By John Reichard

April 29, 2011 -- After a decade or so of collecting information from hospitals on the quality of their care, the Medicare program announced Friday that it will finally start using what the data actually reveals about a hospital's performance to set the level of payments it receives.

Starting Oct. 1, 2012, hospitals will get paid more if they ensure patients get care within 90 minutes of possibly having a heart attack.

So too will those that provide care within a 24-hour window to surgery patients to prevent blood clots; communicate detailed instructions to heart failure patients on follow-up care once they leave the hospital; and ensure their facilities are clean and well-maintained.

Other measures used to vary payment levels include those assessing the quality of treatment for pneumonia and steps taken to prevent patients from acquiring infections within the hospital.
The American Hospital Association issued a statement expressing "disappointment" with the inclusion of infection data to set payments, among other criticisms.

The Centers for Medicare and Medicaid Services said that in addition to the "process of care" measures, the payment system will take into account the experience of patients during a hospital stay, such as how easily they can communicate with doctors and nurses. Facilities that patients rate highly in that area put themselves in a stronger position to get paid more.

The program was unveiled as part of a final regulation.

Officials said in a telephone news briefing Friday on the new "Value-Based Purchasing Program" that they will give greater weight to "process-of-care" measures than patient satisfaction measures in computing overall performance scores. They said they will follow a 70 to 30 balance in their weighting system.

The higher payments in the fiscal year that starts Oct. 1, 2012 will come from a pool of $850 million collected through reducing, by 1 percent, the Medicare payments of all of the 3,500 hospitals affected.

The Centers for Medicare and Medicaid Services said in a news release that "the size of the fund will gradually increase over time, resulting in a shift from payments based on volume to payments based on performance."

Critics say the system is unfair to facilities that have relatively fewer resources to devote to improving the quality of their treatment. However, a CMS official noted on during the briefing that hospitals showing improvement on quality performance measures can also qualify for more reimbursement. In other words, improvement is rewarded financially, along with attainment of certain standards of performance.

CMS Administrator Donald M. Berwick said that over time the measurement system will focus more on the actual medical outcome of treatment rather than on the processes a facility uses in delivering a particular type of care. "This is work in progress," he said of the initial set of measure. "This is by no means the complete set."

Berwick said the payment system would help accomplish the goals of a new public-private program to advance patient safety, which CMS estimates will save up to $35 billion in health costs over the next three years, including $10 billion in Medicare (See related story).

|According to a CMS estimate, Medicare spent $4.4 billion in 2009 to care for patients harmed in the hospital. Readmissions to the hospital cost Medicare another $26 billion, CMS estimated.
The American Hospital Assocation said in a statement that "we are disappointed that our recommendations to improve the Value-Based Purchasing program were ignored. We have serious concerns about specific components, such as the inclusion of hospital-acquired" infections in the payment system.

Because of other provisions to penalize hospitals financially for such infections, hospitals would unfairly be penalized twice, the AHA statement said. It added that the final rule gives too much weight to patient satisfaction measures pending needed improvements in how patient experiences are assessed. "Lastly, the AHA urged CMS to exclude from hospitals' scores any measures for which they report fewer than 25 cases, rather than 10 cases and we are disappointed that CMS did not follow our recommendation."

AHA said it supports the concept of tying payment to performance on quality measures, however.

Medicare has paid hospitals more for a number of years if they report performance data on a variety of quality measures. They get paid less if they do not report the data. But actual performance has not been used to vary payment levels. Performance data has been made available to the public, however, to help them compare hospitals in deciding where to go for treatment.

By Jane Norman, CQ HealthBeat Associate Editor

April 27, 2011-- As the health care law's expanded coverage of the uninsured brings 16 million more Americans into Medicaid by 2014, the challenge will be to find enough primary care physicians willing and able to treat those patients.

A study issued Wednesday by the Kaiser Family Foundation and the Center for Studying Health System Change says primary care physicians who now treat the highest share of Medicaid patients are willing to take on more of them.

