Population Health Insider December 2008
Five questions about physicians’ role in CDHPs
Risk-adjusted model underpays, ignores functional status
CMS unveils two-tier medical home care management fee
Definition of the medical home tiers
DMAA trumpets synergies in DM, medical home
DMAA trumpets synergies in DM, medical home
Cisco creates culture of wellness
Five questions about physicians’ role in CDHPs
Most primary care physicians don’t understand consumer-driven health plans (CDHP) and aren’t ready to provide healthcare financial advice to patients, according to “Are Primary Care Physicians Ready to Practice in a Consumer-Driven Environment?” a study published in the October American Journal of Managed Care, and The Impact of Consumer Directed Healthcare on Providers, a white paper published in October by Fifth Third Bank.
The findings show barriers that health plans will have to clear for CDHPs to effectively increase quality and lower costs.
Physicians play an important role because studies show patients trust their doctors more than health plans and employers, and point-of-care decision-making is a key component to containing costs and choosing the most cost-effective care.
Craig Evan Pollack, MD, MHS, a Robert Wood Johnson Foundation clinical scholar at the University of Pennsylvania in Philadelphia and coauthor of the study, says the researchers wanted to gauge what physicians think of CDHPs, adding that although previous studies have focused on the patient and consumer response to CDHPs, researchers have not explored the physician part of the equation. “I think it’s an open question about what role the doctors should play in these plans,” says Pollack.
Are docs ready?
CDHP enrollment has grown tenfold in three years. About 20% of employers offer the plans, and the U.S. Department of the Treasury estimates CDHP enrollment will reach 25 million in the next decade, according to “Are Primary Care Physicians Ready to Practice in a Consumer-Driven Environment?”
Yet only 48% percent of physicians surveyed are ready to discuss medical budgets with patients.
The study found that 43% of the 528 physicians who responded to the survey said they had “low knowledge” of CDHPs, and about one-third said they had “low knowledge” of how medical savings accounts function. (See Figure 1 on p. 2 of the PDF.)
About one-half of those surveyed think of CDHPs favorably. (See Figure 2 on p. 3 of the PDF.)
Physicians with CDHP enrollees in their practice were more prepared to discuss costs of medical care, cost-effectiveness of medical care, and medical budgeting than those without CDHP members. (See Figure 3 on p. 3 of the PDF.)
More than two-thirds of the physicians were ready to advise patients on the costs of office visits, medications, and laboratory tests, but less than half were prepared to advise on the costs of specialist visits and hospitalizations. (See Figure 4 on p. 3 of the PDF.)
Physicians with CDHP patients were more ready to discuss the costs of medications than those without CDHP members, but were no more ready to discuss the costs of services outside their practices.
On the plus side, more than 70% of physicians said CDHPs decrease care that is not clinically indicated. (See Figure 5 on p. 4 of the PDF.)
Liz Boehm, principal analyst at Forrester Research, Inc., in Cambridge, MA, says getting physicians involved in CDHPs will be difficult without health plans providing training and rewarding them for financial consultations. The variety of health insurers and plans make it difficult for doctors to sort out costs, deductibles, and bene-fit limits and simultaneously keep abreast of the latest in medicine.
“It’s unrealistic to expect physicians to play a primary role there. I think the physician can help determine quality, but the cost-quality tradeoff is something the consumer has to make,” says Boehm.
Sander Domaszewicz, principal at Mercer in Newport Beach, CA, says having physicians deliver the message of healthcare finances holds promise, but there are barriers. “It’s hard to do because there are so many other things on their plate,” says Domaszewicz.
But having educated physicians who can serve as advocates for consumer-driven care can help health plans. For example, physicians can recommend less costly alternatives, such as x-rays instead of MRIs, when appropriate. CDHPs without physician participation have marginal cost reductions, says Domaszewicz.
Can docs trust quality data?
In addition to physician involvement, another component of CDHPs is transparency, which includes accurate quality and cost information so consumers can make informed decisions.
CDHP advocates say online resources will help physicians and patients consider costs and quality at the point of care. However, the study found doctors don’t trust the information. (See Figures 6 and 7 on p. 4 of the PDF.)
The study found that:
That lack of faith could lead physicians to “disapprove of their patients’ use of quality-of-care data, potentially creating tension in the physician-patient relationship,” the study’s authors wrote. “At the extreme, physicians may attempt to dissuade patients from using such data, causing confusion and consternation for patients facing difficult medical decisions. The severe physician distrust of quality data may also present a stumbling block for third-party payers trying to use these tools to direct patients’ use of medical services.”
