Sep 20, 2017 | Coding, Billing, and Collections, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Managed Care Contracts & Payer Reimbursement, Management & Operations, News From Dark Daily
To offset the loss of revenue from the price cuts to Medicare Part B clinical laboratory tests, labs will need to aggressively—but wisely—slash costs to balance their budgets
Any day now, Medicare officials will announce the Medicare Part B Clinical Laboratory Fee Schedule (CLFS) for 2018. Both the Centers for Medicare and Medicaid Services (CMS) and the Department of Health and Human Services Office of Inspector General (OIG) have issued reports indicating that these fee cuts will total $400 million just during 2018, which Dark Daily reported on in July.
Many experienced industry executives expect this to be the single most financially disruptive event to hit the clinical laboratory profession in more than 20 years. This will not only have a substantial negative financial impact on all labs—large and small—but two sectors of the clinical lab industry are considered to be so financially vulnerable they could cease to exist.
At Greatest Risk of Financial Failure are Community Laboratories
The first sector is comprised of smaller community lab companies that operate in towns and rural areas. These labs are at the greatest risk because they are the primary providers of lab testing services to the nursing homes and skilled nursing facilities in their neighborhoods. And because they have a high proportion of Medicare Part B revenue.
Thus, the expected Medicare price cuts to the high-volume automated lab tests—such as chemistry panels and CBCs (complete blood count) that are the bread-and-butter tests for these labs—will swiftly move them from minimal profit margins to substantial losses. Since these labs have a cost-per-test that is significantly higher than the nation’s largest public lab companies, they will be unable to financially survive the 2018 Medicare fee cuts.
The second sector at risk is comprised of rural hospitals and modest-sized community hospitals. What officials at CMS and their consulting companies overlooked when they created the PAMA (Protecting Access to Medicare Act) private payer market price reporting rule is that these hospitals provide lab testing services to nursing homes and office-based physicians in their service areas.
Because of the low volumes of testing in these hospital labs, they also have a larger average cost-per-test than the big public labs. Thus, the 2018 cuts to Medicare Part B lab test prices will erode or erase any extra margin from this testing that now accrues to these hospitals.
Rural and Small Community Hospitals Rely on Lab Outreach Revenue
The financial disruption these Medicare lab test price cuts will cause to rural and community hospitals is a real thing. These hospitals rely on outreach lab test revenues to subsidize many other clinical services within the hospital. One rural hospital CEO confirmed the importance of lab outreach revenue to her organization. Michelle McEwen, FACHE, CEO of Speare Memorial Hospital in Plymouth, N.H., spoke to The Dark Report in 2012 about the financial disruption that was happening when a major health insurer excluded her hospital’s laboratory from its network.
Speare Memorial is a 25-bed critical access hospital in the central part of the state between the lakes region and the White Mountain National Forest. McEwen was blunt in her assessment of the importance of clinical laboratory outreach revenues to her hospital. “The funds generated by performing these [outreach] lab tests are used to support the cost of providing laboratory services to all patients 24/7, including stat labs for emergency patients and inpatients,” McEwen explained. “These funds also help support other services in the hospital where losses are typically incurred, such as the emergency room and obstetric programs.” (See “Critical Access Hospitals Losing Lab Test Work,” The Dark Report, April 2, 2012.)
For the second consecutive year, Lab Quality Confab (LQC) is offering an extended session on clinical laboratory accreditation and certification in New Orleans on October 24-25. CMS has indicated it will participate in this year’s session. It was an historic first for the clinical laboratory industry when last year’s Lab Quality Confab convened a panel that included experts in CLIA laboratory inspection and compliance from the four deeming organizations. From left to right: Moderator Nora L. Hess, MBA, MT(ASCP), PMP, Senior Consultant, Operations Management, Chi Solutions, Inc., Ann Arbor, Mich.; Kathy Nucifora, MPH, MT(ASCP), Director of Accreditation, COLA, Columbia, Md.; Stacy Olea, MBA, MT(ASCP), FACHE, Executive Director of Laboratory Accreditation Program, The Joint Commission, Oakbrook Terrace, Ill.; Randall Querry, Accreditation Manager, Clinical, American Association for Laboratory Accreditation (A2LA), Frederick, Md.; Robert L. Michel, Editor-in-Chief, The Dark Report, Spicewood, Texas; and Denise Driscoll, MS, MT(ASCP)SBB, Senior Director, Laboratory Accreditation and Regulatory Affairs, College of American Pathologists, Northfield, IL. (Photo by Linda Reineke of Riverview Photography. Copyright: The Dark Report.)
