Posts Tagged health reform

Anthem (and others) to Cut Payment for E&M-25 by 50%

Recently, Anthem in Kentucky (and other states), Harvard Pilgrim, and other plans (so I hear), have established policies to reduce by half payment for Evaluation and Management (E&M) services when accompanied by a -25 modifier and billed in combination with some 150 specific (and commonly used) preventative and procedure codes. The -25 modifier is supposed to indicate that these services are ‘separately identifiable’, according to AMA CPT coding rules. The rationale for this 50% reduction is that the plan does not want to pay twice for ‘the overlap of overhead expenses in the RVUs of the code combinations’. Anthem KY also plans to ‘make improvements in (their) primary care fee schedule allowances for office E&M codes’, but it is not clear to me if these improvements are intended to compensate for some or all of these reductions (don’t count on it).

Initially, I was not sure whether this policy would apply to both office based and facility based providers, so I contacted Anthem in KY to see. Though there was some confusion about this at first, the latest response I got from Anthem KY was that “Emergency Room Physicians will NOT be affected by the 50% reduction in payment”. I do not know at this point whether or not this exception also applies to other facility based providers. When I initially saw the policy statement from Anthem, I replied to them that:

I do not believe that ANY portion of the RVUs assigned to the E&M service should be ignored, deleted, modified, or considered duplicative to the RVUs assigned to the additional procedure when separately identifiable services are coded on the same claim. This is what CPT means by ‘separately identifiable’: it means ‘distinct from’. The overhead expenses associated with an E&M service are likely to be completely separate and independent of the practice or overhead expenses associated with the procedure: incremental rather than overlapping. For example, the major practice expense for an office-based practitioner associated with the performance of an ultrasound is the cost of the machine and the cost of the training to perform the service. Neither of these are necessarily duplicative of, or overlapping with, the practice expenses associated with the provider’s E&M service.

In the case of facility based providers, like emergency physicians, the practice expense component of the E&M services are likewise separate and distinct from the practice expenses associated with procedural services by these providers, AND IN ADDITION, the practice expense component of the emergency physician’s E&M services represent a very small component of the overall RVUs assigned to the E&M service – certainly far less than 50%.

I indicated that this policy was inappropriate whether or not it was applied to office based or facility based providers. It is my understanding that several plans have initiated or are planning to initiate this same sort of payment policy. The AMA has also responded to this development. The fact that Anthem in KY is apparently not going to apply this strategy to emergency physicians, and perhaps other facility based providers, and the argument above against this practice, is an opening that other providers can use to push back when faced with these payment reductions. The unilateral decision by health plans to re-invent or re-interpret CPT claims coding rules on the fly, using rationales that appear more like rationalizations, begs for adoption of standardized, universally applied coding/payment rules for all payers.

This post also published in The Fickle Finger

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Medicaid Managed Care Does Not Provide Better Access than FFS Medicaid for Non-emergency Care

The folks who run Medicaid Managed Care Plans often gripe about their enrollees using emergency departments for non-emergency care. And of course, they do, and probably more so than commercially insured enrollees. Most state and federal government regulators and legislators believe that capitation and managed care models for Medicaid can reduce the inappropriate use of ED services by Medicaid patients by incentives that encourage primary care providers in managed care organizations to increase access for their enrollees to extended office hours or next-day appointments for urgently needed, non-emergency care. Recently, the Obama administration decided to kill a proposed plan to use ‘secret shoppers’ to determine whether, in fact, enrollees can get such appointments when they need them, in the face of considerable opposition from these very medical-home advocates. In the ED, we constantly hear from Medicaid Managed Care enrollees who come to the ED because they could not get a timely appointment from their PCP or clinic, but anecdote is not the best evidence, and there is not a lot of recent research about timely access for Medicaid patients (I think because no one in government or health care policy really wants to know). Therefor, we must look to indirect evidence of this phenomenon.