Pollack says the quality measures may cause physicians to “feel judged” and worry about “profiling or unintended consequences.”
“As these plans roll out and more and more patients are encouraged to use quality information, there’s a potential for a lot of confusion,” says Pollack.
Less than half of the physicians in the survey agreed that quality-of-care information from these Web sites should influence a patient’s choice of hospital or specialist. Aetna and Humana are leading regional initiatives to provide price information, but point-of-care availability is still limited, according to the authors.
In The Impact of Consumer Directed Healthcare on Providers, providers interviewed spoke out about the problems with payer information. Eighty percent called the information “problematic” because it is “inaccurate, incomplete, untimely, or unavailable.” Of the remaining 20%, half said they are just beginning to implement the process that allows them to review the information with patients, which means a mere 10% of those surveyed believe they are getting the information they need from payers. “The recurring chief compliant is that it is difficult for providers to accurately know how much of patients’ deductibles have been met at the time of service,” the white paper states.
CDHP members are usually younger and more computer-savvy, which means they expect to control their healthcare costs by viewing bills, making payments, and scheduling appointments online. But many providers, especially small ones, don’t have those online capabilities. Those with online access started with online bill payment, according to the white paper.
Having online services reduces staff labor, freeing up employees to perform other functions such as eligibility checks and additional follow-up, the researchers wrote.
The most innovative providers have kiosks in their facilities to allow patients to determine their out-of-pocket costs. The kiosks also streamline patient interactions, reduce wait times, and increase patient satisfaction. Twenty-five percent of the practices surveyed have kiosks, and another 40% plan to add the technology. Those surveyed who do not have kiosks questioned whether the technology was worth the cost.
“Some providers have reported a reduction in front desk personnel through the use of kiosks, even in a relatively small physician practice,” according to the report.
The providers interviewed said the following two products could help them in this CDHP world:
An easy-to-use, accurate price calculator that predicts expected health plan reimbursement, subtracts that amount from the expected total billed amount, and estimates the patient’s payment responsibility by factoring in copays and deductibles
Forecasting tools that predict patients’ propensity to pay their bill by referencing a credit score or key elements of credit reports
Will docs feel conflicted?
CDHPs may unintentionally create a dilemma for physicians: Should they treat patients according to clinical factors or let nonclinical factors, such as coverage, cost, and ability to pay, play a role in their care recommendations? What will this mean for low-income patients who can’t afford a higher level of care?
Pollack released a study earlier this year that looked at the effect of CDHPs and patient socioeconomic status on physician recommendations for colorectal cancer screening.
The researchers found that socioeconomic status and deductible level affects physician recommendations for preventive care, and covering preventive services and exempting them from medical savings accounts can help “mitigate the impact of high deductibles and [socioeconomic status] on inappropriate recommendations,” according to Pollack’s study.
There is also a potential legal issue for physicians. “From a legal perspective, it remains to be seen whether recommending less expensive, less effective care will leave physicians vulnerable to malpractice claims,” the authors of Pollack’s study wrote.
“I think there are many open questions for physicians taking care of patients in these plans,” says Pollack. “I think one of the goals of our study was to highlight some of the tensions that may exist for physicians and for patients who are covered under these plans.”
Are docs ready to dole out financial information?
Many physicians are not ready to give healthcare financial advice, and the shift to higher copays and deductibles is pushing patient debt onto practices and providers.
At the same time, consumers don’t understand their high-deductible plans and are miffed when their physicians’ offices ask for payment. Health plans and employers aren’t properly explaining high-deductible plans, according to the white paper.
“The general finding was that all of them believe that they needed to be prepared for the coming growing tide, if you will, of more and more consumers paying out of their own pockets, and they needed to prepare themselves for front-end processes to handle that,” explains Nav Ranajee, vice president of healthcare solutions at Fifth Third Bank in Cincinnati and coauthor of the white paper.
Ranajee says many consumers don’t understand CDHPs. They are used to their insurer paying for care and not having to fork over cash at the physician’s office. This is a dramatic shift from the managed care system that Americans have come to expect, in which the insurer pays the lion’s share of costs associated with office visits and procedures, he says.
The white paper researchers interviewed revenue cycle executives in hospitals, clinics, and physician practices to assess how CDHPs are affecting providers.
Those interviewed said revenue derived from CDHPs is increasing, with the average revenue slightly below 3%. The researchers surmised the percentage is actually higher, but offices don’t know all of the patients in high-deductible plans because insurance cards often don’t provide that information.
Another effect is that bad debt write-offs are growing and causing collection issues for practices, which leads to increased staff costs. “While some providers see very little impact, others estimate that CDH write-off experience lies between 40% and 50%,” the white paper states.
