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Contemporary Issues and Solutions for Complex Health Care Systems
- 1. Contemporary Issues and the Future of Complex Health Care Systems Tatiana Cornell The University of Phoenix
- 2. • In the 21st Century, health care leaders in the United States on a federal, state, and local level informed the public that rapidly rising medical costs in the context of poor health care outcomes are financially unsustainable (Beazley, 2010). • Today, more than ever, it is vital for all stakeholders, including patients, providers, health plans, employers, and communities, to come together in an attempt to find the most optimal ways of solving critical issues in health care associated with: • Reimbursement changes • The Affordable Care Act (ACA) • Shortages of clinical professionals Contemporary Issues in Health Care
- 3. Reimbursement Changes • Transitioning from the traditional fee-for-service (FFS) reimbursement model to the pay-for-performance (P4P) or value-based payment type is not only inevitable, it is also the most momentous change in reimbursement policy that our health care system will face in the 21st Century (Brown & Crapo, 2016). • This fundamental change is expected to unfold over the course of several years, allowing health systems to gradually adapt to this drastic alteration of the reimbursement landscape. • This change in reimbursement type is most likely to negatively impact hospitals’ reimbursement in the short run (Brown & Crapo, 2016). • To avoid dramatic financial losses in the long run, hospitals need to develop a robust strategic plan for success in the context of value-based health care (Brown & Crapo, 2016).
- 4. Challenges of the Volume to Value Reimbursement Changes • The mix of revenue will shift: the number of commercial payers will decrease, while the percentage of government plans will increase (Brown & Crapo, 2016). • During the transition period from the FFS model to P4P methodology, FFS revenue is projected to decrease faster than the P4P revenue model can establish itself as the law-of-the land reimbursement type (Brown & Crapo, 2016). • The burden of rising healthcare costs will shift from payers to providers. • Employers will be reluctant to continue covering the rapidly rising insurance premiums of employees, pushing their workers towards high-deductible plans (Brown & Crapo, 2016). • Employees will not be able to afford to pay the high deductible associated with these plans and are likely to skip preventative care all together.
- 5. Strategic Plan to Address the Risks of Reimbursement Changes • Ensure providing the highest-quality, coordinated, accountable medical care. • Provide accurate documentation, utilize coding and billing procedures in strict adherence with all the federal, state, and local guidelines. • Invest in risk adjustment reimbursement methodology training. • Negotiate shared saving contracts with payers to increase revenue.
- 6. Strategic Plan to Address the Risks of Reimbursement Changes • Invest in a sophisticated Electronic Medical Records (EMR) system with the capability of interfacing inpatient and outpatient procedure databases. • Avoid wasting time and money by tracking tests and procedures already performed and prevent adverse reactions by monitoring patients’ drug interactions through patients’ medication lists in EMRs. • Track and prevent 90-day readmission rates. • Monitor, minimize, and eliminate Hospital-Acquired Conditions (HACs).
- 7. Strategic Plan to Address the Risks of Reimbursement Changes • Diligently track and take advantage of every single Medicare value-based purchasing incentive. • Invest in a sophisticated health care analytics program that can facilitate the capture and translating of data and key metrics into clinical and financial strategies. • The key metrics most necessary to track and measure include throughput, quality, readmissions, mortality rates, cost per episode of care, and patients’ satisfaction. • Aggregate clinical and financial data.
- 8. The Affordable Care Act (ACA) • The ACA was signed into law by President Barack Obama on March 23rd, 2010 (U.S. Department of Health & Human Services (HHS), 2015)). • This law mandates that all legal residents of the United States (US) must obtain health insurance coverage (HHS, 2015). • It penalizes those who opt out of purchasing a subscription to a health plan (HHS, 2015). • The ACA forbids health plans to deny coverage for patients with pre-existing conditions (HHS, 2015). • This law requires payers to cap patients’ annual out-of-pocket expenses (HHS, 2015).
- 9. The Affordable Care Act (ACA) • The ACA guarantees 100% coverage for all preventative medical services, and they are not subject to deductibles, co-insurances, and co-payments (HHS, 2015). • To enhance preventative care in the US, the ACA promotes significant expansion of primary care in all communities. • The law also encourages health care organizations to transition inpatient admissions into outpatient settings whenever it is clinically appropriate (Barlas, 2014). • The ACA aims at minimizing hospital readmissions by reducing reimbursements to hospitals with high readmission rates within 30 days of a discharge (Centers for Medicare and Medicaid Services (CMS), 2016)).
