Fiscal Cliff Fun Facts – What happens if we take the jump?

As we go into this holiday season the U.S. “fiscal cliff” has taken center stage inside the Washington, DC beltway.  Pundits, lobbyists and bureaucrats are gathered together around late night fires eating roasted marshmallows and sharing horror stories about what will happen come January 1st.  Each one is trying to top the other with tales of the dreaded effects of the cliff.  Many are so worried that they have even forgotten to place blame, the most popular game in this town.

 

The fiscal cliff is composed of an assortment of automatic tax increases and spending cuts that will occur if no alternatives are approved.  Here’s the fun part – this is all self-imposed, a result from years of deferring action to balance spending and revenue.  It’s like the end of “Thelma and Louise” where all the politicians have climbed into a convertible and zoomed toward the edge.  But here’s the problem – we’re stuck in the trunk!

 

No solution is perfect.  Most of the alternatives are focused on the short-term.  For example, the cliff would cut Medicare hospital related payments by 2 percent, but suggested alternatives could cut even more.

 

So what happens if the government “goes over the cliff?”   Here is a quick summary of what will happen.  One might even call this the, ahem, cliff notes (sorry):

 

NO IMPACT - Social Security, Medicaid, federal pay (including military pay and pensions), and veterans' benefits, are exempt from any spending cuts.  These are the third rail of politics and no elected official wants to go there.

 

CUTS - Spending for defense and non-defense programs would be reduced through “budget sequestration,” automatic spending cuts.  The cuts would be about $110 billion per year, split evenly between defense ($55 billion) and non-defense ($55 billion) spending.  This is out of a total of $1.3 trillion in total projected spending, so don’t expect Uncle Sam to be setting up a lemonade stand.

 

But the cuts would not be uniform as certain defense and non-defense programs will still need to increase.  If no action is taken, some programs would certainly take a big hit and it will not be pretty.  In the health care world, one part of the “cliff” is an automatic 27% cut January 1 in Medicare fees for physicians and other practitioners.  This annual ritual requires Congress to step in each year to avoid the cut for one more year - the notorious “doc fix.”  The cost to avoid this pay cut for 2013 is $25 billion – money that has to come from somewhere else.  Also, other programs, such as extended unemployment benefits, would immediately cease.

 

TAXES - The biggest change, if we go over the cliff, would be increased taxes.  From fiscal year 2012 to 2013, federal tax revenue is expected to increase $399 billion, almost 20 percent.  This includes an increase in Social Security payroll taxes and an end of the Bush tax cuts and alternative minimum income tax.

 

TELEMEDICINE - The immediate impact on telemedicine is uncertain but will likely be minor.  Medicaid won’t be touched and we will probably see little immediate change in Medicare, but we may be seeing cuts in grant programs that could be hard for some telemedicine networks. 

 

Despite the myriad budgetary problems of the government over the past few years, we have seen a doubling in the use of telemedicine.  Going over the “cliff” or adopting other drastic budget decisions next year may force health officials to adopt even more efficient ways to deliver health services and reduce the horror stories of spiraling costs.

 

The savings attributed to telemedicine and the efficient solution it provides to the growing shortages of health professionals is one of the tools needed for these trying times.  While eating their roasted marshmallows, let's hope they see the light.

Regulation or Roadblock?

Telemedicine is a tool that has been used to improve and extend healthcare for well over two decades.  In 2012, ten million Americans will have benefitted from such remote health services as teleradiology, teleICU and remote vital sign monitoring.  Technologies such as video conferencing, the Internet, mobile phones and machine-to-machine applications are all being used to deliver health services.

Rules and laws governing the practice of medicine are needed in order to protect patients and ensure the quality of care.  Telemedicine should not be exempt from such rules.  But neither should it be singled out as a separate practice.

Regulating agencies including state medical boards, the Food and Drug Administration and accrediting bodies need to constantly review and update the standards of care that are placed on medicine.  Our knowledge, the practice, and the tools used in healthcare constantly evolve and new lessons are being learned.  This changes the baseline of best practices.  For example, the history of medicine, from the use of stethoscopes to the deployment of video services has proven that we can no longer equate mere physical proximity to the patient with higher quality health care.