Ninety-five percent of the interviewed executives said there is a need for higher staff skill levels and training because of CDHPs, with the biggest skill upgrades needed in the areas of registration and financial counseling. Nearly three-quarters of the providers interviewed have already started that process by adding staff members and implementing training.
Will banks help docs?
CDHPs are leading to greater roles for banks. Moving beyond traditional bank services to providers, banks now offer health savings accounts (HSA) and healthcare-specific revenue cycle management services.
Along with HSAs, banks are offering online consumer management tools for quality and pricing information and looking for ways to complement practices through payment options such as HSA debit cards, online payment portals, and patient financing programs, according to the white paper.
Ranajee says providers are approaching banks about how they can improve processes. He expects banks will play a larger role in healthcare financing as consumers pay more for healthcare.
Those interviewed for the white paper agreed banks will bring about higher levels of processing and efficiency. “But they expressed concern that banks will not adequately adapt to the unique requirements, considerations, and limitations related to processing healthcare financial transactions,” wrote the researchers. In addition to banks playing a larger role, physicians can benefit from the CDHP movement by offering financial services that allow them to stand out from competitors. “Providers agree that if they do not implement best practice solutions and offer alternative payment methods, then they will soon see an adverse effect on their cash flow and bad debt,” the researchers wrote.
“The more options they have, the increased ability for the provider to collect, and it will lessen the degree of pain for the patient,” says Ranajee.
CDHP services offered by providers
The more innovative revenue cycle executives interviewed are providing some of the following services, according to The Impact of Consumer Directed Healthcare on Providers, a white paper published in October by Fifth Third Bank:
Electronic verification of insurance eligibility and benefit coverage
Manual verification of insurance eligibility and benefit coverage via telephone calls to payers when electronic verification is unavailable or inadequate
Estimates of total expected charges and calculation of patients’ financial responsibility at registration
Calls to patients as early as possible to inform them of their payment responsibility
Staff and training increases to assist with financial assistance applications
Staff and training increases to assist with Medicaid applications
Increases in skilled staff and training to assist in getting early qualifications for charity care
Postponement of scheduled nonemergency treatment until financial obligations are addressed
“[Providers] don’t want to go through three different Web sites to pull down this information. It’s very cumbersome and takes away from the patient care,” says Nav Ranajee, vice president of healthcare solutions at Fifth Third Bank in Cincinnati and coauthor of the white paper.
Risk-adjusted model underpays, ignores functional status
Medicare’s capitation model does not take into account a beneficiary’s functional status and underpays for multiple comorbidities. This lowers reimbursements paid to physicians and health insurers involved in Medicare managed care plans who treat frail patients with multiple chronic conditions, according to a study that appeared in the October American Journal of Managed Care.
“Medicare Capitation Model, Functional Status, and Multiple Comorbidities: Model Accuracy” found that the Centers for Medicare & Medicaid Services Hierarchical Condition Categories (CMS-HCC) risk-adjusted model for Medicare payments underpredicted payments for patients with hypertension, lung disease, chronic heart failure (CHF), and dementia. (See Figure 8 on p. 8 and Figure 9 on p. 9 of the PDF.)
“The difference between the actual costs and predicted payments was partially explained by beneficiary functional status and less-than-optimal adjustment for these chronic conditions,” the researchers state.
CMS-HCC is a risk-adjustment model that “relies on demographic and diagnostic information available from administrative data to predict resource use,” according to the study. Rong Yi, PhD, senior scientist and principal of analytic services at Verisk HealthCare, Inc., in Boston, says CMS tried to discourage vague coding and gaming of the system when it created HCC, which uses a subset of ICD-9-CM codes that focuses on chronic conditions or acute complications of chronic conditions.
“While this is a very good policy decision, we have found that nonchronic conditions often have cost implications for future years,” says Yi.
Although HCC includes lung disease/cancer, stroke/arthritis, and diabetes/coronary artery disease (CAD), there is still a discrepancy between the actual and predicted cost ratios, according to the study. (See Figure 10 on p. 10 of the PDF.)
The underpredicting suggested in the study could play a large role in reimbursements to physicians and insurers because two-thirds of noninstitutionalized Medicare be-neficiaries over the age of 65 have two or more chronic conditions, according to the study.
Katia Noyes, PhD, MPH, associate professor in the department of community and preventive medicine at the University of Rochester (NY) and the lead author of the study, says plans and practices with a large proportion of frail elderly could lose money because of the model.
