ACO study reflects cost savings and reduced readmissions

September 17, 2012 | Erin McCann – Contributing Writer and Associate Editor for Healthcare IT News


Accountable care organizations (ACOs) can deliver cost savings and reduce readmission rates, according to a recent study from the Dartmouth Institute for Health Policy and Clinical Practice

The study, published in the Sept. 12 issue of The Journal of the American Medical Association, examined the cost savings associated with the Physician Group Practice Demonstration (PGPD), a Medicare program that ran from 2005 to 2010 and closely resembled current ACOs.

Study analysis pegged the overall annual savings from this value-based payment model at $114 per Medicare beneficiary, and the overall annual savings for duallyeligible populations  –  that is, patients who qualify for both Medicare and Medicaid  –  at $532 per beneficiary.


Report authors said the cost component findings are significant, as the nation’s 9million dual eligibles comprise 20 percent of the Medicare population but account for 31 percent of its spending, and comprise 15 percent of the Medicaid population but 39 percent of its spending.

Readmission rates were also affected in the demonstration, with 30-day medical readmission rates decreasing 0.67 percent overall for both populations, and 1.07 percent for dually eligible beneficiaries. Moreover, surgical readmissions for dually eligible populations decreased 2.21 percent overall. With 990,117 Medicare and/or Medicaid beneficiaries included in the experimental group, and 7,514,453 beneficiaries in the control group, report authors noted that these numbers are statistically significant.

“The study shows promise for the new healthcare delivery system reforms,” said Carrie H. Colla, lead author of the study and assistant professor at The Dartmouth Institute for Health Policy and Clinical Practice. “And these reforms should align incentives for payers, providers and patients.”

Colla pointed out that the study was done to examine the cost savings benefits of a value-based ACO program, and the PGPD was a near perfect match.  “I would say the two fundamental characteristics of the ACO-type contract are pay-for-performance and shared savings,” said Colla. The PGPD and the new Medicare ACO contracts include both these things, she added, and the quality metrics are very similar. 

Physician groups participating in the demonstration could receive up to 80 percent ofsavings they generated. In the new ACO programs, savings are generally lower, between 50 to 70 percent.

Out of 10 participating physician groups, the University of Michigan Faculty Group Practice saved the most money, averaging out to $866 per person, per year for both populations. When examining the dually eligible patients, the practice’s savings were more marked, pegged at $2,499 per person, per year.

The Middletown, Conn.-based Middlesex Health System saw the least savings all around, actually expending $749 per beneficiary for both populations and $598 for the dually eligible.?As far as non-dually eligible beneficiaries, PGPD savings were not as substantial, with some organizations seeing savings of only $59 per person, per year. However, some organizations, such as Wisconsin’s Marshfield Clinic and the University of Michigan Faculty Group Practice, observed savings of more than $500 per patient, per year for non-dually eligible beneficiaries.

Colla emphasized the significant cost and readmission improvements for the duallyeligible population. She said the study results are “a marker for populations that have higher rates of chronic disease,” and really show that “ACOs have the potential to improve healthcare and reduce spending for [the dually eligible] population.”

Overall, Colla said the study supports value-based healthcare for certain groups and can have a marked effect on complex patients in the system.

“The current fee-for-service payment system has contributed to the fragmented, poorly coordinated care that many patients, especially those who are sick, experience every day,” said Elliott S. Fisher, MD, report author and co-principal investigator of the Dartmouth Atlas Project in a Dartmouth press release. “New payment models like ACOs are intended to encourage providers to coordinate care by offering them a share of any savings achieved when they improve care. These results indicate that when organizations really try to adapt to these new models, they can benefit their patients’ lives and theirbottom lines.”



Dual-eligibles market creates opportunities for physician practices

The managed care market for the Medicare-Medicaid population could range from $86 billion to $183 billion in the next five years, Booz & Co. estimates.

By JENNIFER LUBELL, amednews staff. Posted Sept. 14, 2012. 

Washington- Physicians have new opportunities to partner with health plans to take advantage of the rapidly growing private market for beneficiaries who are eligible for both Medicare and Medicaid, according to a partner at a global management consulting firm.

“There’s been a tremendous interest and appetite around the so-called dual-eligibles population,” said Sanjay Saxena, MD, a partner in the North American health practice at Booz & Co. and co-author of a new Booz report ( in_the_Medicaid_and_Duals_Markets.pdf).

