Well the election is over, and regardless of which side of the political arena you were on, I think we can all agree that changes are coming – and that includes healthcare. During the campaign, the Trump camp pledged to repeal the Patient Protection and Affordable Care Act (PPACA). Now, was that campaign talk or for real? There is general agreement that some components of PPACA make sense and should be maintained. The questions are, what will the structure of the program look like, and at what cost will it be implemented?

So let’s first review the basic tenets, good and bad, of the PPACA.

  1. The biggest benefit is providing insurance for millions of people who previously did not have coverage. Approximately 20 million previously uninsured U.S. residents now have coverage through the PPACA. This includes 13 million who obtained coverage through the federal marketplace, with the balance obtaining coverage through Medicaid expansion and including young adults on their parents’ plans.
  2. It requires all insurance plans to cover essential health benefits, including treatment for mental health, addiction, and chronic diseases.
  3. Insurance companies can no longer deny anyone coverage for preexisting conditions, drop them, or raise premiums if get sick.
  4. Lifetime and annual limits on coverage were eliminated.
  5. Enrollees up to the age of 26 can remain on the health insurance plans of their parents.
  6. States are required to set up insurance exchanges or to use the federal government's exchange to provide easy access for consumers to shop for plans, and tax credits are provided based on income to reduce costs.

Now, what are some of the problems resulting from the PPACA?

  1. Many consumers have had their plans cancelled by their insurance companies because the plans don’t comply with the law regarding the provision of the 10 essential health benefits. In many cases, the cost of replacement insurance is higher. Others have lost their company-sponsored healthcare plans when businesses find that it is more cost-effective to pay the penalty and let their employees purchase insurance plans on the exchanges.
  2. Those who don't purchase insurance are assessed a tax, and in some cases, citizens opt to pay the tax rather than purchase insurance.
  3. Medicare taxes were raised on higher-income individuals and there was a reduction in the deductibility of medical expenses implemented to help fund the cost of the PPACA, as well as increases on taxes on manufacturers and pharmaceutical companies.

With the above as background, let’s discuss the issues surrounding repealing and replacing the Act. From a political and practical perspective, this may not be an easy task. Politically speaking, it will be difficult to take back some of the benefits currently in place as a result of the PPACA. Eliminating health benefits for those who now have access to health insurance through the health insurance exchanges or the expansion of Medicaid and the rollback of coverage for those up to age 26 may not be politically acceptable. From a practical standpoint, new insurance products need to be in place before the elimination of others so that current participants can move easily from one to the other.

In terms of specifics, some of the essential tenets of President-Elect Trump’s plan include the repeal of the individual mandate, the creation of high-risk pools by states for at-risk consumers, replacement of insurance subsidies with a tax deduction for purchase of individual insurance, increased flexibility for health plans to sell insurance across state lines to increase competition, and the promotion of health savings accounts to increase savings for healthcare costs. For Medicaid, Trump’s proposal would replace the current entitlement program by providing block grants to the states. This would provide states with more discretion in how to spend the funds, enabling the tailoring of allotment to suit each state’s individual circumstances and needs. He also favors removal of barriers inhibiting the lowering of drug costs, currently the third-largest area of healthcare spending. These include opening current markets to the importation of drugs from foreign markets that have been proven to be safe and reliable.

Clearly, we see a shift in the structure of healthcare insurance reform from one of increased government involvement to more of a free-market philosophy. This shift is based on the fundamental belief that more competition will result in a greater level of innovation, an increase in health insurance options to individuals at lower costs, and products that better meet the needs of consumers. It will be interesting to see whether this change in approach accomplishes the overall goal of providing greater access at lower cost to those in need of healthcare services. I’m sure these issues, proposed solutions, and the political landscape will become clearer upon the installation of our new president in January 2017.

