Medicare Therapy Benefits Improved

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Some important developments have taken place within the past year in the way Medicare covers skilled nursing and rehab therapy services. Let’s take a look at the changes and how they may affect you or a loved one with Medicare

How It Was Before

First of all, let’s define the terms. The changes we’re discussing are grouped under the category of “skilled nursing care.” That term covers home health and nursing home care. It also includes outpatient therapy services, such as occupational therapy, physical therapy and speech-language pathology services.

Before 2013, Medicare’s policy was to cover skilled nursing care only under certain circumstances. As a patient, you had to demonstrate that you were regaining or improving your ability to perform certain functions in order for Medicare to pay for your services. If not, you could continue receiving the services, but you had to pay for them out of pocket.

What’s Changed

In 2011, the Center for Medicare Advocacy and Vermont Legal Aid filed a lawsuit against Kathleen Sebelius, then Secretary of the U.S. Department of Health and Human Services (HSS). They filed on behalf of four Medicare patients and five national organizations, including the National Multiple Sclerosis Society, Parkinson’s Action Network and the Alzheimer’s Association. The lawsuit, Jimmo v. Sebelius, was settled in 2013. As part of the settlement, the HHS agreed to relax Medicare’s requirements for coverage of skilled nursing and therapy services in institutional or home care settings.

As a condition of the settlement, in January of 2014, Medicare officials updated the agency’s policy manual. Any notion that improvement is necessary to receive coverage for skilled care has been removed. Per other conditions of the legal settlement, CMS has sent notification about the change in policy to a large audience, including health care providers, bill processors, auditors, Medicare Advantage plans and appeals judges.

Why It’s Important

It’s expected that the decision to remove the “improvement” requirement from skilled nursing and therapy services coverage will have a far-reaching effect on the quality of life for people with Medicare. Take, for example, someone with a disease like Parkinson’s or Alzheimer’s. You wouldn’t necessarily expect big improvement from therapy services like physical therapy or occupational therapy. But continuing to get those services might help you maintain your current condition and prevent further deterioration.

The Jimmo settlement may also help people with Medicare who want to avoid institutional care. That’s because it can sometimes cover services offered as a part of home care as well. But it’s also important for people who reside in nursing homes and receive care there.

What You Should Do

It’s important to educate yourself on this change in Medicare coverage practices, and make sure your health care providers know, too. Even after the official policy change and notification, some medical providers are still not aware of these Medicare coverage changes. You or a loved one may be denied coverage for the skilled nursing or therapy you need. If that happens, make sure you contact Medicare or your Medicare Advantage plan to appeal the denial, citing the change in Medicare coverage policy.

Retooling Hospitals – One Data Point At A Time

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When a car rolls off an assembly line, the auto maker knows exactly what parts, labor and facilities cost. Not so in healthcare and now some health executives are trying to make some changes.

Although U.S. hospitals account for the single largest chunk of the nation’s $2.7 trillion in health spending, few of them can say how much it actually costs them to care for every patient they admit.

“To think that health care is this ‘ginormous’ business that doesn’t understand costs is mind-blowing,” said Vivian Lee, senior vice president for health sciences at the University of Utah, an academic medical center with four hospitals and 1,330 physicians. In 2012, Lee was stunned when she challenged senior managers and physicians to find ways to reduce spending, and “they said, ‘We don’t know what it costs, so how can we manage it?’”

Today, the Utah health system is one of a handful in the nation with a data system that can track cost and quality for every one of its 26,000 patients. That data is shared with doctors and nurses for further input about ways to streamline cost and improve care.

In the first year, the system shaved nearly $2.5 million from a $1 billion budget, and officials say they’re in a better position to negotiate with insurers because they know precisely how much it costs to perform a particular procedure.

Their calculations include not just the salaries of doctors and nurses, but also those of cleaning crews, cafeteria workers and anyone who interacts with the patient – as well as the costs of drugs, lab tests and supplies, from gauze and surgical mesh to implants.

Several other systems, including MD Anderson in Houston and Intermountain Healthcare in Utah, are among a handful nationwide that have made such ambitious efforts.

“The primary purpose is to get better outcomes for patients while spending less,” said Bob Kaplan, a professor emeritus at Harvard Business School who blames the rapid escalation in health spending partly on the industry’s inability to measure cost and quality.

For now, the savings are accruing mainly to the health system, but they may lead to lower prices which make their way to consumers in the form of smaller insurance premium increases, as well as better care.

Retail Prices Often Bear Little Connection To Cost

To be sure, most hospitals have long lists of prices they charge for every service — from aspirin to MRI scans — and those end up on bills given to insurers and patients. But most hospital charges have little or no connection to what a supply, service or episode of patient care actually costs the facility.

For decades, hospitals had set those prices using an opaque process that relied on abstruse formulas to account for factors such as unpaid bills and inflation. The list prices that resulted were more akin to a car’s sticker price, used as a starting point for negotiations with insurers, who generally win substantial discounts.

“Some organizations are now trying to do what they do in other industries, such as manufacturing, where they know how much it takes to make the widget, in terms of time and materials,” said Cynthia Ambres, a principal at consulting firm KPMG.
The developments are key at a time when hospitals’ very survival may depend on how well they understand their costs.

“There will be hospitals that don’t … but they will go out of business,” warns Steve Johnson, who helped develop the new tool at the Utah health system.

Hospitals face huge financial pressures: Medicare payments are being squeezed. Insurers and employers are increasingly demanding data about quality and costs. And many policy experts, insurers and Medicare officials are urging a move away from the traditional way hospitals are paid – for each service, doctor visit and drug – to flat or “bundled” payments for a patient’s care.

