Archive for the ‘Healthcare Costs’ Category

Timeline to ICD-10: BCBS Michigan Approach is Business-Driven

January 19th, 2012 by Patricia Donovan

In its third year of ICD-10 work, BCBS of Michigan sees the project as business-driven, not solely an IT initiative. Early on, the Blues plan realized the ICD-10 transition affected nearly all aspects of its business, explained Dennis Winkler, BCBSM’s ICD-10 technical program director, in this week’s webinar on Mapping the Way to ICD-10 Readiness.

One of the first steps in the project was determining how and where it was using codes, Winkler continued. The challenge was then determining how to associate or map ICD-10 diagnosis codes to the proper diagnostic category, and then validate the mappings for professional claims. Faced with more than 70,000 ICD-10 codes, BCBSM focused its work on codes with discrepancies and high-impact codes.

After identifying discrepancies — when an ICD-10 code points to more than one ICD-9 category — BCBSM enlisted five ICD-10-certified coders and a legion of doctors and nurses to help resolve code discrepancies.

The result of their efforts was “BCBSM Blue GEMs” — the payor’s own customized database of general equivalence mappings (GEMs) whose life span would end when CMS stops updating GEMS. The company is willing to share BCBS Blue GEMS with interested entities who wish to model its approach, provided a formal request is submitted.

The BCBSM Blue GEMS will be loaded into an ICD-10 encyclopedia, an enterprise-wide tool that will become “the single source of truth” on ICD-10 as well as a baseline for annual updates, Winkler said.

Winkler also predicted that the issue of ICD-10 neutrality — which occurs when neither the claims acceptance rate, the number or rate of inquiries, the rate of electronic claims or claims reimbursement amounts are affected — will continue to be a hot topic for 2012. Winkler defined the four challenges of neutrality as well as its six targeted dimensions, emphasizing that BCBSM has a reliable process for each of these six dimensions.

A successful transition to ICD-10 will require different levels of collaboration from payers, providers, medical societies and state agencies to get the job done, followed by “testing, testing and more testing.”

Two Medical Home Approaches Behind $1 Billion in N.C. Medicaid Savings

January 9th, 2012 by Patricia Donovan

Aggressive care management and preventive care saved North Carolina Medicaid nearly $1 billion over four years, according to a new analysis by Milliman Inc., a national healthcare consulting firm.

This latest report of savings in the Tar Heel State from patient-centered medical homes (PCMH) links the cost reductions to reduced hospital admissions, readmissions and emergency room visits, many of which are avoided when patient care is managed more efficiently.

The savings update was announced in a press release this week by the office of the state’s office governor, Bev. Perdue.

To provide medical homes, the state continues to partner with the Community Care of North Carolina (CCNC), a nonprofit group of local healthcare provider networks that provide and coordinate care for Medicaid recipients. The 14 regional CCNC networks since 1998 have pooled their resources for technological and administrative purposes, which not only saves operational costs but also provides opportunities for cooperation and collaboration throughout the networks.

With financial support from The Commonwealth Fund, CCNC has created a 16-module toolkit on constructing a medical home approach for vulnerable and high-cost populations.

The modules span everything from program development and rollout to IT support and informatics to establishing a network pharmacist program. There are also modules dedicated to a pregnancy medical home, integration of behavioral health and other populations.

CCNC has also created a workbook and resources for organizations pursuing recognition as a patient-centered medical home.

The Milliman report found that the key to the success of medical homes approach is a strong emphasis on preventative care, and aggressive care management. Although the cost of frequent office visits and treatment of newly diagnosed conditions adds to program costs initially, the reduction of emergency room visits and hospital admissions, as well as capturing of efficiencies and improving quality of care, results in significant savings and better health for the recipient.

The report by the San Diego-based accounting firm examined the impact of the state’s support for primary care medical homes – a system to coordinate healthcare for Medicaid recipients. Milliman’s report, which was required by the General Assembly, found that recipients with a medical home get better care and consumed fewer Medicaid resources than those who lack a medical home. From fiscal year 2007-2010, N.C. Medicaid avoided spending $984 million by having 1.1 million of its members enrolled into medical homes. In just the last two fiscal years of the study – 2009 and 2010 – $677 million was saved.

As N.C. Medicaid enrolled higher numbers of its members into a CCNC medical home, Milliman found annual savings increased—$103 million in fiscal year 2007 (July 1, 2006-June 30, 2007); $204 million in FY 2008; $295 million in FY 2009; and $382 million in FY 2010.