Stay tuned …

About the Author

Greg Adams is the chief strategy officer for Panacea Healthcare Solutions and has over 35 years of experience in the field of healthcare, including 20 years’ experience as a hospital CFO. His experience includes financial operations, managed care contracting, physician practice management, patient accounting, patient access, health information management, materials management, and real estate development. Greg is the past chairman of the national Healthcare Financial Management Association (HFMA), having served as the chair of its Board of Directors in 2011–12. In that role he oversaw the services the organization provides to its 40,000 members. Greg speaks extensively on healthcare reform and the transition to a value-based payment system. His speaking engagements include national, regional, and state programs. From 2002–2005, he served as a member of HFMA’s National Board of Directors and as president of the New Jersey chapter in 1997–98. He has also served as a member of the Board of Trustees and chairman of the Finance Committee at St. Ann’s Home for the Aged in Jersey City, N.J.

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VBPmonitor Editor’s Note:  This article first appeared in ICD10monitor’s November 8, 2016 e-news.  We believe it is such an important topic to show how coding impacts more than just the MS-DRG payment in today’s value based payment world, that we decided to share it with our VBPmonitor subscribers.

While most legacy clinical documentation improvement (CDI) programs have been doing a good job at preserving revenue under the MS-DRG system, a potential blind spot exists. Value-based and alternative payment models (APMs) rely on the concept of risk adjustment to determine final payment in acute care. 

The Centers for Medicare & Medicaid Services (CMS) risk-adjusts patients within quality measure cohorts because the MS-DRG methodology is resource-based and fails to accurately represent patient acuity, which is heavily influenced by the cumulative effect of all existing diagnoses. An example of this is how a diagnosis of COPD may prolong the LOS (length of stay) or increase the likelihood of a readmission to the hospital for a CHF patient.

CMS has determined that use of the MS-DRG alone is insufficient to risk-adjust populations, and the agency uses a completely different tool to do this: hierarchical condition categories (HCCs). Here’s where the blind spot for CDI programs becomes evident. 

Most of today’s CDI programs are focused completely on ensuring that MS-DRGs are accurate and that all standard and major complications and comorbidities (CCs and MCCs) are supported in the clinical documentation as basis for their queries. As such, they are not focused on other secondary diagnoses, which may have a significant impact on risk adjustment for a patient who may be indexed to one of the value-based or alternative payment models for future payment adjustment.  

Over 40 percent of diagnoses included in the HCC methodology utilized for risk adjustment are not classified as MCCs or CCs in the MS-DRG system, which means that there are close to 60 percent of secondary diagnoses that may not be considered important for clarification, specificity, or even coding in the medical record. Complicating matters further, CMS has a goal of tying 90 percent of Medicare reimbursements to one of the value-based payment or alternative payment models by 2018, and the “performance period” by which the payment adjustors are calculated is now. So, what does this mean for you in terms of your existing CDI program? A lot! 

In our work, we find that chief financial officers are frequently unaware of how much of their current Medicare reimbursement is being impacted by these value-based and risk-adjusted payment models, because it appears that the DRG payments are still coming in and the case mix Index is still comprised of all Inpatient Prospective Payment System (IPPS) payments. But once a CFO sees a 1-2-percent penalty applied across the board for a particular program like the Hospital Readmission Reduction Program or VBP program, we typically get their attention. At this point, the clinical leadership, the quality director, and the CDI and coding managers are often caught on their heels trying to explain when, why, and how they will reverse trends that may not be entirely under their control. A coordinated and rapid analysis of the organization’s performance to determine root causes is critical to reversing trends, whether they be the result of poor care, poor documentation, poor coding, or a combination of all three. For the purposes of this article, let’s consider that an organization has already determined that they are experiencing penalties in the Readmission and the Hospital-Acquired Condition Reduction programs as a result of poor clinical documentation resulting in an understatement of patient acuity in the coded data. What should they do?