Kaplan warns that without understanding “where inefficiencies, fat and waste are,” hospitals under pressure to reduce spending may make the wrong cuts.

Patterns Revealed By Data

At the University of Utah, Lee gathered experts across departments — from information technology, the data warehouse and the medical group — freeing them from their usual duties and sequestering them in a large room with an expansive view of Salt Lake City.

They developed a tool that today can pull data within minutes for an entire department and every physician and procedure within it, as well as for every patient treated.

Variations popped out: Why did the same surgery done by some physicians cost so much more than others? Were lower-cost drugs working as well as more expensive ones? Were lab tests being ordered unnecessarily?

Answers to some of those questions have helped the system trim costs in the past year, including:
— $556,300 from reducing the length of stays after kidney and liver transplants;
— $498,700 from developing standardized protocols for when to give patients expensive immune-system boosting drugs;
— $452,000 from lab test savings. Turned out, it wasn’t the really expensive tests that were driving up costs, but the sheer volume of lower-cost, often unnecessary ones.

In orthopedic surgery, for example, analysts found the cost of the same joint replacement surgery, performed by 10 different surgeons, varied by as much as $19,000.

When they drilled deeper, they realized that some surgeons focused on complex trauma and cancer patients. But even after taking that into account, cost still varied widely.

One reason was the different prices of the implants. The surgeons researched quality and agreed on a standard set that worked best.

They also created quality measures, including tracking whether patients were admitted to the orthopedic surgery wing, where nurses and other staff are experienced in their after-care. They found that patients did better if they began physical therapy on the same day as their surgery, and rescheduled therapists to be available late in the day.

Patients whose care meets all the standards are considered to have “perfect care.” Since the “perfect care” standard was adopted, the percent of patients getting it has risen from 40 percent to more than 80 percent while direct patient care costs have fallen.

While all hospitals need to better understand costs, many analysts say they can do that without going to the same lengths as Utah, said Jonah Czerwinski, managing director of strategic planning at the Advisory Board.

“The challenge is striking the right balance,” he said.

Lee believes that hospitals that develop the right tools will be the most responsive. “Ultimately, the entire health care system will be held accountable to provide high quality at lower costs,” she said.

Why Paper Prescriptions Are Going Away

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Charlie is like many patients. He’s in his late 50s, weighs a little too much and his cholesterol and blood pressure are both too high. To lower his risk of a heart attack or stroke, he takes pills daily to control his blood pressure and lower his cholesterol.

A couple of times a year, Charlie visits the doctor to make sure the drugs are working and aren’t causing problems.

The care for patients, like Charlie, has become easier in the last few years because of something that you might take for granted in 2014: electronic prescribing.
When Charlie needs a new medicine or a refill of an old one, his doctor sends the prescriptions to his pharmacy right from his or her computer — the same one that has replaced the paper medical records. The doctor’s ability to prescribe Charlie’s medicines electronically is a bright spot in what has been a painful transition to computerization in health care.

E-prescribing is no small feat. It requires that nearly every pharmacy in the country be networked. And the drugstores’ computers have to be able to talk the language of scores of different electronic medical record systems in use, none of which look or work exactly the same way.

For prescriptions, computers make a world of sense: Doctors and other prescribers can choose medications from a menu rather than having to remember the names and proper dosages. With patents’ insurance information, a doctor can figure out right on the spot which medicines are the best value — no more drugstore sticker shock. The computer also alerts the doctor to risky complications from combinations of drugs. And some other problems with paper prescriptions are eliminated, too. Errors caused by illegible handwriting. Plus, there is no worry for the patient about losing a prescription or never getting around to taking it to the pharmacy. About 1 in 4 paper prescriptions go astray.

All of this has come to pass in a little over a decade. A Virginia-based company called Surescripts (and its predecessors) made it happen. Surescripts is run by a consortium of pharmacies (think big chains like Walgreens and CVS, as well as small independents) and companies like Express Scripts that manage drug benefits.

Besides building a secure national electronic prescribing network, Surescripts made sure that it would work with more than 600 different styles of electronic medical records so that virtually every doctor’s office, whether large or small, could participate.

With the massive adoption of electronic medical records in the last few years, e-prescribing has reached a critical mass. In 2013, half of all prescriptions filed were transmitted electronically over the Surescripts data network.

“It’s a huge health IT success story for a small but crucial part of the medical universe,” says David Yakimischak, executive vice president of Surescripts, who also serves as general manager of the company’s prescribing network. Yakimischak says that in addition to improvements in convenience, safety and reliability, e-prescribing has an additional benefit that doctors love: the rate of unfilled prescriptions drops by 10 percent.

But does all this convenience add to our national health bill? Quite the contrary.
In the case of Surescripts, neither the consumers (patients) nor the main users (doctors) are charged for transactions. All costs are borne by the consortium that created and runs Surescripts, in relative proportion to their share of traffic on the network. “The efficiencies gained in time saved alone pay for the network’s costs,” Yakimischak said.

For all the success Surescripts has seen, there are critics. Data journalist Fred Trotter, author of the book Hacking Healthcare, describes Surescripts as “a monopoly, in all the worst senses of the word. They ensure a continuous drag on innovation. Mostly they are really slow. Slow to approve changes…. [and] slow to respond.”

Surescripts sees itself more as a utility that’s operating for the good of the health system. “We don’t use our size for economic leverage,” Yakimischak says. “We are always open to making things better. We welcome people coming forward with possible solutions or improvements.”

Doctors and patients, like Charlie, know they benefit from Surescripts. The patient’s prescriptions go seamlessly into his or her electronic medical record, and the doctor can see how good a job the patient is doing at taking what is prescribed. For the patient, refills are quicker and easier to get, and they’re safer, too.