Several years ago, discussions about changes in the private insurance market were all about health insurance exchanges, then about accountable care organizations, and “now it’s about the duals,” Dr. Saxena said.

The Booz report discusses ways in which managed care companies could leverage both the Medicaid and dual-eligibles markets by identifying states that present the best growth opportunities and then defining their operating models or “choosing a way to play” in these markets. Managed care organizations, for example, could enable care delivery by supporting or delegating care management activities to medical groups or hospitals, or going so far as to own or manage networks of hospitals or physician groups in an effort to integrate care management and create incentives to drive care coordination.

As managed care organizations engage in these models, physician groups also should think about how they want to participate in the growing Medicaid and dual-eligibles marketplaces, Dr. Saxena said. He said some medical groups may be proactive and well-positioned enough to reach out to health plans and say, “Look, we build medical homes, we have care coordinators, and have the kind of outreach and relationships with the community where wefeel we could share in the incentives and savings and benefits and high-quality care.”

As high utilizers of care, dual-eligibles have complex health needs and rack up roughly $300 billion in costs annually to Medicare and Medicaid. These challenges notwithstanding, many health plans have been viewing government-subsidized markets as very attractive opportunities, Dr. Saxena said. “For physicians, whether we like it or not, those are the markets that continue to grow in size.” In looking at future avenues for growth, analysts have seen that employer-sponsored insurance markets have been declining steadily, and while the individual market is expected to expand through theAffordable Care Act’s insurance exchanges, that’s going to be a difficult market to navigate as well, he said.

WellPoint’s recent acquisition of AmeriGroup and Aetna’s purchase of Coventry Health Care are two developments that illustrate a growing interest in Medicare and Medicaid managed care, Dr. Saxena said. InAetna’s case, “the major driver was greater exposure in the government market. For WellPoint and AmeriGroup, it’s a very similar story.” WellPoint and its competitors have shown recent interest in managing care for the dual-eligible population.

The health system reform law’s expansion of Medicaid, moves by states toward Medicaid managed care to get budgets under control, and a series of new federal demonstration projects that aim to find more efficient ways to manage the dual-eligible population “are three separate but related things that are creating this opportunity,” Dr. Saxena said. During the next five years, Booz & Co. estimates that the managed care market size for dual-eligibles alone could range from $86 billion to $183 billion.

Copyright 2012 American Medical Association. All rights reserved.

Doctors billing Medicare patients at higher rates, report finds

By NBC News staff

Thousands of doctors and other medical professionals have added $11 billion or more to fees for elderly Medicare patients over the last decade by choosing to use more expensive billing codes and ignoring cheaper ones, a new study says.

The report “Cracking the Codes” from the non-profit investigative journalism organization Center on Public Integrity analyzed Medicare claims for a year and found thousands of providers “upcoding,” which is “the practice of charging for more extensive and costly services than delivered, according to Medicare experts, analysis of the data and a review of government audits.”

Controlling rising Medicare costs has been a hot topic in the presidential campaign. The center’s report, which was released Saturday, suggested that reforms should start with a close look at the way hospitals and doctors submit bills for patient care. For example, the study found that 7,500 doctors charged the two most expensive paying codes for three out of four visits in 2008, up sharply from the number who did so at the beginning of the decade.  The CPIs’ report said medical groups argue that treating seniors has grown more complex and time-consuming because of new technology and because seniors are living longer.  But the report found little evidence that Medicare patients as a whole are older or sicker than in past years, or that the amount of time doctors spent treating them on average was rising.  Health care providers also said the rise in fees may be a reaction to years of under-charging, and that the higher costs reflect more accurate billing. The fees are based on a system of billing codes that is structured to make higher payments for treatments that take more time and effort.  Medicare regulators worry that the coding levels may be accelerating in part because of increased use of electronic health records, which make it easy to create detailed patient files with just a few mouse clicks, according to the report.  “This is an urgent problem,” Dr. Mark McClellan, who directs the Engelberg Center for Health Care Reform at the Brookings Institution in Washington, told the CPI. McClellan, a former director of the Centers for Medicare and Medicaid Services, or CMS, said the agency must send a message that it “won’t stand by and do nothing … that they are paying attention to this.”

