Payers & Providers Midwest Edition – Issue of April 19, 2011

8/7/2019 Payers & Providers Midwest Edition Issue of April 19, 2011

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In an early attempt to nd workablealternatives to fee-for-service medicine,Anthem Blue Cross and Blue Shield inMissouri and SSM Health Care have launched

a bundled payment initiative for certainorthopedic operations in St. Louis.

Since the rst of the year, Anthem has beenmaking a single xed paymentto SSM for all total total kneereplacement surgeries at theSSM Joint Replacement Centerat DePaul Health Center inBridgeton, Mo.

The at rate includes allcomponents of care: hospitalstay, physical therapy, durablemedical equipment,readmissions, and outpatient

postoperative care. It alsoincludes fees for surgeons,anesthesiologists, andradiologists.

The new paymentmechanism, while invisible topatients, is built on a recenthistory of collaboration amongproviders at the DePaul center,who have turned theirorthopedic service line into thewell-oiled machine that health-careeconomists and quality experts have longdreamed of.

Anthem came to us, said WilliamSchroer, M.D., an orthopedic surgeon whospecializes in knee procedures and whohelped create the program at DePaul. We are

getting our feet wet here. It allows us toparticipate in a program which is somewhatavant garde, which is what our history has

been the past ve years. Thisseemed like a logical nextstep.

It wasnt by accident thatAnthem sought out DePaul asa working partner. Followingthe thrust of the health reformlaw, the insurance companywas looking for ways toreimburse differently.

SSM has our Blue

Distinction Centerdesignation for total kneesand total hips, said RuthMeyer Hollenback, Anthemsvice president for providerengagement and contracting

in Missouri. We knew theywere high quality and an idealpartner for us to work with.

Anthem wanted to dosomething that was truly

innovative. A lot of people talk around it but

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In Brief

CON Denied toChicago Doctor AfterHospital Opposes Plan

A Chicago internists plan to enlargehis clinic in a Hispanic neighborhood

was derailed in the certicate of needprocess by opposition from Catholicgiant Resurrection Health Care.

Ramon Garcia, M.D., wasdenied an application to expand histwo-physician practice when theCON committee voted 4-1 toapprove it. The committee, whichpasses judgment on all medicalfacility expansions, requires a five-vote majority to pass a project.Three board positions are vacant,and one member was not present.

Garcia, a gastroenterologist, wantedto add urology services to his practice,at an additional investment of$15,000. However, Resurrection

lobbied against his application,arguing that the new services woulddeprive two of its hospitals, St. JosephMedical Center and Saints Mary &Elizabeth Medical Center, of patientrevenues.

According to a letter from SandraBruce, Resurrection CEO, the doctorwho would do the urology proceduresnow does them at the two hospitals,and his patient volume there woulddecline if he opened the new practice.

Garcia said the real reason forResurrections opposition was thelower prices he could charge for thesame procedures.

Trinity Health Will Pay$100 Million to Loyolafor Hospital Purchase

Loyola University Chicago stands togain $100 million from the sale of itsmedical complex in the westernsuburbs, announced in March. (Payers& Providers, 8 March 2011, p. 2)

Continued on Page 3

NEWS

Bundled Payments (Continued from Page One)

theres not much action, Hollenback said. Abundled payment would provide the nancialincentive for SSM to reduce unnecessary

care. And by monitoring and reporting, it willhelp them improve the quality of care. Louise Probst, executive director of the St.Louis Area Business Health Coalition, saidshe was thrilled by this collaboration. Fortoo long in healthcare its the patient or thepayer thats been left with the consequences,in human suffering and money.

Theyre saying, Were a team, we worktogether. We understand our processes andwe understand how to price this. As a resultof that condence, were able to offer a xedprice. Bundled pricing, she added, is really good

news for consumersSSM Health Care, based in St. Louis, is aRoman Catholic system with 15 acute carehospitals in Wisconsin, Illinois, Missouri, andOklahoma. It has 22,000 employees, 4,000licensed beds, and 5,800 afliatedphysicians.

Anthem, the Missouri Blue Cross and BlueShield plan, is a division ofWellPoint Inc.,the Indianapolis-based parent company of 14Blues plans around the country, and by somemeasures the largest private health insurer,with more than 33 million members. As far asHollenback knows, this is the rst such

attempt by a WellPoint Blues plan to enterinto a bundling arrangement with a provider.

About ve years ago, Schroer recalled,we came up with concept of starting ourjoint replacement center, a hospital within ahospital, for total knees and hips, withdedicated nursing staff on a dedicated oor.It would be different from other orthopedics.

Once they made this commit-ment, qualitymeasures improved, patient satisfactionimproved to over 95%, and volume nearlydoubled.

We are now the busiest total kneehospital in the St. Louis area, he noted. In

September 2009 the program was accreditedby the Joint Commissions Disease-SpecicCare Certication for knee and hipreplacement, the only such designation in thestate.

We have been seeking payer partnerswilling to work with us to restructure thenature of our contracts, said Robert Porter,chief strategy ofcer for SSMs St. Louisnetwork. With a bundled payment, we andthe physicians share the nancial incentive tooptimize the patients experience within thatepisode of care, to get to evidence-basedoutcomes in the most efcient manner

possible.Over the past ve years, hospital costs hav

increased and rates have increased, but

physician reimbursement has not increased.The standard fee schedule has declined, saidLisle Wescott, a network director for SSMOrthopedics, who worked with Schroer torene the DePaul operation. They reducedpractice variation, standardized protocols,trimmed waste, supply costs, and expenses foimplants all those things for jointreplacement that make cost variable across thcountry, she said.

When Anthem approached them, we werable to say, we can not only do this, we canexcel, she said. We have physicianengagement and alignment, we have four

years of physicians working with us on this.Thats what you have to do to do this withcondence.

If this group has been doing it better for anumber of years, Anthem is already gainingfrom those efciencies, said Paul Ginsburg,president of the Center for Studying HealthSystem Change in Washington. Anthemslong-term interest is actually getting moreproviders to do this. Its probably worth itswhile to contract with this system, because itcan show other providers, here are someopportunities if you want to improve yourdelivery.

Whether health reform moves forward ornot, there will be a time when fee for serviceis not the standard, Hollenback said. Whenthat point comes, WellPoint wants to haveexperience with other payment methods.

At WellPoint, she said, there are a numbeof procedures we are looking at for potentialbundles: colonoscopies, knee arthroscopies,laparoscopic cholecystec-tomies, coronaryartery bypass grafts, lumbar disk surgery andcervical disk surgery.

Anthem has already talked to SSM aboutexpanding to other bundled payments. Totalhips would likely be next, with cardiology to

follow, Hollenback said.These are steps toward creating an

accountable care organization, one of theintended goals of the recent health reform lawMany provider and payer organiza-tions aremaking the initial moves to creating ACOs.

I keep being encouraged by activity I see inthe private sector, Ginsburg said. Its hard toexecute Medicare reforms because CMSoperates in this shbowl environment,whereas private insurance can be moreexible, and more innovative.


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NEWS

In Brief

The purchaser of the universityshealth complex, Trinity HealthCorp., of Novi, Mich., willdramatically reduce payments tothe university. Between 2003 and2008, the medical complex paid anaverage of $31.9 million a year tothe university, as a subsidy to the

medical school. Going forward,Trinity will pay $22.5 million ayear.

The Loyola University HealthSystem has been a money drain to theuniversity since 2004. In 2009 it lost$37 million on operations and in2010, $7 million, according to CrainsChicago Business.

With the transaction, some $350million in debt will go off theuniversitys books but will stay withthe hospital system. The university hashad to make occasional advancepayments to the hospital to avoid anancial squeeze.

Trinity and Loyola have agreed to

put in $75 million each to construct anew research facility at the medicalcenter in Maywood, Ill.

Aetnas CEO WilliamsReceived $72 Millionin 2010 at Retirement

Ronald A. Williams, who recentlyretired as CEO ofAetna Inc., received$72 million in compensation in 2010,according to a report in the HartfordCourant.

The main form of payment was

$50.4 million for the exercise of stockoptions that were granted in 2001. Hereceived $1.1 million in salary, $2.75million in incentive pay, plus $2.3million in pension value.

Williams, 61, stepped aside as CEOat the end of November. He remainedchairman of the board until last week.Information about his compensationwas included in documents led withthe Securities and ExchangeCommission last week.

Aetna has 18.9 million peopleenrolled in its health plans and hadrevenues of almost $38 billion in2009.

The Department of Health and HumanServices introduced a proposal last week toreduce hospitals errors by 40% over the nextthree years, which would prevent 1.8 million

injuries and save 60,000 lives.The Partnership for Patients is intended asa public-private initiative among hospitals,employers, physicians, nurses, and patientadvocates to make hospital care safer, morereliable, and less costly.

Preventable complications duringtransitions from one care setting to anotherwould be reduced so that readmissions wouldfall by 20%. That would cut readmissions by1.6 million patients, HHS estimates.

These are big goals, said Donald M.Berwick, M.D., director of the Centers for

Medicare and Medicaid Services. But theresults for patients and families will bedramatic millions of people suffering less,tens of thousands of deaths averted, and

anguish and worry decreased beyondmeasure.Several years ago, as head of the Institut

for Healthcare Improvement, Berwickchampioned the 100,000 Lives campaign,which aimed to reduce medical errors in aspecic time frame. Using statisticalprojections, the project estimated that nearlythat number of patients would have diedwithout the changes in processes that wereintroduced.

Defying the wishes of his political party,Missouri Attorney General Chris Koster lastweek led an amicus brief asking a federaljudge to invalidate the central tenet of lastyears landmark health reform law: That allAmericans obtain health insurance.

Koster, a Democrat, joined the case broughtby Republican attorneys general and governorsin 26 states by ling a brief with the 11th CircuitCourt of Appeals in Atlanta. A U.S. districtjudge in Florida invalidated the Affordable CareAct in January, but held off enforcing his rulinguntil it goes to the appeals court.

In his brief, Koster argued that Congress

went beyond its legal authority when itincluded the individual mandate in the law.

Missouri has been trending moreconservative as of late. Koster, a Republicanuntil 2007, was under pressure to oppose threform law. A referendum againstimplementation of the law passedoverwhelmingly in Missouri last year, and bohouses of the state legislature had gone onrecord advising Koster not to cooperate withfederal authorities.

The federal courts, in reviewing thisaspect of the law, must either expandCongress Commerce Clause authority, justifthe provision on alternate constitutionalgrounds, or strike down the individual

mandate, Koster wrote in a letter to the cou

Koster Opposes Health Reform LawMissouri AG Files Brief Against Individual Mandate

HHS Wants to Reduce Errors by 40%Goal is to Save 60,000 Lives, Reduce Readmissions

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If you have ever taken the time to read ahospital bill, you will have no doubt noticedcertain things beyond the usually mind-bendingbottom line. First, they are about as simple tounderstand as a calculus problem written inRoman numerals.

Second, at some point most people noticeone particular line and say to themselves Howcome that single pill costs as much as an entireprescription I get at a drug store?

The question about drugprices could soon be asked farless often through the

expansion of the federal 340Bprescription medicationdiscount program enacted justa few months ago.

Originally passed in 1992as part of the Veterans HealthCare Act, the 340B programoffered a signicant wholesalediscount on pharmaceuticalpurchases to certain hospitalsand federal qualied healthcenters (FQHCs). But in 2010,the Affordable Care Act (partof the federal healthcare

reform package) expanded theprogram, allowing morefacilities around the nation toparticipate.

Currently, most hospitals are ableto purchase drugs at about a 15% to20% discount. The expansion of 340Bwill raise that discount to 51%. Studies showthat that could mean annual savings of $2 and$5 million for a typical 200-bed hospital.

The broadening of the program means thatsuch facilities as specialty hospitals (freestanding cancer hospitals, for example), ruralhospitals, and a broad range of smaller facilities

(such as health centers for the homeless) arenow eligible to participate.Additionally, off-site pharmacies owned by

any of the qualifying facilities may now takeadvantage of the program. Also, as in the past,all FQHCs, hospitals with a disproportionateshare of Medicaid patients and childrenshospitals may participate. All of the facilitiesmust be non-prot.

In the current climate of what can only bedescribed as shifting uncertainty!in regards tohealth care policy and nances, the expansionof 340B will certainly provide a modicum of

stability and a real savings for both hospitals apatients.!

So, whats the catch? There really isnt onHowever, 340B can be a rather complicatedprogram to initialize and manage. Like thatcalculus problem, 340B has a signicant numof regulations attached and even the process oeligibility determination can be quite dauntinthe uninitiated.

Therefore, it is crucial tany healthcare facilityconsidering joining 340B d

homework and know exacwhat will be expected of itits personnel from the verybeginning. It is stronglyrecommended that a facilind an experienced outsidpartner who has been thedone that.

Step one must be a revof the eligibility criteria tis no point to investing timand energy in trying to join340B if there is no hope ofactually happening.

Step two needs to be thcreation of protocols andprocedures as to exactly ho

the program will be implemented. example, the program does allow fothe offering of prescription discoundirectly to the public at off-site faci

controlled pharmacies but deciding whether onot you want to be involved in that aspect hasmade early in the process.

Step three is ensuring continuing compliaonce the program is in place. As with mostfederal programs, ensuring and proving regulacompliance can be challenging.

While 340B can seem daunting, whenexecuted properly the benets can be trulysignicant and improve both patient care andhealthcare facilitys bottom line.

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