All Medical Laboratories Will Suffer Financial Pain from Medicare Price Cuts
But it is not just community lab companies and rural hospitals that are at risk of financial failure as the Medicare Part B cuts are implemented by CMS on Jan. 1, 2018. Any clinical laboratory serving Medicare patients will experience a meaningful drop in revenue. Many larger hospital and health system laboratories are recasting their financial projections for 2018 to identify how big a drop in revenue they will experience and what cost-cutting strategies will be needed to at least break even on their lab outreach business.
This explains why the first big trend of 2018 will be substantial revenue cuts from the Medicare program. It also explains why the second big trend of 2018 will be smart cost-cutting as labs attempt to balance their books and lower spending proportional to the reduced income they project.
Labs Have a Decade of Successful Cost-Cutting, More Cuts are Difficult
Aggressive cost-cutting, however, puts the nation’s medical laboratories at risk for a different reason. For the past decade, most well-run labs have already harvested the low-hanging fruit from obvious sources of cost reduction. They installed latest-generation automation. They re-engineered workflows using the techniques of Lean, Six Sigma, and process improvement.
During these same years, most medical laboratories also reduced technical staff and trimmed management ranks. That has created two new problems:
- First, there are not enough managers in many labs to both handle the daily flow of work while also tackling specific projects to cut costs and boost productivity. Basically, these labs are already at their management limit, with no excess capacity for their lab managers to initiate and implement cost-cutting projects.
- Second, technical staffs are already working at near peak capacity. Increased use of automation at these labs has reduced lab costs because labs were able to do the same volume of testing with fewer staff. However, the reduced staffs that oversee the lab automation are now working at their own peak capacity. Not only are they highly stressed from the daily routine, they also do not have spare time to devote to new projects designed to further cut costs.
Each Year Will Bring Additional Cuts to Medicare Part B Lab Prices
This is why all clinical laboratories in the United States will find it difficult to deal with the Medicare Part lab test fee cuts that will total $400 million during 2018. And what must be remembered is that, in 2019 and beyond, CMS officials will use the PAMA private payer market price reporting rule to make additional fee cuts. Over 10 years, CMS expects these cuts will reduce spending by $5.4 billion from the current spending level.
Taken collectively, all these factors indicate that many medical laboratories in the United States will not survive these Medicare fee cuts. The basic economics of operating a clinical laboratory say that less volume equals a higher average cost per test and higher volume equals a lower average cost per test.
Medical Labs with Highest Costs Most at Risk of Failure from Price Cuts
What this means in the marketplace is that labs with the highest average cost per test make the least profit margin on a fee-for-service payment. The opposite is true for labs with the lowest average cost per test. They will make a greater profit margin on that same fee-for-service payment.
Carry this fundamental economic principle of medical laboratory operations forward as Medicare Part B lab test fee cuts happen in 2018. Labs with the highest average cost per test will be first to go from a modest profit or break-even to a loss. As noted earlier, the clinical lab sectors that have the highest average cost per test are smaller community labs, along with rural and community hospitals. That is why they will be first to go out of business—whether by sale, bankruptcy, or by simply closing their doors.
Learning How to Cut Lab Costs While Protecting Quality
Every pathologist and lab administrator seeking the right strategies to further cut costs in their lab, while protecting quality and enhancing patient services, will want to consider sending a team from their laboratory to the 11th Annual Lab Quality Confab that takes place in New Orleans on October 24-25, 2018.
Anticipating the greater need for shrewd cost-cutting that also protects the quality of the lab’s testing services, this year’s Lab Quality Confab has lined up more than 51 speakers and 39 sessions. Of particular interest are these extended workshops that come with certifications:
- Lean Six Sigma Yellow Belt Training and Certification, led by Maureen Harte, MT(ASCP), LSSBB, Master Black Belt, of HartePro Consulting.
- Mastering Strategic Leadership in Pursuit of Clinical Lab 2.0, led by Karan Arora, Senior Global Marketing Director, Digital Health, Abbott Laboratories.
- Getting More from Lean for Lab Leaders: Henry Ford Production System Lean Gold Certification, led by Richard J. Zarbo, MD, DMD, System Chairman, Pathology and Laboratory Medicine at Henry Ford Hospital.
Sessions will address proven ways to:
- Use real-time analytics to improve workflow in molecular laboratories;
- Introduce automation in microbiology; as well as
- New breakthroughs in core lab automation; and
- Success stories in reducing lab test utilization.
Lab Quality Confab is recognized for its use of lab case studies—taught by the nation’s early adopter lab organizations. Certification classes are available to gain proficiency in the use of Lean methods and Six Sigma tools, such as:
Given the strong interest in smart ways to cut costs, boost productivity, and balance revenue-versus-cost, registrations for this year’s Lab Quality Confab is running at a record pace. The full agenda can be viewed at this link (or copy this URL and paste into your browser: http://www.labqualityconfab.com/agenda).
