Monday, November 16, 2015

More Rules, More Regulations

The current nursing home surveyors' manual is more than 700 pages.

Apparently, that is not enough.

The Obama administration has draft a new set of regulations covering a wide range of topics. A few may be helpful, many not so much.

The administration thinks it may take up to a year to get the regulations in place.

Stay tuned.

The IRS Muddle

Take one very complex health care law and mix it with the complexity and confusion of the Internal Revenue Service, and what do you get?

Monday, September 21, 2015

Get ready, get set,.................?

October 1st marks the transition to ICD-10. We will roll from using about 13,000 ICD-9 codes to using 68000 ICD-10 codes.

Why? Well, the Europeans do it and ya know they are so much more sophisticated than we are.

Layered on top of a less than successful EMR roll out, this has the potential to be a first rate disaster.

Physician offices will be allowed a year of grace, which may or may not work any better than a cold turkey transition.

For physician offices, the standard will be "close counts." Amazing.

We will be watching this carefully.

Saturday, August 1, 2015

Grading Obamacare

The Affordable Care Act (nee Obamacare) is five years old and controversy still rages on many fronts. The Supreme Court has ratified enough of the Act (mandatory Medicaid expansion was a loser) to keep the Act in place for the foreseeable future, but the nitty gritty details still need attention.

The Act is wildly complicated and convoluted, making implementation incredibly difficult. the Obama administration has displayed an incredible lack of administrative skill and an inability to complete projects in a timely manner. was a symptom of a much bigger problem.

So, the grade card:

Expand coverage

Overall, in process, B-

Medicaid, out of Obama’s control

Disrupt and reform health insurance markets

In process, much more to do, outcome uncertain, C-

Mega merger in process, apparently antitrust is dead?   D

Disrupt and reform employer-employee relationships

In process, hard to measure impact, much more to do, outcome uncertain, C-

“Cadillac tax” – hated by both business and unions, that says something, D

Disrupt and reform provider system, disrupt and reform cost structures

In process, future uncertain, bundling moves forward, D 

Innovation driven by providers, B+

Rural healthcare – big trouble, D


Late with new regs, F

Disrupt and reform information systems (EMR) *

In process, “meaningful use”  a mess, high cost, C-

Disrupt and reform information systems (ICD-10 coding changes) *

Pending October 1, outcome uncertain, providers worried, I for incomplete

* technically not a part of the Affordable Care Act

Wednesday, June 24, 2015

Where Are We At? June 2015

The nation awaits the Burwell decision from the Supreme Court.

While this decision could negatively impact the Affordable Care Act, it may not have such a big impact on health care reform.

So what is the difference?

Health care reform is a bit like an avalanche, once it was started by ACA it picked a momentum of its own.

Reform was driven by ACA, but is no longer totally dependent on ACA. We cannot turn back the clock. We cannot return to 2010, with or without ACA.

Friday, June 5, 2015

Medicare ACOs - The Next Generation

The first generation ACOs, the so-called Pioneer model, have been a minor success.
The Affordable Care Act needs ACOs to be big success in order to achieve long-term goals.

The next generation of Medicare ACOs will allow bigger rewards for the ACO participants, as long as the participants are willing to share risk.

CMS has been tinkering with the regulations, finally published on June 4, 2015, for fear the first generation might drop out and the second generation might be a bust.

Stay tuned.

Thursday, April 16, 2015

SGR is Dead, Long Live MIPS!

Passed in 1998, the Sustainable Growth Rate (SGR) system had been “patched” 17 times, as it was an orphan system no one wanted to implement. Lobbyists feasted on the ritual maneuvering to defer SGR because no one could justify cutting Medicare physician fees.

In a collision of politics, problems and opportunities, and driven by the Affordable Care Act, the feds have now passed a reasonable interim solutions to the problem of  Medicare physician fees.

Oh, and no delay on ICD-10.