Milliman also reported that N.C. Medicaid is on a successful path to decrease cost by enrolling aged, blind or disabled (ABD) members into a medical home. Those Medicaid populations are generally the least healthy overall and costliest to treat. Enrollment into medical homes initially would add to the cost of caring for them but pays off in the long term. Indeed, Milliman found that in FY 2006, medical home enrollment of ABD populations cost the state an additional $82 million. But by FY 2010, enrollment of ABD Medicaid recipients into medical homes had paid off with the state avoiding $53 million in costs.

Hospital Initiative, GE-Microsoft Collaboration Target Healthcare-Acquired Conditions

December 19th, 2011 by Cheryl Miller

Hospitals are the targets of two of our stories this week: an initiative and collaboration both aimed at reducing the millions of preventable injuries and complications arising from hospital-acquired infections (HAI.) Ironically, this refuge for the sick is making people sicker; in the United States alone, an estimated 1.7 million HAIs occur annually, resulting in $35 billion in additional healthcare costs, and the loss of nearly 100,000 lives. As we reported in an earlier story this year, a University of Maryland report found that nearly half of the hospital rooms of patients who tested positive for a multi-drug resistant bacteria were contaminated with the bacteria.

In response to this, hospitals across the country will now have the resources and support to reduce HAIs: the HHS has launched a new initiative called the Hospital Engagement Network. Part of the Partnership for Patients initiative, a nationwide public-private collaboration to improve healthcare, $218 million will be awarded to 26 state, regional, national, and hospital system organizations to help develop learning collaboratives for hospitals and provide a wide array of initiatives and activities to improve patient safety.

And a new collaboration between GE Healthcare and Microsoft is tackling this problem by pulling together data from disparate IT systems and identifying those patients most at risk for a given HAI. Hopefully their solutions will enable healthcare organizations to more effectively deploy their resources and deliver better care at lower costs.

And on a local level, a new ER unit designed solely for seniors is in place in HIN’s backyard, at New Jersey’s Monmouth Medical Center. To ease the increasingly complex needs of those 65 and up, the unit has special age-related features like wall sconces with dimmers and floor lighting to prevent falls. More in this issue.

In other news, a new study shows that disease registries can improve health outcomes and save the United States billions of dollars. Research on 13 registries in five countries, including the United States and Sweden, shows that these tools are becoming even more important under healthcare reform as payments for care are linked to effective treatments. According to our 2011 Survey on patient registries, 68 percent of respondents are using registries to improve care quality.

And lastly, a new report from Deloitte reveals that the majority of physicians do not think that PPACA will reduce costs by increasing efficiency, and they are predicting a continued shortage in primary care physicians as they seek administrative roles in health plans, hospitals and other settings.

These stories and more, in this week’s issue of Healthcare Business Weekly Update.

Forget About the Pizza, What About the Sodium?

December 7th, 2011 by Cheryl Miller

Pizza is not a vegetable.

That’s the word from the American Heart Association (AHA) on Congress’s much publicized perceived push for pizza to move to the top of the school lunchroom’s food pyramid, a decision sure to disappoint children everywhere.

But reports have since shown that what Congress actually did was to maintain that the tomato paste in pizza sauce is a concentrated form of tomatoes, and should be counted as such. So that an eighth of a cup of tomato paste, the amount often used in a serving of pizza, should be considered equivalent to a half cup of vegetables. According to a recent article by Sarah Kliff in the Washington Post’s Wonkblog, the United States Department of Agriculture (USDA) did not want to credit a volume of fruits or vegetables that was more than the actual serving, and Congress blocked this.

The USDA’s proposed changes were the first changes in 15 years to the $11 billion school lunch program, according to USDA officials, as cited in an article in the New York Times, and were meant to reduce childhood obesity by adding more fruits and green vegetables to lunch menus.

And while no one can debate the benefits of tomatoes, Kliff’s article goes on to compare the nutritional facts of tomato paste, no salt added, with fresh fruits, and they appear similar, except for the sodium, where tomato paste outweighs the fruit by 33 mg to 1 mg.

And so the real culprit here is not Congress or even pizza, but the amount of sodium in foods, and whether or not it should be regulated.

Sodium has been proven to cause cardiovascular (CV) disease, a relationship recently reaffirmed by the CDC. And CV disease keeps increasing, according to the CMS: “Heart disease causes one of every three American deaths and constitutes 17 percent of overall national health spending, costing $444 billion every year in medical costs and lost productivity in Americans.”

