The Management of Healthcare Organizations Requirements of Health Services Managers

Groups 1 and 3 will present Case 1 on 09/20/2018. All groups will be required to turn in a position brief. For the position brief, please answer the nine questions listed below. Please include the questions with the brief. When answering the questions, please ensure to use all information given to the class as a reference. For the questions requiring external research, please ensure to cite the information. The group presentation should be between 20-25 minutes. The presenting group will be required to provide at least four PowerPoint slides. One set of slides are to be given to the professor and the other three are to be distributed among the other groups. When presenting, business casual attire will be required. Non-business casual attire will result in a reduction of points. Please have the group leader submit an electronic copy of the brief [as a word document (.doc/.docx)] and (when applicable) the PowerPoint slides under the Tests and Quizzes section on blackboard by 11:59 PM Monday (09/24/2018).

1: Please provide a detailed summary of the case. Please ensure to include and discuss all relevant material .

2: Please discuss at least four challenges facing inner city urban hospitals today (external research from respectable sources is required to answer this question) .

3: Please discuss the policy associated with the formation of 501C3 hospitals and the rationale associated with their existence. In addition, please discuss the community benefit obligations under the PPACA and how it may relate to Summit Regional Hospital (external research from respectable sources are required to answer this question) .

4: Please discuss the concept of population health management and what is needed to succeed in this environment (external research from respectable sources are required to answer this question) .

5: Please perform a SWOT (strengths, weaknesses, opportunities and threats) analysis on Summit Regional. Identify and explain at least four points for each category (please ensure to use information provided in the case to support your answer) .

6: Please illustrate and discuss all of the steps in the Evidence Based Management (EBM) model to analyze three overall problems and arrive at three specific evidence based solutions. Please analyze the solutions separately and use a table/chart to organize/explain the points in the mode and also ensure to use information provided in the case to support your answer .

7: Please rank and explain the three evidence based solutions from most likely to implement to least likely to implement .

8: Please specifically identify how your group will implement the chosen solution and then identify how you will evaluate the effectiveness (impact) of the solution .

9: Please identify at least three examples of courses (taken during the HCA program), which were most applicable in helping to apply the material in the case. Please ensure to explain why these courses were chosen .

Outline

The Management of Healthcare Organizations

Requirements of Health Services Managers

Evidence-Based Health Services Management (EBHSM)

Decision Selection (The Research Process)

Formulating the Research Question

Acquiring Research Evidence

Assessing the Quality of the Evidence

Presenting the Evidence

Applying the Evidence to Decision Making

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What makes the management of healthcare organizations so complex?

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The Management of Healthcare Organizations

The Presence of Complex Goals and Objectives:

The goals of HCO’s – patient care, research, teaching, and community service – are more complex than the goals of general manufactures.

As a result the translating of such goals into measurable objectives are difficult.

The objectives of most healthcare organizations cannot be reduced to greater profits or market share.

Dealing with people not products/services.

Healthcare is labor-intensive, the work is often complex, and it involves many professionals working together.

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The Management of Healthcare Organizations

The Presence of Numerous Stakeholders:

The health services manager must gain consent from a variety of stakeholders.

These stakeholders include board members, patients, doctors, ancillary staff, third party payers, and the broader community.

In many cases, there will be some stakeholders who do not agree with the organizational goals and objectives of hospital administration.

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The Management of Healthcare Organizations

Price Competitive Health Care Market:

In the present health care environment, there are greater limitations as to what HCO’s can charge for their services

Price Takers –instead of Price Setters

At the same time, health care costs are increasing consistently.

As a result, managers are challenge by situations (i.e. having inadequate resources) to provide high quality care.

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The Management of Healthcare Organizations

Constantly Changing Health Care Environment:

The role of the health services manager has changed substantially over time.

Medicare and Medicaid, which was introduced in 1965, has help foster the growing complexity and increasing cost of healthcare.

Please provide an example of a federal regulation, which has changed the practice and increased the cost of healthcare.

Healthcare management is no longer primarily hospital acute care management.

Today, many hospitals provide a range of services exceeding far beyond acute care.

New organizations have appeared such as HMOs/ PPOs, skilled nursing facilities (SNFs), ambulatory surgery centers, neighborhood health centers, urgent care clinics, free standing emergency departments, etc.

