Tuesday, September 16, 2014

Although Not Typical, Walmart’s Employee Benefit Costs Worth Noting

A recent CNBC article discussed Walmart’s announcement that it will spend far more than anticipated on employee health coverage and have to trim its earnings forecast for the year. The retailer expected more workers to seek coverage under the Affordable Care Act’s (ACA) mandated coverage requirement, but the actual number topped their projections. Although this news has gotten a lot of attention, National Business Group on Health research indicates that most employers aren’t expecting as large of a jump in healthcare costs as Walmart, and Truven Health research supports this. As the CNBC article points out, Walmart’s employee base has some unique characteristics -- including low-wage workers in states where Medicaid expansion didn’t occur, forcing them to chose Walmart (rather than Medicaid) coverage. These aren’t typical employer circumstances.

Nonetheless, after years of low healthcare inflation, employee benefit costs have grown this year, and Wall Street is going to be keeping an eye on the impact to every company’s bottom line. For employers, monitoring benefits spend and strategy is more critical than ever. Equally important will be engaging employees in healthcare decision making, improving health and productivity through wellness programs, and remaining vigilant on fraud and waste.

Anita Nair-Hartman
Vice President Market Planning and Strategy

Friday, September 12, 2014

Penalties for Avoidable Medicaid Readmissions….And the Gang Piles On

The release of the list of Illinois hospitals penalized for avoidable readmission of Medicaid patients in a recent Chicago Sun Times article was interesting reading! While the list was led by two brand name hospitals, Ann and Robert H. Lurie Children’s Hospital of Chicago and Rush University Medical Center, the list also included John H. Stroger, Jr. Hospital of Cook County, University of Illinois, University of Chicago, St. Mary, St. Catherine, and others with long histories of treating the poor and disadvantaged.

Policy wonks argue that the only way to reduce delivery system fragmentation, which is known to cause quality gaps, is by creating penalties that force changes in the structure of the delivery system. Development of metrics that force hospitals to be responsible for care beyond their current control has become much more common. Why? Because it’s the hospital that has the staff and financial resources to make changes in the delivery system across the community. If the penalty is high enough, the hospitals will innovate to avoid the penalties, ultimately transforming the healthcare system.

Transformation requires innovation, trial, and error, and the ability to rapidly correct error. Setting policies that attempt to drive innovation in the delivery system via stiff penalties is innovative itself! This approach might be reasonable if government could act fast enough to adjust for error inherent in the innovation process. However, in a democracy, government is deliberative by definition, and therefore slow to act. It is especially unfortunate that states are piling on to extend avoidable readmission penalties without taking into account socio-economic conditions of patients. Both state and federal government could simply exempt or reduce the impact of the penalties on safety net hospitals now. There are existing socio-economic adjustment methodologies that have been used for over a decade by health systems like Dignity Health. Neither solution is perfect, but fast action is necessary to reduce safety net hospital financial harm that is being exacerbated by the state “pile on.”
There is no doubt that the government is trying to innovate, and I applaud those efforts. Using hospital penalties to drive innovation and delivery system structural change might even work well in some cases.  But the risk of government’s inadvertent commission of “avoidable error” is too great, given its slowness to act. It would be better to run a few small pilots first to get the kinks out. Then, when the piling on occurs, it will not hurt those that are already hurting.

To read more about the connection between socio-economic factors and readmissions, download our white paper, Community Need Association with 30-Day Readmissions.

Jean Chenoweth
Senior Vice President, Performance Improvement and 100 Top Hospitals

Friday, September 5, 2014

Walmart’s Move into Primary Care

Last year, Walmart announced a plan to provide full primary care services to consumers nationwide within five to seven years. With its latest announcement, as reported by The New York Times, it now intends to start fulfilling its promise. Starting with six clinics in South Carolina and Texas, Walmart announced its intention to open six more clinics by the end of 2014. Walmart stores are often in rural areas that are medically under served, and they may be leveraging their locations to provide medical services in these under served areas. A big winner in this new development may be QuadMed, the service provider who won the contract to partner with Walmart in this effort.

How Walmart intends to use these primary care clinics isn’t completely clear. The traditional QuadMed model has been to provide comprehensive primary care services and to be the patient’s sole primary care provider. Their clinics typically use primary care doctors, with nurse practitioners supplementing the care. Specialty care is typically referred to the specialists in the community, but QuadMed doctors provide all the primary care, even in the care of complex cases.

