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The Truven Health Blog

The latest healthcare topics from a trusted, proven, and unbiased source.

Inpatient Medical Care Transitions

By Michael L. Taylor/Monday, April 20, 2015

One of the architects of the Affordable Care Act, Ezekiel Emanuel, has famously said, “We don’t need 5000 hospitals.” For several years, the number of inpatient admissions has been declining, and that trend is not likely to change. According to the American Hospital Association, 27 hospitals permanently closed their doors in 2014. Inpatient days have declined by 5% over a recent 4 year period, and the US hospital occupancy rate is down to 60%. There are myriad reasons for this decline, including the shift to outpatient centers for many procedures, fewer elective surgeries, declining length of stay, and more patient awareness of other options.

Other factors include the readmission penalties instituted by CMS, the increase in “observation” stays, and the growth of high deductible health plans with the resulting shift of costs to employees.  A newer driver of the fall in hospital days and services utilization is the move from Fee for Service (FFS) to more shared risk/reward strategies. As Accountable Care Organizations (ACOs) and similar arrangements become larger and more prevalent, hospitals will see payment reform impacting all lines of services. Under the FFS form of payment, high tech services were revenue generators, and hospitals were incented to build more MRIs and cardiac catheterization labs. Due to payment reforms, these services now are cost centers, and hospitals are urgently seeking new ways to manage their costs. 

Many communities across the country have an excess number of beds given the falling demand, so hospitals will find other uses for these extra beds – or close them.  Shedding unneeded capacity should help hospitals run more efficiently and decrease redundancies in many markets. Hospitals can use data to decide how many services are needed, and can build facilities based on need, rather than as a revenue driver. Hospitals need more data to understand the market they serve, to analyze the efficiency of the services they provide and the quality of the service lines they do keep.

An article in the Archives of Internal Medicine looked at non-emergency cardiac stent placement. In this report two cardiologists reviewed the records of 7000 patients who had stents placed as part of 8 different clinical trials. That analysis suggested nearly 2/3 of the stents placed were not needed – which is both a cost and a quality issue. A Truven Health analysis found nearly 30% of the medical spend in the US was unnecessary. Payment reform under the Affordable Care Act is designed to lessen the burden of unneeded care, and as the healthcare delivery system becomes more efficient, the need for hospitals will continue to decline. As hospitals become more efficient, driving out waste and improving quality, we may see the cost curve stabilize and even “bend” in the right direction. 

Michael L. Taylor, MD, FACP
Chief Medical Officer

Emergency Department Physicians Ordering Unnecessary Imaging Tests

By Byron C. Scott/Thursday, April 16, 2015

As a residency trained, board certified emergency medicine physician who practiced for over 20 years, I was not surprised entirely by a recent Health Leaders’ article stating that ED physicians order unnecessary imaging tests, based on a research article published in Academic Emergency Medicine in April of 2015.    

There is no question that as a practicing physician in the emergency department, you try to make decisions based on sound evidence-based medicine.  The reality is that other factors are constantly influencing decisions, such as patient demands, other physicians involved in a case, liability issues, and just not wanting to miss something that could harm the patient.  On multiple occasions during my career as a medical director and practicing emergency department physician, I have seen patients with a history and physical exam that did not justify ordering an additional imaging test,  however, medicine is an art and often instinct plays into decisions.  If emergency department physicians ordered tests based exclusively on what evidence based medicine supports, many emergent diagnoses would be missed causing a poor outcome for the patient.  The assumption is that not ordering a test because the evidence does not support it will protect you in a malpractice lawsuit.  However, those who have practiced medicine for years know this is not always the case.  

The best approach for now is to continue to look at innovative ways to engage patients and physicians.  For physicians, this will include having real-time prompts and reminders tied into the electronic medical record ordering system, based on evidence based guidelines that are easy to use and access.  Today, patient education and engagement tools are mostly used outside an acute emergency department, but perhaps these tools with their easy-to-use clinical information, statistics, and images could also provide real-time education for the patient to help explain why certain imaging tests are not required.   Tort reform may be one way to influence excessive ordering of diagnostics test but I believe the clinical instinct and art of medicine, as well as evidence based guidelines and patient education, are important to achieving the best outcomes.