The statistics for diabetes, a preventable disease often caused by poor lifestyle and unhealthy eating, are equally staggering: 78,000 children develop type 1 diabetes every year. The problem is so severe that the United Nations recently held its annual summit on non-communicable diseases, namely cancer, chronic respiratory diseases, CV disease and diabetes. It was the second of its kind to focus on a global disease issue; the first health-related UN Summit addressed AIDs.

And according to a recent study from the Commonwealth Fund, 32 percent of children ages 10 to 17 are overweight or obese.

So, given the amount of calories, fat and sodium in the pizza that contains the pizza sauce that contains the tomato paste, one of the last things our school kids need is more pizza in their diets.

What they do need is to be offered the tools to learn and make independent decisions not only outside the classroom, but inside the classroom as well, and the lunchroom is a good place to start.

But if Kliff is right, the lunchroom just might be the last place for kids to get a good education.

While the U.S. Department of Agriculture writes guidelines for what school meals should look like, few schools actually follow them. Just 20 percent of schools served meals that met federal guidelines for fat content, according to a 2007 USDA audit.

Got an Idea? CMS Offers $1 Billion in Health Care Innovation Challenge

November 28th, 2011 by Cheryl Miller

The CMS continues to reward innovation in healthcare; the latest initiative, the New Health Care Innovation Challenge, plans to award up to $1 billion in grant money to organizations that come up with creative ways to deliver healthcare, improve care and lower costs. The agency will take notice of projects that can be up and running within six months and that can hire, train and deploy workers rapidly. Funded by the PPACA, it’s a push for both creative healthcare solutions and increased healthcare job opportunities in as short amount of time as possible, contrary to the Innovation Advisors initiative launched in October, which seeks healthcare solutions over a year long, labor intensive period. All segments of the healthcare industry are encouraged to apply for the Innovation Challenge; December 19th is the cut off date for LOIs.

A quick, innovative, effective solution is also needed to alter the latest statistics on diabetes furnished by the IDF on World Diabetes Day (November 14th): studies show that one adult in 10 will have diabetes by 2030. Far too many are already afflicted with the preventable disease, including 78,000 children suffering with type 1; this despite the fact that the greatest number of diabetics fall within 40 to 59 years of age. The IDF is hoping that continued international awareness of this problem will help; and the agency is in the midst of a five-year campaign to promote diabetes education and prevention programs. Ironically, the CMS cited one health system that worked with community partners to decrease the risk of diabetes with nutrition programs as inspiration for its Healthcare Challenge initiative. Food for thought.

Another area of concern is the number of seniors receiving the wrong medication during their home healthcare visits. The Journal of General Medicine recently published a study stating that nearly 40 percent of patients 65 and over are prescribed potentially inappropriate medications (PIMs) at rates three times higher that patients who visit a medical office. Some of the blame can be placed on our fragmented healthcare system, researchers said: home health-based patients see multiple physicians who don’t communicate with each other, resulting in the wrong medication. Perhaps most troubling about this study is that the majority of these patients are taking 11 medications on average, and nearly half of them are taking at least one PIM, researchers say.

And lastly, one quick fix that should boost care access for patients: a new clinical affiliation between CVS Minute Clinics and Emory Healthcare. The stand alone clinics are open seven days a week in select areas throughout metropolitan Atlanta and have nurse practitioners on hand to administer wellness and preventive services and tend to common family illnesses. Patients who need care not provided at the clinics will be referred to Emory Healthcare. Both CVS and Emory hope to streamline the process with the use of EMR systems. These stories and more in this week’s issue of Healthcare Business Weekly Update.

November 4 Deadline Looms for Certain CMS Bundled Payment Models

November 2nd, 2011 by Patricia Donovan

Model 4 of the new CMS bundled payments program offers “the best balance of risk and reward” as well as opportunities for gainsharing, advises Jim Reilly, managing partner with TRG Health Care Solutions. This option appears to have the highest level of interest among providers Reilly has communicated with.

The four models included in the new CMS initiative are:

  • Model 1: Retrospective bundled payment for all inpatient hospital stays;
  • Model 2: Retrospective payment model for the acute inpatient hospital stays AND post-acute care;
  • Model 3: Retrospective payment model for post-acute care only;
  • Model 4: Prospective payment for select acute care hospital stay only – Providers select which MS-DRGs to include

Providers interested in participating in Models 2 through 4 have until Friday, November 4 to submit letters of intent to participate. Model 1’s deadline has already passed, Reilly noted, and interest in Model 2 is limited due to associated risk from post-acute care.

