Healthcare Reform: What Might it Look Like?

I showed this photo to an acquaintance who happens to be an ER nurse. The turkey vulture in the image was sitting on a tree next to the freeway, and the title of the photo was Waiting for Roadkill. That nurse said, “hey, that’s how we feel about ourselves working in the ER!”

There is that certain irony in healthcare in that we get into it because we want to help. But perversely we need people to get sick or injured in order for us to help, to have jobs, to get paid, and fulfill our personal mission to do good. One person’s worst day of their life can be our chance to make a difference, or to have an adrenaline rush or an intellectual challenge.

The same irony applies to healthcare organizations: the unhealthier the population we serve, the more likely that the organization can fulfill its mission, especially if that population has a payment source.

What about the future mission of healthcare organizations? The mission will probably not change, but:  Can we continue to sit like the vulture and keep our beds full and our outpatient departments busy, or is something new headed our way? Below I’ve listed some of the changes that we can expect as part of healthcare reform. And if you are thinking that the Supreme Court is going to strike it all down and we will return to the good ol’ days, think again: The current system is simply unsustainable. These are the good ol’ days! Reform itself will change, but there will be reform of some sort.

Moving From
Paid to take care of sick people. The more procedures and episodes of care, the better the revenue stream.
Moving Towards
Paid to keep populations healthy; the less that high cost care is provided, the better the bottom line. Encourage use of seat belts, obeying speed limits, eating healthy, ambulatory services and so forth.

Moving From
Set our prices and make up for losses on charity and government-paid services through profits on commercial insurance (cost shifting).
Moving Towards
The expectation that all payors will gravitate towards the level of payment made by Medicare. There will be nowhere to cost-shift to.

Moving From
We write things down, scan it, and then we file it away. A box of paper costs $10. Pens are ten cents.
Moving Towards
We document electronically, communicate the information through all levels of care, and assemble the collective data in novel and useful ways to guide our decisions. The patients’ records follow them wherever they go. A comprehensive EMR costs millions of dollars.

Moving From
Do our best and charge for our efforts, even if sometimes we have to re-admit or do-over.
Moving Towards
Payments will be at risk based on measures of quality and patient satisfaction. We will have to absorb the costs of our errors.

Moving From
We do our thing, doctors do their thing.
Moving Towards
Alignment of physicians and hospitals into some version of coordinated care organizations.

Moving From
We do our thing, nursing homes, home health agencies, outpatient providers do theirs.
Moving Towards
Single payment per episode of care, and other “bundled payment” schemes

It will be a challenging time. You’ve probably heard the old saying that “no money, no mission.” Some organizations will likely not survive the changes. I’m confident that the organization that I work for can survive and possibly even thrive in the “going to” future world, but that period of transition will be incredibly challenging because the incentives and payments now and in the future are polar opposites.

Here is what I know rehab providers can do to prepare that is within our control:
1. Reduce costs through control of expenses.
2. Learn how to optimize and most effectively use services. (For an example, in outpatient PT will 3 visits per week be more effective than 2 visits per week? Challenge the conventional wisdom and go with identified best practices.)
3. Where ever possible, measure quality and strive to be the best.
4. If we have an established way of doing things, do it that way always. Variation is costly and leads to errors and uncontrolled processes.
5. Challenge the way we do things, but remember that in a complex system each thing we do is tied to many things that others do; any proposed change needs to be carefully evaluated to avoid unintended consequences.
6. Focus on the mission, and have fun.

Many people get anxious when they face change. I see it differently: It’s an opportunity to become an agent of change, to make a difference in how we do things for years to come. This is a time when we all need to engage in adapting and molding our work to the new future.

Why We Do What We Do

I subscribe to a rehab listserve.  Many times, the discussion threads take a hopeless or angry tone when the various contributors try to predict the future of healthcare and the profitability of their businesses.  Such was the case recently, when many private practive PT business owners lamented the cuts in payments, the over-regulation, healthcare reform and the general state of the economy.  I think there may even have been mention of the end of the Mayan calendar!  (OK, I made that part up.)