But there are limits to what those doctors can do, and many more providers—including those who don't now see a lot of Medicaid patients—are going to be needed to meet the heightened Medicaid demand, the study says. The report was based on a health tracking survey of physicians and follow-up phone interviews.

A short-term payment boost for seeing Medicaid patients included in the health care law (PL 111-148, PL 111-152) may help, though payments are just part of the reason why some providers won't take Medicaid patients, the study says. More importantly, the difficulty in finding specialists who will accept referrals for Medicaid patients for further treatment is a barrier for care.

"Inadequate access to specialists is a major problem for primary care physicians who care for many Medicaid patients, and difficulty referring to specialists is an important reason behind some physicians' unwillingness to treat Medicaid patients," said a statement from authors Anna Sommers of the Center for Studying Health System Change; Julia Paradise of the Kaiser Commission on Medicaid and the Uninsured; and Carolyn Miller, a consultant.

The law expands eligibility for the federal-state Medicaid program to Americans younger than 65 and earning less than 133 percent of the federal poverty level. Experts predict a 25 percent increase in the number of Medicaid enrollees. Many will be very poor and are expected to arrive in physicians' offices with chronic conditions that have had little medical attention in the past.

The study looked at 1,460 physicians, including internists, family practice doctors and general practitioners. Those with high shares of Medicaid patients were defined as earning 26 percent or more of their revenue from the program, while those with moderate shares earned 6 percent to 26 percent of their revenue from Medicaid and accepted new patients. The remainder earned less than 6 percent or didn't see any Medicaid patients and were defined as low-share or no-share providers.

The high-share primary care providers most willing to see more Medicaid patients generally work in lower-income areas and are more likely to practice in hospitals or community health centers, the study says. Most use health information technology extensively. They often offer interpreter services for patients who don't speak English and provide patient education for those with chronic conditions.

But they report they don't have enough time as it is with each of their Medicaid patients. "Having inadequate time with patients may indicate that physician resources are strained, affecting the quality of care for all patients in the practice," the study says.

It also found looming problems in expanding access to care for people who will be joining Medicaid.

Eight out of 10 primary care providers who now have low or no shares of Medicaid patients accept no new Medicaid patients. They also limit their participation in Medicare and private insurance.

There may be a lack of "fit" in these doctors accepting more Medicaid patients because their offices are located in zip codes with higher median incomes compared to those who accept higher shares of Medicaid patients. They also don't have interpreter services or staff members who can provide patient education. And they are less advanced in their use of health IT.

Those doctors who now have moderate shares of Medicaid patients said they might revisit the issue as the health care law goes into effect, saying they might hire more nurse practitioners or other health care staff.

Low payment rates and administrative burdens like payment delays and billing requirements were often cited by doctors who don't accept many Medicaid patients.

By Rebecca Adams, CQ HealthBeat Associate Editor

April 27, 2011 -- Federal initiatives to push hospitals to report on the quality of their care—and penalize those who don't measure up—are only useful if the metrics are fair and scientifically sound, evaluate issues vital to patient safety, and consider the differences between patients, a hospital trade representative said at an Alliance for Health Reform briefing.

The Centers for Medicare and Medicaid Services (CMS) increasingly bases hospital payments on whether the institutions report on quality measures and whether those statistics show a given hospital is providing patients with high-quality care. Not only does the 2010 health care law (PL 111-148, PL 111-152) call for additional quality measures, but CMS administrator Donald Berwick also is a strong proponent of evaluating providers' performance quality. By 2017, about 9 percent of Medicare payments to hospitals will be based on reporting and performance of quality metrics.

Hospital executives are concerned, however, that the federal initiatives don't always capture the best information.

Nancy Foster, vice president for quality and patient safety policy at the American Hospital Association, said hospital officials have been concerned some data published earlier this month on the Department of Health and Human Services' (HHS) Hospital Compare website doesn't tell the whole story about facilities' performance.