The veteran of previous CMS forays into bundled payments walked through the four models and timelines during last month’s webinar on “Evaluating CMS’ Bundled Payment Initiative: Operational, Financial and Clinical Considerations.”

Hospitals are more familiar with bundled payments than physician practices, who are traditionally paid by CMS on a fee for service basis, noted Reilly. CMS hopes the new bundled pricing initiative will incentivize hospitals and physicians to work more closely together to improve outcomes.

Reilly reported a “neutral to positive” assessment of CMS’s Acute Care Episode (ACE) pilot from the five participants in that recent CMS bundled payments trial. Reilly worked with all five health systems on the ACE project, including Baptist Health System. Model 4 is also most like the ACE model, and offers a prospective payment, in that CMS will pay one fee after the care is delivered.

Reilly posed several questions for providers to consider before committing to participate, including whether bundled payments will effectively align physicians, result in financial gain, improve quality benchmarks and inspire innovation and change in the healthcare industry.

His advice to potential participants? Start educating your physicians on the payment process, and start now: the application is extremely labor-intensive.

More MGMA Highlights: Changing Where and How Healthcare Is Delivered

October 27th, 2011 by Patricia Donovan

The only way to revamp the existing healthcare system is to “change the places and the ways in which we deliver care,” advised Eric Dishman, Intel Fellow and director of health innovation and policy, during Tuesday’s opening session of the MGMA 2011 annual conference.

To illustrate, Dishman held aloft a small computer about the size of a pedometer that Intel gave to homebound elderly to wear. The computer generated data on their gait, information the scientific community can use to better understand how to prevent falls in this population, he explained during “Changing Practices: Home- and Community-Based Care Technologies for Independent Living.”

It’s just one of the ways Intel is studying the entire “human” system to better design the technologies to support their care, Dishman said.

Out in the conference exhibit hall, home monitoring technology by Alere supports the shift in care delivery locations that Dishman is proposing. The technology allows patients who take the anticoagulant Warfarin to test PT/INR levels regularly. Keeping PT/INR levels within a safe range can help individuals to avoid serious complications such as bleeding or stroke.

“These rapid and real-time diagnostic tests in home allow for more frequent testing, which provides additional data,” explained Clint Brown, Alere home monitoring national business director. “We can catch an INR drifting out of range, which is the essence of preventive care.”

By helping to reduce risk and adverse events, the technology helps to reduce the likelihood of readmissions, Brown added, “while contributing to the efficiency conversation.”

Patient portals were also part of the efficiency conversation at the conference, since they help to optimize EHR use, enhance patient engagement and clinical information exchange and shift some care management tasks to the patients themselves — everything from making appointments to paying bills to reviewing lab results. Most EHRs have a portal component that can be activated.

The conference’s Healthcare Innovations Pavilion featured a case study Tuesday on patient portal use, co-presented by Intuit and St. Vincent Medical Group. The 34-site, 150-physician multispecialty group launched the portal in May, explained Patti Ballman, St. Vincent’s director of operations, but is already experiencing improved patient flow, a decrease in telephone calls and an ability to see more patients.

The portal, which the medical group has branded “MySV,” positions the group well for the patient engagement requirement of meaningful use, but that wasn’t the primary driver for portal implementation, noted Ballman.

“We wanted to improve the care experience for the patients in the office. The online portal allows us to focus more on the patients who are in front of us rather than the ones on the phone.”

Physician practices considering the use of a patient portal should start collecting patients’ e-mails now to make the launch easier, Ballman recommended.

Portals are just one of the technologies that are helping physician practices to improve collections by providing a more private transaction. Another is automated voice messaging, contributes Marc Tumminello, vice president of healthcare practice sales for Televox, another exhibitor at the conference.

“Using automated reminders for accounts receivable is far less costly than call centers,” noted Tumminello. “Practices can also build in the option to speak to a live person. Giving the patients various payment options reduces the potential embarrassment of this transaction.”

Phreesia, which calls itself “The Patient Check-in Company,” puts this transaction back in the waiting room by building payment options into the self check-in process. Patients can check themselves in on the company’s bright orange portable tablets, then render their co-pay or outstanding balance by swiping their credit card on the side of the tablet. The technology verifies eligibility, and also offers customized disease management education at the end of each transaction.

Patients have been receptive to this technology, notes Phreesia representative Katie Ray, who was demonstrating the tablet. “Patients are used to self-service in other aspects of their lives; why not in healthcare?”

