Innovation and Policy: Round-up

As I've sat down throughout the week to write a post, seems everyone else has been quicker on the draw and has provided a perfectly thoughtful reflection on the weeks events. This post, consequently, is devoted to some of the best posts this week:

On the VA report in Time Magazine...

Tony Chen over at Hospital Impact has posted a quick note on this recent article arguing why the VA provides the best place to get your health care in the country.

You can find his post here.

On the challenges of being a resident...

Nick over at Blogborygmi has posted a raw and open look at the challenges our doctors face during the educational process. A thoughtful reminder of the sacrifices our medical professionals make to our communities.

And the growing challenges of being a primary care physician...

Are eloquently recorded in a recent report from the New England Journal of Medicine....simply entitled: Primary Care - Will It Survive?

Innovation and Policy: Consumer Driven Health Care and the Psychology of Pricing

There is a lot of discussion these days about consumer driven health care. A quick Google search alone generates millions of results. Few, however, have begun to discuss the psychology of pricing and consumer driven acquisition of health care.

Assuming that the individual (in some shape or fashion) finally has the ability to directly spend tax-deffered money on their health care costs through a transparent pricing mechanism (i.e. a hospital website that shows the base cost of a procedure), what do you think about the following:

• Should services be bundled (your "entire stay will costs x") or unbundled (the price of your stay is x, the implant for your joint is y, overnight parking is z)?
• People are more likely to go to a health club the first two weeks after having paid for a membership...should hospitals run "specials" for elective surgeries shortly after people sign up for an HSA?
• We often go to concerts or plays that we'd rather not attend simply because we have a $50 ticket in our pocket...how will consumers interpret "sunk costs" in their acquisition of health care services? Should hospitals run "deals" at the end of the year for people who have significant dollars left in their HSA?
• Will people want to pay up-front or be billed for their health care experience? What will providers want? Will hospitals provide an estimate but ask for your credit card on the front end should you want an "upgrade" during your stay?

These are just a few of the questions that come to mind from the provider side in thinking about the pricing issues related to consumer driven health care. While greater transparency in health care is a good thing, I suspect those providers that employ the research on pricing will fair better than others.

To get started...here is a great article from the Harvard Business School.

Additional Note: I'd like to just thank Tony Chen and the folks at Hospital Impact for their outstanding work in bringing health care issues to light and expanding the presence of the health care blogosphere. Great work Tony!

Innovation and Policy: What Health Care System Do You Want?

You have 7 days left to send in your comments!

To whom?

As part of the Medicare Prescription Drug, Improvement, and Modernization Act Of 2003, the U.S. Congress created the Citizens' Health Care Working Group. Composed of 14 members from throughout health care, this group was established to:

• Provide for a nationwide public debate about improving the health care system to provide every American with the ability to obtain quality, affordable health care coverage.
• Develop an action plan for Congress and the President to consider as they work to make health care that works for all Americans.

As part of that effort, the panel has set up a public website for citizens of every identity to send in their comments and recommendations covering all parts of the health care system. The website is citizenshealthcare.gov and is a must read.

So no matter if you're a patient, physician, administrator, insurer, employer, or policy wonk, give the site a read and let your thoughts be known!

Policy: Executive Order - Promoting Quality and Efficient Health Care in Federal Government Administered or Sponsored Health Care Programs

It's rare that I've ever taken the time to actually read an Executive Order.

So, for your reading pleasure I've actually printed the latest Executive Order regarding Health Care IT and Price Transparency below. It's short, it's specific in places while being incredibly vague in others. To make the trip a little easier I've bold faced areas to read if you only have 60 seconds left of free time. If you'd actually like to read the White House release you can click here.

Executive Order - Promoting Quality and Efficient Health Care in Federal Government Administered or Sponsored Health Care Programs

Section 1. Purpose. It is the purpose of this order to ensure that health care programs administered or sponsored by the Federal Government promote quality and efficient delivery of health care through the use of health information technology, transparency regarding health care quality and price, and better incentives for program beneficiaries, enrollees, and providers. It is the further purpose of this order to make relevant information available to these beneficiaries, enrollees, and providers in a readily usable manner and in collaboration with similar initiatives in the private sector and non-Federal public sector. Consistent with the purpose of improving the quality and efficiency of health care, the actions and steps taken by Federal Government agencies should not incur additional costs for the Federal Government.

