New Study Suggests VBP Program Will Have Limited Effect – A study appearing in the September 2012 edition of Health Affairs titled “Medicare's New Hospital Value-Based Purchasing Program Is Likely To Have Only A Small Impact On Hospital Payments,” questions “whether the new pay-for-performance program will substantially alter the quality of hospital care.” The researchers, Rachel M. Werner and R. Adams Dudley, applied the rules governing the inaugural year of CMS’s value-based purchasing (VBP) program to 2009 quality data and concluded that “the financial impact [of the VBP program] will be small, even at the extremes of best- and worst-performing hospitals.” In particular, applying the two “domains” approved for the 2013 VBP program (the process of care domain and patient experience of care domain) to 2009 quality data, the study found that less than six percent of hospitals nationally would experience a change (positive or negative) in payments of more than 0.5 percent. In fact, almost two-thirds of hospitals would experience a change in Medicare payment of a quarter percent or less. There was, however, substantial variation in performance based on hospital characteristics as described below. Because the study was conducted “as if it had been in place in 2009,” the authors stressed that it “cannot address how hospitals will actually perform under the program in 2012.”
The study examined performance results by region and concluded that “New England hospitals had the highest total scores and process scores, while hospitals in the Mountain and Pacific regions scored lowest.” These regional differences in hospital scores translated into an average difference in Medicare payment of over $90,000, with the average New Hampshire hospital—the state with the highest score—achieving an average Medicare payment increase of $66,948, while the average Hawaii hospital—the state with the lowest score—experiencing an average Medicare payment decrease of $25,596.
Hospital performance also varied significantly by teaching status with 20 percent of non-teaching hospitals expecting an increase in Medicare payment of at least 0.25 percent compared to just 10 percent of teaching hospitals. There was an even bigger discrepancy between for-profit hospitals and non-profit hospitals with 35 percent of for-profit hospitals expecting an increase in Medicare payment of at least 0.25 percent compared to just 15 percent of non-profit hospitals. Higher levels of nurse staffing and lower DSH percentages also correlated with higher VBP scores, according to the study.
On the whole, the study suggested that “close to half of US hospitals will face changes in Medicare payment of at least $35,000” under the new VBP program. One would expect that number to increase while the percentage of Medicare payments tied to the VBP program increases from one percent in 2013 to two percent in 2017. The authors stated, however, that “[e]ven after a scheduled doubling in size of the payments by 2017, only eight hospitals would see payment changes as large as 1.5 percent” and concluded that “[t]hese amounts may not have a major influence on hospital care.”
The abstract of the article is available here. The full article is available on the Health Affairs website but requires a subscription.
Reporter, Daniel J. Hettich, Washington D.C., +1 202 626 9128, dhettich@kslaw.com.
HHS Announces Undocumented Individuals With Deferred Action Status Ineligible For Affordable Care Act’s Preexisting Condition Insurance Plan – On August 30, 2012, HHS announced an amendment to an interim final regulation that pertains to the Affordable Care Act’s Preexisting Condition Insurance Plan (PCIP) program. 77 Fed. Reg. 52614. The recent amendment results from the Department of Homeland Security’s (DHS) June 15, 2012 announcement that it will, on a case-by-case basis, provide temporary relief from removal by granting “deferred action” with respect to undocumented immigrants under the age of 31 who came to the United States as children and do not present a national security risk. The amendment to the PCIP program interim final rule clarifies that individuals with deferred action status are ineligible for PCIP program benefits.
The PCIP program interim final regulation took effect on July 30, 2010 and implements the section of the Affordable Care Act that establishes a temporary high-risk health insurance pool program to immediately cover eligible uninsured Americans with preexisting medical conditions. The PCIP program provides coverage to eligible recipients until January 1, 2014, which is when the Affordable Care Act’s prohibition of denying coverage based on health status or medical history takes effect. One of the PCIP program eligibility requirements is that an individual must be “lawfully present” in the United States.
As noted, the HHS announcement comes on the heels of DHS’s decision that it will, on a case-by-case basis, grant “deferred action” with respect to certain undocumented individuals under the age of 31 who came to the United States as children. DHS’s program is referred to as the Deferred Action for Childhood Arrivals (DACA), and its goal is to ensure that the removal process is focused on “high priority” undocumented individuals, such as those posing a danger to national security or public safety.
In the amendment to the interim final regulation concerning the PCIP program, HHS expressly amends the rule’s definition of “lawfully present” so that individuals granted deferred action status under the DACA process are not eligible to enroll in the PCIP program. Moreover, HHS clarifies that because the PCIP program definition of “lawfully present” also applies to the rules governing Affordable Insurance Exchanges and premium tax credits, DACA recipients are also ineligible to enroll in insurance exchanges and cannot receive tax credits starting in 2014. The amendment is effective immediately, before anyone granted deferred action status under DACA applies for benefits under the PCIP program. However, HHS will accept comments on the amendment until October 29, 2012.
