2015 November Affiliate Practice

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United Health Considers Ditching ACA’s Exchanges Due to Giant Losses What Makes for a Successful Accountable Care Organization? U.S. Spends More on Health Care Than Other High-Income Nations But Has Lower Life Expectancy, Worse Health


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Michael Goldberg Bob Herman Jennifer Bresnick Anjalee Khemlani Adam Rubenfire John E. Morrone, Esq. Julia E. Cassidy, Esq. Virgil Dickson

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C O N T E N T S

4 United Health Considers Ditching ACA’s Exchanges Due to Giant Losses

5 What Makes for a Successful Accountable Care Organization?

9 US Spends More On Health Care Than Other High-Income Nations But Has Lower Life Expectancy, Worse Health

10 Health Care Industry Measures Quality in Flawed Way, Harvard Expert Says

12 $2.7 Billion Med Assets Sale Shakes Up Healthcare Group-Purchasing Market

13 OIG Reports on HIPPAA Oversight Could Signal Changes in HIPPAA Enforcement

14 Doctors are Leaving Behind Federal Dollars to Pay for Coordinated Care

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Special Feature

UnitedHealth considers ditching ACA’s exchanges due to giant losses By Bob Herman

UnitedHealth Group has lost $425 million from health plans sold on the Affordable Care Act's marketplaces, which forced the company to lower its profit projections for the rest of the year. The company suggested it may exit the exchanges altogether by 2017. It's a potentially huge blow to President Barack Obama's healthcare reform law, which has already suffered from the demise of half of its not-for-profit health insurance co-ops. The exchanges are the primary conduit to expand health coverage to middleclass Americans. If a major publicly traded insurer bows out, others may follow and destabilize the entire individual market. UnitedHealth reported a $425 million shortfall from exchange products, and that includes $275 million UnitedHealth expects to lose from its 2016 plans. There's also another $200 million to $225 million in potential exchange losses that can't be booked until next year, the Minnetonka, Minn.-based health insurer and services conglomerate said. “We cannot sustain these losses,” UnitedHealth CEO Stephen Hemsley said on an investor call Thursday. UnitedHealth will evaluate its public exchange status during the first half of next year before deciding if it will leave the market. It has also “pulled back” significantly on marketing its 2016 plans and cut commissions to insurance brokers to minimize enrollment growth. It's a swift turn of events for the nation's largest health insurer, which only a month ago touted its exchange strategy and said it was expanding into 11 new markets next year. UnitedHealth did not participate when the ACA's marketplaces kicked off in 2014. “We continue to expect exchanges to develop and mature over time into a strong viable growth market for us,” UnitedHealth President and Chief Financial Officer Dave Wichmann said on the company's third-quarter earnings call in October. Much has changed since then. Hemsley said many of UnitedHealth's 550,000 exchange enrollees were sicker than expected and “strong users of services.” In addition, many people have been signing up outside of the open-enrollment period, and those typically are the people using the most services, Hemsley said. The ACA established special enrollment periods so people could still sign up for coverage if they experienced a life-changing event, such as getting married or having a child. Open enrollment for 2016 plans started Nov. 1. Although 1.1 million people selected a health plan through the federal HealthCare. gov site in the first two weeks, only a third of those people are new to the marketplace. Insurers are hoping more new consumers, especially those who are younger and healthier, will sign up so they can balance the risk from the initial surge of sick members. But many have shied away from the exchanges due to rising premiums, high deductibles and limited provider networks. Anticipating that things will get worse before they get better, UnitedHealth lowered its 2015 profit from $6.25 to $6.35 per share to $6. “We saw no indication of anything actually improving,” Hemsley said. He also suggested that UnitedHealth should have stayed out of the exchanges until after 2017. UnitedHealth is not the only insurance company that has been battered in the early stages of the exchanges. Health Care Service Corp., the Blue Cross and Blue Shield insurer for five states, lost $282 million in 2014 due in large part to the new individual exchange plans. The CEOs of Aetna and Anthem have similarly voiced their concerns with the public exchanges, but they have indicated they will continue to be patient. “We think it's way too early to call it quits,” Aetna's Mark Bertolini said last month. However, the Obama administration may not want to let the losses pile up if they jeopardize the viability of the marketplaces. Since the large national carriers have spoken out about the exchanges, some view the outcry as a public lobbying effort to get more help from HHS, even beyond the ACA's three risk-mitigation programs. “I would be extremely surprised if HHS does not do at least a few things to rectify the situation,” said Ana Gupte, a healthcare managing director at Leerink Partners. For example, the government could take a harder line on hardship exemptions, which insurers have complained “allow people to go in and out (of the exchange) as they please,” Gupte said. “They cannot afford to lose all the publicly traded insurers and the Blue Cross plans,” she added. “The exchanges would collapse without them.” HHS and the CMS did not answer questions about what they would do if UnitedHealth or other large insurers abandoned the federal and state exchanges. However, CMS spokesman Aaron Albright released the following statement: “The health insurance marketplace is entering its third year and continues to grow, giving millions of Americans access to quality affordable insurance. As we've seen during the first two weeks of open enrollment, every day, tens of thousands more Americans turn to the health insurance marketplace for health coverage and even more return to the marketplace for another year. In fact, about 9 out of 10 returning consumers will be able to choose from three or more insurers for 2016 coverage.” Healthcare stocks took a beating Thursday morning in light of UnitedHealth's announcement. UnitedHealth's shares were down 5% by noon EST. Anthem's stock plummeted 7%, while Aetna lost 6%. Hospital chains HCA and Community Health Systems were down 6% and 9%, respectively.