The political bargaining chips included a two year extension for funding CHIP (Children’s Health Insurance Program) and also increases to seniors’ out-of-pocket expenditures. The bill also gives a few years of respite to post-acute care facilities facing reimbursement cuts.

The package fell short on being revenue neutral but provides physicians and Congress with a five year respite from the ridiculous SGR bickering. This issue is not finished though, but it is a starting point on a different path.

Merit-Based Payment Incentive System (MIPS)

The new program starts with a five year fee schedule, with .05% increases each year. No much, but much better than a 21.5% cut. Payments to physicians will be adjust based on MIPS data starting in 2019 and running through 2025.

Key take away – alternate payment systems are coming - fast.

MIPS folds in and improves  three current programs:
1) the Physician Quality Reporting System (PQRS)
2) the Value-based Modifier (VBM), and
3) the EMR meaningful use rules

And what are the pieces of the MIPS puzzle?  Quality, resource use, EMR meaningful use, and clinical practice management headed for alternate payment methods.

So in one fell swoop the feds have folded  many of the pet theories and pet projects for improving results and lowering costs into the new era of MIPS.

Let's not be too cynical, this could work, or at least have some major positive impacts.

The MIPS payment adjustment process is incredibly complicated, too complicated for a brief explanation. The system will push alternate payment methods very hard, and will  push physician risk sharing models.

Make no mistake, this is a giant piloted lab experiment looking for a sustainable model for physician reimbursement. The next ten years are going to be very difficult but very interesting.

The next ten years will be really interesting.

Saturday, March 7, 2015

The Anthem Hack

Anthem Inc., the giant health insurer and service company for many Blue Cross and Blue Shield plans, was subject in January to what may be the largest data hack ever.

Anyone with a primary or secondary plan from any of these carriers may have data in jeopardy.

The find out what Anthem Inc., is doing to protect victims log on to

cross posted:

Thursday, March 5, 2015

Disruption is Disruptive!

The hottest word in business today is “disruption” as in “the I-phone disrupted the cell phone business” or “Uber is disrupting the taxi cab business.”

The Affordable Care Act was clearly intended to be disruptive, Obama administration denials to the contrary. The administration has quit with the denials, finally, but has never really informed the general public how massive the disruption has been and will be.

The ACA was designed to disrupt most of clinical medicine, including the physician-patient relationship, but we really do not talk about that so much.

One theory floated by ACA supporters is a massive wave of innovation has been started that will eventually creates higher quality and lower cost in U.S. health care.

Good news – there is a great deal of innovation in the system, sort of a do it to survive operation.

Bad news – not every practice can be the Mayo Clinic, with primary care and rural care seemingly on the short end of the innovation train.

Disruption sometimes fails – think Pontiac Aztek or Windows 8. There are no guarantees, and the stakes here are incredibly high.

Tuesday, December 16, 2014

Comments on "Gruber-gate"

Professor Jonathon Gruber of M.I.T. has been at the center of a firestorm. Gruber is a highly respected health care economist who was instrumental in developing the Massachusetts (aka Romneycare) health care system and the Affordable Care Act (aka Obamacare).

What Gruber has in intellectual skills he lacks in political savvy. Gruber is seen on several videos ruminating about the passage of the Affordable Care Act, about how the inside politics worked, a lack of transparency and how the Act was massaged through the system to take advantage of “stupid” voters. Some comments:

Did ACA pass due to a lack of transparency?

Not in the sense described by Gruber. ACA passed because Democrats had control.

What sense then?

 ACA was so complicated and confusing no amount of transparency would have mattered.

Was ACA pitched to the voters?

Only to elected representatives. Or at least the elected Democrats. Or their staffs anyway.

Did the elected representatives read and understand the legislation?

According to former Speaker Nancy Pelosi, no. This seems credible. Not enough time.

Why is ACA so complicated?

A simple approach would have allowed direct targeted opposition. ACA is a cauldron of incentives, disincentives, and various sorts of social engineering. The bill is a giant lab experiment with many, many pieces and parts, a sort of Rube Goldberg health care machine.