Recently, I had the chance to review claims data from 138,129 Medicaid Managed Care (MCMC) enrollees and 107,125 Medicaid Fee for Service (MFFS) patients seen consecutively in about 65 EDs in 6 states states over the first 4 months of 2010. Using ED physician charges (all under the same fee schedule) as a surrogate for ‘acuity’, all of these claims were stratified into 20th percentiles, from highest charges to lowest, for the MCMC and FFS patients. If you think about things like ‘deferral of ED care’, the patients who might be the least likely to require emergency care would fall into the bottom 20th percentile of ED physician charges, the least ‘acute’ patients using the least amount of ED physician services. These 20th percentile groupings offered an interesting comparison between MCMC and MFFS.

Here is how the comparison looked:

Medicaid Managed Care: 41.55% of all ED visits for these MC enrollees were in the lowest 20th percentile of charges (representing 26.57% of total ED MD charges for all MCMC enrollees)

Medicaid Fee-for Service: 36.72% of all ED visits for these FFS enrollees were in the lowest 20th percentile of charges (representing 21.14% of total ED MD charges for all MFFS enrollees)

Some of this discrepancy may be accounted for by the fact that the average charge for the MCMC patients was slightly (8%) higher than the average charge for the MFFS patients, but at best what this data suggests is that MCMC plans and capitated medical groups do not provide any better access to enrollees for urgently needed, non-emergency office or clinic appointments than their counterparts providing services to Medicaid patients on a FFS plan. If this were not the case, the numbers would be very different. So much for incentives. I guess as long as these MCMC organizations and plans can continue to underpay ED providers for after-hours urgent care to under-served Medicaid enrollees and not worry about ‘adequate access’ oversight, this isn’t likely to change.

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Much Ado About Very Little – the Deferral of ED Care Boondoggle

Boondoggle – a scheme that wastes time and money. Perhaps this is not the best way to describe the many efforts that are being made to try to keep patients with non-urgent problems from using the emergency department, but from where I sit, deferral of ED care is a cost-saving tactic that not only fails to deliver much in the way of cost savings, it also is a strategy that can be both risky and unethical. More importantly, the focus on deferral of care and ‘unnecessary ED visits’ as a cost-containment tactic is a distraction from efforts that would yield far more savings at far less risk to patients, and to our fragile emergency care safety net.

Recently, I worked with one of the major health plans to look at over 637,000 consecutive commercial and Medicaid California ED patient visits over a one-year period (excluding ED patients who were admitted to the hospital). Based on the data below, it is clear that those 20% of patient visits that represented the least costly visits (facility plus professional ‘allowable payments’) accounted for less than 4% of the total cost for all non-admitted ED patient visits.

Rank            Total Allowed             % of Total Allowed
1                 $520,314,096                       54%
2                 $195,156,385                       20%
3                 $129,376,962                       13%
4                  $84,949,393                          9%
5                  $33,929,559                          4%

Remember, this data just represents patients who were not admitted (facility costs for ED care of admitted patients are bundled into inpatient payments). Thus, it is likely that the bottom 20% of admitted, discharged, and transferred ED patient visits likely represented between 2 and 3% of the total cost of care for all ED visits. ACEP has been saying for a while now that (depending on the source of the data) ED care accounts for around 2% of the $2.4 trillion spent on all health care costs. Now the estimates of the percentage of ED patients who ‘don’t need to be there’ or have ‘non-urgent’ or ‘non-emergency’ problems is a bit more wide-ranging, depending on the agenda of the estimator; and numbers as low as 10% and as high as 50% get thrown around all the time. The Rand Corporation put the number at 17%, the CDC at 8%, and HCA Gulf Coast Hospitals put the number at 40% !!! Clearly, no one seems to be able to define this group in a standardized way, but it is clear that as the poster child for unnecessary and expensive care, the ED has become the target of many attempts to reduce costs by keeping patients out of the ED, or sending them away, based on screening criteria that may, or may not, meet EMTALA standards. Much has been written about the down-sides of the deferral of ED care strategy, and ACEP has a policy that opposes deferral of care, especially when it is not accompanied by adequate access to alternative care venues and carefully designed programs to arrange for timely and appropriate care for those whose care in the ED is deferred. Most ED physicians agree that the way to reduce unnecessary visits to the ED is by improving access for non-urgent care in clinics and primary care offices. However, my issue with all the hubbub about cost-containment through deferral (or denial) of ED care goes beyond the ethical and risk issues: it simply is not a cost-effective strategy.