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 (

Obama Rated Higher in Trust on medicare

August 23, 2012

In Poll, Obama Is Given Trust Over Medicare


NY Times

The Romney-Ryan proposal to reshape Medicare by giving future beneficiaries fixed amounts of money to buy health coverage is deeply unpopular in Florida, Ohio and Wisconsin, according to new polls that found that more likely voters in each state trust President Obama to handle Medicare.

The Medicare debate was catapulted to the forefront of the presidential campaign this month when Mitt Romney announced that his running mate would be Representative Paul D. Ryan of Wisconsin, who is perhaps best known for proposing a budget plan, supported by Mr. Romney, to overhaul Medicare to rein in its costs.

After more than a week of frenzied campaigning on the issue, Medicare ranks as the third-most crucial issue to likely voters in Florida, Ohio and Wisconsin — behind the economy and health care, according to new Quinnipiac University/New York Times/CBS News polls of the three swing states. The Republican proposal to retool the program a decade from now is widely disliked.

Roughly 6 in 10 likely voters in each state want Medicare to continue providing health insurance to older Americans the way it does today; fewer than a third of those polled said Medicare should be changed in the future to a system in which the government gives the elderly fixed amounts of money to buy health insurance or Medicare insurance, as Mr. Romney has proposed. And Medicare is widely seen as a good value: about three-quarters of the likely voters in each state said the benefits of Medicare are worth the cost to taxpayers.

“On Medicare, I don’t like the Paul Ryan plan,” said Beverly McLaren, 72, an independent from St. Petersburg, Fla., who said in a follow-up interview that Medicare worked well for her and that she planned to vote to re-elect Mr. Obama. “I can’t see how it will help at all, and we’ll have more out-of-pocket expenses, and I’m not really clear how it will work.”

About 60 percent of independent voters in the three states support keeping Medicare as it is today, as do at least 8 in 10 Democrats. Republicans are closely divided on the issue in Florida and Ohio, but in Wisconsin, Mr. Ryan’s home state, a majority of Republicans support changing it along the lines he has proposed.

The polls — the first in this series of swing-state surveys taken since Mr. Ryan joined the Republican ticket — showed that at least in Mr. Ryan’s home state, he may be helping Mr. Romney. A majority of likely Wisconsin voters said they approved of the way Mr. Ryan has handled his job in Congress, and 31 percent said his selection made them more likely to vote for Mr. Romney, while 22 percent said it made them less likely to do so. The race appears to have tightened a bit in both Florida and Wisconsin in recent weeks.

In Florida and Wisconsin, where Mr. Obama had led Mr. Romney by six percentage points in polls conducted before the selection of Mr. Ryan, the race is essentially tied. Mr. Obama is ahead in Florida by 49 percent to 46 percent and in Wisconsin by 49 percent to 47 percent — differences within the polls’ margin of sampling error of plus or minus three percentage points. Mr. Obama retains a six-point advantage in Ohio, where he leads Mr. Romney 50 percent to 44 percent, unchanged from last month’s survey.

The polls were largely conducted before the uproar over remarks on rape and abortion made by a Republican Senate candidate in Missouri, Representative Todd Akin, which officials in both parties agree could alter the dynamic of the race, especially among women. Mr. Obama enjoys solid support of a majority of women in each of these three states, the surveys found, but in Wisconsin his healthy lead among women has narrowed since the last poll and now trails the levels of the 2008 election, when he won the state.

The polls’ findings on Medicare underscore the risk Mr. Romney took when he chose Mr. Ryan to be his running mate. Mr. Ryan rose to prominence among conservatives who lauded his willingness to propose unpopular measures to balance the budget and cut the rising costs of Medicare — costs officials in both parties agree are on an unsustainable path. But while the polls found that Mr. Romney enjoyed a wide advantage in all three states on the question of who is better equipped to tackle the budget deficit, it found that he lagged on other questions voters feel strongly about — including who is better equipped to handle health care, Medicare and foreign policy. Some voters give them credit for campaigning on a politically contentious issue.

“It may be political suicide, but at least Romney and Ryan are willing to stand up and say we can’t keep shoveling money into this program and other programs like this,” said Michael Behnke, 59, an independent from Solon, Ohio.

