By Thomas Reinke

The American Cancer Society reports there will be about 1,479,000 new cancer cases in 2009 and the five year survival rate for all cancers has reached 66%, up from 50% in 1977. Since the short term survival rate is higher, the number of living cancer patients will grow by over 1,000,000 people this year, surpassing 12 million.

Cancer survivorship is receiving more attention, not only because of the substantial number of ongoing patients but also because of recognized shortcomings in comprehensive follow-up care. In response, the Ft. Washington based National Comprehensive Cancer Network, a recognized expert in all things cancer, has taken a step to assure that patients receive better care and that physicians have proper guidance for the long term management of cancer patients.

A 2006 report by the Institute of Medicine, From Cancer Patient to Cancer Survivor: Lost in Transition highlighted failures in delivering comprehensive and coordinated follow-up care to cancer survivors. The report indicated that many survivors are lost in transition from acute treatment to a non-system of fragmented care lacking in evidence based approaches for managing cancer as a chronic condition.

The report recommends the implementation of comprehensive survivorship care plans. Historically, community-based support groups - often initiated by patients – have been the source of educational, counseling, nutrition and other essential services, but survivorship care plans transfer some of that responsibility to health care providers.

Hospital based cancer programs have shown some interest in survivorship but overall cancer survivorship care plans have not caught on widely. Recently though the NCCN took an important step to expand the survivorship initiative. The NCCN is a recognized authority in the development of cancer guidelines and its latest version of colorectal cancer guidelines includes a section specifically dedicated to the principles of survivorship. It covers a wide range of evidence based post acute care activities.

It was written by Crystal Denlinger, MD a medical oncologist and Andrea Barsevick, RN, PhD a nursing researcher, both at the Fox Chase Cancer Center, an NCCN member. “Cancer survivorship is more than surveillance; it’s a comprehensive approach that includes prevention, evaluating symptoms, screening to identify unreported symptoms and traditional surveillance,” says Denlinger.

“It’s also a whole person approach that recognizes the long term biological, psychological and social impact of cancer," says Barsevick.

The NCCN guidelines include recommendations for the late effect of disease including managing neuropathy, chronic diarrhea or incontinence, and routine monitoring for cholesterol, blood pressure and glucose.

Other sections of the guidelines cover new information on metastatic disease, including KRAS testing, adjuvant chemotherapy and re-evaluation of patients with unresectable disease following chemotherapy.

Some of the revisions, such as the KRAS biomarker recommendations, indicate that cancer care is changing rapidly. There is growing use of adjuvant chemotherapy, off-label use of drugs, and expanding maintenance drug therapy. PhrMA, the drug manufacturer’s trade association, says there are currently 860 cancer drugs in development, and experts say that many of them will be add-ons to existing regimens, not replacements.

As care becomes more elaborate, experts says survivorship care plans will help oncologists stay on top of the status of patients, and they will benefit other specialists. Survivorship care plans are supposed to be a complete record the course of treatment, indicators of treatment response, and forward looking issues such as recovery from toxicities. These items are included in a part of the guidelines that deals with transfers back to primary physicians.

Denlinger acknowledges the importance of primaries: “Cancer patients commonly have chronic diseases that are successfully being managed by their primary doctor and we’re working more closing with them. And when it’s time to transfer care back to them, they need to understand ongoing issues and shared responsibilities.”

By Steve Goodman

A patient walks into your office, even for the first time, and instead of being handed reams of forms to fill out – your receptionist glances at her computer, smiles and says “Hello Mr. Jones, the doctor will be right with you...” For more than 10 years that has been the promise of EMR – electronic medical records. The technology exists, and many practitioners have systems in place and are reaping the benefits – but how close are we to universal acceptance and ubiquitous use of EMRs throughout the medical community?

At the most basic level an EMR is an electronic record of a patient’s health information generated by all of his or her encounters with any healthcare practitioner or setting.

An EMR is not only a record of past medical history. Included are patient demographics, progress notes, specific problems, medications, immunization records, all laboratory data radiology and other diagnostic reports. EMR has been shown to streamline the clinician's workflow. A recent study published in BMJ, The Journal of the British Medical Association, concluded that when compared with paper based records paperless records were more often fully understandable and fully legible. Paperless records were found to be significantly more likely to have at least one diagnosis recorded, to have recorded the advice that had been given to the patient, and when a prescription had been issued, paperless records were more likely to specify the drug dose. The study also found that doctors using paperless records were able to recall more of the advice they had given to their patients. According to a University of California report prepared for the California Healthcare Foundation that surveyed 20 small physician practices that had implemented EMR, “Almost all users reported increased patient care quality due to such improvements as better data legibility, accessibility and organization, prescription ordering, and prevention and disease management care decision support”   

Tragic events like 9/11, Hurricane Katrina, and the California wildfires have showcased the benefits of electronic record keeping. With large scale EMR systems in place, many of the medical records that were lost in such tragedies would have been preserved, leading to more efficient care and better patient outcomes for those injured or displaced in such events. 

Despite the seeming advantages of EMRs, hospitals across the country are evaluating if, when, and how they will subsidize electronic medical record technology. 

“I see a lot of hospitals still trying to figure out what to do,” says Mark R. Anderson, CEO of healthcare technology advisory firm AC Group, Inc. of Montgomery, Texas. “Hospitals need to learn about the different advantages and disadvantages of [an EMR] project before offering a service.

In the meantime Congress is poised to put forth a multi-billion dollar stimulus package that calls for billion to implement electronic health records and other information technology. The Senate version of the package was supported by Pennsylvania’s own Arlen Specter, one of only three Republican senators to support the bill. The others were Susan Collins and Olympia Snowe, both of Maine. According to the Senate bill, hospitals would be eligible for incentives for using electronic medical records beginning in 2011 and would be penalized if they haven't switched over from paper records by 2015.

In the compromised bill between the House and Senate versions it was Specter, a cancer survivor, who argued for an additional .5 billion for medical research. “I think it is an important component of putting America back on its feet,” Mr. Specter said.

The federal government already supports and operates a practical EMR model. Veterans' hospitals across the country share an electronic system, called VistA, which allows for sharing of records for veterans in its health system. With VistA, a VA facility anywhere in the country has the same access to an eligible patient’s records as his or her local hospital. 

Doctor’s Reactions

Time and again EMRs have been shown to enhance the quality of patient care by minimizing errors and improving efficiency and coordination. With all of the apparent positive benefits to implementing EMR, why have so many physicians still been slow to add an EMR solution to their practices?  Initial cost still seems to be the biggest hurdle. According to Robert Miller, Ph.D., one of the authors of the California Healthcare Foundation study, “The initial costs can be substantial. We came up with about ,000 per billing provider on average. We found providers paid for their initial costs and cumulative ongoing costs in 2.5 years. After that, it was ,000 per billing provider per year in net gains, on average ‘. However, Miller was quick to point out “But that's the average. There were three practices that, at the rate they were generating benefits, would take over nine years to pay for EMRs. One practice almost went bankrupt due to billing problems associated with implementation. So, while the average payback period is 2.5 years, there's also risk in making the move.”

Mike Davis executive vice president of analytics for the Healthcare Information and Management Systems Society (HIMSS) says,“We found that cost continues to be a significant barrier to technology implementation, despite the benefits of improved patient care and fewer medical errors attributed to the EMR.”

That is why Miller, among others, is in favor of subsidies for doctors who implement EMR. These subsidies to community physicians could possibly be paid for out of the billion in the Obama stimulus package to upgrade hospitals' electronic records systems. “Physicians should be paid for using EMRs well” said Miller, “and that's where pay-for-performance comes in. Practices with EMRs are very well situated to gain from pay-for-quality performance because they are in a better position to capture and report on data than are paper-based practices, and have more tools to improve quality.”

Mark R. Anderson believes that even with financial and support staff assistance many physicians may still resist hospital offerings. “The initial reaction might be that they don’t necessarily want an EMR or they want their own,” says Anderson. “Most doctors just don’t trust hospitals.” Regardless of physician resistance, Anderson is convinced hospitals need to develop programs to help provide community physicians with EMR technology. “It is a great use of their money if they think it all the way through,” says Anderson. “There are some great financial benefits to the hospital and it bonds the doctor to the hospital. And, it can improve the quality of care.”

Until federal funding becomes available it has fallen on States and individual municipalities to develop such subsidy programs. New York City for example has begun a million project to heavily subsidize EMRs for 1,000 primary care physicians, mainly those with 10 or fewer doctors, and largely in lower income neighborhoods. The EMR system has been designed for the city by eClinicalWorks. The system usually costs approximatly ,000 to implement for a typical small pratice. However, New York is cutting that cost down to ,000 through subsidies for practices that qualify by having at least 10 percent of their patients who are on Medicaid or without any insurance. In addition to financial subsidies, the city is also providing teams of trainers to assist with the transition.

eClinicalWorks projects that 100,000 healthcare providers will be using the company’s software within the next 10 years, impacting patient care for 100 million patients.

Real World Experiences

There are roughly 200 vendors who provide some sort of EMR to the physician’s office. Obviously we are not dealing with a “one size fits all solution”. In addition to eClinicalWorks, some of the other well-known names are SpringCharts, Massachusetts based Meditech, Allscripts, headquartered in Chicago, and NextGen Healthcare with offices in Horsham, Pennsylvania.

The Reagan Eye Center in Waxahachie, Texas has had NextGen’s system in place since August of 2007. According to Paige Pollard, OD, EMR administrator for Reagan, the key to launching a successful EMR initiative is giving the staff plenty of time to familiarize themselves with the EMR and offering enough training, practice, and support. Explains Pollard, “It’s important to be as comfortable with it as possible.” She adds, “I basically spent one day a week in training or manipulating the system, which worked well because I knew what our exams were like and could configure the EMR to match the way we work.”  The Center has four facilities within Waxahachie. Since the system “went live” there has been increased efficiency across the four now networked sites, where they no longer have to fax charts or other paper records between locations. Pollard explains that the system also automatically supplies the coding for services performed during exams, which has improved revenue. “When I first saw the increase in revenue, I was a bit worried but then realized that the EMR captures codes more accurately and gives you more than you might typically give yourself”

Excela Health, a network of medical practices representing a variety of specialties located throughout Westmoreland County Pennsylvania, turned to Allscripts to implement an electronic health record system for its more than 115 physicians. “Our strategy calls for finding ways to enable physicians to improve the quality of the services they deliver, simplify their lives, and to improve their bottom line, and we believe Allscripts will help us accomplish those objectives," said Otto Salguero, chief information officer of Excela Health. "Electronic health records eliminate the inefficiencies of the paper chart and provide 'best practice' guidelines, automated safety alerts, health management plans and other critical information where it's needed most, at the point of care."

Implementation

Those who have been through the process of implementing EMRs agree that due diligence and having the proper information and support before, during, and after implementation is critical to its success or failure.  As the old saying goes “fail to plan - plan to fail.”

IT experts agree it is important to think through all the steps in an EMR project from one end to the other. Organizations such as HIMSS provide information and valuable resources to healthcare professionals considering an EMR solution. According to an HIMSS report available on their website, among the first steps physicians need to take before implementation of an EMR solution is to “Develop an implementation budget and create a project plan to guide your process”.  The report states that practices all too often underestimate the amount of work required to prepare an EMR product to go live. Small practices should expect staff to put in many additional man-hours, or hire additional staff during implementation -an expenditure many offices fail to plan for. No matter the size of your office or clinic, the EMR vendor you have selected should provide you with a Project Plan – if they have not – be sure to ask for one.

Robert Miller’s research found that most small practices greatly underestimated the learning curve required to reap the full benefits of an EMR system after initial launch. Most of those in the California Healthcare Foundation study reported an increase in the length of time necessary for documentation, and found they were working longer hours on average, once they had put in EMRs. It is difficult to predict length of learning curves and the impact of learning curves on productivity, but most vendors of EMRs say that typically within 6 months to one year, healthcare providers are leaving their offices at their normal times.

Researchers have found two other important pitfalls practices often run into is not having the right hardware to support the EMR system, and not anticipating the level of the staff’s reluctance to adopt the new procedures. The first can be avoided, say the experts, by working with the vendor and following their “recommended” system requirements and not the “minimum” system requirements. According to HIMSS, avoid the second by “appointing a physicians champion” -a person who can reassure staff, ask for their input and be motivating and enthusiastic about the specific benefits that the EMR will provide.   

According to results from the most recent HIMSS Ambulatory Healthcare IT Survey,  market growth of electronic medical record implementations in settings such as private medical practices or specialty clinics, continues at a slow but steady pace. “Our survey results indicate that medical practices and clinics recognize both the value of, and the barriers to, implementation of the electronic medical record,” said Mary Griskewicz, MS, FHIMSS, senior director, ambulatory information systems, HIMSS. “While this transition from paper to digital health records slowly moves ahead in ambulatory healthcare settings, HIMSS will continue to monitor the needs of, and provide educational resources, for this important sector of healthcare.”

Over the next few years, deciding to adopt an EMR will likely be one of the most important decisions made by any clinical practice. The transition to an EMR from a paper system can be challenging, but with extensive planning and proper support many of the pitfalls can be avoided, leading to a successful implementation.

As physicians, hospitals and payors continue to ramp up their efforts to reduce preventable adverse medical events, relatively little attention has been paid to a moment in the care process when the patient is particularly vulnerable: the hospital discharge.

Nearly 18 percent of Medicare patients are readmitted to a hospital within 30 days of discharge, and patients with multiple chronic conditions are readmitted at rates as high as 25 percent, according to Medicare Payment Advisory Commission (MedPAC) estimates, accounting for billion in spending. Research on care transitions suggests that as many as 20 to 30 percent of adverse events following discharge are preventable, and another 30 percent are ameliorable – i.e., their severity could be reduced if corrective measures were instituted earlier and more effectively.

The hospital discharge is a "prototypical condition" for the patient safety movement: it is common and risky; it is nonstandardized from patient to patient and hospital to hospital; responsibility for its implementation is fragmented among many hospital staff; and adverse events occur in approximately one in five discharges that may lead to preventable hospital use, according to a June 2007 study published in the Journal of Patient Safety.

Decentralized responsibility is a central defect of the discharge process, says Judith Black, M.D., MHA, medical director of senior products at Highmark Blue Cross Blue Shield. After a total hip replacement, for example, an orthopedic surgeon writes orders, a primary care physician writes orders, and a case manager issues instructions. The current system does not adequately ensure that patients and their care partners reconcile and understand this information, that it is transmitted timely across care settings, or that patients promptly follow up with their primary care physicians, she notes.

Accreditation entities such as the Joint Commission and the National Committee for Quality Assurance monitor that communication occurs between the hospital and the receiving parties (the patient and their caregiver, for discharge to the home), but they are limited in their ability to monitor the actual effectiveness of the process. The Joint Commission looks at whether the reasons for discharge are based on the patient’s assessed needs; whether discharged patients are given information about continued care and treatment; and whether the patient and appropriate practitioners, staff and family members are involved. But feedback from, and oversight of discharge effectiveness is difficult, as many settings to which patients are discharged are not accredited (most obviously, the home) says Robert Wise, M.D., the Joint Commission’s vice president, Division of Standards and Survey Methods.

The situation is ripe for change, and emerging data suggest that interventions before, during and after discharge can reduce the number of post-discharge adverse events and prevent rehospitalizations. Pilot projects are now addressing documented failures of hospital discharge practices – including incomplete or inaccurate reconciliation of information from multiple clinicians, poor comprehension by patients and lack of appropriate follow-up care.

Those interventions include standardized discharge toolkits, and transitional care nurses using proven, patient-focused protocols who interact with patients more closely for a period after hospital discharge. Systemic and financial hurdles may stymie widespread dissemination of those interventions, although support by government, private foundations and some health insurers is giving those projects momentum and may push them into the mainstream.

Neglected Problem

A reliable theme in medical research literature is that physicians overestimate patients’ comprehension of medical instructions, including those given at discharge. Patients have difficulty remembering their care plans, even better-educated patients do not adequately understand and remember instructions, and physicians underutilize after-care providers – instead relying too heavily on patients’ information retention, says Jeffrey Greenwald, M.D., associate professor of medicine at Boston Medical Center and member of the Society of Hospital Medicine’s Quality and Patient Safety Committee.

