Cutting costs top 2019 priority for healthcare finance execs & other survey findings

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Many senior finance executives are not fully prepared to manage the financial impact of evolving business conditions in today’s healthcare environment, according to a survey by strategic and financial consulting firm Kaufman Hall.

The survey, conducted in September and October, asked CFOs, vice presidents of finance, directors of finance, and other senior finance executives more than 20 questions to gauge performance management progress and trends. Participants represented more than 160 U.S. hospitals, health systems, and other healthcare organizations.

Five findings:

1. Only 13 percent of respondents said their organizations are very prepared to manage evolving payment and delivery models with the financial planning processes and tools now available.

2. Additionally, only 23 percent said they are very confident that their teams can quickly and easily adjust to strategies and plans.

3. Ninety-six percent of respondents said they believe their organizations should be making greater efforts to leverage financial and operational data as part of decision-making.

4. Cost reduction and management is the biggest priority for senior finance executives this year, followed by predicting and managing changing payment models.

5. Along those lines, more than half of respondents cited the following as top improvement priorities for financial planning and analysis:

  • Cost management and efficiency
  • Reporting and analysis to support decision-making
  • Operational budgeting and forecasting
  • Profitability measurement across specific dimensions



29% of US health system payments tied to alternative models

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The percentage of U.S. health system payments linked to alternative payment models grew to 29 percent in 2016, up from 23 percent a year prior, according to a Health Care Payment Learning & Action Network report.

For the analysis, LAN calculated the amount of health plan in- and out-of-network spending that went through APMs. Analysts examined data from 78 health plans, three fee-for-service Medicaid managed care states and fee-for-service Medicare.

Here are three key findings from the report.

1. Forty-three percent of systems’ payments flowed through fee-for-service or legacy payment models in 2016. This is compared to 62 percent in the year prior.

2. Payments through pay-for-performance or care coordination fees reflected 28 percent of payments last year, up from 15 percent in 2015.

3. APM spending totaled about $354.5 billion nationally in 2016.

MIPS Takes a Beating at MedPAC

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MedPAC has been set on defeating the Merit-based Incentive Payment System for a long time; but whether the program should be simply “repealed” or “repealed and replaced” wasn’t clear at Thursday’s meeting.

Health policy experts sometimes battle for consensus over payment issues, but when it comes to the new way of paying most doctors under Medicare, one group reached near-unanimous agreement: Scrap it.

The Merit-based Incentive Payment System (MIPS) should be spiked, virtually all members of the Medicare Payment Advisory Commission (MedPAC) said during a meeting on Thursday morning.

MedPAC, whose members include physicians, healthcare executives, and other policy experts charged with advising the Department of Health and Human Services on Medicare policy issues, has been set on defeating MIPS for a long time; but whether the program should be simply “repealed” or “repealed and replaced” wasn’t clear at Thursday’s meeting.

At the start of the meeting, MedPAC’s analysts addressed the challenges with the MIPS program and proposed a potential alternative.

The Problem with MIPS

The MIPS program is one of two payment vehicles created as a result of the the Medicare Access and CHIP Reauthorization Act (MACRA) — which replaced the almost universally despised Sustainable Growth Rate (SGR) formula. The other payment pathway consists of an array of advanced Alternative Payment Models (APMs), which weren’t discussed in any detail at the meeting.

The main problem with the MIPS program, as MedPAC’s analysts see it, is that MIPS won’t achieve the policy goals that it’s designed to achieve.

The flexibility of the program — the various options for how physicians can report measures and the broad exemptions for certain types of clinicians — has made it overly complex. There are also statistical challenges that stem from trying to develop individual-level performance scores, due to the relatively small case sizes for some providers.

“Everyone will seem to have high performance when in fact many of the measures are topped out or appear to be topped out … and that will limit Medicare’s ability to detect meaningful differences in clinician performance,” said David Glass, a principal policy analyst for MedPAC.

In the end, Medicare gives clinicians a score based on their performance and either raises or reduces their Medicare payment based on that score, but for all the reasons Glass mentioned, he believes it is “extremely unlikely that physicians will understand their score or what they need to do to improve it.”

“Our most basic concern is that the measures in MIPS have not been proven to be associated with high-value care,” he said.

Alternative Proposed

Glass and MedPAC senior analyst Kate Bloniarz suggested an alternative policy approach that leverages population-based measures.

The Voluntary Value Program, as they’ve dubbed the alternative, would get rid of the MIPS program and all three types of reporting requirements — Advancing Care Information (ACI), Clinical Practice Improvement Activities (CPIA), and quality measures — and scrap CMS support for Electronic Health Records reporting.