"The tension for hospitals is, shouldn't we wait just a few more months and publish really reliable data?" Foster said. She argued that HHS officials could have waited for more comprehensive data than the Medicare claims data that was published.

One important issue that the data must include is the health of patients, said Foster and another speaker, David Share of Blue Cross Blue Shield of Michigan, because hospitals that treat sicker patients could appear to have lower quality care unless the data are properly adjusted for risks.

In the future, as more federal safety initiatives continue to roll out, some of the differences between patients could become more important. For example, Foster noted that scientists are constantly discovering more information about genetic differences between patients. As more data about how different groups of people respond to medicine becomes available and medicine becomes more personalized, the questions about quality may get more complicated. If the federal government requires hospitals to collect information about the percentage of patients who get a particular medication, and some patients respond well to one type of medication while others respond well to another, the treatment picture will become more complex.

Hospitals also are not always able to control some of the factors that influence whether a patient is readmitted after being discharged, Foster said. Hospitals that care for a large number of low-income patients may see them return to the hospital if they are not able to afford medications or follow treatment protocols that will keep them healthy, she said. "Does that mean that kind of hospital should be penalized?" Foster asked.

The questions about reporting on quality will ramp up in the next couple of years as CMS's efforts accelerate. Regulations involving value-based purchasing, the meaningful use of health information technology, and hospital inpatient quality reporting will affect hospital payments. Two other signature initiatives by the Obama administration—the move toward advanced primary care practices known as medical homes and the integrated care model involving accountable care organizations—also require providers to produce data on quality measures.

Some groups, especially those that pay for coverage of workers, are excited to see the push toward more reporting on patient care.

"The enthusiasm level is just through the roof" among employers and unions who want to get higher-quality care for employees, said Gerry Shea, the assistant to the president of the AFL-CIO. "We have an opportunity to do something here that we've never done before."

• HHS Hospital Compare Web site (pdf)

By Emily Ethridge, CQ Staff

April 29, 2011 -- The American Medical Association is proposing a complete overhaul of the formula used to determine reimbursements to physicians who see Medicare patients, responding to what observers say is a serious bipartisan effort to deal with the persistent problem.

The AMA's proposal came in response to a letter that House Energy and Commerce Chairman Fred Upton and ranking member Henry A. Waxman sent to 51 medical specialty groups asking how Congress should address changing the formula.

Representatives from several of the groups are expected to testify at a May 5 hearing by the Energy and Commerce Subcommittee on Health to discuss replacing the current formula, known as the sustainable growth rate (SGR).

Observers say the groups, who have long called for scrapping the SGR formula, appeared surprised and heartened to receive the request. "This has never happened before," said Julius Hobson, a former AMA lobbyist who is now a senior analyst at the law firm Polsinelli Shugart. "I looked at the signatures on that letter, saying, 'Wow, this is a big deal,' . . . this may be the big bipartisan thing."

Along with Upton, R-Mich., and Waxman, D-Calif., Republicans Joe Barton of Texas, Joe Pitts of Pennsylvania and Michael C. Burgess of Texas signed the letter, as did Democrats John D. Dingell of Michigan and Frank Pallone Jr. of New Jersey.

"The House Energy and Commerce Committee is determined to achieve a permanent, sustainable solution to the Medicare physician payment problem this year," the lawmakers said in the March 28 letter.

Provider groups say the severe cuts mandated by the SGR formula will prompt physicians to refuse to see new Medicare patients and even to drop some already on their rolls.

Typically, they have called for longer "patches" to stave off the scheduled cuts, rather than proposing more detailed plans to overhaul it, as AMA does in its letter.

Congress acted five times last year to stop the cuts to the reimbursement rates, ultimately blocking a 25 percent cut in payment rates in December. However, that patch lasts only through Jan. 1, 2012, at which time Medicare officials say payments will drop by 29.5 percent.

