New Medical Care Networks Show Savings

Published: September 11, 2012
The New York Times

A new model for delivering medical care, one promoted by the federal health care law, holds promise for slowing the cost of treating the sickest, most expensive patients, according to a new study.


The sweeping law, enacted in 2010 and upheld by the Supreme Court this summer, encourages the creation of “accountable care organizations” — networks of hospitals, doctors groups and other health care providers that collaborate to keep a defined group of patients healthier. The groups share in the savings if they meet quality and cost targets.

The study, which is being published Wednesday in The Journal of the American Medical Association, found that a predecessor to accountable care organizations achieved particular savings in caring for patients eligible for both Medicare and Medicaid.

Many of those patients have multiple, severe health conditions and are especially expensive: The nation’s nine million “dual eligibles,” as they are known, make up 15 percent of the Medicaid population but account for 39 percent of the program’s spending.

In the predecessor program, a Medicare experiment that ran from 2005 to 2010, 10 doctors groups from around the country received bonus payments if they met quality targets and achieved lower cost growth compared with Medicare spending on other patients in their region.

The study, conducted by researchers from the Dartmouth Institute for Health Policy and Clinical Practice, found that the growth in spending per “dual eligible” patient slowed by $532 a year, or 5 percent, after doctors groups joined the demonstration program.

Over all, spending on dual eligibles in the program grew at only 60 percent of the rate of the control group.

“The fact that they saved any money at all is a pretty significant finding,” said Carrie H. Colla, the study’s lead author. “It shows promise in that they did significantly improve quality while modestly improving spending.”

The study found that for dual eligibles, the savings came largely from reducing hospital stays.

Savings for the overall patient population in the experiment was more modest: Spending per patient slowed by $114 a year after the 10 doctors groups joined the demonstration program.

The groups varied significantly in how much they spent per patient and how much they slowed the growth of spending over time. The doctors group that spent the most before joining the program — the University of Michigan Faculty Group Practice, based in Ann Arbor — also saved the most, an average of $2,499 per dual eligible patient annually.

But the group that spent the least on such patients before entering the program — Marshfield Clinic, in Wisconsin — also achieved notable savings, the study found, slowing the growth of spending per dual eligible patient by an average of $987 per year.

The findings come as accountable care organizations are forming around the country. According to the Department of Health and Human Services, morethan 150 such groups now serve about 2.4 million Medicare patients.

In the predecessor program, the Medicare Physician Group Practice Demonstration, participating doctor groups were eligible for up to 80 percent of any savings they generated if they could also show improvement on 32 quality measures.

(A version of this article appeared in print onSeptember 12, 2012, on page A22 of the New York edition with the headline: New Medical Care Networks Show Savings.)

Passport Health Plan Selects McKesson VITAL Nurse Advice Line Services

McKesson’s nurse advice will help 170,000 Medicaid members in Kentucky access the right health care at the right time

Business Wire | 12 Sep 2012 | 08:00 AM ET

BROOMFIELD, Colo., Sep 12, 2012 (BUSINESS WIRE) — Passport Health Plan, a provider-sponsored, community-based Medicaid managed care plan based in Louisville, Kentucky, has selected McKesson to provide nurse advice line services to approximately 170,000 Medicaid members. Available 24/7, the McKesson VITAL Nurse Advice Line service will play a pivotal role in directing callers to the appropriate level of care, helping members navigate the health care system, and improving access to doctors and other health care providers.

“At Passport Health Plan, we are committed to our mission, to improve the health and quality of life of our members. The McKesson VITAL Nurse Advice Line will help us live our mission by giving our membersimmediate access to speak with a registered nurse when they need medical advice.

This will give our members the information they need to get the right care at the right place and time,” said Dr. Steve Houghland, Chief Medical Officer for Passport Health Plan.

Averaging 25 years of experience, McKesson nurses use patented algorithm-based clinical assessment tools that help accurately direct callers to the right level of care. “The McKesson VITAL Nurse Advice Line delivers top-rated customer service, with a 94% user satisfaction rate and an average speed to answer a call of less than 30 seconds. By offering health plan members immediate access to experienced, highly trained nurses, we can helpfacilitate better health outcomes,” said Naoise Colgan, Vice President, Care Management Solutions at McKesson.

About Passport Health Plan Passport Health Plan is a unique public private partnership with the Commonwealth of Kentucky as a provider-sponsored, community-based, member-focused Medicaid health plan that serves more than 170,000 members in 16 Kentucky counties. The Plan has operated successfully over the past 15 years.