- 10. Challenges of the ACA • As a result of the increase in the number of insured patients, providers have to treat a much larger population which helped lead to the current shortage of primary care providers (Clarke, 2014). • To prevent financial losses from covering all preventative services, health plans cut providers’ reimbursement rate making it even more challenging for hospitals to operate at a positive margin (Clarke, 2014). • The necessity to transition services from the inpatient to the outpatient setting lead to a significant loss of revenue amongst health care organizations (Barlas, 2014). • In addition, hospitals get penalized and lose revenue when they do not measure highly enough against national benchmarks in respective key metrics (Clarke, 2014).
- 11. Strategic Plan to Address the Issues Caused by the ACA • To reduce the shortage of primary care providers, the government and private health care organizations should offer various incentives for medical students to become primary care providers. • To address payers’ reimbursement cuts, health systems should start their own health plans where providers and payers can act as a united front. • To maintain a sufficient level of reimbursement while transitioning from an inpatient to an outpatient setting, providers will have to compensate for the anticipated loss of revenue by performing a larger number of outpatient procedures and streamlining the process. • To avoid payment reductions for frequent readmissions, great care should be taken to prevent patients’ infections and monitor the sterility of medical instruments. Clear, appropriate, and timely post-surgery instructions should also be provided at the time of discharge from the hospital.
- 12. Shortages of Clinical Professionals Issue • As was mentioned earlier, the ACA places great importance on patients’ access to primary care to deliver sufficient and timely preventative medical services (Clarke, 2014). • Because primary care providers (PCPs) earn approximately 50% of the salary of a specialist, medical students are reluctant to follow this path, resulting in a significant shortage of PCPs in the US (Herman, 2014). • PCP’s professional burnout is one of the main reasons that lead these physicians to decide to retire earlier than they previously had planned (Lopez, 2014). • A similar scenario in the nursing ranks resulted in a shortage of nurses in the US, as well (Lopez, 2014).
- 13. Strategic Plan to Address the Practitioners’ Shortages in the US • To increase the insufficient number of PCPs in the US, we need to start addressing the sky-rocketing tuition fees of medical students. • The government should create Medicare-sponsored medical schools that offer PCP programs at reasonable prices to encourage medical students to become PCPs. • Non-government organizations should offer scholarships and loan forgiveness programs for future primary physicians. • It is also crucial to allow room for more flexible scheduling and career- promoting opportunities for primary care physicians and nurses to encourage them to stay in the medical profession.
- 14. Strategic Plan to Address Contemporary Health Care Issues • Whatever the nature and direction is of a strategic plan that would address contemporary health care issues, it is impossible to accomplish without strong team work. • It is crucial to have the involvement of a multi-disciplinary and cross- departmental staff to ensure optimal coordination of care and health outcomes for patients (Brown & Crapo, 2016). • For best results, it is also critical to build a team from the bottom up using the advice concerned employees offer that can improve workflow and the bottom line of the organization (Brown & Crapo, 2016). • Once everybody at the company is on the same page, there should be an annual re-evaluation of previous strategic plans to ensure the organization is generating the most effective clinical and financial outcomes (Brown & Crapo, 2016).