Byron C. Scott, MD, MBA, FACEP, FACPE
Medical Director, National Clinical Medical Leader


Dear Employer, Offering Health Plan Choice Alone Is Not Enough

By Chet Winnicki/Thursday, April 02, 2015

Chet Winnicki photoA recent Employee Benefit News article, Many Employees Need Help Picking the Best Health Plan, put some clarity around what we’ve long suspected by sharing details of an Employee Benefit Research Institute study. The study found that nearly half of polled employees consider choice of health plan extremely important, and 36% rate it as very important.

We know plan choice is good. But it’s not enough: the same study found that one-fifth of employees are not confident they can make the best plan choice. Health plan choice during open enrollment can and should be a great experience for employers and employees. As an employer, you’re enabling your employees to enroll in the “right” plans for their healthcare needs, and that’s a real opportunity for both of you to save money: When fewer of your employees over-insure themselves, your healthcare contributions will be reduced as well.

Unfortunately, it’s not that simple.  Despite the time and effort you put into providing plan choices, if you’re offering them without a decision support tool, you’re only creating an opportunity for change. Health plan choice can only reach its full potential when employees pick the best plan for their needs. But according to Aflac’s 2014 Open Enrollment Survey, 90% of American workers choose the same benefits year after year, and 64% say they rarely or never understand the changes in their benefit coverage.

So what’s so hard about forecasting healthcare needs and selecting the best plan? Actually, it’s pretty complicated. Before making an informed decision, employees must consider how much they spent on healthcare in the past, the health status of their family members and costs of any expected treatments or surgeries, and whether they’ll be adding or subtracting any dependents. Their next important step would be to apply their cost forecast against each of the plan options, which includes answering these questions:

  • What will your paycheck premiums total for the year?
  • How much will you pay out-of-pocket before your deductible? How about after your deductible and up to your out-of-pocket maximum?
  • In case you underestimated your healthcare needs, what’s your out-of-pocket maximum?

And we’re not done. High deductible health plans (HDHPs) and the spending accounts (e.g., HSAs, FSAs) that often accompany them add yet another layer of complexity. How will your employees know how much to contribute?


With all they need to know, can we really expect the average consumer to choose the right plan without help and guidance? The answer is absolutely not. Without guidance, your employees are likely to feel confused and frustrated, and believe that you’re passing more healthcare expenses on to them. Employee discontent with the health benefits and open enrollment can lead to job dissatisfaction and lower morale. And open enrollment confusion can burden your human resources staff. In a 2014 survey of human resources executives, nearly half (47%) said that educating employees about health benefits is the most difficult aspect of open enrollment.*

The good news is there are consumer web tools that do this heavy lifting, helping employees forecast their healthcare spending by providing a personalized experience and then recommending the best plan to meet their needs. 

The best of these decision support tools combine an employee’s own historical claims data with a robust, time-tested health care claims database to estimate the cost of conditions or future treatments that are geographically relevant to the employee.  

Plan choice is a great thing, but choice without decision support is a missed opportunity and may actually create employee dissatisfaction. This fall, make the most of the choices you offer your employees by pairing open enrollment with a great enrollment tool.

Chet Winnicki
Senior Director, Product Management

*Keas 2014 HR Executive Survey – Full Report.

The CMS Cost Sharing Reduction Reconciliation Delay: What Does It Mean For Health Plans?

By Marie Bowker/Friday, February 20, 2015

Last week, the Centers for Medicare & Medicaid Services (CMS) announced they would delay reconciling 2014 benefit year cost-sharing reductions (CSRs) until April 2016, rather than the previously stated April 2015.