Of special interest to lab leaders preparing to stay ahead of the financial impact of the Medicare Part B fee cuts, Lab Quality Confab offers deep discounts for four or more attendees from the same lab organization. This allows your lab’s most effective cost-cutters to see, hear, and learn together, so that when they return they can get a flying start helping you align your lab’s costs to the expected declines in revenue that will happen on Jan. 1, 2018.
Reserve your place today and register now http://www.labqualityconfab.com/register.
—Robert L. Michel, Editor-in-Chief
Related Information:
Information, Agenda, and to Register for Lab Quality Confab Taking Place on October 24-25, 2017
In 2017, to Offset Declining Reimbursement and Shrinking Budgets, Savvy Clinical Laboratories Are Using LEAN to Improve Service and Intelligently Cut Costs
Lean-Six Sigma Medical Laboratories Begin to Innovate in Ways That Add Value to Physicians, Payers, and Patients
An Interview with Robert Michel, Editor-in-Chief of The Dark Report
At Lab Quality Confab in New Orleans this Week, Speakers Addressed Major Issues Faced by Medical Laboratories, including the Need for Labs to Deliver More Diagnostic Value to Physicians
Aug 11, 2017 | Laboratory Operations, Laboratory Pathology, Laboratory Testing, Management & Operations
Meaningful use, accountable care organizations, and bundled payment initiatives work best together to reduce readmissions, UM research suggests
Ever since the Centers for Medicare and Medicaid Services (CMS) implemented the Hospital Readmission Reduction Program (HRRP) in 2012, healthcare organizations all over America have sought to prevent unnecessary hospital readmissions within 30 days of discharge. For some clinical laboratories, this meant performing precise microbiology testing to ensure patients are discharged with prescriptions for oral antibiotics in-hand to combat possible infections. Now, a recent study reports that the effort could be paying off, and clinical laboratories played a critical role.
Research performed at the University of Michigan (UM) has linked lower readmission rates under the HRRP to voluntary value-based programs. The three value-based programs the UM researchers identified as contributing to the successful lowering of hospital readmission rates are:
The UM researchers published their findings in the Journal of the American Medical Association (JAMA) Internal Medicine. It could be the first study to demonstrate that synergistic value-based reward programs facilitate healthcare improvement and efficiency. As opposed to HRRP financial penalties alone that is, according to a UM news release.
Researchers Had No Expectations of Payment Reform Programs
Researchers at UM found that all three programs operating together in 2015 (the last year included in the longitudinal study) resulted in about 2,400 fewer readmissions and a $32-million savings to Medicare, the UM release noted.
The team analyzed data on patients treated at 2,877 hospitals from 2008 through 2015 for:
Their source of information was publicly available Hospital Compare readmission data.
“We had no real expectations that hospitals’ participation in voluntary reforms would be associated with additional reductions in readmissions. We thought that it was just as likely that hospital participation in meaningful use, accountable care organization programs, or the Bundled Payment for Care [Improvement] Initiative may be distracting to hospitals, limiting readmissions reduction,” stated Andrew Ryan, PhD, in ACEPNow, a publication of the American College of Emergency Physicians (ACEP) in Irving, Texas. Ryan is an Associate Professor, Health Management and Policy, at UM’s School of Public Health.
More Participation Leads to Greater Reduction in Readmissions
Nevertheless, the UM researchers linked more reductions in readmissions based on common diagnoses to value-based “reward-style” programs than to HRRP financial penalties. And the more value-based programs a provider implemented, the greater reduction in hospital readmission rates, the study found.
Nearly all hospitals studied were participating in at least one of the value-based programs by 2015, as compared to no program participants in 2010, when the Affordable Care Act was signed into law, noted a Healthcare Dive article.
The chart above from the Kaiser Family Foundation (KFF) illustrates the reduction in hospital readmissions starting in 2012, which multiple studies have linked to the CMS Hospital Readmission Reduction Program (HRRP). The rates, according to the KFF, are risk adjusted to account for age and certain medical conditions. (Image copyright: Kaiser Family Foundation.
For 56 providers that were not participating in value-based care programs by 2015, researchers found the following readmission reductions also were associated with HRRP:
- 3% drop in heart failure readmissions;
- 76% drop in heart attack readmissions; and
- 82% decline in pneumonia readmissions.
For the majority of providers, however, escalating value-based care program participation resulted in greater readmission rate reductions, the study noted.
