CMS

CMS Pledges More Than $300 Million to Support Rural Health Transformation

The first Rural ACO Summit in Washington DC last week was a huge success. We engaged in terrific discussions with policy makers, made new friends among rural providers looking to enter the program, and connected rural ACO pioneers across the country. The presentations are available to download here.

Now, there is much work to be done and very little time to get the grant funding available to rural providers. Applications are due to CMS no later than July, and it takes at least two months to complete the application process.

HHS Secretary Burwell’s historic announcement telegraphs the future:

“Our first goal is for 30% of all Medicare provider payments to be in alternative payment models that are tied to how well providers care for their patients, instead of how much care they provide – and to do it by 2016. Our goal would then be to get to 50% by 2018. Our second goal is for virtually all Medicare fee-for-service payments to be tied to quality and value; at least 85% in 2016 and 90% in 2018.”

Most rural providers are exempt from these special payments, so it’s business as usual, right?

Wrong.

If you could see what ACOs see because they have the data….

Rural providers will typically have the highest UNIT costs and will have lower quality scores because they do not participate in PQRS or other quality programs and don’t know where to focus their efforts. You can’t improve what you can’t measure.

The reality is that our cost per beneficiary is lower, but nobody can see that data except for rural ACOs. Rural providers can’t tell this story without the data to prove it. Under the proposed new payment models, within a few years, a typical urban cardiologist could risk losing $100,000 – $300,000 per year in income if his patients are high-cost or if their quality scores are low, and much of this is out of his direct control – it depends a lot on where patients get primary care. It will be in his financial interest to only work with high-quality, low-cost providers, but most rural providers will appear to be low-quality and high-cost due to our lack of participation in ambulatory quality reporting and the way cost data will be presented to them.

Rural providers need to find ways to excel in ambulatory quality and to tell our story of lower costs per beneficiary. We need to help our patients prevent illness and/or navigate their disease. This is the essence of population health management, an essential skill and service of the 21st-century healthcare system. Becoming an ACO will get you where you need to go.

CMS wants rural providers to get into the population health game this year. To do so, they are funding up to 75 rural ACOs who apply in 2015 with $114 million. They are also providing $228 million in technical assistance, under the Practice Transformation Network, to those not yet ready to become an ACO. You must sign up this year to get subsidized assistance. Practice Transformation Networks will be announced this summer. ACO applications must be submitted by July, 2015. National Rural ACO can help.

Get started today, or sign up for our webinar on February 25th at 2:00 PM EST.

February 12, 2015 Accountable Care Organization, CMS, Healthcare Grants and Funding, Healthcare Policy Read more >

Your Seat at the Table

The speed of change in healthcare is breathtaking, and the latest announcements of ambitious new goals and timelines will turn the pressure up even more.   To quote Secretary Burwell, “our goal is for virtually all Medicare fee-for-service payments to be tied to quality and value; at least 85% in 2016 and 90% in 2018.”

We see some real world challenges for rural health. Twenty percent of Medicare fee-for-service beneficiaries live in rural America, yet rural health clinics and FQHCs are exempt from value-based payments and quality reporting; including PQRS, Value-Based Modifiers and Medicare Meaningful Use. Instead of celebrating our freedom from regulations, we should be very worried about how these changes could devastate the rural safety net and negatively impact our patients.

If the rest of the delivery system is paid on quality, and we aren’t, we become a liability to our referral network. CMS is making everyone else report on quality because they know that when we report quality, we improve. CMS is creating a quality chasm. If we don’t participate, our resulting lower quality will negatively affect our patients and our partner’s payments.

If the rest of the delivery system is paid on cost, and our unit costs are higher because of special payments, we become a liability to our referral network. Our special payments will negatively affect our partner’s income.

Given 1) and 2) above, the pressure for our partners to optimize value will result in our patients being diverted from our health systems. Declining quality and volumes will increase costs further, creating a death spiral for rural health systems. Yet today, even if we wanted to participate in quality reporting programs, we don’t have the same access to information or option to do so other than through the Medicare Shared Savings Program (MSSP). And although Medicare has the ability to “standardize” our payments to the PPS rates (like they do with IME, DSH, GPCI and others to protect urban safety net providers), they do not make those concessions for rural payments, putting the target squarely on our backs.