This change is somewhat independent of recent health policy changes

Health Policy Changes: PPACA/Obama Care, Trump Care, Tax Cuts and Jobs Act of 2017

Small changes here can have dramatic effects on how health care organizations conduct themselves**.

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The Management of Healthcare Organizations

Health Policy Events

Health Law Repeal Could Cost 18 Million Their Insurance, Study Finds

WASHINGTON — Eighteen million people could lose their insurance within a year and individual insurance premiums would shoot upward if Congress repealed major provisions of the Affordable Care Act while leaving other parts in place, the nonpartisan Congressional Budget Office said on Tuesday.

Please see the assigned readings folder for full text of article(s).

_________________________________________________________________

Hospital execs assure investors that they can weather ACA repeal

http://www.modernhealthcare.com/article/20170114/MAGAZINE/301149972

Hospital executives who paraded before investors last week at the J.P. Morgan Healthcare Conference in San Francisco put on a brave face about the coming repeal of the Affordable Care Act. To be sure, they were worried about the millions of Americans newly insured under the exchanges and state Medicaid expansions whose coverage is threatened. Kaiser Permanente CEO Bernard Tyson said it would be unconscionable for Congress to repeal the ACA without a simultaneous replacement…..That was the compassionate side. At the same time, systems were talking to investors and analysts, and they chose not to spook them with dire predictions about the impacts of repeal.

Please see the assigned readings folder for full text of article(s).

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The Management of Healthcare Organizations

Health Policy Events

Estimating the Impact of Repealing the Affordable Care Act on Hospitals

Findings, Assumptions and Methodology

Submitted to: The Federation of American Hospitals (FAH) The American Hospital Association (AHA)

http://www.aha.org/content/16/impact-repeal-aca-report.pdf

In modeling the repeal of the ACA as laid out in H.R. 3762, we found that between 2018 and 2026,

The loss of coverage would have a net impact on hospitals of $165.8 billion with the restoration of Medicaid DSH reductions.

The ACA Medicare reductions are maintained and hospitals will suffer additional losses of $289.5 billion from reductions in their inflation updates.

Full restoration of Medicare and Medicaid Disproportionate Share Hospital (DSH) payment reductions embedded in ACA would amount to $102.9 billion.

Please see the assigned readings folder for full text of article(s).

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The Management of Healthcare Organizations

Health Policy Events

CMS to punish more than 2.5k hospitals for 30-day readmissions: 7 things to know

http://www.beckershospitalreview.com/quality/cms-to-punish-more-than-2-5k-hospitals-for-30-day-readmissions-7-things-to-know.html?tmpl=component&print=1&layout=default&page=

Despite the political tumult over a potential ACA repeal, CMS is set to enforce the health law’s readmission rule by penalizing 2,573 hospitals for having too many Medicare patients readmitted within 30 days, according to federal data released Wednesday cited in a Kaiser Health News report.

Beginning in October, CMS will cut payments to the penalized hospitals by as much as 3 percent for a year for having high rates of 30-day readmissions for heart attack, heart failure and pneumonia.

“We’ve spent the last six months fighting about how we’re going to pay for health insurance, which is one part of the ACA,” Ashish Jha, MD, a professor at the Harvard T.H. Chan School of Public Health in Boston, told KHN. “There’s been almost no discussion of the underlying healthcare delivery system changes that the ACA ushered in, and that is more important in the long run to be discussing because that’s what’s going to determine the underlying costs and outcomes of the health system.”

Please see the assigned readings folder for full text of article(s).

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The Management of Healthcare Organizations

Health Policy Events

CMS Proposes to Cancel Mandatory Bundled Payment Models

August 15, 2017

The Centers for Medicare & Medicaid Services (CMS) has proposed to cancel mandatory bundled payment models and make changes to an existing bundled payment initiative focused on joint replacements

Specifically, CMS is moving to scrap the Episode Payment Models and Cardiac Rehabilitation incentive payment model, which were scheduled to begin on Jan. 1, 2018.

The proposed rule, issued Tuesday afternoon, would rescind the regulations related to these models, and also reduce the number of mandatory geographic areas participating in the Innovation Center’s Comprehensive Care for Joint Replacement (CJR) initiative from 67 areas to 33.

Please see the assigned readings folder for full text of article(s).