In the new model, all clinicians would see a portion of their fee schedule dollars withheld, which would be lumped into a pool — for example 2%, though analysts stressed the percent amount had not been decided.

Clinicians would then have three options:

  • Choose to be measured with a “sufficiently large entity” of clinicians and be eligible for value payments
  • Choose to participate in an advanced APM model
  • Lose the withheld fee schedule dollars

In the first option, the “sufficiently large entity” could be those physicians affiliated with a single hospital or one geographic area, she said.

“An entity’s performance would then be collectively measured using a set of population-based measures,” Bloniarz added.

A limitation of the model is that entities must be “sufficiently large” in order to have “statistically detectable performance on the population based measures.”

In the Voluntary Value Program, measures could potentially fall under three categories: clinical quality, patient experience, and value. For example, a clinical quality measure might include mortality or avoidable admissions.

Unlike the MIPS program, all of the measures could be pulled from Medicare claims data or “centrally conducted surveys” avoiding the clinician reporting burden, Bloniarz explained.

Repeal and Replace?

Most members of the commission expressed support for the new model or at least felt it was a good start.

One new commissioner, David Grabowski, PhD, of Harvard Medical School in Boston, said he favored having a replacement, but he worried that some physicians, particularly those in rural areas, or those treating dual eligible patients (enrollees in both Medicare and Medicaid) might be left out. He stressed that incorporating proper risk adjustment mechanisms into the measurement process would be critical.

Paul Ginsburg, PhD, of the Brookings Institution, also supported a repeal-and-replace strategy.

“My sense is that the politicians don’t want to do nothing. They want to do something,” he said.

However, several commissioners were more hesitant, asking whether replacing the MIPS program was necessary.

“Are we creating something that is so close to the advanced APM structure that it’s almost not worth it?” asked Dana Gelb Safran, ScD, of Blue Cross Blue Shield of Massachusetts.

Gelb Safran suggested that if the commission does choose to recommend an alternative, distinctions between it and the APMs would need to be clear. She also wondered aloud whether with these new entities would revive some of the challenges of the old SGR formula.

The challenge with the SGR was that individuals weren’t truly accountable to each other even though they were lumped together, she explained.

“That really undercuts the desire to behave in the way that the incentives should make them behave because somebody else could kill their incentive, so why bother.”

Craig Samitt, MD, MBA of Anthem in Indianapolis, said he would favor a repeal-only approach, based on the replacement model he’d seen that day.

“If a replacement is a voluntary model that would allow us to keep practicing healthcare the way we’ve been practicing, then that replacement is not a good replacement,” Samitt said.

MedPAC member Kathy Buto, MPA, of Arlington, Virginia, suggested another idea: repeal the MIPS program, but continue to withhold the funds from the clinicians who aren’t participating in the advanced APMs. Then use those dollars to reward APM performance.

“I would actually increase the penalty and make it less attractive to stay in MIPS regardless,” she said.

Commission Chairman Francis J. Crosson, MD, joked that he would be happy to escort Buto from the meeting after it adjourned — implying her idea might be dangerously unpopular with physicians.

In the end, Crosson determined that MedPAC’s technical team would return to the group with draft recommendations for repealing the MIPS program and offer two options: a voluntary replacement program similar to the one discussed at Thursday’s meeting with some revisions, and suggestions on how to make the advanced Alternative Payment Models more accessible for physicians.

The commission could then decide whether to recommend one or both options to HHS.

MESA: An Innovative New Value-Based Health Insurance Plan



MESA Will Improve Quality and Lower Costs for Those Who Use Health Care the Most;
Pilot Sites Will Test Model

To provide consumers with an affordable alternative to high deductible health plans (HDHPs), Altarum has created an innovative new model for those who use health care the most. The Medical Episode Spending Allowance (MESA) plan, developed with support from the Robert Wood Johnson Foundation, is especially well suited for those with chronic or serious health conditions, and takes value-based insurance design to a whole new level, improving quality of care while lowering costs.

“Employers and consumers are looking for alternatives to increasingly unaffordable health coverage, and finding a solution that works is essential,”  said François de Brantes, vice president and director of Altarum’s Center for Payment Innovation. “That’s what our MESA Blueprint is all about. By turning the high deductible health plan on its head, the MESA plan significantly reduces the potential for people with on-going illnesses from foregoing needed care.”