This announcement could not have come at a better time!

The National Rural Accountable Care Organization and our thirty member hospitals and community health systems are now in our second year, working together with a clear unified voice that is being heard and changing policy that will secure the future of rural health care in America. We are most proud of our members who are creating patient-centered health systems, leading rural healthcare policy reform discussions and taking charge of their destiny.

To us, the new goals and timelines proposed by HHS Secretary Burwell are simply the next initiative coming from the rapid-changing machinery behind the ACA. There’s much to fix and much to do. We’re ready. We will be in Washington DC the week of February 2nd at the Rural ACO Summit to kick off our 2015 campaign for transforming accountable care for rural communities. We can use your help.

  1. by February 6th. Download our CMS comment letter here.
  2. Activate your political network.  The plight of rural healthcare needs to become a state and national issue.  Too much is at risk for communities that do not act. Ask you representatives to demand that CMS standardizes all rural payments to the PPS rate for the purposes of value-based payments. Download a sample letter for your congressman here.
  3. Join us.  The National Rural ACO. Your seat at the table.  Your path to a sustainable future.

January 30, 2015 Accountable Care Organization, CMS, Healthcare Grants and Funding, Healthcare Policy, Medicare Shared Savings Plan, Payment Reform Read more >

Secretary Burwell Throws Down the Gauntlet

On January 26th, Secretary Burwell laid out an ambitious goal of having “30% of all Medicare provider payments to be in alternative payment models that are tied to how well providers care for their patients, instead of how much care they provide – and to do it by 2016.Our goal would then be to get to 50% by 2018.”

See her blog post on the topic here.

She continues, “Our second goal is for virtually all Medicare fee-for-service payments to be tied to quality and value; at least 85% in 2016 and 90% in 2018.” Hmmm. More than 20% of fee-for-service payments are for rural beneficiaries, yet RHCs, CAH’s and FQHC’s are the only providers whose payments are not tied to quality and value. No PQRS, no value-based purchasing, no value-based modifiers, not even Medicare Meaningful Use. How will the Secretary achieve her goal without offering incentives for rural providers? As one CEO wrote to me yesterday, the times they are a’changin.

Expect more to come from HHS. We’d like to help the Secretary achieve her goal with better incentives for rural providers to participate in ACOs. Better payments, better assignment, more flexibility and having Medicare pay residual cost-sharing for our seniors to encourage them to get care in their rural ACO would go a long way.

Please review our comments letter here.  If you agree, go to www.regulations.gov and send in a comment on CMS-1461-P supporting our ideas. Comments matter! And so do rural beneficiaries!

January 28, 2015 Accountable Care Organization, Care Coordination, CMS, Healthcare Policy, Payment Reform Read more >

Secretary Burwell Throws Down the Gauntlet

On January 26th, Secretary Burwell laid out an ambitious goal of having “30% of all Medicare provider payments to be in alternative payment models that are tied to how well providers care for their patients, instead of how much care they provide – and to do it by 2016.Our goal would then be to get to 50% by 2018.”

See her blog post on the topic here.

She continues, “Our second goal is for virtually all Medicare fee-for-service payments to be tied to quality and value; at least 85% in 2016 and 90% in 2018.” Hmmm. More than 20% of fee-for-service payments are for rural beneficiaries, yet RHCs, CAH’s and FQHC’s are the only providers whose payments are not tied to quality and value. No PQRS, no value-based purchasing, no value-based modifiers, not even Medicare Meaningful Use. How will the Secretary achieve her goal without offering incentives for rural providers? As one CEO wrote to me yesterday, the times they are a’changin.

Expect more to come from HHS. We’d like to help the Secretary achieve her goal with better incentives for rural providers to participate in ACOs. Better payments, better assignment, more flexibility and having Medicare pay residual cost-sharing for our seniors to encourage them to get care in their rural ACO would go a long way.