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What Makes for a Successful Accountable Care Organization? By Jennifer Bresnick

Accountable care organizations are becoming increasingly popular as payers seek new strategies to cut costs, but what makes a healthcare provider more likely to receive its own benefits from the value-based reimbursement structure? Medicare and private payers have both pinned a large part of their financial hopes on developing the accountable care organization, which aims to improve coordination, cut costs, and raise quality in a fiscally responsible – but somewhat risky – manner. While Medicare has been aggressively pursuing plans to shift the majority of its fee-for-service business into value-based reimbursement models by 2018, its Medicare Shared Savings Program (MSSP) and Pioneer ACO initiatives have come under fire in recent months as providers struggle to achieve meaningful savings on a broad scale. Quality and performance may be on the rise for the majority of these organizations, but shared savings are harder to muster, even when patients are receiving better care. With the news that two more Pioneer ACOs have left the ambitious but embattled experiment, participants in the less riskheavy MSSP cohort may be wondering what their future holds if leaders in the field of value-based care cannot sustain relatively modest expectations. Recent Pioneer dropouts, including Dartmouth-Hitchcock Health System, Steward Health Care System, and Mount Auburn Hospital, have all reiterated their commitment to the principles of accountable care, and are seeking entrance into a slightly different Medicare program. The Next Generation ACO promises larger financial returns without some of the benchmarking flaws inherent in the older iterations of the ACO system, and may be a better match for some of these disappointed organizations. The number of MSSP ACOs, however, continues to rise, and private payers are adding new ACO participants by the dozen each month. As more and more ACOs contribute their knowledge to the changing industry, patterns in preparation, performance, and financial potential are beginning to emerge. What features, tools, and competencies combine to produce a successful accountable care organization? Can these organizations find a consistent way to improve quality while accruing shared savings? Smaller systems with fewer beneficiaries It turns out that bigger might not be better in the world of the ACO. A recent Health Affairs analysis found that accountable care organizations with fewer attributed beneficiaries in 2012 and 2013 achieved notably higher average savings, and were the most likely to significantly cut their spending relative to their benchmarks. The trend continued into 2014, with the smallest organizations markedly outperforming their larger peers. ACOs with fewer than 6500 beneficiaries achieved average savings of 1.5 percent, while organizations with more than 20,000 attributed patients racked up just 0.5 percent on average. In 2014, just ninety-two of the 333 MSSP ACOs qualified for shared savings. They split $341 million in bonuses after helping their peers to hold spending $806 million below CMS target levels. Physician-based ACOs are also more likely to achieve success than those with a hospital or health system at the center, suggest David Introcaso, PhD, and Gregory Berger, MPP. ACOs that include a federally-qualified health center (FQHC) or rural health clinic were also more likely to receive financial bonuses for quality improvements. Smaller numbers may also coincide with fewer organizational resources, but providers and patients operating in a tighter, more personalized environment might benefit from a team-based atmosphere or the opportunity to develop stronger ties with patients inside and outside the clinic walls. Adherence to innovative care improvement frameworks The patient-centered medical home is often viewed as an important complement for the accountable care organization. The PCMH framework, along with other patient-centered care strategies, help to provide a foundation of population health management and coordinated, responsive care that can cut costs and improve patient engagement. In Oregon’s system of sixteen coordinated care organizations (CCOs), similar in structure and purpose to the standard ACO, patient-centered medical home development is one of the key building blocks of success. Since 2011, CCOs have more than doubled their PCMH enrollment numbers, bringing more than 80 percent of beneficiaries into the patient-centered care framework. As PCMH enrollment rose, patients and providers scored better on chronic disease management benchmarks, and were able to reduce improper use of high-cost services, like the emergency department, for routine primary care. “We know that many of the CCOs, when a new member was enrolled, would contact the member and make them aware of who their primary care team is,” said Lori Coyner, Director of Health Analytics at the Oregon Health Authority. “We believe that that early connection with primary care probably allowed new members to start going directly to their primary care home and not just to the emergency department because they didn’t know where to go.” NOVEMBER 2015 5