Interestingly, telemedicine often employs clinically superior tools than those normally used by physicians for in-person care such as electronic stethoscopes or digital otoscopes.  Clinical decision support systems, once considered electronic voodoo, are commonly used in every hospital and even mandated by the federal government as part of meaningful use.

Certainly there are some basic issues that need to be reassessed in light of rapidly changing medical evidence, new technologies and delivery innovations.  However, placing radically tougher requirements and significantly higher standards of care for the use of telemedicine will not necessarily ensure the quality of healthcare or protect patient’s lives.  In fact, such new regulations, often developed out of ignorance and fear, create serious roadblocks in the pathway to health reform.

(c) American Telemedicine Association

Telemedicine wins big in first round of innovation awards

Telemedicine initiatives were a significant feature of the first round of projects announced by the Centers for Medicare and Medicaid Innovation (CMMI).

Established by the Affordable Care Act, CMMI has been appropriated $10 billion over ten years to fund initiatives that foster health care transformation.  The CMMI Health Care Innovation Awards provide grants to support the most compelling new ideas to deliver better health, improved care and lower costs to people enrolled in Medicare, Medicaid and Children's Health Insurance Program.
The leadership of the Center has been eager to include telemedicine as a priority since its inception.  In response to an early request from the Center, ATA provided an analysis of some of the leading areas for the Center to fund. 
The first round of Innovation Awards were just announced.  Out of the total of 26 approved projects, 7 went to projects involving telemedicine for a total of $46 million in funding. The projects using telemedicine are projected to yield a combined 3-year savings of $76 million.

A description of the approved projects involving telemedicine is available here: www.americantelemed.org/files/public/policy/CMMI_Projects_Telemedicine.pdf.

Unfortunate Hits on HIT

The latest issue of Health Affairs (http://content.healthaffairs.org/content/31/3.toc) has brought into question two tenets behind HIT: reducing the number of medical tests and increasing quality based on increased electronic health information.

One article titled: "Computer Access to Test Results Doesn’t Reduce Imaging" finds that allowing doctors easier access to medical imaging tests “was associated with a 40-70 percent greater likelihood of an imaging test being ordered.” The easier it is for a doctor to quickly see the test results, the more likely the person is to order such tests. Arguments have been made to counter the study since it used four year old data and did not take fully into account the role of customized systems that have full electronic records in place and greater incentives for the doctor to stick with previous lab tests and images. But the size of the study involving almost 1,200 physicians divided between those using such computer access and others that do not and the clear distinction in the results between the two groups will prove vexing.

The second article, titled: "Hospital Compare Site Has Little Effect on Death Rates, Study Finds" looks at the CMS program to publically compare hospital performance data. The effort assumes that, once consumers can see and compare hospital performance data there would be pressure on underperforming hospitals to improve outcomes. After looking at claims data for hospitals between eight years, they found little differences in death rates due to heart attacks or pneumonia that could be attributable to publicizing hospital performance. While the report doesn't throw out the need for such information it clearly indicates that the expectations over such an effort are overblown.

These articles add another layer of criticism to earlier reports that electronic records systems actually allow hospitals to increase billings to insurers rather than just cut costs.

Since telemedicine services are based on the transmission of electronic data and images, the establishment of a comprehensive, interoperable and easily accessible electronic health information highway can greatly facilitate the use of remote healthcare. Implementation of electronic records has been slow but recently accelerated thanks to incentive payments CMS is providing to physicians and health systems. It will be interesting to see if these reports inhibit further adoption initiatives.

© 2012

The Cost of Licensure

Last week’s Congressional briefing on state medical licensure brought surprises. Even though I have been looking at this issue since ATA started (in 1993) I had no idea the extent of the concerns by providers and the amount of potential problems facing consumers. Nor was I aware of the actual financial cost of the current system. Based on a recent examination of state policies, physician licensing statistics and fee requirements, ATA conservatively estimates that over $250 million is spent annually for additional state license fees by physicians already licensed in their home state.

Of course, this varies from state to state. For example, of the 88,000 physicians licensed in New York, 20 percent reside outside of the state and, presumably also hold a license in the state in which they reside. In Wyoming, of the 3,000 licensed physicians 66 percent live outside the state. Some states license for two years, others charge an additional application fee. Some offer a reciprocal license but still charge a fee. All of this was taken into account in our estimate.