The AMA's proposal would repeal the current SGR formula and enact a period of "stable payments" from 2012 to 2016, including annual payment updates that keep pace with the growth of medical practice costs.

That time would allow Congress to work on legislation creating a new payment formula, the AMA said in its letter.

Hobson, currently an outside consultant for the American Academy of Family Physicians (AAFP), said several organizations also requested the five-year transition period in their responses to the committee.

AAFP, for instance, called for paying a higher reimbursement rate to physicians who deliver primary care and preventive health services during that transition period to reflect their role coordinating care and helping patients manage chronic diseases—factors associated with better health outcomes and lower costs.

"The only problem with five years is you're going beyond where everybody else has been willing to go for the temporary time," Hobson said.

Both the AMA and the family physicians group wants to use that time to test new payment models put forth as ways to improve coordination and quality of care, as well as lower costs. The group said that Congress should look at different payment models already being tested in Medicare and the private sector, including pay-for-performance, bundled payments, and accountable care organizations.

The AMA also recommended that Medicare test transitional models, including accountable medical home models and warranties for inpatient care.

"We believe this proposed framework, and timeline, are critical to developing the evidence base necessary to ensure a reformed Medicare physician payment system meets our mutual goal of improving the Medicare program, while ensuring beneficiaries' continued access to care," said the letter signed by Michael D. Maves, the AMA's chief executive and executive vice president.

Hobson said the AMA's proposal reflected the committee's request that the ideas translate into legislation, and acknowledged that any fix is going to require bipartisan support and 60 votes in the Senate.

"Republicans and Democrats are looking at two things that go with [a payment fix]," he said. "One is keeping the growth in costs down, and the second one is quality. And they want to blend those two things into a permanent payment."

The proposals and the hearing are just the beginning of what could be a months-long congressional debate over how to revamp the SGR. In October, the Medicare Payment Advisory Commission is planning to recommend to Congress how best to change the reimbursement formula.

President Obama frequently has said he is committed to permanently fixing the formula, but his fiscal 2012 budget proposal included a way to avoid the payment cuts for two years. His budget document put the cost of a 10-year fix, including continuing to review the SGR through 2021, at $315 billion.

By John Reichard, CQ HealthBeat Editor

April 29, 2011 -- In a coup for the fledgling office at heart of the Obama administration's efforts to find ways to streamline health care and control spending growth, Nancy Nielsen, a physician and past president of the American Medical Association, has signed on as a senior adviser to the Center for Medicare and Medicaid Innovation.

The center has captured the imagination of policy analysts supportive of the health law (PL 111-148, PL 111-152). In the New Yorker magazine, surgeon and writer Atul Gawande devoted an article to promoting the idea of continual innovation. He noted the revolutionary gains in agricultural productivity in the 20th century brought about by constant experimentation under the auspices of the U.S. Department of Agriculture, and called for a similar system for delivering health care in the United States.

Nielsen could help make doctors a big part of the experimentation at the Center for Medicare and Medicaid Innovation, which was created by the health and has a $10 billion budget. It is housed at the Centers for Medicare and Medicaid Services (CMS). Doctors are believed by many analysts to be the key to controlling health care costs, given their power to prescribe drugs, tests and medical procedures, and make referrals.

Congressional Republicans say that while innovation is needed in health care, the activities of the center bear close scrutiny.

"I think there needs to be a lot of oversight on that center," a House GOP aide said at a Washington, D.C., conference earlier this year. "Does it hold promise? Absolutely. But any time you take $10 billion and go give it to the group holed up in a office someplace and say, 'here, good luck, and try to reduce Medicare spending with really no strings attached and no direction,' I think there's some concern there."

Nielsen "certainly knows physician leaders, not just at the AMA, but also the specialty societies," said former AMA lobbyist Julius Hobson who expressed surprise on learning about Nielsen appointment. "She would be in a position to get the physician groups to take part in the pilots" launched by the center. "It's a good move."

Nielsen will advise center director Richard Gilfillan.