Robust health IT infrastructure and data analytics capabilities Technology is another key component of the accountable care organization, and one that has been challenging for a broad spectrum of providers. Recent studies have found that interest in accountable care has been rapidly outpacing healthcare organizations’ ability to implement big data analytics and population health management capabilities that would best support their efforts. Nearly a quarter of providers and 41 percent of payers said that interoperability and systems integration issues were among their greatest technical challenges in 2014, according to a McKesson Corporation survey, and approximately 20 percent of respondents anticipate running into roadblocks in relation to data collection and insight access in the near future. “As ACOs pull data from more sources, they also report lower abilities to leverage their health IT infrastructure to support care coordination, patient engagement, physician payment and contract adjudication, population health management and quality measurement,” said a separate report from the eHealth Initiative and Premier, Inc. “Without seamless or frictionless access to information, ACOs report significant challenges with integrating technology (88 percent) and analytics (83 percent) into workflow.” Accountable care organizations that are able to overcome these infrastructure development issues are often able to gather important data on their patients that aids care coordination, predictive risk stratification, chronic disease management, and better clinical decision support. Six Anthem Blue Cross ACO participants were able to save close to $8 million by investing in population health management technology, the payer announced in June. By bolstering their capability to identify high-risk patients, the organizations could more effectively target care interventions and reduce the burdens of chronic disease. We use Anthem’s data and analytics to determine which PPO members would most benefit from this [care coordination] program and assist them,” said Dr. Daniel Bluestone, Chief Medical Officer at Santé Community Physicians IPA. “After we identify these members, we aggressively pitch the program to the members, their doctors and other staff members,” he continued. “Once members see the benefits of ACO care coordination for themselves, they convince their doctors to become advocates of the program.” In Oregon, collecting and analyzing clinical data from participating CCOs is a top priority, Coyner said. “We’re building a clinical data repository so that eventually, when the CCOs submit their clinical data, it will come directly there. There is also some health information exchange (HIE) coming online. There’s one that serves the southern part of Oregon, and multiple CCOs are connected there. So we have been tracking what sort of health information technology is happening.” “One of the key pieces is that we actually provide data to the CCOs through a portal on a monthly basis,” she added. “So they see this information a lot more often than we report publicly. We track and monitor the measures so that we know where our transformations are being effective, and how we can provide learning collaboratives and other resources for some of the metrics where the CCOs aren’t continuing to show improvement.” At Atrius Health, one of the eleven Pioneer ACOs to receive shared savings in 2014, a strong foundational EHR and a focus on health information exchange helped the physician practice-based system accrue a $2.8 million shared savings payment. “We have the benefit of being on one instance of Epic, which means that all of our primary care practices and our specialists are all on one common electronic health record,” explained Emily Brower, Vice President of Population Health. “That enables us to exchange and coordinate data within the Atrius Health system of care. We have also built ways to exchange information with our partnering hospitals, and are working in a similar way to try to exchange health information with our partnering skilled nursing facilities.” “We had built our own home-grown electronic health record system way back before those were commercially available, and have always pushed as much as we can around health information exchange across settings, using everything from alerts and notifications to bi-directional viewing of records between our resources and hospital systems,” she added. “We will use pretty much whatever tools we can to improve the flow of health information across care settings.” Long-term experience with value-based care It may not seem like a shocking statistic, but accountable care organizations that commit to the long-haul and have more experience with value-based reimbursement are more likely to achieve positive financial results. The latest Medicare data showed that more than a third of ACOs who joined the MSSP in 2012 produced shared savings in the most recent program year, compared to just 27 percent of 2013 ACOs and only 19 percent of organizations that signed up the following year. “Many of [these] organizations are new to the whole business of managing care and accepting risk,” commented Dr. Jonathan Niloff, Chief Medical Officer of McKesson. So I’m not at all surprised, given the expertise and infrastructure that's required, that some of the organizations that are new to this endeavor are not generating savings early on.” “It’s significant that they all demonstrated quality improvements,” he asserted. “Those are much easier to achieve at the beginning