First, we recommend that CDI specialists get comfortable with APR DRGs within their concurrent workflow, as it brings important visibility to secondary diagnosis that impact and drive severity of illness (SOI) and risk of mortality (ROM). While there are very few tools on the market that bring visibility to which secondary diagnoses are classified within the HCCs, it is still a valid assumption that by querying providers for clarification on secondary diagnoses that affect SOI and ROM, CDI specialists are helping physicians and coders improve the depiction of patient acuity in the resulting claims data. The use of the APR-DRG grouper as part of the CDI process workflow moves beyond a best practice to a standard of practice. Modeling a working APR-DRG in addition to an MS-DRG helps CDI specialists determine which high-value diagnoses should be clarified due to their impact on the tiered APR-DRG. In our experience, 30 percent of the final coded medical records we review carry the potential for an improvement in SOI and ROM scores through simply coding diagnoses that are already present in the record or requiring clarification with the provider. This represents a significant opportunity for most organizations to capture patient acuity that otherwise is left off of submitted claims.

Second, we recommend adding a new metric to the CDI and coding dashboard called coding depth. Coding depth is simply a measure of how many secondary diagnoses are captured beneath the level of the primary CC or MCC on each claim. This is incredibly important, because there are literally thousands of diagnoses that impact risk adjustment that may not be captured if a coder or CDI specialist limits his or her focus to just the MS-DRG. Some examples include “history of” codes and diagnoses such as anxiety and depression, which impact the likelihood of patients being readmitted to the hospital or developing a complication while hospitalized.

Finally, we suggest a disciplined focus on specificity in coding and an advanced level of clinical sophistication in how we drill down on non-specific diagnoses with physicians, resulting in being absolutely certain that we have the most specific diagnosis code possible. For example, a diagnosis of “chronic anemia” may help us in terms of a CC or MCC, but is not necessarily the best possible diagnosis for risk adjustment, particularly if the patient is on an iron supplement. The CDI specialist should query the provider for more specificity as to the type of anemia, because a iron deficiency anemia diagnosis is powerful in a range of metrics, such as risk of mortality and patient safety indicators. Clinical sophistication in querying is usually developed during “face time” with clinicians and is unlikely to be facilitated through the use of written or electronic queries. Adapting the CDI workflow to accomplish high-value personalized interventions with clinicians is vital to helping them understand how important, clear, and unambiguous documentation impacts the depiction of their patient’s acuity, which may in turn also help them in the office setting with the value-based payment models being implemented there as well.

This certainly has been a year of great change for CDI and coding. We have a tremendous opportunity for partnering and cross-fertilizing our unique but connected skill sets to work as a unit with clinicians. These value-based and risk-adjusted payment models are not going away, and they only magnify the value that a future-state CDI program can bring to an organization, including the ability to pivot to a focus on patient acuity and risk adjustment.

About the Author

Michelle Wieczorek is a senior manager in the DHG Healthcare CFO Advisory team and focuses on clinical documentation and revenue integrity initiatives.  She is a Registered Nurse, Registered Health Information Technician and Certified Professional in Healthcare Quality with more than 30 years of experience in healthcare.   She has served in leadership roles in Clinical Nursing, Health Information Management, Utilization Review, Clinical Quality, and Information Technology.   

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The Green Mountain State just took a mountain-sized leap to the forefront of the nation’s healthcare system’s massive shift toward value-based care.

The Centers for Medicare & Medicaid Services (CMS) and the state of Vermont last week jointly unveiled the Vermont All-Payer Accountable Care Organization (ACO) Model, a new initiative aimed at accelerating delivery system reform for residents of the state.

Through the model, CMS noted in a press release, the most significant payors active in Vermont – a list that includes Medicare, Medicaid, and commercial payors – will “incentivize healthcare value and quality, with a focus on health outcomes, under the same payment structure for the majority of providers throughout the state’s care delivery system.” CMS also announced that it had approved a five-year extension of Vermont’s section 1115(a) Medicaid demonstration, which, in addition to extending the state’s comprehensive demonstration, includes the authorities needed to make Medicaid a full partner in the new statewide Model. 

CMS and Vermont said they are aiming for broad ACO participation throughout the state to “make redesigning the entire care delivery system a rational business strategy for Vermont payors and providers, and to deliver meaningful improvements in the health of and health care for Vermonters.”