The HCC model does not take into account functional impairment. This could affect Medicare’s Special Needs Plans (SNP), which provide coordinated care to dual eligibles with certain chronic illnesses who reside in institutions such as nursing homes.
Yi says non–claims based information such as functional status, socioeconomics, culture, linguistics, and geography affect how patients interact with the healthcare system. “Including non–claims based data has been discussed for quite a number of years in the risk-adjustment and predictive modeling field, functional status being one of them. Clinically, functional status significantly affects how a patient seeks care and follows the doctor’s treatment requirements,” she says.
Yi says collecting these kinds of data elements will take a large effort. “Unless there is a systemwide effort to start enforcing the collection of such data elements, we can debate the underpayment relating to not having functional status or other factors like this forever. I personally don’t think one can do much about it at all,” she says.
The model also doesn’t take into account dementia, osteoporosis, and other chronic conditions that could affect a patient’s health status and care.
Researchers looked at how 11 target comorbidities may affect functional impairment, including arthritis, osteoporosis, diabetes, CAD, CHF, and dementia.
Certain combinations of those ailments could affect patient performance in activities of daily living (ADL), which would affect medical costs. ADLs include bathing, dressing, and eating. The researchers say the more ADL deficiencies a patient has, the greater the difference between the HCC model’s predicted cost and the actual expenses.
In the study, researchers looked at 46,790 communitydwelling Medicare beneficiaries between 1992 and 2000. Nearly three-quarters of beneficiaries in the study had two or more target comorbidities.
“Patients with CHF and dementia reported the highest level of deficiency across all ADL categories: 14.38% relied on others’ help with eating (feeding), and more than 50% used help or assisted devices for bathing. Other groups with a high ADL deficiency level included patients with stroke combined with hypertension or arthritis, CHF and osteoporosis, and CAD and diabetes,” according to the study.
The findings mean that the CMS-HCC model “significantly underpredicts expenses for patients with hypertension, lung disease, CHF, and dementia after adjusting for patents’ disability level,” wrote the researchers. (See Figure 11 on p. 11 of the PDF.)
Ross Winkelman, managing director at Wakely Consulting Group in Denver, who helps managed care organizations develop Medicare Advantage filings and bids, says his company has seen a similar understatement of the HCC risk-adjustment models for subgroups. Another issue is the limited number of comorbidities recognized in the HCC model and delays that increase risk scores. Managed care organizations or provider groups that accept a percentage of risk-adjusted benchmarks and serve a disproportionate number of sicker, more frail individuals will likely be underpaid, and those with healthy populations will be overpaid.
“Risk adjustment dampens these effects but does not completely eliminate them,” says Winkelman.
Kirk L. Shanks, MAS, actuarial analyst at Wakely Consulting Group in Clearwater, FL, points to another concern: The Medicare HCC model is based on the previous year’s claims data. For example, if an individual is healthy in 2007 and becomes ill in 2008, the provider group or managed care organization would receive lower payments because of the patient’s low-risk score based on 2007 data.
If the patient leaves the plan in 2008, the group or organization would not receive increased payments. However, if the patient is in the same plan in 2009, and the HCC increases the individual’s risk score, the group or organization would recoup the previous year’s costs with 2009’s higher payments.
Shanks says another example is a new 65-year-old Medicare beneficiary who is ill but has no encounter data with CMS. “The plan would be paid a default rate, which is relatively low, in the first year. The plan would not get the benefit of the increased risk score and associated plan payment until the next year,” he says.
Effect on health plans
These discrepancies affect not only physicians, but also health plans involved in Medicare managed care programs.
“Our results demonstrate that unless a special disability adjustment is introduced for patients with comorbidities, entering into risk arrangements with Medicare for services provided to people with multiple comorbid conditions may be more risky for health plans serving this population than anticipated,” wrote the researchers.
SNPs that are not qualified for the frailty adjustment are “financially at a disadvantage in providing care to the very frail and disabled,” the researchers wrote. These kinds of disincentives could push managed care plans to not enroll those individuals.
“[Private insurers] probably should start looking at collecting more information on functional status just as Medicare should,” says Noyes, adding that the payment model’s deficiencies could be a catalyst for primary care doctors leaving for specialty care.
In specialty care, doctors are responsible for only one condition rather than the multiple comorbidities in primary care.
The payment model could potentially benefit specialty care, which is more costly than primary care. “I think that’s one reason why there is an outflow of providers from primary care,” says Noyes. “[Primary care is] where most of the elderly get their care.”
Noyes says she is hopeful that Medicare will review its payment system and adjust for comorbidities and functional status. However, she does not expect changes, because tweaking the system is unlikely to save money, although it could improve quality and outcomes. “My experience tells me that very few things in this current system of healthcare saves money. You may improve quality of care, but everything comes at a cost,” she says.