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The Management of Healthcare Organizations

Health Policy Events

Moody’s Severe flu season will pressure nonprofit hospital margins

Written by Alia Paavola | January 30, 2018 |

https://www.beckershospitalreview.com/finance/moody-s-severe-flu-season-will-pressure-nonprofit-hospital-margins.html

Despite an increase in patient admissions, the severe flu outbreak this season will pressure nonprofit hospital margins, according to a recent report by Moody’s Investors Service.

A surge in patient volume is often credit-positive for hospitals since reimbursements are often tied to the number of patients served. However, the surge in flu-related patient volume will pressure hospital margins because reimbursements for flu-related services often fail to cover the cost of treatment.

“Minimizing the length of stay for flu patients is essential to maintaining margins, but the severity of this year’s flu will complicate those efforts,” the Moody’s report reads.

Please see the assigned readings folder for full text of article(s).

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The Management of Healthcare Organizations

Health Policy Events

Without the Insurance Mandate, Health Care’s Future May Be in Doubt

By ROBERT PEARDEC. 18, 2017

WASHINGTON — For years, the Obama administration said the health care system as constructed by the Affordable Care Act could not survive without a mandate that most Americans have health insurance. With surgical precision, the sweeping tax bill that Republicans plan to pass this week will do away with that mandate.

What comes next for health care is unclear.

The demise of the Affordable Care Act’s mandate will lead to higher premiums and lower enrollment in plans sold on the health law’s marketplace, Wendy K. Mariner, a professor of health law at Boston University, said Monday. But she added, “I don’t think we can say with any confidence” how much premiums will rise or coverage will decline.

Please see the assigned readings folder for full text of article(s).

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Requirements of Health Services Managers

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Requirements of Health Services Managers

Balance the Needs of Key Internal and External Stakeholders:

Health care managers must perform a delicate balancing act:

Key internal stakeholders may not want, nor may see the need for strategic interventions.

However, at the same time, managers may be facing important external stakeholders (e.g. Federal government, State & Local governments, Joint Commissions) demanding change.

Healthcare managers must help their organizations be responsive to demands of external stakeholders while mobilizing the support of (or by placating) internal stakeholders.

E.g. EMR Adoption, Medicare Reimbursement and MD resistance.

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Requirements of Health Services Managers

Internal And External Stakeholders (continued):

Managerial interventions should always be financially and politically feasible.

Financial Feasibility: The manager should have a clear idea of where the funds will come from before he/she suggests a capital project or major initiative.

Political Feasibility: When proposing a new initiative, managers should also be aware of both the level of acceptance (buy in) and resistance.

They should also have a good idea of where the support and resistance will come from.

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Requirements of Health Services Managers

Usable Knowledge of Quantitative Measures:

The healthcare enterprise is becoming increasingly concerned with measuring results.

However, because of its complexity, healthcare is very difficult to measure.

Managers must have patience and show creativity in applying quantitative measures, which often has more relevance to process rather than the outcomes of care.

Please see the assigned reading titled Process versus outcome indicators in the assessment of quality of health care.

_________________________________________________________________

Usable Knowledge of Finance:

An important aspect of the health manager’s job is finance.

Managers must understand and generate timely funds from various payers and contributors.

We will talk more about later

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Requirements of Health Services Managers

Ability to Deal with Clinical Staff:

Complicating the manager’s job is the fact that doctors and nurses may see managers primarily as support staff.

This image may contrast with the manager’s role as the person who sets measurable objectives; and the person who makes certain that the organization can adapt to the ever changing health care environment.

__________________________________________________________________

Managerial work is accomplished in part through e-mails and meetings that some clinicians may regard largely as a waste of time.

Clinicians usually feel that they can be more useful when involved in providing patient care.

 

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Requirements of Health Services Managers

Attain a High Level of Managerial Performance:

The healthcare manager’s work is being transformed by an information revolution and a revolution in performance expectations.

Healthcare managers are expected to support quality improvements, lead revenue generation, contain costs, and manage relationships with important stakeholder groups.

E.g. Economic Value Added (EVA) Analysis

 

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Evidence-Based Health Services Management (EBHSM)

Please see assigned reading titled:

Is there a thing such as Evidence Based Management

Evidence-Based Health Services Management (EBHSM)

All managers should make decisions based on evidence. In order to obtain the evidence to make more effective decisions? Managers should be able to do the following:

Identify emerging opportunities/ threats.