On the clinical side, several presenters described how they are embedding case managers in the primary care practice. In separate sessions, both Advocate Physician Partners (APP) and Marshfield Clinic said they have embedded case managers in physician practices in the last year.

Sixty colocated outpatient case managers were added to APP’s clinical integration program in early 2011, explained Dr. Mark Shields, senior medical director and vice president of medical management for Advocate Physician Partners and Advocate Health Care. “They will focus on the sickest 2 to 3 percent of our population.”

Marshfield Clinic has embedded 55 nurse care coordinators in its 35 NCQA-recognized level III patient-centered medical homes, explained Dr. Theodore Praxel, medical director of quality improvement and care management. On average, the nurse care coordinators have been working for about six months in the practices, which have been very positive about this addition to the care team.

Watch this blog for more detail on these hot topics for practices — as well some innovative strategies for coping with HIPAA compliance, physician shortages, acquisition, decreased reimbursements and other challenges.

ACO Final Rule Accompanied by Advance Payments for Care Coordination Tools

October 24th, 2011 by Cheryl Miller

The anxiously awaited final rule on accountable care organizations (ACOs) for Medicare beneficiaries is finally out. Based on the more than 1300 comments CMS received on its proposed ACO ruling first released in March, this new rule will make it easier to establish ACOs by providing organizations with additional funding for support tools, such as new staff or information technology systems. Under this new initiative, the Advanced Payment Model, these payments would be recovered from any future shared savings.

The second initiative, the Medicare Shared Savings Program, will provide incentives for healthcare providers who agree to work together and become accountable for coordinating care for patients. Participants who meet certain quality standards based upon, among other measures, patient outcomes and care coordination among the provider team, may share in savings they achieve for the Medicare program. Both initiatives launched on October 20th.

The United States earned low marks in healthcare access and affordability in the Commonwealth Fund’s third annual scorecard report. According to the report, the nation received a 64 out of a possible 100 when compared to best performers. Among the findings that contributed to the score were the percentage of overweight or obese children (32 percent), the number of prescription errors among elderly Medicare beneficiaries (one out of four) and the percentage of adults that reported not having a primary care provider in 2008 (44 percent).

Despite the low scores in key quality indicators, the United States is doing something right in the area of heart failure (HF) care. New research from the Yale School of Medicine shows that hospitalization rates for HF dropped by 30 percent from 1998 to 2008. One year mortality rates also dropped slightly during this period. HF ranks as the most frequent cause of hospitalization and re-hospitalization among older Americans, with related costs estimated at $39.2 billion in 2010.

In other news, 46 percent of physician practices do not meet NCQA standards for medical homes. The news, from a recent University of Michigan-led study, found that while larger, multi-specialty practice groups can more easily meet the standards, one in nine Americans receive healthcare from smaller, often solo practices. Researchers recommend initiatives to help these smaller practices team up with larger organizations to establish more medical homes.

More than 50 percent of physicians and hospitals are looking at ways to team up, a trend that is causing medical malpractice concerns. Aon’s 12th annual Hospital and Physician Professional Liability Benchmark Analysis states that healthcare systems will face significant risk management challenges associated with integrated physician-hospital arrangements. The study details the growth of integrated self-insurance strategies and highlights the challenges faced by systems as they pursue the cost of risk savings.

And lastly, what are you doing to staunch the flow and expense of avoidable emergency department use? Describe your efforts in this area by October 31 and you will receive a free executive summary of results from this second annual survey. These stories and more in this week’s issue of Healthcare Business Weekly Update.

CMS Seeks Innovation Advisors

October 24th, 2011 by Cheryl Miller

CMS has rolled out a lot of solid initiatives this year; now the latest, the Innovation Advisors program.

The CMS Innovation Center is looking to recruit up to 200 healthcare professionals, including clinicians, allied health professionals and health administrators, to test and refine new models of healthcare delivery for Medicare, Medicaid and CHIP beneficiaries. Program officials hope to deepen skills that will drive improvements to patient care and reduce costs. 

Those who are selected for the program will have to commit up to 10 hours a week for the first six months of the program attending on site and remote sessions to expand their skills and knowledge. The rest of the year-long program will be spent implementing what they learned in their organizations and communities.