But in the Walmart deal, there’s a subtle difference. Nurse practitioners will be providing the care with oversight of physicians, but the physicians won’t actually see patients – just providing oversight. This is a different model that may have implications for Walmart. As reported in The New York Times, the QuadMed Medical Director, Dr. David Severance said, “In that circumstance (complex care patients), it’s our desire to get those individuals established with a primary care provider, preferably a physician within the community.”

This is a different approach for QuadMed. The Walmart clinics won’t be a primary care center, but will employ a nurse practitioner model that uses physician in the community for primary care, in some cases. This model has similarities to the Walgreens and CVS approach of “retail clinics” that provide a limited scope of services and don’t deliver primary care. QuadMed has provided more comprehensive services, that of a patient-centered medical home led by a strong primary care physician. Their clinics have an excellent track record of providing cost-efficient, high-quality care in a timely manner. This new model of care will need to be delivered with a mid-level approach and a partnership with a physician in the community. That may be tricky.

The Walmart approach to delivering outpatient care could fill an important void, especially in under served areas. I was surprised to learn the Walmart clinics will only be open 8:00 a.m. – 5:00 p.m. Monday through Saturday, and 10:00 a.m. – 6:00 p.m. on Sunday. I imagine the hours will expand over time to offer more evening hours to better compete with urgent care centers—especially in Texas, which doesn’t restrict free-standing emergency and urgent care centers. To be successful over time, the clinics will also need to accept their patient’s private insurance; this will be another change in the QuadMed model.

Medical care can be fragmented, with multiple physicians treating the same patients, but not communicating well. This fragmentation can lead to medical errors, inefficiencies and increased cost. The physicians overseeing the Walmart clinics should have a clear method of communicating with other physicians caring for these patients, ensuring all involved are aware of any diagnoses and treatments resulting from the clinic visit. There should also be a method to avoid duplicate lab tests and x-rays – a common problem in today’s medical care community. Well-run centers generally do a better job of using generic prescriptions, managing referrals to specialists, and avoiding unnecessary tests, especially CT and MRI exams. Since the actual care will be delivered by nurse practitioners, not by physicians, close oversight will be important to avoid these pitfalls.

This is a big step for Walmart, and I’m hopeful these clinics perform well. Will Walmart one day be the largest provider of primary care in the U.S.? Don’t be surprised to see that happen.

Michael L. Taylor, MD, FACP
Chief Medical Officer

Thursday, September 4, 2014

Ensuring Success in the Health Plan Marketplace

A recent New York Times article discussed the impact of competitive health insurance markets on the cost of purchasing health insurance, particularly via Marketplaces. Health plans are just beginning to understand and create market-based products tailored for consumer needs and market competition. Competition motivates health plans to improve value and align consumer needs with products and services, resulting in the consumer benefits of lower premiums and additional services and coverage. As part of the retail and complex channel strategies for health plans, aligning consumer needs (provider network, out-of-pocket-costs, and service coverage) with their products becomes increasingly important, as does ensuring appropriate consumer education on plan design choices, cost transparency, and engagement in healthcare. Health plans that can manage these aspects when offering products in the new Marketplaces will have greater success – gaining more consumers and keeping them for the long-term.

Anita Nair-Hartman
Vice President of Market Planning and Strategy

Wednesday, September 3, 2014

Care Coordination Under Medicare

The recent announcement by the Centers for Medicare and Medicaid (CMS) concerning payment for care coordination is a step in the right direction.

Dr. Matthew Press, an internist in academic medicine, aptly described how demanding excellent care coordination can be. In the August 13, 2014 edition of the New England Journal of Medicine, Dr. Press wrote of his work with a patient (Mr. K.) who had recently been diagnosed with a mass in his liver:

“Over the 80 days between when I informed Mr. K. about the MRI result and when his tumor was resected, 11 other clinicians became involved in his care, and he had 5 procedures and 11 office visits (none of them with me). As the complexity of his care increased, the tasks involved in coordinating it multiplied. I kept a running list and, at the end, created an “instant replay” of Mr. K.'s care (see diagram; also see animation, available with the full text of this article at NEJM.org). In total, I communicated with the other clinicians 40 times (32 e-mails and 8 phone calls) and with Mr. K. or his wife 12 times. At least 1 communication occurred on 26 of the 80 days, and on the busiest day (day 32), 6 communications occurred.”

