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APPLIED POLICY INSIGHT
Challenges in risk adjustment
Employed to "level the playing field" in value-based payment models, risk adjustments can have unintended consequences. We take a look at the challenge of fine-tuning these equalizers.
As the United States transitions from a fee-for-service (FFS) model of healthcare delivery to value-based payments (VBP), both payers and providers have recognized the importance of fairly accounting for preexisting differences in patient health status.
 
The management of heart disease in a patient with diabetes and high blood pressure is inherently more complex and consequently more costly than treating the same condition in a patient without comorbidities. In the absence of a method to adjust for these variances, VBP becomes inequitable, penalizing providers who care for sicker patient populations.
 
To address these differences in patient health status, payers employ risk adjustment—a methodological approach intended to level the playing field in VBP assessments of outcomes, expenditures, and performance.
 
However, risk adjustment models introduce distinct challenges. As incentives within VBP have been reconfigured, some health plans and providers have learned to manipulate risk adjustments for financial gain. Moreover, emerging research suggests that poorly designed risk adjustments can perpetuate inequities in healthcare.
HHS explores AI solutions
The Department of Health and Human Services (HHS) piqued interest last month with notification that its use case inventory for artificial intelligence (AI) had tripled in the last year. HHS's listed use cases point to how its agencies hope to leverage AI’s potential while navigating federal policies, stakeholder skepticism, and technological challenges.
HHS's 2023 inventory, publication of which was required under an executive order passed during the Trump Administration, lists 163 non-classified and non-sensitive current and planned AI use cases across seven agencies.

The National Institutes of Health (NIH) led the list with 47 use cases. The Food and Drug Administration (FDA) was a close second with 44 use cases.

Many of the applications merely streamline clerical and administrative workflows. For example, a chatbot may soon replace a public inquiry phone line at the Administration for Health Research and Quality (AHRQ). However, others suggest an increasing integration of AI in the sub-agencies’ more sophisticated data gathering and decision-making processes. 
Team updates
Applied Policy is pleased to announce that Kate Claessens has assumed acting leadership of the company's Healthcare Services vertical.

Kate will lead team members in providing regulatory monitoring and analysis to health systems, hospitals, group practices, skilled nursing and long-term care providers, home health and hospice providers, and individual practitioners.
A member of the Applied Policy team since 2017, Kate brings extensive health policy experience in both the public and private sectors to her new role.

She previously served in a variety of capacities within the Department of Health and Human Services, including in the Office of the Secretary, the Health Care Financing Administration, and the Centers for Medicare & Medicaid Services (CMS). She also worked as a Senior Legislative Consultant for the BlueCrossBlueShield Association and was Senior Director of Health Policy & Reimbursement for Roche Diagnostics Corporation North America.

An expert on EU reimbursement issues, Kate assumes leadership of the Healthcare Services vertical concurrent with her move back to the United States after a six year residency in Switzerland. And we are delighted to welcome her back.
Applied Policy welcomed Will Henkes as a Health Policy Associate in August.

Will previously worked at the Wisconsin Department of Health Services, where he managed the max fee rate schedule for acute and primary healthcare services, designed rate structures and wrote reimbursement policy for new Medicaid programs, and projected the fiscal impact of program changes to HMO capitation rates. He also has experience working in healthcare software.
Will will be completing research and analysis on a variety of topics, with a primary focus on healthcare services. Asked about his new position, he said, “I joined Applied Policy to apply my experiences working in health policy to helping clients who are making a difference in healthcare.”

Will graduated with a Bachelor of Arts in Economics, cum laude, from Carleton College. He also received a Master of Public Affairs from the Robert M. La Follette School of Public Affairs at the University of Wisconsin – Madison.
Applied Policy also bid aloha to Patrick Harrison in August. Patrick, who came to Applied Policy from Hawai'i, has assumed a new role as Senior Director, Regulatory and Compliance, at the National Hospice and Palliative Care Organization. Fortunately, NHPCO is headquartered only a few blocks from Applied Policy's office on the Potomac River, and we hope our paths will cross often.
Applied Policy team members sharing a congratulatory lunch for Patrick Harrison. Back row from left: John Voorhees, Alison Falb, Donnie Lucas, Marlowe Galbraith, Will Henkes, Patrick Harrison, and Andrew King. Front row from left: Paulette Brockington, Caitlyn Bernard , Emma Hammer, and Lily Fortsch.
Applied Policy's latest rules summaries
CMS proposes Minimum Staffing Requirements for Long-Term Care (LTC) Facilities

