Archive for category Healthcare Insurance
In response to a suit by emergency physicians and hospitals in Washington State that led to a judicial injunction against the State’s plan to restrict Medicaid payment for ED visits, the State of Washington’s Health Care Authority has conspired with CMS to require emergency physicians to provide services to Medicaid enrollees for free. Emergency physicians are required by law (EMTALA) to provide medical screening services (and stabilizing care) to anyone who presents to an emergency department, and these physicians are subject to severe fines and penalties if they fail to provide these services.
CMS is well aware of this obligation, yet this agency has notified the State of Washington that the Medicaid program may ‘proceed under its existing authority to pay for only medically necessary Emergency Room visits’ based on a list of so-called ‘non-emergency diagnoses’ submitted on claims to the Medicaid program in that State (and presumably, other states that want to use the same process). Thus, the federal government is requiring emergency physicians to perform a medical screening evaluation (which can be as simple as a brief history and exam, or as complicated as a full and thorough evaluation to rule out subtle but potentially life threatening medical conditions), but is telling federally-funded state Medicaid programs that they need not pay the emergency physician for this service if it turns out the patient does not have a medical emergency, based on this list of final diagnoses. When a government mandates a service from private individuals, and refuses to pay for that service, this is tantamount an unconstitutional and illegal taking of services, and is surely a violation of the physician’s rights.
Curiously, CMS does not allow Medicaid Managed Care Plans in any state to use a list of final diagnoses to preclude payment to emergency physicians or hospitals for these screening and stabilization services. Many states explicitly require payment for medical screening services even when no medical emergency is detected. It is pretty clear that Washington State’s HCA is pushing back hard on emergency care providers for having the gall to use the courts to defy their authority. Resorting to this kind of abusive policy, knowing that it is likely to undermine the financial viability of the safety net and the ability of emergency care providers to meet the needs of all of Washington’s citizens, goes beyond the pale.
The list of so-called non-emergency diagnoses that WA HCA has come up with provides a clear indication of the extent to which this agency will go. This list includes such diagnoses as: hyposmolality (which can cause coma), hemopthalmos (hemorrhage in the eye), foreign body in the hand (often causes infection), multiple contusions (as in getting a beating), pregnancy, etc. Even if every single one of these diagnoses can be managed in a physician’s office, it is important to understand that to get to these diagnoses, it is often necessary to rule out other conditions that may look very similar, but are far more serious, even life-threatening. Performing a cursory medical screening exam in an ED is a prescription for a very expensive EMTALA violation, a hospital’s loss of the right to treat Medicare patients, and a malpractice suit that can end a career. Requiring emergency care providers to perform these evaluations on Medicaid enrollees, and then refusing to compensate them for the effort (and the risk), is just reprehensible.
This post was also published in The Fickle Finger (www.ficklefinger.net/blog/)
State governments have fallen into deep budget deficit holes, as we all know, and state legislators and policy makers are casting about for ways to dig themselves out. Many are climbing over the backs of those least able to fend for themselves in this troubled economy, since the poor have little clout and even less representation, now that the Supreme Court has given corporations and unions carte blanche to finance political campaigns up the political wazoo. Therefor, it should come as no surprise that the budgets of State Medicaid programs all across the nation are taking a big hit, and Medicaid policies intended to protect access to care for the indigent are being bent all out of shape, if not violated outright, in the process. Unfortunately, access to emergency care is getting the lion’s share of the attention in this cost-saving, budget slashing, attack on Medicaid, and this effort is rending holes in the emergency care safety net.
From the East Coast to California, State Medicaid Departments and policy makers have decided to target the ‘unnecessary use of the emergency department’ by Medicaid enrollees as the easiest way to eliminate waste and excessive costs in the Medicaid program, even though there are many far better opportunities to save money and reduce unnecessary expenditures in Medicaid and in health care in general. No doubt, ED care is relatively more expensive than UCCs and clinics and PCP offices for non-urgent medical services, and no doubt, many Medicaid patients could potentially receive this care in other, more appropriate venues, if these venues weren’t already failing miserably when it comes to providing adequate access for unscheduled non-emergency care to Medicaid enrollees. To many people, a cursory look at the efforts to get these non-emergency patients out of the ED might seem not only reasonable, but compelling, in the face of massive State budget shortfalls. Thus, you now see all sorts of policies aimed at limiting access to the ED, some designed to dissuade Medicaid patients from even considering a visit to the ED, others designed to retroactively deny coverage, or payment, for these services, despite the adverse consequences such policies will inevitably have on these patients, their families, and everyone else who might need emergency care. It seems to those of us who understand the implications of such policies the epitome of penny wise, pound stupidity.