Readmission Reductions for Heart Failure Patients
Noting the influence of value-based programs, HealthcareDIVE and FierceHealthcare reported the following results for the heart-failure patients studied:
- ACOs result in 2.1% annual readmission reduction;
- MU participation attributed to a 2.3% drop in annual readmission reduction;
- Involvement in all three programs (ACOs, MU, and bundled payments) result in the largest annual readmission declines for hospitals of 2.9%.
Readmission Reductions for Heart Attack, Pneumonia Patients
For myocardial infarction patients, the study showed these effects from value-based programs on readmission declines:
- 7% from ACO launch;
- 5% associated with MU; and
- 2% readmission reductions when all programs were in effect.
For pneumonia patients, the research suggested these changes in readmission declines were associated with value-based programs:
- 4% from ACO launch;
- 4% due to MU; and
- 9% when all programs were in effect.
The researchers advise that providers, aiming for quality improvement and cost savings, should leverage as many of these programs as possible.
“There is a reason to believe these [value-based] programs are reinforcing the broader push to value-based care. Our findings show the importance of a multi-pronged Medicare strategy to improve quality and value,” noted Ryan in the UM news release.
Clinical Laboratories Play Key Role in Reducing Readmissions
Accurate medical laboratory testing plays a critical role in the success of these hospital readmission reduction programs. Thus, all pathologists and laboratory personnel should congratulate themselves for a job well done. And commit to continuing their outstanding performance.
—Donna Marie Pocius
Related Information:
Association Between Hospitals’ Engagement in Value-Based Reforms and Readmission Reduction in the Hospital Readmission Reduction Program
Voluntary Value-Based Health Programs Dramatically Reduce Hospital Readmissions
Value-Based Reforms Linked to Readmission Reductions
Hospitals Participating in Value-Based Programs Have Lower Readmission Rates
Study: Value-Based Care Programs Reduce Readmissions
Involving Patient’s Family in Discharge Process Linked to 25% Reduction in Hospital Readmissions
Integrating Caregivers at Discharge Significantly Cuts Patient Readmissions, Pitt Study Finds
Hospitals with Lowest 30-Day Readmission Rates Succeed at Reducing Rates by Improving Care Coordination and Monitoring of Patients After Discharge
Jul 17, 2017 | Compliance, Legal, and Malpractice, Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Uncategorized
Another big question is whether the lobbying of medical laboratory and pathology societies can educate and convince members of Congress to delay and reform the PAMA Final Rule that uses the market price study of what private payers pay for lab tests
Coming in just five months are the deepest, most painful clinical laboratory test price cuts ever implemented by Medicare officials. During calendar 2018 alone, both the Centers for Medicare and Medicaid Services (CMS) and the Office of Inspector General US Department of Health and Human Services (OIG) expect the price cuts to the Medicare Part B Clinical Laboratory Fee Schedule (CLFS) to lower spending on lab tests by $400 million!
The bad news doesn’t stop there. Lab industry observers say that significant numbers of hospital laboratories and independent lab companies are unprepared for the drop in revenue they will experience once the Medicare price cuts take effect. And, with only 157 days remaining before Jan. 1, 2018, medical laboratory executives and pathologists have precious little time to prepare their labs to operate on significantly less Medicare revenue.
PAMA Market Study of What Private Payers Pay for Clinical Laboratory Tests
Blame it on the Protecting Access to Medicare Act (PAMA) of 2014! PAMA directed CMS to conduct a market study of the lab test prices paid by private health insurers, and then use this data to set the prices of the CLFS. As many lab professionals know, CMS spent the last 24 months publishing a final price reporting rule that defined which medical laboratories must report the prices they are paid by private payers, and then collecting that data.
The data reporting period ended on May 31. In coming months, CMS will publish the new CLFS test prices and allow time for public comment.
Recognizing the need to help lab executives and pathologists understand the scale and scope of the Medicare lab test price cuts coming their way, Dark Daily and its sister publication, The Dark Report, have asked two experts with unique knowledge about this issue to give interested lab managers an up-to-the-minute intelligence briefing during an important webinar. It’s titled, “Deep Medicare Fee Cuts Are Coming to Your Clinical Laboratory in 157 Days: What You Must Do Now, Why Congress Might Intervene, and Action Steps to Protect Your Lab’s Financial Integrity,” and it happens later this week on Thursday, July 20, at 1 PM Eastern.
First Opportunity to See What Private Payers Pay for Medical Laboratory Tests
The first expert to speak is Lâle White, Executive Chairman and CEO of XIFIN, Inc., a health information technology (HIT) company headquartered in San Diego. Annually, White and her colleagues handle as many as 300 million lab test claims for hundreds of their clinical laboratory clients. Also, XIFIN is electronically interfaced with every health insurance plan in the US. These two facts mean that White has essentially the same data their lab clients reported to CMS.