Precisely define management challenges or opportunities.

Collect data.

Find and critically appraise relevant information from published and non-published sources.

Be able to conduct and evaluate experiments (e.g. pilot testing) in which new methods are plotted.

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Evidence-Based Health Services Management (EBHSM)

Evidence-Based Health Services Management (EBHSM) is the systematic application of the best available evidence to the evaluation of managerial strategies to improve the performance of health services organizations.

This evidence is derived from well conducted management research.

_______________________________________________________________

EBHSM does not replace but rather complements other types of knowledge and information.

Other sources of information and knowledge such as personal experience, experiences of others in similar situations, expert opinion, and simple inspection of data trends and patterns can and should also be used in decision making.

__________________________________________________________________

The EBHSM approach is a process which involves several steps.

See graph

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The Six Step Decision-Making Process (adapted)

1.

Identification of a problem/issue

2. Identification of possible decisions

3.

Allocation of weights to possible decisions

4.

Selection of a decision

5.

Implementation

of the decision

6. Evaluation of decision effectiveness

Evidence-Based Management

Evidence-Based Health Services Management (EBHSM)

External Environment

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Evidence-Based Health Services Management (EBHSM)

What types of management questions can the EBHSM be applied to :

Evidence-based health services management can be applied to three types of management issues:

Core business transaction management.

Operational management.

Strategic management.

Case projects will deal with one of more of these management issues.

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Examples of Management Questions to which EBHSM can be applied

Type of Management Issue Issue/Management Questions
Core Business Transactions* How can the payer process MD claims for payment more quickly? How can the health system’s information on patient eligibility for benefits be made more accurate? What methods for paying physician claims achieve speed, convenience, and accuracy requirements
Operational Management How can nurse absenteeism be reduced? Will decreasing the patient/nurse ratio improve patient outcomes? Does hospital discharge planning and follow up improve patients’ outcomes? Does hand washing among healthcare workers reduce hospital-acquired infections? Does raising part of employees’ compensation on achievement of unit or team goals improve teamwork and coordination?
Strategic Management How do hospital mergers affect administrative costs? Do hospital-physician joint ventures (i.e. specialty hospitals), such as orthopedic surgery centers, have negative effects on in-hospital surgery? Does the implementation of an electronic medical record improve the quality of patient care? Do pay-for-performance incentives substantially improve targeted care processes?
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Decision Selection

The Research Process

Decision Selection

The Research Process

Applying evidence to the assessment of possible decisions and alternatives, and the selection of a best decision can be accomplished by:

Formulating the research question.

Acquiring the relevant research findings and other types of evidence.

Assessing the validity, quality, and applicability of the evidence.

Presenting the evidence in a way that will make it likely that it will be used in the decision making process.

Applying the evidence in decision-making.

This is a weakness among many heath managers.

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Decision Selection:

Formulating the Research Question

Decision Selection

Formulating the Research Question:

The first step in the decision selection process is to turn the management question/issue into a research question.

This can be done by framing the issue in a way that will increase the probability of locating useful research studies.

This task usually requires more thought than one may first believe.

In order to find relevant research, a very specific management question will have to be broadened.

However overly broad, vague, or highly abstract research questions must be avoided.

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Decision Selection

Formulating the Research Question (continued):

For example, less assume that a manager is interested in knowing the following:

The likely effect of implementing a hospitalist program on the cost and quality of care for patients treated for cardiac problems in a suburban Arizona hospital.

This type of question is too specific. It will be hard to find information on such a topic.

___________________________________________________________________

The impact of hospitalist on the healthcare delivery system?

A question of this nature is too broad. A search on this topic will pull too much information.

___________________________________________________________________

The impact of a hospitalist program on the cost and quality of inpatient care in US community hospitals?

This is an example of a good research question.

You will be asked to replicate at a later date.

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Decision Selection:

Acquiring Research Evidence

Decision Selection

Acquiring Research Evidence:

Many managers will find it helpful to use technology to help locate research articles.

Health organizations that have made a significant investment in knowledge management.

Many large health systems have libraries, trained librarians/webmasters, Internet information resources.

The vast majority managers do not have such resources, thus they are limited to what they can find on the open Internet.