In the same vein, CMS recently sent a letter to state Medicaid directors explaining that individuals with deferred action status under the DACA process are ineligible for Medicaid or the Children’s Health Insurance Program (CHIP) under the CHIPRA state option (which gives states the option to provide Medicaid and CHIP to children and/or pregnant women “lawfully residing” in the United States and otherwise eligible for the programs).
The amendment to the interim final rule is available here. CMS’s letter to state Medicaid directors is available here.
Reporter, Jennifer Simmen Lewin, Atlanta, + 1 404 572 3569, jlewin@kslaw.com.
IOM Recommends Strategies for Reducing Inefficiencies and Improving Patient Care – A new report released by the Institute of Medicine (IOM) on September 6, 2012, Best Care at Lower Cost: The Path to Continuously Learning Health Care in America, cites multiple inefficiencies and shortcomings in the healthcare industry that result in “missed opportunities, waste, and harm to patients.” According to the IOM Report, America’s healthcare system is not evolving quickly enough: “The system needs to learn more rapidly, digest what does and does not work, and spread that knowledge in ways that can be broadly adapted and adopted.” The 18-member IOM Committee estimates that about 30 percent of health spending in 2009, roughly $750 billion, was wasted on unnecessary services, excessive administrative costs, fraud, and other problems. Another estimate suggests that 75,000 deaths could have been prevented in 2005 if every state had delivered services at the same level as the best-performing state. In its report, IOM offers a roadmap for addressing these shortcomings.
IOM’s “roadmap” for transforming the nation’s healthcare system centers around the three-part goal of (1) building an adaptive system; (2) delivering reliable clinical knowledge to patients; and (3) improving the policy environment. Specific recommendations for healthcare delivery organizations include:
- Digital Infrastructure. Fully and effectively employ digital systems that capture patient care experiences reliably and consistently, and implement standards and practices that advance the interoperability of data systems;
- Clinical Decision Support. Accelerate integration of the best clinical knowledge into care decisions by adopting tools that deliver reliable, current clinical knowledge to the point of care and adopting incentives that encourage the use of these tools;
- Patient-Centered Care. Monitor and assess patient perspectives and use the insights to improve care processes; establish patient portals to facilitate data sharing and communication among clinicians, patients, and families; and make high-quality, reliable tools available for shared decision making with patients at different levels of health literacy;
- Community Links. Partner with community-based organizations and public health agencies to leverage and coordinate prevention, health promotion, and community-based interventions to improve health outcomes, including strategies related to the assessment and use of web-based tools;
- Care Continuity. Develop care coordination and transition processes, data sharing capabilities, and communication tools to ensure safe, seamless patient care; payers should promote effective care transitions that improve patient health through their payment and contracting policies;
- Optimized Operations. Continuously improve health care operations by utilizing systems engineering tools and process improvement methods to eliminate inefficiencies, remove unnecessary burdens on clinicians and staff, enhance patient experience, and improve patient health outcomes;
- Financial Incentives. Reward continuous learning and improvement in the provision of best care at lower cost through internal practice incentives; payers should reward continuous learning and improvement through outcome- and value-oriented payment models, contracting policies, and benefit designs;
- Performance Transparency. Increase transparency on health care system performance by collecting and expanding the availability of information on the safety, quality, prices and cost, and health outcomes of care to help inform care decisions and guide improvement efforts; and
- Broad Leadership. Expand commitment to the goals of a continuously learning health care system by developing organizational cultures that support and encourage continuous improvement, the use of best practices, transparency, open communication, staff empowerment, coordination, teamwork, and mutual respect and align rewards accordingly.
The IOM Report is available on the IOM website, which can be accessed by clicking here. The Report Brief is available by clicking here. A summary of the IOM’s Recommendations is available by clicking here.
Reporter, Susan Banks, Washington, D.C., +1 202 626 2953, sbanks@kslaw.com.
Healthcare Roundtable on Healthcare Executive Liability – On Friday, September 28, 2012, at 1:00 - 2:30 P.M. Eastern Time, King & Spalding will host an Atlanta-based Roundtable focused on recent developments in healthcare executive liability. Participants will be able to attend in person or via Webinar.
The Roundtable will include the following topics:
- Government resources allocated to healthcare fraud investigation and prosecution after Health Reform;
- OIG's increasing use of exclusion authority to target healthcare executives;
- Discussion of factors reviewed by OIG in exclusion decisions and proactive steps to consider;
- Criminal liability for executives under the responsible corporate officer doctrine;
- Director and officer liability insurance policies, undertakings, "Upjohn warnings," and defense issues for consideration by individuals; and
- Lessons learned from recent high-profile prosecutions and exclusion proceedings against healthcare executives
More information about this Roundtable is available by clicking here.
This bulletin provides a general summary of recent legal developments. It is not intended to be and should not be relied upon as legal advice.
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