Healthcare's "Indefensible Administrative Costs"

Administrative inefficiencies in U.S. healthcare are obvious to the most casual consumer. But how much inefficiency is there?

On December 2nd 2008, Emdeon and Newt Gingrich's Center for Health Transformation (CHT) announced the formation of the U.S. Healthcare Efficiency Index.

The US Healthcare Efficiency Index measures the progress towards use of electronic transactions and stands at a lowly 43%. Current electronic transaction utilization for medical claims ranges from Claims (75%), Eligibility Verification and Claims Status (both 40%), Claim Remittance Advice (26%) and Payments (10%).

Converting the remaining paper transactions to electronic is estimated to save the U.S. healthcare system $30 billion annually. This is equivalent to the bailout of U.S. automakers... twice per year.

The problem of high administrative costs is much bigger than the issue of administrative simplification as it was contemplated under HIPAA. However, the Efficiency Index reveals that HIPAA has failed to deliver the promised percentage of electronic transactions usage as documented in the final rule for Standards for Electronic Transactions.

So what are the broader parameters of high and inefficient administrative costs?

• A 2007 McKinsey Global Institute study of healthcare costs in the US concluded that the US spends $1,600 per capita "more on healthcare than other OECD countries" and "found that the overriding cause ... is the failure of the intermediation system - payors, employers and government - to provide sufficient incentives to patients and consumers." Despite this excess spending, the U.S. provides coverage to 85% of the population, compared to 100% in most other OECD countries. McKinsey estimates that, of the U.S. excess spending on healthcare overall, more than 20% is attributable to administration and insurance.
  

• A 2008 California Health Care Foundation (CHFC) Snapshot: Health Care Costs 101, calculates that 7% of the national health expenditure is on administration. Administration costs are growing at an 8.8% rate, much higher than recent growth in overall healthcare spending (6.7%) and higher still than CPI growth (3.2%). Since 1986, administration costs have grown from 5% to 7% of the national health expenditure, rising from $23 billion to $145 billion. Private spending on administration is 9% while public spending administration is 6%.
  

• On November 21, 2008, Uwe Reinhardt, economics professor at Princeton criticized these "indefensible administrative costs". In referring to the McKinsey study, his analysis concluded that of the 21% excess spending, "85% of this excess administrative overhead can be attributed to the highly complex private health insurance system in the United States. Product design, underwriting and marketing account for about two-thirds of that total. The remaining 15% was attributed to public payers that are not saddled with the high cost of product design, medical underwriting and marketing, and that therefore spend a far small fraction of their total spending on administration."

The Last Mile: Personal Healthcare Monitoring

Improved outcomes for patients with chronic diseases depend in part on the ability to monitor the patient's health and to pro-actively manage and intervene as needed. Connectivity to the home and home health devices represents "the last mile" in this effort.

On November 18 HL7 announced the release of the Personal Healthcare Monitoring Report (PHMR) Implementation Guide (warning: zip file). This Draft Standard for Trial Use (DSTU) guide was co-developed with Continua Health Alliance.


The PHMR conforms to the Continuity of Care Document (CCD) standard:

• According to HL7, PHMR "describes how to use the CCD templates for communicating home health data to an electronic health record".
• This opens the potential for home health device information passing to a regional health exchange or a personal health record.
• Further, Healthcare Information Technology Standards Panel (HITSP) has stated that the Continua Health Alliance architecture is intended for incorporation into the HITSP Consumer Empowerment specifications for Remote Monitoring (IS 77) for Home Healh Devices, such as a "Personal Area Network" device.

Other recent vendor announcements are taking related paths to close this last mile, although their support for the PHMR Implementation Guide has not been announced.

On November 10, Microsoft announced a pilot with Cleveland Clinic using Microsoft's HealthVault. "The pilot will be a physician-driven, invitation-only opportunity offered to a group of Cleveland Clinic PHR users in the areas of diabetes, hypertension and heart failure. Cleveland Clinic plans to enroll approximately 400 patients and aims to demonstrate that the program will enable patients and physicians to better manage and track chronic diseases from home, using the patient’s own computer....Patients will be provided HealthVault-enabled digital devices, such as blood pressure monitors and glucometers, and asked to perform regular health monitoring. By connecting the device(s) to their home computers, their health information will be uploaded, with their consent, to a personal HealthVault account controlled by the patient, and then sent to their Cleveland Clinic MyChart account. This data will create an online log of the readings that will be available to the patient’s physician."