“This model is historic in terms of its scope, aiming to include almost all providers and people throughout the state in an all-payor ACO model to drive improved quality, better care coordination, healthier people, and smarter spending,” said Patrick Conway, M.D., CMS principal deputy administrator and chief medical officer. “This model may also allow eligible physicians and other clinicians in Vermont to qualify for Advanced Alternative Payment Model bonus payments from the Quality Payment Program, given their commitment to be accountable and improve care for patients.”

CMS labeled the announcement an “exciting advancement” in the agency’s partnerships with states to accelerate delivery system reform; CMS has been partnering with Maryland for the past three years as part of the Maryland All-Payer Model to shift hospital payments to global budgets that reward value over volume. The Vermont All-Payer Model builds on the Maryland All-Payer Model, the agency explained, by expanding statewide healthcare transformation beyond the hospital, a move intended to “provide valuable insight for other state-driven all-payor payment and care delivery transformation efforts.”

The new Model offers ACOs in Vermont the opportunity to participate in a Medicare ACO initiative tailored to the state via a startup funding boost of $9.5 million, intended to assist medical providers with care coordination and to bolster their collaboration with community-based providers. Additionally, the section 1115(a) Medicaid demonstration extension enables Medicaid, a critical healthcare payor under the new Model, to enter into ACO arrangements that align with that of other payors.

“CMS is excited about the promise of the Vermont All-Payer ACO Model to improve healthcare value and quality,” the agency’s press release read. “In addition, CMS seeks public input on additional opportunities to partner with states on payment and care delivery reform.”

On Sept. 8, 2016, CMS had released a request for information on concepts related to state-based payment and delivery system reform initiatives.

“The (Patient Protection and) Affordable Care Act, through the creation of the Center for Medicare and Medicaid Innovation, allows for the testing of innovative payment and service delivery models, such as the Vermont All-Payer ACO Model, to move our healthcare system toward one that rewards clinicians based on the quality, not quantity, of care they give patients,” CMS stated. “Today’s announcement is part of the Administration’s broader strategy to improve the healthcare system by paying providers for what works, unlocking health care data, and finding new ways to coordinate and integrate care to improve quality.”

In March 2016, the Obama Administration estimated that it had met the ambitious goal – 11 months ahead of schedule – of tying 30 percent of Medicare payments to quality and value through alternative payment models by 2016. The federal system’s next goal is tying 50 percent of Medicare payments to alternative payment models by 2018.

Modern Healthcare noted that Vermont’s move is unprecedented in its scope.

“We will become the first state in America to fundamentally transform our entire healthcare system so it is geared towards keeping people healthy, not making money,” the publication quoted Vermont Gov. Peter Shumlin as saying, further noting that the governor earlier this year traveled to Washington, D.C. to negotiate a deal with U.S. Health and Human Services Secretary Sylvia Mathews Burwell.

The Model will be considered an advanced alternative payment model under the new Medicare reimbursement program, Modern Healthcare noted, making participants eligible for a performance bonus.

“Vermont will limit annual per capita expenditure growth for major payors to 3.5 percent and Medicare growth to at least .1 to .2 percentage points below projected national growth,” the article read. “State officials have also said they are looking to improve access to primary care and treatment for substance abuse, mental health and chronic disease.”

The publication also noted that an issue brief from the Vermont Legislative Joint Fiscal Office found several potential benefits of the model, including better care and an improved economy for the state, but it also found possible risks, such as uncertainty that the federal funding will cover transition costs and a question of whether all providers will be adequately represented.

FierceHealthcare reported last week that acting CMS Administrator Andy Slavitt tweeted a message of support for the plan, but the news outlet also noted that the shift to the new Model will be a “gradual transformation.” Robin Lunge, director of healthcare reform for Shumlin, told the Associated Press the state expects to reach 36 percent of care services by the second year, and ramp up to 70 percent by year six.

