outpatient department costs, hospitals may decide to close off-campus facilities which could limit access.

America’s Essential Hospitals (AEH) focused on these access issues in its comments, stating that CMS policies “will perpetuate health care deserts” by limiting flexibility and withholding payments to outpatient departments. It emphasized that establishing and sustaining new off-campus facilities is a challenging process when serving vulnerable patients, and that the policy will make new facilities “economically unsustainable.”

These access comments should have been of little surprise to CMS, as on May 19, 2016, a very large group of senators signed a letter addressed to Acting Administrator Andy Slavitt requesting flexibility in applying the new policies. The senators emphasized the necessity of providing hospitals a predictable landscape while providing them the leeway needed to ensure access. The senators specifically asked for flexibility for services provided at dedicated emergency departments (DEDs) as well as off-campus departments that sought to relocate, rebuild, expand, or change ownership in order to meet a community’s needs.