2. CHASING THE CHEESE
Following Patients from Commercial
to Government Programs
Peter Winston
Executive Vice President
SynerMed
Adaptive Business Leaders
Los Angeles Healthcare CEO
Roundtable
October 17, 2014
3. The Good Ol’ Days
• Used to be, there was a complete bifurcation
of the marketplace – actually a trifurcation
– Commercial
– Medicare
– Medi-Cal
• And providers organized themselves into two
cohorts
– And never the twain shall meet
4. Banner Year – 1966
The rise in government programs began with
Title 18 (Medicare) and Title 19 (Medicaid) of
the Social Security Act
5. 1973
• The Federal HMO Act
• If an employer offered
coverage – and there was
an HMO in the area – the
employer was mandated
to offer workers a choice
• HMOs exploded
• Set the stage for the rise of the HMO (and the
marginalization of traditional indemnity coverage)
6. The ‘80s
• Managed care takes off
– The original “narrow networks”
– Medicare HMOs begin
– Medi-Cal experiments with PCCMs
• Payment Reform
– Early ‘80s = DRG hospital payments
– Late ‘80s = RBRVS provider payments
“As goes Medicare, so
goes the rest of the
healthcare industry”
7. The ‘90s
• PCCMs so successful, California decides to end the
program
• Replaced by a new Medi-Cal managed care model – or
rather, 3 models
– COHS – County Organized Health System
– GMC – Geographic Managed Care
– The 2-Plan Model
• By 1997, 50% of all Medi-
Cal beneficiaries enrolled in
managed care
10. The Aughts
• Implementation of Medicare Part D
• Otherwise, a relatively quiet period in
healthcare while the rest of the world was in
turmoil
– 9/11
– Dot Com Boom & Bust
– Wars in Iraq & Afghanistan
– The Housing Bubble
– The Great Recession
11. Picking Up the Pace
• 2010 – The Affordable
Care Act
• And the cheese moves
faster…
12. 2011
Conversion of Medi-Cal Seniors & Persons with
Disabilities (SPD) from FFS to Managed Care
And Baby Boomers Start Turning 65
14. 2013
• APR DRG (no more CMAC) in Medi-Cal
• Medi-Cal managed care expands to the remaining
rural counties
• Healthcare.gov and Covered California
• PCP Rate Parity between
Medicare and Medicaid
15. APR-DRG
• APR-DRG is determined thru diagnosis,
procedure codes, patient age, patient gender,
and other relevant information
• First is the facility
• Second comes the DRG
• Third comes the severity level
– Minor (1), Moderate (2), Major (3), Extreme (4)
• Mom & Baby generate 2 claims
– Currently they only generate one
16. 2014
• The REAL ObamaCare officially begins
– Initial roll out targeted at individuals
• Government subsidies available to more than 70% of
all sign-ups on the exchanges
• Rates of uninsured populations decrease, especially in
those states that simultaneously expanded Medicaid
• 3.4M fewer Californians uninsured
• Medicaid Expansion also subsidized by
federal gov’t
• 100% for first few years; then 90%
thereafter
• Strapped states ask, “Where will we
find the other 10% going forward?”
17. 2014 Medi-Cal Changes
• Low Income Health Program (LIHP) moved into Medi-Cal
managed care (Jan 2014)
– High cost adults who could not qualify for private coverage
• New Medi-Cal aid categories (Jan 2014)
– Childless Adults
– The 138’s (138% of the federal poverty level)
• New Medi-Cal HMO premiums move from aid category to
age/sex (July 2014)
– Pediatric rates set to decline
– Adult rates set to increase
• Governor Brown vetoes bill forgiving Medicaid payback on
beneficiaries who purchase insurance thru the exchange
18. • California’s 3-year Coordinated Care Initiative
(CCI) for the dually eligible Medi-Medi population
• Pushes all MLTSS (Managed Long Term Services &
Supports) from uncoordinated FFS into
coordinated managed care
– Custodial Care / Nursing Homes
– CBAS – Community Based Adult Services
– PACE – Program of All-Inclusive Care for the Elderly
– IHSS – In-Home Supportive Services
• Medicare is voluntary, but Medi-Cal is mandatory
19. What Do The Trends Show
Medi-Cal Enrollment Trend 2004-2013
21. Connectivity
• The trend started with ACOs
– Medicare focused on FFS Medicare patients
– Commercial created their own versions
• Sacramento – Dignity, Blue Shield, Hill Physicians, CalPERS
• All about sharing information
• Step 1 – Go electronic
– Movement from paper to Electronic Health Records
(EHR/EMR)
– But these are still silos until they are connected
• Step 2 – Connect thru an HIE
22. Drugstore Cowgirl
• 826 ER visits in 7 months in 5 counties
• 138 ambulance rides
– No one ever said no
• 226 doses of Dilaudid
• ER physicians ordered 178 x-rays
• Repeatedly transported, tested & medicated
23. Drugstore Cowgirl
(continued)
• ER Physicians “knew” the patient (as documented
in the medical record), but continued to do
complete workups and bill high level codes
– Hide behind EMTALA shield
• Hospitals create additional liability by not
providing adequate oversight over their ER docs
• Anyone who says they are “connected” is full of it
24. Health Information Exchanges
• Many start with grant funding, but fail because they don’t
have a sustainable business model
– One regional player did it differently
– IEHIE – is sustainable & expanded statewide
as a result of SynerMed and its
statewide IPA footprint
• 2014 saw a new player join the mix – Cal Index – looking
to startup by year end with $80M in initial funding
– Joint venture between Blue Cross,
Blue Shield and Dignity Health
– 9 Million members
• Question: Why have two HIEs in the same service areas?
