Tuesday, 24 May 2016 17:20

Are You Swimming Fast Enough?

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d linnesNew Centers for Medicare & Medicaid Services (CMS) hospital data went public this week – so how are you comparing to your competition?

The new performance data for hospitals, including timely and effective care measure data and Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) data, was released on May 4. As the reimbursement associated with value-based purchasing (VBP) is based on a competitive bell curve, we advise hospitals to be focused on the movement of the database and also the movement of their competitive markets.

As this data is updated quarterly, hospitals need to know how they are positioned in real time related to the performance of their identified competitors. Hospitals need to review the quarterly updates from the Hospital Compare database, identifying where the bell curve has moved, updating financial forecasting, and seizing upon strategic opportunities.

We advise hospitals to recalculate their forecast assumptions and use their most current data to provide the most accurate forecast of their organization’s performance and opportunities. Also, be sure that your organization’s performance is matching that of the pace of your competitors in order to maximize your financial performance and market growth.

Make sure your pay-for performance reports include:

  • A competitive analysis of providers’ performance in your market;
  • A financial forecast and performance comparative to the CMS database for VBP; readmissions, and hospital-acquired conditions (HACs); and
  • The most recent emergency department performance comparative

About the Author

Debbie is a partner and chief operating officer for DCCS. She has a broad background of CEO, COO, and operations leadership in systems (CHW, SCLHS, CHI) and freestanding health systems across the country. She brings experience in moving organizations forward to consulting and interim senior leadership and operating positions and has a strong strategic and clinical background with outstanding physician relations skills. She rejuvenates underperforming organizations and programs, raising performance and profitability, and develops leadership and workplace cultures that lead to high levels of performance and employee satisfaction. Her core skills include  vision/strategic planning, operations improvement, physician practice operations, leadership development, clinical quality/patient safety, service excellence, service line development, population management, mergers/acquisitions, physician alignment, ambulatory and physician services, and workplace culture development.

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john derrThis is the sixth article in a series addressing the value proposition of long-term, post-acute care (LTPAC) providers and LTPAC health IT vendors. The articles focus on five major valued quality of care coordination (VQCC) differentials between LTPAC providers and acute/ambulatory care providers. This series of articles is based on the LTPAC health IT collaborative ONC brief written in May 2015 for Karen B. DeSalvo, national coordinator for health information technology and acting assistant secretary for health with the U.S. Department of Health and Human Services (HHS), titled Health Information Technology Use & Value Delivered by The Long-Term and Post-Acute Care (LTPAC) Sector.

Readers can find the complete ONC brief on the LTPAC HIT Collaborative website (http://www.ltpachealthit.org/sites/default/files/ONC%20Brief%20LTPAC%20HIT%20Value%20and%20Use_May%201%202015.pdf).

The first three VQCC value proposition differentials were duration; eAssessments; and chronic care. The fourth VQCC is medication management. The VQCC LTPAC medication management differential:

  • Provides for a comprehensive review of each patient’s medication management and reconciliation by a licensed consultant pharmacist as it relates to all factors that affect the clinical outcomes of medications, including laboratory, diet, and therapy. Clinical information reconciliation (CIR) addresses medication reconciliation, medication indication for use, allergies, allergy intolerance, and reactions.
  • Provides for a review of the hospital transition-of-care reconciled medication results as it pertains to medications taken before hospitalization, potential drug interactions, and polypharmacy. It ensures that each medication has an indication.
  • Ensures that skilled nursing facilities (SNFs) have a medication team comprised of the nurse, medical director, primary care provider, institutional pharmacy, and consultant pharmacist to conduct comprehensive, integrated, person-centric management of medications. This also involves the electronic health record (EHR), electronic medication administration record, and in some nursing homes,an automated medication dispensing instrument.  
  • Provides for medication counseling when a patient transitions to another provider or home.

Medication management is very important to every patient, but it’s more important when a patient is being transitioned from an acute-care setting to a SNF or home healthcare agency (HHA) and then to their home. This is especially critical when the patient requires chronic care and has comorbidities. The second VCQQ, chronic care, notes how important LTPAC diagnosis, care provision, and maintenance are to patients requiring chronic care, and how these persons make up a large percentage of Medicare costs. One of the important aims in chronic care is to establish each patient’s medications and then provide medication management in order to meet the indicators established by the prescribing physician and to prevent polypharmacy. As pointed out in the previous VQCC bullet points, the ideal provider location to establish a patient’s medication regimen is an SNF.