During her presentation, White will show you how her company analyzed the real information from hundreds of millions of medical lab test claims that were reimbursed by thousands of private payers. You are in for a big surprise!
Learn Why Medicare Lab Test Fee Cuts Will Be Deep and Painful
XIFIN’s conclusions are based on real-world data. They demonstrate how the CMS final rule was written to direct the way federal officials calculate and set the 2018 Part B clinical laboratory test prices, and reveal why the fee cuts will be deep and painful for the lab industry’s highest-volume tests. You’ll hear facts about XIFIN’s analysis and learn to use that knowledge to model and predict precisely how deep Medicare’s revenue cuts to your lab will be when the new price schedule becomes effective on Jan. 1.
Lâle White (above left), CEO of XIFIN, Inc., spoke at the Executive War College on Laboratory and Pathology Management last May, where she shared insights about the coming price cuts to the Medicare Part B Clinical Laboratory Fee Schedule (CLFS). Julie Scott Allen (above right) is Senior Vice President of the District Policy Group, Drinker Biddle, and represents the National Independent Laboratory Association (NILA) in Washington, DC. White and Allen will be speaking at a special Dark Daily webinar later this week on the current status of the Medicare fee cuts and how lab executives should respond to protect the financial integrity of their labs. (White photo copyright: The Dark Report. White photo by Linda Reineke. Allen photo copyright: Drinker Biddle.)
Because it is generally agreed that CMS officials will target the top 20 lab tests by volume for the deepest price cuts, the actual revenue drop will depend on your mix of tests and the volume of Medicare patients associated with each test. CMS says it will use the weighted median of the private payer lab test price data to determine its new Part B fees.
However, that is a flawed approach and the source of much criticism.
White will show why the weighted median generates a lower price than the use of a weighted average calculation. You’ll see the direct impact that CMS’ use of the weighted median will have on your lab’s Medicare revenue, beginning on Jan. 1.
Understanding Current Developments at CMS and Within Congress
Julie Scott Allen will be the second speaker on the July 20 webinar. She is Senior Vice President, District Policy Group, Drinker Biddle, and represents the National Independent Laboratory Association (NILA) in Washington, DC. In this role, Allen works with officials at CMS, the Department of Health and Human Services (HHS), and with members of Congress on issues relevant to the clinical laboratory members of NILA. She regularly participates as part of the Clinical Laboratory Coalition on these matters.
Allen will give you an up-to-the minute perspective on efforts by the clinical laboratory industry to educate officials within Congress, HHS, and CMS about the consequences of allowing the PAMA final rule price cuts to become effective on January 1, 2018. This is important information you can use to craft strategies to protect your lab’s financial stability. You’ll also recognize opportunities to contact your elected officials in Congress at the time when your input can make an important difference.
The message of many in the Clinical Laboratory Coalition to members of Congress is that, if the PAMA Medicare fee cuts happen as planned, many hospital lab outreach programs and community lab companies in the states and districts of the various Senators and Representatives will probably end up going out of business, filing bankruptcy, or selling to a national lab company.
Behind the Scenes on PAMA Fee Cuts, ACA Repeal-and-Replace
Allen will take you behind the scenes of the inside-the-beltway developments that relate to the coming Medicare Part B clinical laboratory fee cuts. Different players from the clinical laboratory community are in discussions with CMS officials about the need to delay and reform the implementation of these price cuts.
Meanwhile, there are several developments unfolding within Congress that affect clinical laboratories. Yes, one of them is the PAMA final rule on lab price cuts. However, congressional efforts to repeal and replace the Affordable Care Act (ACA) are creating opportunities for different medical specialties—including the profession of laboratory medicine—to advocate for needed reforms in their areas of clinical services.
When clinical laboratory and anatomic pathology leaders are informed, they are more effective in two roles:
- Protecting the clinical excellence and financial sustainability of their respective laboratories;
- Advocating with government officials and lawmakers on the issues that are important to keeping the nation’s laboratories financially viable and key contributors to improving the quality of patient care.
Full details about this important webinar are at this link. Or copy and paste this URL into your browser: https://ddaily.wpengine.com/webinar/deep-medicare-fee-cuts-are-coming-to-your-clinical-laboratory-in-157-days-what-you-must-do-now-why-congress-might-intervene-and-action-steps-to-protect-your-labs-financial-integrity to register.