_________________________________________________________________

In addition to traditional Internet based searches, evidence related to the management research question can come from a wide array of sources:

Frequent and (somewhat) reliable sources of evidence can come from colleagues, consultants, and known experts in the field.

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Decision Selection:

Assessing the Quality of the Evidence

Decision Selection

Assessing the Quality of the Evidence:

Most managers do not have the minimal competency needed to assess management research.

“Garbage in Garbage out”

Research assessment skills enable managers to judge the quality of the evidence available.

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Decision Selection

Assessing the Quality of the Evidence (continued):

Ideally, managers should have (or have available to them) the competency to assess the following:

The strength/weakness of the research design.

The study context and setting.

Sample sizes of the study groups.

The controls used to deal with confounding factors.

The reliability and validity of measurements.

The methods and procedures used.

The justification of the conclusions.

Study sponsorship.

The consistency of the findings with other studies.

The class will have numerous opportunities to apply these points.

 

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Decision Selection:

Presenting the Evidence

Decision Selection

Presenting the Evidence:

Managers and researchers should present evidence to the decision-making process in a way that is:

Timely.

Brief.

Avoids technical jargon.

Provides clear description of the questions addressed.

Incorporates the context of the research findings.

Offers an assessment of the strength of the evidence.

Gives the results and implications for practice.

Makes the presentation easy to assess.

This information provides the basis for judging your presentations and written briefs.

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Decision Selection:

Applying the Evidence to Decision Making

Decision Selection

Applying the Evidence to Decision Making:

Challenges

Getting health service organization decision-makers use of the research generated evidence can be a challenge.

Lack of appropriate incentives/capabilities: Most organizations today do not have incentives or capabilities necessary for routinely using evidence in their decision-making.

Time involved to adequately analyze/develop: Substantial staff time is often required to ensure an adequate deliberative process.

Opportunity Costs to Status Quo: There are opportunity costs to managers and others who feel that their previous practices are challenge by the evidence.

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Decision Selection

Applying the Evidence to Decision Making

Challenges continued:

Different Horizons between theory and practice: Many users demand that the available evidence have immediate, use for a particular the vision, but often the available research evidence cannot be used in that way.

The evidence is mainly for a long term impact, not short term

Please see the assigned reading titled The Hidden Traps in Decision Making.

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Decision Selection

Applying the Evidence to Decision Making

Conclusion:

Research evidence derived from EDHSM can be used to:

Open up communication among managers and other stakeholders.

Enable the manager(s) to generate creative solutions.

Enhance the manager’s ability to estimate (test) the likely effects of each alternative solution to a problem.

Increase the decision-makers knowledge of a problem, which can help provide a more informed decision.

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Health Care Analysis & Evaluation Lecture Packet # 1

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CMS Proposes to Cancel Mandatory Bundled Payment Models

By Amy Baxter | August 15, 2017

The Centers for Medicare & Medicaid Services (CMS) has proposed to cancel mandatory bundled payment models and make changes to an existing bundled payment initiative focused on joint replacements.

The proposal aligns with what home health stakeholders have called for, as some have stated the mandatory bundles were being implemented too fast.

Specifically, CMS is moving to scrap the Episode Payment Models and Cardiac Rehabilitation incentive payment model, which were scheduled to begin on Jan. 1, 2018.

The proposed rule, issued Tuesday afternoon, would rescind the regulations related to these models, and also reduce the number of mandatory geographic areas participating in the Innovation Center’s Comprehensive Care for Joint Replacement (CJR) initiative from 67 areas to 33.

CMS also proposed making participation in the CJR model voluntary for all low volume and rural hospitals in all CJR geographic areas. The CJR model tests bundled payment and quality measurement for an episode of care related to hip and knee replacements, and went into effect April 1, 2016. Home health providers have seen an opportunity in CJR, as they are key players in keeping costs down through the post-acute period after patients undergo joint replacements.

The new proposal is in line with Health and Human Services (HHS) Secretary Tom Price’s desire to scrap mandatory bundled payment models in favor of voluntary programs.

“Changing the scope of these models allows CMS to test and evaluate improvements in care processes that will improve quality, reduce costs and ease burdens on hospitals,” CMS Administrator Seema Verma said in a statement. “Stakeholders have asked for more input on the design of these models. These changes make this possible and give CMS maximum flexibility to test other episode-based models that will bring about innovation and provide better care for Medicare beneficiaries.”