When it comes to the running mates, Mr. Ryan comes out ahead with independents. On balance, they feel more favorable toward Mr. Ryan but have a more negative view of Vice President Joseph R. Biden Jr., who has drawn criticism in recent days for saying that Mr. Romney’s policies would unchain the financial sector and “put y’all back in chains.” But many voters in Florida and Ohio said they did not yet know enough about Mr. Ryan to form an opinion — and many in all three states said the choice of running mate would have no impact on their votes.

The polls were conducted by telephone (landline and cellphones) from Aug. 15 through Tuesday among 1,241 likely voters in Florida, 1,253 likely voters in Ohio and 1,190 likely voters in Wisconsin. All three are states Mr. Obama won, but where Republicans have since made gains in state and local elections.

Mr. Romney has taken pains to stress that his Medicare plan would not change the benefits for people 55 or over. But voters over 55 have strong feelings about it, including in Florida, the electoral-vote-rich state where Republicans will hold their convention next week.

Jim Ryan, 75, a retired executive from Bradenton, Fla., who is an independent, said it was an important issue because he and his wife were on Medicare.

“We’re enjoying the benefits now, and the Paul Ryan program of making it into a voucher system would change things,” he said. “I know it’s not intended to apply to people in our age group, but I’m concerned about the future. I think it’s a wonderful program, and I’ve got middle-aged children and I don’t want to see the program destroyed. It’s probably one of the best programs sponsored by the federal government that we’ve ever had. It does have to be made fiscally sound, but there are ways to do that without destroying the whole concept or the substance of it.”

Mr. Romney has been attacking Mr. Obama for counting on $716 billion in Medicare savings to help pay for his health care law — savings that Mr. Ryan also counted on in his budget plan but which Mr. Romney has promised to restore. The poll underscored how unpopular deep cuts to Medicare are.

Only about a tenth of the voters in each state said they would support major reductions in Medicare spending to reduce the federal deficit. Nearly half of the voters in each state said they would support minor reductions, and about a third said they would not support any reductions at all.

Reporting was contributed by Marjorie Connelly, Allison Kopicki, Marina Stefan and Megan Thee-Brenan.

NY Times – Medicare Issue Hot in Campaigns

August 14, 2012

Two-Way Jabs on Medicare Recast Races for Congress


WASHINGTON — In one tight Florida House race, a hastily assembled TV commercial to begin airing Wednesday takes aim at a top target of Democrats, highlighting his votes “to end Medicare as we know it.”

Republicans in Montana are advertising on behalf of their Senate candidate, noting his stance against a Republican plan “that could harm the Medicare program.” House Republican strategists are advising their lawmakers to try to stay on the offensive over Medicare and steer clear of words like privatization.

The fight over Medicare, the popular federal health care program for older Americans, is rapidly intensifying in House and Senate races around the nation after the selection of Representative Paul D. Ryan as the Republican vice-presidential candidate. Congressional Democrats and some analysts say that development could transform the fight for control of Congress, given his role as the author of a House-approved budget plan that would reshape Medicare.

“A House budget plan is a House budget plan,” Senator Patty Murray of Washington, the chairwoman of the Democratic Senatorial Campaign Committee, said Tuesday. “But all of the sudden the architect and definer of that has the potential of sitting in the White House, and that is really frightening to people.”

Despite political anxiety expressed privately by some Republican strategists about Mitt Romney’s choice of Mr. Ryan, other top Republicans say that they welcome the fight over Medicare and that they believe they can win a national debate over the future of entitlement programs. They intend to paint the Democratic Party as the one putting Medicare at risk by failing to come up with a plan to keep it solvent as a wave of baby boomers approaches retirement age.

Mr. Romney said Tuesday that he would, if president, restore Medicare cuts that both President Obama and Congressional Republicans have backed and unveiled a new campaign advertisement trying to drive home that point.

“Paul Ryan and Republicans are the only ones who have stepped up with proposals,” said Senator John Cornyn of Texas, head of the National Republican Senatorial Committee. “These issues were going to come up anyway, and you might as well have your best and most articulate spokesman on the field making the case for it, and that is Paul Ryan.”

Mr. Ryan’s new prominence has abruptly thrust Medicare into the top tier of issues, but it was always going to be a theme in the 2012 House and Senate elections and was already playing a role in advertising.