Hobson also noted with interest the news that Nielsen will also report to HHS Secretary Kathleen Sebelius, who will rely on her for "special projects."

That could suggest a larger role for Nielsen at some point at HHS, Hobson said. However, her appointment is for one year.

Apart from any special projects, Nielsen is likely to find plenty to do at the innovation center, which is heavily involved in efforts to foster the growth of team-based care through the creation of accountable care organizations. One of the big questions about ACOs is how best to involve physicians in forming and running them.

Nielsen is the former head of the Office of Medical Education at the School of Medicine at the State University of New York at Buffalo. The university announced her move to Washington and said that once she finishes up her term at the agency she will return to the university to serve in her role as senior associate dean for health policy.

"The idea is to identify the best thinking and best practices, bring them to this center and then disseminate them so that we can all become a learning community throughout the country," the university's news release quoted Nielsen as saying. "It doesn't make sense to have every single community trying to figure out how to moved forward, without sharing what others have learned."

By Rebecca Adams, CQ HealthBeat Associate Editor

April 26, 2011 -- The Department of Health and Human Services is expecting a barrage of comments after its recent announcement that it wants public input into the essential benefits that insurance plans in the new exchange markets will have to cover in 2014.

HHS Secretary Kathleen A. Sebelius said that she will solicit feedback this fall on the types of benefits that plans must cover. The Institute of Medicine also will make recommendations later this year.

"I look forward to hearing from the American people, doctors, nurses, members of Congress and all interested stakeholders," Sebelius said earlier this month. "Beginning this fall, HHS will launch an effort informed by the IOM's recommendations to collect public comment and hear directly from all Americans who are interested in sharing their thoughts on this important issue. I'm confident that this process will ensure all Americans have a seat at the table and strengthen our health care system."

The additional opportunity for public input comes after the release of a Department of Labor survey on April 15. Some lobbyists criticized the effort as minimalist, while advocates for health insurance plans said its findings were not relevant to the types of plans that will operate in the new exchanges.

The survey was required by the 2010 health care overhaul (PL 111-48, PL 111-52). It gave HHS officials a sense of the types of benefits that are typically covered by health insurance plans. While HHS officials had been expected to rely on the information to help them craft the essential benefit package rules, the limited nature of the DOL data makes it less useful in determining a final benefit package.

The 62-page report summarized previous reports and included new information for 12 specific benefits. DOL officials had considered providing details for a wider range of services but concluded that "it is not possible to produce reliable data for many of the services due to the lack of detail that characterizes many plan documents." The dozen benefits that the department had enough data to describe included emergency room visits; ambulance services; diabetes care management; kidney dialysis; physical therapy; durable medical equipment; prosthetics; maternity care; infertility treatment; sterilization; gynecological exams and services; and organ and tissue transplantation.

"It is difficult to see how the DOL report, with its limited information, will be very helpful to HHS," said Ian D. Spatz, senior adviser at Manatt Phelps and Phillips.

"HHS is going to have a lot of different inputs and opportunity for public comment," said Families USA deputy executive director Kathleen Stoll. "They'll take this study as one piece of information. This survey is not an end-all or be-all study, by any means. It's an additional input."

The trade association for health insurers, America's Health Insurance Plans (AHIP), argued that the limitations of the survey could lead to misleading conclusions because the report reflects the types of benefits offered by big companies, rather than plans in the small business and individual markets.

"The coverage data in the new survey are more consistent with coverage offered by large employers which tends to be much broader than what most small businesses choose to purchase today," said AHIP spokesman Robert Zirkelbach. "The essential benefits requirement needs to take into account coverage offered by both large employers and small businesses to avoid forcing many small employers to 'buy up' and purchase significantly more coverage than they can afford. In addition, small businesses will also be hit hard by a new health insurance sales tax that will further drive up the cost of coverage and make it even harder for them to offer coverage to their employees."

• Labor Department Survey (pdf)