California’s Medi-Cal program now intends to impose a $50 copay on ED visits in order to discourage ED use. Texas Medicaid will reduce payment on ER claims by 40% if the final diagnosis is not on their ‘emergency diagnoses list’, and Virginia likewise reduces payment for Level 3 visits using a similar approved list. In Illinois, a very rigid set of criteria are used to deny coverage under the prudent layperson standard, and in Oregon and other states, like Colorado, emergency physicians are paid a $10-20 ‘screening fee’ when the final diagnosis is not on the list of approved medical emergencies. Recently, In Washington State, Medicaid program directors have decided to implement what may be the epitome of bad medical policy by refusing to reimburse providers when the patient uses the ED more than three times in a year for non-emergency problems like hypoglycemic coma or pseudomonal pneumonia or sepsis. The process that WA used to derive this list of unapproved diagnoses, and meet their budget savings target, would be laughable if it weren’t so inane (see this blog )
These policies all have one thing in common; they entail little direct political risk for policy-makers. They rely on the EMTALA obligation of emergency care providers to ensure that patients who seek care from the ED, whether because they are seriously ill or injured or simply because there is no where else they can get any kind of care, will likely not be turned away. It won’t matter if the Medicaid enrollee can’t afford the $50 co-pay, or has to make a fourth visit to the ED in a year for another acute exacerbation of a chronic illness, or fails to pay the ED bill when the State declines to cover the visit, or is relying on the ED for psychiatric care because they can’t get into a treatment program, or makes an ‘imprudent’ decision to use the ED because they are concerned their chest pain might be an MI rather than esophagitis. Nearly all of these patients will be evaluated and treated for their medical emergency and even in most cases for their non-emergency condition, or at least be afforded a referral to an alternative venue once screened. This is not just because of EMTALA, but also because emergency physicians are, in almost every instance, compassionate providers who understand that they are the last, best, and often only hope for many of these patients – the safety net for the safety net.
The States that have adopted these budget-saving strategies also rely on another political reality to justify what otherwise might seem to be a fairly callous approach to the economically disadvantaged: all of these policies effectively dump the financial responsibility for caring for these patients on to the backs of hospitals and emergency care providers. The bet is that voters and taxpayers won’t care if the Medicaid programs in their state take advantage of EMTALA obligated providers in order to ease the burden on state budgets. Despite increasing hospital and ED closures, shortages of emergency physicians, and disappearing ED on-call specialists; the assumption seems to be that emergency care will always be there when needed even if these providers have to work for free. Somehow, EMTALA has suspended the laws of supply and demand.
Medicaid policies designed to reduce payment for ED care also have in common the decision to sidestep the prudent layperson standard that CMS imposed on Medicaid Managed Care organizations under section 1932(b)(2)(B)(ii) of the Social Security Act. Though many states have adopted this standard for Medicaid Fee-for-Service programs, others argue that prudent layperson does not apply to their Medicaid FFS program, and that they are not required to pay for medical screening exams when the final diagnosis does not substantiate an emergency medical condition, even though many of these same states have their own version of an EMTALA mandate on the books. Ultimately, this debate may need to be resolved in courts, where emergency care providers will hopefully be protected from abusive payment practices that effectively result in theft of their services.
The oddest aspect of these state payment policies is that they seem to be founded on the principle that the best way to punish Medicaid patients for using the ED inappropriately for health care services, and change this behavior, is to refuse to pay hospitals and emergency physicians for providing these services. The fact that these policies will adversely impact access to emergency care for everyone, rich and poor, seems to escape just about everyone.