Sec. 2. Definitions. For purposes of this order:

(a) "Agency" means an agency of the Federal Government that administers or sponsors a Federal health care program.

(b) "Federal health care program" means the Federal Employees Health Benefit Program, the Medicare program, programs operated directly by the Indian Health Service, the TRICARE program for the Department of Defense and other uniformed services, and the health care program operated by the Department of Veterans Affairs. For purposes of this order, "Federal health care program" does not include State operated or funded federally subsidized programs such as Medicaid, the State Children's Health Insurance Program, or services provided to Department of Veterans' Affairs beneficiaries under 38 U.S.C. 1703.

(c) "Interoperability" means the ability to communicate and exchange data accurately, effectively, securely, and consistently with different information technology systems, software applications, and networks in various settings, and exchange data such that clinical or operational purpose and meaning of the data are preserved and unaltered.

(d) "Recognized interoperability standards" means interoperability standards recognized by the Secretary of Health and Human Services (the "Secretary"), in accordance with guidance developed by the Secretary, as existing on the date of the implementation, acquisition, or upgrade of health information technology systems under subsections (1) or (2) of section 3(a) of this order.

Sec. 3. Directives for Agencies. Agencies shall perform the following functions:

(a) Health Information Technology.

(1) For Federal Agencies. As each agency implements, acquires, or upgrades health information technology systems used for the direct exchange of health information between agencies and with non-Federal entities, it shall utilize, where available, health information technology systems and products that meet recognized interoperability standards.

Dinger: it's a shame interoperability is so far off.

(2) For Contracting Purposes. Each agency shall require in contracts or agreements with health care providers, health plans, or health insurance issuers that as each provider, plan, or issuer implements, acquires, or upgrades health information technology systems, it shall utilize, where available, health information technology systems and products that meet recognized interoperability standards.

Dinger: Once again...is there a timeframe for interoperability? Good in theory...tough in practice. It's going to be hard to tell providers who have already spent millions on IT initiatives that their systems are not interoperable.

(b) Transparency of Quality Measurements.

(1) In General. Each agency shall implement programs measuring the quality of services supplied by health care providers to the beneficiaries or enrollees of a Federal health care program. Such programs shall be based upon standards established by multi-stakeholder entities identified by the Secretary or by another agency subject to this order. Each agency shall develop its quality measurements in collaboration with similar initiatives in the private and non-Federal public sectors.

Dinger: It will be interesting to see who gets to play in the above collaboration.

(2) Facilitation. An agency satisfies the requirements of this subsection if it participates in the aggregation of claims and other appropriate data for the purposes of quality measurement. Such aggregation shall be based upon standards established by multi-stakeholder entities identified by the Secretary or by another agency subject to this order.

(c) Transparency of Pricing Information. Each agency shall make available (or provide for the availability) to the beneficiaries or enrollees of a Federal health care program (and, at the option of the agency, to the public) the prices that it, its health insurance issuers, or its health insurance plans pay for procedures to providers in the health care program with which the agency, issuer, or plan contracts. Each agency shall also, in collaboration with multi-stakeholder groups such as those described in subsection (b)(1), participate in the development of information regarding the overall costs of services for common episodes of care and the treatment of common chronic diseases.

Dinger: What exactly is the difference between "make available" and "provide for the availability?" And what does it meet to require release of prices and then let it be at the option of the agency? Sounds like we're saying we're committed without asking the agencies to commit...

(d) Promoting Quality and Efficiency of Care. Each agency shall develop and identify, for beneficiaries, enrollees, and providers, approaches that encourage and facilitate the provision and receipt of high-quality and efficient health care. Such approaches may include pay-for-performance models of reimbursement consistent with current law. An agency will satisfy the requirements of this subsection if it makes available to beneficiaries or enrollees consumer-directed health care insurance products.

Dinger: It's good to see some examples here....pay-for-performance would be a big step...but risk-adjusted quality standards are a difficult thing to develop - let alone build consensus around.


Sec. 4. Implementation Date. Agencies shall comply with the requirements of this order by January 1, 2007.