Let’s assume that it is possible to accurately identify and screen the patients that do not need ED care without missing the patients who really do have an impending medical emergency in the early stages of presentation, and that we could reasonably eliminate the 20% of ED visits that use the least amount of ED resources. I don’t actually believe this is possible, but let’s make this assumption. If it were, we could reduce the US health care budget by something like 3% x 2%, or 0.06%. But wait- surely some money would have to be spent caring for most of these patients in the clinic or PCP’s office. So perhaps the actual savings from deferral of ED care might amount to 0.05% of the health care budget (50 cents for every $1,000). Probably, the number is even lower. Yes, I know, it is real money, but in relative terms, they call this ‘budget dust’.

The study on ED visits in CA that I mentioned above also looked at costs by procedure and costs by diagnosis for those 637,000 patients. I was surprised to learn that renal and ureteral stones accounted for $25 million of the $963 million spent on all these patients. So, roughly, the same amount of money was spent taking care of 7,900 patients with kidney stones as was spent on taking care of the 127,000 patients who might have qualified for deferral of ED care. In fact, the data from the Anthem study suggested that we could save as much money by reducing the number of CT scans done in the ED by 1 out of 12 scans as we could by barring the door of the ED to every single one of the 127,000 patients in this study who accounted for the lowest 20% of ED costs.  My point is that all sorts of legislators and health plan executives and government regulators are screaming about, and scheming about, reducing unnecessary ED visits, and distracting us all from focusing on where the real money gets spent, and the real savings could be achieved. You want to talk about saving health care dollars: let’s look at back surgery, depression, end of life care, obesity. But no, the focus of TENCare and HCA and the Dr. Thompson’s in Washington State and elsewhere is on the ‘imprudent’ parent who takes their screaming, vomiting, febrile 2 year old child into the ED at 3 AM, only to be diagnosed with a lowly ear infection. And to top it off, the solution to this problem that many Medicaid program directors and legislators have lit upon, the best way to keep these patients out of the ED, is simply to decide, after the fact, not to pay the ED physician for having provided this care. Yep, that makes a lot of sense.

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PPACA, Medical Loss Ratios, and Capitation – a Loop Hole Big Enough to Drive an Armored Truck Through

One of the new health reform provisions in the PPACA regulations is a requirement for health insurers to spend a certain proportion of health insurance premiums on actual medical care, thus limiting to some extent the proportion of these premiums that can be allocated to administrative expenses and profits. This proportion is called the medical loss ratio (MLR), and in the regs the proportion that must be spent on care is 85% or higher in large-group markets and 80% or higher in individual and small-group markets. I believe the impetus for this rule is two fold: 1) to try to get insurers to minimize the costs associated with administration of the plan (so as to maximize their profits within the MLR restriction), and 2) to try to insure that any successful cost-effective care strategies that are adopted go directly to reducing the premium costs for enrollees. Insurers that fail to meet this standard must rebate some premiums back to enrolees. It doesn’t take much savvy to imagine that insurance companies executives would, in response to this reform of their market, launch aggressive advocacy strategies to modify these regulations in order to recoup their potential profit margins and maintain their obscene executive salaries.

Great debates have been sparked at DHHS and at the National Association of Insurance Commissioners over a wide range of MLR issues, especially around what types of activities should be included in the definition of ‘medical services provided to enrollees’ (should nurse advice lines and other ‘cost-containment strategies’ count as care?), whether federal taxes should be factored into or excluded from the calculations, to which types of plans should MLR standards apply (should mini-med plans be included?), and a whole host of other accounting, reporting, and procedural issues. Nothing generates gaming the system in Washington like new federal regulations, and health insurance lobbyists are having a field day. I had to laugh when I read that the former director of the Congressional Budget Office and president of the think tank American Action Forum was quoted as saying: “I was surprised to see the members of Congress try to influence this process.” Really?