In 2016, Rand Corporation performed a literature review of medication reconciliation and summarized that:

  • Medication reconciliation (MR) is a national patient safety goal.
  • Approximately half of hospital-related medication errors and 20 percent of adverse drug events (ADEs) occur during transitions, admission, transfer, or discharge from a hospital.
  • Seventy-five percent of medication errors are preventable.
  • The economic impact of medication errors is substantial.
  • MR is the most common type of health system error.
  • Preventable ADEs are associated with one in five injuries or deaths from errors.
  • Drug-related morbidity and mortality estimates were approximately $177 billion in 2000.

What is medication management? There are many different definitions describing the processes and regulations. To list only a few, there is medication therapy management (MTM), medication management (MM), medication reconciliation (MR), and drug regimen review (DRR). It is my belief that this involves not just one clinical element, process, or form, but a management of a person’s medications throughout their life and across their spectrum of care (if they are under professional care). In my research I found a very comprehensive definition in the 2012 Patient-Centered Primary Care Collaborative (PCPCC) Resource Guide on “The Patient-Centered Home: Integrating Comprehensive Medication Management to Optimize Patient Outcomes” (https://www.pcpcc.org/sites/default/files/media/medmanagement.pdf):

“Comprehensive medication management is defined as the standard of care that ensures each patient’s medications (whether they are prescription, nonprescription, alternative, traditional, vitamins, or nutritional supplements) are individually assessed to determine that each medication is appropriate for the patient, effective for the medical condition, safe given the comorbidities and other medications being taken, and able to be taken by the patient as intended. Comprehensive medication management includes an individualized care plan that achieves the intended goals of therapy with appropriate follow-up to determine actual patient outcomes. This all occurs because the patient understands, agrees with, and actively participates in the treatment regimen, thus optimizing each patient’s medication experience and clinical outcomes.”

I realize that this definition is referring to a person in their home, but in transitions of care from an episodic incident, over 40 percent of the time the person is transitioned to a SNF, which becomes their home for a short period of time for rehabilitation. The SNF has the time, professional staff, and capability to develop and include medication management in a person-centric, electronic longitudinal plan before the person is transitioned to their home of choice or to a HHA.

Medication source is a barrier to true medication management. There is a big push on medication reconciliation (MR) lists, especially when it comes to rehospitalization. But a list is just a list, and whoever is filling out the MR list should ensure that it is accurate.

In today’s world medications can be acquired from various sources, including the retail pharmacist, hospital clinical pharmacist, senior pharmacist, and consultant pharmacist. The medications can be obtained from various pharmacies as prescriptions or over-the-counter medications. The trend of relabeling prescription medications to over-the-counter continues, and these medications can cause adverse drug reactions. MR requires the collection of data from various sources, not just what the hospital provided before the transition of care.

An SNF represents a tightly controlled, closed environment that uses an institution pharmacy to provide medications. Today’s leading LTPAC clinical technology vendors have incorporated an electronic medication administration record (eMAR) to assist nurses in their medication administration. An eMAR, as defined by CMS, automatically tracks medications from order to administration using assistive technologies.

The MR also incorporates the act of reconciling any discrepancies between lists. The Improving Medicare Post-Acute Care Transformation (IMPACT) Act of 2014 also requires a standardized MR. In the SNF, the process is assisted by a licensed consultant pharmacist supported by the American Society of Consultant Pharmacists (ASCP). Many of these consultant pharmacists are also certified by the Commission for Certification in Geriatric Pharmacy (CCGP) and are very valuable in chronic care and polypharmacy.

Gaps in True Medication Management

True, comprehensive medication management has to be a closed, continuous process throughout the spectrum of care, especially for persons requiring chronic care. The major gap is in the transition of care, when a comprehensive MR has to be conducted and transmitted electronically to the next care setting. The following is an example graphic of a transition of a person from their episodic incident to their home. At each transition of care (ToC) point, there is a possible discrepancy in the MR.


There are also gaps within the SNF medication management process that would improve what already is the best provider site to establish medication within a comprehensive EMR. First, within the SNF’s EMR, there has to be an integrated system incorporating all clinical technology that affects the patient’s medication management, as well as an integration of the consultant pharmacist software application, which provides medication review.


Another gap is in the administration of the medications. Today, in the majority of SNFs, there is a medication cart that is filled with the medication punch cards from the institutional pharmacy with a 30-day supply of a patient’s medications. This manual process causes problems when medications are changed or when the patient is transitioned from the facility. Unused medications that are already paid for are a cost problem for SNFs.

This long has been a manual process, but it can be automated. As an example, below are two graphics; the first demonstrates the traditional distribution on medications and the second depicts the use of a medication-dispensing instrument.