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than the direct financial improvements. But I think it's interesting to see that the longer one has participated in the program, the greater the probability that one is accruing the clear financial savings.” Jumping into accountable care with both feet is another way to achieve financial success and quality improvements, added Brower. Atrius Health had been transitioning to a population health management mentality long before it accepted Medicare’s accountable care propositions, which made it easier to shift away from its last fee-for-service payer holdouts. “It’s very, very difficult to operate in both the fee-for-service and the global payment or value-based payment world, because those incentives are not aligned,” she said. “The more payers in your market that embrace value-based payment, the easier it will be.” “It can seem somewhat paradoxical, because it can feel that it's very risky to move so fast, especially for systems that haven’t done much value-based work before, but I think it's actually less risky. I think it's harder to get results if you've only got one set of patients or one program in that model, and it actually becomes easier and less risky if you put all your eggs in one basket.” “Once we were able to bring [our Medicare] patients and those dollars into a value-based model, it worked very well for us.”

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US Spends More on Health Care Than Other High-Income Nations But Has Lower Life Expectancy, Worse Health

New Report Finds Americans Have Fewer Doctor and Hospital Visits Than People in Other Nations; Outsized Spending Likely a Result of More Technology, Higher Prices For Care and Prescriptions Drugs The U.S. spent more per person on health care than 12 other high-income nations in 2013, while seeing the lowest life expectancy and some of the worst health outcomes among this group, according to a Commonwealth Fund report out today. The analysis shows that in the U.S., which spent an average of $9,086 per person annually, life expectancy was 78.8 years. Switzerland, the second-highest-spending country, spent $6,325 per person and had a life expectancy of 82.9 years. Mortality rates for cancer were among the lowest in the U.S., but rates of chronic conditions, obesity, and infant mortality were higher than those abroad. “Time and again, we see evidence that the amount of money we spend on health care in this country is not gaining us comparable health benefits,” said Commonwealth Fund President David Blumenthal, M.D. “We have to look at the root causes of this disconnect and invest our health care dollars in ways that will allow us to live longer while enjoying better health and greater productivity.” Using data from the Organization for Economic Cooperation and Development (OECD) and other sources, the report, U.S. Health Care from a Global Perspective: Spending, Use of Services, Prices, and Health in 13 Countries, compares health care spending, use of services, prices, and health outcomes in the U.S. with those in Australia, Canada, Denmark, France, Germany, Japan, the Netherlands, New Zealand, Norway, Sweden, Switzerland, and the United Kingdom. Most of the data are for 2013, and so predate the major insurance provisions of the Affordable Care Act.