In all the fuss, some of which has actually made it into the national news media, there appears to be one particular loophole for insurers that seems to have escaped much attention. This loophole is big enough to drive an armored truck through, on the way to the bank (with a brief stop-over in Wall Street to rack up some leveraged premium on the insurer’s stock price). When health plans, particularly HMOs, capitate medical groups and IPAs to service their enrollees, these plans typically pass, via the per-member-per-month cap payment, not only the risk of paying for care, but also much of the cost for managing the program. Capitated medical groups are often delegated the responsibility for paying non-contracted provider claims, credentialing providers, managing prior authorizations, investing in IT, marketing plans to potential enrollees, and a whole host of other administrative tasks normally performed by the plan. Yet in accounting for administrative overhead to meet the MLR requirements, it appears that these plans will be allowed to shift these administrative costs to their subcontracted medical groups and IPAs and count them as ‘medical services’. What a deal for the plans!

At a recent Department of Managed Health Care meeting in California, a representative of a large capitated medical group described the development of one of the first Accountable Care Organizations (ACOs) in the state, in concert with Blue Cross. When I asked this representative, during the public question period, which of the administrative costs associated with management of the ACO would be attributed to Blue Cross when it came time to calculate the MLRs for the plan; he at first hemmed and hawed, then said that the issue had not been discussed with the plan yet. Really? This far into the planning process, you would think that issue would be pretty high on the list. ACOs are not just going to be Medicare Advantage programs, they are going to evolve into the next iteration of commercial health coverage, and you can bet that many plans will skip right over shared savings and similar strategies and go directly to capitation, because there is nothing better for an insurance company than collecting premiums like a health plan, acting like a broker, and shucking all the risk on to the providers. At this same DMHC hearing, CAL/ACEP testified as to how EMTALA obligated providers were being ripped off by these unregulated subcontracting medical groups and IPAs, and left holding bags full of unpaid claims when these risk bearing organizations go belly up. The HMOs, of course, often respectfully decline to take responsibility for these unpaid claims. Remember the term ‘negligent delegation’ when an ACO near you goes bankrupt – it may come in handy.

But I digress. My point here is that, for some reason, DHHS seems to have been deterred from closing this ‘capitation-delegation model’ loophole in the MLR rules, and we can only hope they catch on before the rules are finalized.

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Emergency Medicine and Payment Reform – Becoming Part of the Solution PART III

Health care is bankrupting this country. The truth is, emergency physicians are as much a part of the problem as any other provider, health plan, or patient in this country. Many emergency physicians over-order scans and tests, practice defensive medicine, over-utilize consultants, don’t pay much attention to the cost of drugs and treatments we order or prescribe, and generally spend too much money for too little benefit. I could argue convincingly that we are more effective and efficient than most physicians, especially in light of the difficulties of practice in the ED; but our challenge is not just to dispel the mistaken assumption that ED services do not meet the value proposition. We must simultaneously participate in developing solutions to the cost-effective care conundrum, or the payers and politicians will focus on ways to work around us, or through us.

