Are preference-sensitive surgical procedures a significant cost contributor for Medicare?

Medical conditions with more than one treatment option are termed preference-sensitive conditions. For many preference-sensitive conditions, surgery is one of several treatment options, and in some instances, several types of surgical procedures are available to treat a single condition. Surgical procedures for the subset of preference-sensitive conditions with surgery among their treatment options are termed preference-sensitive surgical procedures (PSSPs).

Variation in rates of surgery for preference-sensitive conditions commonly reflects a lack of strong clinical evidence or an unresolved debate about the efficacy of treatments. For example, greater disagreement among surgeons about the effectiveness of a procedure increases the likelihood of its geographic variation.

There is no industry standard definition or list of PSSPs, and no comprehensive list of PSSPs has been published. In addition, the contribution of PSSPs to total population costs has not been previously reported. However, shared decision-making (SDM) provides patients with a review of conservative and invasive treatment options. Its greatest impact is expected to be on the treatment of preference-sensitive conditions, including the use of PSSPs. Studies demonstrate the potential for the wider adoption of SDM to reduce healthcare costs because as many as 20% of patients who participate in SDM choose less invasive surgical options and more conservative treatment than do patients who do not use decision aids.

In this paper, Milliman’s Kate Fitch, Carol Bazell, and Sumudu Dehipawala focus on 15 PSSPs that may be performed to treat certain preference-sensitive conditions that have surgical treatment options. Their interest is in quantifying the incidence and cost of PSSPs for the Medicare Fee-for-Service population and identifying areas of spending that may provide opportunities for reducing medically unnecessary utilization.

Two proposed rules open up opportunities for care coordination through telehealth

Over the summer, the Centers for Medicare and Medicaid Services (CMS) issued two proposed rules that will create mechanisms for some providers to receive payment for telehealth as well as other non-face-to-face and care coordination services using telecommunications technologies. Together, the changes proposed in the calendar year 2019 Medicare Physician Fee Schedule (PFS) and the Medicare Shared Savings Program (MSSP) proposed rules have the potential to enable new interactions that strengthen care access and coordination for a much broader set of patients.

The term “telehealth” is often used to broadly refer to the use of telecommunication technologies to furnish healthcare services. However, Medicare telehealth services specifically refer to a set of Part B-covered services specified under section 1834(m) of the Social Security Act. By law, Medicare fee-for-service (FFS) telehealth services under the PFS are currently subject to the following conditions:

• Provided using real-time, interactive audio and video
• Geographic restrictions on originating site (beneficiary location)
• Setting restrictions on distant site (provider location)
• Provider restrictions (and possibly further limitations due to state licensure laws)
• Limitations on type of visits

Waivers of Medicare telehealth rules are currently available under specific CMS’ Center for Medicare and Medicaid Innovation models. For example, under the existing Next Generation ACO Model, CMS has waived the geographic and originating site requirements for Medicare telehealth services. In addition, beginning in 2018, the Next Generation ACO Telehealth Waiver was expanded to include asynchronous telehealth services for teledermatology and teleophthalmology, which provides physician payment for the receipt and analysis of remote, asynchronous images for dermatologic and/or ophthalmologic evaluation.

MSSP ACOs do not currently have such flexibility because no telehealth waivers are available to them. However, under the MSSP proposed rule, for 2020, CMS proposes changes for telehealth services provided by ACOs that take on two-sided risk. Specifically, CMS proposes to expand ACOs’ use of telehealth by removing the geographic and originating site restrictions on these services. This means that ACOs will be able to provide telehealth services to beneficiaries in their homes as well as for beneficiaries obtaining care in Metropolitan Statistical Areas.

In addition, under the PFS proposed rule, CMS proposes to provide separate payment for new non-face-to-face services, virtual check-in visits, chronic care remote physiologic monitoring, interprofessional consultation, and remote professional evaluation of patient-transmitted information.

In this paper, Milliman’s Susan Philip, Carol Bazell, and Laurie Lingefelt describe these changes in greater detail and also discuss the possible implications for providers and MSSP ACOs in particular.

Regulatory roundup

More healthcare-related regulatory news for plan sponsors, including links to detailed information.

Medicare Parts A and B cost-of-living-adjustments for 2019 published
The Centers for Medicare & Medicaid Services (CMS) has issued the cost-of-living adjustments applicable to components in the Medicare program for 2019.

To view the rates, click here.

Bills prohibiting pharmacy “gag” clauses signed into law
President Donald Trump signed the Patient Right to Know Drug Prices Act and the Know the Lowest Price Act of 2018 into law. The first law prohibits health insurers and pharmacy benefit managers from limiting pharmacies’ ability to discuss cheaper drug options with consumers. These “gag” clauses prevent pharmacists from telling group health plan enrollees, and individual drug plan enrollees, if the retail price of a drug would be cheaper than the enrollees’ co-pay amounts.

This second law prohibits a prescription drug plan under Medicare or Medicare Advantage from restricting a pharmacy from informing an enrollee of any difference between the price, copayment, or coinsurance of a drug under the plan and a lower price of the drug without health-insurance coverage.

HHS releases annual civil monetary penalties inflation adjustment
The Department of Health and Human Services is updating its regulations to reflect required annual inflation-related increases to the civil monetary penalties in its regulations, pursuant to the Federal Civil Penalties Inflation Adjustment Act Improvements Act of 2015.

For more information, click here.

Understanding APM financial settlements

While alternative payment models (APMs) have increased in popularity over recent years, they can be difficult to implement because of their operational dependence on payment systems designed for fee-for-service (FFS) reimbursement. In addition, moving away from a FFS reimbursement construct can cause underreporting of detailed services. As a result, many APMs undergo financial settlements, meaning payments flow as normal during model performance periods and are retrospectively reconciled to a target price or benchmark after the fact.

APM financial settlement data offer providers opportunities to validate financial calculations, understand methodology, and enhance patient management. Providers can also gain perspective on other revenue drivers such as patient retention.

In this paper, Milliman consultants explore APM reimbursement methodologies through the lens of the Centers for Medicare and Medicaid Services Oncology Care Model as an illustrative case study.

Major challenges for medical professional liability

The medical professional liability (MPL) insurance industry has experienced its most extended period of profitability over the last decade. But the last two years have seen the industry’s combined ratio creep up to 100% and over. This article by Susan Foray, Paul Greve, and Richard Henderson provides an overview of the state of the MPL insurance industry through the first half of 2018, focusing on key MPL environmental factors, MPL litigation trends, and MPL industry financials.

This article was originally published in the Third Quarter 2018 PLUS Journal, a publication of the Professional Liability Underwriting Society.

Modified HRRP benchmark may affect provider reimbursements

The 21st Century Cures Act was passed into law in 2016 with the express purpose of decreasing hospital readmissions. In connection with the legislation, the Centers for Medicare and Medicaid Services (CMS) announced changes to the Hospital Readmission Reduction Program (HRRP) in fiscal year (FY) 2018, finalizing those changes with the release of the FY 2019 Inpatient Prospective Payment System (IPPS) final rule. The program has been modified to incorporate measurements of the socioeconomic status of patients served by each hospital.

CMS has altered the HRRP benchmark that readmission rates are measured against. The new rule groups hospitals into “peer groups” that are defined in terms of the proportion of patients with dual eligibility for both Medicare and Medicaid. Rather than one benchmark applying across the board to all hospitals, different benchmarks will now apply for each peer group.

The changes to HRRP starting in FY 2019 could have significant monetary impacts to a provider’s reimbursement. Milliman’s James Lucas illustrates the effects in his article “Fiscal year 2019 HRRP impact to hospitals.”