Dr. Press went on to comment he doesn’t have a full-time practice, but splits his time between teaching and caring for patients, and acknowledged how difficult care coordination can be for a physician practicing medicine full-time.

Many primary care physicians have provided care coordination without compensation, but it’s hoped this policy change by CMS will drive improved outcomes. I should point out that care coordination is an integral part of the patient-centered medical home concept. It’s generally a process used by most organizations that provide care using a team-based concept that is value-based, not based on traditional fee-for–service reimbursement.

There will be challenges.  Most physicians are highly ethical, but there’s a potential for abuse and perhaps even fraud. I can imagine a physician hiring a nurse practitioner to do nothing but make telephone calls to elderly patients with several chronic diseases. The CMS requirement for the patient to agree, in writing, beforehand and the patient footing 20% of the bill should drive accountability, but this new program will require oversight. Is the $42 per month proposed by CMS enough compensation to make this worthwhile? I would expect that smaller practices won’t find this feasible at that rate of pay. The requirement that someone from the medical practice be accessible 24/7 may also give physicians some pause.

Even with the inevitable uncertainties of any new program, I think larger, well-organized practices will find this new policy helpful in caring for some of their most complex patients, and I’m hopeful many practices will integrate care coordination into their management of the care of these patients.

Michael L. Taylor, MD, FACP
Chief Medical Officer

Tuesday, September 2, 2014

Large Employers Continue to Manage Their Healthcare Spend

A recent survey published by the National Business Group on Health (NBGH) found large employers haven’t stopped trying new ideas to control their healthcare spend. Various consulting firms have predicted anywhere from a 4% to 9% healthcare cost increase for 2014, with a sharper uptick in 2015, so these strategies are very important. The medical spend trend in the past several years has been more moderate due to a combination of lingering effects from the recession and payment reform. What strategies will employers use to control costs in the future? Here is a partial list (in no particular order):
  • Employers will continue to implement higher co-pays and deductibles. This has been occurring for 20 years with the employer typically paying 70-80% of the cost and employees picking up the rest.
  • The use of high-deductible health plans (HDHP) will continue to grow, with deductibles above $1000. HDHP include the full cost of all prescriptions as part of the deductible, and employers expect that strategy to drive more transparency around drug costs and a higher demand for generics.
  • Employers will more carefully consider the use of spousal surcharges. The logic is that if a spouse has other coverage because they work at another employer, the spouse should take that coverage. Spousal surcharges run more than $100 per month, and are intended to incent the spouse to seek other coverage.
  • Large employers haven’t given up on wellness programs. We will see continued interest in financial incentives to change behavior, with a minority of employers incenting outcomes such as weight loss, tobacco cessation and physical activity.
  • Many employers haven’t found value in disease management programs and are looking into other ways to help employees better utilize healthcare services. The future of disease management programs is unclear, but providers are working hard to target these programs to patients who are most likely to benefit.
  • “Specialty drugs” or “biologics” are a growing cost issue. As has been reported by many, the new Hepatitis drug costs $84,000 for a 12 week treatment. Specialty drugs consume roughly 25% of the drug spend, but are projected to rise to nearly 50% in the coming years. Employers will likely use step therapy and prior authorization programs to manage these costs.
  • Interest in narrow networks will continue to grow, including incentives to receive care at distant medical centers and “Centers of Excellence.” Large employers with many employees at one location are studying the feasibility of contracting with only a few hospitals by offering the hospitals a larger volume in return for a lower unit price. I believe this will be limited to certain procedures (cardiac bypass, hip and knee replacement) rather than full alliances.
  • Employers will continue to drive “pay for value, not volume” payment reform. This is a newer trend, but I believe it will grow substantially in the next several years. Employers want to know they are buying high quality healthcare, and not paying for wasteful unnecessary care.
  • Employers are still considering more transparency tools to help their employees understand cost, but many employers are looking to their health plans to provide these tools.
  • Most employers have shifted their retiree benefit plans (especially for the pre-65 retirees) to an exchange, rather than allowing the retirees to remain on their traditional plans.
  • Some employers are looking to public or private exchanges. These conversations are less likely to be occurring for those who employ large numbers of knowledge workers; most of this activity will likely take place among companies that employ low-margin service employers.
Our clients are studying many options. There is no single clear strategy; every employer has a different culture, and a unique approach to managing costs. These choices are difficult for employers to evaluate, because there are so many variables and confounders that it’s difficult to know what parts of the strategy are actually working. Employers are depending more and more on data and analysis to understand all these moving parts. The one constant among all the variables will be the need for data and thoughtful analysis.

Michael L. Taylor, MD, FACP
Chief Medical Officer

Tuesday, August 26, 2014

Need More Evidence that Patient Education Can Reduce Readmissions? Start Here.

As healthcare practitioners and administrators, we are keenly aware of the complexities associated with preventing readmissions. Common questions that come to mind when tackling the readmissions dilemma include: What patient care and education interventions can we implement? Do we have a solid transition of care program? What is the cost impact to my organization, from direct costs to loss in reimbursement? Most importantly, how can we embed sustainable programs to avoid readmissions? 

Take for example the impact of medication management related issues as a factor for readmissions. In an evaluation conducted by Feignbaum, et al. at Kaiser Permanente, researchers studied factors contributing to readmissions within 18 hospitals (1).  Medication management issues impacted 28 percent of preventable readmissions and were identified as one of the top five areas for to prioritize for organizational intervention programs. Upon interviewing 189 patients and caregivers, researchers found that 32 percent of patients indicated they would have liked to have received more communication regarding their medications, and of these, 73 percent of caregivers indicated that lack of information was one of the components that lead to a readmission (1). This data, coupled with a recently published article by Mixon, et al. focusing on post-discharge medication errors, highlights a significant area of opportunity to prevent medication management related issues. The study indicates that medication errors ranging from omissions, commissions, and misunderstanding in indication, dose, and frequency were found in 50 percent of patients after hospital discharge (2). The groups most impacted were those with low health literacy and numeracy scores (2). These statistics are sobering and should make us want to re-evaluate our current approach towards medication-related patient education in order to improve our practices to reduce the risk for patient harm and eliminate avoidable readmissions. 

When creating a strategic approach to reduce medication management related readmissions and errors, organizations should consider the following areas of improvement:
  • Integrate medication handouts into Electronic Health Records (EHR) to optimize clinician work flow and enhance the patient discharge process
  • Provide patient education handouts that adhere to health literacy standards to improve patient comprehension and retention of medication management related topics with tools designed for those with greatest risk of non-compliance (low health literacy and numeracy)
  • Embed a “Teach-back Process” to validate patient and/or caregiver comprehension of the medication management related information provided
  • Provide low-literacy aids to augment learning with tools such as pill-boxes, text messages, and/or daily medication schedules
These interventions are not only meaningful for the clinical outcome improvement results they can provide, but they are also aligned with safety, regulatory standards, and compliance standards that lead to higher reimbursement payments. These incented standards range from reduction in readmissions related to medication management events, to attestation for Meaningful Use Stage II criteria for integrated patient education and improving patient satisfaction scores as evaluated by the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS) survey. 

Pharmacists, physicians and nurses, it’s time to ask yourself how your organization is approaching medication-related patient education. Has your organization mobilized the medication-related experts who impact care decisions at the point of care? Do you have the opportunity to improve your work flow to make time for caregivers to exercise best practices in education on discharge? Do you know how many patients you are discharging with medication errors? These questions can help you on the journey to reduce your medication management related risk and improve your organizational approach.

Arti Bhavsar, Pharm.D.
Consulting Manager


  1. Feigenbaum P, et al. Factors contributing to all-cause 30-day readmissions: a structured case series across 18 hospitals. Med Care. 2012 Jul:50(7):599-605. 
  2. Mixon AS, et al. Characteristics associated with post discharge medication errors. Mayo Clin Proc. 2014 Aug:89(8):1042-51.

Tuesday, August 19, 2014

The Newly Insured Don’t Turn into Primary Care Physician (PCP) Loyalists Overnight

When looking at the impact of the newly insured, the Philadelphia market’s experience of an 8% rise in emergency department (ED) use is notable. Moving from uninsured to insured status may happen in a day, but new health service use habits take time. The impact of the newly insured – via Medicaid expansion or private exchanges – is still unfolding.

Truven Health forecasts on the impact of the newly insured mirror the statistics noted in the Philadelphia Inquirer article, “With Health Law, ERs Still Packed.” In fact, young adults and children are more likely to use an ED when they have insurance versus when they had less insurance. Surprisingly or not, children, Millennials and young Gen Xers are not primary care physician (PCP) loyalists.

Join our webinar “What to Expect from the Newly Insured” to get highlights on what to expect, tips on how to prepare, and how to realize higher profits and deeper customer engagement.

Linda MacCracken
Vice President, Advisory Services

Wednesday, August 6, 2014

ACO Executives Struggle to Estimate Degree of Financial Risk

A recent survey found many executives of Accountable Care Organizations (ACOs) are struggling to properly estimate the degree of financial risk their organization can bear. These organizations would benefit from an actuarial assessment of the ACO population for which they are intending to provide care, but many ACOs don’t have the many types of data needed to properly estimate risk. There are two areas of risk to assess:


  • The cost implications for those patients with chronic disease: ACOs need to not only understand the costs associated with chronic diseases such as heart disease, diabetes and cancer, but also the prevalence of these diseases in the population for whom the ACO is assuming risk
  • The cost implications for those without a chronic disease, but at risk for illness due to lifestyle risk factors: A large volume of scientific literature has consistently shown that, in a given population, as the number of risk factors increase, medical cost rises.
Doctors may have this information for the patients for whom they are caring, but they won’t have the data for an entire population. It’s difficult to predict costs without prevalence data.

Obtaining the data necessary to do this risk analysis is therefore necessary, but can be tricky for ACOs. Multi-year administrative claims data can demonstrate the burden of chronic disease, although typically this data isn’t held by any single provider. Regarding lifestyle risk, many large employers use “self-reported” data from health risk assessments for this purpose, but ACOs generally do not have access to these data. There are other factors to consider to predict costs in a population. Socioeconomic factors, level of education, and ethnicity all impact medical costs, but ACOs may struggle to obtain these data as well.

Successful ACOs will need access to these data streams and the ability to analyze the data to make financial predictions and create viable business models. They will also need to factor in the cost of obtaining these various types of data to include in the models. They will then need to partner with doctors and hospital systems to provide high-quality, efficient care in order to be financially viable. It can be done – we have customers that are assembling and integrating multiple data streams, performing and monitoring the analytics, and sharing the results across their enterprises – with careful planning, close coordination, and transparent governance.

Michael L. Taylor, MD, FACP
Chief Medical Officer

Thursday, July 31, 2014

Enterprise-Wide View of Population Health Can Lead to More Value

The 2014 “Most Wired” hospitals from Health and Health Networks annual survey of hospitals are focused on supporting their organization’s initiatives to drive analytics for population health management. Rightfully so, they are looking at the extreme demands on their IT departments, their lower margins and the magnitude of change occurring around them to make deliberate and specific steps toward managing their populations’ health. Many of these experiments are happening in very discrete and targeted ways, employing resources carefully, all of which makes a vast amount of sense in the current healthcare landscape. The danger of this approach, however, is a myopic view of population health by the stakeholders that fails to deliver true organizational impact.

Equally critical to husbanding resources appropriately with these new endeavors is the need to have an enterprise view of how these strategies will play out over the whole network over time. A synchronized organizational strategy that involves all key stakeholders will guide resource decisions that will be critical in preventing future costly rework. A common aggregation of population health needs across stakeholders will often uncover the requirement to have a longitudinal view of patient data. This ensures common patient counts in the most basic of analytics, as well as more complex questions of exclusions, duplicative information and which measures matter the most to ensure compliance with quality, utilization and outcomes goals for the whole enterprise. Furthermore, the level of investment required for an organization to fully liberate the vast sums of useful data currently locked in provider facilities and data silos is a strategic choice better suited to serving multiple purposes to ensure that the investment reaps its potential economic value and supports enterprise-wide decisions.

Working with limited data sets in the short-term to quickly get an experiment up and running or focusing on meeting one Centers for Medicare & Medicaid Services (CMS) requirement must be in line with the long-term goal of having financial and operational metrics that are in sync, both for the clinician leveraging that data for his or her own practice as well as the CFO looking at the outcomes across a program, as an example. Neglecting to take time to sort through these universal data needs in the planning of a program can lead to frustration and a potential lack of trust in the data which will in turn severely challenge key stakeholder engagement.

It’s a simple idea that is much easier said than done in the real world.

A fully vetted strategy that is supported by partners with real-world experience on the cost/benefit choices to be made during these kinds of population health analytics efforts, will go a long way to set an organization on a track, break population health into manageable pieces, and ensure that the whole organization ultimately moves forward together. Without this alignment and focus, limited resources can be lost to isolated pet projects that fail to impact overall patient outcomes or the organization’s bottom line.

Rebecca Molesworth
Manager, Solution Management