And on the same day, Intel announced it's piloting its 510(k)-approved Health Guide. "Pilot studies in the United States are currently planned with health care organizations such as Aetna, Erickson Retirement Communities, Providence Medical Group in Oregon and SCAN Health Plan. The goals and objectives are to assess how the Health Guide integrates with different care management models in the home. These first studies focus on the ability to demonstrate improved health outcomes for conditions such as heart failure, diabetes, hypertension and chronic obstructive pulmonary disease."

Engage with Grace

Written by Alexandra Drane & The Engage with Grace Team

We make choices throughout our lives -- where we want to live, what types of activities will fill our days, with whom we spend our time.

These choices are often a balance between our desires and our means, but at the end of the day, they are decisions made with intent. But when it comes to how we want to be treated at the end our lives, often we don't express our intent or tell our loved ones about it.

This has real consequences. 73% of Americans would prefer to die at home, but up to 50% die in hospital. More than 80% of Californians say their loved ones "know exactly" or have a "good idea" of what their wishes would be if they were in a persistent coma, but only 50% say they've talked to them about their preferences.But our end of life experiences are about a lot more than statistics. They're about all of us.

So the first thing we need to do is start talking. Engage With Grace: The One Slide Project was designed with one simple goal: to help get the conversation about end of life experience started. The idea is simple: Create a tool to help get people talking. One Slide, with just five questions on it. Five questions designed to help get us talking with each other, with our loved ones, about our preferences.

And we're asking people to share this One Slide - wherever and whenever they can.at a presentation, at dinner, at their book club. Just One Slide, just five questions. Lets start a global discussion that, until now, most of us haven't had.Here is what we are asking you: Download The One Slide and share it at any opportunity - with colleagues, family, friends. Think of the slide as currency and donate just two minutes whenever you can. Commit to being able to answer these five questions about end of life experience for yourself, and for your loved ones. Then commit to helping others do the same. Get this conversation started.

Let's start a viral movement driven by the change we as individuals can effect...and the incredibly positive impact we could have collectively. Help ensure that all of us - and the people we care for - can end our lives in the same purposeful way we live them. Just One Slide, just one goal. Think of the enormous difference we can make together.

To learn more please go to www.engagewithgrace.org.

Economic Crisis: Impact on Hospitals

The American Hospital Association has released its study of the economic crisis which shows an alarming deterioration in the financial condition of the nation's hospitals. As a consequence, 39% of hospitals are considering reductions in Information Technology capital investments and 45% are considering reductions in Clinical Technology.

The full report documents that patients are less likely to access hospitals for care and less likely to be able to pay for services.

Hospitals are having a much harder time paying their debt and have less access to capital. 33% of hospitals are reporting increased interest expense for variable rate bonds, with interest rates in the most recent quarter up 15% over the same time last year.

More than half of hospitals surveyed reported that they are also considering reductions in administrative costs and staff as other financial pressures bear down. Hospitals' total margins are down significantly in the third quarter 2007 from positive 6.1% to negative 1.6%.


The margin pressures include:

• Non-operating revenue is down significantly due to investment losses which are causing 31% of hospitals to increase funding in their pension plans.
  
• 38% of hospitals are reporting a moderate or significant decline in admissions and 31% are seeing a moderate or significant decline in elective procedures.
  
• Unemployment is increasing. Each 1% increase in national unemployment takes 2.5 million people off of employer health plans coverage.
• Uncompensated care is rising by 8% compared to the same quarter last year.
• Medicaid expenditures are increasing with increasing enrollment, but so too is the state Medicaid funding gap as the states confront their own budget deficits.
• Hospital payment shortfalls for Medicare and Medicaid are increasing

The Lighter Side of NCVHS

So who says that the complex and important work of the National Committee on Vital and Health Statistics (NCVHS) can’t also be light-hearted?

The following are transcript excerpts from the NCVHS full committee meeting on September 16-17, 2008. The award for the best one-liner goes to Larry Green, University of Colorado.


MR. REYNOLDS: … I would ask that if you have any conflicts of interest related to any issues coming before us today would you please so publicly indicate during your introduction. I have no conflicts.

** A number of other participants introduce themselves having no conflicts. **

MS. MCCALL: Carol McCall. I am with Humana, member of the committee, no known conflicts.