Democrats had long intended to assault Republicans who voted for the Ryan budget in 2011 and 2012 and were trying to find a way to figuratively put Mr. Ryan on the ballot with his colleagues. Now Mr. Ryan will literally be on the ballot, and top Democratic strategists say that in picking him, Mr. Romney has given Medicare a huge boost as a driving issue that could lift Democrats in dozens of close races.

“Mitt Romney has given us a lot to work with,” said Representative Steve Israel of New York, chairman of the Democratic Congressional Campaign Committee. “It was becoming challenging to try to nationalize the Ryan budget, and Mitt Romney just handed that to us.”

House Democrats moved quickly on Tuesday to try to cash in. In a high-profile South Florida race, the Democratic candidate, Patrick Murphy, prepared a new ad against the Republican incumbent, Allen B. West, that highlighted Mr. West’s two votes for the Ryan budget while asserting that Mr. Murphy would “fight for seniors, protect Medicare.”

While the new commercial does not specifically mention Mr. Ryan, strategists said it was fashioned to capitalize on his joining the race for the White House. It is also the leading edge of what is likely to be a flurry of ads, Web activity and aggressive political advocacy as the two parties compete to shape the narrative on Medicare.

In addition to helping bankroll Mr. Murphy’s ad, the Congressional committee began automated phone calls in the districts of 50 Republican incumbents who voted for Mr. Ryan’s budget, which would turn Medicare into a voucher program for future retirees. In Nevada, a labor group is buying online ads that say the Romney-Ryan ticket would drive up costs for older Americans.

As Democrats pushed the idea of a political windfall, top Republicans say they believe the worry about Mr. Ryan is overheated. They say they were already bracing for a Medicare line of attack and are more than ready for it.

“We’ll take any opportunity to talk about Obamacare and the Medicare cuts that were included in it,” said Paul Lindsay, a spokesman for the National Republican Congressional Committee, who said that Republicans had learned how to contend with the issue after having debated it for more than two years already.

In a private message to candidates, House Republican leaders sought to allay any concern by providing material on how to respond to inquiries on Medicare, suggesting that candidates make the case that Democrats have their own lightning rod of a running mate: the new health care law.

The message also advises Republicans to choose their words carefully and emphasize “strengthen” and “protect” over phrases like “every option is on the table.”

Despite the Republicans’ confidence in their ability to counter the Democrats, the Senate race in Montana offered evidence that some party leaders recognize that the Ryan budget could be a liability.

The state party there paid for an advertisement on behalf of Representative Denny Rehberg, a Republican who is in a close race with Senator Jon Tester, a Democrat. It lauds Mr. Rehberg for his votes against the Ryan budget, a stance that the advertisement said showed his independence in partisan Washington.

The ultimate impact of the Ryan pick on Congressional races will become clearer in the days ahead.

“Certainly more Democrats are more enthusiastic than they were last week,” said Jessica Taylor, a senior analyst for the nonpartisan Rothenberg Political Report. “But whether it moves a ton of races, we are going to have to wait and see.”

Michael D. Shear and Sarah Wheaton contributed reporting from New York.


Medicare pilot program meant to revise policy that leaves seniors with costly bill

from the Washington Post

By Susan Jaffe, Published: August 9

Medicare has launched a pilot project to test whether it can relax hospital-payment rules to help the growing number of seniors who are shelling out thousands of dollars for follow-up nursing-home care.

The issue involves what should be an easy question: Is the Medicare beneficiary an inpatient or an observation patient?

The answer can mean the difference between Medicare-covered follow-up nursing-home care or a senior facing an unexpected whopper of a bill.

Though many seniors stay in the hospital for several days and are in a regular hospital room while being treated, they don’t always know that the hospital has classified them as an observation patient, which is considered outpatient care.

Under Medicare rules, patients must have at least three days in the hospital as an inpatient — not just for observation — to qualify for follow-up care in a nursing home. In addition to generally higher hospital co-payments, hospital observation patients can be billed any amount by their hospital for the routine maintenance drugs they need. Some have reported charges of $18 for one baby aspirin and $71 for one blood pressure pill that costs 16 cents at a local pharmacy.

This may all come as a surprise because hospitals don’t have to tell Medicare beneficiaries they are in observation care.

Currently, if Medicare decides that a hospital has billed it for inpatient treatment of a patient who should have received observation services, the facility can lose its entire payment.

That may prompt hospitals to put too many people in observation care, Medicare said in the rule announcing the pilot program.