Industry Support

The agency did make clear it would likely push forward with voluntary models.

“Moving forward, CMS expects to increase opportunities for providers to participate in voluntary initiatives rather than large mandatory episode payment model efforts,” a summary of the proposal reads. “The changes in the proposed rule would allow the agency to engage providers in future voluntary efforts, including additional voluntary episode-based payment models.”

Some home health care players have opposed to mandatory bundled payments, but are supportive of voluntary models that incentivize post-acute care providers to work with hospitals and other acute care settings. Others have opposed the speed at which the mandatory bundles were being implemented, despite delays in implementation in some instances.

“We believe CMS is taking a very sensible and reasonable step in evaluating innovations on a voluntary rather than mandatory basis,” Bill Dombi, interim president for the National Association for Home Care & Hospice (NAHC), told Home Health Care News on Tuesday.

Scrapping new mandatory bundled payment models is also in line with the Trump administration’s larger efforts to reshape bundled payments, including the rumored new version of the Bundled Payment for Care Improvement, or BPCI 2.0.

The proposed rule was filed on Tuesday, August 15, and is scheduled to be posted to the Federal Register on August 17. The proposal will be open to public comment for 60 days, ending October 16.

Read the full proposed rule here.

Written by Amy Baxter

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CMS to punish more than 2.5k hospitals for 30-day readmissions: 7 things to know

Written by Brian Zimmerman | August 04, 2017 | Print | Email

http://www.beckershospitalreview.com/quality/cms-to-punish-more-than-2-5k-hospitals-for-30-day-readmissions-7-things-to-know.html?tmpl=component&print=1&layout=default&page=

Despite the political tumult over a potential ACA repeal, CMS is set to enforce the health law’s readmission rule by penalizing 2,573 hospitals for having too many Medicare patients readmitted within 30 days, according to federal data released Wednesday cited in a Kaiser Health News report.

Here are seven key takeaways from the KHN report.

1. Beginning in October, CMS will cut payments to the penalized hospitals by as much as 3 percent for a year for having high rates of 30-day readmissions for heart attack, heart failure and pneumonia.

2. Last year, CMS penalized all but 174 of the same hospitals for readmissions.

3. The penalties are estimated to result in $564 million in savings for the federal government, which is comparable to the amount saved last year under the ACA’s readmission rule.

4. The rule, established in 2012, sought to address the high readmissions rates among Medicare beneficiaries and address the high rates of medical costs associated with these readmissions.

5. Since the rule’s implementation, America witnessed a reduction in repeat hospital patients. Between 2007 and 2015, readmissions for conditions addressed by the rule for Medicare patients dropped from 21.5 percent to 17.8 percent.

6. However, the rate of reduction in readmissions leveled off in recent years, suggesting a plateau in the level of improvements possible under the rule.

“We have indeed reached the limits of what changes in how we deliver care will allow us to do,” Nancy Foster, vice president for quality at the American Hospital Association, told KHN. “We can’t prevent every readmission. It could be that there is further room for improvement, but we just don’t know what the technique is to make that happen.”

7. Some experts suggest the political acrimony over a potential ACA repeal stalled talks on how to improve the nation’s current health system.

“We’ve spent the last six months fighting about how we’re going to pay for health insurance, which is one part of the ACA,” Ashish Jha, MD, a professor at the Harvard T.H. Chan School of Public Health in Boston, told KHN. “There’s been almost no discussion of the underlying healthcare delivery system changes that the ACA ushered in, and that is more important in the long run to be discussing because that’s what’s going to determine the underlying costs and outcomes of the health system.”

To read the full Kaiser Health News report, click here .

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Hospital execs assure investors that they can weather ACA repeal

By Dave Barkholz | January 14, 2017

http://www.modernhealthcare.com/article/20170114/MAGAZINE/301149972

Hospital executives who paraded before investors last week at the J.P. Morgan Healthcare Conference in San Francisco put on a brave face about the coming repeal of the Affordable Care Act. To be sure, they were worried about the millions of Americans newly insured under the exchanges and state Medicaid expansions whose coverage is threatened. Kaiser Permanente CEO Bernard Tyson said it would be unconscionable for Congress to repeal the ACA without a simultaneous replacement. And he went further by insisting that the current ACA be the “starting point” for benefits and provider standards in a replacement plan. That was the compassionate side. At the same time, systems were talking to investors and analysts, and they chose not to spook them with dire predictions about the impacts of repeal.