How Does MESA Work?
MESA’s incentives are finely calibrated to encourage consumers to seek out high value care and for providers to deliver it. The plan is based on a reference pricing model, so consumers can choose service providers that offer high quality care at a lower price.

Members pay out-of-pocket only when the cost of care extends above the specified allowance for a given episode of care. Plan members who select network providers that have accepted financial risk—for example through a bundled payment—could potentially avoid out-of-pocket expenses entirely. MESA also arms consumers with tools to research procedures, identify providers in their area, and view providers’ costs and quality ratings, so they can select the best care.

“As Americans are being asked to pay more for their health care, health insurance innovations, such as the Medical Episode Spending Allowance (MESA), that align consumer and provider incentives on quality and cost measures are an essential step forward,” said A. Mark Fendrick, MD, director of the University of Michigan Center for Value-Based insurance Design. “Strategies that reduce the patients’ out of pocket cost burden for clinically indicated services provided by from high performing clinicians are a necessary and important strategies to achieve the Triple Aim.”

“The Kentuckiana Health Collaborative, a coalition of employers, payers, providers, and consumers of health care, supports alignment of incentives to reduce barriers to high-quality, high-value care. We strongly encourage efforts to drive adoption of rational, creative alternative payment models and commend Altarum’s efforts to innovate with MESA,” said Stephanie Clouser, Kentuckiana Health Collaborative data scientist.

A New Path Forward
Each MESA benefit is finely tuned to incentivize the physician/patient relationship towards mutual cooperation and motivation to do the right thing, at the right time, in the right place—in a fully transparent marketplace. Information on the benefit model is available in the MESA blueprint, which provides employers and payers with a practical understanding of the framework, including compliance with legal and regulatory statues and actuarial equivalence to existing group health plans.

“MESA provides a comprehensive plan that marries payment reform with benefits reform, provider engagement with consumer engagement, and physician accountability for costs of care with patient accountability for managing their health and costs of care,” said Emmy Ganos, program officer at the Robert Wood Johnson Foundation. “Many of the concepts aren’t new—they are tried and tested—but their combination is, quite simply, a better solution.”

That solution will be tested in selected pilot sites throughout the United States in years to come. The criteria for sites to become pilots include willing employers and providers, current engagement in and familiarity with alternative payment models, and a commitment to price and quality transparency.  Those interested in becoming pilot sites should contact Altarum at

From Payment Reform to Benefit Reform
Over the past ten years, the Center for Payment Innovation’s PROMETHEUS Payment® model has revolutionized the way we pay for medical care. PROMETHEUS packages payment around a comprehensive episode of medical care that covers all patient services related to a single illness or condition. The model has been used as a basis for most of the public and private sector bundled payment models that are implemented in the United States today. One of its offshoots is the PROMETHEUS Analytics® software, which can help power the MESA model and now revolutionize health benefits.


5 steps to get your hospital’s MACRA strategy off and running

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Anand Krishnaswamy, vice president of Kaufman Hall’s strategic and financial planning practice, makes the case that MACRA readiness should be a priority not only for physicians, but also for hospital boards and executives.

The first performance year of the Medicare Access and CHIP Reauthorization Act is now underway, which will determine Medicare Part B payments in 2019. Although 2017 is designed to be a transition year, providers who dive in now have the opportunity to maximize financial rewards and set themselves up for success down the line.

“The biggest underlying issue is the lack of awareness and engagement by health systems and physician groups,” Mr. Krishnaswamy tells Becker’s. Though many providers are distracted by the uncertainty on Capitol Hill, MACRA and value-based care are likely here to stay — and it’s time for hospitals to craft a strategy.

Mr. Krishnaswamy suggested providers take the following five steps to prepare for MACRA.

What will become of MACRA, Obamacare, health IT? HIMSS boss weighs in (podcast)–eP25rc0Hwmk-R_rXgYAaImEVTiuXGNVDLeAIeDlnNnpp2Rvr8-S6CoixHNz2e8IgTczIQUGzbzH8tZZzvUQQvptzPVQ&_hsmi=42936331

HIMSS Chicago 2015

The annual Healthcare Information and Management Systems Society (HIMSS) conference gets under way Monday in Orlando, Florida, with numerous preconference activities starting Sunday.

As more than 40,000 people descend on Central Florida for the grueling event, MedCity News talked to HIMSS CEO and President H. Stephen Lieber for what has become an annual ritual, at least for this reporter. As usual, it’s on tape.

HIMSS17 is the last HIMSS conference with Lieber in charge; he announced in December that he would retire at the end of 2017.

Lieber is preparing to depart at a time when health IT is at a crossroads.