There are a number of companies that provide instrumentation for medication runs within SNFs. One of these is the Talyst’s InSite System. This in-facility medication dispenser is designed for improving the medication supply chain into SNFs, and medication management within SNFs, thereby aligning them more closely with acute-care medication management practices. The InSite System is being expanded to make it the authoritative SNF informatics hub, wherein real-time data aggregation, data visualization, and even simulations occur among data a) from medication therapy and regimen management; b) from medication prescribing practices and other physicians’ orders; and c) from medication administration outcomes noted in nurses’ clinical notes, and from in-facility EHRs and eMAR. Having an in-facility medication dispenser will eliminate a gap in the process and also eliminate medication waste.

Another gap in true medication management involves polypharmacy. Polypharmacy is defined by one medical dictionary as “the practice of administering many different medicines, especially concurrently, for the treatment of the same disease (and) the concurrent use of multiple medications by a patient to treat usually coexisting conditions and which may result in adverse drug interactions.”

This can happen with various sources of medications, especially when a person is going through transitions between provider sites.

The emerging field of pharmacogenomics offers a very valuable tool in eliminating polypharmacy issues. It will help eliminate unnecessary medications and ensure that medication is correct for each individual patient as we move into personalized medicine. The National Institutes of Health (NIH) U.S. National Library of Medicine defines the field like so:

“Pharmacogenomics is the study of how genes affect a person’s response to drugs. This relatively new field combines pharmacology (the science of drugs) and genomics (the study of genes and their functions) to develop effective, safe medications and doses that will be tailored to a person’s genetic makeup.

Many drugs that are currently available are ‘one size fits all,’ but they don't work the same way for everyone. It can be difficult to predict who will benefit from a medication, who will not respond at all, and who will experience negative side effects (called adverse drug reactions). Adverse drug reactions are a significant cause of hospitalizations and deaths in the United States. With the knowledge gained from the Human Genome Project, researchers are learning how inherited differences in genes affect the body’s response to medications. These genetic differences will be used to predict whether a medication will be effective for a particular person and to help prevent adverse drug reactions.” (https://ghr.nlm.nih.gov/primer/genomicresearch/pharmacogenomics)

The medical, pharmacist, and LTPAC communities are just starting to realize the value of pharmacogenomics solving polypharmacy issues and improving quality of life for geriatric persons requiring chronic care. One of the major obstacles is the cost of the laboratory tests. In order to establish some quantifiable documentation on the cost savings, there was a study with the following conclusion:

“A recent study by the University of Utah on the comprehensive approach to medication management, based on the YouScript CDS system, demonstrated a 39-percent reduction in hospitalizations and a 71-percent reduction in emergency department visits among a cohort of elderly, polypharmacy-treated patients subjected to CYP genetic testing and comprehensive interaction management in the four months following testing. In total, more than 95 percent of prescribing physicians found the CDS-generated reports helpful and approximately a half implemented recommended changes in patient medication regimens.” (Brixner D, Biltaji E, Bress A et al. The effect of pharmacogenetic profiling with clinical decision support tool on healthcare resource utilization and estimated costs in the elderly exposed to polupharmacy. J. Med. Econ. 19, 1–40 (2015). http://www.futuremedicine.com/doi/abs/10.2217/pme.15.47)


The VQCC differential of medication management is very important in providing personally tailored healthcare and utilizing the advantages of an SNF. When the gaps noted above are closed, the SNF will be one of the best medication management sites in the spectrum of care because of the other VQCCs noted, especially the duration of stay and the professional environment.

About the Author

John F. Derr, RPh is CEO of JD & Associates Enterprises, specializing in strategic clinical technology with a focus on person-centric electronic longitudinal medication management and LTPAC. He has more than 50 years of top executive-level experience with Squibb, Siemens, Tenet (NME), Kyocera, MediSpan, and EVP of AHCA. He was SVP, CIO, and CTO for Golden Living, LLC. He is a member of corporate boards providing guidance on clinical healthcare IT and medication management. He represents LTPAC and pharmacy as a member of the U.S. Department of Health and Human Services (HHS) HITECH Committee on Standards. Derr is a graduate of the Purdue School of Pharmacy and a 2006 Distinguished Purdue Alumnus.

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j alidinarThe Centers for Medicare & Medicaid Services (CMS) released the highly anticipated proposed final rule for the Medicare Access & CHIP Reauthorization Act of 2015 (MACRA) on Wednesday, April 27. The 962 pages released to the public establishes more clarity regarding the Merit-based Incentive Payment System (MIPS), which consolidates components of three existing payment models: the Physician Quality Reporting System, the Physician Value-based Payment Modifier, and Medicare's electronic health record (EHR) incentive program.

One of the biggest highlights revealed is that MACRA removes the sustainable growth rate formula, which cut Medicare payments for some services, and replaced it with a .5-percent year-over-year increase in the physician fee schedule.