MR. HOUSTON: No known conflicts, you sound like an attorney. John Houston, University of Pittsburg, and member of the committee, no known conflicts either.

.....

DR. MIDDLETON: I think we are allowed three newbie questions right?

MR. REYNOLDS: No, you are not new anymore Blackford. If you go back and read the early minutes of today's meeting you are no longer new.

.....

MS. TRUDEL: … Both of those standards underwent significant revision as a result of the first round of pilots and we are very much hoping that both or at least one of them will be in a place where we can move forward.

MR. REYNOLDS: Let me just volunteer a comment: Hot dog that is great!

..…

DR. TANG: The other piece is data. … Data might be the third dimension to this matrix and I think it will relate very tightly to the data stewardship presentation … How does NCVHS with it's policy focus and data middle name fit into this matrix? …

MR. REYNOLDS: Did all of you notice that since Paul's part of the committee that he is now given the committee a middle name? I am not sure we have adopted that yet, but we have noted that the comment was made.

..…

MR. WALLEN: … you've beaten the PHR and the EHR to death, and so I won't go into any of that.

MR. BLAIR: But you noticed they're not dead yet.

..…

DR. GREEN: I'd like to ask a two-part question. One is in this area, the personal health record, what's going on in mental health? Secondly, with your example, when you are sequestering information that say relates to mental health, depression, you don't know you're depressed, the way you use SNOMED to search the record for this, could you say a little bit more about how you actually managed to succeed in sequestering the fact that this person has depression given that that word might appear in a lot of places?

DR. CARR: Can you speak up, Larry?

MS. GREENBERG: Could you speak up a bit?

DR. GREEN: I could, but I'm finished.

..…

DR. FRANCIS: … it's actually possible to identify some categories of sensitive information, and do it in a quite fine-grained way which I think is nifty. …

MS. GREENBERG: “Nifty” is in fact the correct technical term.

..…

DR. CARR: … the next one is data integrity. I know that's a word that Bill always struggles with, but it's really a statistical concept not an ethical one.

..…

DR. STEINDEL: … we need the one-page picture, and we ought to look at it that way.

MS. MCCALL: I'm in just ecstatic agreement.

..…

** The meeting continues the next morning with another round of introductions. Everyone says “no conflicts”, until: **

MR. HOUSTON: John Houston, University of Pittsburgh Medical Center, member of the Committee, and no conflicts, no known conflicts.

MS. MCCALL: In his subconscious there are many. Carol McCall, Humana, member of the Committee, no conflicts.

Value of Personal Health Records

The Center for Information Technology Leadership (CITL) has estimated that Personal Health Records (PHR) can deliver savings of $21 billion annually.

Architectures

CITL's full report evaluated four different PHR architectures: 1) Provider-tethered, 2) Payer-tethered, 3) Third party and 4) Interoperable.

Tethered architectures refer to providers or payers providing the data integration to the PHR. The Third Party architecture refers to manual aggregation of health information but without the ability to integrate back to the clinical and administrative systems "in their native formats". In the Interoperable architecture, patient information flows into the PHR using standards based health information exchange from sources throughout the region and from there can be machine interpreted by the clinical and administrative systems.

Costs

The Provider-tethered architecture provides a limited view of the patient, compared to an interoperable regional approach. This architecture also requires a very large number of implementations to support 80% PHR adoption:

• Provider - 26,000
• Payer - 706
• Third Party - 3
• Interoperable - 428

The number of implementations is a major factor driving the total national installation costs.

Savings

The CITL value chain model is used to estimate the value of the PHR functions including:

1. Information Sharing
1a. Complete Test results
1b. Complete Medication lists

2. Information Self-management
2a. Congestive Heart Failure Management
2b. Smoking Cessation Management

3. Information Exchange 3a. Appointment Scheduling
3b. Medication Renewals
3c. Pre-Encounter Questionnaire
3d. e-Visits


Four of these functions contribute 95% of the value: Sharing of complete test results ($7.9); Congestive heart failure management ($6.3), e-Visits ($4.8), and Medication renewals ($1.1).

The annual steady state net value for the Interoperable architecture comes in tops at $19 billion, followed by Third-Party and Payer-tethered at $11 billion with Provider-tethered trailing at a whopping negative $29 billion.

News Analysis

So what are the strategic implications for Healthcare Organizations (HCO's)?

• HCO's won't be able to carry this on their shoulders - - the costs are prohibitive.
  
