Applying Mental Health Parity in 2014

This week we’ll take a closer look at the November 2013 final ruling of the Mental Health Parity Act which becomes effective this month. While the Act is not new, these guidelines will decisively affect how it is implemented throughout the country.

Drug Utilization Management Trends in ACOs

In today’s post we share a research study that MedSpan conducted on how Accountable Care Organizations (ACOs) will impact the way drug therapies are prescribed and used. This quantitative study about drug utilization management provides insight into information and trends that drug companies can then use to modify their marketing programs and messages.

Hospitalists series: the Neurohospitalist

A brief but in-depth look at how neurohospitalists are impacting hospital neurologic care and quality stroke metrics.

Hospitalists rising: a brief overview

Hospitalists are one of the fastest growing physician specialties in the medical field today, and the increase in the number of hospitalists attests to the value of their role in our changing healthcare landscape. In this entry, we’ll provide a general overview of hospitalists, and expand on the topic in our ongoing series about the hospitalist trend. The series will include entries on emerging hospitalist specialties, such as orthopedic hospitalists and neurology hospitalists, and discussion of the value hospitalists deliver, the hospitalist’s role in an ACO environment, and how healthcare reform may impact hospital medicine. Stay tuned!

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The term “hospitalist” was coined in the mid 1990s, and describes physicians who exclusively provide care for hospitalized patients. The hospitalist specialty is unique in that it is organized around a site of care (the hospital) rather than say, a particular organ (such as a cardiologist). A majority of hospitalists are trained in general internal medicine,¹ but specialized hospitalists are now becoming more common as well. Emerging hospitalist specialties include neurology hospitalists, oncology hospitalists, OB-GYN hospitalists and orthopedic hospitalists.

According to the Society of Hospital Medicine, 11,159 physicians identified themselves as a hospitalist in 2003.¹  As the graph below shows, this number has dramatically increased in less than ten years, to 34,799 hospitalists in the U.S in 20121, with a compound annual growth rate of 12.05% in this period.

(click for an enlarged version)

The rapid rise in the number of hospitalists is proof of the role’s increasing value to healthcare providers today. Hospitalists serve as important intermediaries in the continuum of care. Unlike hospital physicians who stay in a specific department, such as an emergency medicine physician, hospitalists manage and help care for patients throughout their hospital experience, following them from the ER into the critical care unit and arranging post-acute care.¹ They differ from primary care physicians because they do not have separate office-based practices where they see patients. Hospitalists work in shifts in the hospital, and often on block scheduling in which they work 5-7 consecutive days for 10-12 hour shifts, followed by 5-7 days off.²

This setup is valuable for a few key reasons. First, primary care physicians have less hospitalized patients than ever before, and it makes less sense for them to take valuable time to travel to the hospital and make rounds. With hospitalists overseeing care for hospitalized patients, primary care physicians can focus on caring for patients in the outpatient setting.

Secondly, hospitalists provide increase access to care in the hospital. As hospitalists are based in the hospital,  they are much more accessible to patients than their primary care physicians, especially when there are crises or changes in the patient’s condition.

Finally, hospitalists have expertise in providing and coordinating care in the inpatient setting.Their familiarity with the hospital environment, staff, protocols and resources allows them to efficiently coordinate and expedite patient care and most importantly, reduce the length of a patient’s stay.¹

This reduced length of stay and the corresponding reduction in hospital costs is the key incentive for hospitals to install hospitalist programs, and they’re doing so at a fast pace. A 2007 survey of 5,000 community hospitals by the American Hospital Association (AHA) showed that 83% of hospitals with 200 beds or more utilized hospitalists, and projected that about 58% of all US hospitalists have hospital medicine programs, with an average of 9.4 hospitalists per hospital.³

As the hospitalist concept gains ground in US hospitals, new specialized hospitalist groups are growing too. We’ll explore these emerging hospitalist specialties in our next blog entries.