Participants will be asked to:

  • Support the Innovation Center in testing new models of care delivery.
  • Utilize their knowledge and skills in their home organization or area in pursuit of the three-part aim of improving health, improving care, and lowering costs through continuous improvement.
  • Work with other local organizations or groups in driving delivery system reform.
  • Develop new ideas or innovations for possible testing of diffusion by the Innovation Center.
  • Build durable skill in system improvement throughout their area or region.
  • This initiative is just one of a number of efforts proposed by CMS this year; to date, more than 5,000 organizations have joined the Partnership for Patients and pledged to reduce hospital-acquired conditions and improve transitions in care.  The Bundled Payments for Care Improvement initiative will give providers flexibility to work together to coordinate care for patients over the course of a single episode of an illness.  The Comprehensive Primary Care Initiative will allow CMS and other payers, such as employer-based health plans, to align strategies designed to strengthen primary care services delivered to Medicare beneficiaries.

    Applications for the Innovation Advisors program are due on November 15, 2011.  Applications will be reviewed and Innovation Advisors will be notified of their selection by mid-December 2011. 

    More information, including a fact sheet, frequently asked questions, application and terms and conditions can be found here.

    Q&A: How to Survive and Thrive Under Bundled Payments

    October 14th, 2011 by Patricia Donovan

    Time in the trenches with Acute Care Episode (ACE) pilot participants qualifies Jim Reilly to comment on CMS’s latest Bundled Payments initiative specifically and bundled payment trends in general. The managing partner of TRG Healthcare Solutions shares three lessons CMS learned from the ACE pilot and more in this interview with the Healthcare Intelligence Network (HIN).

    (This interview was conducted in advance of Reilly’s presentation on “Evaluating the Bundled Payment CMS Initiative — Legal, Financial, and Clinical Considerations,” an October 19, 2011 HIN webinar.)

    HIN: To begin with, what did CMS learn from the ACE Pilot and how is that influencing its newest payment initiative?

    Mr. Reilly: First, CMS learned that episodic payments or bundled pricing is a very effective way to incentivize hospitals and physicians to work closer together. They firmly believe combining the fees for an episodic period will lead to better coordinated care, not only between hospitals and physicians but across different specialties, to work together for optimal outcomes. They also learned that it will save CMS money. Through their bundled pricing experience in the past, this has led to lower rates that CMS pays for providers. And they also feel, finally, that it’s going to improve beneficiary health and outcomes. So it’s something that they’re investing in and moving forward with aggressively nationally.

    HIN: ACE Pilot participant Baptist Health System, one of the companies that you worked with, refers to its ‘Hallmark moment’ of distributing gainshare checks to participating physicians. What are some other benefits of participation for health systems?

    Mr. Reilly: Physician alignment is number one. The level of collaboration has truly increased within that health system. That then drives a greater focus on quality metrics and service metrics — not only the cost side, but also a different level of engagement in trying to move those important cardiovascular and orthopedic metrics in this case. That’s been a great benefit to the health system.

    The health system is also benefitting from this experience because CMS is not the only payor that’s going to be adopting bundled payments as a way to pay for care. There will be other payors outside of CMS — outside national payors that will be active in bundled pricing. And a system like Baptist Health is well positioned to take advantage of that as well.

    HIN: And finally, our fifth annual survey on the patient-centered medical home (PCMH) found that 9 percent of respondents have already begun experimenting with bundled payments. From your perspective, is this an adequate representation of the marketplace? Where do you think this trend is going?

    Mr. Reilly: I don’t think it’s an adequate representation. Sometimes in this industry, we’re a little bit slow to move and be as innovative as we should be. The trend here, particularly with specialties like cardiovascular services and orthopedic services, is definitely more toward acceptance of risk in contracting with Medicare and other payors. You’ll see a great deal of activity beyond CMS, with other payors following suit.

    And in order to succeed in that environment, we need more providers out there becoming clinically integrated — not only for the acute care episode, but for post-acute care services, so that we can survive and thrive under bundled payment for CMS. And other payors are going to adopt this. This current CMS bundled pricing initiative is going to escalate to other providers out there moving forward in this direction.

    HIN: To follow up on that, could you define ‘clinical integration’ and explain why that needs to happen first?

    Mr. Reilly: Certainly. The care process requires multiple caregivers and providers to get the optimal outcome and service. And today many times, we have competing interests among doctors and hospitals. We’ve got physicians that are dealing with challenges of running private practices; sometimes that takes away from collaborating in what is the optimal episode in amounts and levels of care provided for patients.

    Once we move into alternative payment methodologies such as bundled payments, it breaks down some of those barriers. We’ve got surgeons and cardiologists and anesthesiologists and radiologists and consultants working more in a united way to ensure that that patient is getting optimal care and efficient care. That’s clinical integration.