As co-investigator in a study called Project RED (Re-engineered Hospital Discharge), which is funded by the Agency for Healthcare Research and Quality, Greenwald says that half of patients who get traditional discharge instructions can’t name key information, such as why they were in the hospital, a list of their medications, and their follow-up plans. Median age is in the 40s for patients in the study.

"This problem is rampant and underappreciated: the perception is that we do a good job at it," says Greenwald. Contributing to the problem, he says, is the limited amount of time dedicated to the discharge process in an era of shorter hospital stays, inadequate communication with after-care providers, and inadequate systems of after-care. "The level of change required is not insubstantial, and requires multidisciplinary coordination, as well as buy-in from the ‘C-suite’ of hospital leadership," he adds.

"Hospitals can only control what’s within their walls, and not a patient’s access to transportation for follow-up care, or their ability to cover their medication costs, or the social ties of an isolated elderly person living in a high-rise," says Aline Holmes, RN, senior vice president of clinical affairs for the New Jersey Hospital Association.

Other recent research corroborates the problem of discharge failure. Many patients have poor comprehension of various aspects of their care, according to a study of four categories of emergency department discharge information: diagnosis and course, ED care, post-ED care, and return instructions, published online in July by the Annals of Emergency Medicine. Researchers wrote that "the chaotic nature of the environment and transient interactions pose significant challenges to communication" during the discharge process, noting that three-quarters of the patients studied demonstrated deficient comprehension in at least one of the four categories – most commonly post-ED care (medications, ancillary measures, and follow-up), while half of patients demonstrated deficient comprehension in two or more categories. Perhaps more disturbing, most patients weren’t even aware of their lack of understanding, and perceived their difficulty with comprehension only 20 percent of the time. Clinicians, therefore, cannot simply ask patients to identify their areas of confusion, the researchers noted.

Care transitions are especially important for elderly patients and other high-risk patients who have multiple comorbidities. More than half of patients over age 70 years responding to a posthospitalization telephone survey did not recall anyone talking with them about how to care for themselves after hospitalization, according to a study published last September in the Journal of Hospital Medicine.

There are significant gaps in quality and safety when patients transition from the hospital to an outpatient setting, and patient safety problems are exceedingly common in the early discharge period, writes Alan Forster, M.D., MSc, Assistant Professor at the University of Ottawa and Scientist, Clinical Epidemiology, Ottawa Health Research Institute – who Greenwald says is a seminal researcher on hospital discharge failure and improvement. Several studies performed about five years ago in the U.S. and Canada by Forster and colleagues demonstrate that approximately one in five medical patients experience an adverse event during the first several weeks after hospital discharge, while one-third of those events are associated with disability and half of them are associated with use of additional health services.

Close to two-thirds of post-discharge adverse events are preventable or ameliorable, such as a patient who develops C. difficile diarrhea complicated by severe dehydration or sepsis following discharge, Forster writes in a December 2004 commentary published in Hospital Medicine. The most prevalent type is an adverse drug event, such as a side effect that harms the patient, while other types include procedural complications or hospital-acquired infections that become clinically apparent only after patients go home – a phenomenon exacerbated by hospitals shortening patient length of stays, according to Forster. Diagnostic and therapeutic errors account for approximately 10 percent of post-discharge adverse events, a frequency that Forster believes may be underestimated, as patients in post-discharge research studies are generally followed for one month, at most, which may be too short a follow-up duration to identify poor outcomes related to such errors.

Deficiencies of the discharge process itself lead to adverse events, writes Forster. Patients who are unable to remember a discussion with their care provider about the side effects of their medication are at a three-fold greater risk of experiencing an adverse event than patients who can recall such information. Patients see multiple providers before, during and after a hospital encounter who are often practicing in different locations. Discharge summaries often lack important information describing the most responsible diagnosis, the results of important tests, the medications prescribed at discharge, or the follow-up plans; and are often not handed off in a timely manner, if at all, to multiple follow-up physicians. There is a lack of infrastructure to adequately monitor patients’ conditions or test results after they get home, Forster writes, and patients often have trouble getting in contact with physicians who cared for them while hospitalized to discuss new symptoms, side effects of medications, or follow-up that is not proceeding as planned.

Medical Home Within the Home

Physicians are witnessing a culture change whereby blaming preventable rehospitalizations on noncompliant patients is giving way to a paradigm of clinician- and system-level improvement to better prepare patients for their self-management role in their next care setting following hospital discharge, says Greenwald.

Those improvements are gaining momentum and showing promising preliminary results: increasing patients’ understanding of their follow-up plans, encouraging them to recognize and act on important new health problems and complications after discharge, and coordinating their ability to do so.

A common element among various intervention models is the use of a dedicated discharge advocate who plays a greatly enhanced care coordination role than traditional discharge planners – analogous to the coordination function of the medical home model of primary care – tying together fragmented medical records and care management advice; ramping up the use of proven patient-centered techniques; encouraging better involvement and follow-through by patients and their caregivers; and in some cases directly facilitating that follow-through.

Greenwald’s Project RED attempts to sort through a maze of discharge procedures by identifying clear roles and responsibilities of physicians, nurses and others involved in the discharge process. Using root cause and qualitative analyses to study systems and processes related to patients who are frequently admitted to the hospital, Greenwald and his colleagues identified specific failures of the hospital discharge system to inform a reengineered discharge process. Components of Project RED, which Greenwald says are being tested in ongoing randomized controlled trials, include:

· A dedicated discharge advocate appointed to each patient to coordinate activities during admission and prior to discharge, and who serves as the patient’s key contact person after discharge. The advocate prepares patient education throughout the hospital stay – not just at discharge, oversees medication education and reconciliation, arranges medication pickups and durable medical equipment delivery post-discharge, and ensures that patients have scheduled transportation.

· A comprehensive after-hospital care plan document, including photos of the primary treating physician and the discharge advocate; explicit instructions for the first days and weeks after discharge; follow-up appointment details; pending test results; a list of medications, medical indications and diagnoses, and doses and schedule, with photos of each pill; and diet, exercise and lifestyle recommendations.

· A phone call from the hospital pharmacist within two to three days after discharge to identify medication issues or concerns, check on the patient’s clinical condition, and remind them about follow-up appointments.

Patients in preliminary survey data indicate feeling better-prepared; having their questions answered better; and having a greater understanding of appointments, medications and diagnoses.

Many components of Project RED were incorporated into a quality standard on hospital discharge endorsed in late 2006 by the National Quality Forum, providing a clear road map for hospitals to follow, says Greenwald.

Greenwald is also co-investigator of a workflow redesign trial that attempts to standardize the hospital discharge – with local institutions adapting implementation based on their resources and workflow processes. The initiative, called Project BOOST (Better Outcomes for Older adults through Safe Transitions), was launched this summer by the Society of Hospital Medicine (SHM) at six pilot sites, with support by a grant from the John A. Hartford Foundation.

The initiative features a hospitalist physician as the leader of discharge quality improvement, in collaboration with other care providers, and incorporates best practices endorsed by care transitions researchers, hospital medicine physicians and pharmacists, and specialists in process improvement, health quality and patient safety. The initiative is led by a national advisory board that includes representatives from the Agency for Healthcare Research and Quality, The Joint Commission, the Centers for Medicare & Medicaid (CMS), and the Blue Cross and Blue Shield Association.

The project’s centerpiece is a discharge planning toolkit that includes:

· A risk stratification process and universal patient discharge checklist addressing key transition-readiness issues.

· A sheet of written discharge instructions (separate from the traditional discharge summary, and written in lay terminology) listing reason for the hospitalization; medications (ideally, distinguishing which medications were old, new, or changed and which medications the patient was on prior to admission that he or she should no longer take) with name, dose, route and frequency; what types of complications may occur and what to do if they happen; list of follow-up appointments for tests and clinical visits, with their dates, times and locations; and list of relevant contact information (e.g., principal care providers, the pharmacy, and inpatient physicians).

· A teach-back guide for assessing a patient’s understanding of a concept, i.e., asking the patient open-ended questions to encourage them to explain their understanding of the issue at hand, rather than telling the patient the information and asking for yes/no confirmation of comprehension.

· A risk-specific intervention plan, ensuring that the patient understands how to manage predictable events after discharge and why, when and how to access medical attention.

· A tracking mechanism to confirm that the patient’s principal outpatient provider receives the discharge summary, and encouragement of phone communication between inpatient and outpatient providers to address identified risk factors, primary issues of the hospitalization (including therapies initiated and discontinued), and outstanding issues, tests, appointments and follow-up plans for the patient.

· A commitment to arrange telephone contact (by either the hospital-based team or the outpatient care provider) to the patient or their caregiver within 48-96 hours of discharge in order to assess the patient’s condition and adherence and to reinforce follow-up. The year-long Project BOOST trial will measure the interventions’ impact on length of stay, readmission rate and user (patient and provider) perception of effectiveness, says Greenwald. One of the six pilot sites is the Hospital of the University of Pennsylvania, and enrollment of an additional 24 sites began last month.

Another initiative which focuses on elderly patients – the Care Transitions Intervention – promotes the principle that patients and their caregivers need to become more active participants in their medical care. Spearheaded by Eric Coleman, M.D., MPH, director of the Care Transitions Program at the University of Colorado, the program features a personal health record and an advanced practice nurse "transition coach" who initiates a home visit and three telephone calls during a 28-day posthospitalization discharge period to encourage the patient and caregiver to assert a more active role during care transitions, and to ensure that the patient’s needs are being met.

The transition coach focuses on four conceptual areas or "pillars" derived from Coleman’s earlier investigations of what patients and their caregivers said would be most valuable to them during care transitions: assistance with medication self-management, a personal health record owned and maintained by the patient to facilitate cross-site information transfer, timely follow-up with primary or specialty caregivers, and a list of red flags that indicate a worsening condition with instructions on how to respond to them.

Goals of the home visit include reconciling the patient’s medication regimens; role-playing effective communication strategies so that the patient is prepared to clearly articulate his or her care needs during subsequent physician encounters; and reviewing red flags for worsening conditions, what initial management steps to take, and when to contact the appropriate health care professional.

Coleman’s intervention was able to reduce rehospitalization rates at 30 and 90 days, including rehospitalization for the same diagnosis, and decrease hospitalization costs at 180 days, even in a heavily penetrated Medicare Advantage market which has for many years attempted to reduce hospital use, according to results published in Sept. 2006 in the Archives of Internal Medicine.

The Care Transition Intervention model shifts the advance practice nurse’s role from doing things for the patient to the supportive role of facilitator who encourages the patient to do as much as possible independently. That less intense role also allows transition coaches to manage more patients – 24 to 28 patients per coach at any given time – and avoid redundancy with existing health care practitioners such as home health nurses and case managers, according to Coleman.

Another approach, the Transitional Care Model (TCM), deliberately assigns advance practice nurses a more intense role – not just as a coach to promote a good handoff, but as a caregiver who actively delivers both acute and community-based services, monitoring and managing in-hospital planning and home follow-up for chronically ill high-risk older adults. A demonstration project using the model is being implemented in the Philadelphia region by its principal architect, Mary D. Naylor, Ph.D., RN, Marian S. Ware Professor in Gerontology, University of Pennsylvania School of Nursing.

Unlike traditional case management, the purpose of the model is not to provide ongoing care to patients but to optimize patient outcomes specifically following a defined acute episode of illness. The model features transitional care nurses, each managing an active caseload ranging from 15 to 20 patients, who follow them from the hospital and make regular home visits, and who offer ongoing telephone support seven days per week through an average of two months post-discharge, says Naylor. After the initial visit, a minimum of one home visit per week during the first month is made, followed by semi-monthly visits until discharge from the program. The transitional care nurse prepares a transition summary – which includes patient’s goals, progress in meeting them, and ongoing or unresolved issues with the plan of care – for patients and primary care providers who assume responsibility for continuing care.

While the model is nurse-led, Naylor notes that it is a multidisciplinary approach that includes communication to, between and among the patient, family and informal caregivers, physicians, nurses, social workers, discharge planners and pharmacists, with a focus on increasing patients’ and caregivers’ ability to manage their care. The nurse accompanies the patient on their first post-discharge visit to their primary physician (and on subsequent visits, if needed), assisting them in generating a list of questions to ask, and assisting them in understanding the physician’s instructions immediately after the visit.

Randomized controlled trials have demonstrated that the TCM model has resulted in fewer rehospitalizations for patients’ primary illnesses and coexisting conditions, says Naylor. Among patients who required rehospitalizations, the time between their primary discharge and readmission was longer and the number of inpatient days was generally shorter than expected. The program has led to improved health outcomes, greater satisfaction of care and reduced all-cause hospital readmissions – at a savings of about ,000 per patient, says Naylor.

Overcoming Implementation Barriers

The current reimbursement system offers two challenges that transition care improvement initiatives must overcome: incentive to improve and wherewithal to improve.

"As long as hospitals are paid for rehospitalizations, it is difficult to see the incentive for them to prevent them," except in capitated systems, says Greenwald. "Incentives are still not sufficiently aligned to prevent rehospitalization. Some hospitals may lose revenue if they lower readmission rates. But, I say this unapologetically: it’s the right thing to do," Greenwald says.

Reducing payments to hospitals with excessive readmission rates is one approach that was recently recommended by the Medicare Payment Advisory Commission (MedPAC). But physicians and insurers interviewed for this article regard that as using "a hatchet instead of a scalpel," given the complexity of factors that contribute to hospital readmissions.

"We must ensure that we are incenting behaviors we are truly seeking, and avoid unintended consequences," says Don Liss, M.D., Aetna’s medical director for the mid-Atlantic region. "Readmission is too broad a measure in itself, and one must consider several other variables such as patient severity and risk," he adds.

The reputational impact on hospitals of transparency initiatives by CMS and other entities – which publicize hospitals’ readmission rates as a quality outcome measure – injects a level of accountability to spur improvement, says Liss.

Absence of a reimbursement mechanism for care across care settings remains another key barrier to widespread adoption of care transition initiatives, which require additional money and resources. Government and private foundation grants have funded demonstration pilots, but sustainable payor models have yet to be worked out. Proponents of transitional care models are beginning to build relationships with commercial insurers to fund the projects, and CMS is also beginning to take an interest in them.

Highmark is implementing Coleman’s model in several venues, with a focus on empowering patients and caregivers to accept a more active role in their transition, says Black. In January, the insurer plans to roll out a pilot project using a dedicated care transition coach with a community hospital. This summer, Highmark launched a care transition collaborative project with Quality Insights of Pennsylvania and six hospitals primarily in the Westmoreland Co. region, focusing on Medicare fee-for-service patients.

Highmark has also incorporated Coleman’s principles in an ongoing Medicare Advantage pay-for-performance pilot with two hospitals to improve transitions of care for patients discharged from a hospital to a skilled nursing facility, and anticipates eventual cost savings associated with reduced readmissions, Black notes. Highmark plans to share the results from the pilot program at local, state and national forums to stimulate further programs in transitional care improvement, adds Black.

A transition coaching model similar to Coleman’s is being implemented at ten hospitals in New Jersey, focusing on African-American and Hispanic/Latino patients diagnosed with heart failure, and funded by the New Jersey Health Initiatives – a statewide grant-making program of the Robert Wood Johnson Foundation, says Holmes. "Expecting Success: Excellence in Cardiac Care" features an advanced practice nurse who maintains contact with heart failure patients, primarily through telephone calls, to coach them on diet and nutrition; offer medication and medical management; advise them on when to contact a physician for a worsening condition; and ensure that they keep follow-up appointments with their primary care physician, she notes. The program began in early 2007 and runs through June 2009.

Health insurers are also beefing up their case management programs and focusing them more heavily on care coordination during the discharge and outpatient periods for high-risk patients. Independence Blue Cross (IBC) over the past couple of years has doubled the number of nurses involved in case management programs, and is adopting such a focus, says Richard Snyder, M.D., senior vice president of health services. In its Healthy Lifestyles: Keys to Wellness program, IBC nurse coordinators make telephone contact with patients to monitor gaps in care, medications and follow-up appointments, he notes.