—Michael McBride
Related Information:
NILA and Other Stakeholders Ask HHS to Delay the Medicare Laboratory Payment Reform Rule
Nation’s Most Vulnerable Clinical Laboratories Fear Financial Failure If Medicare Officials Cut Part B Lab Fees Using PAMA Market Price Data Final Rule
Overview of CMS-1621-F Medicare Clinical Diagnostic Laboratory Test Payment System Final Rule
Dark Report Cracks the Mystery on PAMA Pricing; Genetic Coverage Still Tough Going
XIFIN Analysis of Its Real Price Data Shows Hospital Lab Price Effect: Study Based on Hundreds of Millions of Lab Test Claims
10% PAMA Fee Cut Would Lower Medicare Pay to Laboratories by $400 Million: New OIG Report Provides Clues as to How Cuts to CLFS Prices Will Reduce Payments to Clinical Labs
CMS Issues PAMA Final Rule That Aims to Cut Medicare’s Clinical Laboratory Test Price Schedule Sharply Beginning in 2018
Deep Medicare Fee Cuts Are Coming to Your Clinical Laboratory in 157 Days: What You Must Do Now, Why Congress Might Intervene, and Action Steps to Protect Your Lab’s Financial Integrity
Jul 3, 2017 | Laboratory Operations, Laboratory Pathology, Laboratory Testing, Managed Care Contracts & Payer Reimbursement, Management & Operations
OIG suggests better use of analytics by CMS could prevent gaming of the system by providers; clinical laboratories can help through test utilization management technology
It may come as a surprise to many hospital-based pathologists and clinical laboratory managers that the Centers for Medicare and Medicaid Services (CMS) has reason to suspect that some hospitals are “gaming” the system in how they report hospital-acquired infections (HAIs).
In 2015, CMS implemented the Hospital-Acquired Condition Reduction Program (HACRP) as part of the Patient Protection and Affordable Care Act (ACA). The HACRP program incentivizes hospitals to lower their HAI rates by adjusting reimbursements according to the inpatient quality reporting (hospital IQR) data provided by the healthcare providers. Hospital IQR data is the basis on which CMS validates a hospital’s HAI rate (among other things CMS is tracking) to determine the hospital’s reimbursement rate for that year.
However, an April 2017 report by the Office of the Inspector General US Department of Health and Human Services (OIG) noted that CMS was not doing enough to identify and target hospitals with abnormal reporting of HAIs.
The OIG reported:
- CMS, in 2016, met its regulatory requirement to validate inpatient quality reporting data;
- It reviewed data of 400 randomly selected hospitals as well as 49 hospitals targeted for failing to report half their HAIs, or for low scores in the prior year’s validation process;
However, OIG also reported that CMS did not include hospitals that displayed abnormal data patterns in its targeted sample. Targeting those hospitals, according to the OIG, could identify inaccurate reporting.
CMS staff had identified 96 hospitals with aberrant data patterns, but did not target them for validation—even though the agency can select up to 200 targeted hospitals for review, Becker’s Hospital Review pointed out.
Dollars More Important than Deaths
According to the OIG report, Medicare excluded in its investigation dozens of hospitals with suspected HAI reporting. This is odd since the CMS and the Centers for Disease Control (CDC) apparently are aware that some healthcare providers have manipulated data to improve their quality measure scores and thus increase their reimbursement rates.
“Collecting and analyzing quality data is increasingly central to Medicare programs that link payments to quality and value. Therefore, it is important for CMS to ensure that hospitals are not gaming [manipulating data to improve scores] their reporting of quality data,” the OIG report noted.
“There are greater requirements for what a company says about a washing machine’s performance than there is for a hospital on quality of care. And this needs to change,” stated Peter Pronovost, MD, PhD, in the Kaiser Health News article. “We require auditing of financial data, but we don’t require auditing of healthcare quality data, and that implies that dollars are more important than deaths.” Pronovost is Senior Vice President for Patient Safety and Quality at Johns Hopkins University School of Medicine.
Peter Pronovost, MD, PhD (above) testifying on preventable deaths before the Senate Subcommittee on Primary Health and Aging in 2014. He is Senior Vice President for Patient Safety and Quality at Johns Hopkins University School of Medicine in Baltimore. Pronovost told Kaiser Health News that there are no uniform standards for reviewing data that hospitals report to Medicare. (Photo copyright: US Senate Committee on Health, Education, Labor and Pensions.)
Medicare Missed Hospitals with Suspected HAI Data
CMS should have done an in-depth review of many hospitals that submitted “aberrant data patterns” in 2013 and 2014, the OIG stated in its report. According to a Kaiser Health News article, such patterns could include:
- A rapid change in results;
- Improbably low infection rates; and
- Assertions that infections nearly always struck before patients arrived at the hospital.
“There’s a certain amount of blind faith that hospitals are going to tell the truth. It’s a bit much to expect that if they had a bad record they are going to fess up to it,” noted Lisa McGiffert, Director of the Safe Patient Project at Consumers Union, in the Kaiser Health News article.