Healthcare organizations in the U.S. have spent the better part of the last 10 years installing and now optimizing electronic health records, though they continue to lag when it comes to sharing data across systems. And they continue to gripe about EHR usability and Meaningful Use requirements.

Providers in recent years also have grappled with updates to HIPAA regulations and the conversion to ICD-10 coding. Now, they face some new regulations affecting health IT.

Notably, the 2016 Medicare Access and CHIP Reauthorization Act (MACRA) is coming into force for ambulatory care. The rise of accountable care is “certainly having an impact already in terms of how care is not only delivered,” as well as how payers calculate reimbursements, Lieber noted.

They also face the uncertainty that comes with a change in administration in Washington.

Still, some things do remain relatively constant in health IT.

“The ongoing challenge in dealing with security, there is going to be an even greater focus this year as we try to bring more attention, more focus on what it takes to make sure that we’re handling data in a secure way,” Lieber said.

Clinical analytics has become a normal course of business in the field as well, though it has changed from merely clinical decision support and retrospective analytics to predictive analytics and machine learning. “As the field evolves, we’re evolving the programming with it.” Lieber noted.

Policy seems to be where a lot of intrigue is right now. It’s easy to make assumptions about what the new Trump administration might do, but assumptions are just that.

Top 10 healthcare trends for 2017

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2017 will be a transition year shaped by changes proposed by President-elect Donald Trump and a Republican Congress. Chief healthcare concerns include legislative proposals to “repeal and replace” the Affordable Care Act (ACA), along with the continued movement to implement alternative payment models (APMs) as called for in the Medicare Access and CHIP Reauthorization Act (MACRA). We will address the potential changes ahead when it comes to shifting health benefits, provider supply, new care models, transparency, and the continued growth of consumerism. 2017 will be a dynamic year as we pivot and move in a new political direction.

Top 10 challenges facing physicians in 2017

2016 was a challenging year on many fronts for healthcare providers.

Physicians have just started to digest the Medicare Access and CHIP Reauthorization Act of 2015 (MACRA) and its changes to physician reimbursement. A long presidential election finally reached its conclusion, but the consequences of a Republican Congress and President-elect Donald J. Trump for U.S. doctors and patients remain unclear. And running a private practice did not get any easier. Balancing the need to deal with patients who won’t listen or won’t pay while also seeking positive patient satisfaction scores remains a daily struggle for many. 

These were just some of the challenges physician readers told Medical Economics they experienced this year and anticipate continuing for the foreseeable future. 

For the fourth consecutive year, Medical Economics reveals its list of obstacles physicians will face in the coming year and, more importantly, how to overcome them. For this latest presentation, we asked readers to tell us what challenges they face each day and where they needed solutions.

Here are their responses, starting with the biggest challenge of the coming year.

How doctors can overcome payment obstacles in 2017


Survey: 70% of medical groups worried about MACRA implementation

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Almost three-quarters of employed medical groups are concerned about implementation of the final Medicare Access and CHIP Reauthorization Act rule, according to The Advisory Board’s survey of the Medical Group Strategy Council.

The Advisory Board said it recently surveyed a group of 30 employed medical groups to determine their concern about MACRA and see how they’re adjusting to the changes MACRA will cause.

Here are five survey findings.

1. Seventy percent of respondents are “concerned” or “totally freaked out” by MACRA. Of the remaining respondents, 20 percent are “confident,” while 10 percent are “ambivalent,” the survey found.

2. The MACRA final rule, a landmark payment system for Medicare physician fees that replaces the sustainable growth rate formula, includes two pathways for provider participation: the Merit-Based Incentive Payment System and the Advanced Alternative Payment Model. According to the survey, 70 percent of respondents anticipate participating in MIPS, while the remaining 25 percent predict they will fall into the APM category.

3. Only half of the medical groups that believe they will participate in MIPS expect to be prepared to report data for the entirety of 2017, according to the survey. Another 21 percent anticipate choosing the partial-year option to be eligible for the smaller positive payment adjustment, and 29 percent of respondents planning to “test the program” by reporting nominal data to avoid the negative payment adjustment.

4. The Advisory Board said 58 percent of survey respondents identified MACRA as the driving force for consolidation efforts in their markets.

5. However, the other 42 percent of respondents have not observed MACRA affecting consolidation decisions in their markets, The Advisory Board said. “This could be a result of the additional support for small practices CMS included in the final rule. But we’re still in the early stages of MACRA implementation, so this may change during the coming year,” The Advisory Board added.