Policy makers have selected payment reform as the primary path to cost-effective care, and fee for service as the principle foil responsible for our health care financing predicament. I could argue that tacking ‘for profit’ in front of ‘health plans’ is equally responsible, but this is, after all, America. Health reform is in many respects predicated on the concept of risk sharing: sharing the financial risks of care (and the rewards of cost-effective care) between insurers, providers, and patients on the assumption that having ‘skin in the game’ will solve the problem. Bundled payments, episodes of care, ACOs, pay for performance: its all designed to restrain costs by sharing risk, which is presumed to motivate providers to adopt strategies and develop infrastructure designed to cut costs (first) and improve care (second). The most critical role that ACEP has in the next few years is to determine how EPs can participate in the context of payment reform while preserving our value and protecting our practices.
Let’s talk about ACOs first. To make a very complicated story short, ACOs are likely to be about full capitation, or about risk pools, or both; and they are also about consolidation of physician practices to facilitate this risk sharing. In my experience, one consequence of this consolidation is that the PHOs (physician hospital organizations – soon to morph into ACOs) tend to pay lower rates to EPs than health plans pay. EPs are going to have to find ways to share risk in ACOs as independent practitioners or as hospital employees without sacrificing significant income or undermining practice quality and autonomy. Half of ED physicians are either hospital employees or the employees of academic institutions, and the other half are partners or independent contractors (or employees) of groups contracted to staff the ED. What the former need to understand about the latter is that the independent practice of emergency medicine is key to defining the commercial value of EP services: anything that undermines the payment of claims from an EP who is engaged in the ‘independent practice’ of EM undermines the wages of the EP who is employed by a hospital, a university or an HMO. We are all part of a national market for EP services. If the mode of our participation in ACOs, either as contracted groups, or employees, turns EP services into a commodity, we, and perhaps our patients, will suffer. Thus, when ACEP talks about EP participation in ACOs, or contributes to the development of model contracts, or policies for revenue or risk-pool distribution, or strategies for coordination of care with other ACO-participating providers; these three different modes of EM practice (independent contractor, employee, educator) need to be factored into the equation, most likely in separate and distinct approaches.
Another set of strategies for cost-containment and payment reform is the concept of bundled payments and episodes of care. I liken this to carving off most of the meat before throwing the bone to the pack of hounds. I suspect it will not be easy to identify episodes of care or bundled payment categories that will accurately reflect the contribution of EPs to the overall effort expended on these patient groupings. The management of abdominal pain is s tree with so many branch points it makes knee replacement look like an asparagus stalk. To complicate matters further, the three modes of EM practice will also have to be addressed in defining the EP’s share of the bundled payment for these episodes of care. For example, the work-up and management of a patient with abdominal pain in an environment like Kaiser is likely to be quite different than for the same patient in a community ED or a university teaching hospital where access to consultants, follow-up, and coordination of care are organized on a different model; even if you assume that under ACOs, access to EMRs and diagnostic services were equivalent. Personally, I think even though most episodes of care and bundled payments will focus on the higher-cost conditions, these approaches to payment reform are not likely to cover more than a modest percentage of the work EPs do, or the compensation we earn. Mostly, I believe, independent EM practitioners will be carved out of these payment reform modules because our level of participation will be difficult to predict, and our ability to restrict our role is limited. We are, after all, one of the few players on the team that regularly plays just about every position. The danger of being carved out, however, is that we then stick out like a sore thumb, an expense item begging to be trimmed.
I think one of the most effective ways for EPs and ACEP to contribute to solving the cost of care conundrum, and thus demonstrate our value to patients and payers alike, is through cost-effective care protocols. It is through the use of such protocols that EPs can earn a piece of the cost-sharing incentives, especially in risk pools. If we get carved out of bundled payments, we can get integrated back in under the risk-sharing umbrella through risk pools. Even so, it will still be necessary to utilize cost-effective care protocols that take into consideration each of the three EM practice modes. For example, hearing hoofbeats, you are more likely to encounter zebras in the ED of a major university teaching and referral center than in a small community hospital. Likewise, we should also focus on the most costly patients and types of care first, use best evidence, and take great care to protect our integrity as professionals and care givers. This last is what I mean by preserving the quality of our practice. An emphasis on cost-effectiveness is an invitation to inappropriate deferral of care, denial of access to needed testing and consultation, inappropriate discrimination in service, avoidable delays, and excessive risk taking, all of which hurts our patients and ourselves. Development of these protocols will not be easy, but adoption of these protocols across the spectrum of EM practice will be the real challenge. As I mentioned in the very beginning of this three-part diatribe, one hospital’s welcome cost effective protocol is another’s inadvertent financial misstep. It will take time to align incentives across all our modes of practice, medical staffs, hospital administrations, payers, and patients. Patient education as well as resident and provider training will be an essential part of the process, and all of us need to be part of the solution.

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