Dinger: Better get started...131 days left.

Sec. 5. Administration and Judicial Review.

(a) This order does not assume or rely upon additional Federal resources or spending to promote quality and efficient health care. Further, the actions directed by this order shall be carried out subject to the availability of appropriations and to the maximum extent permitted by law.

Dinger: It's always in the fine print...are we to understand that if there's no money to implement the above, the agencies aren't responsible for implementing? It certainly appears to be the case...

(b) This order shall be implemented in new contracts or new contract cycles as they may be renewed from time to time. Renegotiation outside of the normal contract cycle processes should be avoided.

(c) This order is not intended to, and does not, create any right or benefit, substantive or procedural, enforceable at law or in equity against the United States, its departments, agencies, or entities, its officers, employees, or agents, or any other person.

Dinger: That is to say...in general...this order is meant as a political gesture and is unlikely to overly dictate implementation or enforceability.

After reading the above, it will be interesting to see how the media portrays this move by the White House and the degree the message is characterized as a "sure thing" coming in 2007. It should be noted that after the order was signed...Bush went directly to a campaign fundraiser.

Policy: Declining Reimbursement for Physicians

CMS recently announced a proposed cut 0f 5.1% in Medicare reimbursement for Physicians.

While it is not uncommon for CMS to announce an annual reduction, this one is in the $2.5 Billion range...annually....which likely means they want to see some reduction - even if it's only a portion of the current proposal.

Outside of the growing frustration this will cause for physicians, physicians will clearly be looking for new ways to augment their already declining reimbursement. Areas of focus will likely include:

• Specialty Hospital involvement
• Ambulatory Surgery Center (ASC) Joint Venture involvement
• Concierge Medicine Growth

...just to name a few. Taken in this context, it's no wonder CMS is making the above three areas easier for physicians to participate in.

Innovation: HBR Ideacast

We're all short on time. And the Harvard Business Review is here to help.

Whether you'd prefer it on your iPod or want to listen over the web, HBR's new ideacast brings you up-to-speed on some of the latest innovations in management and business in 15-20 minutes every two weeks.

While nothing takes the place of the evidence-based research reviewed in the monthly print magazine, the ideacast is laid-back, jargon-free, and highly applicable.

This weeks favorite topic: Winning Over Change Resistors.

Enjoy!

Policy: Safe Harbors and E-Health Technology

Between the fighting in the Middle East, the Landis disappointment, and the start of the upcoming NFL season, the Department of Health and Human services announced a new "safe harbor" for hospitals to provide IT services to physicians. A "safe harbor" is most easily defined as a piece of legislation that allows hospitals to provide services to physicians at low or no cost without fear of being fined for inducing referrals.

So, as most of my friends have asked - who cares?

While you can visit the HHS website for the full commentary or, better yet read the commentary from one of the best health care law firms in the country, below you can find a quick synopsis of the legislation and what it might mean:

1) Hospitals can provide e-prescribing and e-health services to physicians at no cost (e-prescribing software) or at 15% of cost (e-health services).

What this might mean: Physicians will likely get their PACS system and electronic medical record (EMR) services through a given hospital. This will significantly raise the switching cost for physicians to move their offices or begin working at a competing hospital. Physicians will save big bucks and hospitals will have one more way of retaining key physicians services at their facility.

2) Hospitals and Physicians must use governement "certified software."

What this might mean: The IT industry will be making a big push here to get involved since hospitals are now paying the bill (as opposed to price averse physician practices), but they'll also be lobbying hard to get on the "certified" list. While Adam Smith may have argued for a more open market...others will likely be buying stock in companies on "the list."

3) Organizations capable of donating services not only include health care providers, but also health plans.

What this might mean: Health plans will be equally trying to "tie up" key physicians by providing free software and support. This will likely put physicians in tough spot where the health plan lowers their reimbursement...but don't want to leave the plan because their using the plan's EMR and e-prescribing software (its unlikely the plans and providers will use the software as a leverage point for obvious reasons...but it still is a potential conflict of interest).

4) The Safe Harbor ends in 2013.

What this might mean: Everyone is incented to participate as quickly as possible. While HHS has set a limited timeframe, they've also provided a first mover advantage to Plans and Providers who quickly respond.