Two months ago, New Jersey’s Horizon Blue Cross Blue Shield compeleted a year-long pilot project for which it contracted with a company to make a post-discharge phone call to every Horizon patient within 24 hours (except those who have home care services scheduled) to review their status, ask whether they are adhering to follow-up care instructions and whether they are encountering any problems, and refer them to Horizon’s clinical staff or to their physician to arrange for follow-up care if necessary, says Richard Popiel, M.D., Horizon’s vice president and chief medical officer. Horizon is examining the results of the pilot to see its impact on readmission rates, he notes.

Aetna supported a demonstration project using Naylor’s Transitional Care Model for about 200 of its Medicare managed care members in the mid-Atlantic region, which was completed six months ago, says Naylor. The success of that project has led the University of Pennsylvania Health System (UPHS) to adopt the model two months ago.

Independence Blue Cross has signed on as the first insurer to reimburse for Naylor’s program through UPHS, focusing initially on heart disease and diabetes, says Snyder. IBC’s case managers will also be involved in exchanging information with the transitional care nurses. "It is a fully integrated and coordinated program – a safety net during a particularly vulnerable time for patients," says Snyder. "We’ll be interested in demonstrating better clinical and financial outcomes in all phases of care," adds Snyder, who says it is preposterous to pour large sums of money into high-tech inpatient procedures, only to discharge patients to an environment with little coordinated support. Snyder says IBC is talking to other hospital systems about the Transitional Care Model. "We want to make this a mainstream-type program."

This past August, CMS invited Naylor, Coleman and others to discuss their models with Quality Improvement Organizations from 14 states, with plans to award contracts for care transitions improvement programs, says Naylor. "We hope CMS will eventually offer a benefit for patients to access evidence-based transitional care services. That is our ultimate goal," she adds.

The government’s recent proposal to replace the ICD-9 code sets – now used to report health care diagnoses and procedures – with massively expanded ICD-10 code sets by October 2011 has provoked an outcry by the physician and health insurance communities, who warn that the deadline will wreak havoc by not giving ample time to adjust to a tremendous increase in coding and billing complexity.

In a proposed rule published in late August, the U.S. Department of Health and Human Services’ Centers for Medicare & Medicaid Services (CMS) said the 27-year-old ICD-9 (International Classification of Diseases, Ninth Revision), with its 17,000 codes, cannot adequately accommodate new procedures and diagnoses, and will start running out of available codes next year. ICD-10, by contrast, contains more than 155,000 codes (approximately 68,000 of which are physician diagnosis codes) and CMS touts its ability to accommodate a host of new diagnoses and procedures; as well as bring far greater "granularity" or detail to diagnosis and procedure coding; provide more detail in electronic transactions; facilitate a nationwide electronic health information environment; and fully support quality reporting, pay-for-performance, bio-surveillance, and other critical activities.

In a separate proposed regulation, CMS wants the health care industry to adopt an updated standard for Health Insurance Portability and Accountability Act (HIPAA) electronic transactions – the ANSI X12 standard, Version 5010. The new standard is an essential prerequisite for claims, remittance advice, eligibility inquiries, referral authorization, and other widely used transactions using the ICD-10 codes, which are not supported by the current Version 4010 electronic transaction standards. CMS proposed that implementation of the new 5010 standards be completed by April 2010 – a deadline which the physician and health insurance communities believe will cause massive confusion and potentially catastrophic disruption of the health care coding, billing and reimbursement system because it overlaps the system-testing period for ICD-10 implementation by 10 months.

ICD-10 will have a huge impact on the costs to physicians of clinical documentation and administrative transactions. According to its regulatory impact analysis, CMS estimated that the cost associated with physician training for adopting ICD-10 could be as high as 5 million, while physician practice productivity losses could be a high as high as million, and total lost productivity costs to providers and health plans for improper and returned claims could be as high as .1 billion.

The magnitude of the impending changes has catalyzed physician and insurer group opposition to the deadlines, details of which they will communicate to CMS by the October 21 public comment deadline. CMS will then review the comments and publish the final implementation rules sometime thereafter.

"This is a massive administrative undertaking for physicians and must be implemented in a timeframe that allows for physician education, software vendor updates, coder training and testing with payers – steps that cannot be rushed and are needed for a smooth transition," according to Joseph Heyman, M.D., board chair of the American Medical Association (AMA). "CMS’ efforts to go full-steam ahead on the transition to the ICD-10 coding system without first pilot-testing the newest HIPAA electronic transaction form (5010) that will be needed to process claims boggles the mind," says Heyman, noting that "the timetable of just three years for simultaneous implementation of these two new major systems is woefully inadequate, and CMS is setting the stage for major implementation problems."

Because ICD-10 contains more than nine times the number of codes as ICD-9, moving to ICD-10 is the "largest, most massive change to the health care industry in 30 years, and has the potential for tremendous disruption," according to Robert Tennant, senior policy advisor on government affairs for the Medical Group Management Association (MGMA). The move will require massive system and workflow changes – including coordinated actions among medical groups and their vendors, clearinghouses and health plans – and it is a recipe for disaster to force such a change without sufficient pilot testing before implementation, Tennant adds.

Recent MGMA surveys indicate that 95 percent of respondents in medical practices would have to purchase software upgrades for their practice management systems or buy all new software; 64 percent concluded that they would have to purchase code-selection software, and 84 percent stated that they did not think public and commercial health plans would be ready to accept claims with ICD-10 codes by October 2011.

The Blue Cross and Blue Shield Association (BCBSA) agrees, warning that CMS’s proposed ICD-10 and 5010 implementation timeframes are unworkable and will cause a meltdown in the health care industry, including inaccurate and delayed payments to providers and consumers, an inability to detect fraud and abuse, and unnecessarily higher total costs of implementation due to the accelerated timeline, according to Joel Slackman, BCBSA’s managing director for policy in the office of policy and representation.

A coalition of organizations including BCBSA, MGMA, AMA, some 50 other national physician organizations, and nearly every state medical society, supports the move to ICD-10 but calls upon CMS to extend the implementation date by two years. The coalition notes that the government’s own advisory body, the National Committee on Vital and Health Statistics (NCVHS), said the health care industry should adopt ICD-10 only after the 5010 transaction standards are fully implemented and tested. The coalition endorses NCVHS’s recommendation that CMS allow consecutive implementation: two years for conversion to 5010, then another three years before conversion to ICD-10 – by October 2013.

Said CMS Acting Administrator Kerry Weems, in a statement announcing the proposed rules, "We recognize that the transition to ICD-10 will require some upfront costs, but each year of delay would create additional costs, both because of the limitations of ICD-9 and because of the need to employ the greater precision that ICD-10 codes provide to support value-based purchasing of health care and other initiatives. We will continue to work collaboratively across the health care system to ensure a smooth transition to use of the updated transaction standards and ICD-10."

Since the transition to ICD-10 won’t be for another three years, at the earliest, physicians do not yet need to be trained in the specific codes. They should, however, prepare for the overhaul now by researching its likely impacts on their practice and care delivery systems; by developing a long-term budget for new practice management software, systems and staff; and by contacting their billing system vendor and their health plans, according to Tennant.

Finer Granularity

CMS notes that ICD-10 provides much more information and detail within the codes than ICD-9, including:

· Significant improvements in coding primary care encounters, external causes of injury, mental disorders, neoplasms, and preventive health.

· Advances in medicine and medical technology that have occurred since the last revision.

· Codes with more detail on socioeconomic, family relationships, ambulatory care conditions, problems related to lifestyle, and the results of screening tests.

· More space to accommodate future expansions.

· New categories for post-procedural disorders.

· The addition of laterality – specifying which organ or part of the body is involved when the location could be on the right, the left, or could be bilateral.

· Expanded distinctions for ambulatory and managed care encounters.

In its proposed rule, CMS illustrated how ICD-10 would overcome limitations of ICD-9. For example, ICD-9 contains a single procedure code that describes the endovascular repair or occlusion of head and neck vessels, and does not describe the artery or vein on which the repair is performed, the precise nature of the repair, or whether the approach is a percutaneous procedure or is transluminal with a catheter.

CMS summarized the shortcomings of ICD-9:

· ICD-9 is outdated, with only a limited ability to accommodate new procedures and diagnoses.

· ICD-9 lacks the precision needed for a number of emerging uses (for example, pay-for-performance and biosurveillance).

· ICD-9 limits the precision of diagnosis-related groups (DRGs) with very different procedures being grouped together in one code.

· ICD-9 lacks specificity and detail, uses terminology inconsistently, cannot capture new technology, and lacks codes for preventive services.

· ICD-9 will eventually run out of space, particularly for procedure codes.

Adoption of the ICD-10 code sets, according to CMS, will:

· Support value-based purchasing by accurately defining services and providing specific diagnosis and treatment information, such as identifying cases of MRSA and other specific conditions, and would further Medicare’s ability to detect and prevent program abuse.

· Support comprehensive reporting of quality data.

· Ensure more accurate payments for new procedures, fewer rejected claims, improved disease management, and harmonization of disease monitoring and reporting worldwide.

· Allow the United States to compare its data with international data to track the incidence and spread of disease and treatment outcomes because the United States is one of the few developed countries not using ICD-10.

CMS maintained that ICD-10 will lead to fewer rejected claims by reducing the number of cases where copies of the medical record need to be submitted for clarification for claims adjudication. For example, ICD-10 injury codes identify in detail the fracture site of a malunion or non-union, while the ICD–9 codes for malunion and non-union do not identify fracture site. If the payor required this information to adjudicate the claim, the provider would need to send a claims attachment. As another example, because ICD-10 injury codes provide finer detail in identifying bilateral fractures, if a patient fractured both wrists, two codes could be assigned – one code identifying the left wrist fracture and a separate code identifying the right wrist fracture. ICD-9 does not provide this detail and if a provider wanted to report fractures of both wrists and reported the diagnosis code twice, the claim would be rejected, CMS noted.

The increased granularity of ICD–10 would allow case management organizations to better identify candidates for disease management programs, and to better adapt the disease management program to the individual once enrolled, according to CMS.

ICD–10 can also improve quality measurements, patient safety and the evaluation of medical processes and outcomes because it allows new procedures, diagnoses and technologies to be easily incorporated as new codes for both existing and future clinical protocols, CMS said. In an age of electronic health records, it does not make sense to use a coding system (ICD-9) that lacks specificity and does not lend itself well to updates, CMS noted.

Once initial confusion stemming from ICD-10’s complexity subsides, fraud and abuse could be reduced because finer granularity leaves fewer "gray areas" and less ambiguity in coding, CMS added.

Impact on Physicians and Insurers

Critics of CMS’s ICD-10 and 5010 implementation proposals say it is unrealistic to expect the health care industry to handle the massive complexities and to conduct sufficient pilot testing in such a short timeframe, while some question whether the benefits of transitioning to ICD-10 outweigh the costs at all.

The finer granularity of the new codes, touted by CMS, will impose considerable administrative burdens on physicians – who will have to diagnose patients with far greater specificity to satisfy the new data fields, and burdens on health plans – which have to adjudicate claims that contain far more complicated data. As an example, Tennant notes, there are four ICD-9 diagnosis codes for sprained and strained ankles, while there are 72 ICD-10 codes – adding details such as cause, location and angularity of injury. "ICD-10 has a code for ‘struck by a parrot,’ and a different code for ‘struck by a macaw.’ Should physicians track down what kind of bird caused a patient’s injury?" asks Tennant.

"If health plans are requiring the most specific, most granular codes or else reject the claim, who will pay the physician for arriving at the most specific code?" asks Tennant. As an example, to determine the type of Down Syndrome – required under the ICD-10 taxonomy – a genetic test is needed.

Whether physicians will utilize the finer granularity is another question. A study of an Arkansas Blues plan found that physicians who diagnosed patients with acute sinusitis – which has six available codes under ICD-9: maxillary, frontal, ethmoidal, sphenoidal, pansinusitis, and unspecified – chose the "unspecified" code on their claims 82 percent of the time. There are 14 ICD-10 codes for sinusitus. "If providers are not using the distinctions available in ICD-9, what will it take to get them to use the finer gradations of those previously unused distinctions in ICD-10?" asks Slackman.

Reimbursement implications of that question are not yet known, Slackman says. "Until we start seeing a couple of years of ICD-10 coding, we won’t know enough about how physicians are changing their coding behavior – whether they’re upcoding or downcoding – to know how to respond. The first year of data won’t be robust enough to know," he notes.

Slackman points out that CMS said nothing about how ICD-10 will affect hospitals’ prospective payments. "To us, that is a major omission that makes it very difficult to project the impact on health plans’ cash flow, and the impact on physician coding behavior," he says. "Until we know how DRG payments will change, we won’t know how physician payment will change," Slackman adds.

It also remains to be seen what level of coding specificity local Medicare carriers and commercial health plans will require for physicians to be reimbursed. Tennant says CMS requires diagnoses to the most specific code available, but he doesn’t know whether carriers will require the full spectrum of granularity as a precondition to reimbursement.

According to Slackman, many commercial health plans will "pend" a claim that uses an "unspecified" code, and request further information, which he says can delay payments and lead to a cash flow problem for physicians. Over time, given the movement toward quality performance measurement and pay-for-performance, public and private payors are going to start to ask for greater specificity in claims data, or else pend the claim, Slackman predicts.

Physicians will experience more burden to qualify for pay-for-performance bonuses, which could defeat the purpose of such programs, says Tennant. MGMA analysis has found that many physicians fail to recoup the extra expense their practice goes through to achieve their P4P bonus payments. Under ICD-9, such programs may have used metrics requiring 10 to 15 codes. Under ICD-10, those same P4P programs could potentially require 60 codes, he adds.

Slackman believes that physicians may eventually see higher P4P reward payments under ICD-10 as health plans move toward, and devote additional funding to, outcome-based payments. Incentives will eventually align with those codes requiring greater levels of specificity, he says.

Coding aids which physicians have come to rely upon may no longer be available under ICD-10. The primary way many physicians submit codes is the one-page "superbill," which contains their most commonly used ICD-9 codes for them to circle. Under ICD-10, they won’t be able to do that, predicts Tennant, as a vastly greater number of codes will make the superbill too unwieldy. "Physicians will need to have some type of code selector software in their exam room, either on a desktop computer or hand-held device," Tennant says.

Because of the extreme specificity of diagnosis notes required under ICD-10, physicians may also lose one of the major efficiency strategies they had to deal with HIPAA requirements: relying on coding support entities known as clearinghouses to convert non-compliant claims data into a format that is acceptable to a health plan, says Slackman.

According to its regulatory impact analysis, CMS estimated that the cost associated with physician training for adopting ICD-10 will be about million, while it could be as high as 5 million (the upper range, using CMS’s cost analysis assumptions). Physician practice productivity losses – the cost resulting from a slow-down in coding bills and claims because of the need to learn the new coding systems – were projected by CMS to be about million, or as high as million. CMS estimated the cost to providers (CMS lumped large and small provider groups, as well as institutional providers such as hospitals into one provider estimate) of system changes for software vendors to be about million, or as high as 7 million.

Acknowledging that the new code sets will likely produce a temporary increase in coding errors, especially on the part of physicians, CMS estimated that additional returned claims processing would cost providers and health plans (no physician-specific figure was given) 9 million in the first year following implementation, 5 million in the second year, and million in the third year. CMS’s global estimate of total lost productivity costs for improper and returned claims for transitioning to ICD-10 is 3 million, and could be as high as .1 billion.

According to Slackman, one-third of BCBSA’s plans have begun the ICD-10 conversion planning process through the work of interdisciplinary teams comprising chief medical officers and experts in medical policy, provider contracting, provider relations, benefit design, information technology, and fraud and abuse. "Early findings suggest that this is going to be the biggest change yet, far bigger than Y2K or the move to HIPAA transaction requirements," says Slackman.

If CMS’s final rule keeps the Oct. 2011 implementation date for ICD-10, says Slackman, health plans will need to cut corners and will develop workarounds that will end up costing more money in the future, just to meet the deadline.

Experiences with other HIPAA mandates, including the original 4010 transaction and the National Provider Identifier (NPI), illustrate the time needed to implement even the simplest of transactions required under HIPAA, says Slackman. Implementation of the NPI transaction – the simplest of the mandated HIPAA transactions – took four years and four months. It makes no sense to provide less than three years for the massive overhaul that the 5010 and ICD-10 changes will require, Slackman adds.