• HCO's will need to ensure that their clinical and administrative systems can interoperate using national standards and can participate in regional health information exchange initiatives.
  
• HCO's should look to collaborate and invest in PHR's that are building towards an interoperable standards-based technology platform and are able to connect with multiple providers in the region.
  
• HCO's will need to develop strategies which distinguish between the 1) Personal Health Record (patient-centered) and 2) the portals which connect the HCO to the patient/consumer (HCO-centered).

The strategic implications align well with a recent presentation to AHIC of PHR adoption which favored a Utility Service Model.

Many thanks to Blackford Middleton and CITL for permission to reproduce excerpts from the report.

"Fruitful Marriage of Mob Behavior and Medicine": Google Flu Trends

The New York Times called it the "fruitful marriage of mob behavior and medicine." Google announced today that "certain search terms are good indicators of flu activity. Flu Trends uses aggregated search data to estimate flu activity in your state up to two weeks faster than traditional systems."

So searches for flu and other like search terms, based on analysis over hundreds of billions of de-identified searches, may be a good indictor of flu outbreak - -with results 1 to 2 weeks faster than trailing indicators based on reporting to the Centers for Disease Control and Prevention (CDC). The graph below charts the correlation between Flu Trends and CDC data.





What's the flu activity in your state? Check out the Flu Trends map.


An early version of an upcoming article in Nature Magazine reports that "because the relative frequency of certain queries is highly correlated with the percentage of physician visits in which a patient presents with influenza-like symptoms, we can accurately estimate the current level of influenza activity in each region of the United States, with a reporting lag of about one day. This approach may make it possible to utilize search queries for influenza surveillance in areas with a large population of web search users."

In their press release, Google forsees a breakthrough in proactive management of disease outbreaks. "For epidemiologists, this is an exciting development, because early detection of a disease outbreak can reduce the number of people affected. If a new strain of influenza virus emerges under certain conditions, a pandemic could emerge and cause millions of deaths (as happened, for example, in 1918). Our up-to-date influenza estimates may enable public health officials and health professionals to better respond to seasonal epidemics and — though we hope never to find out — pandemics. We shared our preliminary results with the Epidemiology and Prevention Branch of the Influenza Division at CDC throughout the 2007-2008 flu season, and together we saw that our search-based flu estimates had a consistently strong correlation with real CDC surveillance data."

ePHI at high risk

On October 27, the Office of the Inspector General (OIG) released their report on HIPAA Security and Electronic Protected Health Information (ePHI) compliance. The findings include:

• Security audits in 7 hospitals nationwide show numerous, significant vulnerabilities in the administrative, technical and physical safeguard provisions of the HIPAA Security Rule.
• These vulnerabilities place the confidentiality and integrity of ePHI at high risk.
  
• As a result, CMS has executed a contract to conduct compliance reviews.

So the HIPAA security auditors are coming and the chances are that most healthcare organizations are not ready. What will these audits cover?

CMS's office of e-Health Standards and Services has published the Interview and Document Request for HIPAA Security Onsite Investigations and Compliance Reviews. The audits will review policies, procedures and other evidence related to:

• Prevention, detection, containment, and correction of security violations
• Employee background checks and confidentiality agreements
• Establishing user access for new and existing employees
• List of authentication methods used to identify users authorized to access EPHI
• List of individuals and contractors with access to EPHI to include copies pertinent business associate agreements
• List of software used to manage and control access to the Internet
• Detecting, reporting, and responding to security incidents (if not in the security plan)
• Physical security
• Encryption and decryption of EPHI
• Mechanisms to ensure integrity of data during transmission - including portable media transmission (i.e. laptops, cell phones, blackberries, thumb drives)
• Monitoring systems use - authorized and unauthorized
• Use of wireless networks
• Granting, approving, and monitoring systems access (for example, by level, role, and job function)
• Sanctions for workforce members in violation of policies and procedures governing EPHI access or use
• Termination of systems access
• Session termination policies and procedures for inactive computer systems
• Policies and procedures for emergency access to electronic information systems
• Password management policies and procedures
• Secure workstation use (documentation of specific guidelines for each class of workstation (i.e., on site, laptop, and home system usage)
• Disposal of media and devices containing EPHI

The auditors will also be looking for documents related to:

• Entity-wide Security Plan
• Risk Analysis (most recent)
• Risk Management Plan (addressing risks identified in the Risk Analysis)
• Security violation monitoring reports
• Vulnerability scanning plans and Results from most recent vulnerability scan
• Network penetration testing policy and procedure and results from most recent network penetration test
• List of all user accounts with access to systems which store, transmit, or access EPHI (for active and terminated employees)
• Configuration standards to include patch management for systems which store, transmit, or access EPHI (including workstations)
• Encryption or equivalent measures implemented on systems that store, transmit, or access EPHI
• Organization chart to include staff members responsible for general HIPAA compliance to include the protection of EPHI
• Examples of training courses or communications delivered to staff members to ensure awareness and understanding of EPHI policies and procedures (security awareness training)
• Policies and procedures governing the use of virus protection software
• Data backup procedures
• Disaster recovery plan
• Disaster recovery test plans and results
• Analysis of information systems, applications, and data groups according to their criticality and sensitivity
• Inventory of all information systems to include network diagrams listing hardware and software used to store, transmit or maintain EPHI
• List of all Primary Domain Controllers (PDC) and servers
• Inventory log recording the owner and movement media and devices that contain EPHI

More painful than an insect bite? ICD-10 cost-benefit for healthcare providers

That long overdue ICD-10 announcement finally arrived from CMS and comments on the proposed final rule were due this month.

You can take it to the bank that ICD-10 will ultimately be approved. ICD-9 is running out of codes to support the growing number of new high cost medical procedures.

But what about the overall healthcare provider financial cost-benefit?

To gain some insight on this, let's first look at superbills, which many providers use to allow for quick coding for reimbursement. The Blue Cross Blue Shield association just released a comparison of a current ICD-9 superbill to the equivalent using ICD-10. The new codes turn a 2 page superbill into a 9 page behemoth.

For example, an insect bite using ICD-9 is shown on the superbill as "919.4 Insect bite". (Thanks to an anonymous reader for the clarification that there are 18 ICD-9 insect bite codes of which 16 are specific to a particular body site and two are not).

Want to do the same thing using ICD-10? Here are your choices:

S00.06A Insect bite of scalp; Initial encounter
S00.06D Insect bite of scalp; Subsequent encounter
S00.269A Insect bite of unspecified eyelid and periocular area; Initial encounter
S00.269D Insect bite of unspecified eyelid and periocular area; Subsequent encounter
S00.36A Insect bite of nose; Initial encounter
S00.36D Insect bite of nose; Subsequent encounter
S00.469A Insect bite of unspecified ear; Initial encounter
S00.469D Insect bite of unspecified ear; Subsequent encounter
S00.561A Insect bite of lip; Initial encounter
S00.561D Insect bite of lip; Subsequent encounter
S00.562A Insect bite of oral cavity; Initial encounter
S00.562D Insect bite of oral cavity; Subsequent encounter
S10.16A Insect bite of throat; Initial encounter
S10.16D Insect bite of throat; Subsequent encounter
S10.86A Insect bite of other part of neck; Initial encounter
S10.86S Insect bite of other part of necks; subsequent encounter
S10.96A Insect bite of unspecified part of neck; Initial encounter
S10.96D Insect bite of unspecified part of neck; Subsequent encounter
S20.161A Insect bite of breast, right breast; Initial encounter
S20.161D Insect bite of breast, right breast; Subsequent encounter
S20.162A Insect bite of breast, left breast; Initial encounter
S20.162D Insect bite of breast, left breast; Subsequent encounter
S20.169A Insect bite of breast, unspecified breast; Initial encounter
S20.169D Insect bite of breast, unspecified breast; Subsequent encounter
S20.361A Insect bite of right front wall of thorax; Initial encounter
S20.361D Insect bite of right front wall of thorax; Subsequent encounter
S20.361S Insect bite of right front wall of thorax; Subsequent encounter
S20.362A Insect bite of left front wall of thorax; Initial encounter
S20.362D Insect bite of left front wall of thorax; Subsequent encounter
S20.369A Insect bite of unspecified front wall of thorax; Initial encounter
S20.369D Insect bite of unspecified front wall of thorax; Subsequent encounter
S20.461A Insect bite of right back wall of thorax; Initial encounter
S20.461D Insect bite of right back wall of thorax; Subsequent encounter
S20.462A Insect bite of left back wall of thorax; Initial encounter
S20.462D Insect bite of left back wall of thorax; Subsequent encounter
S20.469A Insect bite of unspecified back wall of thorax; Initial encounter
S20.469D Insect bite of unspecified back wall of thorax; Subsequent encounter
S20.96A Insect bite of unspecified parts of thorax; Initial encounter
S20.96D Insect bite of unspecified parts of thorax; Subsequent encounter
S30.860A Insect bite of lower back and pelvis; Initial encounter
S30.860D Insect bite of lower back and pelvis; Subsequent encounter
S30.861A Insect bite of abdominal wall; Initial encounter
S30.861D Insect bite of abdominal wall; Subsequent encounter
S30.862A Insect bite of penis; Initial encounter
S30.862D Insect bite of penis; Subsequent encounter
S30.863A Insect bite of scrotum and testes; Initial encounter
S30.863D Insect bite of scrotum and testes; Subsequent encounter
S30.864A Insect bite of vagina and vulva; Initial encounter
S30.864D Insect bite of vagina and vulva; Subsequent encounter
S30.865A Insect bite of unspecified external genital organs, male; Initial encounter
S30.865D Insect bite of unspecified external genital organs, male; Subsequent encounter
S30.866A Insect bite of unspecified external genital organs, female; Initial encounter
S30.866D Insect bite of unspecified external genital organs, female; Subsequent encounter
S30.867A Insect bite of anus; Initial encounter
S30.867D Insect bite of anus; Subsequent encounter
S40.269A Insect bite of unspecified shoulder; Initial encounter
S40.269D Insect bite of unspecified shoulder; Subsequent encounter
S40.869A Insect bite of unspecified upper arm; Initial encounter
S40.869D Insect bite of unspecified upper arm; Subsequent encounter
S50.369A Insect bite of unspecified elbow; Initial encounter
S50.369D Insect bite of unspecified elbow; Subsequent encounter
S50.869A Insect bite of unspecified forearm; Initial encounter
S50.869D Insect bite of unspecified forearm; Subsequent encounter
S60.369A Insect bite of unspecified thumb; Initial encounter
S60.369D Insect bite of unspecified thumb; Subsequent encounter
S60.468A Insect bite of other finger; Initial encounter
S60.468D Insect bite of other finger; Subsequent encounter
S60.469A Insect bite of unspecified finger; Initial encounter
S60.469D Insect bite of unspecified finger; Subsequent encounter
S60.569A Insect bite of unspecified hand; Initial encounter
S60.569D Insect bite of unspecified hand; Subsequent encounter
S60.869A Insect bite of unspecified wrist; Initial encounter
S60.869D Insect bite of unspecified wrist; Subsequent encounter
S70.269A Insect bite, unspecified hip; Initial encounter
S70.269D Insect bite, unspecified hip; Subsequent encounter
S70.369A Insect bite, unspecified thigh; Initial encounter
S70.369D Insect bite, unspecified thigh; Subsequent encounter
S80.269A Insect bite, unspecified knee; Initial encounter
S80.269D Insect bite, unspecified knee; Subsequent encounter
S90.463A Insect bite, unspecified great toe; Initial encounter
S90.463D Insect bite, unspecified great toe; Subsequent encounter
S90.466A Insect bite, unspecified lesser toe(s); Initial encounter
S90.466D Insect bite, unspecified lesser toe(s); Subsequent encounter
S90.569A Insect bite, unspecified ankle; Initial encounter
S90.569D Insect bite, unspecified ankle; Subsequent encounter
S90.869A Insect bite, unspecified foot; Initial encounter
S90.869D Insect bite, unspecified foot; Subsequent encounter

And that is just for insect bites.

Providers will clearly need to be prepared with education, software and process improvements to deal with ICD-10, in addition to complex transaction integrations and implementations. And transitional reimbursement challenges such as retroactive adjustments using different code sets will be entertaining, to say the least.

A recent study assessed the cost impact of the proposed ICD-10 rule on providers. For a typical 10 provider practice, the cost is $285,195. And for a large practice? $2.7 million.

CMS listed 6 reasons for the move to ICD-10:

• More accurate payments for new procedures
• Fewer rejected claims
• Fewer improper claims
• Better understanding of new procedures
• Improved disease management
• Better understanding of health conditions and health care outcomes
• Harmonization of disease monitoring and reporting world-wide

Unless you're a provider managing risk, only "fewer rejected claims" and "fewer improper claims" have a potential favorable impact on healthcare providers' operating costs. And it's very likely those benefits have been overstated. For example, HHS treats all claims processing costs as variable to calculate the benefit of "fewer rejected claims".

