AMARILLO, TX – Health care in the United States is good, but it is inefficient. Payment methodology has historically been based on a fee-for-service (“FFS”) model. This means that the payor pays for the service rendered, or the product provided, regardless of whether the service/product is effective. Under this FFS model, providers operate in “silos” (think of a farm silo). That is, one provider does not know what the other providers are doing. There is little to no “coordination of care.”
And so while a lot of money may be spent on services and products, patients may not necessarily be getting better…resulting in additional expenditures of money. This results in a downward spiral.
This FFS approach results in rewarding “high dollar treatment” that may treat the immediate problem but that does not keep the patient healthy. Conversely, the FFS approach pays poorly for “low dollar” approaches to preventative care (i.e., how to keep patients healthy so that they do not need “high dollar treatment”).
Recognizing this paradox, payors and providers are shifting away from the FFS model and are gravitating towards the collaborative care model (“CCM”). Under the CCM, (i) payors and referral sources select providers that can show good patient outcomes, (ii) providers coordinate with each other, and (iii) reimbursement to providers relates to patient outcomes.
So what does this have to do with the DME industry, and more specifically, with collaborative arrangements between DME suppliers and hospitals, physicians and other providers? The answer is this: There is a “sea change” taking place pertaining to paying for health care services…and DME suppliers have the opportunity to be part of, and benefit from, this sea change.
An example is the Hospital Readmissions Reduction Program that states that if a Medicare patient is treated in the hospital for one of six conditions (e.g., congestive heart failure, pneumonia, COPD) and is discharged, then if the patient is readmitted within 30 days for that same condition, the hospital will be subjected to future payment reductions by Medicare.
A DME supplier can work with the hospital to reduce the incidences of “frequent flyers”…patients being readmitted less than 30 days following discharge. For example, the hospital and the DME supplier can enter into a Preferred Provider Agreement (“PPA”) that states: (i) subject to patient choice, the hospital will refer its discharged patients to the DME supplier and (ii) in return, the DME supplier will provide value-added services to the patient designed to reduce the risk of the patient being readmitted soon after discharge. These services can be as mundane as calling the patient and caregiver to remind them that the patient needs to take his medication as prescribed…or that the patient needs to see his physician as scheduled…or that the patient needs to take his breathing treatments as directed…or that the patient needs to eat healthy food and drink plenty of water. The DME supplier can provide these services on its own, or the supplier can coordinate with a home health agency, therapy clinic, pharmacy, or other provider.
In rendering value-added services to discharged patients, it will be important for the DME supplier to collect data (i) describing the services that the supplier is rendering and (ii) describing the outcome of the services. The DME supplier can use this data to (i) justify, in the hospital’s eyes, the “preferred provider” arrangement and (ii) pitch the same type of arrangement to other hospitals. In turn, the hospital can use the DME supplier’s data to show to payors that the hospital is providing cost-effective care.
A similar type of program (i.e., similar to Medicare’s Hospital Readmissions Reduction Program) may be imposed by commercial insurers on hospitals…meaning that the post-discharge services offered by the DME supplier will become even more important to hospitals.
Data Analytics and Performance Measurements
As health care delivery shifts from FFS to the CCM, the DME supplier needs to ask itself: “How do I stand out in a world where quality of care matters?” According to Cognizant Reports – Analytics Driven Healthcare: “[I]n an increasingly competitive world where reimbursements are declining and proof of better care is required to improve clinical outcomes, organizations need to analyze all the data they can get their hands on. Stratifying the population, identifying patients at risk, analyzing gaps in care and elevating pre-care planning planning…can drive thoughtful and effective preventative care strategies.”
The DME supplier’s data is paramount. If the supplier can show that it positively impacts a patient’s health care cycle (i.e., limiting readmission, reducing chronic conditions, raising patient satisfaction), then referral sources (e.g., hospitals and physicians) and third party payors will be motivated to interact with the supplier.
In aggregating data, the DME supplier will need to redact identifying information so as to comply with HIPAA guidelines.
