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Health Management Technology News
  February 10, 2014
In this issue:

12 things to know about the SGR repeal bill

Powerful panels go for permanent 'doc fix'

Walgreens brings big data analytics to healthcare clinics through expanded relationship with Inovalon

Veteran VC says beware of health IT bubble: Not enough ‘actual business plans’

12 things to know about the SGR repeal bill

Democratic and Republican leaders in both houses of Congress have finally agreed on a bill that would repeal Medicare's much-maligned physician payment system. But the measure leaves a few questions unanswered.

For one thing, the bill doesn't outline a way to pay for itself, which is well recognized as the biggest hurdle to doing away with the sustainable growth rate (SGR) payment formula, especially in an election year.

But the language of the deal lawmakers announced Thursday will be pretty close to the one signed into law, if this bill reaches that point.

So, it's worthwhile to take a deeper dive now into how the bill -- the SGR Repeal and Medicare Provider Payment Modernization Act -- will change Medicare payments under Part B.

1. First and foremost, the bill will repeal the SGR, provide a 0.5% payment increase each year though 2018, and leave the current payment system otherwise untouched for 4 years.

2. In 2018, a new Merit-Based Incentive Payment System, as it will be called, will consolidate the Physician Quality Reporting System (PQRS), Value-Based Modifier, and "meaningful use" program for electronic health records (EHRs) starting in 2018.

Those programs combine to levy reimbursement penalties of at least 5% of Medicare payments for doctors who don't participate or meet requirements, and physician groups count their sunsetting as a victory. Although the 0.5% increase from 2014 through 2018 might not sound like much, lobbyists count these potential penalties going away as an increase in physician payments.

The Merit-Based Incentive Payment System would judge providers on quality, resource use, meaningful use, and clinical practice improvements. Under that system, penalties for lesser performers are capped at 4% in 2018, 5% in 2019, 7% in 2020, and 9% in 2021. Rewards for exceptional performers are capped at $500 million per year from 2018 through 2023.

3. Physicians who receive a significant percentage of Medicare revenue from an alternative payment model such as an accountable care organization will receive a 5% bonus starting in 2018.

However, certain requirements must be met for the bonus. The payment model must involve a certain amount of risk for financial losses and include a quality measurement component.

Patient-centered medical homes are exempt from the financial risk obligation if they're proven to work in the Medicare population. It will be interesting to see how that determination will be made.

Also, alternative payment models from private payers and Medicaid will be taken into consideration if no Medicare model exists in a provider's area.

4. Providers who participate in an alternative payment model will be exempt from the new Merit-Based Incentive Payment System.

Also, the law creates a Technical Advisory Committee that will study physician-focused alternative payment model proposals.

5. The Department of Health and Human Services (HHS) must publish by May 1, 2015, a plan for the development of quality measures for the incentive payment system and alternative payment model.

That plan should be developed with physician feedback and updated annually. HHS will also receive $15 million annually through 2018 to develop such a plan.

"The Secretary will contract with entities, which could include physician organizations, to develop priority measures and focus on measures that can be reported through an EHR," according to a summary of the bill.

6. The bill mandates that CMS create a billing code for care management services for patients with complex chronic conditions -- a code that CMS is already working on.

7. The bill also takes several stabs at attempting to revalue codes for Medicare which may overpay.

For example, if Medicare spends 0.5% above the estimated amount in 2015-2018, the legislation mandates the codes be rebalanced for the following year. Lawmakers also require a Government Accountability Office study of the American Medical Association's Relative Value Scale Update Committee (RUC) processes.

8. The bill attempts to crack down on the inappropriate use of advanced diagnostic imaging.

Starting in 2017, Medicare will only pay for diagnostic imaging services that meet certain criteria, such as appropriate-use criteria.

Also that year, HHS will identify doctors who have low adherence to appropriate-use criteria and, in 2020, will subject them to prior authorization for applicable imaging services.

9. HHS will publish utilization and payment data for physicians on the Physician Compare website by July 1, 2015.

Read the full med page today article here

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Powerful panels go for permanent 'doc fix'

Committee leaders in the House and Senate have unveiled bipartisan legislation repealing Medicare's flawed physician payment system and giving doctors in the program a small pay raise. The bill to create a permanent "doc fix" was introduced Thursday after more than a year of negotiations between parties in both chambers. Its central provisions repeal Medicare's sustainable growth rate formula and increase physician reimbursement rates by 0.5 percent annually for 5 years.

Top lawmakers from both parties praised the deal as a major victory for doctors and seniors.

"Congress has spent a decade lurching from one ‘doc fix’ to the next, creating a new, unnecessary threat to seniors’ care each time. Enough is enough," Senate Finance Committee Chairman Max Baucus (D-Mont.) said.

"This proposal would bring that cycle to an end and fix the broken system. Our bill makes Medicare’s physician payments more modern and efficient, and it will protect seniors’ access to their doctors."

The announcement comes just two months before Medicare doctors face a payment cut of almost 24 percent.

Congress has relied on temporary "doc fixes" for more than a decade to avoid dramatic pay cuts to doctors, but hope for reform rose last year after budget analysts unexpectedly cut the cost of repeal.

The American Medical Association (AMA), which has spent years lobbying to repeal the sustainable growth rate (SGR), welcomed the measure and urged both chambers to pass it before the next payment cut hits doctors on April 1.

"Continuing the cycle of short-term patches by merely addressing the 2014 cut that is imminent on April 1 without solving the underlying problem would be fiscally irresponsible and further undermine the Medicare program," AMA President Ardis Dee Hoven said in a statement.

