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Clinical Laboratories and Pathology Groups

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News, Analysis, Trends, Management Innovations for
Clinical Laboratories and Pathology Groups

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Independent Clinical Laboratories in Maryland May Need to Step-up Outreach with Hospitals as New CMS Program Launches Jan. 1

Clinical laboratory leaders will want to pay close attention to a significant development in Maryland. The state’s All-Payer Medicare program—the nation’s only all-payer hospital rate regulation system—is broadening in scope to include outpatient services starting Jan. 1. The expanded program could impact independent medical laboratories, according to the Maryland Hospital Association (MHA), which told Dark Daily that those labs may see hospitals reaching out to them.

The Centers for Medicare and Medicaid Services (CMS) and the state of Maryland expect to save $1 billion by 2023 in expanding Maryland’s existing All-Payer Model—which focused only on inpatient services since 2014—to also include primary care physicians, skilled nursing facilities, independent clinical laboratories, and more non-hospital settings, according to a CMS statement.

Healthcare Finance notes that it represents “the first time, CMS is holding a state fully at risk for the total cost of care for Medicare beneficiaries.”

Value of Precision Medicine and Coordination of Care to Clinical Labs

“If a patient receives care at a [medical] laboratory outside of a hospital, Maryland hospitals would be looking at ways to coordinate the sharing of that freestanding laboratory information, so that the hospital can coordinate the care of that patient both within and outside the hospital setting,” Erin Cunningham, Communications Manager at MHA, told Dark Daily. Such a coordinating of efforts and sharing of clinical laboratory patient data should help promote precision medicine goals for patients engaged with physicians throughout Maryland’s healthcare networks.

The test of the new program—called the Total Cost of Care (TCOC) Model—also could be an indication that Medicare officials are intent on moving both inpatient and outpatient healthcare providers away from reimbursements based on fees-for-services.

CMS and the state of Maryland said TCOC gives diverse providers incentives to coordinate, center on patients, and save Medicare per capita costs of care each year.

“What they are really doing is tracking how effective we are at managing the quality and the costs of those particular patients that are managed by the physicians and the hospitals together,” Kevin Kelbly, VP and Chief Financial Officer at Carroll Hospital in Westminster, told the Carroll County Times. “They will have set up certain parameters. If we hit those parameters, there could be a shared savings opportunity between the hospitals and the providers,” he added. (Photo copyright: LifeBridge Health.)

The TCOC runs from 2019 through 2023, when it may be extended by officials for an additional five years.

How Does it Work?

The TCOC Model, like the earlier All-Payer Model, will limit Medicare’s costs in Maryland through a per capita, population-based payment, Healthcare Finance explained.

It includes three programs, including the:

  • Maryland Primary Care Program (MDPCP), designed to incentivize physician practices by giving additional per beneficiary, per month CMS payments, and incentives for physicians to reduce the number of patients hospitalize;
  • Care Redesign Program (CRP), which is a way for hospitals to make incentive payments to their partners in care. In essence, rewards may be given to providers that work efficiently with the hospital to improve quality of services; and,
  • Hospital Payment Program, a population-based payment model that reimburses Maryland hospitals annually for hospital services. CMS provides financial incentives to hospitals that succeed in value-based care and reducing unnecessary hospitalizations and readmissions.

CMS and Maryland officials also identified these six high-priority areas for population health improvement:

  • Substance-use disorder;
  • Diabetes;
  • Hypertension;
  • Obesity;
  • Smoking; and
  • Asthma.

“We are going to save about a billion dollars over the next five years, but we are also providing better quality healthcare. So it’s going to affect real people in Maryland, and it helps us keep the whole healthcare system from collapsing, quite frankly,” Maryland Gov. Larry Hogan, told the Carroll County Times.

OneCare in Vermont, Different Approach to One Payer

Maryland is not the only state to try an all-payer model. Vermont’s OneCare is a statewide accountable care organization (ACO) model involving the state’s largest payers: Medicare, Medicaid, and Blue Cross and Blue Shield of Vermont, Healthcare Dive pointed out. The program aims to increase the number of patients under risk-based contracting and, simultaneously, encourage providers to meet population health goals, a Commonwealth Fund report noted.

Both Maryland’s and Vermont’s efforts indicate that payment plans which include value-based incentives are no longer just theory. In some markets, fees-for-service payment models may be gone for good.