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Sources

1. http://www.hospitalmedicine.org/

2. http://www.acponline.org/medical_students/career_paths/hospitalist/

3. http://www.todayshospitalist.com/?b=articles_read&cnt=762

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The Economic Impact of Medicaid Expansion on Hospitals and Manufacturers

In our last blog entry, we identified the top reasons some states have decided not to move forward with expanding their Medicaid programs in 2014 (“State Decisions on Medicaid Expansion Still Unfolding”). Since the June 2012 U.S. Supreme Court ruling that made Medicaid expansion under the Affordable Care Act optional for states, the economic implications of the expansion have been key in each state’s decision. In this entry, we’ll discuss these economic implications and how they may affect hospital revenues and healthcare manufacturers.

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The economic implications of Medicaid expansion have been hotly debated by supporters and opponents of the measure. The federal government will bear 100% of costs from 2014-2017, and incrementally decrease funding from there until it reaches 90% in 2022. The states will then need to cover the remaining 10% of costs.¹

States that support the measure want to take advantage of the federal dollars, which will reduce state costs and generate economic growth in the form of jobs and revenue.^2,3

Opponents of Medicaid expansion are concerned that more of the cost will be shifted from the federal government to states down the line despite the government’s promises. They also point to state budget deficits and say that state fiscal stability must be fully reviewed before considering Medicaid expansion.²

Providers have a less diverse perspective of Medicaid expansion. Almost all providers believe that Medicaid expansion will have a positive impact on provider revenue. As the chart below shows, with the states currently moving forward (not including Michigan, which very recently decided to go forward ), hospital Medicaid payments are expected to increase by a total of $103.7 billion in the 2013-2022 time frame, the equivalent to a 7-8% increase in Medicaid payments.⁴

The expansion will move some U.S. residents from private insurance to Medicaid, which pays providers at lower rates. However, this loss for hospitals would be offset by Medicaid payments from the much greater number of previously uninsured patients who will be covered under Medicaid, to the tune of $2.59 gained per every dollar lost from private insurance payments.⁵ Hospitals are also expected to reduce uncompensated care costs (such as those often incurred in the emergency room), as these patients  – if they are U.S. residents – will now be covered by Medicaid.

States that don’t move forward with expansion will retain their current federal funding for Medicaid programs, but will experience reductions in other federal funding. For example, the Affordable Care Act requires a reduction in funding for disproportionate share hospitals. In other words, they will take these cutbacks without the offsetting gains from Medicaid expansion.

How might the expected increase in Medicaid payments for many hospitals affect healthcare manufacturers?

We know that hospital Medicaid payments are expected to increase significantly as millions become insured in states that go forward. Additionally, the Affordable Care Act will expand state benchmark benefits packages to include ten broad categories of essential health benefits, including ambulatory care services, lab services and prescription drugs,⁶ that will likely increase market access to products and services (see table below for the full list⁷).

Ten Categories of Essential Health Benefits required by the Affordable Care Act

This increase in hospital payments could be a boon for manufacturers of medical devices and drugs used extensively in the hospital. For example, the increase in patient census will correspondingly increase demand for medical devices, imaging procedures and pharmaceuticals currently administered in the hospital. Medical device manufacturers might find a more welcome audience for a high value-added product, especially if the product generates offsetting cost savings and delivers measurable improvements in care that can translate into publicly reported outcomes.

However, this expectation should be taken with caution. As hospitals serve more patients, costs of direct care as well as facility maintenance and repair will increase. Many hospitals have been struggling financially for years, and revitalizing their own financial health may take higher priority than paying for high value-added products.

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Sources:

1. http://www.cbpp.org/files/status-of-the-ACA-medicaid-expansion-after-supreme-court-ruling.pdf

2. http://www.washingtontimes.com/news/2013/aug/12/medicaid-expansion-quandary/?page=all

3. http://www.healthlaw.org/images/stories/2012_08_02_50_reasons.pdf

4. http://kaiserfamilyfoundation.files.wordpress.com/2013/07/8458-analyzing-the-impact-of-state-medicaid-expansion-decisions2.pdf

5. http://www.rwjf.org/content/dam/farm/reports/issue_briefs/2013/rwjf405040/subassets/rwjf405040_1

6. http://www.medicaid.gov/state-resource-center/FAQ-medicaid-and-chip-affordable-care-act-implementation/downloads/Benefits-FAQs.pdf

7. http://www.annalsoflongtermcare.com/files/images/Stefanacci%20Table.png

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