Commonwealth Fund researchers found the U.S. to be a substantial outlier when it comes to health spending. Health care consumed 17.1 percent of the nation’s gross domestic product (GDP) in 2013, about 50 percent more than any other country. Despite being the only country in the study without universal health care coverage, government spending on health care in the U.S.—mainly for Medicare and Medicaid—was high as well, at $4,197 per person in 2013. By comparison, the U.K., where all residents are covered by the National Health Service, spent $2,802 per person. Americans Get Less Health Care, Spend More for It According to the study, health care spending per person is highest in the U.S. not because Americans go to doctors and hospitals more often, but because of greater use of medical technology and health care prices that are higher than in other nations. When looking at health service pricing and use, the report finds: • People in the U.S. visit doctors an average of four times per year; only residents of Switzerland, New Zealand, and Sweden have fewer visits. Americans also go to the hospital relatively infrequently, with 126 visits per every 1,000 people, compared to 252 visits in Germany, where the rate is highest. • Americans receive the most diagnostic imaging exams, including MRIs, CT scans, PET exams. The average U.S. adult also takes more prescription drugs than adults in all the other countries except New Zealand. • Prescription drugs are most expensive in the U.S., with prices twice as high as in the U.K., Australia, and Canada. • Prices for health services are considerably higher in the U.S. than elsewhere. On average, heart bypass surgery costs $75,345 in the U.S., compared to $15,742 in the Netherlands, where the procedure is least expensive. “When you look more deeply at how countries spend on health care, it is very clear that in the U.S. we are paying higher prices but NOVEMBER 2015

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not getting more,” said David Squires, senior researcher at The Commonwealth Fund and coauthor of the report. “And because we spend so much on health care, there is less to spend on other important needs and investments.” Additional Findings • U.S. does well on cancer care. The U.S. appears to have comparatively good health outcomes when it comes to cancer care. Rates of cancer deaths were lower in the U.S. than in most other nations—164 for every 100,000 people, compared to 220 in Denmark, 196 in the Netherlands, and 193 in the U.K. Cancer deaths in the U.S. also declined faster between 1995 and 2007 than in the other countries. • Health care spending growth slowed in the U.S. and globally. Per capita health care spending growth in the U.S. has slowed in recent years, from 2.47 percent in 2003–09 to 1.50 percent in 2009–13. This slowdown occurred in other countries as well, with spending growth even turning negative in Denmark and the U.K. • U.S. spends the least on social services. The U.S. spends only 9 percent of GDP on social services like disability benefits or employment programs. It is the only country studied where health care spending accounts for a greater share of GDP than social services spending. In contrast, France and Sweden spent 21 percent of GDP on social services. Moving Forward High health spending in the U.S. has far-reaching economic consequences, affecting wages and personal financial well-being while worsening budget deficits, the report’s authors say. New health care models like accountable care organizations, which base provider pay on patient outcomes, could encourage higher-quality, lower-cost care. These models, they say, could also help bring about a shift toward proportionally greater spending on social services, as health care organizations are incentivized to think more broadly about what their patients need to be healthy.

Health care industry measures quality in flawed way, Harvard expert says By Anjalee Khemlani The problem isn't that the people in health care aren't good, it's that the industry has the wrong structure. A common theme at health care discussions around the state was echoed at one hosted by Virtua Health on Friday in Philadelphia. “This model of care cannot work. That it works as well as it does is a miracle,” said Michael Porter of the Harvard Business School. Porter explained that the main issue is that the current systems of measuring quality are flawed, focusing on basic methods rather than the actual outcomes of health care.