The proposal also links payments to value via MIPS and measures physicians in four areas:

  1. Cost
  2. Quality
  3. Practice improvement
  4. Technology use

With the CMS belief that the new consolidated program will offer physicians greater simplicity and flexibility, the agency is offering two paths for physician payments:

  1. Physicians can choose to participate in the Merit-based Incentive Payment System, or MIPS.
  2. Physicians can have a significant amount of their revenue generated under a qualifying alternative payment model, or APM.

The law will also allow providers to opt out of MIPS and receive enhanced rates beginning in 2019 if they participate in alternative payment models.

Fine details reveal that “providers must meet three requirements for each model to be considered eligible.”

Within the two tracks of advanced payment models, requirements include:

  1. Participants must use certified electronic health record/EHR technology
  2. Participants must provide payment for covered professional services based on quality measures compared to those used in the quality category of MIPS.

Payment Structure and Participation/QP Determination

Now, a model of payment structure is just one key consideration, but what about provider participation, engagement, eligibility, and results? To address that head-on, providers approached CMS with great concerns about whether they can participate in more than one APM model.

”If an individual eligible clinician who participates in multiple advanced APM entities does not achieve the qualified APM professional QP status through participation in any single APM entity,” CMS responded, “CMS would assess the eligible clinician individually to determine QP status based on combined participation in Advanced APMs."

And what about rural health providers? Did we make the cut without getting cut? CMS addressed rural health as well, noting that the rule indicates that professional services performed at critical access hospitals, rural health clinics, and federally qualified health centers that meet certain criteria can be counted towards the QP determination.

Performance Period 

The rule proposes the performance period as 2017 for the 2019 payment adjustment, meaning that the first performance period would begin in 2017 for payments adjusted in 2019. 

Why this Time Frame? 

  1. The language of the proposed rule indicates that this time frame is necessary to allow data and claims to be submitted and data analysis to occur.
  2. CMS believes that this would allow a full year of measurement and sufficient time to base adjustments on complete and accurate information.

So with 2017 right around the corner, is this proposed final rule an example of a true call to action for physicians to recognize that the future of healthcare is indeed rooted in alternative payment programs? The buzz among healthcare experts as well as many on Capitol Hill already seems to indicate that physicians need to begin assessment and preparation in positioning their participation now. But many physicians would beg to differ that immediacy is the right path and that critical components will affect everything – from patient care, to how it is delivered, to what’s at risk, to sites of care.

More Questions than Clarity for Physicians, More Complexity and Less Inclusion?

  1. Did 962 pages create more questions than answers?
  2. While physicians are eager to adopt value-based payment models under the Medicare Access and CHIP Reauthorization Act, they are also concerned that the transition will be difficult and disruptive to patients.
  3. Is the CMS definition of alternative payment models too narrow and applicable?

Physicians and MIPS: 

  1. CMS believes that in the first program year, at least, most physicians will choose the MIPS path.
  2. Physicians will select six outcome-oriented measures to track, and the budget-neutral program will carry upside and downside risk.
  3. There is lingering concern that CMS is “dooming” physicians in MIPS participation, since physicians have been doing ample work and none of it qualifies.

Physicians and APM:

  1. The APM path will reflect traditional Medicare payments in its first two years and then will be opened to all payers, including Medicare Advantage plans.
  2. There will be greater physician flexibility to make investments, such as hiring care coordinators.
  3. Physicians will assume risk for episodic care rather than the patient’s totality of health history (as with ACOs).
  4. Physicians will be taking on the entire CMS payment for an episode of care, not just their piece.
  5. Total spending could dwarf what the physician is paid. 
  6. The program could drive more physicians to join hospital groups because the model shows a preference toward larger health care systems. 
  7. Because hospitals are getting the lion’s share of the revenue, it doesn’t allow an independent, small, or rural physician practice to operate in a risk-based system on their own respective revenues. 
  8. Is there enough risk mitigation and protection? Physicians wouldn’t have the same waiver from fraud and abuse laws that exists in an ACO, and with a key focus on the hospital-physician relationship, it could create a kickback risk.
  9. How will APM really be defined?

Patients and Technology: 

  1. According to the rule, patients would be attributed to physicians by way of a new coding system, allowing them to gauge whether they are coordinating the care for the patient or providing care for a specific need/complaint.
  2. Technology focus will emphasize interoperability, security measures, and information exchange, but duplication has to be removed.
  3. Will there be infrastructure that will allow providers to analyze data and use it to improve efficiency?
  4. CMS will require a software interface application called an API, allowing patients to access their health information.
  5. Quality reporting burdens will be mitigated by implementing a program called Advancing Care Information, accounting for 25 percent of physicians’ performance scores. This would allow ease of selection for the measures physicians report. Additionally, ACI would affect only Medicare payments to physician offices, not Medicare hospitals or Medicaid programs.
  6. If passed, this would replace the current meaningful use program, and reporting would begin Jan. 1, 2017, along with the other components of the Quality Payment Program.
  7. There would be no more “all or nothing” approach within meaningful use, as the new rule would omit requirements for clinical decision support and computerized provider entry in physician EHRs.
  8. Consolidation of past programs and concerns that efforts to prevent information blocking the focus on surveillance might create more burden and skepticism.