Please review our comments letter here.  If you agree, go to www.regulations.gov and send in a comment on CMS-1461-P supporting our ideas. Comments matter! And so do rural beneficiaries!

January 28, 2015 Accountable Care Organization, Care Coordination, CMS, Healthcare Policy, Payment Reform Read more >

National Rural ACO’s Response to the Proposed Rule for the Medicare Shared Savings Program

What is at stake? CMS has introduced a proposed rule to improve the integrity and attractiveness of the Medicare Shared Savings Program. Many of the changes are welcome improvements for all providers, but they fall short of meeting the unique needs of rural providers. For a brief summary of the proposed rule please see our comments, which follow.

Who is the National Rural ACO? The National Rural Accountable Care Organization was the first of its kind t bring together unaffiliated providers in multiple states to enable rural participation in the Medicare Shared Savings Program by pooling lives, expertise and financial resources. Now in its second program year, the leaders of National Rural ACO have blazed a trail for others to follow as a non-profit peer learning and education organization that can disseminate knowledge learned from our data. Today, thirty health systems in six ACOs covering nine states participate in the National Rural ACO under a single data warehouse.

Why do we care so much about the MSSP? Safety net providers are the only primary care systems left in the country that are not eligible for incentives for providing better care at a lower cost. This lack of incentives may create health disparities for rural beneficiaries, who are in desperate need of Medical Homes and Care Coordination. Without the appropriate data and incentives, cash-strapped rural providers cannot redesign their delivery systems to meet the three-part aim. The MSSP is the only program broadly available today to create the framework for change that safety-net patients need.

What are the rural issues? The key economic issues that affect rural providers are that they are low volume with high fixed costs and little or no operating margin, and are almost wholly dependent on Federal payments. They constantly struggle to survive and have very limited cash reserves, which provide no margin for error or “rainy days.” The effect of small cuts to their payments in the past few years has resulted in a record number of closures. According to the Flex Monitoring Team, the average days of cash on hand for CAHs is a paltry 69 days.

“We count our cash on hand in minutes. Every day we open the checks to see who we can pay.”

Lee Barron, CEO, Southern Inyo Hospital

The following chart illustrates key economic considerations of CAH-based health systems.Table1_SelectedMedian

Could volume be the answer to saving the rural safety net? Rural cost accountants postulate that CAHs have very high fixed costs; therefore incremental volume is essentially free. To illustrate that point, if CAH discharges are 75% Medicare, the CAH’s allowable costs are $5,000,000, and there are 1000 patient days, Medicare pays the CAH 75% x $5,000,000 x 101% = $3,787,500 or $3,786 per patient day. If the CAH doubled its average daily census from 3 to 6, and the incremental cost was only 15%, Medicare would pay the CAH $4,365,625, or $2,178 per patient day. The same is true for outpatient services, which account for almost 75% of CAH revenue. It is no coincidence that the CAH in our ACO that has the highest market share (62%) also has a very low cost per beneficiary. Different facilities have different fixed costs and different abilities to increase share, but increasing volume is a clear way to reduce the cost of rural healthcare. The following chart illustrates the potential savings by driving increased volume to cost-based reimbursed providers.

[1] “CAH Financial Indicators Report: Summary of Indicator Medians by State.” Flex Monitoring Team Data Summary Report No. 16. October 2014. [Data from 2012.]

PotentialMedicareSavings

Figure 1: Volume Effects on Cost-Based Reimbursement

Can rural health systems increase market share? From the claims data we see, they certainly can. Our ACOs only get claims data on the patients who use their primary care more than anyone else, so these are presumably our most loyal customers, yet the claims data shows that they on average only capture 35% of the claims for their attributed lives. Reviewing that claims data shows they would be capable of providing an additional 35% of the services if the patient chose to get their health care locally.

 ACOMarketShare

Figure 2: National Rural ACO Share of All Claims Data

Why aren’t people using the local health system, even when their PCP works for the CAH? We can only speculate here, but our Community Needs Assessments show some interesting data. Unlike the national average of 70%, only 50% of our patients can name their PCP. Similarly, only 30% of ED visits nationally are for primary care, yet our data shows that 50% of our rural ED visits are for primary care. Our patients use the ED, the internet, or get in their car and drive when they can’t get an appointment. There is no urgent care center in town to take care of their needs and it is very expensive to keep the clinic open after hours, in addition to creating yet another barrier to recruiting rural physicians.