- 15. References • Barlas, S. (2014). Hospitals Struggle With ACA Challenges. National Center for Biotechnology Information, U.S. National Library of Medicine, 39(9), 627-629, 645. Retrieved from http://www.ncbi.nlm.nih.gov/pmc/articles/PMC4159055/ • Beazley, S. (2010). A Brief Guide to the U. S. Health Care Delivery System. Chicago, IL: An American Hospital Association Company • Best Medical Degrees. (2016). Is Medical Degree Worth It Financially? Retrieved from http://www.bestmedicaldegrees.com/is-medical-school-worth-it- financially/ • Brown, B. & Crapo, J. (2016). The Key to Transitioning from Fee- for-Service to Value-Based Reimbursement. Health Catalyst. Retrieved from https://www.healthcatalyst.com/hospital- transitioning-fee-for-service-value-based-reimbursements
- 16. References • Centers for Medicare and Medicaid Services. (2016). Readmissions Reduction Program (HRRP). Retrieved from https://www.cms.gov/medicare/medicare-fee-for-service- payment/acuteinpatientpps/readmissions-reduction-program.html • Clarke, C. (2014). NueMD Blog. How the Affordable Care Act Will Affect Provider Reimbursement. Retrieved from http://www.nuemd.com/blog/affordable-care-act-will-affect- provider-reimbursement • Herman, B. (2014). Pay Gap Between Specialists, Primary Care Physicians Diminishing. Becker’s Hospital Review. Retrieved from http://www.beckershospitalreview.com/compensation- issues/pay-gap-between-specialists-primary-care-physicians- diminishing.html
- 17. References • Lopez, J. (2014). Clinical staff shortage: How your hospital can address staffing needs. Healthcare Business and Technology. Retrieved from http://www.healthcarebusinesstech.com/clinical- staff-shortage/ • Nugent, M. E. (2012). Delivering value to multiple stakeholders: 2013 and beyond. Healthcare Financial Management, 66(12), 55. Retrieved from http://search.proquest.com.contentproxy.phoenix.edu/docview/13 26435678/fulltext?accountid=35812 • U.S. Department of Health & Human Services. (2015). About the Law. Retrieved from https://www.hhs.gov/healthcare/about-the- law/index.html#
Editor's Notes
- Health reforms in the United States, as well as all across the globe, were triggered by the society’s need to curb rising health care costs, while improving health outcomes. Multiple studies reveal that this goal is unattainable unless all the stakeholders involved in the process of medical care in one way or another are actively participating and contributing their time, money, and effort to insuring the best health outcomes (Nugent, 2012). Physicians are expected to provide the most optimal medical treatment for patients’ conditions to improve, health plans are expected to promptly reimburse the medical services their members need for recovering, patients are supposed to comply with physicians’ recommendations, employers are expected to sponsor patients’ health plans to provide a sense of security for their employees, and communities are encouraged to promote healthy life styles by educating their members about wellness and nutrition, building fitness centers, and getting their population involved in various health-oriented community initiatives (Beazley, 2010).
- The fee-for-service reimbursement model traditionally rewards providers for the volume of performed procedures and, basically, encourages physicians to perform a maximum amount of treatments to optimize reimbursement. Providing unnecessary services leads to wasting payers’ financial resources. Furthermore, a large number of unnecessary treatments does not seem to translate to improved health outcomes making this scenario to be detrimental for both patients and payers (Brown & Crapo, 2016). Although physicians are generously compensated for their services in the context of the fee-for-service model, the rest of stakeholders are essentially on the losing end: patients do not get better, and payers lose money. To rectify this situation, the government has created various programs encouraging and incentivizing physicians to take responsibility for their services and strive towards optimal health outcomes for their patients (Brown & Crapo, 2016). By promoting the P4P or value-based services, the government declared its commitment for converting volume to value in health care, which appealed to commercial insurance companies only too happy to follow Medicare and Medicaid in this pursuit (Brown & Crapo, 2016). These initiatives are expected to enforce improvements in the delivery of care and significantly benefit patients and payers; but what does it mean for providers? For providers, transitioning from volume to value can ultimately make or break them. How can providers survive and succeed in this value-based era?
- As the baby boomers age, Medicare expenditures are expected to grow rapidly. However, Medicaid expenses are projected to increase even faster than Medicare expenses (Brown & Crapo, 2016). This trend was prompted by the Affordable Care Act (ACA) that authorized the Medicaid expansion starting in 2010. The percentage of retired baby boomers is expected to lead to a shrinking number of commercial health plans and, consequentially, to negatively impact hospitals’ bottom line (Brown & Crapo, 2016). The health organizations functioning with the FFS mentality in the P4P era are projected to operate with a -15.8% margin by 2021 (Brown & Crapo, 2016). In the last fifteen years, healthcare premiums grew from $6,000 to over $16,000 annually, which is roughly a 167% increase; employers’ contribution to employees’ health plans remained basically the same – 27% then and 28% now (Brown & Crapo, 2016). Providers’ profits will decrease in the context of the government health plans, the number of patients who can afford high-deductibles will become even smaller, and, in addition, providers will be penalized for re-admissions and hospital-acquired conditions (Brown & Crapo, 2016). What can hospitals do to survive in such a challenging time?