Overall Concerns/Observations 

  1. Inoperability – It is critical that physicians have robust and interoperable electronic health records and options for treating patients beyond face-to-face meetings.
  2. CMS doesn’t seem to reflect on or provide inclusion for the variety and needs within the marketplace, hospital, and physician practices. A large hospital system has vastly different needs from those of an independent practice or a rural hospital and physician practice.
  3. Rapid healthcare policy changes won’t allow physicians the time to build sufficient infrastructure, resulting in loss of necessary physician engagement and participation support.
  4. Physicians are concerned that they won’t have sufficient funds to make changes while continuing to see patients.
  5. Physicians won’t have a trial-and-error period in determining what payment models and health record systems will work best for them.
  6. Will there be truly be, as CMS notes, “potential opportunities to align the programs to best serve clinicians and patients, and (engagement) with Medicaid stakeholders as well."
  7. The proposed rule clarifies that existing alternative payment models will count as advanced APMs. The rule, for instance, excludes the Bundled Payments for Care Improvement initiative, as well as Track 1 of the Medicare Shared Savings Program.
  8. Is this a pathway for rural healthcare? Complexity and continual change are creating more operational costs, and what does this or other proposed final rule changes by CMS say about the future of the physician sustainability model for recruitment and retention, especially in the rural markets? 
  9. More physicians will continue to look at DPC (direct primary care) as the pathway to creating more physician satisfaction, patient engagement, and successful patient outcomes.  

The proposed rule is scheduled to be published in the Federal Register on May 9. CMS will solicit public comments on the rule over the next 60 days.

About 30 percent of physician payments are currently flowing through alternative payment models.

About the Author

Janelle Ali-Dinar, PhD is a rural healthcare expert and advocate with more than 15 years of healthcare executive experience in many key areas addressing critical access hospitals (CAHs), rural health clinics (RHCs), physicians and patients. Dr. Ali-Dinar is a sought-after speaker on Capitol Hill.  A former hospital CEO and regional rural strategy executive, Janelle is a past National Rural Health Association Rural Fellow, Rural Congress member Nebraska Rural Health Association President.  She is currently the Nebraska DHHS Chair of The Office of Minority Health Statewide Council addressing needs of rural, public, minority, tribal and refugee health and is serves on the Regional Health Equity Region VII council as Co-Chair of Rural Health and Partnerships.  Janelle holds a masters and doctorate in communications and recent graduate in public health leadership. Janelle is currently the vice president of rural health for Mygenetx.

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s doran


Shortcomings of the Current Payment Model

The Centers for Medicare & Medicaid Services (CMS) has issued a proposed rule that would reinvent the way physicians are paid for the administration of medications in physician offices or hospital outpatient settings. CMS has estimated that in 2015, the total payments for separately paid drugs amounted to roughly $22 billion. Payments for Part B drugs have nearly doubled since 2007, and concerns are mounting over a significant annual increase in such payments of 8.6 percent, largely attributed to separately paid drugs.

The Medicare Part B drug program currently pays providers the average sales price (ASP) of a drug plus an additional 6 percent of the drug’s sales price to compensate for the unvarying costs of the collection, storage, maintenance, and preparation of medications. The proposed rule asserts that this payment methodology lacks the capability to account for both the effectiveness of a particular drug or the cost of comparable drugs. There is also implied criticism that when medication reimbursement is tied directly to drug costs, providers have a financial incentive to recommend higher-cost treatments. By inadvertently encouraging the consumption of more expensive products, CMS argues that the add-on costs could play a role in prescribing patterns linked to generating greater profits for providers.

Overview of the Demonstration

 Proposed Changes and Desired Results

The proposal is not a permanent change, but rather a mandatory five-year demonstration that is authorized to assess how innovative payment and service delivery models may reduce significant growth in Part B drug expenditures while simultaneously conserving or enhancing the quality of care provided to beneficiaries. The published report concludes that the current reimbursement methodology of ASP plus 6 percent, regardless of the price paid to acquire the drug, is inconsistent with the optimization of high-quality, low-cost care. The implementation of an alternate Part B drug payment design proposes to achieve cost and quality improvements through a shift in provider incentives that will include lowering the 6-percent ASP add-on to 2.5 percent plus a flat fee payment, and incorporating a value-based purchasing (VBP) component that will be applicable to health plans, pharmacy benefit managers, hospitals, and other groups. CMS believes that this model of testing the reduction of drug payment reimbursement would not only directly correlate to cost containments, but indirectly link to the most effective drug prescribing patterns, rewarding positive patient outcomes.

