CMS Has The Clout To Significantly Improve Health Care Delivery, But Fearing Political And Legal Backlash Has Settled Instead For Band-Aids


The U.S. spends some huge cash on healthcare; a staggering $4.3 trillion general and nearly $13,000 per particular person, which is considerably greater than what most different main nations within the developed world spend per capita. And, as I just lately opined on this column, we’re additionally getting sicker as a nation – practically half of the U.S. inhabitants now lives with at the very least one continual situation, comparable to coronary heart illness and diabetes, that are the 2 main causes of dying in our nation. We will largely thank an unworkable fee-for-service (FFS) mannequin, which prioritizes income over affected person outcomes, for the disaster we face at the moment. This damaged system has and continues to drive our nation’s failing healthcare supply system deeper into the bottom.

For many years, led by the Facilities for Medicare and Medicaid Companies (CMS), the nation’s largest payer, the federal government has tried, at instances admirably, to regulate rising healthcare prices whereas bettering high quality and affected person security, all whereas demanding accountability and worth transparency within the course of. Alongside their 40-year journey to reform, nevertheless, CMS has encountered fierce resistance from healthcare supply organizations, physicians and their highly effective lobbies in Washington, D.C. Should you observe the cash, the reason being apparent: FFS nonetheless pays the hospital payments. And, fearing political and authorized backlash, CMS as a substitute selected a piecemeal method to reform.

To grasp the place CMS missed the mark, it’s instructive to take a step again in time and chronicle a number of the company’s most noteworthy enforcement actions and the business response that ensued.

In 1983, CMS launched Prognosis-Associated Teams (DRGs). In easy phrases, as a substitute of hospitals billing Medicare for every cost for care administered, DRGs launched the idea of assigning a set worth for an outlined bundle of providers {that a} hospital would supply for various classes of diagnoses, whether or not or not it’s diabetes, coronary heart failure, pneumonia or different critical circumstances. It was the primary critical try to impose value controls in healthcare supply.

In 2008, CMS introduced that they’d now not be reimbursing hospitals for pricey and preventable ”By no means Occasions” or Hospital-Acquired Situations (HACs), together with affected person falls, surgical procedure carried out within the fallacious a part of the physique, surgical web site infections or stress ulcers. It was some of the transformative actions taken in recent times by CMS to lastly maintain hospitals accountable for the errors they themselves made within the administration of affected person care – and it didn’t take an act of Congress.

In a associated transfer, the company, in 2012, started imposing heavy fines on normal acute-care hospitals for Medicare FFS sufferers who have been readmitted, unplanned, inside 30 days of discharge for sure circumstances, together with coronary heart failure (HF), myocardial infarction (AMI), continual obstructive pulmonary illness (COPD) and elective major complete hip arthroplasty and/or complete knee arthroplasty (THA/TKA). Created by the Affected person Safety and Inexpensive Care Act (PPACA), the Hospital Readmissions Discount Program (HRRP) supported the federal government’s “nationwide objective of bettering well being take care of Individuals by linking cost to the standard of hospital care.”

In 2015, CMS continued its march to the promised land of value-based care by setting a benchmark of getting 85% of Medicare FFS funds tied to high quality or worth by 2016 and 50% of funds structured in line with different cost fashions (APM) by 2018. Regardless of falling in need of its 2018 objective, it was “the primary time within the historical past of the Medicare program that [Department of Health and Human Services] HHS has set express objectives for different cost fashions and value-based funds,” stated then-Secretary of the company, Sylvia Burwell.

Most just lately, final yr, CMS required hospitals to publicly put up their costs for 300 “shoppable providers” {that a} healthcare client can schedule prematurely. The objective was to extend transparency – a key ingredient of attending to a market-based mannequin. Whereas CMS optimistically thought these reforms would drive much-needed and lengthy overdue change, many of those so-called “fixes” turned out as a substitute to be band-aid options seeking an issue.

As I defined in our ebook, Bringing Worth to Healthcare, when bundled pricing for providers (i.e. DRGs) was launched, hospitals predictably tried to offset the decrease FFS revenues by ramping up demand and the capability to deal with extra procedures. For instance, they made new investments in diagnostic imaging gear and different know-how to maintain excessive revenue margin procedures churning alongside, amongst different money-making techniques. In essence, extremely environment friendly suppliers stood to make extra on providers like hip replacements, whereas these unable to pivot misplaced out. As writer Steven Brill succinctly put it on this Time piece, “all these high-tech advances – pacemakers, MRIs, 3-D mammograms – have produced an paradoxically upside-down well being care market. It’s the solely business wherein technological advances have elevated prices as a substitute of reducing them.”

Moreover, to protect themselves from malpractice lawsuits, suppliers have been beneath added stress to proceed turning up the quantity on the service code stage to offer extra healthcare. Compounding the issue, DRGs additionally severely diminished the function of medical doctors as “gatekeepers” liable for managing, coordinating and directing care in probably the most environment friendly manner potential.

Beneath this new advanced coding and reimbursement cost construction, which grew to become an administrative nightmare for compliance managers, physicians turned their power and a spotlight towards coding their interventions to attain most reimbursement. Finally, this meant devoting much less time and focus to their major job: caring for his or her sufferers. Medical doctors have been additionally resigned to ship their sufferers to see extra specialists for extra superfluous exams as a result of CMS care coordination reimbursement is minimal. The squeeze simply wasn’t definitely worth the juice. Alarmingly, in speaking to hospital executives from a few of our most revered establishments for our ebook, they instructed us that 30-40% of the “care” delivered at the moment isn’t clinically crucial!

Sufferers have paid a excessive worth whereas being shuffled aimlessly by a fragmented and siloed system that has failed to offer high quality care throughout the continuum. We see the ramifications of this technique enjoying out at the moment in our continual illness epidemic. The best shortcoming of the DRG experiment is that CMS by no means linked the brand new cost construction to affected person outcomes. The company additionally assumed that if prices have been lowered, supply high quality and affected person security could be a pure byproduct of change. That hasn’t materialized in any vital manner both.

When CMS stopped reimbursing hospitals for their very own errors, it ought to have set the stage for improved high quality and management initiatives. Nevertheless, the info reveals that hospitals are nonetheless largely thought to be unsafe. There are between 44,000 and 98,000 preventable hospital associated deaths annually, with affected person falls numbering someplace between 700,000 to 1 million yearly. In lots of circumstances, these falls end in harm and much more utilization. Leapfrog Group’s most up-to-date hospital security rankings of two,862 normal acute care hospitals discovered that solely 30% acquired an A ranking and greater than 40% acquired a C grade or beneath. One statistic reveals that greater than 50,000 lives could possibly be saved if “all hospitals carried out on the stage of A graded hospitals.”

With respect to hospital readmission penalties, greater than 90% of hospitals have been penalized at the very least as soon as since HRRP’s inception. Furthermore, current knowledge reveals Medicare is lowering readmission funds to almost 50% of all hospitals due to excessive readmissions. Whereas HRRP’s objectives are commendable, and fewer hospitals count on to be penalized subsequent yr, 1000’s of hospitals are being fined. That’s nonetheless 1000’s too many. Some hospitals have additionally discovered workarounds comparable to readmitting sufferers on “day 31” or, as one physician defined, treating sufferers within the ER or as “commentary stays” to keep away from readmittance penalties.

CMS’ efforts to tie funds to outcomes have clearly not had their supposed impact, and a part of the dilution has come from intense supply sector stress. All it’s a must to do is have a look at the business’s highly effective foyer teams – specifically the American Hospital Affiliation (AHA) and the American Medical Affiliation (AMA) – to search out quite a few makes an attempt to attempt to thwart these efforts at each flip.

When CMS introduced their guidelines for hospital worth transparency, the AHA fought the measure all the way in which to the Supreme Courtroom. As I defined amid the authorized battle, hospitals cynically disguised their opposition to pro-consumer reforms as affected person advocacy, arguing that even when the transparency rule have been to enter impact, pricing complexity would render the data ineffective to sufferers. The resistance to such a easy reform is totally mystifying – particularly when put within the context of how most different consumer-facing industries function, the place, at a minimal, prospects know the baseline value of services they’re paying for upfront.

Fortunately, hospitals and their beltway henchmen misplaced the transparency struggle, however regardless of issuing greater than 300 warnings, CMS has solely fined two hospitals to this point. Sadly, it has been extra bark than chew. The AHA additionally sued the federal government over the rule requiring disclosure of privately negotiated charges between hospitals and business well being insurers, and along with the AMA, additionally took the federal government to court docket over the shock billing regulation. The checklist of litigation goes on. These advocacy teams spend thousands and thousands annually on lobbying in Washington and revenue enormously from process coding. In addition they profit from the beneficiant assist of state and federal elected representatives who’ve excessive stakes in defending physician and hospital pursuits – a lot of that are states’ largest employers and political donors.

Whereas CMS has been attempting to enhance high quality and decrease prices in healthcare supply for many years, they’ve finally chosen to not train the facility and authority they’ve to alter the underpinnings of a failing and damaged system. Constrained by political stress and the specter of authorized motion, they’ve as a substitute pursued reforms on the margins. Failing to drive the business in direction of a value-based system that ensures accountability for affected person outcomes has allowed suppliers to proceed driving our damaged, unaffordable, fragmented and provider-centric FFS prepare. Persevering with down the tracks has led to larger prices which might be then handed on to business payers, who in flip cross them on to employers and finally customers within the type of larger deductibles and copays.

There are numerous sheriffs within the wild, wild west city of healthcare supply, all digging in to guard their very own pursuits – and that’s not good. Attending to a brand new value-based mannequin would require laborious work and introspection from all stakeholders, together with healthcare techniques, payers and pharmaceutical and system producers, to basically change the way in which they give thought to care and the way it’s delivered. However CMS, with its immense regulatory and market energy, has probably the most clout to revive regulation and order and obtain what all business stakeholders say they need, specifically “higher well being outcomes at decrease value.” For years, this mantra has been the business’s rallying cry for change. Nonetheless, the fact is that prices are largely not linked to affected person outcomes that think about crucial benchmarks like social determinants of well being (SDOH). In shying away from actively driving the business in direction of worth, CMS has been unable to interrupt the logjam. And, till they’re keen to exhibit decisive management and institute reforms which have actual enamel, the wheel of dysfunction continues to go spherical, holding customers helplessly caught in a system going downhill.

Covid-19 got here at a heavy value, with over 1,000,000 lives misplaced and hospitals hemorrhaging large monetary losses as a consequence of a FFS mannequin that buckled beneath the disaster. It was a jolting wake-up name for a sleepy business resistant to alter, but when we discovered something from the pandemic, it’s that timidity can now not substitute for actual management. We should demand accountability, prime to backside, from all who’ve a stake in healthcare supply’s future. CMS has demonstrated that they’ve the wherewithal to get it accomplished.

We hope the previous isn’t a prologue. However as I defined in my final column, the journey to inhabitants well being administration continues to be predictably painful and sluggish for well being care supply organizations, at the same time as they acknowledge that inhabitants well being is the longer term. As our Numerof & Associates 2022 State of Inhabitants Well being Survey Report discovered, continued fears over the specter of monetary losses stays the biggest impediment to adopting value-based care. With 2023 on the horizon, we are able to count on to brace for extra darkish and stormy days forward.