Will the ACA work as intended?

Too early to tell, especially for medical providers and employers. The phase-in was designed to take many years, has been rocky and is now behind schedule.


Do the Republicans have a better plan?

No, the GOP has no policies that could be called a “plan.”


Monday, October 20, 2014

PPACA Problems

In the political season politicians continue to use ACA as a ping pong ball, slapping it back and forth in classic playground "is to, is not" style.

Is PPACA a major success, a work in process or a giant flop?

We vote for work in process with major reservations.

Pro-PPACA forces tend to emphasize new patient coverage, while anti-PPACA forces tend to emphasize screaming headlines focused on problems.

So what are the problems?

Based on intense interactions this year with providers across the nation we have compiled a list and will discuss each in a future post.

What's on the top of the list?

Deferred care due to higher co-pays and deductibles, for both exchange and private market insureds.

What's else is on the problem list?

employer confusion

IRS chaos (forms, instructions, calculations, etc.)

primary care overload

late regulations and implementations

the exchange backend function

the integration stampede

Pioneer ACO disappointment

problems with payment innovations

We will explore these problems and more between now and the end of the year.

Comments always welcome.

Saturday, July 19, 2014

High Tech Crystal Balls – Predictive Analytics

Data! Big Data! Bigger Data!

“Big data” and data analytics are all the rage. Moneyball was a successful book and movie telling a story about the use of data and predictive analytics to improve a baseball team.

Providers create vast oceans of data, much of which escapes analysis in the crush of daily operations and the horrors of the revenue cycle. In the past the system could be navigated with reasonable effort and physician compensation was generous enough, so analytics was not necessary to success.

We are in a new era, where bundling and reference pricing and ACOs will change the nature of health care operations.

Some good news – most of your work does not require massive data sets or highly sophisticated computer models – most of your work requires reasonable amounts of data and a well designed spreadsheet model.

Predictive analytics is a data rich version of a classic question - “what if.”

Sensitivity analysis is analytics focused on the change of a single variable. Scenario analysis is a change involving multiple variables. Assuming the group has a sophisticated budgeting process built on a spreadsheet platform, those same spreadsheet model can be altered for focused predictive predictive work.

Don't have a sophisticated budgeting process? Time is a wasting.

One field of accounting knowledge is critical, the ability to separate variable, fixed and mixed costs. This is critical to building proper incremental assumptions in your models. A 20% change increase in procedures does not create a 20% increase in all costs, and knowing what does change is critical.

Executives and administrators have plenty of work to do, the work load is going to get heavier, and more sophisticated analysis and planning will be required. Adding predictive capabilities provides important tools to improve feedback and to improve decision making.

Tuesday, July 15, 2014

The Era of Mandatory Compliance

The Affordable Care Act moved compliance programs from "recommended" to mandatory.

Many of us thought recommended really meant "mandatory" anyway but now it is law.

Problem is, the Obama administration has not gotten around to writing the implementing regulations. Since LTCFs were supposed to be in compliance by March 23, 2013 this is sort of awkward.

There is guidance available, and there are a multitude of good reasons to have a compliance program, so providers should be moving forward with programs. To do otherwise is akin to driving a car without a seat belt.

Look for a series of commentaries over the next two months on the techniques and advantages of a vigorous compliance program.

Thursday, June 19, 2014

PPACA - bad news, good news

Pulled from some seminar materials I am developing, and based on recent interactions with hundreds of executives, financial officers and providers:

Problems with Obamacare (and related)

#1 by a huge margin in non-scientific poll of hundreds of providers: deferral of care due to larger co-payments (premium share, co-pay, deductible)

       a weak labor market combined with ACA impacts on insurers = massive risk shift to employees

       insurers reacting to ACA, employers reacting to ACA, shifting costs to working middle class

      immense shift in bargaining power in insurer vs. provider balance


mid sized employers confused and beleaguered

chaos in the hospital sector (due to ratchet down of revenues and scramble for business models)

mad scramble to integrate and build new business models, often fueled by massive uncertainty