This is by no means comprehensive in description, but it is a significant step in moving health care into the 21st century. While more electonic medical records will help improve quality and coordination, its market affects should not be underestimated.

Innovation: Baylor meeting the needs of its patients

We have all been talking about providing hotel-like amenities to our patients for some time, but it has been difficult to find some leading institutions willing to make the investments in patient comforts. While I'm sure there are others out their, a recent story covered some of the work Baylor has done in one of its new facilities.

Some of the key investments Baylor is using to differentiate themselves:

• Interactive TV - where you can order on demand movies and television programs
• On-demand room service 24 hours a day using a custom-designed menu (which only presents items within dietary guidelines set by the patient's physician)
• Wireless internet access for laptop users
• A comprehensive "business center" on each floor for families and visitors

In an industry defined by declinig reimbursement, it is likely that operating efficiency that produces necessary margins to invest in patient comfort may becoming a growing market differentiator in competing markets.

Note: If you know of other providers who are making considerable investments in patient comforts, please send us a comment below!

Innovation and Renewal: Leave it to IBM

Considering my former life was spent in the technology consulting arena, I've been a close follower of "Big Blue" and there turnaround in the nineties. Their open extranets have been a significant source of innovation throughout the global technology space. Incidentally, for those who may not follow the patent world, IBM has registered the most patents annually for the last decade.

So I have to admit I was more than a little excited when I came across IBM's own Health Care Blog. It's not voluminous, nor does it contain multiple posts on a single day - but it is impressive.

Covering everything from Clinical Genomics to Patient Remote Viewing, you will find some of the best and the brightest's comments on what they think is coming around the corner.

For more information on what IBM's thinking about our own health care dilemmas, click here.

Note: I especially like their most recent note on Independent Health Banks.

Innovation: Sustainability Reports

Health care, unfortunately, has not built a reputation for quality storytelling.

Health care is most often known for its acronyms, complicated research, and jargon wielding professionals. Patients are unable to read their own charts (let alone bills). And while those few items could be topics in and of themselves, I thought I would spend a few minutes on institutional storytelling.

While health care is most often believed to be a public good that should be extended to as many people as possible, providers have been reticent to talk about the margins it produces on an annual basis. For-profits don't want to draw attention to it and non-profits don't want to be accused of making too much of it.

So here is a middle way...

Phillips (and others) have recently announced the publication of "sustainability reports." While more popular in Europe than the US, these reports do an exceptional job of talking about the importance of their employees, initiatives they're involved in environmentally, dollars they're contributing to the community, and how the profits they make ensure sustainability of the organization.

I think all organizations would do well by their employees, communities, and funders (shareholders or otherwise) in producing such a report and reframing the way we think about health care and the sustainable ways it is provided to our communities.

Philip's report remains my favorite and you can find it here.

NOTE: If anyone has done a similiar report for their health care organization, please let me know and I'll make note of it in future posts.

Policy: CMS Announces Payment Reforms for Inpatient Hospital Services

As promised, below are some notable changes to the inpatient hospital payment schedules announced by CMS today. For complete details, visit the official announcement on the CMS website.

The highlights (according to CMS):

• The revised payments will become effective for discharges on or after October 1, 2006.

JD: You've got 90 days to get ready...

• Medicare’s inpatient rates for operating expenses will increase by 3.4 percent in FY 2007 for those hospitals that report quality data to CMS. Overall, the final rule is estimated to increase payments to acute care hospitals by $3.4 billion.

JD: Note to all..."those hospitals that report quality data to CMS." We'll see what the final ruling is on the 18th, but I suspect there will be significant incentive to increase public reporting of quality data...a good thing.

• The changes will reduce incentives for hospitals to invest in certain service areas because payment rates significantly exceed costs.

JD: Hmmm...I think they mean profitable services will simply become less profitable. For the more idealistic non-profit purists out there...there will be less money available for free clinics and community education courtesy of highly profitable cardiac and neuro services.

• Specialty hospitals—hospitals that provide a limited range of services and typically are owned in whole or in significant part by physicians who serve as referral sources — may selectively provide such profitable services...but..as a result of the payment reforms implemented in 2006 and now for 2007, payments to cardiac specialty hospitals are expected to decline by over 5 percent between 2005 and 2007.