“There's CMS, and Leapfrog ... all sorts of measurements going on. The center of our universe of measurement is processes,” he said, adding that 95 percent of national group quality measures are process measures. “Are you following the guidelines? We are defining this as quality. As 'Did you check this box?' Is that quality? No, that's basic. Quality is, 'What result did you get? How well did the patients actually do? What was their functional status?' Yet we got lulled into idea that quality is checking a box.” The focus should instead be the outcomes of the patients, and measuring them based on a grade for multiple hierarchies. Cost and patients’ time are also part of the equation. The outcome hierarchy should include the health status achieved or retained, the process of recovery and the sustainability of health, Porter said. “We haven't held ourselves accountable for time. Time matters to patients, too,” Porter said. In a measure of prostate cancer treatment quality, for example, often the only measurement is the survival rate. But there are other issues, too, such as erectile dysfunction or incontinence. In a German study comparing all the achievable outcomes, survival rates were in the 90 percent range, but the other two issues were just as high on average at some hospitals, compared with less than 50 percent at some of the best hospitals. Survival or readmission rates only tell part of the story, Porter said; quality measures need to focus on what matters to a patient. Another aspect of quality that is overrated is a health system or medical professional's reputation. Too many people live off of their reputations, which are often judged by how many journals they have been published in or the medical societies they belong to and are recognized by, Porter said. And while that does play a role, it is not a good defining factor, as the results of care are.

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My goal as a physician, first and foremost, is to help people feel better. In today’s healthcare environment we all know this can be very challenging. Fortunately, at Sovereign Health Medical Group, I have been able to practice medicine without any of the distractions that can make a physician’s job tougher than it already is.

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$2.7 billion MedAssets sale shakes up healthcare group-purchasing market By Adam Rubenfire A private equity firm will acquire MedAssets and split the company in two, absorbing its revenue-cycle management business and selling its group purchasing and consulting business to the VHA-UHC Alliance, which is already one of the biggest GPO players in healthcare. Pamplona Capital Management will purchase Alpharetta, Ga.-based MedAssets for $2.7 billion, or $31.35 per share, in cash. The firm will sell off the GPO and performance-improvement and Sg2 consulting businesses to the VHA-UHC Alliance and combine the remaining revenue-cycle management business with its own, called Precyse. The financial terms of the deal with VHA-UHC were not disclosed. The transaction is expected to close in the first quarter of 2016, pending regulatory approvals. MedAssets would then be completely out of the GPO business and VHA-UHC would more than double its purchasing volume. VHA-UHC, itself the product of a merger this year, handles more than $50 billion in purchasing volume with more than 5,200 health system members and affiliates, including most of the nation's academic medical centers, as well as 118,000 non-acute customers. MedAssets serves about 3,300 hospitals and 123,000 non-acute providers, representing over $59 billion in total spending. The companies have a number of overlapping customers.

MedAssets referred questions to Dr. Jeremy Gelber, a partner at Pamplona who moved the firm into the healthcare space when he was hired in 2013. Gelber said MedAssets' supply chain business is “more valuable in the hands of our partners at VHA-UHC Alliance than in our hands.” VHA-UHC CEO Curt Nonomaque said in an interview that the two companies have much in common, including robust pharmacy programs, but also bring different strengths to the table. MedAssets, for example, doesn't have a private drug label or risk-based contracts, and Novation does, said Jody Hatcher, VHA-UHC's president of offering delivery and operations. MedAssets, meanwhile, has “real strength in capital equipment and purchased services, which I think will be very complementary.” MedAssets' revenue-cycle management business alone is estimated to manage over $450 billion in gross patient revenue and serves over 2,700 providers. Pamplona and VHA-UHC have agreed to work together on certain offerings to serve mutual customers, according to a news release. After the deal, the combined revenue-cycle management company would be 45% technology, 45% services and 10% workforce development, through Precyse's partnership with HealthStream, which develops software for provider education. Gelber said. MedAssets has strong front-end systems like its patient access portal and good back-end systems like its charge capture, denials management and receivables functions, but can benefit from Precyse's offerings in health information management, coding, case management, transcription and clinical documentation improvement. “When you put that whole thing together, you're giving the CFO accountability across the revenue cycle,” Gelber said. “Marrying in clinical and financial information, that's really important in the value-based world.” Executives at VHA-UHC and Pamplona said it's too early to know what will happen to the MedAssets brand or the company's management teams. The company had just appointed Bharat Sundaram as president of its spend and clinical resource management segment in September. Due to the acquisition announcement, MedAssets released its earnings Monday morning instead of after markets closed, as

