2010 Has Already Been a Huge Year in Healthcare

Health Information Technology (HIT)

The physician incentive payments/penalty provisions that piggybacked their way onto the federal healthcare reform law have physicians concerned and scrambling. IT vendors and advisers are drawn to the opportunities the new law has created; and physicians need to be educated and wise.

The so called “HITECH” provisions of the federal healthcare reform law create a pot of about $34 Billion worth of incentive payments for eligible professionals and hospitals that attain meaningful use of certified electronic healthcare records (EHR) technology. To obtain any money, eligible parties will have to demonstrate full compliance no later than 2015, and earlier (2011!) if they want the full benefit. Medicare has allocated roughly $44K worth of incentives for each compliant physician; and Medicaid offers another $20K roughly, but the real incentive is not the money; it’s the fact that financial penalties apply if you don’t comply by 2015.

Financial incentives are available for eligible professionals who use certified HIT which satisfies the “meaningful use” regulations, which were issued August 2010. They are complex and limited by time lines which industry insiders claim to be unreachable. Vendors are, nevertheless, selling and physicians are buying software and solutions in hopes they will qualify for the incentive payments. Physicians should make sure that their contracts with such vendors protect them by requiring the solutions to be certified and meet the meaningful use guidelines.

Healthcare Reform

Though everyone is scared about how healthcare reform will unfold, remembering the past may help. The fact is the concepts in the Act are not new. For instance, IPAs, PHOs, capitation and the like are the cornerstone of the reform. Physicians have seen these before, though not on a government mandated basis. Moreover, where those models were once purely financial, there is a heavy clinical outcome component woven into the regulations.

No matter how one views it, the Act creates huge opportunities for physicians and others. Risk based compensated Accountable Care Organizations (ACOs) are slated to be the new platform for healthcare delivery. Good news for PCPs: regulators and think tankers think that physicians, especially primary care physicians, are the best positioned to lead the ACO development charge. That said, the form the ACOs will take is completely unclear and is expected to unfold over a period of ten years. Like technology vendors, physicians have to be wary of anyone who has something to sell at this time. One size does not fit all! IPAs might be a great vehicle to start. Capitated models are familiar, but a bundled payment methodology may work better in some circumstances. One thing that is certain: whatever business model a physician explores ought to be able to bear financial risk (e.g. capitation or bundled payments) and measure clinical outcomes, because both elements will form the basis of payments of the future. Though specifics about the future of healthcare are unavailable, the following is a fair list of what’s likely:

1. Movement away from fee for service payment to risk based compensation;
2. The prevalence of IT & EMR;
3. The need to demonstrate clinical effectiveness;
4. An expanded role of primary care physicians;
5. Expansion of concierge type services;
6. Employment of physicians by hospitals;
7. The development of larger medical practices;
8. More patients (through insurance mandates and expansion of Medicaid eligibility);
9. Expanded use of “physician extenders” (as the PCP shortage worsens); and
10. Increased enforcement in the area of healthcare fraud (civil & criminal).

OIG and CMS Pronouncements

May was a busy month for healthcare regulators. SMS issues the Ambulatory Surgery Center Waiting Area Separation Requirements, which has had the effect of preventing creative business opportunities between ACSs and other healthcare businesses.

Additionally, the OIG recently issued an Advisory Opinion which makes it very difficult for imaging centers to do prior authorizations for referring physicians.

Fraud and Abuse

If the first 2/3 of 2010 are any indication of the future in healthcare law, healthcare business professionals have a lot to keep up with. Enforcement by the Justice Department and the Office of Inspector General is in full swing. Already, for instance, nearly $2 million has been repaid as the result of employing a person who has been excluded from a federal healthcare program. Examples include:

1. One provider paying $122K for improper supervision of physical therapy;
2. The possibility of $50K in fines and 135 years in prison for one provider who allegedly failed to supervise speech therapy;
3. One Miami consultant being subject to 10 years in prison and $250K per count for billing Medicare for HIV treatment when the patients didn’t have HIV;
4. A whistleblower from Collier County alleging a hospital chain illegally induced physicians with money and favors in exchange for patient referrals.

Developments will continue to roll out as policies are enacted to implement change. And, over the course of the next ten years that healthcare reform is implemented, the one thing we can count on: surprises. Keep watching, learning and adapting.

With over 23 years of healthcare law experience following his experience as legal counsel for the Florida Medical Association, Mr. Cohen is board certified by The Florida Bar as a specialist in healthcare law. With a strong background and expertise in transactional healthcare and corporate matters, particularly as they relate to physicians, Mr. Cohen’s practice involves him in regulatory,

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Rising Healthcare Costs and Outsourcing

The cost of healthcare in the US has been steadily increasing in the past few years, and according to some projections by consultancy firms, the trend will continue. This has lead to increasing acceptance of outsourcing by different hospitals and healthcare providers across the country. Information technology, medical transcription, medical billing, and medical coding outsourcing have been increasing in response to the need to reduce cost.

Healthcare Costs On the Rise

On the 15th of September, New York based consultancy firm, Towers Watson (NYSE:TW), projected an 8.2% increase in employer health care costs for 2011. According to Ron Fontanetta, senior health care consultant with Towers Watson, “Employees today are adjusting to historically lower-than-average merit pay increases, while at the same time facing higher health care contributions, copays and deductibles. This combination could adversely affect many employees and intensify the growing affordability crisis.”

Meanwhile, Chicago based company, Hewitt Associates (NYSE:HEW), estimates that it may be as much as 9%. In Chicago, the projection is as high as 12.4%. The figure is the highest it’s been in five years.

In a statement by Hewitt’s health care practice leader Ken Sperling said, “Employers continue to struggle to balance the significant health care needs of an aging workforce with the economic realities of a difficult business environment.”

The report attributes the increase to an aging workforce, coupled with increasing costs of technology as well as the health care reform act.

Cost And Outsourcing

There’s certainly no doubt that the cost of healthcare is increasing and in response, healthcare providers and hospitals are struggling to maximize revenue while minimizing expenses in order to reduce the cost on consumers.

One example is Hendrick Medical Center, who, on the 7th of September, signed a managed service and recruitment process outsourcing contract with AMN Healthcare Services (NYSE:AHS). Ralph Henderson, AMN President for the Nursing and Allied divisions, said that the contract would result in, “lower bill rates and operational costs, reduced liability and mitigated insurance risks, and increased compliance with clinical standards.”

Outsourcers in the meantime are expanding into the healthcare space in order to take advantage of the opportunity.

As MaryAnne Pace, co-founder of company, Health BluePrints stated, “Healthcare providers are looking for solutions to increase net cash, achieve revenue cycle performance improvement, enhance operational efficiency, and improve overall patient and physician satisfaction.” The company was recently acquired by NCO Group, who along with the acquisition also released a new end-to-end Healthcare Revenue Cycle Management (RCM) solution on the 13th of September.

Another company moving into the healthcare space is Tricom India (NSE:TRICOM), who is currently acquiring US healthcare service provider GTESS Corporation. The news announced on the 14th of September came after Tricom India announced that it recently secured a five-year contract from a US-based healthcare firm for $10 million. Meanwhile, Conifer Health Solutions also announced an acquisition on the 28th of September. The company is acquiring MediHealth Outsourcing in order to strengthen its position in the healthcare outsourcing space.

Healthcare Numbers

As the trend of rising healthcare continues, healthcare providers and hospitals are looking to reduce costs, and at this point one of the solutions they are turning to is outsourcing – an opportunity that outsourcers are gearing to take advantage of. Healthcare, just like any other business, has to worry about the numbers.

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