The American College of Physicians (ACP) opposes adoption of ICD-10 diagnosis codes outright, as it is not convinced that the benefits of adoption outweigh the complexity and costly disruption to physician practices, particularly to small physician practices that are least able to absorb additional costs, according to Brett Baker, ACP’s director of regulatory and insurer affairs. In addition to the practical challenges of system conversion, physicians have no way of gauging the payment implications of the new codes, says Baker. Some payors may use the greater coding detail to expand medical necessity denials and limit payment for some codes, he adds.

Based on ACP’s work with committees of internists, Baker’s sense is that there is probably not much awareness in the physician community about ICD-10 and its implications.

Preparation Advice

Physicians should ask these questions of their practice management and billing system vendors, says Tennant:

· Will you be producing an upgrade to accommodate ICD-10 and 5010 transactions?

· Will the upgrade be available for my version of software (including older versions)?

· When will the upgrade be available?

· What will it cost my practice?

Physicians should ask these questions of their health plans, suggests Tennant:

· When do you anticipate being ready to test 5010 electronic transactions for: claims, remittance, claims status inquiries, patient insurance eligibility verification, and prior authorization?

· When will you "go live" with these transactions?

· Will you publish a "companion guide" (containing payor-specific coding format standards) to facilitate 5010 transactions?

· Will you be using CMS’s "crosswalk" from ICD-9 to ICD-10 (a short-term bootstrapping device used to map old codes to new codes, especially in the beginning of the transition), or will you be using your own crosswalk?

· What level of ICD-10 code specificity will you require?

· Will you pay for the additional tests to arrive at the more specific diagnoses?

Physicians should assign a point person in charge of fact-finding to keep up with the developments – particularly dates and costs – related to 5010 and ICD-10 phase-in, advises Tracey Glenn, director of practice management consulting at PMSCO Healthcare Consulting in Harrisburg, Pa. Free training programs for practice staff will be offered by the CMS, the American Health Information Management Association (AHIMA), and the American Academy of Professional Coders (AAPC), says Glenn.

The practice may ultimately have to purchase new coding software to translate diagnoses into ICD-10 codes, while some electronic medical record systems may be able to accommodate the new codes, according to Glenn. "Most of the vendors we’ve talked to are aware that this is coming, and the bigger vendors have an idea of what to do," adds Glenn, noting that "we’ve seen practices with ancient legacy software that may not be able to make the change."

The top five practice management system vendors, which represent some 80 percent of the market, look to be prepared to meet 5010 and ICD-10 requirements, while the other 20 percent of mostly smaller vendors will have a significant challenge to make a successful conversion, according to Lee Barrett, executive director of the Electronic Healthcare Network Accreditation Commission (EHNAC).

By Christopher Guadagnino, Ph.D.

Curbing the rise of obesity rates among Americans has overtaken smoking as the putative public health priority, with government and non-profit health agencies promoting frequent anti-obesity warnings. One of the latest reports, titled F as in Fat: How Obesity Policies Are Failing In America 2008, released last month by the Robert Wood Johnson Foundation and the Trust for America’s Health, declares obesity to be one of the most serious health problems in the U.S. The report notes that adult obesity rates have doubled since 1980 – from 15 percent to 30 percent, that two-thirds of adults are now either overweight or obese, that childhood obesity rates have nearly tripled since 1980 – from 6.5 percent to 16.3 percent, and that the obesity epidemic adds billions of dollars in health care costs. The report castigates federal, state and local governments for failing to address the obesity epidemic in proportion to the threat that it poses.

Counterposing the prevailing "war on obesity" is a body of literature – including some recent studies that have been widely reported in the press – that complicates the issue by casting doubt on some of the most basic assumptions about the dangers of being overweight and what to do about it, namely, that being overweight is unhealthy, and that people can lose significant amounts of weight and keep it off if sufficient interventions are put into place.

Many physicians express a lack of confidence in treating obesity, indicating in surveys that they expect patients to be unmotivated and non-compliant with treatment, that those who do stay in treatment won’t lose much weight, and those who do lose weight will likely regain it, according to a research report released late last year by the George Washington University School of Public Health and Health Services. The report, Re-Visioning Success: How Stigma, Perceptions of Treatment, and Definitions of Success Impact Obesity and Weight Management in America, notes that there is no consensus today among patients, providers and researchers on what constitutes successful weight loss, as overweight and obese people and their health care providers often have unrealistic weight loss goals and very few succeed in achieving them. A major barrier in preventing and treating obesity, the report indicates, is a sense of futility and pessimism – the perception or assumption that nothing works, and that treatments produce only modest amounts of weight loss and seem hardly worth the effort.

Obese individuals themselves are often unrealistic about weight loss, defining success as losing a large amount of weight and hoping for unachievable results from obesity treatments, according to Gary Foster, Ph.D., director of the Temple University Center for Obesity Research and Education, and professor of medicine and public health at Temple University School of Medicine. In surveys, obese patients seeking weight loss treatments indicate a 38 percent loss in body weight as their ideal, a 25 percent loss as something they would be happy with, and a 17 percent loss as disappointing, Foster notes.

Treatment programs traditionally counsel individuals to temper their expectations, says Foster. Obesity is a chronic refractory condition, he says, and patients can realistically expect to lose, on average, seven to nine percent of their body weight over the first six months at an academic weight loss center, less than a third of which is typically regained at 18 months, but as much as 80 percent of which is regained in five years.

While bariatric surgery has been successful in assisting obese persons lose and maintain significant amounts of weight loss, the George Washington University report notes that those procedures are typically only available to people who are morbidly obese or who are already suffering from related medical comorbidities such as hypertension and diabetes. For the majority of overweight and obese Americans, clinically effective weight loss interventions are scarce.

Those mixed messages from anti-obesity advocates and from research questioning the efficacy of medically-backed weight loss treatments raise questions about what role physicians and medical institutions can or should play in combating obesity and how they can best help their patients, a sizable percentage of whom will be overweight and obese, and who may express frustration with conflicting weight loss information they hear.

A consensus among experts interviewed for this article is that physicians play a central role: helping the patient redefine success. Encouraging overweight and obese patients to sustain a modest, but realistic weight loss of only a few pounds, they say, can bring significant health improvement even in the absence of much cosmetic change.

A consistent and meaningful definition of success is lacking in research and public health arenas, notes the George Washington University report, and society has yet to embrace a modest, but achievable goal for obesity intervention that focuses on improved health outcomes rather than weight reduction to some pre-set number, like optimal body mass index (BMI). "The paralysis resulting from a sense of futility and the perceived lack of ‘effective’ treatments may actually be a mismatch between the goals of people trying to lose weight and those whose goal it is to improve health and the lack of a cohesive system that integrates both views," the report concludes.

Obesity Impacts

The incidence of obesity in the U.S. is rising, stretching into earlier years in childhood, and producing serious comorbidities.

BMI, a ratio of weight to height, is a common measure of obesity and overweight: adults with a BMI of 25 to 29.9 are considered overweight, while individuals with a BMI of 30 or more are considered obese, notes the Trust for America’s Health’s F as in Fat report. Before June 1998, when the National Institutes of Health (NIH) adopted the current optimal weight threshold, the federal government defined overweight as a BMI of 28 for men and 27 for women. Many experts recommend assessing an individual’s health using factors in addition to BMI, such as waist size, waist-to-hip ratio, blood pressure, cholesterol level and blood sugar, the report notes.

The report lists multiple contributors to the rising incidence of obesity in the U.S., including food choices (adults consumed approximately 300 more calories daily in 2002 than they did in 1985); communities not designed for physical activity (e.g., lack of public transportation options, inconvenient or unsafe walking areas); greater marketing, advertising and affordability of less nutritious foods; more meals – many of them high in calories – eaten outside of the home; workplaces that limit or discourage physical activity; limited health insurance coverage for obesity-prevention services; "electronic culture" options for entertainment and free time; and increased risk factors for obesity and related diseases in children with obese parents.

The health impacts of obesity and overweight are well-documented, and the report cites a round-up of research to that effect. More than 80 percent of people with type 2 diabetes are overweight, while diabetes is the seventh leading cause of death in the U.S. and accounts for 11 percent of all U.S. health care costs. People who are overweight are more likely to suffer from high blood pressure, high levels of blood fats, and high LDL ("bad") cholesterol – all risk factors for heart disease and stroke. Roughly 30 percent of cases of hypertension may be attributable to obesity, and in men under the age of 45, the figure may be as high as 60 percent. People who are overweight may increase the risk of developing several types of cancer, while approximately 20 percent of cancer in women and 15 percent of cancer in men are attributable to obesity. Obese adults are more likely to suffer from depression, anxiety and other mental health conditions than normal weight adults. Obese individuals (BMI=30) are 83 percent more likely to develop kidney disease than normal weight individuals (18.5<BMI<25), while overweight individuals (25< BMI=30) are 40 percent more likely to develop kidney disease. Obesity is a known risk factor for the development and progression of knee osteoarthritis and possibly osteoarthritis of other joints.

Questioning Assumptions About Obesity

While no one seriously questions that significant comorbidities are associated with obesity, recent studies add to a body of literature suggesting that the health impact of being overweight and moderately obese has been greatly exaggerated, that people’s weight is largely biologically determined within a fairly narrow range, and that changing diet and increasing exercise has little long-term influence on weight loss.

A study published last month in the Archives of Internal Medicine concluded that half of overweight adults may be heart-healthy. The analysis of nationally representative government surveys from 1999 to 2004 found that about 51 percent of overweight adults had mostly normal levels of blood pressure, cholesterol, triglycerides and blood sugar, while almost one-third of obese adults had abnormal levels on none or only one of those measures. The study also found that about a fourth of adults in the recommended-weight range had unhealthy levels of at least two of the measures.

A second study, appearing in the same issue of Archives, concluded that even in obesity there can be metabolically benign fat distribution not accompanied by insulin resistance and early artherosclerosis.

A study published in the Journal of the American Medical Association in 2005 highlighted what researchers termed an "obesity paradox." Using statistical methods to factor out causes other than obesity that could lead to death – smoking, age, chronic diseases – and using reliable national data comprised of actual measured heights and weights, researchers were left with a "U-shaped" mortality curve in which there was less mortality risk from being overweight relative to normal weight, little mortality risk from being obese, and higher mortality risk from being extremely obese or underweight.

Critics have questioned society’s fixation on the anti-obesity movement. Gina Kolata, science reporter for the New York Times, in her book Rethinking Thin, cited research indicating that people’s weight is largely biologically determined, and that decades of studies consistently show that very few people lose substantial amounts of weight and most never achieve their goal of permanent and substantial weight loss. At best, dieters can sustain an average of five to ten percent weight loss.

For example, wrote Kolata, an eight-year, million project sponsored by the National Institute of Health’s National Heart, Lung, and Blood Institute, published in the American Journal of Clinical Nutrition in 2003, followed third graders in 41 elementary schools in the Southwest, mostly Native Americans at great risk of obesity. The two-year intervention included healthy and low fat breakfast and lunch (representing one-half of their total calories each day), regular instruction to children and families on how to choose healthy foods, exercise breaks every day and an hour of real exertion at least three times a week. The study found no change in body weight of children compared to the control group.

A study published in Archives of Pediatrics in 1999, also sponsored by NIH, which Kolata described as the largest school-based randomized trial ever conducted, involved third graders from 96 schools in CA, LA, MI and TX who were given healthy food, nutrition instruction and extra physical activity until fifth grade. Children in the schools with special programs learned their lessons, ate less fat, exercised more, retained their knowledge for years afterward, wrote Kolata, but their weights after three years were no different from the control group.

A study in the New England Journal of Medicine this July highlighted the difficulty of weight loss even among the most dedicated dieters. A tightly-controlled, two-year randomized trial study (with an unusually high proportion of subjects – 85 percent – adhering to the study’s diets throughout the entire two years) found that moderately obese subjects who adhered to low-carbohydrate, Mediterranean, and low-fat diets for two entire years lost only six to ten pounds. But even that modest weight loss led to improvements in cholesterol and diabetes biomarkers, and the researchers suggested that personal preferences and metabolic considerations might inform individualized tailoring of dietary interventions.

Some researchers believe that genetic predisposition may play a major role in obesity, and is a large obstacle to treatment. If true, then those with such genes "catalyze the possibility" of becoming obese with easy access in today’s society to plenty of calories for their genes to direct them to become fat, according to Jules Hirsch, M.D., professor emeritus of The Rockefeller University and physician-in-chief emeritus of The Rockefeller University Hospital in New York City. "If you have a gene for obesity, you now have the maximum possibility of becoming obese," given our society’s wealth, abundance of foods, fast foods, sedentary lifestyles and other factors, says Hirsch. A life-long obesity researcher, Hirsch is currently investigating the genetic obesity hypothesis by studying infantile obesity effects in mice.

"People who eat and exercise the same don’t weigh the same," says Foster, noting that it is harder for biologically predisposed people to lose weight. "It is not a fair game. For some, it is unrealistic to try to lose even five percent of their body weight," he adds.

Inherited hormonal mechanisms may account for diet-resistant obesity. For example, diet-induced weight loss in humans results in a decrease in the body’s concentration of leptin, an appetite-suppressing hormone discovered in 1994 by Jeffrey M. Friedman, M.D., Ph.D., professor at the Rockefeller University and Director of the university’s Starr Center for Human Genetics. Because it is secreted by adipose tissue, increased fat mass increases leptin levels, which in turn reduces appetite and body weight; while decreased fat mass leads to a decrease in leptin levels and an increase in appetite and, ultimately, body weight. By this mechanism, weight is maintained within a relatively narrow range, and genetic defects in the leptin gene or its receptors are associated with severe obesity in animals and in humans, according to Friedman’s research abstract on the Howard Hughes Medical Institute website. Reduction in leptin concentration – which is beyond the behavioral control of individuals – may explain the high failure rate of dieting, Friedman believes, as low leptin is a potent stimulus to increased appetite and weight in animals and humans.

"People have underestimated the biological back-up mechanisms that make it extremely difficult to lose more than seven to ten percent of body weight. If you induce weight loss, you turn on these counter-regulatory systems in the gut and central nervous system that govern appetite and energy expenditure, and control body weight," says Stephen Schneider, M.D., an endocrinologist, and professor of medicine, UMDNJ- Robert Wood Johnson Medical School.

Obesity researchers therefore believe that the anti-obesity movement tends to place too much emphasis on overall body weight, ignoring a more complicated relationship between body fat and its metabolic impacts. "It’s not how fat you are," says Schneider, "but rather, what the obesity is doing to you."

Redefining Success

Even though most overweight or moderately obese patients rarely sustain more than a five to ten percent weight loss through non-surgical clinical treatments, experts believe that is an important achievement, and continue to study the metabolic changes that it brings. Interventions, they say, should be targeted according to how fat is distributed in the body, and physicians should help patients reach modest – but achievable – goals for weight loss, which can greatly improve health even in the absence of much cosmetic slimming or an "optimal" BMI.

Even anti-obesity advocates have begun to acknowledge the importance of redefining success as modest, incremental intervention. The Trust for America’s Health declares in its F as in Fat report that "too many Americans, including health practitioners, have an unrealistic expectation about how much weight loss is enough to achieve meaningful change. The research community should redefine successful weight loss as it pertains to ‘controlling or reducing health risks and costs,’ instead of meeting some unrealistic standard set by society." For individuals, the report notes, "there is increasing evidence that substantial weight loss is not needed to change health outcomes for obese individuals; in fact, as little as a 5 to 10 percent weight loss can reduce the risk factors for some diseases, including diabetes and some cardiovascular diseases."

"Being overweight, for most people, is not unhealthy. The acceptable BMI used to be 27, then epidemiologists lowered it to 25. I see that as arbitrary," says Madelyn Fernstrom, Ph.D., founding director of University of Pittsburgh Medical Center’s Weight Management Center. A reasonable goal for physicians is to encourage healthy overweight people to be weight-stable, she says: for a patient with a BMI of 29 and normal blood work, the best advice might simply be not to gain any weight. "The opening dialogue should be whether patients should lose weight or be weight-stable," says Fernstrom.

