Will or won’t private payers join CMS’ Primary Care Demo?

by Torsten Bernewitz

Tweet

In two weeks, on November 15, public and private payers interested joining the CMS Comprehensive Primary Care Initiative, or “primary care demo”, must file a non-binding letter of intent. Final applications will then be due in mid January. See more details here: (http://innovations.cms.gov/documents/pdf/cpc_initiative_solicitation.pdf)

But what is in it for the payer – and at what cost?

The program will test new payment and delivery approaches with the aim of lowering Medicare, Medicaid and Children’s Health Insurance Program (CHIP) spending. CMS will enter into agreements with practices in selected (still to be defined) markets.

Payers and practices will have to sign agreements of their own in order to accommodate a shared-savings component envisioned to kick in after two years, when CMS’s additional per-beneficiary care management fee will be reduced.

The model will reward primary care providers for improved, comprehensive care management. The hope is that better outcomes will also lower overall costs.

CMS will pay – in addition to their usual Medicare reimbursement - an average risk-adjusted care management fee of $20 per Medicare FFS beneficiary per month to participating primary care practices. This fee is to compensate providers for several activities, including helping patients with serious or chronic illnesses follow personalized care plans, giving 24-hour access to patients for care and health information, providing preventive services, and working with specialists to improve care coordination.

Like most other alternative healthcare delivery and payment models, the program will incorporate systematic data sharing with practices about cost, utilization and quality metrics to monitor improvements. The monthly fee will drop in later years of the program – the time when benefit sharing with payers will become available.

So how attractive is all this for the payers, in particular the private ones?

At the recent AHIP Shared Responsibility Summit, which showcased alternative delivery and payment models very similar to the one envisioned here, it was highlighted that in all cases significant upfront payer investment is needed to get things started, in particular to help with the processes and systems managing data and money flows (see http://payer-strategies.blogspot.com/2011/10/love-is-all-you-need-well-not-quite.html).

It is not quite clear to what extent the additional CMS fees will covers this need, and that is of course a headache for the payers who are contemplating if they should join or not.

Of course the CMS argument is that the increased effectiveness of the primary care physicians will also benefit the payer. And this may be true – in other places system cost saving could indeed be shown.

However, there is potentially also a “free rider” effect here – if providers change the way they deliver healthcare, for example through more cost conscious referral approaches, we can expect this to spill over into all patients they handle. We see a this phenomenon time and again when the benefit designs of one health plan influences provider behavior and then has a halo effect on other plans. 

Thus all plans will benefit, even if they do not sign up for the initial program. So if I am a payer, what is my motivation to sign up for more costs (at the hope of cost savings later), and share the benefits (that I might have enjoyed anyway)?

________________________

Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com

Madness strikes! The new ICD-10 list

by Torsten Bernewitz

Doctor: “How did you get your S0010XA?”

Patient: “Well, you know that I have a Z9181, especially when I am doing F1010.  So I entered this Y92511, where I W51XXXA. In response, that person started Y042XXA which triggered my Y042XXD. This started Y040XXA and Y040XXD and that’s how I got the S0010XA, but the other person has S060X0A.”

(To decode see the end of this post. Or read on for hair-raising entertainment.)

If we thought healthcare is already caught up in red tape, we got another thing coming. 

You may know that today hospitals and doctors use a system of about 18,000 ICD-9 codes to describe medical services in bills they send to insurers. Apparently that’s not enough, so we’ll increase that by a factor of eight to about 140,000! These are the ICD-10 codes.

The Centers for Medicare & Medicaid Services (CMS) have set the ICD-10-CM/PCS compliance date to October 1, 2013. According to CMS there will be no delays and no grace period, i.e. after that date providers will no longer be able to report ICD-9-CM codes for services provided, if they want their claims to be paid.

What do we gain?

Well, for example, we can now use code Y9272 to indicate that a chicken coop was the place of occurrence of our injury. For a barn the code is Y9271, Y9273 for a farm field and Y9279 for other farm locations.

If you don’t hang out on a farm but follow more highbrow distractions, there’s a code for you, too. We have the gallery (Y92250), opera house (Y92253) and theater (Y92254). For a shop the code is Y92513 - but be careful to use Y92512 for a supermarket, store or market.

Codes Y92020-29 indicate various locations in a mobile home where an injury has occurred, in the order of kitchen, dining room, bathroom, bedroom, driveway, garage, swimming pool, garden and yard (can use the same code for these two), and including “other place” as well as “unspecified place”. Again – all of that in a mobile home; naturally there are specific codes for these locations if the home is single-family (private) house.

BTW, you’ll have noticed that these codes all start with “Y” – why indeed!

There are also codes for contact with powered household machinery - initial “encounter” (W292XXA) and contact with powered household machinery - subsequent “encounter” (W292XXA) - I guess if it doesn't kill you first time you can always get up and try again .

I also like “assault by hot household appliances - initial encounter (X983XXA).

There are three codes for walking into a lamppost – including, yes, you guessed it, initial and subsequent encounters.

We have three codes for falling from in-line roller skates, which are different from non-in-line rollerskates, which are different from heelies, skateboards (also three codes each), and, of course, “other rolling-type pedestrian conveyance” (love the language).

All this will make the mining of patient data even more interesting - hurray!

-----------------

So here are the codes for the story at the beginning:

S0010XA: Contusion of unspecified eyelid and periocular area (a.k.a. “black eye”), initial encounter

Z9181: History of falling

F1010: Alcohol abuse, uncomplicated

Y92511: Restaurant or cafe as the place of occurrence of the external cause

W51XXXA: Accidental striking against or bumped into by another person, initial encounter

Y042XXA: Assault by strike against or bumped into by another person, initial encounter

Y042XXD: Assault by strike against or bumped into by another person, subsequent encounter

Y040XXA: Assault by unarmed brawl or fight, initial encounter

Y040XXD: Assault by unarmed brawl or fight, subsequent  encounter

S060X0A: Concussion without loss of consciousness, initial encounter

Cheers!

________________________

Torsten Bernewitz is a healthcare industry analyst and management consultant.
He is Managing Principal, Healthcare Insurers and Payers at ZS Associates.

This post is the author’s own and does not necessarily represent ZS Associates’ positions, strategies or opinions.

Contact: torsten.bernewitz@zsassociates.com