As the supplier collects and organizes data, it needs to be aware of hospitals’ and payors’ measurement standards. Some hospitals/payors use quality metrics where entities are gauged on “how well providers deliver services, meet the needs of patients and improve outcomes.” Additionally, as the CCM expands, providers and payors have come to realize that patient engagement and patient outreach are more vital than under the FFS model. According to Key Steps for Payer Success in ACOs: “In order to truly reduce medical costs and improve care quality, patients will need to be engaged in their care because it would improve overall health and lead to fewer expensive emergency room visits.”
In the DME space, the first thing to understand about “data analytics” or “performance metrics” is that the metrics by which a supplier might measure are a little different. Such metrics can vary based on factors such as the types of medical equipment a supplier specializes in, or the revenue sources the supplier might pursue. DME suppliers can focus on data analytics by asking themselves: (1) What can we control? (2) What can we become efficient at? (3) How can we prepare and understand readmission metrics? (4) Can we calculate readmission rates by condition? (5) Can we review patients’ demographic data to conduct risk assessments, and identify at-risk patients and prioritize their treatment?
Ensuring that patients are using their products appropriately is a selling point to referral sources…and to payors. Defining desired outcomes and having a mechanism to capture data points related to products provided to patients allow DME suppliers to quantify successful patient outcomes.
Practical Steps That The DME Supplier Can Take
First and foremost, the supplier needs to understand that the “old way of doing business” no longer works. The supplier cannot simply provide a good product, provide good service, and expect to get paid enough to keep its doors open. This may have been the case 15 years ago…but is no longer the case.
The supplier needs to understand the concept of the “irresistible force meeting the immovable object.” The “irresistible force” are the 78 million Baby Boomers retiring at the rate of 10,000 per day. The “immovable object” is the limited pot of money to keep the aging Boomers alive. Payors will “dole out” their money sparingly. Said another way, payors will focus on paying those providers that can quantitatively show that the services/products they are providing are achieving good patient outcomes. In other words, because of the DME supplier’s value-added services, its patients are staying away from hospitals and physicians.
And so the DME supplier needs to understand (i) what hospitals need in order for them not to experience reductions in payments from payors (see the Hospital Readmissions Reduction Program discussion, above); (ii) the types of data that hospitals and other referral sources value; and (iii) the types of data that are persuasive to third party payors. Then the DME supplier needs to focus on collecting and organizing data that shows how effective the supplier’s products and services are. And finally, the DME supplier needs to “sell itself” to referral sources and payors. By “selling itself,” suppliers need to show how they are different from their competitors…this difference being the performance measurement data that the supplier collects.
Jeff Baird and Brad Howard will be presenting the following webinar:
AAHOMECARE’S EDUCATIONAL WEBINAR
What Business Practices Will Get the Department of Justice’s Attention?
Presented by: Jeffrey S. Baird, Esq., Brown & Fortunato, P.C. & Bradley W. Howard, Esq., Brown & Fortunato, P.C.
Monday, December 18, 2017
2:30-4:00 p.m. EASTERN TIME
Health care fraud continues to be a top priority for the Department of Justice. Brown & Fortunato defends DME suppliers that have criminal and civil cases brought against them by the DOJ. As such, B&F works closely with federal investigators and prosecutors. This program will share observations regarding how the DOJ is attacking the problem, and what the DME supplier can do if it is the target of an investigation. Nationwide, there are nine Medicare Fraud Strike Forces using data analysis techniques to uncover fraud. This program will discuss the types of activities by DME suppliers, that the DOJ is focusing on. The program will set out “nuts and bolts” steps that the DME supplier can take to reduce the risk of being targeted by the DOJ. Lastly, the program will discuss the steps that a supplier should take in the event that it finds that is the target of a DOJ investigation.
Register for What Business Practices Will Get the Department of Justice’s Attention? on Monday, December 18, 2017, 2:30-4:00 pm ET, with Jeffrey S. Baird, Esq., and Bradley W. Howard, Esq., Brown & Fortunato, P.C.
Please contact Ika Sukh at firstname.lastname@example.org if you experience any difficulties registering.
Jeffrey S. Baird, JD, is Chairman of the Health Care Group at Brown & Fortunato, PC, a law firm based in Amarillo, Tex. He represents pharmacies, infusion companies, HME companies and other health care providers throughout the United States. Mr. Baird is Board Certified in Health Law by the Texas Board of Legal Specialization, and can be reached at (806) 345-6320 or email@example.com.