Physicians can refine their targeting of obesity interventions by explaining to overweight and obese patients that "obesity comes in different flavors" – belly versus hips and buttocks – and some obese persons do better than others. Patients with excess abdominal fat do more poorly and have more medical complications, including diabetes – the chief menacing complication of obesity, says Hirsch. Determining whether a patient is insulin resistant, or has excess liver fat, represents further important clinical refinement to defining obesity in a physician’s patient population and requires frequent and vigilant monitoring of overweight or obese patients’ glucose metabolism and other screenings, Hirsch notes.

Large waist circumference indicates the more visceral and metabolically active fat, and its measurement is critical for stratifying the risk of diabetes, fatty liver, cardiovascular disease and sleep apnea, says Christopher Still, D.O., director of Geisinger Health System’s Obesity Institute, and director of its Center for Nutrition and Weight Management. Weight loss interventions may be especially warranted for men with a waist measurement over 40 inches, and women over 35 inches, he notes. The gynoid, or pear-shaped fat distribution around the hips and buttocks may even be cardio-protective, notes Still, producing higher concentrations of high-density lipoprotein ("good") cholesterol which enables lipids like cholesterol and triglycerides to move through the blood stream back to the liver for excretion or re-utilization. That said, it is bad to be obese for other medical reasons, including degenerative arthritis, he adds.

A clinical paradox is that women seek the services of weight loss clinics at a ratio of four-to-one over men, even though men have by far the more adverse abdominal fat distribution, says Foster, and he suggests that a greater focus on overweight and obesity in men with greater than 40-inch waist size may be warranted.

"Treatment stinks," Hirsch declares, noting that medication or diets – even those administered at academic-based weight loss centers, which promote different types of diets, behavior modification therapy and other treatments – make no lasting improvement 80 to 90 percent of the time. The type of diet doesn’t make much difference in outcomes, either, he believes. Even long-term outcomes of bariatric surgery are questionable beyond five or six years, as data are poor and a great number of research subjects are lost to follow-up studies, says Hirsch.

"There is good evidence that what matters most for long-term weight control is a change in physical activity and moderate reduction of caloric intake – by any dietary means a person wants – to lose five to ten pounds. Those lifestyle changes are key diabetes interventions, and even a surprisingly small loss of weight can lower insulin resistance," says Hirsch.

Patients at the cusp of being at risk of type 2 diabetes can reduce by 60 percent their chance of getting the disease with as little as an 8.8-pound weight loss, notes Foster, who says further research is underway to determine whether certain types of diets are best suited to certain metabolic improvements – such as lipid, blood pressure or glycemic control. "The data are not there yet, but the more important clinical implication is that the best diet is the one the patient can adhere to. If we can get weight loss reliably and predictably, then we can fine-tune them. Until then, it is splitting hairs," to endorse one diet over another, Foster believes.

Some experts believe that targeting insulin resistance with medication, such as glitazones, can be effective at redistributing body fat away from the liver and muscles – resulting in little weight loss, but significant metabolic improvement, according to Schneider, who also says it is not yet known whether there are certain diets that will target that kind of fat more effectively. "We still need to find out why and how certain types of fat distribution cause insulin resistance. Then, we can target drugs more effectively," adds Schneider.

Physicians can adopt simple and effective interventions for overweight and obese patients seen in their office. "Ask three to four minutes worth of questions, then negotiate a change with the patient – something he or she can sustain on a life-long basis," says John Buse, M.D., president, medicine and science, of the American Diabetes Association (ADA). Questions can include: "Do you snack? What do you eat? How much walking do you do? Do you exercise?" Buse notes that many health insurance plans don’t cover dietitian services for patients without a diagnosis. A major barrier, says Buse, is taking a monolithic approach to diabetes management, like "don’t eat any white food," instead of individualizing lifestyle choices for patients. "Positive reinforcement is key," notes Buse, "then ‘seducing’ people into more favorable lifestyles during serial office visits." Ideally, the ADA recommends 30 to 60 minutes most days of moderate physical activity, together with trained counseling, adds Buse.

For a 250-pound person, a 500-calorie deficit per day can lead to a one-pound-per-week weight loss, says Still. A simple prescription can be offered to everybody, irrespective of body shape, he says: avoid all caloric beverages – including fruit juices –which can add 1,000 calories per day, and increase exercise activity.

Moderate exercise, combined with moderate caloric reduction, can achieve some cardiovascular improvement even without significant long-term weight loss, says Howard Kramer, M.D., a private cardiologist with Cardiovascular Associates of Southeastern Pennsylvania. He promotes the "Ten Thousand Steps to Better Fitness" program and advises his overweight patients to buy an inexpensive pedometer to count 10,000 steps – about three miles of walking – per day, while he also recommends programs such as Weight Watchers, which uses a convenient point system to make caloric tracking easy.

Even though the ability to lose weight and keep it off is very difficult, Foster says it would be "therapeutic nihilism" not to try, that a five to ten percent loss of weight is a therapeutic success, and that patients must be encouraged to set small but attainable goals – five, six or seven pounds at a time.

Directions for future obesity research include studying the effects of various coaching and counseling behavior approaches to manage obesity as a long-term condition, rather focusing on short-term fixes, says Foster. Increased frequency of contact with health care practitioners appears to be important, as obese patients don’t do well when left unmonitored, he notes. What works best appears to be self-monitoring – of what you eat, how you move, and what you weigh; accountability – getting weighed on a regular basis; and structured approaches to portion control that makes caloric adherence convenient and uncomplicated, adds Foster.

Obesity researchers are currently investigating the biological processes of obesity, including the hypothalamus and central nervous system mechanisms of fat storage, using molecular genetic techniques, says Hirsch, while he believes future research must study obesity’s developmental sequence – tracking the genetic, environmental and behavioral contributors to the fat sequestration mechanism during infancy and childhood. By adulthood, says Hirsch, that mechanism appears to be set to maintain a person’s weight within 10 to 15 percent body weight range, and any weight loss treatment is attempting "to buck a very fundamental and complicated body control mechanism."

Obesity researchers are also investigating the hormonal changes in the gut and brain that follow bariatric surgery and lead to significant resolution of diabetes, high blood pressure, fatty liver, sleep apnea and other obesity-related comorbidities, with the hope of being able to mimic those changes without surgery, using pharmaceutical or endoscopic procedures, says Still.

"If you have a ‘war on obesity,’ you have to know who the enemy is," says Hirsch. "Is it fat people? Schools? Parents? The enemy is ignorance – we don’t know yet how and why obesity comes about."

In the wake of a bruising battle to forestall draconian Medicare reimbursement cuts to physicians, Medicare spending remains at the center of the federal budget debate, with alarming growth statistics driving legislators to ponder radical reform proposals for Medicare and the U.S. health care system.

The rate of growth in health care costs is the single most important factor influencing the federal government’s long-term fiscal balance, according to Congressional Budget Office Director Peter Orszag, who joins health care economists and industry experts in warning legislators that cost-cutting decisions alone are insufficient and must be accompanied by more fundamental health care reform.

Health care economists say that at least one-third of health care spending in the U.S. is unnecessary and cannot be shown to improve health outcomes, while the spending growth of federal health programs is putting other important national priorities at risk – not least of which is the search for ways to bring affordable health insurance to the nation’s 47 million uninsured. That is the situation that Congress and a new president face next year, while Congress is dedicating much of the rest of this year to hearings and summits to determine how best to go about healing an ailing health care system.

Health reform advocates agree that rising health care costs are linked to growth in the number of uninsured, and that health insurance expansion must include efforts to address rising costs. Advocates are pushing several approaches to tackle the problem: consumer-driven strategies (e.g., quality and cost transparency impose market discipline on providers through consumer choices), government-driven strategies (e.g., imposing benefit mandates and uniform regulation across health insurers, measuring provider performance, and overseeing research on cost and quality), and provider-driven strategies (e.g., adopting health information technology, developing and implementing best practices, changing practice patterns, and ramping up disease prevention).

Medicare payment reform mechanisms are also on the table, with the expectation that the commercial insurance market would eventually adopt them. Noting that individual physicians are not rewarded or penalized for their own utilization or performance, advocates propose replacing the Medicare fee-for-service reimbursement model with medical home capitation, bundled prospective payments to physicians akin to hospital DRGs, or capitated episode-of-care payments shared among all caregivers of a given patient.

The health care overhaul debate appears to have moved beyond how to expand health insurance to cover all Americans and how to reduce health care spending, as two separate questions. The focus now is working out details of how to structure incentives appropriately to optimize cost, quality and access. Having health insurance is a prerequisite for access to timely health care, but it is not a guarantee, notes American Medical Association (AMA) President Nancy H. Nielsen, M.D., pointing to new health insurance mandates and state subsidies in Massachusetts which have led to unexpectedly large cost overruns and newly-insured patients flooding physicians’ offices, forcing physicians either to turn down patients or put them on waiting lists.

Key stakeholders agree that expanding health insurance and reducing health care spending cannot be achieved in a sustainable way without extracting greater value from health care spending. Promoters of this concept are calling for more value-based research and dissemination of evidence-based standards that weigh the comparative effectiveness and cost of health care interventions.

Another consensus appears to be that a comprehensive blend of strategies is needed to achieve sustainable health system reform. In its proposal to cover the uninsured, for example, the AMA says it advocates a clear role for government in financing and regulating health insurance coverage, while it also advocates several provider-driven initiatives, as well as expanded consumer choice to fuel market experimentation with plan benefit design. The AMA promotes four broad strategies to contain health care costs: reduce the burden of preventable disease, make health care delivery more efficient, reduce nonclinical health system costs, and promote value-based decision-making. The American College of Physicians (ACP) similarly enlists a blend of reform mechanisms in its proposals, including the creation of a national entity for value-based research to coordinate, support and disseminate cost-effectiveness standards for therapies, procedures, drugs, devices and clinical management strategies.

Legislators are appraising a variety of reforms to address health care cost containment, affordable health insurance expansion and value-based health care utilization. The Senate Finance Committee, for example, convened a bipartisan symposium in mid-June called, "Prepare for Launch Health Reform Summit," which it billed as part of its year-long series of hearings and roundtables to prepare for committee action on health reform next year. Health care economists, industry experts and government representatives are advocating various reform mechanisms – including competition, transparency, prevention, efficiency and comparative cost-effectiveness. These proposals will shape Congress’s health care overhaul debate and will have significant impacts on physicians and the way they practice medicine.

Approaches and Trade-Offs

Misaligned payment, disparate health care costs and an overabundance of untested procedures have jeopardized the U.S. health care delivery system, which spends more than 0 billion each year on medical care – representing one-third of procedures that physicians perform – that fails to improve a patient’s health, Orszag told the Senate Finance Committee at the Prepare for Launch summit. He based those estimates on studies documenting significant geographic variation in Medicare spending without outcome improvement for higher-cost treatments. "Overuse of supply-sensitive services and differences in social norms among local physicians seem to drive regional approaches in the use of innovations and treatments," said Orszag.

Several dynamics fuel the problem of runaway health care spending, according to Paul B. Ginsburg, Ph.D., president of the Center for Studying Health System Change, in testimony delivered to the Senate Finance Committee in early June. There is little research on comparative effectiveness, and rapid technology diffusion is extended beyond patients who are most likely to benefit from it. Compounding that evidence gap is the cultural obstacle among Americans that insured people should get all the medical care they want, regardless of cost – which works against attempts to discourage the development of treatments with small or uncertain benefits. Providers have exploited intense competition for niche specialty services and have avoided less profitable services, leading to overpayment for some services and underpayment for others. The fragmented payment system limits physicians’ productivity improvements, as each physician is paid on the basis of services he or she provides rather than on what is done by all providers to address a patient’s medical condition. The reliance on third-party payment blunts consumer incentives to economize on the use of care.

Ginsburg outlined challenges faced by various reform proposals. Shifting away from employer-based to individual coverage health insurance is not attractive because individual underwriting raises costs. Regional health insurance exchanges to create more attractive risk-pooling mechanisms for the individual health insurance market is a promising but largely untested concept, and could perhaps be tested with those without access to employer-based health insurance. Federal support for an information technology infrastructure, and an expanded role for disease management in Medicare and Medicaid may improve quality and lower costs, but not commensurate with the magnitude of the cost problem.

That latter approach was championed by Intel Corporation Chairman Craig R. Barrett, who told the Finance Committee that, while government has to help lead the way toward systemic transformation, employers and the private sector are more nimble and able to lead the way toward new care paradigms and new financing alternatives, and have the purchasing power to "pre-empt" the system and effect change. Central to Barrett’s recommendations is the use of information technology to promote patient-centered care, safety, efficiency and follow-up, including electronic prescribing, electronic health records, portable health records, and remote diagnostics and monitoring technologies focused on services to the elderly and chronically ill. Barrett also spoke of the need to "transition from the fee-for-service treadmill" to a reimbursement system that rewards a more patient-centered approach via rewards for the use of IT to provide better communication, care and follow-up. "Through coordinated care provided by professionals combined with the expanding technology alternatives being proposed in this Congress, we can start to see a reversal in skyrocketing medical costs," said Barrett.

Increasing transparency within an employer-based health insurance model faces major limitations as a cost-saving mechanism, according to CBO Director Orszag. Allowing workers to see how much of their income is being reduced for employers’ health plan premium contributions and what the money is paying for might reduce the range of prices for health care services, he said, but they remain insulated from the full price of their health care, which limits their incentive to compare prices. Awareness of prices will also make little difference in emergencies or in the relatively small number of cases that account for a disproportionate share of overall health spending, he added.

A key engine of meaningful reform, according to Ginsburg, is more efficient and equitable clinical rationing with a broader and complementary array of cost containment tools using evidence-based practice guidelines and institutionalized technology assessment to inform benefit package design, offering broad patient and provider choices coupled with extensive clinical value information and higher cost-sharing when the values are small.

No single approach can control health care spending growth, said Ginsburg, who recommended implementing a range of interventions by the public and private sectors, including what he called "demand-side" options – e.g., increased patient cost-sharing at the point of service, changing the tax treatment of health insurance to grow the individual health insurance market, and expanding provider quality reporting to Medicare for more robust transparency initiatives; and "supply-side" options – e.g., revising Medicare’s payment structures to better reflect relative costs; replacing Medicare’s fee-for-service payment structure with per-episode payment that includes all providers in an episode of care; paying for chronic disease management, including care coordination, on a capitated basis; and expanding "high-performance" physician networks and new pay-for-performance models.

"There is much we do not know about how to do effective clinical value rationing at the moment," Ginsburg told the committee. "Estimates of the fraction of physicians’ care decisions that are supported by unambiguous clinical trial evidence range from 11 percent to 65 percent, depending on specialty and care setting," he added.

CBO Director Orszag recommended a combination of aggressively promulgated comparative effectiveness standards backed by financial incentives for physicians to use them. Generating more information about the relative effectiveness of medical treatments, he said, would offer a basis for ensuring that future technologies and existing costly services are used only when they are clinically superior to those of other, cheaper services. He noted that the CBO plans to release two reports on health policy late this year, one presenting budget estimates for several specific policy options, and the other addressing critical topics related to proposals to make major changes in the health care system, said Orszag.

The value-based theme was echoed by Ben S. Bernanke, chairman of the Federal Reserve Board, speaking to the Senate Finance Committee at the Prepare for Launch summit. The challenge of health system reform, he said, is not simply to lower costs, but to "get our money’s worth," by simultaneously addressing the challenges of access, cost and quality with an eclectic set of reforms. For example, expanding access to health care – whether through mandating or strongly incentivizing enrollment in health insurance, imposing coverage mandates on insurers, or subsidizing coverage for low-income people who are not covered by Medicaid – would improve health outcomes, but almost certainly raise financial costs, Bernanke said. Increasing the quality of health care –e.g., increased patient screening – could also result in higher total health care spending, he noted.

"At the heart of the debate are the fundamental social questions of how we determine when various medical services are worth their cost and how we measure and reward good performance by providers," Bernanke concluded, adding that good clinical and cost-effectiveness information and appropriate incentives are necessary to allocate resources efficiently.

Physician Proposals

Both the AMA and ACP are advocating a comprehensive set of reforms incorporating a blend of consumer-, government-, and provider-driven strategies.