Scope of the Model

The model is outlined to run in a two-phase, four-arm control trial over the course of five years. Phase I would be scheduled to begin no earlier than 60 days after the final rule’s publication and Phase II beginning no earlier than January 2017. In a broad sense, Phase I, anticipated to be budget-neutral, will encompass evaluating and understanding the impact of changing the current add-on payment structure from ASP plus 6 percent to ASP plus 2.5 percent and a flat fee. Phase II, anticipated to generate savings, will involve understanding the impact of engaging value-based purchasing (VBP) tools similar to those used today by commercial health plans, pharmacy benefit managers, and hospitals, such as indication-based pricing, reference pricing, and clinical decision support tools. CMS published the following table, seen in

doran 1

Figure 1 provides a broad overview of the proposed model.

In order to ensure adequate statistical control and avoid selection bias throughout evaluation, the model will be administered geographically based on primary care service areas (PCSAs), and participation will be mandatory for all providers, hospitals, suppliers, and pharmacies furnishing Part B drugs chosen for the model. CMS anticipates including 7,048 of the 7,144 PCSAs found across the United States. It was recommended to exclude the 96 PCSAs throughout the state of Maryland, as concerns that an unobservable bias for payment and/or prescribing patterns may arise, as the Maryland All-Payer Model negates Medicare hospital payment rules. The 7,048 other PCSAs will be involved through stratified random distribution to each arm of the model, roughly 1,700 to the control and three test arms. The proposed strata are defined by the number of Medicare beneficiaries furnishing Part B drugs within each PCSA and the average Part B drug expenditures per beneficiary. CMS intends to use three single cut points of Part B drug beneficiary counts per PCSA, one at 1,500 and two for the distribution of the average sums expended for Part B drugs per beneficiary, per PCSA: $500 and $3,000. These cut points in total result in six strata with which the PCSAs will be randomly assigned to one of the four arms of the model.

Medicare Part B drug benefits include many categories of drugs administered across varying care settings and payment methodologies. Aside from a limited exception of drug categories deemed inappropriate candidates for the model, a vast majority of drugs paid under Part B were determined fit for inclusion, as outlined in Figure 2. CMS would overlay payment amounts on the quarterly ASP drug pricing files and the quarterly update to Addendum B of the Outpatient Prospective Payment System (OPPS_) with model-derived payment amounts within the geographic areas under evaluation, therefore including nationally priced drugs with ASP, wholesale.

doran 2

Acquisition cost AC) and average manufacturer’s price (AMP)-based payment amounts are listed on the quarterly price file.

 Phase I

The first phase of the model is intended to promote understanding of the impact of redistributing physicians’ reimbursements for the cost of drugs. In developing potential approaches for evaluating changes, CMS took types of drugs and their price points (i.e. high-, medium-, and low-cost) into consideration while also factoring in the effects on entities within the drug supply chain, including beneficiaries, providers, suppliers, and the Medicare program. Within this phase, drug payments based on ASP and WAC with a 6-percent add-on will be replaced with an updated 2.5-percent add-on as well as an additional flat fee paid per administration day. Healthcare Common Procedure Coding System (HCPCS) codes with AMP-based payments will be paid based on the lower of the quarter’s AMP-based payment, or the model payment would apply.

The flat fee payment is derived from the difference between total payments with a 6-percent add-on in the most recently available 2014 claims data set and the total estimated payment for Part B drugs, within the same set of claims, using a 2.5-percent add-on payment to the flat fee. The difference then would be divided by the total number of encounters per drug per day, using 2014 claims, resulting in a flat fee of $16.80 for 2016. The total payments under Phase I are not anticipated to change considerably. In fact, the 2.5-percent add-on will be maintained throughout the model, as CMS believes that the chosen point will serve sufficiently in limiting changes to provider or supplier drug acquisition and/or the sale of products from drug manufacturers. The flat fee amount will be scheduled to update each year by the percentage increase in the consumer price index (CPI), automatically adjusting the dollar value of the 2.5-percent add-on to changes among ASP price levels. The random PCSA assignment will subject approximately half of the nation’s providers and suppliers to the ASP plus 2.5 percent and the flat fee payment methodology.