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previously planned. It also canceled its scheduled conference call related to the financial results, and said it won't conduct a call about earnings or the acquisition. The company reported $190 million in revenue for the third quarter, up 8.1% from $176 million during the same period the year before, thanks to strong growth in spend and clinical resource management. Profits dropped sharply to $8.4 million, down 66% from $24.5 million during last year's third quarter. Income took a hit from a $10.3 million one-time impairment charge due to the previously announced elimination of certain revenue-cycle management products, as well as increased restructuring costs of $5 million related to the company's ongoing expense reduction program. "Over the last year, our progress captured the attention of outside parties, and we received a number of unsolicited inquiries expressing interest in acquiring MedAssets," MedAssets CEO R. Halsey Wise said in a statement. "Our board of directors and executive leadership team conducted a thorough review of strategic alternatives and, after careful consideration, we determined an acquisition by Pamplona is the best course of action for our shareholders, customers and employees." Morgan Stanley, Barclays, Macquarie Group and GCI have committed financing for the deal. MedAssets launched its latest restructuring effort in September in response to several quarters of falling profits. The initiative was expected to save MedAssets $21 million annually by cutting 180 full-time jobs, or about 5% of its workforce, in addition to closing an office and cutting non-employee expenses. Restructuring costs are mainly related to termination benefits.

OIG Reports on HIPAA Oversight Could Signal Changes in HIPAA Enforcement By John E. Morrone, Esq. and Julia E. Cassidy, Esq. Recent OIG reports signal an upcoming increase in OCR activity and oversight of HIPAA covered entities, even in the absence of a breach.

On September 29th, the Office of Inspector General (OIG) in the U.S. Department of Health and Human Services (HHS) released two reports which reviewed the successes and shortcoming in the Office for Civil Rights’ (OCR) oversight of Health Insurance Portability and Accountability Act (HIPAA) compliance for covered entities. OCR is responsible for overseeing covered entities’ compliance with the HIPAA standards, which include the Breach Notification Rule, the Privacy Rule and the Security Rule. In one report, the OIG provided conclusions and recommendations from their study on covered entities’ compliance with the HIPAA Privacy Rule, while in the other report, the OIG provided conclusions and recommendations from their investigation of OCR’s follow-up on breaches of patient health information which are reported to OCR. In both studies, the OIG reached some similar conclusions. The guidance provided by these reports should be recognized by providers for what it is: harbingers of OCR’s likely future enforcement activity. One of the key findings by the OIG likely to have a direct impact on providers, is that OCR will now proactively audit covered entities to monitor compliance with the Privacy Rule, as opposed to its traditional approach of initiating investigations as a result of complaints or breach reports. The fact that OCR has not been proactively auditing covered entities allows for some level of comfort for covered entities, as there is not a great concern that OCR will conduct an investigation of a covered entity unless a potential breach or violation were reported. It is likely that this will be changing in the very near future, as the OIG has recommended that OCR improve its oversight of covered entities and take a proactive stance, by instituting a permanent audit program, as opposed to OCR’s current reactive posture. In addition, the OIG recommended improving the tracking system which OCR uses to keep records about investigations of covered entities. Such improvements in record-keeping and tracking investigations could mean that OCR will be more likely to impose penalties, as it will more easily be able to determine when covered entities are the subject of multiple investigations. Regarding the follow-up of breaches, the OIG made some similar recommendations concerning the need for OCR to improve its tracking system. The OIG recommended that OCR more uniformly enter information about breaches, whether large or small, into a searchable database. At present, OCR has largely focused on thoroughly investigating large breaches (e.g. breaches of 500 or more affected individuals) that are reported to it. However, the OIG has now recommended that OCR also track and follow-up on small breaches that are reported to it. This could have a significant impact on providers who may experience several small breaches, as it will be more likely that OCR will now closely track and examine covered entities that experience several small breaches. In addition, the OIG recommended that OCR maintain more complete documentation in its database of corrective actions taken by covered entities that experience a breach. Currently, because OCR does not keep thorough records of corrective actions, covered entities may be able to get away with implementing few changes if they experience a breach. Once OCR implements these recommendations to better document corrective actions taken by covered entities, it will place greater scrutiny on these corrective actions that covered entities take to ensure that the covered entities carry out the necessary changes and prevent the occurrence of a similar breach in the future. It is extremely important for providers to understand how to comply with HIPAA, as well as what to do if they experience a breach. These reports serve to emphasize the importance of compliance and the ways in which OCR will begin to more actively investigate HIPAA compliance. Frier Levitt has a great deal of experience in this area, and can help you and your practice to comply with the many HIPAA requirements. NOVEMBER 2015