CMS Needs Better Data Analytics
So, what does the OIG advise CMS to do? The agency called for “better use of analytics to ensure the integrity of hospital-reported quality data.” Specifically, OIG suggested CMS:
- Identify hospitals with abnormal percentages of patients who had infections on admission;
- Apply risk scores to identify hospitals with high propensity to manipulate reporting;
- Use experiences to create and improve models that identify hospitals most likely to game their reporting.
CMS’ Administrator Seema Verma reportedly responded, “We will continue to evaluate the use of better analytics as feasible, based on Medicare’s operational capabilities.”
Medical Laboratory Diagnostic Testing Part of Gaming the System
A 2015 CMS/CDC joint statement noted “three ways that hospitals may be deviating from CDC’s definitions for reportable HAIs,” and two involve diagnostic test ordering. According to the OIG report, they include:
- Overculturing: Diagnostic tests may be overutilized by providers in absence of clinical symptoms. Hospitals may use positive results to game their data by claiming infections that appeared days later were present on admission and thus not reportable.
- Underculturing: Hospitals underculture when they do not order diagnostic tests in the presence of clinical symptoms. By not ordering the test, the hospital does not learn whether the patient truly has an infection and, therefore, the hospital does not have to report it.
- Adjudication: Hospital administrative staff may inappropriately overrule those who report infections. HAIs are, therefore, not shared.
Clinical Laboratories Can Help
One in 25 people each day receives an HAI, CDC estimates. The OIG findings should be a reminder to medical laboratories and pathology groups that quality measures and patient outcomes are often transparent to media, patients, and the public.
One way medical laboratories in hospitals and health systems can help is by investing in utilization management technology and protocols that ensure appropriate lab test utilization. Informing doctors on the availability of appropriate diagnostic tests based on patients’ existing conditions, unique physiologies, or medical histories, could help prevent hospitals from inadvertently or deliberately game the system.
Clearly, transparency in healthcare is increasing. That means there will be more news stories revealing federal agencies’ failures to respond to healthcare data in ways that could have protected patients and the public. Clinical laboratories don’t want to be included in negative reporting.
—Donna Marie Pocius
Related Content:
CMS Validated Hospital Inpatient Quality Reporting Program Data, But Should Use Additional Tools to Identify Gaming
Medicare Failed to Investigate Suspicious Infection Cases from 96 Hospitals
CMS Can Do More to Validate Hospital-Reported Infection Data, OIG Report Finds
Study Suggests Medical Errors Now Third Leading Cause of Death in the US
Research Study at Johns Hopkins University Reveals CDC Does Not Record Medical Errors in Annual Mortality Report, Yet Such Errors Are Third Leading Cause of Death
Biggest Opportunity for Clinical Laboratory Industry is Utilization Management of Lab Tests, But Only If It Is Done Well
Lessons from the Pioneers: Reporting Healthcare-Associated Infections
Webinar: Simple, Swift Approaches to Lab Test Utilization Management: Proven Ways for Your Clinical Laboratory to Use Data and Collaborations to Add Value
Jun 23, 2017 | Laboratory Management and Operations, Laboratory News, Laboratory Operations, Laboratory Pathology, Management & Operations
Medical laboratory inpatient test volume may continue to decline as the Medicare hospital readmission reduction program expands in 2017 and state population health programs garner funding
We are now several years into the Medicare program that is designed to reduce hospital readmissions. Statistics from these years show encouraging progress in reducing the readmission rate of Medicare patients. This is a trend that has important implications for all hospital-based clinical laboratories.
Hospitals are the most expensive site of care in the entire healthcare system. In its ongoing battle to reduce healthcare costs, the Centers for Medicare and Medicaid Services (CMS) implemented a carrot-and-stick program called the Hospital Readmission Reduction Program (HRRP) aimed at lowering hospital readmission rates nationwide.
Established in 2013 by the Affordable Care Act (also known as Obamacare), the HRRP lowers reimbursements to acute care hospitals that have high rates of Medicare readmissions within 30 days of initial discharge, and increases reimbursements to hospitals that lower their readmission rates, a March 2017 Kaiser Family Foundation (KFF) Issue Brief explained.
And, according to the KFF, these programs are having an impact. Readmission rates dropped by 8% nationwide as hospitals found ways to avoid the stiff financial penalties and earn the financial rewards. Additionally, patients are increasingly choosing ambulatory care settings, or to receive care at home, rather than re-entering hospitals. This has lowered states’ readmission rates even further.
From a healthcare cost perspective, this is good news. However, these programs have had unintentional consequences as well. The federal initiatives and state population health programs responsible for lowering readmission rates also directly impact medical laboratories by simultaneously reducing the flow of inpatient testing volume.