CMS unveils two-tier medical home care management fee
Second tier is technology-focused
The Centers for Medicare & Medicaid Services (CMS) has provided a blueprint for the Medicare Medical Home Demonstration (MMHD) that is planned to launch in 2010.
In its demonstration project, CMS is defining the medical home as practices that score above the National Committee for Quality Assurance’s Physician Practice Connections—Patient-Centered Medical Home thresholds in continuity of care, clinical information system, delivery system design, decision support, patient/family engagement, coordination of care across providers and settings, and improved access to care.
CMS believes the demonstration will attract practices because of care management fees, sharing of project savings, better quality of care, and improved practice work flow and job satisfaction.
CMS’ MMHD project will include a two-tier structure that is based on the practice’s capabilities. The practices that are qualified to take part must develop and implement care plans, use evidence-based medicine and decision support tools, utilize health information technology (IT) to monitor and track health status, and encourage patient self-management.
The two-tier system is:
The first tier is an entry-level step into the medical home. It includes integrated care plans, patient education and support, and written standards for patient access. The second tier builds on that foundation with technology such as electronic health records (EHR) that capture clinical information, including blood pressure and lab results; a systematic approach to coordinate facility-based and outpatient care; and additional capabilities, including e-prescribing. (See “Definition of the medical home tiers” on pp. 15–17 of the PDF for the full list.)
Vince Kuraitis, JD, MBA, principal and founder of Better Health Technologies, LLC, in Boise, ID, says the demonstration design shows that CMS believes technology is necessary to implement the medical home.
“It’s a carrot to incentivize physicians to be able to develop electronic health records with the belief that, ultimately, they are going to be necessary,” says Kuraitis. “I think there is a broader public policy objective being woven in around health information technology, and in my opinion, that’s a good thing and in the right direction.”
Bruce Bagley, MD, medical director for quality improvement at the American Academy of Family Physicians in Leawood, KS, says primary care physicians are already on the path to EHRs. Bagley says half of his organization’s membership has EHRs and another one-quarter are shopping for the technology.
Who is eligible?
CMS plans to reveal the eight geographic sites that will take part in the project by the end of 2008, which will include urban, rural, and medically underserved sites. (See Figure 12 on p. 13 of the PDF.)
Eligible physician practices for the CMS project include general internists, family practices, and geriatrics. Radiologists, pathologists, anesthesiologists, dermatologists, and psychiatrists are some of those not eligible to take part.
CMS has limited the requirements for beneficiaries to participate. Patients eligible to take part in the MMHD are Medicare fee-for-service beneficiaries with at least one eligible chronic condition who are not living in a hospice or nursing home, receiving treatment for end-stage renal disease, or enrolled in Medicare Advantage. Eighty-six percent of Medicare beneficiaries fit those criteria, according to CMS.
Kuraitis says opening the project to so many Medicare beneficiaries should attract physicians, who will see the demonstration includes healthier seniors, as well as those with comorbidities. The limited requirements also move the demonstration from a chronic disease project to one that deals with prevention and wellness. The legislation that created the demonstration did not allow for such a wide population, but Kuraitis says the change is a positive.
Care management fee
CMS will pay a per-member per-month care management fee depending on the practice’s medical home tier and the chronic disease burden in the patient population. The fee will be based on the AMA/Specialty Society RVS Update Committee (RUC) physician work relative value units, practice expenses, and insurance, and is risk-adjusted depending on the Hierarchical Condition Categories score of the patient.
In April, the RUC recommended a payment structure that was praised by some, but criticized by those who believed the care management fees would not pay physicians enough to take part.
Bagley says he believes the latest care management fee will be enough to care for the Medicare beneficiaries in the demonstration. Kuraitis, who questioned the previous care management fees, likes the new payment proposal. A practice in Tier 2 will receive about $100 per member per month for the more at-risk patients. Spread that money out among a couple hundred Medicare beneficiaries, some of whom have only one chronic illness, and physicians should take part in the project, he says. (See Figure 13 on p. 14 of the PDF.)
To interest physicians, Kuraitis says CMS should err on the side of paying too much. “You can always ramp it down. If you don’t pay them enough and they’re not interested, the project is dead in the water and you will have alienated them,” he says.
Practices will also get to share in the project’s savings. The first 2% of savings are not shared with practices, but 80% of the savings above that 2% figure will be shared with practices. CMS will allocate the money based on members-months of enrolled patients.
CMS’ MMHD is an opportunity for population h