As previously stated, Phase I will be implemented with a budget-neutral approach in order to isolate the impact of changes to the redistribution of the add-on payment toward Part B drug expenditures without introducing additional savings as a second potential source of behavioral adjustments. CMS does not anticipate a substantial overall reduction in Part B drug spending, but rather an incentive to prescribing higher-value drugs. CMS published the following table, seen in Figure 3, providing an illustrative example displaying the impact of potential numerical markups against the current methodology. The figure represents comparable drugs, those used to treat a similar condition with related patient outcomes, associated with widely varying prices. CMS intends to remove the penalization linked with prescribing lower-cost drugs, especially when evidence concludes that a cheaper drug may be equally effective, if not better, for some patients. 

doran 3Phase II

While restructuring the add-on payments addresses the financial incentives that may affect prescribing, the second phase of the model would involve understanding the impact of implementing value-based purchasing (VBP) and clinical decision support tools for Part B drugs alone, simultaneously to the alternative ASP. Specifically, it will help providers understand the differences in payment when there is a group of therapeutically similar drugs in play, or the benefits of using alternative incentives to improve the effectiveness, safety, and quality of physician prescribing patterns for Part B drugs. CMS has noted that the success of these tools hinges on managing health benefits and drug utilization by Medicare Part D plans and within the commercial insurance sector. After review, CMS has identified several tools that through appropriate structure may be adaptable to Part B to improve patient care and manage drug spending. CMS outlines VBP efforts that would include one or more of the following strategies to serve as a framework for interventions for selecting suitable Part B drugs:

  • Discounting or eliminating patient co-insurance amounts This pricing strategy would seek to reduce or waive cost sharing for particular products for a subset of the Medicare population to effectively incentivize the use of higher-value drug products. Despite many Medicare beneficiaries utilizing wraparound coverage, which primarily subjects cost sharing to discounts or elimination, CMS has proposed to keep the copayment associated with the HCPCS code from exceeding 20 percent or to waive it completely for lower-value Part B drugs. This proposal would not change the overall payment amount, but rather increase Medicare’s payment percentage while upholding the total allowed charges for a drug.

  • Indications-based pricing – A second pricing strategy would alter pricing for a particular drug based on the varying degrees of clinical effectiveness for a range of indications covered under existing Medicare authority. CMS would institute this pricing based on appropriately supported and reliable studies and reviews, or evidence-based clinical practice guidelines from neutral and/or independent sources. High-quality and comprehensive clinical evidence findings would be reflected through a closer alignment of drug payments with significant outcomes.

  • Reference pricing – Another proposed pricing strategy involves the concept of setting a standard payment rate or benchmark to provide equal payment for therapeutically similar drug products. This standard may be based on the average drug price of the group, the most clinically effective drug of the group, or another defined threshold for this specific group of drug products. Additionally, the benchmark rate will take individual drug characteristics into account, much like indications-based pricing, in terms of relative effectiveness demonstrated through competent and reliable evidence. CMS believes that by eliminating the direct link between the purchase price and payment rates, it offers a stronger incentive to evaluate outcome and cost together in the selection of treatment regimens.

  • Risk-sharing agreements based on outcomes – CMS has also designed a plan to potentially enter into voluntary, outcomes-based risk-sharing agreements with manufacturers. The agreements would be centered on drugs for which little evidence is available with respect to long-term value or magnitude of health outcomes. The final price of a drug would be tied to results achieved through specific population outcomes rather than predetermined prices based on historical population data. The agreements would require clearly defining accurate and valuable clinical outcome goals based upon manufacturers’ competent and reliable scientific evidence for a specific drug.

  • Feedback on Prescribing Patterns and Online Decision Support – Lastly, CMS proposes a two-component, evidence-based clinical decision support (CDS) tool consisting of an online educational piece supporting clinical decisions and advisable feedback based on drug utilization in Medicare claims. The educational component is intended to deliver information reflective of up-to-date literature and consensus guidelines to promote the most effective prescribing habits for certain indications. The second component is intended to provide comparable national or geographically focused feedback on Part B claim payment patterns for certain drugs and/or indications. The voluntary use of the CDS tool is suggested to support a physician’s interest in mindful prescribing.

