Opportunity in the Eye of the Perfect Storm
By Kim Michael--Contributing author John Collier--CEO Innovative Managed Care Solutions Copyright March 2015
As anyone in healthcare knows, healthcare in the United
States is undergoing significant change right now, much like the famed “Nor
Easter” that Bostonians refer to as “The Perfect Storm”. “The Perfect Storm” is when many different
weather patterns combine at a single intersection to become a “super”
storm. That is essentially what is
happening in healthcare.
First we have the Affordable Care Act, which will likely add
many millions of previously uninsured Americans (or Americans forced to change
insurance companies to an Exchange ACA Plan) to the category of the insured, however
the percentage of young and healthy people that the government had hoped to
sign on did not materialize as planned.
Instead the majority of the first wave of the newly insured were the older
and sicker segment of the population whose need for more healthcare per capita,
reducing their overall contribution, seriously skewed the delicate balance
between risk, cost and utilization.
Next we have the massive and costly system conversions, stemming
from requirements by the federal government and the ACA. This added meaningful use to the equation,
including electronic prescribing, and adhering to quality standards, for
physicians, at least called PQRS which many hospitals and healthcare systems
across the country entered into in hopes of better controlling costs and
creating better clinical outcomes through unified platforms and greater
transparency.
What many did not anticipate was the vast amount of time it
would require to complete, and the massive demand on internal resources it
would inflict in relearning and retooling to accommodate the new technology,
all while simultaneously working on the original system.
And if that was not enough, add to it a completely new
medical coding system (ICD-10) that will convert what was once 13,000 codes
(ICD-9) to over 68,000 codes –which will change on October 1st,
2015. Example: Instead of coding for a patient
who has had a toe amputated, coders will need to select the code that it is the
third toe on the left foot. The new
coding process involves much greater specificity and significantly more detail
in physician documentation, which leads to another issue that many coders have
with the process, even before ICD-10.
Healthcare associations across the country are already
warning that this alone will result in a black hole that will devour resources
on a massive scale, increase denials, slow revenue and reimbursement cycles,
and require staffs across the country to be completely retrained, and payment
systems retooled.
And if that is not enough to adequately call the current
healthcare environment--the “Perfect Storm”.
Add this to the mix:
*The Federal Government’s mandated
that all hospitals update
to accommodate Electronic Health Records (EHR).
to accommodate Electronic Health Records (EHR).
*CMS fee reductions reducing
reimbursements to hospitals often at or below
Cost.
*Federal government cutbacks
(sequester impact).
*More regulation on both hospitals,
physician groups, and insurance
Companies.
And beyond the provider’s doors, the world of third party
reimbursement is changing as well. A
snowball of increased patient pay involvement predicated by the rising and
unchecked costs of healthcare, perpetuated by the Affordable Care Act will soon
create a patient responsibility/liability “crisis” across the country that will
likely impact millions.
For an industry that is slow to change, the part of the Perfect
Storm that has already hit has left healthcare and the business of
healthcare—reeling; and there is still more to come. But there is a light at the end of the
tunnel.
Our system of healthcare is broken. I think most people will agree on that
point. In 2000 The Word Health
Organization ranked the US as 37th in the quality of care and first
in cost per capita. Since then a number
of studies doing similar rankings consistently find the US either last or near
the bottom, though it has yet to be established how these metrics are derived. Even so, it seems to be evident that Americans pay the most of any country in the
world for healthcare and yet the quality of that healthcare is seriously in
question. Even so, there are people (and
organizations) who are making huge profits, while the majority of the
healthcare industry is struggling just to survive, somewhat mirroring the polarity
in the US between the “haves” and the “have nots”.
The one reality of healthcare, and the one least talked
about, is that “true healthcare reform” in this country will not occur until
there is a solid commitment to fix the pieces that are broken. We can reduce fees, cut cost, increase the
number of insured people to off set rising costs, but until we decide to fix
what’s broken, it will continue to be broken.
How we got here (and why) is an interesting story.
Historically healthcare originated from different seeds of
the same tree--two distinct sides to healthcare. The clinical side, which dealt with treating
patients, curing disease, tending to the care of others, and tracking outcomes
became one branch; and then there was the business of healthcare, how those
services are billed and reimbursed became another.
As these two branches evolved through the years they became
two separate platforms and strangely, platforms that did not talk to one
another. To get them to communicate a
third language had to be invented which was called medical coding. Procedures and services had to be translated
into numbers and codes for the business side to know how to bill for them-but
before that could happen it had to go to a device called the “Charge Master”
which took the codes and translated them into costs so the billing platform
could bill for them.
Now complicating this even further was the physician’s part
of the bill that was separate from the hospital’s systems, and of course any services
like tests, lab work, x-rays, etc. were also billed separately and did not match
up because often times one did not know what the other was actually billing
for. So at the end of the day there was
no single point, where everything was actually visible— except the patient. But
because of the complexity of the statements, few patients had any understanding
of what they were actually looking at. Insurance
companies took on the role of managing costs by reviewing services and paying
claims, but not really managing the actual care of the patient, which was often
left up to the Primary Care physician, but once the patient was referred on to
either another doctor, specialist, or hospital, his or her ability to manage
that patient’s care became almost impossible to track and consequently impossible
to manage. As a result cost overruns, unnecessary tests, redundancy in
treatment and even fraud could occur with little or no ability to control it.
So this is where, at least one of the lights at the end of
the tunnel can be found. Most of the
advanced systems that providers are embracing the idea of converting to a unified system; the idea of a single platform that integrates all of the platforms
that didn’t, or couldn’t talk to one another before, theoretically creating a
single pathway that a patient’s care, and the cost of that care, could be
mapped and thus managed to create better outcomes and reduce interoperability.
But there are still other major pieces of this puzzle that
need to be fixed. Recently I spoke with
a friend who needed an MRI. One location
quoted him $700 while across town he got a quote for the same test and it was
$10,000. Same test. There is a huge discrepancy (and little or no
consistency) in the way healthcare is priced.
Prices vary from physician practice to physician practice, hospital to
hospital, demographic to demographic, and region to region; simply based on
what the market will bare. But history
has proven that market driven healthcare pricing rarely serves the needs of the
patients and often opens the door to what, in other industries, would be
labeled “price gouging”.
The same is true of insurance companies, all of whom negotiate
different terms and have different fee structures for each hospital, forcing
many hospitals and physician groups to have literally hundreds of separate
contracts on file; complex contracts that are constantly being updated and
changed, causing a ripple of costly inaccurate payments to occur.
And if true cost control is ever to happen, America has to
address the cost of pharmacy and drugs.
In all of these focus areas, each arm or leg of the healthcare industry
is extremely powerful because of the money they generate and the influence they
wield, but none more so than the drug companies. Drug costs in the US are many times higher
than any other country in the world. At
one point during the ACA negotiations the government considered allowing
Americans to buy drugs abroad, from places like Canada where drug costs are far
less, but the power of the US drug cartel crushed it. But if reform is to be driven by pricing, why
not open the doors to competitive world pricing like the world’s oil
market? This is the one area of
healthcare reform where price driven reform would work and significantly
balance (and reduce) drug costs through competition.
So all of these pieces of the Perfect Storm, if managed
properly, can have a happy ending, but it will require America to rethink what “reform”
really means, and to realigning itself with the best practices that serve the
needs of the patient--both clinically and economically.
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