Meet Linda. She is 74 rural resident and was in fair health. In the last two years she has broken her hand, broken her arm, sprained her ankle and suffered a head injury from a series of falls. She has been seen in 10 different Part A facilities and 43 Part B facilities with total claims exceeding $250,000 in the past two years. Without a regular PCP, Linda used the internet to find a doctor who would help her with her back pain. The botched spinal surgery resulted in her $163,000 admission to a renowned tertiary hospital to remove the implant and help her recover. Linda deserves a medical home and a care coordinator to “watch her back.”

How can we increase volume for Medicare Beneficiaries? Essentially by creating a rural Medicare PPO. We could increase local volume considerably if we had the ability to incentivize our patients to get care in our community by having Medicare cover residual patient cost-sharing (after supplemental insurance.) As cost-based reimbursed facilities with high fixed costs, increased local volume naturally lowers costs for Medicare while also bringing the patient closer to their medical home.

The cost of having Medicare cover in-network cost-sharing after supplemental insurance can be estimated using 2012 data from MEDPAC reports, which showed average beneficiary cost-sharing is $1550 per year, and that 10% of seniors do not have supplemental insurance that covers these costs. Currently, our cost-based facilities only have a 35% of total claims. This should yield a cost per beneficiary of ($1,550 X 10% X 35% X 50%) = $54.25 per beneficiary per year, which would be charged against total Medicare spending for the ACO. Rural providers would bear 50% of this cost by virtue of being in a shared savings program. Medicare would gain significantly due to the effect of higher volumes on per capita cost-based reimbursement. The greatest winner would be the beneficiary and the rural community, which would see increased local spending, employment and better, more comprehensive care. See Figure 1 for a model of potential savings for Medicare based on increasing volume to cost based providers.

What does the data say about rural care coordination? Our patients are literally scattered to the wind. Our members range from 182-3200 patients attributed to them who are using from 75-300 different Part A facilities and thousands of different doctors.

A good example is Mammoth Lakes Hospital and Rural Health Clinics. Mammoth has 520 attributed lives that have been seen in 259 different Part A facilities and 3,294 unique Part B providers in the past two years. Review of their patients data is a “trail of tears” with patients bouncing from one provider to the next, one hospital to the next, without communication, coordination or forethought. Given the opportunity and the data, rural providers can do much better.

How can rural providers increase market share? Any business that is the sole proprietor of services in a service area that has the ability to increase its market share can do so by focusing on business fundamentals. Customers want value – high quality, great service and a low price. If a patient is ill and cannot get care in their community, the evidence suggests that he will either use the ED or get in his car and drive to the nearest available provider. They will not simply wait for the next appointment. Rural communities must create capacity for primary care to be successful in the future.

In addition, focusing on the 25% of Medicare patients that comprise 82% of total Medicare spending and giving them the help and support they need can increase market share the most with the least amount of effort. If implemented well, primary care frequently determines how and where patients get more advanced care. Rural health systems should actively recruit these patients providing them with care coordination services to help them navigate their disease and the byzantine healthcare system, identifying high value providers for them and ensuring their data and history follow them wherever they go. Losing these highly coveted patients to competing health systems can devastate a rural health system.

How can rural providers increase their margin? Increasing market share is good for our patients and good for Medicare, but cost-based reimbursement still leaves the rural provider without an operating margin, always teetering on the brink of insolvency. We think this can be solved by the Medicare Shared Savings Program, where rural providers can earn a margin by delivering high-quality care and lower cost through care coordination of the chronically ill and by building market share. In order for it to work, however, we need specific changes to the MSSP that recognizes our unique needs and payment system.