Looking Ahead

The release of the proposed sweeping changes to Medicare Part B drug reimbursement has received welcomed advocacy, but also sparked grave concern. In response, CMS aims to incorporate its evaluation of many current policies in use by health plans, insurers, and pharmacy benefit managers. The only way for these peripheral payment policies to mitigate the lack of evidence available as to the potential effects on Medicare beneficiaries’ limited medication access, differing healthcare standards and outcomes, and overall cost controls is to factor into account the challenges that may exist for evaluating a proposed study of this great magnitude. Medicare’s implementation of any permanent change would rely on meaningful information, in turn proving to be dependent upon well-designed methods for performing the experiment. For policyholders to gather high-quality evidence of how this change may directly affect patients, providers, and suppliers, they must consider the transparency of its development. A comprehensive experiment leverages external input to ensure that valid conclusions can be drawn. With respect to the complexity of this proposal, CMS values public comments, a critical aspect to informing future healthcare policies and ensuring that the Medicare program continues to serve the future needs of its beneficiaries. A full outline of the proposal can be found at the following link: https://www.gpo.gov/fdsys/pkg/FR-2016-03-11/pdf/2016-05459.pdf.

About the Author

Stephanie Doran is a health information management (HIM) consultant and project manager for HealthAdvanta, a health information and technology company. She is a graduate of Temple University, where she earned a bachelor’s degree in health information management and was honored with the Health Information Management Professional Excellence Award for her distinguished development and achievement.

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r tallerThe recently released proposed rule regarding the Medicare Access and CHIP Reauthorization Act (MACRA) of 2015 includes a lengthy section detailing what advanced alternative payment models (APMs) are, how to qualify, and which APMs are being considered for the first performance year. Clinicians participating to a certain degree in advanced APMs will qualify for incentive payments. 

From 2019-2024, a clinician meeting the standards for advanced APM participation is excluded from the Merit-Based Incentive Payment System (MIPS) adjustments and would receive a 5-percent Medicare (Part B) incentive payment. Beginning in 2026 and beyond, clinicians who continue to meet the standards for advanced APM participation are excluded from MIPS adjustments and would receive a higher fee schedule update than those not in an advanced APM. 

Advanced APMs are APMs in which clinicians are providing coordinated, high-quality care while accepting a certain risk criteria. In the proposed rule, three criteria are given for meeting the standards for an advanced APM. The first criteria relates to financial risk, as participants are required to bear risk representing at least 4 percent of the APM spending target, marginal risk for which the advanced APM entity is responsible for of at least 30 percent, and a minimum loss rate of no greater than 4 percent. 

The proposed rule includes more granularity for each of these concepts. The second set of criteria relates to basing payments on quality measures comparable to those in the MIPS quality performance category. In discussing this concept, CMS noted that quality measures must be evidence-based, reliable, and valid – and, where available, one of the measures must be an outcome measure (if an appropriate measure for the advanced APM is on the MIPS measure list). 

The third criteria relates to the requirement that an advanced APM mandate that at least 50 percent of clinicians use a certified electronic health record (EHR) technology  in the first performance year, and this increases to 75 percent in the second performance year. The proposed rule also details rules for medical home models that would be expanded under the Center for Medicare & Medicaid Innovation (CMMI) authority enabling them to qualify as an advanced APM. 

For performance year one, the models that are proposed to qualify as advanced APMS include Comprehensive Primary Care Plus, Medicare Shared Savings – Tracks 2&3, Next-Generation ACOs, Comprehensive End Stage Renal Disease Care Models (large dialysis organization arrangement), and Oncology Care Model Two-Sided Risk (available in 2018). 

CMS is seeking comment on other models that could qualify as advanced APMs and intends to update the list on an annual basis. To qualify for incentive payments requires significant participation, and clinicians would qualify based on either payments received or patients seen in an advanced APM. For 2019 and 2020, participation requirements are Medicare-only (payments or patients). Beginning in 2021 (performance year 2019), the participation requirements expand to include non-Medicare patients or payors, and thresholds increase as well. The proposed rule also has an extensive section defining other payor advanced APMs. MACRA legislation established the Physician-Focused Payment Technical Advisory Committee (PTAC), whose purpose is to review/assess physician-focused payment models submitted to the Committee and make recommendations on them to the Secretary of the U.S. Department of Health and Human Services. Additional details on the role of PTAC and physician-focused payment models is also included in the proposed rule. PTAC has held two meetings and recently released a draft document on the process for reviewing physician-focused payment models, with public comment due by mid-May. For additional information on PTAC, go online to https://aspe.hhs.gov/ptac-physician-focused-payment-model-technical-advisory-committee.

About the Author

Rhonda Taller is VBPmonitor’s legislative correspondent. She has over 30 years of experience with health information technology working within the vendor environment with roles in product management, management, government affairs, and strategic consulting. Her expertise is on topics related to CMS reimbursement and quality regulations, value-based reimbursement programs, ICD-10, meaningful use, and health reform. Rhonda has held volunteer positions with HIMSS and WEDI, including appointment to the HIMSS Business Systems/Medical Banking Committee (2010-2012), chairing the HIMSS ICD-10 Task Force (2013-2014), and serving as co-chair of the WEDI ICD-10 Transition Workgroup.

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