JD: This is big...CMS is going to start approving applications once again for specialty hospitals. Granted...they may get a bit less reimbursement...but will remain profitable ventures and attractive places to practice medicine. For all of you in non-CON (certificate of need) states...it's going to be a wild market over the next few years.

• While the payment reforms will significantly improve accuracy, their effects generally balance out at the hospital level for hospitals other than specialty hospitals.
• No hospital will experience an estimated decrease in payment for FY 2007 from the improvements to Medicare’s inpatient hospital system after including the update for inflation.
• While some diagnosis related groups (DRGs) have significant payment increases, no DRG has a FY 2007 payment reduction more than 5.4 percent.

JD: So...you shouldn't expect to see a decline in reimbursement unless you do a significant number of procedures in one of the DRGs being reduced 5.4%? Hope CMS lets us know (soon) which DRGs are being reduced...

• The payment reforms consist of two major parts which do not save money, but better align payment with the costs of care by increasing payments for some admissions and decreasing payments for others. The first part begins a transition to using estimated hospital costs, rather than list charges, to set payment. The reform will eliminate biases in the current system arising from the hospital practice of having list charges that disproportionately exceed costs for some services.

JD: The catch is always in the fine print...by making the above change, CMS effectively gets to continue lowering reimbursement as hospitals find new ways of generating a margin. A good solution in the short run...a disincentive for hospitals to keep reducing costs in the long run.

• The change will go into effect October 1, 2006 and will be phased in over a 3-year period.
• In addition, CMS is announcing steps to further evaluate hospital charging practices—particularly for expensive items like medical devices—as part of considering further improvements for 2008.
• More accurate accounting for the severity of a patient’s illness, which has a significant impact on costs of care. In 2007, CMS is beginning the process of moving to more complete severity adjustment by adding 20 new groups to the current DRG system.

JD: A good thing...the payment system will reimburse us for how sick the patient is...

• CMS is also implementing a significantly lower threshold for cost “outlier” status than had been proposed earlier this year. Consistent with the law, Medicare expects the additional payments for high cost cases will equal 5.1 percent of total inpatient payments.

JD: 5.1% of total inpatient payments above the threshold? Hope this doesn't incentivize some hospitals to discharge patients early...

• CMS is committed to ensuring that Medicare beneficiaries have rapid access to new technologies by providing for temporary add-on payments for appropriate technologies. In order to be eligible for additional reimbursement, a product must be:
  
  New – that is, less than two to three years old;
  Expensive – meeting a defined cost threshold in relation to the underlying DRG; and
  A substantial clinical improvement for the Medicare patient population.

JD: Can we define "additional reimbursement?" Some new devices are tens of thousands more than their generic, yet still effective, counterparts.

• CMS approved new technology add-on payments for an innovative new treatment for back pain in this final rule. The technology — the X STOP Interspinous Process Decompression System — relieves pain, numbness and weakness caused when nerves coming from the spinal cord become compressed. The device prevents the patient’s nerves from being compressed while preserving motion. It is the first technology to treat this condition that offers a minimally invasive alternative to conservative treatments (exercise, physical therapy and medication) and major back surgery.

JD: Is this a commercial? Props to St. Francis Medical Technologies for getting a shout out in the new CMS ruling...it's unfortunate not all device companies could have such affective marketing efforts.

• Additionally, CMS will continue to make add-on payments in FY 2007 for two technologies that were approved for new technology payments in FY 2006: Restore® Rechargeable Implantable Neurostimulator and GORE TAG.

JD: Wait...there's more? Looks like the neuro device industry hit one out of the park. It would be nice to see additional payments made to the health systems who make extra efforts to deliver vaccine and primary care to the underserved and underinsured.

• With respect to payments for Graduate Medical Education (GME), the rule finalizes the clarification to the CMS policy that only time spent in patient care activities may be counted for IME purposes in the hospital complex.

JD: This is too bad...a lot of good education occurs outside the "hospital complex."

• The final rule will appear in the August 18, 2006 Federal Register and will be effective for discharges on or after October 1, 2006.

JD: It's good to see CMS looking at new ways to innovate the payment system...we'll see what the next few months bear out.