ACOs not delivering yet at any large scale

failure to properly implement the back end of

           hundreds of thousands of families may have to repay due to flawed
                    subsidy calcs

providers cannot get easily or timely get coverage information, but on the hook

major problems with EMR/EHR implementation, “meaningful use” a mess

DHHS-CMS late with regulations (compliance), or writing incoherent regulations (meaningful use)

family practice not better off and often worse off

nothing significant to boost supply of family docs or nurses

               (will we see a boomer provider retirement surge? Stay tuned)

Medicaid fees with small contribution margins (variable costing) and negative contribution margins (full costing)

C.L.A.S.S. was stillborn and long-term care funding is being ignored at our peril

readmission penalties – first stage of formal rationing?

future of rural health care in doubt (small hospitals are probably toast within 5 years), small improvement in urban health care access (the hospital shake out will impact the outcome)

ACA based innovations

access improved somewhat and screening procedures in place (although someone has to pay)

surge of integration and construction of new business models (for better and worse).

ACO trials are in progress, could yield scaled results in the future

surge of innovation in business models

bundling could provide major benefits

surge of innovation in analytics (the government is not much help)

surge of innovation in clinical care

more careful use of ordering (imaging, Rx, therapies) but could have a clinical downside

FINALLY, providers have significant negotiating leverage in dealing with some suppliers

Saturday, March 29, 2014

March 2014 ACA Update Part II

The Centers for Medicare and Medicaid Services and the Department of Treasury issued regulations this week on numerous aspects of the Affordable Care Act. To the surprise of very few, another extension was the major news in these releases.

Here We Go Again.....Politics meets Health Care Policy

The fiasco coincided with the individual policy cancellation tsunami and the results was a gigantic mess which still begs for resolution. The Obama administration eventually provided an option for states to extend ACA non-compliant policies for one year.

This year expires just prior to the mid-term elections, causing a (smaller) torrent of cancellation notices. Prudence being the better part of political non-valor, there is now an option for states to extend the policies for two years until renewals effective October 1, 2016 and after.

Extra Enrollment Month

An extra month was added to the upcoming enrollment season, which coincidentally starts AFTER the midterm election. New deadline is February 15th, 2015.

Out of Pocket Maximums

For 2015, $6,600 for individuals and $13,200 for families. For some a decrease, for many an increase.

Treasury Rules and Regs for Reporting

The IRS is charged with collecting ridiculous amounts of data, is the heavy hand of penalty enforcement and will distribute tax credits.


The small business program MAY be delayed, or maybe not. Management by chaos.

And so......

The slow, painful, dysfunctional implementation of the Affordable Care Act continues.

March Update

ACA (Obamacare) Update March 2014

Sign-ups continue, although the “back room” functions are moving very slowly. Providers are struggling with verification problems and missing insurance cards. The deadline approaches.

Other Changing Policies

A huge number of policies in both the employer-paid sector and the individual policy sector changed as of January 1, creating more messes for patients and providers.

Moving individual policy holders into the exchange system has been a nightmare and will likely continue to be a nightmare for some time. Providers are struggling with a high percentage of patients presenting new insurance cards for both new carriers and the same carriers with different policies. Confusion reigns.

More Cash from Patients

The long term trend of “risk shift” - less coverage from employers and more out of pocket from patients – has been accelerated by Obamacare. This is impacting both patients and providers, and not for the better.

This creates numerous headaches for providers, who have enough headaches already.

Fall will be Interesting

With the ICD-10 adoption deadline October 1 and the EMR/EHR operational deadline January 1, 2015 the fall season will be stressful for providers.

Deadlines ….. don't mean much, it is the extended deadlines that are important.

Compliance programs … both nursing homes and physician groups are supposed to have mandatory compliance plans – except the regulations are not written yet. Stay tuned.

And so.... 2014 may be the single most stressful year in the history of our health care system – until 2015.