Conclusion

The Medicare Shared Savings Program provides the necessary framework for improving care, improving health and lowering costs for rural beneficiaries. Unlike urban providers, there are no other programs for the safety net that enable these new systems of care proven to improve cost and quality. Our proposed creation of a Safety Net Track 4 will make the program extremely attractive to safety net providers and encourage their participation. Cost-based reimbursement can be effective if coupled with the right incentives to provide the right care at the right time for the beneficiaries, while allowing rural providers to earn more for delivering better care. Please comment today at regulations.gov, CMS-1461-P.

Download the National Rural ACO’s comment letter here.

Download this blog post as a PDF here.

January 20, 2015 Accountable Care Organization, CMS, Healthcare Policy, Medicare Shared Savings Plan, Payment Reform, , , Read more >

Announcing Our New ACOs: 30 Rural Health Systems Participating In Six ACOs In Nine States In 2015

This is a proud day for the National Rural ACO.  Today, we issued a news release about our new ACOs.  Read on and you’ll see why we are so excited.

The National Rural ACO announced today it has successfully formed five additional ACOs in 2015 for rural providers following in the steps of the first ACO started in 2014. Using the organization’s unique collaborative model, fifty-two entities, including 28 rural and critical access hospitals, 42 rural health clinics, 12 federally qualified health centers and 9 private physician practices in thirty rural health systems were able to afford and qualify for the Medicare Shared Savings Program. More than 65,000 attributed Medicare beneficiaries from the states of Texas, California, Washington, Iowa, Indiana, Missouri, Oregon, Illinois and Michigan are now benefitting from the program under the care of 1,300 clinicians.

Our newest ACOs are:

  • National Rural ACO
  • Reid ACO, Suburban Health ACO
  • American Rural ACO
  • Northwest Rural ACO
  • National Rural ACO II

In almost all cases, the rural hospital sponsored the program and invited local providers to join at no charge. Although annual revenue for the hospitals ranged from $5 million to $758 million per year, and they all included employed or contracted physicians, only one applicant had enough beneficiaries to form its own ACO. All of the others joined forces to achieve the minimum number of beneficiaries and to reduce the cost of participation in proportion to what rural providers can expect to earn from the program.

The National Rural ACO provides comprehensive services including claims data access and analysis, evidence-based medicine leadership, care coordination coaching and the governance, legal and compliance services needed to succeed.

“The National Rural ACO’s unique model of collaboration is the first of its kind to enable rural providers to receive higher reimbursement for improving the care they deliver,” said Tim Putnam, CEO of Margaret Mary Hospital and chair of the board for the first National Rural ACO. “We can access the same type of powerful data, waivers and programs that urban ACOs can for about the same cost as it would be to hire one person to figure out how to get into the program.”

Please contact us if you would like more information about our new ACOs.

 

January 7, 2015 Accountable Care Organization, Care Coordination, CMS, Healthcare Grants and Funding, News Read more >

Does CMS Really Hate Rural Hospitals?

We often hear in our travels the opinion that CMS wants to close rural hospitals and have everyone use urban hospitals instead. Many think that CMS believes rural hospitals are too expensive and provide low quality care. They point to the plethora of innovation models focused on urban areas, with almost no rural health system participation, unless the rural member joins as part of an urban system. Sixty percent of rural health systems are supported by local tax dollars and would rather “live free or die.”

Is it that CMS doesn’t care, or is it that they don’t know? Historically, health insurance payment innovation has always come from the private sector first. Commercial insurers created ACOs long before Medicare did. Diagnosis Related Groups (DRGs) were a commercial insurance innovation. Capitation and HMOs were tested in the private sector first. The government needs data and experience before it can implement new payment models, and the private sector is not testing new models in rural America. Furthermore, urban payment models cannot scale down to rural health systems. Everyone remembers when DRGs were implemented in rural hospitals. Hundreds of rural hospitals closed as a result. CMS is wise to be cautious.

As rural healthcare providers, we are going to have to lead innovation if we want to survive. No one else can or will do it for us. We have formed the National Rural Accountable Care Organization so that we can pool our resources, our knowledge, our lives and our ideas to create and test new payment models. The future of our communities depends on us working together. Join us.

November 25, 2014 Accountable Care Organization, Care Coordination, CMS, Healthcare Policy, Read more >