PPACA, Medical Loss Ratios, and Capitation – a Loop Hole Big Enough to Drive an Armored Truck Through
One of the new health reform provisions in the PPACA regulations is a requirement for health insurers to spend a certain proportion of health insurance premiums on actual medical care, thus limiting to some extent the proportion of these premiums that can be allocated to administrative expenses and profits. This proportion is called the medical loss ratio (MLR), and in the regs the proportion that must be spent on care is 85% or higher in large-group markets and 80% or higher in individual and small-group markets. I believe the impetus for this rule is two fold: 1) to try to get insurers to minimize the costs associated with administration of the plan (so as to maximize their profits within the MLR restriction), and 2) to try to insure that any successful cost-effective care strategies that are adopted go directly to reducing the premium costs for enrollees. Insurers that fail to meet this standard must rebate some premiums back to enrolees. It doesn’t take much savvy to imagine that insurance companies executives would, in response to this reform of their market, launch aggressive advocacy strategies to modify these regulations in order to recoup their potential profit margins and maintain their obscene executive salaries.
Great debates have been sparked at DHHS and at the National Association of Insurance Commissioners over a wide range of MLR issues, especially around what types of activities should be included in the definition of ‘medical services provided to enrollees’ (should nurse advice lines and other ‘cost-containment strategies’ count as care?), whether federal taxes should be factored into or excluded from the calculations, to which types of plans should MLR standards apply (should mini-med plans be included?), and a whole host of other accounting, reporting, and procedural issues. Nothing generates gaming the system in Washington like new federal regulations, and health insurance lobbyists are having a field day. I had to laugh when I read that the former director of the Congressional Budget Office and president of the think tank American Action Forum was quoted as saying: “I was surprised to see the members of Congress try to influence this process.” Really?
In all the fuss, some of which has actually made it into the national news media, there appears to be one particular loophole for insurers that seems to have escaped much attention. This loophole is big enough to drive an armored truck through, on the way to the bank (with a brief stop-over in Wall Street to rack up some leveraged premium on the insurer’s stock price). When health plans, particularly HMOs, capitate medical groups and IPAs to service their enrollees, these plans typically pass, via the per-member-per-month cap payment, not only the risk of paying for care, but also much of the cost for managing the program. Capitated medical groups are often delegated the responsibility for paying non-contracted provider claims, credentialing providers, managing prior authorizations, investing in IT, marketing plans to potential enrollees, and a whole host of other administrative tasks normally performed by the plan. Yet in accounting for administrative overhead to meet the MLR requirements, it appears that these plans will be allowed to shift these administrative costs to their subcontracted medical groups and IPAs and count them as ‘medical services’. What a deal for the plans!
At a recent Department of Managed Health Care meeting in California, a representative of a large capitated medical group described the development of one of the first Accountable Care Organizations (ACOs) in the state, in concert with Blue Cross. When I asked this representative, during the public question period, which of the administrative costs associated with management of the ACO would be attributed to Blue Cross when it came time to calculate the MLRs for the plan; he at first hemmed and hawed, then said that the issue had not been discussed with the plan yet. Really? This far into the planning process, you would think that issue would be pretty high on the list. ACOs are not just going to be Medicare Advantage programs, they are going to evolve into the next iteration of commercial health coverage, and you can bet that many plans will skip right over shared savings and similar strategies and go directly to capitation, because there is nothing better for an insurance company than collecting premiums like a health plan, acting like a broker, and shucking all the risk on to the providers. At this same DMHC hearing, CAL/ACEP testified as to how EMTALA obligated providers were being ripped off by these unregulated subcontracting medical groups and IPAs, and left holding bags full of unpaid claims when these risk bearing organizations go belly up. The HMOs, of course, often respectfully decline to take responsibility for these unpaid claims. Remember the term ‘negligent delegation’ when an ACO near you goes bankrupt – it may come in handy.
But I digress. My point here is that, for some reason, DHHS seems to have been deterred from closing this ‘capitation-delegation model’ loophole in the MLR rules, and we can only hope they catch on before the rules are finalized.