In conclusion, the effect of these limited benefits and high costs could be more painful to providers than an "S30.867D".

Mobilizing Personal Health Information - Consumer Perspective

How will consumers "mobilize" their personal health information?

On July 29, the American Health Information Community (AHIC, "The Community") examined how consumers may access, use and share their personal health information (PHI). This article highlights the consumer perspective.

Utility Service Model

John Moore from Chilmark Research compared several business models for PHI delivery. These include: 1) Consumer approach to manage health, 2) Employer and healthplan approach to reduce costs and manage risks, 3) Provider approach for consumer (patient) retention, and 4) Utility service model approach to "create an ecosystem".

The utility service model consolidates multiple data sources into a secure repository available to multiple applications and services. This model scores very well, with the notable exception of portability which is "under development". Moore scored the utility service model as the only approach with the potential for high rates of adoption.

Consumer Interest

Carol Diamond of Markle Foundation's Connecting for Health organization surveyed public attitudes towards Personal Health Records (PHR). Markle's survey found only 13.5% of respondents very interested in using a free web-based PHR and another third somewhat interested.

Markle contends that the establishment of privacy and information practices are critical to consumer PHR adoption.



















Markle's Connecting for Health Common Framework and Framework for Networked Personal Health Information define clear "price of admission" requirements for PHR adoption, but are they sufficient to achieve adoption?

Standards and Interoperability
Connectivity with healthcare organizations will be required to make PHR's easy to access and manage. Jeff Blair, Lovelace Clinic, made the case for the Nationwide Health Information Network and standards based interoperability as foundational elements to achieve adoption.

Editorial comment: Where are the incentives?
The one missing ingredient in all of this: financial incentives for patients and providers. Why are payers and employers more interested in PHR adoption? They are dealing with the pocketbook issues of how population health affects their P&L.

Senate Bill - Much more than 2008 fee schedules

Ted Kennedy returned to the Senate floor and 18 Republicans switched their votes to deliver a veto-proof majority for the bill which stops a 10.6% decrease in 2008 physician fee schedules, programmed to begin July 1, 2008.

The bill also lays the groundwork to correct major problems with the recently proposed 2009 rule from CMS.

Best summary of the legislation comes from the Heart Rhythm Society:

"Medicare Physician Payment Update

• Stops 10.6 percent Medicare physician payment cut scheduled for July 1, 2008, continues existing 0.5 percent increase through December 31, 2008, and provides an additional 1.1 percent update for 2009
• Effective 2009, requires physician fee schedule budget neutrality adjustments for 2007 and 2008 relative value unit changes to apply to the conversion factor, instead of work values

Quality

• Extends the physician quality reporting initiative (PQRI) through December 31, 2010 while increasing the PQRI bonus to 2 percent for 2009 and 2010
• Makes improvements to the PQRI, including a requirement for the endorsement of measures by a consensus-based, standard setting entity and permits group practices to report, using a sampling methodology, on measures targeting high-cost, chronic conditions
• Requires the Secretary to provide confidential feedback to providers regarding their resource use and to submit a plan to Congress regarding transition to a value-based purchasing program for physicians

Electronic Prescribing (E-prescribing)

• If at least 10 percent of a physician’s Medicare charges fall under the services identified by the PQRI e-prescribing measure and physicians use a qualifying e-prescribing system, they are eligible to receive a:
• 2 percent bonus payment in 2009 and 2010
• 1 percent bonus in 2011 and 2012, and
• 0.5 percent bonus in 2013
• If these physicians do not use e-prescribing, they will face penalties of -1 percent in 2012, -1.5 percent in 2013, and -2 percent in 2014 and beyond. Beginning in 2009 physicians will be ineligible to receive a PQRI bonus for e-prescribing
• Exceptions will be made for significant hardships (e.g., rural areas without sufficient Internet access)
• Payment bonuses are made after adoption of e-prescribing system, not as an up-front payment to facilitate initial investments

Primary Care Services

• Adds new funding and expands the authority for the Medicare Home Demonstration Project. Medical homes are large or small medical practices where a physician provides comprehensive and coordinated patient centered medical care and acts as the “personal physician” to the patient
• Authorizes the Secretary to expand the duration and scope of the demonstration if certain quality and/or savings targets are achieved