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Docs are leaving behind federal dollars to pay for coordinated care By Virgil Dickson The CMS says doctors tending to tens of millions of chronically ill Medicare patients aren't taking advantage of federal dollars aimed at improving care and reducing hospital readmissions and overall costs. This year, Medicare began paying an average of $42 per patient per month for non-face-to-face chronic-care management services, such as consulting with other doctors caring for the same patient who might be dealing with dementia, heart disease or arthritis. The CMS estimates 70% of Medicare beneficiaries—roughly 35 million—would be eligible, but CMS has only received reimbursement requests for 100,000 beneficiaries thus far, Kathy Bryant, a senior technical adviser in the Center for Medicare, said last week at an Advisory Panel on Outreach and Education meeting. She added that even that number may be too high as some could be duplicate claims. One possible reason for the low interest is that doctors have to get permission from patients who are responsible for a 20% copayment each time their provider bills for the services. “Getting bills for things when they haven't seen a doctor is not something they are used to,” Bryant said. Others said the CMS didn't provide enough information on how to properly bill under the codes. “Physicians are leery about using them because they don't know if they are doing so correctly,” said Regina Mixon Bates, founder and CEO of the Physicians Practice S.O.S. Group, a healthcare consulting and education firm. Another reason could be the lengthy process on electronic health-record systems. “There is a concern all this documentation, along with their regular workload, is not worth it for the money they would receive,” said Diane Calmus, government affairs and policy manager at the National Rural Health Association. “It's just too many hoops they would have to jump through.” A study from the Stanford University School of Medicine last month looked at how much chronic-care management could affect the typical primary-care practice. The study found substantial increases in annual revenue, as much as $77,295 in year one, could be gained if they used registered nurses to conduct annual wellness visits and used other staff to handle more frequent management. And a study released Tuesday by Smartlink found that less than 20% of 300 physicians interviewed are currently participating in the program. The vast majority of physicians who are participating in the chronic-care management program believe it is improving patient care. The CMS hopes to raise awareness and interest among providers and beneficiaries, Bryant said. The APOE suggested targeting nurses and case workers, as they would be the ones who would likely be billing under the codes. The panel also suggested engaging consumers through social media. Some industry stakeholders believe that could help. The American Academy of Family Physicians is also performing outreach on the codes, and is highlighting members who have successfully billed under it, according to Dr. Robert Wergin, board chair of the group. Dr. Andrew Gurman, president-elect of the American Medical Association. said his group is educating medical practices on chronic-care management services, which he calls a “game-changer,” because doctors will be getting reimbursed for services they already provide. And therein lies another rub, expert say. Many doctors and practices will have to inform patients that the case management they were doing for free will now cost patients a co-pay. “Some doctors said they were concerned that their patients would be unwilling to pay the cost-sharing,” said Dr. Peter Hollmann, a Pawtucket, R.I., internist and member of the American Geriatric Society Board. However, he said the biggest likely reason for the slow uptick is that this code is still relatively new. “There is an expected delay in uptake of new codes, especially when the rules are complicated. This requires that a practice use an electronic record, get patient consent to bill, and have a written care plan in place. Then the practice needs to track the time in a calendar month. None of this is part of a practice routine and Medicare only has data on early months,” Hollmann said.

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