But one contributor, Thomas Howell PT, from Idaho, wrote the following.  I think he summarized nicely my thoughts on the subject.

I am tired of the doom and gloom AND I am tired a discussion that hasn't once focused on the patient. At its root healthcare is and always will be about caring for people. Ask me if things are harder than 10 years ago and I would say firmly NO. I have more tools from equipment to outcomes tools and more research evidence than ever before to guide what I do and allow me options for care that are successful and repeatable.

Patients/clients are receiving care that, even when limited by insurance, is still way better than I ever could have imagined 24 years ago when I started PT school. In addition, I have opportunities outside of traditional PT care to establish a business model with, from fitness to wellness to women's health. 25 years ago a majority of PT practices survived only by contracting with home health or SNF's because the reimbursement was much worse than it was today.

What is harder is to use physical therapy purely as a business to get wealthy but you know what - that's not what this profession is all about. I am about profit as much as any American business person and agree that we have too many regulations but at the same time my motivation is not profit but treating patients. Every day I am thankful for the opportunity to make a difference in people's lives.

Yes, maybe our profession will become a profession that we cannot make a huge profit any more but does that diminish it or what we do day in and day out as healthcare professionals? I don't think so and I would bet many other colleagues would agree. Ask yourself if you would still be in the profession if you could only earn what teachers make in your area. Would you still be in the profession? I know plenty of PT's that would because patient care and making a difference in people's lives is the most important thing to them as it is to me.

Amen.

Oregon's CCO Transformation

In Oregon, healthcare reform will be centered around new Coordinated Care Organizations (CCO).  Much of this is still barely understood by providers, but in fact the implementation will begin this year.  To get a general overview of what the CCOs will encompass and their role in Medicaid, click here for a presentation put together by the Oregon Association of Hospitals and Healthcare Systems.

Publication In Impact Magazine

I'm honored to say that I've authored an article published in the June issue of Impact, the journal of the private practice section of the APTA. My contribution to this  issue was to share the lessons learned from some of our experiences with compliance audits conducted by our Medicare Administrative Contractor, Noridian. Since many private practices have not had the experience of going through such audits, I decided to share a bit of practical knowledge with the PT community.

I cannot link from here to the article, but I do want to post right now some corrections that will appear in a future issue; so for those to have landed here from that article, here goes a dose of humble pie:

Dear Editor:
I wish to correct several factual errors in my article entitled “Preventive Medicine for Surviving a Medicare Audit.” None of the “Lessons” from the article change; those are still my recommendations. In the interest of complete accuracy, however, here are the corrections:

1. In my article, I stated that CERT audits are pre-payment, and that if the results of a CERT audit show a high error rate, there may be consequences. CERT audits are post-payment, and charts are selected randomly. In the Comprehensive Error Rate Testing Program (CERT) the purpose is to establish a Medicare FFS paid error rate, which is done through a small random sample of provider claims. If a claim has been found to be paid in error by the CERT contractor, the FI/MAC is responsible for initiating repayment activities.

2. I stated that my organization had been subjected to a CERT audit which found a high error rate, followed by another audit to validate that we’d changed our practices. In fact, those were probe audits, initiated by our MAC, and conducted on a pre-payment review basis. It is the probe audit that can result in consequences, including follow-up probe reviews to reassess the provider error rate. And it is the probe audit that, if compliance is not demonstrated, may result in being placed on a correction action plan as referenced in the Medicare Program Integrity Manual up to and including more serious sanctions such as a referral to the Program Safeguard contractor or the ZPIC, or in the most dire of circumstances to the OIG.

3. Also, for clarification, the error rate is calculated based on charges in error compared to total charges. "…the error rate is the dollar amount of submitted charges billed in error (minus any confirmed underbilled charges) divided by the total amount of submitted charges for the services medically reviewed”

I apologize for these errors, which are mine alone. And I would like to acknowledge Nancy Beckley, a fellow author in the June IMPACT for her collegial and professional assistance in clarifying these issues.

It demonstrates one more lesson for the readers: This stuff is very technical and complex. It’s best to get professional help in preparing your business for the inevitable audits that are coming, and in responding to audits that do occur.