– It’s all about control. Unless everyone joins the party, Drugstore
Cowgirl will continue her Yippeecayay ways
25. A Simple Start
• An ER Button
• All ERs required to query the HIE during
registration every time a patient shows up in
the ER – anywhere in the state
• The HIE pulls up all recent history
• But it also notifies the PCP, IPA and potentially
the health plan with a button or blinking light
for immediate case management intervention
• Why not???
26. Engagement
• Related to connectivity, but these are still
closed silos
– Hospitals building out portals for their patients
– However, it’s still a market share proposition
– How will new companies like Vivity communicate
– both internally amongst themselves – and
externally with non-Vivity providers?
• Or will they?
27.
28. Our Innovations
• The CONNECT Healthcare Ecosystem
— SHARE
— MATH
— CHECKBOOK
— CONSULT
— DIRECT
— COMPLEX CARE
— PLAN
— STORE
— BIRTHING CENTER
— MEMBER
— CAREGIVER
• Coming Soon!
HOSPITALIST/SNFist Portal
ED Portal
HIE integration (IEHIE)
PRESCRIBE
32. How is Your Cheese Moving Going Forward?
• Continued Expansion
– of Medicaid Managed Care
– of Subsidized Policies on the Covered California
Exchange
– of Medicare Advantage
• Continued Shrinkage
– of Commercial Health Policies - especially if employers
opt out of providing coverage for their employees and
put them onto the Insurance Exchanges
– of the Uninsured
• Continued Development of HIE Connectivity
33. More ObamaCare
• 2015 – Roll out for businesses with more than 100
employees
• 2016 – Roll out for businesses with between 50-99
employees
34. But We’re Not Done Yet
• More Service Integration
– More Mental Health Parity
– New Autism Benefits – How to implement
– More Counties in Medi-Medi Pilots
• More Vertical Integration
– Birthing Centers
– Ambulatory ICUs
– New Types of Risk-Sharing (more than just 2 partners)
• The Face of Competition is Changing
– More Limited Knox-Keene Plans taking Global Risk
– Vivity Health – “The enemy of my enemy is my friend”
• And personally counting down to retirement
– More Telehealth
– Bundled Payments
In actuality, the good OLDER days had just one product – commercial indemnity – also called “pay and chase.”
For the bifurcation that came later, it wasn’t just doctors. Hospitals would do it too, though they did it for different reasons. Hospitals couldn’t relocate like doctors. They inherited their neighborhoods, regardless if the neighborhood was moving up or down economically.
Story of the Social Security Act (1930s). Few if any had pensions. The New Deal created Social Security. Wouldn’t cost much because the average life expectancy was around 54 years of age.
Now move forwards by 30 years. Before then, everything was commercial … or just cash. Social Security is successful, but people are living longer. Then they hit 65 and their warranties run out. They spend every last penny on end of life care and die penniless.
In 1966 President Johnson signed into law Titles 18 and 19 of the Social Security Act as part of The Great Society. And the irony is that organized medicine was AGAINST Medicare.
Cash (and checks) was a known. Government funded medicine was a complete unknown.
So the first major cheese movement of the expansion of government funded healthcare happened 30 years after the creation of social security.
The cheese is moving.
Big Hair!
Managed care takes off – both pros and cons.
In Medi-Cal, the rise of the PCCMs = Primary Care Case Management. The California model had the DHCS serving as an HMO-lookalike in a shared risk arrangement with groups of doctors seeing defined populations of Medi-Cal patients. Originally there were 13, some whose names you might recognize, including MOLINA, TOWER HEALTH, and UNIVERSAL CARE. These were doctors who were SHUNNED by the medical establishment. Certainly revenge can be the best medicine.
But a bigger cheese-moving moment comes in the form of payment reform. Medicare grows into the 800 pound gorilla in the room. Prior to this, Kaiser was the Big Kahuna. And most, if not all health plans adopt these payment methodologies for paying hospitals (DRG) and doctors (RBRVS).
But not just government payment methodologies. Commercial insurance fees started to be set as a percentage of Medicare as a way of standardizing payments.
The pace of cheese speeds up, especially in Medi-Cal.
Managed care model includes 3 cheesy flavors – County Organized Health System (COHS), Geographic Managed Care (GMC), and the 2-Plan Model.
Mostly low-hanging fruit – TANF members.
Today, the distribution is two-thirds/one-third. And it will continue to move in this direction, as you will see in a few minutes.
Boomers are adding 10,000 new beneficiaries EACH DAY.