Through its "Voice for the Uninsured" campaign, the AMA is promoting a three-part proposal to cover the uninsured that shifts government spending toward people with lower incomes; expands insurance opportunities to those without employer-based insurance; gives patients more control over health care spending; and reforms health insurance market regulations to protect vulnerable populations without unduly driving up premiums, while fostering market experimentation to find the most attractive combinations of plan benefits, cost-sharing and premiums.

The proposal entails three specific reforms:

· Shifting some or all of the government’s employee income tax break on job-based insurance – which the AMA says is well over 5 billion each year – to tax credits or vouchers for lower-income individuals to obtain health insurance, with the subsidies being more generous at lower income levels.

· Allowing individuals to use the tax credits or vouchers to help pay for premiums of any available insurance, whether offered through a job, another arrangement or the open market. As with current job-based insurance today, health plans would still have to meet federal guidelines for covered benefits, but people would have greater say in what types of benefits and plan features they value, thereby stimulating the individual health insurance market and compelling insurers to offer better, more affordable coverage options.

· Streamlining health insurance market regulations to permit market experimentation to find the most attractive combinations of plan benefits; and to include protections for high-risk patients – such as guarantees that they will not lose coverage or be singled out for premium hikes due to changes in health status, and additional targeted government subsidies that allow insurers to keep premiums down in the regular market. People who are uninsured despite being able to afford coverage should face tax implications.

How these proposals would impact physicians is not known, "but we have to move in that direction, away from the tax exclusion of employer-based health insurance," says Nielsen. More choice for consumers might drive robust marketplace competition among health plans and increase physicians’ contracting leverage, for example, while a greater number of health plan options may either lead to increased administrative burdens on physicians, or to stronger incentives among health plans to consolidate claims processing functions.

Noting that no health insurance reform proposal would be complete without giving serious consideration to managing health care costs, the AMA maintains that the ultimate public policy goal is not cost-reduction per se, but achieving better value for health care spending – i.e., improved clinical outcomes, quality, and/or patient satisfaction per dollar spent, according to policy approved by its Council on Medical Service last year.

Given that rising health care costs have been fueled by increased prevalence of preventable chronic disease, clinical risk factors, unhealthy behaviors, major inefficiencies in health care system – including overuse and underuse of services, and excessive non-clinical costs, the AMA proposes four parallel strategies to address rising health care costs: reducing the burden of preventable disease, making health care delivery more efficient, reducing nonclinical health system costs, and promoting value-based decision-making.

The most promising policy interventions identified by the AMA Council include the following:

· Promote patient lifestyle counseling through adequate insurance payment and inclusion in quality measurement and pay-for-performance initiatives.

· Support comparative cost-effectiveness research, giving funding priority to medical research that uses both cost and clinical evaluation criteria, and disseminating findings to physicians, patients and other decision-makers.

· Continue development of health information technology to automatically provide relevant, timely and actionable information, e.g., clinical guidelines and protocols, cost-effectiveness information, quality measurement and pay-for-performance criteria, patient-specific medical and insurance information, prompts for lifestyle counseling and care management, and alerts to flag and avert medical errors.

· Use clinical performance and quality measurement to improve efficiency. Encourage development and adoption of measures aimed at reducing overuse of unwarranted services and increasing use of recommended services known to yield cost savings.

· Encourage use of targeted benefit design by insurers, e.g., reducing or waiving patient cost-sharing for chronic illness medications, particularly when patient noncompliance poses a high risk of adverse clinical outcome and/or high medical costs.

· Support medical care, insurance coverage and public health initiatives targeted toward underserved populations in order to achieve greater overall impact.

· Build broad coalitions of stakeholders, recognizing that confronting endemic problems such as obesity and tobacco use will require societal change and collaboration within and outside the health care system.

· Support ongoing analysis of non-clinical activities in order to reduce costs that do not add value to patient care.

Those proposed interventions emphasize the central role that physicians play in addressing rising costs and improving value for health care spending, the Council noted, as they would shift resources toward preventive services, increase the availability of both clinical and cost information needed to make cost-effective decisions, and employ incentives to make value-based decisions. Important synergies exist among the proposed interventions, as useful cost-effectiveness information disseminated through health information technology could support physicians in providing personalized lifestyle counseling to patients, particularly if payment reform, performance measurement, and complementary patient support also promote lifestyle counseling, the Council added.

The Council also noted that a fundamental restructuring of health care delivery and reimbursement is being promoted by four national medical societies – the American Academy of Family Physicians, American Academy of Pediatrics, American College of Physicians, and American Osteopathic Association – based on a patient-centered medical home approach, whereby each patient has an ongoing relationship with a personal physician trained to ensure continuous, comprehensive care for all stages of life and across the entire health care system. The approach features a central role for health information technology, evidence-based medicine, clinical decision-support tools and ongoing quality improvement efforts, while payment reform would reflect the added value of activities that fall outside of face-to-face patient visits, including coordination among providers and secure e-mail and telephone consultation.

Nielsen says the AMA supports the medical home model, as well as other payment reform models – such as testing bundled payment for all services around a hospitalization for select conditions, as recommended by the Medicare Payment Advisory Commission (MedPAC). Such new models, the AMA Council said, would reward greater collaboration among physicians, hospitals and other stakeholders for innovating cost-effective approaches to care that meet the patient’s overall health care needs, including preventive care, acute treatment, chronic disease management, behavioral change, education and wellness promotion.

But Nielsen cautions that "there has not been enough discussion yet to know the consequences of alternative payment reforms. We need to see how they work." She says they should continue to be implemented incrementally as pilot programs to resolve design and implementation issues.

Another MedPAC proposal – to apply budget-neutral Medicare bonus payments for primary care clinicians – causes the AMA some concern. "We are all for coordination of care, but redistributing financing for it is a different conversation," says Nielsen. The American College of Surgeons and 13 other specialty societies flatly oppose the proposal and, in a letter sent to MedPAC and legislators this May, expressed concern that the policy’s requirement to cut reimbursement for surgical services could have negatively impact an already eroding specialty physician workforce and jeopardize patient access to surgical care.

The ACP has its own set of proposals to expand coverage – as outlined in its policy monograph, Achieving Affordable Health Insurance Coverage for All Within Seven Years: A Proposal from America’s Internists – and it believes that health insurance reform must be done in concert with changes in health care financing and delivery to improve outcomes and efficiency of care, such as a risk-adjusted care coordination embodied by the patient-centered medical home model. "There are strong data that primary care is the basis of a well-functioning health care system," says J. Fred Ralston, Jr., M.D., who notes that effective care – e.g., prevention, monitoring and follow-up – requires coordinating a lot of ongoing activity outside of the physician office. "We think more competitiveness and transparency is the most effective approach to reform – if individuals had more opportunity to shop for their health care choices. Right now, the payment levels don’t support the level of practice that primary care physicians would like to offer," says Ralston.

Under the ACP’s proposals, everyone who needs coverage but does not have access through their employer would have access to a subsidized health insurance program, either through expanded Medicaid eligibility, refundable and sliding scale tax credits to uninsured workers, or state purchasing group arrangements modeled after the Federal Employees Health Benefits Program. Every participating health plan would be required to offer a benchmarked package of benefits, including preventive services, and would be required to agree to uniform new federal rules on risk-rating and renewability. Purchasing groups would give individuals the collective buying power that is now available only to large groups, and individuals would have a greater choice of health plans and more continuity of care than they do currently. Opt-outs would be discouraged by individual or employer mandates to encourage participation in the national and/or state-based health plans, or by automatic enrollment in publicly funded plans.

Comparative Effectiveness Information

An essential feature for a high-quality and efficient health care system is improved availability of comparative effectiveness information – the evaluation of the relative clinical effectiveness, safety and cost of two or more medical services, drugs, devices, therapies, or procedures used to treat the same condition. That premise is supported by a broad array of entities including the Institute of Medicine, MedPAC, the Congressional Budget Office, the Blue Cross Blue Shield Association, the American Health Insurance Plans, the National Business Group on Health, and physician groups including the AMA and ACP.

Congressional bills have been introduced to advance the comparative effectiveness concept. A House bill introduced in May 2007 by Reps. Tom Allen (D-ME) and Jo Ann Emerson (R-MO) would significantly increase funding – from the current million per year to billion over five years – for comparative effectiveness research sponsored by the Agency for Healthcare Research and Quality (AHRQ), and would require all payers, including government, insurers and self-funded plans, to pay a share of the funding based on their number of covered lives. A Senate bill introduced this March by Senate Finance Committee Chairman Max Baucus (D-MT) and Budget Committee Chairman Kent Conrad (D-ND) would create a private, nonprofit institute to set a national agenda of comparative effectiveness research priorities, develop methodological standards, and contract with AHRQ and other approved federal and private entities to conduct the research, which would then be peer-reviewed and publicly disseminated to patients and providers. Neither legislation specifies that costs be included in research studies, although they could be included down the road.

People believe high-cost care equals high-quality care, despite evidence to the contrary, and they undervalue disease prevention and overvalue disease "heroics" or intense medical interventions to reverse disease, according to testimony delivered last month to the House Budget Committee by Jeanne M. Lambrew, Ph.D., associate professor in the Lyndon B. Johnson School of Public Affairs, University of Texas at Austin, and Senior Fellow in the Center for American Progress Action Fund. In the absence of evidence on benefits and costs, she said, people and providers often assume that more is better even when it may be wasteful or harmful. What is needed, said Lambrew, is a strong infrastructure of standards for high-quality, cost-effective care, networks for transferring these standards throughout the system, and policies for their adoption.

The U.S. expends insufficient funds to develop comparative effectiveness data and there is no coordination or prioritization of current efforts in either the public or private sector to help produce comparative effectiveness information that would provide the greatest health care impact, according to the ACP. The limited amount of comparative effectiveness data that is produced is done piecemeal, with little or no rational prioritization on the basis of the benefits it would provide to individual patients and the general population, little coordination or harmonization of evaluative efforts, and uneven methodological standards for evaluating and reporting the results to clinicians and patients, the ACP notes.

That lack of available information on the relative clinical effectiveness and costs of different treatments for the same condition creates critically important limitations for the clinical decision-making process, according to the ACP. Each day, in the privacy of the examination room, patients are treated for conditions for which there are numerous treatment options, including treatment for common conditions such as intermittent heartburn, more serious chronic conditions such as high blood pressure or diabetes, and immediate life-and-death issues such as choosing the best approach for the treatment of acute coronary syndrome or an aortic dissection, the ACP notes. Absent increased investment to develop evidence about comparative effectiveness, the ACP adds, the nation is at serious risk of producing more and more innovations without an effective and efficient means of incorporating them into a health care system with limited resources.

The ACP is promoting a detailed proposal to develop and distribute information to physicians, health care payors and patients regarding the comparative effectiveness of currently available health care interventions, through an adequately funded, government-supported national entity to prioritize, sponsor, and/or produce this comparative information. Interventions would be weighed with outcomes metrics such as life years gained, cases of disease prevented, improvement in functional status, or health-related quality-adjusted life years.

The entity should be protected from undue government and private sector influence, have transparent proceedings and reports, include extensive stakeholder involvement, and ensure the general distribution of findings to all interested parties. The entity would review and synthesize existing evidence and initiate new research in priority areas where essential evidence does not exist.

Medicare has attempted on two occasions to pass language through the rule-making process to support the use of cost-effectiveness data as a factor in the making of coverage decisions, but Medicare discontinued its efforts on both occasions after many stakeholders expressed strong opposition, objecting that it would be the forerunner to the use of rationing under Medicare and could inappropriately limit access to services, the ACP notes. Other obstacles to implementing comparative cost-effectiveness information include concern that it may lead to an increase in costly litigation by patients, questions about soundness of methodology and trustworthiness of data, and concerns that it may inhibit technical innovation in health care (particularly of costly interventions), the ACP adds.

To mitigate some of these concerns, the ACP recommends that the comparative effectiveness entity include a panel of stakeholders and experts in the area of cost-effectiveness analyses to reconcile disparate estimates of cost effectiveness and to suggest procedures for potential use by stakeholders who plan to consider cost-effectiveness information in clinical, coverage, purchasing, and pricing decisions. Those recommendations should recognize that cost-effectiveness analysis is only a tool to be used in coverage and pricing decisions and cannot be the sole basis for making resource allocation decisions. As part of the decision-making process within the doctor–patient relationship, the ACP notes, cost-effectiveness information must take into account the unique needs and values of each patient and the clinical opinion of the treating physician, while also recognizing the limited nature of health care resources available to society in general.

Faced with the substantial, unsustainable growth in health care expenditures, almost all stakeholders have expressed a renewed interest in increasing the availability of cost-effectiveness information, and making valid and reliable cost-effectiveness data from a trusted source available to all stakeholders would ultimately result in a better and more socially equitable means of controlling overall costs than the current approach of limiting access to care for some of the most vulnerable, or using cost information in the decision-making process in a nontransparent manner that doesn’t consider effectiveness, the ACP maintains.

The ACP further recommends that all health care payors, including Medicare, other government programs, private sector entities, and the individual health care consumer, use both comparative clinical and cost-effectiveness information as factors to be explicitly considered in their evaluation of a clinical intervention. Cost should never be used as the sole criterion, and should be considered along with the explicit, transparent consideration of the comparative effectiveness of the intervention.

Ensuring that physicians, payors and patients adhere to proven standards is a remaining challenge, according to Lambrew. Misaligned financial incentives for providers and patients limit any impact of comparative cost-effectiveness data, she said, because value is rarely taken into account when determining whether and what a provider gets paid, or what patients pay in cost sharing. Provider payment rates usually only account for a service’s cost, not its benefit, promoting high-cost health care irrespective of its merit, she noted. For example, there is little evidence supporting the use of CT scans for management of heart disease, yet their use – and thus costs – is rapidly increasing, she said. Congress should tie the use of value-oriented standards to Medicare payment reform, she added, such as adopting successful pay-for-performance models, creating bundled payments across providers and/or services, and adjusting patient cost sharing to promote high-value care and discourage low-value care.

Nielsen agrees that more clinical and cost-effectiveness information is needed, and policy released this June by the AMA’s Council on Medical Service promotes physician access to the best effectiveness and cost information about interventions to guide value-based decision-making. But whether government and insurers should reward or penalize physicians based on how they use the information "needs a different conversation," Nielsen says. "The value equation must also include patient preference," says Nielsen. "They may say no to a recommended therapy, and all must share equal responsibility that the agreed upon course of treatment is a compromise," she adds. Just the creation of a body of cost-effectiveness information is sufficient to influence physicians’ practice patterns, Nielsen believes.

"The key for a value-based initiative to work," says Ralston, "is for patients to have access to someone who sees the big picture – a trusted primary care physician with point-of-care information about the appropriate diagnostic services," and not a specialist who has the incentive to perform high numbers of procedures, Ralston argues. The ideal system would also have financial incentives aligned, e.g., charging patients higher co-pays for interventions shown to have lower cost-effectiveness value, while reimbursing physicians and nurse educators more to take the time to offer the cost-effectiveness data to patients, Ralston adds.

Administrative complexity and inefficiency are major cost-drivers in a largely fragmented health care delivery system, raising annual health care costs by almost 0 billion, by some research estimates. A typical physician practice contracts with a dozen or more health plans and must contend with each payor’s way of contracting, credentialing, preauthorizing, coding, billing and reimbursing, as well as verify patient benefit coverage and adhere to proprietary clinical guidelines and protocols.

Health insurer contracting and billing represent the major sources of administrative burden for physicians, and survey data from the Medical Group Management Association (MGMA) puts eye-opening dollar amounts on the cost of these duplicative activities.

The system of processing medical claims alone adds as much as 0 billion annually in cost to the health care system, and is inefficient and unpredictable, according to the American Medical Association (AMA). Physicians divert substantial resources – as much as 14 percent of their total revenue – to ensure accurate insurance payments for their services, according to the AMA’s first National Health Insurer Report Card on claims processing, released last month. A recent survey of its membership by the American Academy of Family Physicians (AAFP) reported that most family physicians spend more than 10 percent of their total work time doing administrative tasks.

The scope of what commercial health plans are willing to standardize and simplify is limited by proprietary ways of doing business in a competitive market. Fee schedules, formularies, covered services, preauthorization, diagnostic and procedural coding policies, among other things, will continue to vary to the extent that health plans and regulators view them as strategic legal elements of marketplace competition.