Diagnostic Imaging

• In order for physicians, practitioners, facilities or other entities that perform advanced diagnostic imaging services (MRI, CT, and nuclear medicine/PET) to receive reimbursement for the technical component of Medicare imaging studies payment, they will need to be accredited by January 1, 2012. The bill gives Secretary the authority to determine other diagnostic imaging services (excluding X-ray, ultrasound, and fluoroscopy), in consultation with physician specialties, that would be subject to accreditation requirement
• Establishes a 2-year voluntary demonstration program to determine whether physician compliance with appropriateness criteria for advanced diagnostic imaging services

Beneficiary Improvements

• Provides Medicare coverage for “additional preventive services” determined by Secretary that identify medical conditions or risk factors recommended by the U.S. Preventive Services Task Force, subject to national coverage decision process
• Waives deductible for “Welcome to Medicare” physical, expands timeframe for physical from six months to one year following enrollment in Medicare; and adds new services to this benefit, including “additional preventive services” and end-of-life planning

Other Provisions

• Charges Institute of Medicine with making recommendation to Congress on methodological standards for reviewing clinical effectiveness research and best methods for developing clinical practice guidelines
• Directs the Office of the Inspector General to report on the extent to which Medicare providers follow rules regarding discrimination against beneficiaries with limited English proficiency and Culturally and Linguistically Appropriate Services (CLAS) Standards and will require the Secretary to correct deficiencies
• Requires MedPAC to conduct a study on the merits of establishing a Medicare Chronic Care Practice Research Network to test new models of care coordination
• Directs Government Accountability Office (GAO) to study the interest rate and equipment utilization assumptions used in determining practice expense relative value units"

Summer reading: Care of CMS

The Associate CIO for one of the top medical schools in the country was telling me about the challenge he faces as a physician and CIO: "Either I can remember these large volumes of information about my specialty, or I can remember the payer rules that come in equally large tomes. But I can't remember both."

Today, CMS publishes in the Federal Register its 834 page proposed rule on Medicare Part B 2009 physician fee schedules and other changes. Comments are due before you're back from vacation... on August 29. The final rule is scheduled for November 1. For those of you with only enough time for the "Cliff Notes version", check out the CMS fact sheet.

First the good news:
Medicare is proposing new HCPCS codes supporting follow-up inpatient telehealth consultations. The codes would be used by practicioners who are "consulted by the patient’s attending physician regarding the patient’s care but who are not available for a face-to-face encounter."

This rule proposes a fairly narrow application of "virtual visits", but it certainly represents a step in the right direction. In 2006, CMS had stopped coverage for these telehealth consultations.

CMS has been resistant to approving codes for any "virtual visits". CMS could serve as a market mover for private insurance, should this regulation be approved.

And now the bad news:
980,000 physicians, other practioners and medical suppliers will be paid an average 5.4% less - - $54 billion in 2009 compared to $57 billion in 2008.

Physician Reporting Quality Initiative (PQRI):
The 1.5% incentive payment for reporting PQRI measures is eliminated. Quality reporting would be extended in 2009 with addtion of 64 new measures and the carry-forward of 111 existing measures.

Electronic Health Record (EHR) Reporting of PQRI
CMS wants to begin accepting data from EHRs for PQRI individual measures (not Measures Groups) starting January 1, 2009.

Exception for Incentive Payment and Shared Savings Programs
Medicare and private insurers have been piloting pay-for-performance and other programs that use economic incentives to encourage quality cost-effective care delivery. In many of these cases, hospitals may be paying physicians and this "may implicate the physician self-referral law". CMS proposes an exception to the physician self-referral law that would permit these payments provided "specified conditions are met."

e-Prescribing
For providers submitting Part D presecriptions electronically, computer-generated faxes will continue to be permitted if there are temporary communication problems that preclude the use of the NCPDP SCRIPT standard. This is now extended to include dispensers who may also use computer-generated faxes to request refills from providers not capable of using NCPDP SCRIPT.

Other changes
There are a variety of other actions in the proposed rule with less direct impact on healthcare technology. These include anti-markup provisions, RVU review, Physician Payment Locality Options review, quality standards for diagnostic testing services, ESRD facility payment, competitive acquisition program (CAP) revisions, changes to enrollment and billing rules, beneficiary signatures for non-emergency ambulance service, commentary on organ retreival services .