Healthcare Reform and Rehabilitation

This may be a cumbersome post, suitable only for those who care about such issues as healthcare policy and reform. And when you are reading, keep in mind that ultimately this only reflects my own opinion and viewpoint. Hopefully it’s food for thought.

So I’ll start with a poll: If you think that healthcare delivery is going to change in the next 6 years, raise your hand. [Waiting, counting.] If you didn’t raise your hand, and you think the health care systems will ultimately be about the same, with minor adjustments, raise your hand. [More waiting, more counting.]

I’m guessing that your vote falls along the lines of your political persuasions: If you believe that “ObamaCare” was an important step forward in providing healthcare to all, you probably feel that the country will continue—with minor adjustments—onward to full implementation of the healthcare reform law that was passed last year. You also feel that rationality will ultimately prevail and that the arbitrary system that we have now will change with the helping hand of government.

If you feel that “ObamaCare” is a bureaucratic takeover of healthcare, inevitably destined to include Death Panels to pull the plug on anybody over a certain age, you probably raised your hand for the second choice. You feel that rationality will ultimately prevail and that this excellent system that we’ve spent years designing in the U.S. of A. will continue to evolve without the heavy hand of government.

Reality, as usual, has little to do with political views. Here are some realities that impact this discussion:

• Healthcare costs are rising rapidly, taking an ever-larger portion of the Gross National Product and contributing to ever-increasing government deficits. This is unsustainable. Unsustainable means something will change. Fact.

• Payments from Medicare and Medicaid do not cover the cost of delivery of services. That means that the commercial insurers have to pay an ever-higher portion of total healthcare costs in order to make up for what the government does not pay. (“Cost-shifting.”) The insurance companies must then pass these increases on to the employers who ultimately pay for the coverage. Employers are unwilling to continue to absorb these increases; healthcare benefits costs are already causing major distress to their bottom lines. This means that something will change. Fact.

Given the two imperatives above, it’s our destiny that healthcare funding and delivery will change. The only real question is if it will be a deliberate, carefully crafted change, or will it be driven by politics (“special interests”) rather than facts, or will the system simply implode. Who of you votes for “carefully crafted” as the preferred route?? [Counting hands again.]

Years ago, Oregon tackled one of the overriding realities of healthcare: it must somehow be rationed. Prior to the reforms enacted here, the rationing happened by limiting the number of people who could be on the Medicaid rolls. When money ran out, they simply stopped letting people in to the system. After reform, the rationing occurred differently: more people qualified, but medical needs were ranked and some diagnoses and procedures were not funded. We see one of the results of that reform now in our outpatient therapies: PT for the “sprains and strains” diagnoses are not covered, but services related to stroke are covered. The rationale for this being that if we have to cut something, let’s cut something that will eventually usually get better without treatment. Carefully crafted. Fact-based.

We do not know what Washington is going to do in implementing (or not) the Healthcare Reform Act. But, once again, Oregon is moving ahead with its own reform, and will likely be far ahead of whatever our Congress and CMS come up with. Here is the future:

1. Payments from government payors to providers will be cut more.
2. Hospitals are likely to be made accountable for the costs of re-hospitalization and downstream care (e.g., home health and rehab services) up to a month post-discharge from the acute hospital.
3. It will be increasingly difficult, if not impossible, to cost-shift to commercial insurance.
4. A higher proportion of individuals will be covered by government-backed insurance.
5. This decrease in income will put a squeeze on providers to cut costs in order to survive. Some will not survive, at least in their current forms.
6. Hospitals and healthcare systems will operate based on a well known premise: Ultimately, cost is controlled by utilization patterns. And utilization is controlled by physicians.
7. The logical response to this fact is that physicians will increasingly be employed or otherwise aligned with the hospitals. Furthermore, services provided outside the hospital (SNF, IRFs, outpatient services) will also need to align with hospitals’ interests in order to receive referrals.
8. We are likely to see new configurations of healthcare systems. The catch-word of the moment is “medical home.” No single definition exists, and different methods have been used in different parts of the country. But what they focus on is utilization. Higher primary care utilization for patients who could avoid hospitalization (diabetics, heart failure, asthma, to name a few) and “smarter” utilization for those who do need hospitalization. The old-fashioned description is a case-management approach to medicine.