- By providing high-quality care, hospitals demonstrate their effort to cure patients and, therefore, produce favorable health outcomes for the society in general, create a great reputation for community hospitals, and generate high ratings on government-initiated surveys. These developments lead to an increasing volume of patients through word of mouth, payers’ recommendations, and inclusion of such providers in payers’ networks. Accurate documentation that supports medical necessity for performed procedures expedites the reimbursement time frame. Adhering to all coding rules and regulations prevents delays, denials, and guarantees sufficient revenue cycle management. The risk adjustment reimbursement methodology is based on evaluating payments according to a patient’s enumeration of acute and/or chronic diseases. The payment calculation is based on the per-capita historic healthcare cost trends for treating similar conditions in the context of other diseases. Hospitals and health systems with a large patient base can take advantage of the opportunity to negotiate their contracts with health plans; the more patients the providers treat, the better price they can agree on.
- Today, EMRs are not only the government’s requirement for the records’ meaningful use (MU), accessibility and interoperability; it is also a sufficient way to retrieve patients’ health and demographic information by different providers coordinating the course of a patient’s treatment. It is critical for an EMR to have the capability to interface inpatient and outpatient hospital databases to prevent duplicate services and, therefore, save money. It is also important for monitoring drug interactions by being able to check every patient’s current drug list and, thus, avoid adverse effects and improve health outcomes. In addition, a sophisticated EMR can alert caregivers about prior readmissions and help them design a treatment plan to prevent readmissions in the future. A similar scenario is possible to prevent HACs. Preventing readmissions and HACs can help health organizations avoid Medicare penalties and, consequentially, save some money in the long run.
- Hospitals need to stay on top of all shared savings programs to optimize reimbursement. Managing shared savings programs with profound expertise will increase incentives and, therefore, reimbursement, as well as improve health outcomes and decrease medical costs (Brown and Crapo, 2016). A health care analytics program is supposed to capture certain key metrics to make sound medical and financial decisions. These metrics include throughput or the time it takes to complete various processes, such as the interval between cases in the operating room (OR) or turnaround time for labs. Another metric is quality of care, measured against the government-defined benchmarks, such as the number of falls per month or appropriate and timely discharge instructions. Readmissions should also be carefully monitored to avoid penalties, while high mortality rates can result in loss of incentives (Brown & Crapo, 2016). Cost of episode of care is important to track and measure to justify expenses and develop strategies for even more appropriate and reasonable expenditures. Patients’ satisfaction level is now a major criterion not only for expanding a patient base, but also in directly effecting government incentives. The higher the satisfaction, the more significant the incentives. And finally, it is critical to utilize the EMR and health care analytics program that allows clinical and financial data interface and interrelate. Clinical and financial silos prevent conducting thorough and effective analysis and evaluation of health organizations’ clinical and financial outcomes. By analyzing both data in the context of health care organizations’ clinical and financial operations, senior management can measure the results against established standards and decide how to proceed with developing appropriate strategies for improving both processes (Brown & Crapo, 2016).
- This law was designed as one of the most significant pieces of health care legislation after establishing Medicare and Medicaid in 1965 (HHS, 2015). It was created as an alternative to the universal or national coverage plans existing in Western Europeans countries, Canada, and Japan. The law was devised to clinically, financially, and technologically transform the medical practice in the US (Clarke, 2014). Although it helped many patients to finally obtain health insurance, monthly premiums were still too steep for a large percentage of the US population. This issue lead to tremendous discontent amongst Americans who had to pay a penalty for opting out of purchasing health insurance. In addition, many of Obamacare plans have exorbitant deductibles making these plans virtually unusable (Clarke, 2014). Furthermore, the ACA caused significant financial losses for commercial health plans who were not allowed to deny coverage for pre-existing conditions and had to cap patients’ annual out-of-pocket expenses. To minimize their financial losses, commercial payers cut their reimbursement rates to medical providers (Clarke, 2014).