There are approximately 850,000 active physicians in the United States, regulated and licensed by 70 state-based medical and osteopathic boards. It is estimated by the Federation of State Medical Boards that currently 22 percent of U.S. doctors hold a license in more than one state, but this number is bound to increase as medicine, physicians and patients increasingly rely on mobile devices.

In the end, the cost of licensure is not just about finances. It includes the cost of patient safety related to uncoordinated practice rules, regulation and disciplinary activities of separate, independent authorities governing thousands of health professionals.

© 2012

Seven Market Trends

The telemedicine market is expansive, multifaceted and growing. I have selected seven topics for brief comments and predictions as we start 2012:

1. Shifting away from reimbursement and from CMS decision-making

It’s been the Holy Grail for telemedicine in America. But the rapid growth of managed care, Accountable Care Organizations and medical homes are changing the way telemedicine services are paid, away from the fee for service model. One quarter of all Americans, 73 million patients, are now covered under a managed care health insurance program. With such shifts the focus of decision-making is gradually turning to local and regional healthcare decision makers.

2. Telemedicine as a standard of care

Medical images, x-rays and the like, have been viewed in digital form for forty years. Teleradiology is now so common that many hospitals don’t use the term – outsourcing radiology, at least for after-hours, is just the way things are now done in healthcare. It has become so common that providing 24/7 services by a radiologist, relying on teleradiology where needed, may be the first part of telemedicine to become a true standard of care. Such standards are included in state, federal and Joint Commission requirements and serve a basis for court decisions on legal liability that hold hospitals accountable. It would not surprise me to see a legal suit decided on this basis, it has already been raised in a few cases.

3. Emergence of independent remote clinical enterprises

Outsourcing the interpretation of radiological images is now used by most hospitals in the U.S. Independent diagnostic testing facilities have been around since 1998. Now, a relatively new and related market is the use of private firms of medical specialists to provide remote clinical consultations. A series of vendors have sprung up to do just that for stroke care, mental health, hospitalist and intensivist services, and dermatology. Some may be considered competitors to hospital-based telemedicine programs serving smaller clinics while others may be contractors to the hospital. Look for mergers and expansions of such enterprises as the market starts to take off.

4. The rise of virtual medical centers

In October 2011, Mercy Hospitals announced that it would build a $90 million virtual care center near its headquarters in Chesterfield, MO. The specialists will be located at one site and serve patients in outlying centers across the four states in which Mercy operates: Missouri, Kansas, Arkansas and Oklahoma. On a smaller scale, intensivists at Inova Health System in Virginia are based out of a corporate office building and provide remote ICU services to 122 ICU beds throughout northern Virginia. Other health systems are looking closely at these developments and, if successful, will start on their own versions of virtual centers.

5. mHealth

mHealth is still a sizzling subject and is an important addition to the mix of technologies changing the way healthcare is delivered along with other innovations such as social networking, “Big Data” and personalized medicine. In June 2010 I wrote that we were at the top of the hype cycle for mHealth. I was premature. Wild promises, naivety about the way healthcare is paid for and delivered, and investors throwing money at some, well, “interesting” devices and services have continued. Mobile health apps are multiplying exponentially. No doubt there will be some upcoming market adjustments, but wireless technologies will continue to help redefine what we mean by telemedicine.

6. Programs vs. networks for multi-site telemedicine operations

Federal grants have helped to establish about 200 telemedicine programs linking multiple health centers throughout the country. Almost all have been based out of one large medical center, operating a hub-and-spoke program that allows the medical center to provide remote clinical and educational services to connected spokes. Such a design can expand a center’s competitive footprint and increase referrals. An alternative approach connecting multiple centers, clinics and offices based on a true network design is starting to gain favor. Such a network is typically financed by paid memberships from participating sites and grants rather than clinical services fees. Services can be delivered from any site on the network to any other site. An early model is the Arizona Telemedicine Program. The Ontario Telehealth Network is a classic model of his approach.

7. Multi-nationalization

Once confined largely to international charities to under developed nations and a few remote image-reading centers, telemedicine is poised to become a major source of international trade. Global investments in high-speed networks and emerging practice guidelines are providing the infrastructure. Issues such as licensure, payment mechanisms, trade protectionism and cultural biases are but a few of the barriers in the way. However, the potential revenue from such services could have a significant effect on worldwide trade balances.

© 2012 Jonathan D. Linkous