"It is time for action to repeal the SGR and establish a transition to a new more stable Medicare physician payment policy to better serve America’s senior citizens."

The endorsement of three powerful committees — Senate Finance, House Ways and Means and House Energy and Commerce — makes it likely that leaders in both chambers will bring the bill to the floor this spring.

This assumes lawmakers can come to an agreement about how to pay for the reform, estimated to cost between $120 billion and $150 billion. Offsets were not announced Thursday and have already proven a major sticking point.

Healthcare sectors are bracing for the possibility of further cuts, and lobby groups continued to position their members Thursday in response. In one example, long-term care providers urged Congress to accept their offer to generate revenue by lowering hospital readmission rates.

“Our profession has policy solutions that create incentives for providers that can not only contain costs, but also improve quality of care," said American Health Care Association President Mark Parkinson in a statement.

Read the full The Hill article here

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Walgreens brings big data analytics to healthcare clinics through expanded relationship with Inovalon

Walgreens is expanding its relationship with Inovalon, Inc., a leading technology company, to implement its patient assessment tool and technology platform to support improvements in care, quality and risk score accuracy programs across more than 400 Healthcare Clinic at select Walgreens locations. The convergence of Inovalon’s data-driven patient assessment tool, Electronic Patient Assessment Solution Suite (ePASS), and Healthcare Clinic at select Walgreens creates a unique offering within the health plan and retail clinic industry. With the implementation, Inovalon’s analysis of more than 8.3 billion medical events brings analytic insights to Healthcare Clinic programs.

“By integrating data analytics, we can gain even deeper insights to help improve patient care and, ultimately, outcomes,” said Heather Helle, divisional vice president, Healthcare Clinic. “We continue to expand the scope of services, capabilities and footprint at Healthcare Clinics. These types of innovative solutions enable our nurse practitioners and physician assistants to play an increasingly important role as part of a patient’s care team.”

Healthcare Clinic at select Walgreens improves members’ choice, providing a convenient, community-based access point for member assessments versus the traditional in-home model.

The combination of Inovalon’s advanced analytics and Healthcare Clinic’s nurse practitioners and physician assistants, as well as its laboratory and immunization resources, provides a superior solution to health plans, ACOs and integrated care delivery organizations seeking to achieve goals in improving quality outcomes, and risk score accuracy.

“Bringing advanced analytics to the point of care in real time is a powerful benefit for patients being seen in today’s highly complex health care environment,” said Keith Dunleavy, M.D., president and chief executive officer of Inovalon. “We are proud to be working with Walgreens on this industry leading initiative, supporting its commitment to improve health care outcomes for Healthcare Clinic partners and patients nationwide.”

Read the Walgreens press release here

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Veteran VC says beware of health IT bubble: Not enough ‘actual business plans’

With software executives filling out the roster at this year’s JP Morgan Healthcare Conference, and with the reported IPO plans of medical cost-transparency software provider Castlight Health at a $2 billion valuation, information-technology for the health-care industry is beginning to look nearly bulletproof as a sector.

But with feverish activity and high valuations comes the danger of a bubble, said veteran investor Anne DeGheest, who was an investor and entrepreneur through the tech boom of the 1990s, and who founded Sand Hill Road firm HealthTech Capital several years ago.

Ms. DeGheest has invested extensively in medical devices and in health-related information technology, and she said she learned in the ‘90s to read the signs of an economic bubble. She sees some of those signs today, telling Venture Capital Dispatch of a potential “Series B crunch” as a number of health entrepreneurs without solid business plans try to raise money from investors.

Q: What is the ‘Series B crunch?’

A: Right now, there is a bubble forming. The country is re-shaping its largest industry, and it’s the biggest experiment we’ve ever done with the American economy. It’s opened the floodgates, and there is a sort of Gold Rush because there is massive opportunity. So much of the money is going into companies at the seed or Series A level, and it’s coming from angels and unsophisticated investors. When it comes time for these companies to raise a larger, Series B round, they are going to have to answer a lot of tough questions about their business plans. Many will not have answers to those questions, and some of these companies are going to fail.

Q: What are the types of questions investors will ask at the Series B level?

A: We’re going to ask, ‘What is your value proposition, and how will you prove it? What pain points are you trying to solve in the market? What’s the cost of customer acquisition in your business?’ A lot of these companies say they are going to pull data from a variety of sources, run algorithms on the data, and then present the data to the customer. At the Series B level, we would ask, ‘Why is this data actionable? Who is meant to take action on the data? How do you measure the impact of this data?’

Q: Why do you think the company founders will not have those answers?

A: This is what I have been seeing. There’s a tidal wave of startups like we’ve never seen before. It’s kind of like the dot-com boom, there is this rush to build a product that you can demo. Thirty-five companies presented [at a health I.T. conference affiliated with the JP Morgan Healthcare Conference]. And at CES, I lost count. The effort is all going into making a product that can be shown, but not into building a business. I don’t see enough actual business plans.

Q: What other signs do you see that there is a bubble forming around health IT?

A: I see a lot of things that remind me of the ‘90s. Just like then, unsophisticated investors and angels are providing a lot of bridge loans. Without a good business plan, though, a bridge loan is a pier to nowhere. Also, there’s a shortage now of good engineers. There are also many, many copycat companies in health IT. They have no actual intellectual property, they just say they are going to take information and deliver it more efficiently. Some of these companies will not put a cap on their valuations. They seem to think there is no actual limit to their value.

Read the full The Wall Street Journal article here

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