Under the pilot program, the 380 hospitals participating will be able to rebill Medicare for observation services if claims for inpatient care are rejected. Medicare officials want to see if that takes some of the pressure off hospitals.

Advocates for seniors say the pilot project won’t help observation patients.

Toby Edelman, a lawyer at the Center for Medicare Advocacy, said the classification should be scrapped.

“It’s pretty arbitrary,” she said. “People get the same care whether they are inpatient or observation, especially when they are co-mingled in the hospital.”

The center has filed a lawsuit against the government to eliminate observation care.

A Medicare spokeswoman declined to respond to questions about the project or provide a list of the participating hospitals because of the litigation.

Medicare officials are also asking for feedback on whether to tighten the rules for observation care, including setting a time limit or specifying which diagnoses require a full hospital admission.

Medicare recommends that patients be in observation care for no more than 24 to 48 hours. The number of patients in observation care beyond 48 hours more than doubled, to 7.5 percent, between 2006 and 2010, Medicare said.

During the three-year pilot program, if Medicare determines that an inpatient level of care was inappropriate, the participating hospitals will be able to resubmit bills to Medicare for each treatment or procedure the patient received, as if that patient were an observation patient. The hospitals will receive 90 percent of the allowable Medicare payment for these services. In return, the hospitals give up the right to appeal to Medicare for the full inpatient payment.

The pilot program doesn’t go far enough for the American Hospital Association.

“It is limited to a small fraction of hospitals affected by the policy, underpays hospitals for care provided and requires hospitals to waive all appeal rights for these claims,” spokeswoman Alicia Mitchell said.

Kaiser Health Newsis an editorially independent program of the Henry J. Kaiser Family Foundation, a nonprofit, nonpartisan health policy research and communication organization not affiliated with Kaiser Permanente.

Medicare fraud busters unveil command center

Medicare fraud busters unveil command center


BALTIMORE (AP) — Medicare’s war on fraud is going high-tech with the opening of a $3.6 million command center that features a giant screen and the latest computer and communications gear. That’s raising expectations, as well as some misgivings.

The carpeting stills smells new at the facility, which went live a week ago in a nondescript commercial office park on Baltimore’s outskirts. A couple dozen computer workstations are arrayed in concentric semicircles in front of a giant screen that can display data and photos, and also enable face-to-face communication with investigators around the country.

Medicare fraud is estimated to cost more than $60 billion annually, and for years the government has been losing a game of “pay and chase,” trying to recoup losses after scam artists have already cashed in.

Fraud czar Peter Budetti told reporters on a tour this week that the command center could be a turning point. It brings together in real time the geeks running Medicare’s new computerized fraud detection system with gumshoes deployed around the country. Imagine a kind of NCIS-Medicare, except Budetti says it’s not make-believe.

“This is not an ivory-tower exercise,” Budetti said. “It is very much a real-world one.”

But two Republican senators say they already smell boondoggle.

Utah’s Orrin Hatch and Oklahoma’s Tom Coburn say Medicare’s new computerized fraud detection system, a $77-million investment that went into operation last year, is not working all that well. In a letter to HHS Secretary Kathleen Sebelius, they questioned spending millions more on a command center, at least until the bugs get worked out.

“Institutionalizing relationships through establishing a (command) center may be useful, but if huge sums of money have indeed been spent on a video screen while other common-sense recommendations may have not been implemented due to ‘resource concerns,’ this seems to be a case of misplaced priorities,” wrote Hatch and Coburn. Insiders are telling them the screen alone cost several hundred thousand dollars, the senators say.

The two Republicans may have more than congressional oversight in mind. In an election year, Medicare fraud is an issue with older voters because it speaks to the Obama administration’s stewardship of the program.

Responded Budetti: “Our expectation is that this center will pay for itself many times over.”

Conducting what amounted to her first formal inspection on Tuesday, HHS Secretary Sebelius set the bar high for the command center, nothing less than the end of “pay and chase.”

“Preventing fraud and abuse is what this effort is about,” she said.

The government’s new antifraud computer system aims to adapt tools used by credit card companies to stop theft from Medicare and Medicaid. It was launched with great fanfare last summer. But by Christmas, it had stopped just one suspicious payment from going out, for $7,591. Administration officials say that shouldn’t be the only yardstick, and the system has made other valuable contributions.