For more information on the Vermont All-Payer ACO Model and the section 1115(a) Medicaid demonstration extension, please go online to read:

Vermont All-Payer ACO Model: https://innovation.cms.gov/initiatives/vermont-all-payer-aco-model/

Vermont’s Green Mountain Care Board: http://gmcboard.vermont.gov/payment-reform/APM

Vermont All-Payer ACO Model Fact Sheet: https://www.cms.gov/Newsroom/MediaReleaseDatabase/Fact-sheets/2016-Fact-sheets-items/2016-10-25.html

Mark Spivey is a national correspondent for VBPmonitor.com. He can be reached at This email address is being protected from spambots. You need JavaScript enabled to view it.. 

Approximately 1,600 hospitals out of 3,000 will receive Medicare bonuses in 2017, leaving about 1,300 hospitals receiving a negative payment adjustment. The Centers for Medicare & Medicaid Services (CMS) released the news on Tuesday, Nov. 1, 2016. 

In addition, for the 2017 fiscal year, about half of hospitals will see a small change in their base operating MS-DRG payments (between -0.5 and plus-0.5 percent). After taking into account the statutorily mandated 2-percent withholding, the highest-performing hospitals will receive a net increase in payments of slightly more than 4 percent, and the lowest-performing hospitals will incur a net reduction of 1.83 percent.

The domains for the 2017 fiscal year Hospital Value-Based Purchasing (VBP) Program and the weighting for these domains were:

  • Clinical Care (30 percent)
    • Outcomes (25 percent)
    • Process (5 percent)
  • Patient and Caregiver-Centered Experience of Care/Care Coordination (25 percent)
  • Safety (20 percent)
  • Efficiency and Cost Reduction (25 percent)

According to a Nov. 1 article in Modern Healthcare, “the results are ‘somewhat concerning,’” said Francois de Brantes, executive director of the Health Care Incentives Improvement Institute. One reason was the fact that fewer hospitals are being rewarded. Another was hospitals' lack of movement in rankings.

The number of hospitals whose payments were docked grew from 1,236 in 2016 to 1,343 in 2017, according to a Modern Healthcare analysis of the data. Last year, 59 percent of hospitals received bonus payments; this year, 55 percent did.

More than half of the 2,879 hospitals participating in the program both years will see lower payment adjustments in 2017 than in 2016. Payments improved for 1,388 of those hospitals.

About 1,250 hospitals earned bonuses both years, and 875 were hit with penalties both years. By comparison, 437 hospitals that earned bonuses last year were docked in 2017, and 315 hospital penalized in the last round will receive bonuses next year.

The measure set for the 2018 program year includes several changes:

  • Two measures from the clinical care/process sub-domain are being removed:  AMI-7a and IMM-2 measures. The remaining measure, PC-01, is moving to the Safety domain.
  • A three-item care transition dimension is being added, as part of the Hospital Consumer Assessment of Hospital Providers and Systems (HCAHPS) survey, to the Patient and Caregiver Centered Experience of Care/Care Coordination domain.
  • In the 2017 Outpatient Prospective Payment System (OPPS) final rule, the pain management dimension – which is derived from the HCAHPS survey – is being removed from the Patient and Caregiver-Centered Experience of Care/Care Coordination domain, beginning with the 2018 fiscal year VBP program.

The 2018 Hospital VBP Program will include four equally weighted domains:

  • Clinical Care (25 percent)
  • Patient Experience and Caregiver-Centered Experience/Care Coordination (25 percent)
  • Safety (25 percent)
  • Efficiency and Cost Reduction (25 percent)

It is evident that the healthcare industry is moving forward at a rapid rate to implement programs focused on improving the quality of patient care and outcomes while reducing costs. While everyone may not agree on how it is being accomplished, I believe that everyone agrees that it is the right thing to do. The key will be to continue to assess what we are doing and improve on it moving forward.