Tenet Healthcare CEO Trevor Fetter told his audience during a packed session that two-thirds of the ACA patients that Tenet sees had health insurance before Obamacare and had moved over to the exchanges. Dallas-based Tenet, the nation’s third-largest investor-owned hospital company, derives about 3% of its admissions and 5% of revenue from exchange patients, Fetter said. But here’s the kicker: Tenet has seen about $230 million in benefits from the healthcare law between its inception in 2010 and 2016. In contrast, Medicare cuts imposed under the law have cost Tenet $350 million over that time, Fetter said. That’s a net negative of $120 million since 2010. “Once you look back to the Medicare cuts that began in 2010, we believe that the ACA has lowered our cumulative earnings, not raised them,” Fetter said.

LifePoint Health CEO Bill Carpenter made a similar point last month at the Citi 2016 Global Healthcare Conference. LifePoint, the nation’s fourth-largest investor-owned hospital company, generates from ACA volumes about $60 million annually in earnings before interest, taxes, depreciation and amortization, Carpenter told the assembled analysts. If the new Congress and the Donald Trump administration simply repealed ACA and reversed the Medicare cuts made as part of the program, LifePoint would be no worse off, he said. But the world typically doesn’t work that way, Wright Lassiter III, the new CEO of the Henry Ford Health System in Detroit, said in an interview. Government reimbursement cuts are unlikely to be completely restored, especially as budget deficits and competing priorities vie for dollars, he said.

Lassiter said subsidized insurance and Medicaid expansion under the ACA in Michigan have given the newly insured an opportunity to seek preventive care and early diagnosis. That’s a benefit to the overall health of the community and a dynamic to keep costs in check if people can get care before their afflictions send them to emergency rooms. Or, as Tyson put it at the J.P. Morgan conference, previously uninsured patients have gained access “to the front door” of healthcare. Investor fears of an ACA repeal, meanwhile, have abated. After a panicked sell-off of hospital stocks immediately following Donald Trump’s election, most have rebounded back to where they started or slightly above. The stock price of Community Health Systems closed Friday at $6.94, up 17% since Nov. 8. Select Medical’s shares rose 30% over that time to $14.85.

Shares of bellwether HCA Holdings, the nation’s largest investor-owned hospital company, were down just 2% to $79.41. Similarly, LifePoint’s shares had regained most of the ground they had lost, closing at $59.20 Friday, down 3% since Nov. 8. Even Tenet has rallied. Its shares closed Friday at $18.22, down 10% from a Nov. 8 close of $20.27. But its shares had sunk as low as $14.38 on Dec. 14. Fitch Ratings Managing Director Megan Neuburger said if the ACA went away overnight, the impact on hospitals would not cause a mass downgrading of their debt. Neuburger said there would be an assumption that at least some of the Medicare cuts made as part of ACA would be restored. “It would not be the end of the world.”

Dave Barkholz

 

Dave Barkholz

Dave Barkholz is Modern Healthcare’s Southern Bureau Chief stationed in Nashville. He covers hospitals, doctors, suppliers and governance across the Southeast. A winner of numerous national journalism awards, Barkholz started his career at Modern Healthcare in 1984 covering the investor-owned hospital companies. He spent the past 10 years in Detroit at Automotive News, a sister Crain publication.

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Health Law Repeal Could Cost 18 Million Their Insurance, Study Finds

By ROBERT PEAR JAN. 17, 2017

WASHINGTON — Eighteen million people could lose their insurance within a year and individual insurance premiums would shoot upward if Congress repealed major provisions of the Affordable Care Act while leaving other parts in place, the nonpartisan Congressional Budget Office said on Tuesday.

A report by the office sharply increases pressure on Republicans to come up with a comprehensive plan to replace the health care law. It is likely to doom the idea of voting to dismantle the 2010 health law almost immediately, with an effective date set sometime in the future while Congress works toward a replacement.