Clinical laboratory leaders may want to touch base with their colleagues in Maryland and Vermont to learn how labs in those states are engaging providers and performing under payment programs that, if successful, could replace existing Medicare payment models in other states.

—Donna Marie Pocius


Related Information:

Maryland’s Total Cost of Care Model

Maryland All-Payer Model Expands to Include Outpatient Services

Gov. Hogan Sees Maryland Model as Example for U.S. Healthcare

The Maryland Model

Gov. Larry Hogan, Federal Government Sign Maryland Model All-Payer Contract

CMS Expands Maryland’s All-Payer Program to Outpatient Services

Vermont’s Bold Experiment in Community Driven Healthcare Reform

Hospitals on Buying Spree Snap Up Physician Practices

Doctors Opt For More Resources, Fewer Administrative Burdens Over Independence

There’s an interesting trend which has significant implications for pathologists and the clinical laboratory testing industry over the long term. For a variety of reasons, growing numbers of physicians are selling their medical practices to hospitals and health systems. This is creating a noticeable reduction in the number of private practices in the United States.

As commercial laboratory executives know, when a medical group practice is purchased by a hospital or health system, the clinical laboratory test referrals are redirected to the laboratory outreach program of the new owners. That means a reduction in the number of potential laboratory test clients in that regional market.


Medicare Pays Small and Mid-Size Practices to Participate in EHR Study

Reluctance of small and mid-sized physician practices to invest in electronic medical record (EMR) systems has been oft noted by Dark Daily. Now, Medicare is hoping to motivate these physician groups to adopt electronic health records (EHRs) with a new incentive program.

In an effort to jump-start physician adoption of EHR systems, the Centers for Medicare and Medicaid launched a five-year demonstration that offers small and mid-size physicians offices the opportunity to earn bonuses and receive a free EHR system.

Over the five years of the project, each doctor chosen for the demonstration could receive up to $58,000, with a limit of $290,000 per practice. The initiative will operate in Alabama; Delaware; Georgia; Louisiana; Maine; the Maryland/Washington, D.C., area; Oklahoma; and Virginia. Demonstration sites with communities in multi-county areas will also be in South Dakota; Jacksonville, Florida; Madison, Wisconsin; and Pittsburgh, Pennsylvania.

Participation alone will not guarantee the extra Medicare payments. CMS will randomly choose only half of the 200 practices recruited in each community to get EHR incentive payments The other half will serve as a control group and will get no bonuses, even if they use certified systems. Some physicians are frustrated about the prospect of being in the control group and not getting bonuses, but most accept the control group system as necessary.

According to coverage from American Medical News physician practices put into the control group will know from the outset. These groups will be required only to complete an annual survey of their EHR status. They will receive a small fee for participating in the survey. CMS wants to see how physician practices in the group progress in IT adoption, despite not receiving financial incentives from the Medicare program. No physicians in the control group will be required to use an EHR. Incentive payments will not be available to non-primary care doctors or to practices with more than 20 physicians.

“This demonstration is designed to show that streamlining health care management with electronic health records will reduce medical errors and improve quality of care for 3.6 million Americans,” stated Health and Human Services (HHS) Secretary Mike Leavitt. “By linking higher payment to use of EHRs to meet quality measures, we will encourage adoption of health information technology at the community level, where 60% of patients receive care. “We also anticipate that EHRs will produce significant savings for Medicare over time by improving quality of care. This is another step in our ongoing effort to become a smart purchaser of health care-paying for better care, rather than simply paying for more care.”

According to the HHS press release, the demonstration will be open to participation by up to 1,200 physician practices. Over a five-year period, the program will provide financial incentives to physician groups using certified EHRs to meet certain clinical quality measures. A bonus will be provided each year based on a physician group’s score on a standardized survey that assesses the specific EHR functions a group employs to support the delivery of care.

This EHR incentive program demonstrates the federal government’s resolve to push providers to eliminate paper charts and adopt electronic health records. Because this demonstration project will last five years, that fact alone indicates that health policy makers don’t expect to see rapid acceptance of EHRs by small and mid-sized physician groups in the near future.

Related Articles:
HHS Announces Project to Help 3.6 Million Consumers Reap Benefits of Electronic Health Records

CMS selects communities for Medicare EHR bonus pilot project

Doc groups back EHR study (Modern Healthcare subscription required)