CMS has posted the Hospital VBP incentive payment adjustment factors for the 2017 fiscal year in Table 16B, available online

For more information on the Hospital VBP Program, please visit the CMS website  and the QualityNet website

About the Author

Kim Charland is the editor of VBPmonitor and the senior vice president of clinical innovation with Panacea Healthcare Solutions. Kim has 30 years of experience in health information and reimbursement management for hospitals and physician offices. Kim’s primary role with Panacea is publisher of VBPmonitor.com, which is the company’s newest online monitor and is focused on value-based purchasing and quality. She is also co-host of ICD10monitor.com’s Internet news broadcast Talk-Ten-Tuesdays. In addition, she assists with product development for Panacea’s consulting and software divisions, as well as the MedLearn publishing division. Kim is also recognized as a national speaker who has spoken for numerous organizations.  Kim is also the president-elect for the New York Health Information Management Association. 

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On Tuesday, Nov. 1, 2016, the Centers for Medicare and Medicaid Services (CMS) released the final 2017 Outpatient Perspective Payment System (OPPS) rule. CMS stated in its fact sheet that “these finalized policy changes will improve the quality of care Medicare patients receive by better supporting their physicians and other healthcare providers and (reflecting) a broader Administration-wide strategy to create a healthcare system that results in better care, smarter spending, and healthier people.”

CMS will be removing from the 2017 patient satisfaction survey questions on pain management. CMS has said that it is not aware of any research to support an association between the patient satisfaction survey questions on pain management and the national opioid epidemic; however, due to multiple government agencies attempting to address this epidemic, the questions will be removed and alternate questions developed for future use.

CMS is adding seven measures to the Hospital Outpatient Quality Reporting Program for the 2020 payment determination and subsequent years.

Two are claims-based measures:

  • OP-35:  Admissions and Emergency Department Visits for Patients Receiving Outpatient Chemotherapy
  • OP-36: Hospital Visits after Hospital Outpatient Surgery

Five are Outpatient and Ambulatory Surgery Consumer Assessment of Healthcare Providers and Systems (OASCAHPS) Survey-based measures:

  • OP-37a: OASCAHPS - Facilities and Staff
  • OP-37b: OAS CAHPS - Communication about Procedure
  • OP-37c: OAS CAHPS - Preparation for Discharge and Recovery
  • OP-37d: OAS CAHPS - Overall Rating of Facility
  • OP-37e: OAS CAHPS - Recommendation of Facility

CMS is also making changes under the Medicare Electronic Health Record (EHR) Incentive Program for eligible hospitals and critical access hospitals attesting to CMS, including hospitals that are eligible to participate in both the Medicare and Medicaid EHR Incentive Programs (dual-eligible hospitals), by eliminating the clinical decision support (CDS) and computerized order entry (CPOE) objectives and measures, beginning in 2017. CMS is reducing a subset of thresholds for the remaining objectives and measures for modified Stage 2 and Stage 3. Additional changes include allowing all returning participants in the EHR incentive programs to report on a 90-day EHR reporting period in 2016 and 2017. CMS is also finalizing an application process for a one-time, 2017 significant hardship exception to the Medicare EHR Incentive Program for certain eligible professionals who are also transitioning to the Merit-Based Incentive Payment System (MIPS). These additions increase flexibility, lower the reporting burden for providers, and focus on the exchange of health information and using technology to support patient care.

The OPPS /ASC Final Rule and IFC are available in the Federal Register, and accessible online.

A fact sheet on this final rule and IFC is available online.

About the Author

Kim Charland is the editor of VBPmonitor and the senior vice president of clinical innovation with Panacea Healthcare Solutions. Kim has 30 years of experience in health information and reimbursement management for hospitals and physician offices. Kim’s primary role with Panacea is publisher of VBPmonitor.com, which is the company’s newest online monitor and is focused on value-based purchasing and quality. She is also co-host of ICD10monitor.com’s Internet news broadcast Talk-Ten-Tuesdays. In addition, she assists with product development for Panacea’s consulting and software divisions, as well as the MedLearn publishing division. Kim is also recognized as a national speaker who has spoken for numerous organizations.  Kim is also the president-elect for the New York Health Information Management Association.

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