If nothing followed the gutting of President Obama’s signature domestic achievement, the budget office said, 32 million people could lose their health insurance by 2026, and premiums in the individual insurance market could double. Senator Susan Collins, Republican of Maine, showed the unease of some in her party when she said that repealing the health care law and delaying a replacement could send insurance markets into “a death spiral.”

She detected “a growing consensus among members of both the Senate and the House that we must fix Obamacare and provide reforms at nearly the same time that we repeal the law,” she said on the Senate floor on Tuesday.

The new budget office report, issued after a weekend of protests against repeal, will only add to the headaches that President-elect Donald J. Trump and congressional Republicans face in their rush to take apart Mr. Obama’s health law as they try to replace it with a health insurance law more to their liking.

Republicans cautioned that the report painted only part of the picture — the impact of a fast repeal without a Republican replacement. Senator Orrin G. Hatch, Republican of Utah and the chairman of the Finance Committee, said the numbers represented “a one-sided hypothetical scenario.”

“Today’s report shows only part of the equation — a repeal of Obamacare without any transitional policies or reforms to address costs and empower patients,” he said. “Republicans support repealing Obamacare and implementing step-by-step reforms so that Americans have access to affordable health care.”

Congress last week approved a budget that clears the way for speedy action to repeal the health care law. The votes were 51 to 48 in the Senate and 227 to 198 in the House.

But Republicans have yet to agree on a replacement bill, and existing Republican plans, like one drafted by Representative Tom Price of Georgia, who was selected as Mr. Trump’s secretary of health and human services, have yet to be scrutinized by the budget office. The office provides Congress with the official projections of legislative costs and impact that lawmakers use to formulate policy.

Republicans cautioned that the report painted only part of the picture — the impact of a fast repeal without a Republican replacement. Senator Orrin G. Hatch, Republican of Utah and the chairman of the Finance Committee, said the numbers represented “a one-sided hypothetical scenario.”

“Today’s report shows only part of the equation — a repeal of Obamacare without any transitional policies or reforms to address costs and empower patients,” he said. “Republicans support repealing Obamacare and implementing step-by-step reforms so that Americans have access to affordable health care.”

Congress last week approved a budget that clears the way for speedy action to repeal the health care law. The votes were 51 to 48 in the Senate and 227 to 198 in the House.

But Republicans have yet to agree on a replacement bill, and existing Republican plans, like one drafted by Representative Tom Price of Georgia, who was selected as Mr. Trump’s secretary of health and human services, have yet to be scrutinized by the budget office. The office provides Congress with the official projections of legislative costs and impact that lawmakers use to formulate policy.

The estimates by the budget office are generally consistent with projections by the Obama administration and by insurance companies.

In its report, the budget office said that repealing selected parts of the health care law — as specified in the earlier Republican bill — would have adverse effects on insurance markets.

In the first full year after the enactment of such a bill, the office said, premiums would be 20 percent to 25 percent higher than under current law.

Repealing the penalties that enforce the “individual mandate” would “both reduce the number of people purchasing health insurance and change the mix of people with insurance,” as younger and healthier people with low health costs would be more likely to go without insurance, the budget office said.

The Republican bill would have eliminated the expansion of Medicaid eligibility and the subsidies for insurance purchased through Affordable Care Act marketplaces, after a transition period of about two years.

Those changes could have immediately increased the number of uninsured by 27 million, a number that would gradually increase to 32 million in 2026, the budget office said.

Without subsidies, the budget office said, enrollment in health plans would shrink, and the people who remained in the individual insurance market would be sicker, with higher average health costs. These trends, it said, would accelerate the exodus of insurers from the individual market and from the public marketplaces.

As a result, it said, about half of the nation’s population would be living in areas that had no insurer participating in the individual market in the first year after the repeal of marketplace subsidies took effect. And by 2026, it estimated, about three-quarters of the population would be living in such areas.

While writing the Affordable Care Act in 2009 and 2010, lawmakers continually consulted the Congressional Budget Office to understand the possible effects on spending, revenue and insurance coverage. The current director of the budget office, Keith Hall, who signed the report issued on Tuesday, was selected and appointed by Republican leaders of Congress in 2015.

The latest report was requested by Mr. Schumer and two other Democrats, Senators Ron Wyden of Oregon and Patty Murray of Washington.

Jennifer Steinhauer and Thomas Kaplan contributed reporting.

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