Nuances of insurance product design mean that a health plan may apply its fee schedule differently to seemingly identical services, such as paying 100 percent for a colonoscopy performed on a healthy 50-year-old (deemed a preventive service), but paying only 80 percent and requiring a patient copay for a colonoscopy performed on someone with abdominal pain (deemed an indicated medical intervention), says Don Liss, M.D., Aetna’s medical director for the mid-Atlantic region. "Employer groups are interested in buying customized types of plans. We wouldn’t want to see the industry preclude that flexibility," he adds.

"It is not hard to see why health plans evolved differently, with homegrown codes and unique billing requirements," says Richard Snyder, M.D., senior vice president of health services for Independence Blue Cross (IBC). Not many years ago the health care system was entirely a paper environment, and in the pre-HIPAA years nascent computer-based systems emerged as health plans converted to electronic handling of their claims administration processes, he notes. "We recognize the need to standardize the things that are not in the competitive realm," he says.

Initiatives to reduce administrative burdens on physicians have focused on standardizing some physician-payor transactions, and simplifying the flow of data for others. Legislative attempts to mandate standardization among commercial insurers, such as a bill to standardize managed care contracting, coding and claims-handling policies pushed by the Pennsylvania Medical Society since 2000, have not succeeded. The duplicative administrative burden of tracking multiple contracting guidelines, clinical protocols and coverage policies serves no one, however, and voluntary simplification efforts have made some progress. Health plans, physician groups and the information technology sector are collaborating to standardize data exchange for administrative tasks such as credentialing and patient benefit determination, while many individual health plans offer physicians expedited information exchange through Internet-based provider portals.

Perhaps ironically, the solution to most of the administrative complexity appears to be the use of increasingly sophisticated health information technology: if not simplifying the system through standardization, then expediting ways to handle payor transactions through more transparent and efficient data exchange.

Even in a typical physician office without a fully automated practice management system, replacing traditional paper and telephone calls for insurance administration – i.e., claims submission, referral and preauthorization requests, and patient eligibility verification – with electronic transactions brings a per physician savings of more than ,000 annually, according to a Milliman Inc. study released January 2006.

Several physician groups are promoting electronic health record (EHR) adoption as a key component of administrative burden reduction, and are touting the business case that these admittedly expensive systems not only lead to improved health care quality, but also produce a return on investment to physicians.

Significant Administrative Cost Burden

Some administrative burden is self-imposed by physicians, particularly small or medium-sized practices that are busy seeing as many patients as possible and don’t take the time to think about standardizing their workflow for efficiency, according to Sherry Migliore, director of consulting for PMSCO Healthcare Consulting in Harrisburg, Pa. Every patient visit generates approximately 15 pieces of paper which are filed and transferred, occasionally misplaced and eventually found, she notes. Something as fundamental as putting office policies and procedures into writing, she says, can bring uniformity and smoothness to administrative and clinical processes, e.g., setting appointments, registering patients in the office, ordering and tracking lab results, handling patient charts, and coding with accuracy and completeness. "The more structure you put into your medical practice and the more you standardize your processes, the more efficient you and your staff will be and the less administrative burden you’ll have to endure," adds Migliore.

It is the payment system, though, that accounts for the lion’s share of the burden, accounting for the bulk of the 25 to 30 percent that the health care system spends on administration, by some national estimates, according to MGMA President William F. Jessee, M.D. "We have a payment system that’s based on piecework: providers trying to increase the medical service-related piecework they do, and health plans trying to find ways not to pay. Unless we align these incentives, the system will remain an administrative nightmare," Jessee notes.

The main focus of administrative simplification initiatives, therefore, has been standardization of data flow between physicians and health insurers. "Everyone agrees that administrative burdens are wasteful and inappropriate. The big challenge is to get consensus on how to standardize administrative tasks among health plans, and overcome the inertia of nobody wanting to change the way they do things," adds Jessee.

The AMA National Health Insurer Report Card examined the claims processing performance of Medicare and seven national commercial health insurers – Aetna, Anthem Blue Cross Blue Shield, Cigna, Coventry Health Care, Health Net, Humana and United Healthcare. Based on a random sample of over five million electronically billed services, the study found that:

· There is wide variation in how often health insurers pay nothing in response to a physician claim (from less than 3 percent to nearly 7 percent), and in how they explain the reason for the denial. There was no consistency in the application of codes used to explain the denials, making it expensive for physician practices to determine how to respond.

· Health insurers reported to physicians the correct contracted payment rate only 62 to 87 percent of the time. When health insurers report an amount that does not adhere to the contracted rate, it adds additional, unnecessary costs to the physician practice to evaluate the inconsistency.

· More than half of the health insurers do not provide physicians with the transparency necessary for an efficient claims processing system.

· There is wide variation among payors as to how often they apply computer generated edits to reduce payments (from a low of less than 0.5 percent to a high of over 9 percent). Payors also varied on how often they use proprietary rather than public edits to reduce payments (ranging from zero to as high as nearly 72 percent). The use of undisclosed proprietary edits inhibits the flow of transparent information to physicians, adding additional administrative costs to reconcile claims.

The MGMA surveyed its network of medical groups to ascertain how much they spend on health plan administrative tasks, and in June 2005 issued a position paper noting that – on a per-physician basis – practices reported that their staffs verify insurance information on as many as 25 patients per day, answer up to 50 calls per day from pharmacies, and spend up to three hours on each credentialing application. Based on compensation, staff and physician minutes spent and the number of tasks conducted each year, the estimated annual cost of various administrative tasks for a 10-physician medical group was almost 0,000. That included:

· ,444 per year spent on phone calls with pharmacies resolving drug formulary issues.

· ,761 spent per year verifying patient coverage, copayments and deductibles for thousands of varying health plans.

· ,248 spent per year resubmitting denied claims – 73 percent of which are eventually paid. On average, 2.78 claims per full-time-equivalent physician are denied each week because of lack of information about the insurer’s requirements.

· ,618 spent per year submitting credentialing applications for each physician. Practices submit 17 credentialing applications per physician each year on average.

· ,800 spent per year negotiating insurance contracts with an average of 15 different health plans per year, and renewing six of those each year. Administrators spend 4 1/2 hours negotiating each insurance contract.

Complexities like these feed discontent and add to the danger of physician burnout, as well as staff burnout on both sides of the adversarial relationship between health plans and providers, according to Jessee.

Reform Wish List

The MGMA would like to see a "simplified payment system" in which the health care system may continue to have multiple payors, but they would offer a limited set of standardized insurance plans and use one standard credentialing event, one set of clinical guidelines, one formulary, one set of disease management protocols, one standard contract form, one standard billing process, one set of coding and documentation policies, and one base fee schedule.

Under MGMA’s vision, six areas of administrative health care complexity are most in need of simplification:

Insurance product design. State legislation would be required to mandate four or five standard health insurance products, ranging from a relatively low-cost, high-deductible catastrophic policy to a full-coverage health maintenance option. Insurer processes should be standardized for verification of insurance coverage, and all insurers should adopt a single, common electronic inquiry and response system for verifying patient insurance coverage.

Payer and provider contracting. A single, state-specific contract form should be used for contracting between health plan payors and each type of provider organization. Payor and provider groups should collectively determine the terms of these agreements. To further minimize confusion and costs associated with annual contract revisions, all payor contracts should become effective on the same date each year.

Billing and payment processes. Medical practices, hospitals and other providers should adopt standard patient billing forms in each state. A standard Web-based system should be developed and implemented through which providers can verify patient eligibility and insurance coverage, while insurers need to agree on standards for data content and format, and make current information on their insured customers available electronically. Standard rules for claims submission should be developed, and insurers should develop and adopt standards specifying the documentation required for any specific CPT codes and agree to common coding policies, including bundling and use of modifiers.

Credentials verification. A standardized credentialing application form and data set should be developed, and health plans, hospitals, nursing homes and ambulatory surgery centers should be required to use it for physician credentialing. A single organization would conduct verification of provider credentials in each state.

Health care fees. A standard physician fee schedule should be established with uniform base fees paid for a particular CPT code for all insurers. A statewide organization could negotiate a single base-fee schedule with all payors in the state and agree on a standard set of additions to the base fees to reward groups that meet patient needs. This reform would eliminate the current patchwork of base rates and incentives, varying by payor, which requires practices to reconcile widely varying payments received against the widely varying amounts contractually owed by insurers. Pay-for-performance incentives should be standardized so that all insurers would make higher payments to practices meeting a common set of performance incentive measures.

Clinical care management. Clinical guidelines and disease management protocols for common conditions should be standardized. Plans and local practitioners in a geographic region could collaboratively develop and maintain guidelines, and plans in each market could collaboratively finance the effort. Prior approval should be eliminated except where proven effective, and remaining requirements should be standardized among all payors. Drug formularies should be standardized.

Some Standardization Progress

The U.S. health care delivery system is a long way from fulfilling MGMA’s wish list for administrative simplification, and health plans are skeptical that several of the agenda items will ever be achieved in a competitive market system. Nevertheless, standardization has commenced for two types of administrative chaos: the physician credentialing process, and patient plan benefit determinations – the "low hanging fruit," according to Jessee.

The MGMA, the AAFP and the American Health Information Management Association (AHIMA) recently co-founded an organization to champion those reforms: the Healthcare Administrative Simplification Coalition (HASC), which also has input by groups including the American College of Physicians, the American College of Surgeons, the AMA, Centers for Medicare & Medicaid Services (CMS), United Healthcare, Humana, Microsoft, and employer groups. That coalition is campaigning to broaden awareness of the price of administrative complexity and redundancy, especially among employers and consumers who ultimately bear the cost of health care services, says Jessee. The coalition plans to host a summit this fall to shine a national spotlight on those issues, notes AAFP Executive Vice President Douglas E. Henley, M.D.

To promote simplified credentialing and patient coverage determination processes, the coalition is endorsing the consensus work of the Council for Affordable Quality Healthcare (CAQH) – a nonprofit alliance of health plans, networks and trade associations. For its first initiative, CAQH has worked with health plans, providers, accrediting bodies (NCQA, Joint Commission, URAC) and others to develop a single, national form – the Universal Credentialing Datasource (UCD) – an online data-collection system that eliminates redundancy and inefficiency of paper-based credentialing processes by allowing physicians (and other health care professionals) to post their credentialing and demographic information once, rather than separately for a dozen or more organizations, to a secure, national database that is accessible by health plans, hospitals and other organizations, according to Sorin Davis, MPA, director of marketing and business development for CAQH.

The system pre-empts snafus of paper-based credentialing applications, over 30 percent of which are sent back to providers for correction after being deemed to be incomplete, illegible or illogical (i.e., from a data transposition error), says Davis. If required data is omitted, the UCD system catches it and prompts the physician in real time.

Rather than submit multiple recredentialing applications for each organization, a physician simply logs on to the UCD Website and updates the data and/or attests to its accuracy and timeliness. With access to a data set that is "in perpetual state of readiness" to be used for recredentialing, participating health plans have reduced the time they take to complete the credentialing process to 60 days, down from 180 days, says Davis. There is no charge to the physician to use the service, which is supported by user fees from health plans.

Some 600,000 health care providers, including about half of the physicians in the U.S., are currently using the UCD, as are most national health plans and many Blues plans – including most insurers in Pa. and New Jersey, says Davis. Physicians can print out a PDF file of the pre-populated UCD application, which many nonparticipating payors will accept, he adds. Based on MGMA’s analysis, CAQH estimates that UCD reduces provider administrative costs by more than million per year, by two million man-hours in time required to complete and send the application forms, and has eliminated more than 2.1 million legacy paper applications.

The UCD is probably the most successful administrative simplification effort in health care thus far, says IBC’s Snyder. "Credentialing physicians is something all health plans are required to do, and there is no competitive reason for us not to want to standardize that," notes Snyder, who has served as CAQH’s quality improvement chair. "We have seen dramatic improvement in the completeness of applications, and over 90 percent of new applicants are credentialed in 30 days," he adds.

"We’re seeing the next frontier of users coming on board: the hospitals," says Davis, and CAQH is working to tweak the UCD tool to accommodate their data needs, e.g., separating standardized credentialing data from institutions’ unique privileging data requirements.

Unfortunately, CMS has been reluctant to use the UCD, and is instead sticking with its own, labor-intensive credentialing system, the Provider Enrollment, Chain and Ownership System (PECOS), notes Jessee.

Getting hospital medical staffs and CMS to buy into the UCD are two of the most important goals for administrative simplification, says Henley.

CAQH’s second initiative focuses on electronic data transfer between physicians and health plans. Physicians who routinely verify patient insurance eligibility and benefits through electronic or other means experience higher rates of paid accounts and can save up to 50 percent of their labor costs simply by switching from manual to electronic means of verification, CAQH research has found. Its second initiative, the Committee on Operating Rules for Information Exchange (CORE), seeks to make that process more predictable and consistent across health plans. CORE has developed administrative information rules that health plans voluntarily adopt, so that physicians who electronically query any CORE-certified health plan for patient benefit information receive it in a uniform format within 20 seconds, rather than having to navigate separate health plans’ proprietary data portals and sift though a hodgepodge of data display formats, according to Gwendolyn Lohse, CAQH’s deputy director and CORE managing director.

Over 30 leading national health care organizations – covering about 65 million or one-third of commercially insured lives in the U.S. – are currently certified as CORE-compliant and exchange information in a standardized fashion with providers, allowing them to (1) determine whether a health plan covers the patient, (2) determine the type of benefit coverage, and (3) confirm coverage of certain treatments and the patient’s co-pay amount, coinsurance level and base deductible level. Physicians can access that information before or during a patient office visit using the electronic system of their choice for any patient or health plan – and can quickly inform patients – some of whom may not even know the name of their own health insurer.

Aetna is requiring all of its administrative data-exchange vendors to be certified as CORE-compliant, a move announced this February by Aetna’s Chairman and CEO Ronald A. Williams, who is also CAQH chairman. IBC and Horizon Blue Cross Blue Shield of New Jersey are also participants in the CORE initiative.

CAQH hopes to expand CORE’s standardization to other types of data and expects by the end of this year to announce uniform rules for patient identifiers, patient accumulators, claims status, and patient financial responsibility for an increased number of service codes. Future work will attempt to standardize the electronic delivery of additional administrative transactions, such as prior authorization, referrals and claim status, says Lohse. "Patient eligibility is the first step to get to all other provider-health plan interactions. If you come out of the gate correctly, it’s going to lead to downstream savings on other transactions," she adds.

There may be limits to further industry-wide standardization, however. Health plans are reluctant to collaborate with their competition on issues that they perceive as relinquishing market value, even those that appear to be natural candidates for standardization – such as disease management protocols that are backed by nationally-accepted clinical guidelines. Aetna, for example, says it uses a uniquely sophisticated set of algorithms for its disease management system, issuing customized "care considerations" indexed to highly-individualized patient characteristics. "Other payors don’t do that. That’s a competitive advantage to us," says Liss.

Health plans may also be leery that too much collaboration will spark antitrust concerns. "Legislators can help by giving clear safe harbors for standardization, while another real opportunity is to get the business community – employers – to lean on the health plans," to standardize more processes, says Jessee.

Expediting Data Exchange

Many physicians are already streamlining some of their administrative health plan transactions through provider portals – secure Websites for data exchange. Unlike the CORE initiative, however, provider portal content and format vary by individual health plan.

NaviNet, a portal created by NaviMedix, Inc. and used by insurers including IBC, Highmark, Aetna, Cigna and UnitedHealth, boasts the ability to save a physician office 100 hours per month on administrative processes, an 85 percent reduction in time to process claim investigations, more than 50 percent reduction in patient eligibility verification time, more than 60 percent reduction in time spent verifying the status of an inpatient authorization, and 75 percent reduction in time spent contacting the plan to request an authorization for treatment.

Snyder says IBC handles nearly two million physician inquiries per month, and roughly 150,000 transactions per business day via NaviNet, including information about patient eligibility and benefits, claim and encounter (for capitated plans) submissions, referrals, drug and advanced imaging precertification, claims tracking, fee schedules, formularies and ER admissions.

One of the best upgrades of NaviNet’s utility for physicians is real-time prior authorization, in which physicians check off patient characteristics and the system gives approval for a service in seconds; if the criteria are not met, the physician then forwards the application to reviewers, says Carey Vinson, M.D., vice president of quality and medical performance management for Highmark.