Sebelius spoke with three groups of staffers during her visit Tuesday. One group was responsible for developing computer models to query billing data for suspicious patterns; another in charge of investigating data generated by the computer models, looking for mistakes as well as real fraud; and a third handling coordination with law enforcement around the country. The staffers said they expect the coordination to cut the time it takes to investigate suspected fraud schemes from months to days and weeks.

Hatch’s office says development of the computer models has lagged. Command center staffers told Sebelius the first-year goal is to have 40 such computerized anti-fraud queries to sift through millions of incoming claims.

The administration must report to Congress on the antifraud computer system later this year, an assessment that will first be independently reviewed by the Health and Human Services inspector general’s office.

Hatch and Coburn say they have repeatedly pushed the administration for details and “the responses have been polite, but vague.”

Medicare scams have grown into sophisticated networks where crooks file millions of dollars in bogus claims and take off with the money. Sometimes they even manage to flee abroad to countries where the feds can’t touch them.

47th Birthday – Medicare & Medicaid

Monday, July 30, 2012

Happy Birthday MEDICAID and MEDICARE!

 From Longterm care leader

Today marks the 47th anniversary of Medicare and Medicaid. President Lyndon B. Johnson signed both programs into law on July 30, 1965.  You can read LBJ’s speech at the signing ceremony, listen to his taped conversations and find a brief history of the programs here.

The Medicare bill had been hotly debated in every Congress for 13 years before it was passed.  Since its inception, Medicare has helped provide health care coverage to millions of our nation’s elderly.  Today, Medicaid is an important payment source for our nation’s seniors and persons with disabilities.  According to AARP, over 40 million people currently rely on the Medicaid program; this includes 64% of nursing home patients and 13% of assisted living residents who need the program to help pay for their everyday care.

Medicare and misinformation

Columbia Journalism Review

Is my premium rising? A beat memo for reporters

By Trudy Lieberman

The Affordable Care Act (ACA), passed in 2010 and recently ruled constitutional, changes the rules to require even more seniors to pay higher Part B premiums. It did that by freezing those income thresholds used to determine who pays more. Before the change, the threshold rose with the rate of inflation; now that the threshold is frozen, more people will be affected as their incomes inflate—at least from 2011 through 2019 when the old rules are scheduled to return By 2019, about 10 percent of all seniors will be paying higher Part B premiums.

The ACA also affected premiums seniors pay for Part D benefits—their drug coverage. And as with Part B, seniors with higher incomes will pay higher premiums for this coverage. From 2006, the time the drug benefit began, to 2011, premiums varied by which drug plan a senior chose, but seniors enrolled in the same plan within the same region of the country paid identical premiums. Now they don’t. This year about 3 percent of seniors who have the drug benefit (not all do) pay higher premiums; by 2019, about 8 percent will. This year the average monthly Part D premium is about $31, although the actual premiums also vary by the kind of plan, which is provided by private insurers. (Unlike other Medicare coverages, private insurers provide the drug benefit). Monthly premiums range from $15 to about $132.

Why the changes? Increased revenue from higher premiums along with cuts to Medicare—mostly in the form of payment reductions to hospitals and other providers—are part of a package of savings experts hope will reduce the cost of the Medicare program.

Higher premiums for Parts B and D also accelerate the shift occurring all across the healthcare system requiring consumers to pay more for their care. Some proposals floating around Congress would speed up the cost shift even more, by requiring even more seniors to pay higher Part B and Part D premiums. Income thresholds would be frozen after 2019, or perhaps permanently. Other proposals would increase the amount of healthcare expenses beneficiaries would have to pay out-of-pocket. The media haven’t touched those hot buttons yet, but seniors listening to the candidates might just want to know about them (I will write about them in coming days).

For now the conclusion of the Kaiser Family Foundation is a good place for reporters to start their reporting.

If the income thresholds are frozen over a longer period of time, then a growing share of the elderly and disabled people who would not be considered high income by today’s standards would face higher premiums and as the income-related premium amounts increase over time, they would consume a larger share of income.

So: Premiums for both Part B and D are rising, in order to reduce costs to Medicare, and as a result of actions by both political parties.

Who can afford these higher premiums and who can’t is an important line of inquiry, and more useful to readers than simply repeating political charges and countercharges.