- Preventative services include wellness visits, mammograms, colonoscopies, vaccinations, medical screenings for gestational diabetes and HIV, etc. (HHS, 2015). By mandating insurance companies to cover all preventative services, the ACA strives to prevent the development of various chronic conditions and treat them in a timely manner if necessary. This initiative prompts the need for increasing the number of primary care providers who can offer these services in their practices. Notwithstanding, health plans were not so enthusiastic about covering preventative services without charging patients extra and responded to this challenge by reducing providers’ reimbursement to maintain health insurance companies’ profits (Barlas, 2014). The ACA initiative to decrease inpatient and increase outpatient procedures lowers payers’ expenses; however, hospitals lose a certain amount of revenue as a result of this transition (Barlas, 2014). What other issues emerge at health care organizations due to the ACA initiatives?
- Because specialists’ compensation level is significantly higher than that of a primary care provider, medical students have been leaning towards becoming specialty surgeons, who usually make twice more than family medicine doctors (Herman, 2014). It is imperative for the government and non-government health care organizations to find solutions to this problem. Much like in a domino effect, health plans’ financial losses from covering all patients’ preventative services encourage them to seek profit somewhere else (Clarke, 2014). Consequentially, they try to maintain their profits by cutting providers’ reimbursement rates; although patients benefit from finally having access to preventative care, providers suffer from lower payments. Furthermore, their FFS reimbursement is going through a stage of bundled payments, wherein a number of procedures historically performed to address a certain condition in a single episode of care is reflected in only one or two Current Procedural Terminology (CPT) codes instead of several codes that used to be billed separately prior to implementing the concept of a bundled payment (Clarke, 2014). Although it is designed to reduce costs, it puts a certain financial strain on providers (Clarke, 2014).
- Incentives for medical students to become primary care providers can include, for example, a financial loan relief plan, where graduates can pay a monthly amount based on the level of their salaries. Insurance companies want their enrollees to stay healthy so as to not require medical care while they are still paying their monthly premiums. This is how health plans generate profits. Providers generate income from patients being ill and needing their services. In the FFS reimbursement model, the more procedures providers perform, the higher their profits. To eliminate the discourse between payers and providers, health systems should launch their own plans. In this scenario, providers do not depend on a health plan to approve a particular procedure when they consider it clinically justified. Frequent hospital readmissions occur very often due to the HACs that could be prevented by strictly following medical protocols, ensuring absolute sterility, and monitoring patients’ post-procedural health status. It is crucial to attend to all aspects of a hospital stay to ascertain the most optimal health outcomes.
- The Council on Graduate Medical Education who monitors and reports physicians’ trends in the practitioners’ workforce projects a shortage of 85,000 doctors by 2020 (Beazley, 2010). This problem is much more significant in rural or Health Professional Shortage Areas (HPSAs) with affecting a population of 65 million people. To deliver sufficient care to this population, we need 16,585 primary care physicians (Beazley, 2010). For nurses, it is their demanding schedules of working 12 and more hours a day that triggers their professional burnout and decreases their enthusiasm about this profession (Lopez, 2014). What can be done to address this shortage of clinical professionals and boost their morale?
- Medical schools charge future doctors exorbitant amounts of money in tuition fees, ranging in total from approximately $208,000 in public to $279,000 in private universities (Best Medical Degrees, 2016). To obtain this degree, medical students have to study hard for many years, pass all the required exams, and, finally, take responsibility for human lives, once they become certified board physicians. We want physicians to embrace value-based care and be accountable for patients’ health outcomes, but how can they do it with sincerity, when they have enormous loans to pay off? This is where physicians’ financial interests can conflict with patients’ medical needs. Should they try to provide as many medical services as possible to raise their reimbursement or should they try to produce the most optimal health outcomes from the minimal medical interventions? This is the question we, as society, need to answer. Grueling work hours are also to blame for physicians and nurses’ professional burnout (Lopez, 2014). Maintaining healthy life-work balance is one of the most effective ways to manage stress. When physicians and nurses get to spend quality time with their family and friends, they are more likely to be rested and happy at work and create a pleasant and nurturing work environment for the rest of the staff (Lopez, 2014).
- It is tremendously important for all senior management teams to coordinate their actions and understand the extend and the significance of every department’s contribution to the success of the company (Brown & Crapo, 2016). Only when clinicians understand their impact on the financial performance of their organization, and financial management comprehends physicians’ reasons for performing certain procedures, can the organization count on both groups to collaborate in delivering high-quality care at affordable rates (Brown & Crapo, 2016).