Under the Affordable Care Act, all issuers of qualified health plans (QHPs) must provide cost-sharing reductions to eligible enrollees and will be reimbursed for the value of the CSRs. For health plans, cost-sharing reduction plans present one of the most complicated compliance tasks to come out of the ACA. The law requires that health plans:

·         Determine advance payments to approximate the value of the cost-sharing subsidy

·         Declare, before the start of a plan year, which reconciliation methodology (Simplified or Standard) they’ll use

·         Reconcile all advance payments and actual subsidies at the end of the year

·         Complete an actuarial validation process and certify all results (if using Simplified method)

·         Re-adjudicate 100 percent of claims (if using Standard method)

Now, CMS will reconcile 2014 benefit year cost-sharing reductions for all issuers beginning on April 30, 2016, along with the 2015 plan year reconciliation. CMS also announced that it will allow those that had selected the Simplified methodology to switch to the more accurate Standard methodology. In announcing the move, CMS acknowledged that the Simplified methodology was yielding inaccurate CSR estimates for a number of issuers, and that many issuers using the Standard methodology were facing difficulties upgrading their systems in time for the reconciliation deadline.

This news is a mixed bag for health plans, depending on where they are in their CSR process. Some health plans were ready for the April 2015 deadline, while others were still scrambling to comply.

With all of the other ACA and market pressures plans are under, pushing CSR to the back burner will certainly seem tempting in light of this change. However, as data and analytics experts partnering with a number of plans on CSR solutions and with deep knowledge of the CMS regulations, we at Truven Health advise against this.

Health plans: use this additional time to ensure that your reconciliation projections are accurate and your data and processes are working correctly.  Your CFO and finance team will want this information for accurate accounting now and going forward ― so use this time well! 

If you’ve started the process with Simplified, embrace this chance to switch to the Standard method. If you’ve yet to select a partner, use this as your chance to choose your best fit. Take this time to work out wrinkles in your reconciliation process and get it just right well before the 2016 deadline, to ensure clear vision on your financial outlook.

As always, we’ll continue to monitor these events and share information that impacts your CSR status.

Marie Bowker, Senior Director, Practice Leadership
Bryan Briegel, Director of Operations

The CMS Readmission Program — Plus or Minus for Seniors and Hospitals?

By Michael L. Taylor/Thursday, February 19, 2015

Michael Taylor photoAs CMS expands its 30-day readmission penalty program, more financial pressure is placed on hospitals and seniors. This program has driven hospitals to increase the use of outpatient observation services. Inpatient stays are paid by Medicare Part A, but outpatient observation is paid by Medicare Part B which covers only 80 percent of the bill. Here is what is happening in some markets. Let’s say a person is admitted to a hospital for heart failure. The length of stay might be 3-4 days and then the patient is discharged. If that same person has a recurrence of heart failure within 30 days of the initial discharge, the hospital will not be paid for that episode. However, if the 2nd episode is handled under outpatient observation status, the hospital is paid, but the patient (who probably didn’t realize he/she was not admitted to the hospital) receives a bill for 20 percent of the charges. 

This is an issue, but the larger issue is how the law assigns all the risk to the hospital. Perhaps the thought was that poor inpatient care is the cause for readmissions, but the reality is that many other factors not under the hospital's control can drive readmissions. The patient has some responsibility — the patient needs to be compliant with medications, follow up with his/her primary care physician, and follow all discharge instructions. In some cases, a primary care physician might not be available, or the patient might not be able to travel to pharmacies and doctors offices, thus not getting needed follow-up care.

Another issue is that heart failure is a complex clinical condition, and despite the best level of care, sometimes symptoms recur and patients need to be re-admitted. The 30-day provision doesn’t seem fair to hospitals in the case of heart failure; if the patient is readmitted on day 29, the hospital is not paid, but if the 2nd episode occurs on day 31, the hospital is fully paid. The 30-day rule makes more sense for certain surgeries such as hip and knee replacements. With those surgeries, a readmission within 30 days could be avoided.

Given these issues, I believe the 30-day rule should be modified. Certain medical diagnoses could use a “sliding scale” based on number of days since discharge. I don’t think the rule should be dropped, however. This rule is forcing hospitals to consider continuity of care issues, ensuring that appropriate post-discharge planning and care does occur. It also further encourages ACO and patient centered medical home approaches, which are designed to provide continuity.  It discourages fee-for-service approaches, which are typically not structured to provide these services very well. For these reasons, I think the 30-day rule is (and should be) here to stay.

Michael L. Taylor, MD
Chief Medical Officer

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