Although comprehensive legislation to fund innovation is not expected until next year, some see the possibility that Congress could advance Medicare funding for telehealth this year.


Sept. 14—Medicare may be able to spur productivity leaps at hospitals and other providers, but only if it is willing to pay for such advances, according to legislators and industry members.

The reluctance of the Centers for Medicare & Medicaid Services (CMS) to pay for the innovations already funded by private payers—and the need for legislation to require such payments—were among the key points underscored by congressional healthcare leaders this week.

Rep. Pat Tiberi (R-Ohio) said CMS doesn’t fund many innovative ways of delivering health care and increasing productivity because agency officials do not believe they have the authority to subsidize such activities.

“It’s a problem that exists because the statute hasn’t been updated in the way we provide reimbursement in a long time,” Tiberi said following a Sept. 14 congressional hearing on medical innovation.

Tiberi plans to support legislation in the next Congress to explicitly authorize Medicare to fund more recently developed medical devices and treatments.

Such innovations would not require a rise in overall spending and in fact could reduce spending by increasing healthcare professionals’ productivity, industry officials said.

“We have a doctor shortage, we have a nurse shortage, we have all of these shortages out there,” Michael Gallup, president of TeleTracking Technologies, said at a Ways and Means Committee Health Subcommittee hearing. “How do we fix that? Well, let’s get them more productive.”

The need for increased provider productivity was underscored by a recent analysis by the Congressional Budget Office (CBO). If hospitals improve their productivity only at the rate of the overall economy, an average of about 0.8 percent annually, by 2025 the share of hospitals with negative profit margins will rise to 41 percent, the CBO concluded. Greater productivity is required to keep more hospitals financially ahead of payment cuts required by the Affordable Care Act (ACA).

Many industry observers have questioned whether productivity leaps are possible in such a “high-touch” industry. They cite data such as the fact that the cost of healthcare labor has increased seven times faster than the industry’s productivity rate, according to a report by the U.S. Bureau of Labor Statistics.

Other experts showcased evidence this week that such productivity increases already are occurring.

For instance, one system to improve patient flow processes decreased the average length of stay for inpatients by over 18 percent and created emergency department capacity for 12 percent more patient visits without adding to the bed count or adversely affecting care quality, according to an analysis.

“If we can take labor and help them be more productive, help doctors become more productive and not do the things they don’t want to do, we then get more patients through at the same price,” Gallup said.

Reforms Needed

Among the CMS payment policy changes needed to spur healthcare productivity increases is a willingness to broadly reimburse telehealth, legislators and industry officials said.

“There are a lot of barriers there,” Rep. Diane Black (R-Tenn.) said about expanded Medicare payments for telehealth.

Black touted her legislation, the CONNECT for Health Act, which an Avalere Health analysis concluded would save Medicare $1.8 billion over 10 years.

Sen. Brian Schatz (D-Hawaii) said this week that he hopes his bill to expand Medicare reimbursement of the technology will be included in the year-end, must-pass federal government funding bill, according to published reports.

Also with the potential to help contain costs are technology packages that track prescription filling and refilling. A quarter of patients who go to a pharmacy to fill a prescription do not get it filled when they discover the cost, and others never take in the prescription after the pharmacist describes side effects, said Jared Short, COO at Cambia Health Solutions. A Cambia program, MedSavvy, aims to spur better adherence and outcomes—and increase cost savings as a result—by providing data to clinicians on the effectiveness and cost of prescription medications.

Other innovations include an Allscripts pilot to notify some of the 40 million patients whose medical records are stored in its systems that they have the seven preconditions for developing diabetes.

“Data and analytics allow for reaching out to patients to keep high-risk patients healthy,” said Greg Long, chief medical officer (CMO) and senior vice president for systems of care at ThedaCare.

ACO Problems

The new ideas came amid growing questions about some the highest-profile efforts by CMS to increase provider productivity. Questions about Medicare accountable care organizations (ACOs) were renewed after the New York Times conducted a high-profile review of the departure of Dartmouth-Hitchcock from the Pioneer ACO program, which was developed with the help of researchers with the Dartmouth Institute for Health Policy and Clinical Practice.

“This doesn’t mean ACOs are a failure,” Rep. Jim McDermott (D-Wash.) said. “It does mean that there are questions we need to ask.”

Dartmouth-Hitchcock was among a number of low-cost providers that struggled to collect financial rewards through the ACO program.

Based on the latest ACO results, a Leavitt Partners analysis found that the benchmark was the factor most strongly linked to the ability to earn bonus payments: The higher the starting point, the more likely the ACO was to score below the benchmark.

Similarly, an analysis by Ashish Jha, a Harvard health policy researcher, concluded that per capita benchmarks for ACOs that garnered savings were $10,580 and their actual spending was $10,140. Meanwhile, ACOs that didn’t reap savings had average benchmarks of $9,601 and actual spending of $9,901.

Thedacare, a not-for-profit Wisconsin health system, formerly was a Pioneer ACO and has moved on to participate in the Next Generation ACO program. However, Long, the organization’s CMO and senior vice president, was hopeful that payers—including Medicare—eventually will move to a capitated model with risk adjustments based on patient health.

“The key is how you match the payment methodology at the same time you are improving care,” Long testified at the hearing. “That’s been the biggest barrier to most healthcare systems: As you continue to do the right thing for patients, we are currently cutting our own revenue and being paid in a manner that would be most beneficial for the” industry.


Rich Daly is a senior writer/editor in HFMA’s Washington, D.C., office. Follow Rich on Twitter: @rdalyhealthcare

Publication Date: Wednesday, September 14, 2016