At the same time, clinicians at the nation’s hospitals—in their efforts to avoid readmissions—have a motive to become more effective at ordering the right medical laboratory test at the right time, and to use the lab test results to more effectively treat the patient. Thus, for the nation’s hospital labs, the Medicare program to reduce readmissions has both an upside and a downside.
Programs, Data Mining That Help Providers Avoid Readmissions
Hospitals nationwide are operating programs aimed at attracting federal financial rewards for keeping people healthy, and from being admitted to hospitals due to conditions that could have been prevented, USA Today reported.
One such program involves Christiana Care Health System (Christiana Care) of Wilmington, DE. Christiana Care implemented CMS’ Care Link transitions program through the Center for Medicare and Medicaid Innovation (CMMI), also known as The Innovation Center, which, “supports the development and testing of innovative healthcare payment and service delivery models.”
The provider experienced a 20% drop in patients being readmitted within 30 days of surgery, due to its “bundled payment” plan for heart failure, the USA Today article noted. Hip and knee replacement readmissions were down 25% 30 days after discharge as well.
“Without the funding we got through CMMI, it’s hard to imagine we’d be in the position we’re in today,” stated Janice Nevin, MD, CEO of Christiana Care.
Janice Nevin, MD (above), CEO of Christiana Care Health System, Wilmington, DE, is concerned that the upcoming changes to the ACA will affect the funding the healthcare provider has received from the CMS Innovation Center. “I would strongly urge that we keep the commitment to CMMI (because) you have to innovate to learn,” she told USA Today. (Photo copyright: Christiana Care Health System.)
Changes to HRRP for Dual-Eligibles Could Affect Penalties
Some patients are more expensive than others. Patients who draw both Medicare and Medicaid funding simultaneously, for example. These “dual-eligibles” are disproportionately expensive for hospitals to treat, reported Modern Healthcare.
In fact, they are just 18% of CMS beneficiaries, but accounted for one-third of all Medicare fee-for-service (FFS) spending in 2013, according to a Medicare Payment Advisory Commission June 2016 demographic report.
CMS is proposing to adjust penalties in the HRRP to reflect the proportion of patients who are dual-eligible, presumably hoping the change will both lower costs and reduce penalties on healthcare providers.
Hospital Readmissions Data from 49 States
CMS data show that between 2010 and 2015 hospital readmission rates fell by 8%, reported Healthcare Finance News. Other key data recently released by CMS and reported by Healthcare Finance News:
· 49 states reduced avoidable hospital readmission rates since 2010;
· Vermont’s readmission rate rose slightly from 15.3% in 2010 to 15.4% in 2015;
· In 43 states, readmission rates fell by more than 5%;
· 11 states had a more than 10% drop in readmission rates;
· The fall in readmission rate translates to about 104,000 hospital readmissions avoided for Medicare beneficiaries in 2015 and 565,000 readmissions averted since 2010; and
· Avoidable admissions, occurring within 30 days of initial discharges, account for more than $17 billion in Medicare annual expenditures.
Action Steps for Clinical Laboratories
Pathologists and lab leaders need to efficiently work with colleagues, especially when caring for hospitalized patients with conditions relative to the HRRP. Clear and patient-friendly discharge instructions for diagnostics are important. And, the lab’s coordination with post-acute-care providers, such as skilled nursing facilities, on follow-up testing is key to avoiding unnecessary readmissions.
Regardless, medical laboratory inpatient test volume will likely continue to decline. As Dark Daily readers know, the decline in inpatient testing is associated with more than just the HRRP. The transition to new models of integrated care that has taken place over the last few years is also a factor, as Dark Daily reported in “Falling Inpatient Revenues at Many Hospitals is Sign of Healthcare’s Transition to New Models of Integrated Care and Changes in Medical Laboratory Test Utilization.”
Medical laboratory directors and sales teams are advised to continue their efforts at boosting outpatient volume to fill the inpatient void.
—Donna Marie Pocius
Related Information:
Hospitals Work to Keep Patients from Being Admitted
Aiming for Fewer Hospital U-Turns: The Medicare Hospital Readmission Reduction Program
49 States, DC Reduce Avoidable Hospital Readmissions
Dual-eligibles: The Next Target in Hospital Readmissions Penalties
June 2016 Data Book, Section 2: Medicare Beneficiary Demographics
Hospitals Mine Clinical Data to Help Reduce Costs and Avoid Readmissions, Creating Opportunities for Clinical Laboratories and Pathologists to Contribute to Improved Patient Outcomes
Falling Inpatient Revenues at Many Hospitals is Sign of Healthcare’s Transition to New Models of Integrated Care and Changes in Medical Laboratory Test Utilization