ACOs are coming to a health care market near you. About the only real difference I can see between the ACO model and the ‘managed care model’ is that health plans (or Medicare or Medicaid) will be using incentive payments to promote cost-effective care, rather than (or in addition to) capitation payments as a risk sharing (or risk transferring) strategy. These incentive payments will include aggregate payments negotiated between the ACO and the payers, and incentive payments to individual providers within the ACO that are eligible to receive these incentive bonuses. This may seem like a new approach, but it is really not much different than the ‘risk pools’ that plans once used to incentivize medical groups and IPAs to hold down costs. I guess that everyone assumes that this risk-sharing concept has a better chance to work now that all these sophisticated tools like EMRs and chronic disease management advocates are around to help coordinate care. Some folks might argue that ACO incentives are about promoting effective care, but trust me, the emphasis is likely to be on COST first, and effective, second.
ACOs are not just meant to exist under the Medicare program, so it is likely that many of the payment methodologies and organizational entities (like IPAs, medical groups, PHOs, and integrated health systems like Kaiser) are going to get into the ACO game on the commercial side as well as the government payer side. Consequently, there might be an opportunity here to rewrite, at the federal and especially the state level, the rules under which commercial and government sponsored managed care has been operating for the last few decades. If you have the chance to influence the way ACOs will operate, and the rules they must follow, in your State, or at the federal level, you might consider promoting some of the following suggestions, which are born of many hard lessons learned from the most abusive and inappropriate practices of managed care plans and provider groups around the country (and especially in California, where managed care took root many years ago).
• A managed care model that limits the percent or number of physicians who have equity ownership of the organization is likely to promote both practice and payment policies that preferentially derive benefits for the equity holders rather than for the providers and their patients. Also, it is easier to get physicians ‘on board the bus’ if they all have an equal stake in the success of the organization. ACOs should have broad, and preferably equal, equity participation among all participating physician providers.
• Physician leadership in ACOs should continue to provide clinical services so that they experience the impact of the clinical practice policies they develop and promote.
• When developing payment policies for different physician specialties and roles in the ACO or Foundation model, consideration should be given to whether the physicians are obligated to take on the care of the under- and uninsured as a part of their practice, and these obligations should be considered part of the practice overhead of these physicians, relative to the physicians in the ACO who can and do decline to take on these responsibilities in their practice.
• Foundations and ACOs that are initiated by, or intimately tied to, hospitals have often and particularly used coercive tactics in negotiating contracts with hospital-based providers. Coercive contracting must be countered by strict rules regarding the development of fair market discount and other payment arrangements with hospital based providers, especially those whose ability to decline participation in caring for ACO patients is limited by EMTALA or by virtue of at-risk departmental staffing contracts with hospitals.
• Carve-outs and selective enrollment and dis-enrollment policies must be strictly limited in order to ensure that ACOs and Foundations do not game government sponsored capitation programs.
• Primary care centered ACOs should not be responsible for the payment of the claims of non-contracted non-elective services, as this will encourage these ACOs to inappropriately pay claims rather than manage patient care as a means of reducing costs and increasing profits.
• ACOs that take on claims payment responsibilities for all professional services should be required to contract for non-elective as well as elective specialty care services, so that the ACO does not have to rely on the EMTALA obligation of ED on-call specialists for non-elective and after-hours care.
• ACOs should not be delegated the responsibility by a health plan for paying the commercial claims of non-participating providers: this should be the responsibility of the health plan, with cap deductions or risk pool arrangements to ensure that the ACO does not over-utilize non-par provider services.
• If an ACO becomes financially insolvent, the health plan should be responsible for unpaid commercial ACO-delegated claims, under the concept of negligent delegation.
• ACOs should be accountable to their community, and not just to their assigned patients.
• ACO administrative overhead should be counted against the 85% mandatory health plan medical loss ratio requirements under health reform.
• If an ACO does not have a nurse-advice line or similar mechanism for assisting patients in deciding whether or when to use emergency department services, it should not be allowed to retroactively deny coverage for emergency department services based on the prudent layperson standard.
• Hospitals that participate in, contract with, or develop ACOs should be required to collect data on hospital inpatient and outpatient care services and outcomes that can be accessed and reported by ACO providers in order to meet performance and reporting benchmarks.
Courtesy of a recommendation from a friend, Dr. Joel Stettner, let me also suggest you view the following video, which is very funny, and sadly all too accurate: