Congress and the RAC Process

It was encouraging to see a letter from 111 members of Congress on February 10th related to the heavily flawed Recovery Audit Contracting process to Health and Human Services Secretary Sebelius.  The letter details the huge administrative burden that has been imposed on hospitals based on a flawed incentivized arrangement for Recovery Audit Contractors.  The RACs are paid a commission on the dollar amount of claims up to three years after services have been rendered.  Their commission ranges from 9% to 12.5% of the claims that they deny.  They pretty much deny every claim and once the appeal gets to the Administrative Law Judge (ALJ) level, the appeals are overturned since there are no incentives for the ALJ.  The problem is that the average ALJ can process 1000 appeals per year.  With the number of judges hearing appeals at 65 across the US, it would take a 77 years to get through the current backlog.

 Last month, CMS announced that it will now take up to 3 years to get a decision at the ALJ level.  The law states that a decision is required in 90 days.  The problem is that CMS can recoup funds at the first two appeal levels before the ALJ appeal.  So, CMS keeps their money, RACs receive their commission and hospitals that have provided the care are not paid for the care that has already been delivered.  What is important to note is that we have only lost one appeal at the ALJ level.  We are providing the appropriate care to our patients and that has not been lost on the administrative law judges.  Under any other circumstance, the RAC process would be shut down and its operators and beneficiaries would be charged with fraud.  But, because it's the federal government, it is allowed.  

Another interesting tidbit, yesterday CMS held a forum in DC to provide information on the RAC process.  Our Compliance Officer and General Counsel attended.  The gist of their message:  here are the things that you hospitals can do to bring improvement to the process.  They are finally looking to automate the process since it has been a mail process since inception.  They expect to be fully automated by 2016.  Where have we heard that before?

Since When Has Maryland Become Minnesota

Twenty-five years ago, I moved to Maryland, but this winter I now find myself living in Minnesota.  What happened?  In my neighborhood, we got about 8 inches of snow last Monday.  Then on Wednesday, two inches of ice.  To round out the week, another four inches of snow on Sunday.  And the entire time experiencing well below freezing temperatures.  To add insult to injury, another five to eight inches starting tonight and continuing through Thursday.  This morning, the temperature was ZERO.  The older I get the more I HATE winter.  My eventual destination post retirement will be Hilton Head and even there it's been winter.  I never imagined returning to Florida to live, but I may have to re-think that idea.  

I have also noticed that there hasn't been a lot of talk about Global Warming this winter.  Al Gore has quietly transitioned to dialoguing about Climate Change.  Could we do a better job of taking care of our planet?  Sure!  Is there more hype than substance to global warming and climate change, most definitely.  Remember, Spring is only 37 days away.

Private Sector CEOs Becoming Hospital CEOs En Masse

I read an article in Chief Executive magazine on the change that is occurring in hiring hospital CEOs. According to the article, hospital and health system boards are now pursuing replacement CEOs from private industry rather than experienced members from the hospital C-Suite.  They say that they want an outside perspective with the move away from a fee-for-service environment.  Sorry, but I am not buying it.  

With the changes occurring in health care today, there may be a unique situation whereby someone with a certain background is deemed to be well suited for a particular health system, but as a rule of thumb, no way.  The article cites a banker taking over a struggling health system in Miami.  They cite four additional examples where a consultant, a university president, a lawyer and a supple chain executive became hospital CEOs.  How many of them were hospital board members who thought that they could make the transition from oversight through governance to running the hospital, a business that Peter Drucker has called the most complex industry to run?  Again, there may be unique situations requiring a unique set of skills but the two-thirds of replacement CEOs expected this year coming from outside of health care ain't gonna happen.  

If CEOs from private industry think that there are too many regulations in their respective industry, try 122,000 federal health care regulations that health system CEOs have to be responsible for in their everyday work lives.  That doesn't include State regs, OSHA, IRS and list goes on.  They also have no experience in working with physicians unless you are the university president who could draw on his or her experience in dealing with faculty, which requires a different set of skills.  You just don't tell physicians that this is way it's going to be done so just go out and do it because I said so, as I have heard my business colleagues suggest from time to time.  

Now, I have seen an increase in the number of physicians being asked to become CEOs of a hospital.   If you have a physician who is a champion of the changes that are occurring in the health care delivery model, who embrace the triple aim of health care reform, who understand quality-based reimbursement, who are in tune with population health and is an adopter of evidence-based medicine, then you may have the right person for the job.  Taking someone from the private sector may work in certain circumstances, but not as the solution stated in the article.

An Exceptional Response, As Usual

Around 2:20 PM yesterday, a tour bus traveling from Altoona, PA, to Rocky Gap Casino went out of control and crashed.  The result of the crash was that 15 of the 26 passengers came to our Trauma Center and the remaining passengers were transported to UPMC Bedford.  Our Command Center was activated and the response was overwhelming.  The ED staff, the Lab, Radiology, Respiratory Therapy and a host of others, including many docs who were off, responded to assist.  For the most part, the passengers were treated for minor injuries and released.  Nonetheless, the dedication and teamwork when an incident like this one occurs is amazing and makes one proud to be associated with WMHS.

Taking That Very Difficult Step

This week our Alliance partner, Meritus Health in Hagerstown, announced that they were eliminating 120 positions by next week.  The cut will impact about 60 employees, including 43 with a reduction in hours.  As soon as the Meritus announcement became public, the other two Alliance Health hospitals were contacted by the local media in Frederick and Cumberland as to whether or not the staff reduction was related to the alliance.  The answer is no.  

Over the next few years, there will be less positions because of the alliance, but the objective is to control the reductions through retirements, turnover and attrition.  As few people as possible will be impacted through the creation of a Management Services Organization or MSO.  We are projecting considerable savings through the MSO, but at the same time recognize the importance of jobs in each of our communities.  The MSO savings will also allow us to save dollars that we would not be able to if we didn't form the alliance.  

We can certainly sympathize with both the leadership at Meritus as well as the employees as we took a similar step in 2012 when we had a net loss from operations.  When over 75% of our operating budgets are staff and “stuff,” there are only so many places to look for savings.  In FY'12, WMHS reduced our operating budget by $8 million; Meritus is projecting a $6 million to $7 million savings through their reduction.  

All hospitals are feeling the impact of changes in health care and we have to work together to ensure that care delivery improves while we reduce the cost of care.  This is why our new alliance, Alliance Health, with Meritus, Frederick and WMHS, is so important for both the current day as well as the future.

CVS and Their Decision to No Longer Sell Tobacco Products

It is admirable that CVS has joined the many independent pharmacies across the county in deciding not to sell tobacco products.  Most pharmacies haven't sold cigarettes in decades, but as of October 1, 2014, CVS will cease their sales.  The impact on CVS is around $2 billion in cigarette sales alone, WOW!  Now you know why it took so long.  Still no word from Walgreen's, the primary competitor to CVS on their decision, but they can't hold themselves out as having a strong commitment to health care, but continue to sell cigarettes.  Then there is Walmart that continues to sell cigarettes while espousing their commitment to healthier communities.  An interesting tidbit on that subject; last year at a Governance Conference, one of the WMHS board members asked the Chief Medical Officer for Walmart who was talking about their commitment to health care now and into the future as well as lecturing hospital leaders on the cost of health care, why Walmart continues to sell cigarettes and unhealthy foods if they are so committed to health care?  His response was that they continue to study the matter, but recognize that something has to be done.  I guess not anytime soon since the sales of both continue and will most likely grow.  By the way, Target has never sold cigarettes in its stores, but there is welcomed news for smokers; the dollar stores that seem to be opening another new store on an hourly basis, at least in my area, are now selling cigarettes at their locations.  They say that their shoppers at these discount stores tend to be smokers and they are trying to meet their needs.  I guess they never thought to do something responsible and not sell cigarettes in an attempt to get their shoppers healthier so they are around longer to shop in their stores.  Oh well, congrats to CVS on your decision but why does the decision take eight months to implement

Vinnie, You Just Can't Help Yourself

I just read a blog by Vinnie DeMarco, who runs the Maryland Citizen's Health Initiative, on the new Medicare Waiver in Maryland.  It didn't take long into his blog for Vinnie to insult all Maryland hospitals.  He describes life for hospitals under the new waiver that pretty much reflects what WMHS and nine other Maryland hospitals have been involved with over the last four plus years under Total Patient Revenue.  But, then he goes onto describe how Maryland hospitals will try to game the system by encouraging costly patients to go to other hospitals and skimping on care by discharging patients to skilled nursing facilities.  

All of our work over the last three years, which resulted in WMHS dramatically reducing readmissions, admissions, ED visits, observation stays and ultimately reducing cost of care, which resulted in WMHS paying money back to the State based on our achieved savings, seems to be for not.  In addition, what Mr. DeMarco fails to realize is that we have truly bent the cost curve under value-based care delivery, that the Health Services Cost Review Commission has been monitoring the performance of all hospitals under the Total Patient Revenue payment methodology for the last three years and that they will begin to monitor all of the hospitals in Maryland as to their compliance with the waiver.  The bottom line is that if we don't meet a lot of predetermined targets, Maryland hospitals will lose the waiver.  All Maryland hospitals have agreed that is not an outcome that we want so, gaming the system isn't an option.  

He complains of hospitals preparing to deliver too little care.  Grant you, it is a delicate balance when you begin to provide care in the most appropriate setting which may be in an acute setting, but it also may be in a clinic, a physician's office, a skilled nursing facility or even in the patient's home.  You can't accuse hospitals of driving up volume and the cost of care in one sentence and failing to deliver care to the patient in the next.  After a great deal of hard work, TPR hospitals have figured out that balance as the remaining Maryland hospitals will in the near term.

In closing, I found Vinnie's last sentence interesting in that the Maryland Citizen's Health Initiative is going to work with every stakeholder possible, including providers, as we make this journey together.  He certainly has a funny way of setting out on this self-described "collaborative" journey.