To get an idea of how this might work, check out Atul Gawande’s article about utilization in the January 17 New Yorker.  I especially liked this little vignette from the article; you can imagine how “rogues”—whether they be doctors or therapists—would be handled in a well-managed, rational, system:

[The physician] told me about a woman who had seen a cardiologist for chest pain [20 years] ago, when she was in her twenties. It was the result of a temporary, inflammatory condition, but he continued to have her see him for an examination and an electrocardiogram every three months, and a cardiac ultrasound every year. The results were always normal. After the [medical management] clinic doctors advised her to stop, the cardiologist called her at home to say that her health was at risk if she didn’t keep seeing him. She went back.

The clinic encountered similar troubles with some of the doctors who saw its hospitalized patients. One group of hospital-based internists was excellent, and coordinated its care plans with the clinic. But the others refused, resulting in longer stays and higher costs (and a fee for every visit, while the better group happened to be the only salaried one). When [this doctor in the article] arranged to direct the patients to the preferred doctors, the others retaliated, trolling the emergency department and persuading the patients to choose them instead.

“‘Rogues,’ we call them,” [this doctor] said. He and his colleagues tried warning the patients about the rogue doctors and contacting the E.R. staff to make sure they knew which doctors were preferred. “One time, we literally pinned a note to a patient, like he was Paddington Bear,” he said. They’ve ended up going to the hospital, and changing the doctors themselves when they have to. As the saying goes, one man’s cost is another man’s income.

And that last phrase is the heart of the matter. Our income, my income, all providers’ income, is someone else’s cost. My predication is that if we align ourselves with excellence in patient satisfaction, outcomes, and cost controls, then the rehab professions have a bright future. But nobody owes it to us. We become “preferred” by delivering results at the most reasonable cost compared to alternatives. Evidence will prevail over relationships and marketing.

In that same New Yorker article, Gawande describes the comments of a hospital CEO who had worked hard on the utilization issues. Under our current system, successful management of utilization means lower census and outpatient business—not exactly a sign of success for a hospital CEO. But that leader responded this way,

The Atlantic City economy, he said, could not sustain his health system’s perpetually rising costs. His hospital either fought the pressure to control costs and went down with the local economy or learned how to benefit from cost control.

And there are ways to benefit. At a minimum, a successful hospital could attract patients from competitors, cushioning it against a future in which people need hospitals less. Two decades ago, for instance, Denmark had more than a hundred and fifty hospitals for its five million people. The country then made changes to strengthen the quality and availability of outpatient primary-care services (including payments to encourage physicians to provide e-mail access, off-hours consultation, and nurse managers for complex care). Today, the number of hospitals has shrunk to seventy-one. Within five years, fewer than forty are expected to be required. A smart hospital might position itself to be one of the last ones standing.

Note re the Denmark comment: In Oregon, the bed ratio is 1.8/1,000 residents; in Denmark, it’s 3.5/1,000. For comparison, in Florida it’s 2.9/1,000 and in New York state it’s 3.1.   Nobody really knows how far we can go with reducing high-cost care,  but that's the journey we are on.

CERT Audit: Most Common Therapy Errors in Noridian's Territory

Here's a summary of the common denials for errors found during Noridian's audits of all providers of physical therapy in the past three years. The data below is taken from the reports found here.

2009, May
97110 Therapeutic Procedure, one or more areas, each 15 minutes; therapeutic exercises to develop strength and endurance, range of motion and flexibility
Missing copy of signed/dated treating physician's certification/recertification of the Physical Therapy (PT) plan of treatment for the billed DOS and daily PT log including times and units of service. Also need daily treatment note.

97140 Manual Therapy Techniques, one or more regions, each 15 minutes
Missing (1) the physician order for physical therapy, (2) the physical therapy evaluation, (3) the plan of care and (4) the treatment notes.

2008, November
97110 Therapeutic Procedure, one or more areas, each 15 minutes
Missing copy of signed/dated treating physician's certification/recertification of the Physical Therapy (PT) plan of treatment for the billed DOS and daily PT log including times and units of service. Also need daily treatment note.

97140 Manual Therapy Techniques, one or more regions, each 15 minutes
Missing (1) the physician order for physical therapy, (2) the physical therapy evaluation, (3) the plan of care and (4) the treatment notes.

97530 Therapeutic Activities, Direct, Patient Contact by Provider, Each 15 minutes.
Missing Physician (MD) order for Physical Therapy (PT), MD certification/recertification for PT, PT Plan of Treatment/Evaluation and PT notes to include minutes, Flow Sheet

2008, May
97110 Therapeutic Procedure, one or more areas, each 15 minutes
Missing copy of signed/dated treating physician's certification/recertification of the Physical Therapy (PT) plan of treatment for the billed DOS and daily PT log including times and units of service. Also need daily treatment note.

97530 Therapeutic Activities, Direct, Patient Contact by Provider, Each 15 minutes
Missing Physician (MD) order for Physical Therapy (PT), MD certification/recertification for PT, PT Plan of Treatment/Evaluation and PT notes to include minutes, Flow Sheet

97140 Manual Therapy Techniques, one or more regions, each 15 minutes
Missing (1) the physician order for physical therapy, (2) the physical therapy evaluation, (3) the plan of care and (4) the treatment notes.

97116 Therapeutic proocedure; gait training (includes stair climbing)
Missing daily treatment flowsheet that lists specific therapeutic activities/exercise performed and actual time involved performing each activity. Also requires certifcation and re-certification.

These findings from past audits are likely to guide the focus of future audits, not only with CERT but also with Medicare-RAC and Medicaid-RACs.

Government Review of Rehab in Nursing Homes

The Office of the Inspector General recently released a report about "questionable billing" which found: [Our] findings raise concerns about the potentially inappropriate use of higher paying RUGs, particularly ultra high therapy. The findings also indicate that the current payment system provides incentives to SNFs to bill for ultra high therapy and for high levels of assistance when these levels of care may not be needed. We recognize that the Centers for Medicare & Medicaid Services (CMS) is making several changes to the RUGs in fiscal year 2011. However, more needs to be done to reduce the potentially inappropriate and significant increases in payments for ultra high therapy and other higher paying RUGs.

Based on these findings, we recommend that CMS:

Monitor overall payments to SNFs and adjust rates, if necessary.

As CMS makes changes to the number of RUGs, it should vigilantly monitor overall payments to SNFs and adjust RUG rates annually, if necessary, to ensure that the changes do not significantly increase overall payments.

Change the current method for determining how much therapy is needed to ensure appropriate payments. The amount of therapy that the SNF provides to the beneficiary during the look-back period largely determines the amount that Medicare pays the SNF. CMS should consider several options to ensure that the amount of therapy paid for by Medicare accurately reflects beneficiaries’ needs. CMS should consider requiring each SNF to use the beneficiary’s hospital diagnosis and other information from the hospital stay to better predict the beneficiary’s therapy needs. In addition, CMS should consider requiring that therapists with no financial relationship to the SNF determine the amount of therapy needed throughout a beneficiary’s stay. CMS should also consider developing guidance that specifies the types of patients for whom each level of therapy, including ultra high therapy, is appropriate.

Strengthen monitoring of SNFs that are billing for higher paying RUGs. CMS should instruct its contractors to monitor SNFs’ use of higher paying RUGs using the indicators discussed in this report. CMS should develop thresholds for the indicators and instruct its contractors to conduct additional reviews of SNFs that exceed them. If SNFs from a particular chain frequently exceed the thresholds, then additional reviews should be conducted of the other SNFs in that chain.

While this has no direct impact on our hospital therapy services, it is one more indication that (1) CMS is focused on inappropriate payments to providers, and that (2) overutilization of therapy services is on their radar screens. We can expect that in one form or another, hospital and outpatient therapy services will feel a similar squeeze.