To deal with the complexities of multiple health plan formularies, electronic prescribing is the way to go, immediately informing the physician of a specific patient’s drug benefit coverage for their plan, while also tracking the physician’s prescribing history for that patient, Vinson says. Highmark is offering a ,000 subsidy to 4,400 physicians throughout Pa. to acquire an e-prescribing system, he notes.

The success of any electronic health information system faces a surprisingly fundamental obstacle: correctly identifying the patient. A significant driver of "first pass" claims rejection is incomplete or erroneous patient identification, according to MGMA’s Jessee, who suggests that an electronic patient ID card (e.g., with a magnetic stripe) would standardize the manner in which patients are entered into the claims processing system and would significantly reduce administrative burden and cost. CMS has told MGMA that congressional action is needed to implement a national patient ID card, while states are beginning to explore the concept, Jessee says, noting that Colorado’s governor recently signed a bill requiring the state’s health insurers to implement electronically enabled patient ID cards by July 2010.

Another fundamental obstacle is physician uptake of electronic transaction tools. About one-third of physician claims received by Horizon Blue Cross Blue Shield of New Jersey are still submitted on paper, says James F. Albano, who notes that the state has a high proportion of solo and small physician practices, many of which do not use computerized transactions. Horizon has even offered subsidies in the past to encourage electronic claims submission, he notes. Horizon is a few months away from offering physicians the ability to make requests for authorization of services electronically through its provider portal, adds Albano.

Push for Electronic Health Records

Many physician groups view EHR adoption as a key component of administrative burden reduction, in addition to clinical quality improvement, by creating complete and portable documentation and coding of patient encounters – including clinical and claims data, which ultimately would lead to fewer claim delays and denials. According to the AAFP, EHRs with decision support tools at the practice level could also eliminate much of the need to require prior authorization for medically indicated care or services, e.g. high-technology imaging and prescription drugs. Registries to provide chronic care/disease management and/or population management in the family physician’s practice ideally would also be imbedded in the functionality of an EHR.

To actualize the power of EHRs, AAFP believes that the industry must adhere to interoperable and compatible data exchanges, such as the Continuity of Care Record, a health record standard specification developed jointly by the AAFP, the American Academy of Pediatrics, ASTM International, the Massachusetts Medical Society, the Healthcare Information and Management Systems Society, and other health informatics vendors. The Continuity of Care Record specifies what core health information a patient’s health summary document should contain – such as patient demographics, insurance information, diagnosis and problem list, medications, allergies and care plan – and can be transmitted electronically among care givers. The record is created by a physician using an EHR system at the end of an encounter and can potentially be created, read and interpreted by any EHR software application.

The result would be the ultimate time-saver, says Henley: "A physician will need only one machine at his or her ‘check-out’ and will swipe a patient’s insurance ‘smart card’ that has agreed-upon information embedded in it." According to AAFP, the entire electronic process should take less than 30 seconds: (1) a physician bills a complete claim at the time of service via a practice management software system to a claims clearinghouse, (2) clearinghouse transmits the claim to the payor, (3) the payor adjudicates the claim and responds with an electronic acknowledgement of the processed claim, (4) the clearinghouse transmits adjudication back to the practice’s computer, which displays results to the office staff. Infrastructure and support processes on both ends – the physician and the payor – are necessary, as physician practices must be able to code and file a patient’s claim electronically at the point of care.

AAFP is promoting EHR adoption through its Center for Health IT, which assists members with selecting and implementing a particular EHR system for their office. Most practices can expect a reasonably quick return on investment after EHR implemention through appropriately increased coding levels, decreased medical records staffing and transcription costs, and efficiency-related revenue gains from more patient visits, says Henley. He cites case study research published in Health Affairs in 2005, in which initial EHR costs averaged ,000 per FTE provider in a solo or small-group primary care practice and ongoing costs averaged ,500 per provider per year, while the average practice paid for its EHR costs in 2.5 years and profited after that.

Fewer than one in five of the nation’s doctors has started using such records, according to results of a national survey published online last month in The New England Journal of Medicine. The survey found that less than nine percent of small practices with one to three doctors use EHRs, while EHRs are used by 51 percent of larger practices, with 50 or more doctors. A survey of its membership about a year ago found that 37 percent of AAFP’s members had already implemented an EHR system, while 13 percent were in the process of implementing one, and 25 percent were planning to do so within the next 18 months, says Henley.

The Pennsylvania Medical Society (PMS) hopes to accelerate EHR adoption with a recently-awarded grant by the Pennsylvania Department of Community and Economic Development from the Broadband Outreach and Aggregation Fund (BOAF) to continue its ConnectTheDocs broadband initiative, according to Dennis Olmstead, PMS’s chief economist and vice president of economics and payor relations. The grant will fund educational programs and other resources to help physicians overcome barriers to technology adoption, and will fund regionally specific projects in northwest Pa. and the Bucks County area allowing physicians to obtain or upgrade their broadband connections for a better price than they could get on their own, through a group purchase arrangement. "Building a backbone of high-speed Internet access is one of the areas we can take the lead in reducing physicians’ administrative costs," says Olmstead.

Payors should reward physicians who demonstrably follow evidence-based care guidelines, such as those included in many EHRs’ clinical decision-support features, by reducing administrative burdens, suggests Michael Barr, M.D., vice president of practice advocacy and improvement for the American College of Physicians. One way would be to eliminate or relax prior authorization requirements, a practice known as "gold carding," which some health plans have piloted in tiered provider networks, he says.

Horizon has pilot-tested the gold carding concept with radiologists, with inconclusive results, and continues to study its viability, says Albano.

Aetna has removed the need for referrals to physicians in its Aexcel specialist network who meet both clinical performance and efficiency standards. Liss says he hopes there will be opportunities in the future to remove further administrative burdens from Aexcel-designated physicians.

[caption id="attachment_1940" align="alignleft" width="163" caption="POS President Jon B. Tucker, M.D."][/caption] By Jeffrey Barg

We examine how we arrived at this impasse and the prospects for getting out of it.

CAP Funding Quandary

At the start of Gov. Ed Rendell’s second term in January 2007, he proposed a comprehensive package of health reforms under the title of "Prescription for Pennsylvania." The various proposals that required new legislation were put into a single bill, House Bill 700. With different stakeholders and interest groups opposing different parts of the legislation, HB 700 was divided into separate pieces of legislation, some of which had enough support to gain passage, while other parts remained embroiled in political conflict. Rendell’s universal health insurance proposal called Cover All Pennsylvanians (CAP) faced substantial opposition.

At the center of CAP was state-supported, affordable basic health insurance for uninsured adults and small businesses offered through private insurance companies. The coverage would be subsidized for Pennsylvanians earning less than 300 percent of the federal poverty level; those earning over 300 percent of poverty could purchase CAP at cost. Employers that had not provided coverage for their employees could buy into CAP if they have 50 or fewer employers and if these employees earned less than the state average wage. Employers that did not offer health coverage would be assessed a three percent payroll tax.

The three percent employer tax was opposed by business groups and legislators who told Rendell that they could not pass it, according to Rosemarie B. Greco, director of the Governor’s Office of Health Care Reform. In November, 2007, Rendell proposed four alternative funding approaches to the legislature as a means to break the impasse.

Retention Account Surplus

Up until this point, legislation to continue the MCARE (Medical Care Availability and Reduction of Error) abatement, a medical liability insurance subsidy for physicians and other health care providers, was moving on a totally separate track. Funded primarily by a 25-cents-per-pack tax increase on cigarettes and 10 cents per automobile ticket, the abatement has provided nearly billion in MCARE payment relief to Pennsylvania health care providers since 2003. The MCARE Abatement Program was established in 2004 to cover 2003 and 2004. The program was then extended one year at a time for 2005, 2006 and 2007.

The 25-cents-per-pack tax revenue and 10 cents per automobile ticket is dedicated to the Health Care Provider Retention Account. The account is used to make up for shortages in the MCARE Fund due to abatement of MCARE surcharges that would otherwise have been made by Pa. physicians and other providers. Because MCARE payouts in malpractice lawsuits declined by 50 percent over the past five years, a 0 million surplus developed in the Retention Account.

A contest between physicians and hospitals was waged in the Republican-controlled Senate in October of 2007 over how to spend the Retention Account surplus. The Pennsylvania Orthopaedic Society lobbied to have the surplus dedicated entirely to retiring the billion unfunded MCARE Fund liability as part of legislation to extend the MCARE abatement to 2008. The hospitals won. On October 30^th, the Senate approved a one-year extension of the MCARE abatement along with the following allocation of the Retention Account surplus: 50 percent for reducing the unfunded liability; 25 percent for reducing hospital-acquired infections; and 25 percent for funding electronic medical records.

CAP Meets MCARE

With no resolution of the CAP funding query in sight, Rendell held a press conference on December 4^th in which he proposed using half of the Retention Account surplus instead of the payroll tax as part of a funding package for CAP. In addition, cigarette taxes would be raised 10 cents a pack and smokeless tobacco and cigars would be taxed for the first time. If legislators failed to approve CAP, Rendell would prevent the MCARE abatement from being extended to 2008.

Rep. Scott Boyd (R-Lancaster) accused Rendell of "governing by blackmail," reported the Pittsburgh Tribune Review. "Disrupting a program designed to retain and attract doctors is a very poor policy choice when we are deeply concerned about health care access and quality," Sen. Gib Armstrong (R-Lancaster), chairman of the Senate Appropriations Committee, said in a statement.

In a December 21 letter to Pa. health care providers, Rendell argued that because of significant improvement in the state’s medical malpractice climate, there are sufficient funds in the Retention Account to continue the MCARE abatement program for an additional 10 years and provide significant funding for CAP. The letter noted that while health care providers would start receiving their MCARE assessments in the next few weeks, no payments would be due before March 31, 2008. With their help, the letter exhorts, the extension of the MCARE abatement and coverage for the uninsured could be secured before the due date.

PA ABC Replaces CAP

In March, the House Democrats amended Senate Bill 1137, the legislation extending the MCARE abatement that was approved in October by the Senate, with sweeteners for everyone. For physicians and other health care providers, not only would it extend the MCARE abatement for another year; it would gradually increase the abatement level to 100 percent for all physicians (it has been 50 percent for most physicians) and extended it for ten more years. It also would phase out the MCARE Fund altogether over ten years, gradually transferring all of physicians’ malpractice coverage to the private insurance market, and would dedicate state tax revenues to retiring its .8 billion unfunded liability.

The amendments to SB 1137 also included a scaled down version of CAP, now called Pennsylvania Access to Basic Care (PA ABC). Eligibility for state subsidized premiums was dropped from 300 percent to 200 percent of the federal poverty level. Under CAP, all uninsured adults earning over 300 percent of the federal poverty level could buy into the program at cost, whereas under PA ABC, only uninsured adults earning between 200 percent and 300 percent of poverty are permitted to buy-in, unless they meet certain other requirements such as a pre-existing condition that prevents them from gaining coverage otherwise.

The MCARE abatement provisions of the bill did not come without strings, however. In order to qualify for the abatement, providers must (1) accept patients within the PA ABC and CHIP programs; (2) pay all their state taxes; and (3) complete a course on drug economics.

The House passed the measure on March 17 with some Republican support. Rendell sent another letter to Pa. health care providers on March 27 extolling the virtues of the legislation and asking for their support in gaining passage in the Senate. He notes at the end of the letter that since the March 31 deadline will not be met, providers will now be required to pay their unabated MCARE assessments for 2008 and that they will get refunds if the legislation gains final adoption.

Last ditch efforts to pass a single-year abatement extension in the House failed, though it probably would have been vetoed by the governor even if it had passed. As March ended, physicians and other health care providers lost their MCARE abatement. The connection between MCARE abatement and efforts to extend health insurance to more Pennsylvanians became more than just political leverage; it became a costly, tangible reality.

Getting ABC Right

Physicians and hospitals have been working with the Rendell administration and legislators to improve SB 1137. The Pennsylvania Orthopaedic Society (POS) has been generally supportive of SB 1137, with orthopedic surgeons having more to lose than most other specialties if the abatement program ends. As POS President Jon B. Tucker, M.D., states in his April 23^rd letter to Pa. senators: "Since 2003, Pennsylvania’s nearly 1000 orthopaedic surgeons have received nearly 2 million in MCARE abatement." Later in the letter, Tucker diplomatically writes: "If the state government is intent on using MCARE surplus revenues for purposes other than abatement and retirement of the MCARE Fund, ... POS prefers the legislation as passed by the House with certain reservations." POS then requests the following amendments:

· Guarantee that state revenues are committed to provide abatement as well as annual MCARE Fund obligations (claims and operating expenses) before other programs receive funding.

· Provide that adequate funds are reserved to retire the MCARE Fund completely.

· Require health insurance contractors to compensate physicians at reimbursement rates that are fair and reasonable.

· Ensure that health insurance contractors promptly pay physician claims and that physicians actually receive any required co-payments from PA ABC participants.

While POS has accepted the connection between MCARE and the health insurance expansion, the Pennsylvania Medical Society (PMS) and the Hospital & Healthsystem Association of Pennsylvania (HAP) have not. In response to a question about the connection, Tucker said: "What is good for the goose, is good for the gander. What is good for Pennsylvania should be good for physicians." The PMS website as of May 16^th states: "The governor’s office continues to link MCARE abatement extension and phase-out to a plan to expand health insurance coverage for the uninsured and underinsured. The Pennsylvania Medical Society strongly supports expanded health insurance coverage but believes that these issues should be considered separately." PMS President Peter S. Lund, M.D., responded to the issue, however, by saying that perhaps it is an appropriate quid pro quo.

PMS is also concerned that SB 1137 does not adequately address funding for PA ABC, does not legislate a guaranteed funding stream to pay off the unfunded liability, and ties MCARE abatement to participation in PA ABC. While PMS has long supported increases in tobacco taxes, Lund said, these taxes do not constitute a stable revenue stream since they are intended to reduce tobacco consumption. Money for retiring MCARE must be locked up so that it cannot be used for any other purpose, Lund said. The requirement that physicians participate in PA ABC in order to qualify for an MCARE abatement would enable carriers to reimburse physicians at unreasonably low rates, Lund said.

There is no equivocation in HAP’s opposition to connecting MCARE to health insurance expansion. The two issues need to be separated, said Paula A. Bussard, HAP’s Senior Vice President, Policy and Regulatory Services. The MCARE proposal is close to workable, Bussard said. While further conversation is needed on the uninsured, according to Bussard, it is more workable than CAP. Both can be addressed and advanced through the legislature, she said.

Bussard emphasized that addressing MCARE is essential to the state’s ability to recruit physicians and avoid physician shortages. Retirement of the MCARE Fund should be done with an accurate and sustainable funding source, she said. Linking abatement to participation in PA ABC would impede fair negotiations with insurance carriers, she added. HAP also believes that there should be different insurance options offered, she said. One size does not fit all. Healthy 20 to 35-year-olds do not need the same breadth of benefits as older people do.

HAP also believes that some technical adjustments should be made to the MCARE phase-out. Instead of transferring ,000 of responsibility from the MCARE Fund to the private market each year for ten years, it would be better to transfer 0,000 every other year, said James M. Redmond, HAP’s Senior Vice President, Legislative Services. And when you get close to the end, he added, you are better off making a big jump rather than a gradual step. Once you get to 0,000 responsibility in the private market, the next step should be million, he said.

The Rendell administration and House Democrats have shown some receptivity to these concerns. Governor’s Office of Health Care Reform Director Rosemarie B. Greco said that they are open to a lock box mechanism for funds dedicated to retiring the MCARE Fund. There also is an openness to setting minimum reimbursement levels. In fact, reimbursement levels set at 85 percent of Medicare for physicians and 105 percent of Medicare for hospitals were originally in the PA ABC legislation and were taken out at the request of health care providers, according to Rick Speese, executive director of the House Insurance Committee. Greco said that some sort of disproportionate care payment could be made to providers who see a high percentage of PA ABC patients.

Speese said that House Democrats are willing to negotiate these and other points once they get something passed by the Senate and attempt to reconcile the differences between House and Senate versions.