The counties of service include Breckinridge, Bullitt, Carroll, Grayson, Hardin, Henry, Jefferson, Larue, Marion, Meade, Nelson, Oldham, Shelby, Spencer, Trimble and Washington. Passport Health Plan is sponsored by the University of Louisville Medical School Practice Association, University of Louisville Hospital, Jewish and St. Mary’s Healthcare, Norton Healthcare, and the Louisville/Jefferson County Primary Care Association, which includes the Metro Louisville Department for Health and Wellness and Louisville’s two federally qualified health centers, Family Health Centers and Park DuValle. For additional information, please visit


About McKesson McKesson Corporation, currently ranked 14th on the FORTUNE 500, is a healthcare services and information technology company dedicated to making the business of healthcare run better. We partner with payers, hospitals, physician offices, pharmacies, pharmaceutical companies and others across the spectrum of care to build healthier organizations that deliver better care to patients in everysetting. McKesson helps its customers improve their financial, operational, and clinical performance with solutions that include pharmaceutical and medical-surgical supply management, healthcare information technology, and business and clinical services. For more information, visit


SOURCE: McKesson Corporation CONTACT: McKesson Health Solutions Michelle Malgesini, 303-664-6410 Copyright Business Wire 2012 -0- KEYWORD: United States

2,200 hospitals face Medicare pay penalty for readmissions

The rate reduction for too many repeat patient stays fails to account for socioeconomic factors and leaves poorer communities at a disadvantage, facilities say.

By CHARLES FIEGL, amednews staff. Posted Aug. 27, 2012.

Washington Medicare soon will begin penalizing hospitals for excess readmissions, which critics argue in some cases can stem from factors outside a facility’s or doctor’s control.

The health system reform law required Medicare to adopt a program to reduce 30-day readmission rates in hospitals. An Aug. 1 Centers for Medicare & Medicaid Services regulation codified the details of the program, revealing that Medicare will reduce payments by up to 1% for more than 2,200 hospitals, which comprise about two-thirds of U.S. facilities.


CMS developed a formula to assign each hospital a benchmark for excess readmissions in three categories — heart attack, heart failure and pneumonia. Those hospitals that exceed the readmissions ratio will lose a total of $300 million during the 2013 program year that begins Oct. 1. For hospitals that don’t improve, penalties will grow to a maximum of 2% for the 2014 program year and 3% for 2015.

A 2007 Medicare Payment Advisory Commission report concluded that more than 17% of hospital patients were readmitted within 30 days in 2005. A 2006 Commonwealth Fund Report projected that the Medicare program could save $1.9 billion a year if the national readmission rate were lowered to levels achieved by the best-performing facilities. Median 30-day hospital readmission rates for heart attack patients is 19.9%, 24.8% for those with heart failures and 18.4% for cases of pneumonia, CMS stated in the rule.

About two-thirds of U.S. hospitals stand to be penalized for excess readmissions starting Oct. 1, 2012.

Hospitals had argued that penalties should be assessed only for aspects they can control. The American Hospital Assn. and the Assn. of American Medical Colleges had asked CMS to consider socioeconomic factors that can lead to patients being readmitted. Facilities had suggested that rates be adjusted to account for numbers of Medicaid beneficiaries as well as for planned or unrelated readmissions. Other factors that need to be considered include patient access to follow-up health care services, such as availability of primary care physicians and ability to afford prescribed medicines, said Nancy Foster, AHA’s vice president of quality and patient safety policy.

“Hospitals will lose a substantial amount of money and find it more difficult to help those communities,” Foster said.

Poorer communities with hospitals facing the maximum penalties will be hurt by the new program, said Gregory Maynard, MD, senior vice president for the Society of Hospital Medicine’s Center for Hospital Innovation & Improvement. Some areas of the country where hospitals have low readmission rates, such as Utah and Idaho, will be spared.

In the final rule, CMS said it needs to examine the role that socioeconomic factors play in readmissions. The Medicare agency also says it wants to avoid adjustment factors that would create differing standards of quality for different patients. But hospitals will not receive the additional time they requested to lower readmissions before penalties are assessed starting in October.

“Since we believe that all hospitals should be working towards the goal of reducing readmissions on an ongoing basis, regardless of population, we believe that we do not need to postpone the implementation of the readmission payment adjustments in order to provide time to hospitals to implement readmission reduction programs,” CMS said.

SSM Health Care, based in St. Louis, operates 17 hospitals in Illinois, Missouri, Oklahoma and Wisconsin. More than half of SSM Health Care facilities will be penalized.

The hospital system has been working to reduce rates by improving care transitions, said Gaurov Dayal, MD, SSM Health Care’s chief medical officer. For instance, hospitals will arrange for a home health professional to visit chronically ill patients released after a stay for congestive heart failure. The health professional would work to ensure discharge instructions are being followed to help prevent a readmission.

Several factors can lead to readmissions, and no one solution will reduce readmissions to zero, he said. That is a fact he said the entire health care community must understand.

“It isn’t something that only a hospital can solve,” Dr. Dayal said. “We have a fragmented delivery care model that we’re trying to improve.”



How big will the Medicare readmissions penalty be?

The Centers for Medicare & Medicaid Services estimates that more than 2,200 hospitals will have their base Medicare payments reduced in 2013 by a new adjustment for excess readmissions. Total hospital pay will be decreased by 0.3%. A CMS analysis showed that urban hospitals in the mid-Atlantic and rural hospitals in the East South Central and West South Central regions will see the highest decreases.





Up to 0.09%


0.10% to 0.19%


0.20% to 0.29%


0.30% to 0.39%


0.40% to 0.49%


0.50% to 0.59%


0.60% to 0.69%


0.70% to 0.79%


0.80% to 0.89%


0.90% to 0.99%





Source: Final rule on Medicare hospital readmission payment policy, Centers for Medicare & Medicaid Services, Aug. 1 (