As part of the Affordable Care Act, ACOs focused specifically on Medicare FFS patients. The premise is to impose managed care practices WITHOUT adding a “Mother May I” component. This is the beginning of population health. CMS provides claims data so the ACO can see more of the picture rather than just the data that is in their own wheelhouse. What it also showed is that other parts of the country started to leapfrog over California’s step-by-step evolutionary process of moving to managed care. Data analytics explodes as a result of all this internal information sharing.
Hospitals have been paid Medicare DRGs for decades. Now Medi-Cal is changing the way it pays hospitals. APR-DRGs move hospital compensation away from per diem (CMAC) rates with rate differentials in Northern vs Southern California (based on Northern California market strength) and make them look more like Medicare (DRG) rates where everyone gets paid the same, but with its own Medicaid twists. Changes incentives for hospital from “heads in beds” to “profits are when heads are NOT in beds.”
PCP Rate Parity – paid 100% by feds for 2 years. What happens next? Who knows.
The big pieces of the Affordable Care Act are finally implemented. But there are still a number of major questions unanswered. Will beneficiaries in states that did not build their own exchanges be able to use tax subsidies? What about the religious doctrine as laid out in the Hobby Lobby case? What about the states that did not expand Medicaid?
With the change from aid category to age/sex, dollars will now flow to where the pathology lies. That will be little comfort to pediatricians, who have been paid at rates greater than 200% of Medi-Cal for at least 15 years. They won’t see it that way.
And most recently was the bill Governor Brown vetoed that would have exempted the 138s from having to pay back Medi-Cal for free health insurance.
Population has multiple chronic conditions
Uncoordinated care can have 10-15 physicians, each saying that they are the ones in charge.
These additional pushes put even more Medicaid beneficiaries into managed care. Hence the 68% managed care market penetration will now go even higher.
Medi-Cal has been growing, and will continue to grow with (1) Medicaid expansion, and (2) Cal Medi-Connect (which isn’t even on this chart). But if you think this is scary, wait until you see the next slide…
Take a good look at this slide. There’s a whole lot of cheese going on.
To say you are connected just opens you up to liability. The Dignity, Blue Shield, Hill Physicians, CalPERS ACO saved “millions”, but raises the question – what if the patient went to Sutter instead of Dignity? And what if it’s a Blue Cross member going to Sutter? Unless everyone is connected, you create more issues than solutions. Case in point, “Drugstore Cowgirl…”
Let me tell you about “Drugstore Cowgirl.” This is a real member.
Is anyone surprised that a patient comes in with complaints of trouble breathing after having 178 xrays? Some of these hospitals are in systems. They are already connected. So to my friends at the new VIVITY Health, even though you are focusing on commercial business, population health demands that you answer the question regardless – what will YOU do to avoid radiating patients 178 times in a year?
And in addition to the IV drugs, the patient is given scripts for pills to hake home, which most likely was her primary source of income.
Personally, ER physicians continually doing full workups on repeat patients whose history they know is nothing short of malpractice. That’s like the old days of E&M (evaluation and management) coding where you billed a high level code because an elderly patient was there for an hour. It’s not because she’s sick; she’s lonely. CPT codes changed to pay doctors based on brain cells used; not for being a babysitter.
So why do we still have these inane rules for ER physicians? And because the patient was known, even if the staff denied her requests for drugs, we read from the record that she would go into the parking lot and light up a cigarette waiting for the shift to change before reentering the ER. I’m just waiting for a good ambulance-chasing attorney to create a landmark whistle-blowing lawsuit (and I want a piece of it).
As an aside, don’t get me started on ER physicians and the EMTALA shield. On the one hand, they want to be paid for everything, whether the patient needs it or not, because of EMTALA. On the other hand, many of these same docs ATTEST to CMS that 60% of their business is primary care in order to qualify for the ACA Bump. So what are they? ER or PCP? And if PCP, can I deny their ER claims because primary care by a person who is NOT the patient’s PCP is deniable?
Does anyone remember Cal eConnect? This HIE was started in 2010 using federal dollars, but ran out of money in 2012. They turned over their operations to the Institute for Population Health Improvement at UC Davis.
The good news is that as of Sept 9, 2014, 9 regional HIEs joined CalDURSA (California’s Data Use and Recipricocal Support Agreement), a multi-party trust agreement that allows participants to use the federal Direct and Exchange projects, a standardized, secure method of sending encrypted health data over the internet. It is tailored to the policies, procedures and operational practices specific to HIEs in California. This will ensure data security and patient privacy while eliminating the need for point-to-point agreements and custom technologies, which all add to increase costs.
When talking about connectivity, I think simple. I’m a Medicaid guy. Much of what I see is viewed with Medicaid-tinted glasses. Connectivity is great, but everyone focuses on everything. As a result, nothing much gets accomplished. I believe in starting small. How small? How about an ER button.
And now, a few words from our sponsor – SynerMed.
Unique portals for different functions and different populations.
Development of customized portals. Goal is administrative simplification. But without connectivity, your portals are worthless. Our goal is to be an agnostic player in this space. It is not about Blue Cross vs Blue Shield vs anyone else in particular. It’s about what’s right for the patient.
Everyone wants to keep members healthy, but you must remember that every person has an expiration date.