On September 1st, the Centers for Medicare & Medicaid Services (CMS) issued the long-awaited Minimum Staffing Standards for Long-Term Care Facilities and Medicaid Institutional Payment Transparency Reporting proposed rule. As part of the Biden Administration’s Nursing Home Reform initiative, this rule includes proposals to establish national minimum nurse staffing standards to ensure safe and high-quality care for residents living in nursing homes. 
CMS issues the fiscal year (FY) 2024 Hospital Inpatient Prospective Payment Systems (IPPS) for Acute Care Hospitals and the Long-Term Care Hospital (LTCH) Prospective Payment System and Counting Certain Days Associated with Section 1115 Demonstrations in the Medicaid Fraction final rules

The rules issued on August 1 increase hospital operating payment rates by 3.1 percent, continue the hospital low wage index policy and makes rural wage index changes, and calculates disproportionate share hospital payments (DSH) from three years of uncompensated care data and reduces DSH payments. 
Skilled nursing facilities get four percent pay bump, CMS finalizes quality reporting program changes (CMS 1779-F)

On July 31, CMS issued the fiscal year (FY) 2024 Skilled Nursing Facility (SNF) Prospective Payment System (PPS) Rate Update and Quality Reporting Requirements final rule. Provisions of the final rule are effective October 1, 2023.
CMS releases proposed Hospital Outpatient and Ambulatory Surgical Center Update for CY 2024, establishing payment for intensive outpatient programs, with changes to price transparency (CMS-1786-P)

On July 13, CMS issued the Hospital Outpatient Prospective Payment (OPPS) and Ambulatory Surgical Center (ASC) Payment Systems proposed rule, which proposes updates to the OPPS and the Medicare ASC payment system for calendar year (CY) 2024. Comments are due by September 11, 2023. 

Jim Scott completes term
as Board Chair of
the Alliance for Aging Research
Jim Scott, Applied Policy’s President and CEO founded the company with the goal of “Improving Lives” and his dedication to this ideal extends beyond the workplace.
In addition to helping his clients succeed, Jim has also donated his time and expertise to the Alliance for Aging Research, serving as its Board Chair, and supporting its mission “to make healthy aging a reality.” Jim’s commitment to help the aging was forged by observing his father serve as a caregiver to his stepmother during her decade-long struggle with Alzheimer’s. 

Jim is now stepping down as Board Chair after a five-year term. Sue Peschin, President and CEO of the Alliance, expressed her gratitude for his work in a recent statement: 

“Jim has served as a positive and motivating force to the Alliance for Aging Research in many invaluable ways. Under Jim’s leadership, the Alliance has significantly grown in our overall revenue and our influence on healthy aging issues throughout the public and private sectors.  

Jim has generously shared his expertise with us on CMS regulatory issues, as well as on how to target our education and advocacy efforts in ways that promote expanded coverage and access for Medicare and Medicaid beneficiaries. He helped us pivot and refocus our goals through the COVID-19 crisis, as we worked to address some of the most serious health challenges older adults had ever experienced. We are incredibly grateful for Jim’s service as our Board Chair and I know his contributions here have gotten us closer to reaching our vision of a culture that respects aging as a greater good and values investments that advance independence, dignity, and equity.”
Join NVHPF on
September 19 for
our Fall Media Panel
With Congress back in session and election year issues coming into focus, health policy is dominating much of the conversation in Washington.

Healthcare costs remain a source of financial pain throughout the country, and the Biden Administration has revealed its list of the first ten drugs subject to price negotiations under the Inflation Reduction Act. Lessons learned from the COVID-19 pandemic are changing the way doctors care for their patients. Medical devices promise innovative new treatments, and substance abuse continues to ravage the well-being of thousands of Americans.

Who will emerge as victors among the competing stakeholders in today’s healthcare debates?

Michelle Stein, Health Care Editor, Reporter, and Assistant Publisher at Inside Health Policy; Rachana Pradhan, Correspondent for Kaiser Family Foundation (KFF) Health News; and Shannon Firth, Washington Correspondent for MedPage Today, will join the Northern Virginia Health Policy Forum on Tuesday, September 19 from Noon to 1PM ET to share their insights on what is ahead in healthcare for providers, patients, and the industry.

We hope that you can join us.
Highlights from NVHPF's August event
Reauthorizing the SUPPORT Act:
The Future of the Fight Against Addiction
On August 22, the Northern Virginia Health Policy Forum hosted Megan Meacham, Director of Rural Strategic Initiatives at the Health Resources and Services Administration (HRSA), and Andrew Cosgrove, Senior Director for Policy and Research at the Biotechnology Innovation Organization (BIO), in conversation about the reauthorization of the SUPPORT Act and the future of the war on drugs.
Watch highlights of the event above,
click here to watch the event in its entirety, or download a summary here.
The rise and fall of white coats in medicine
Do you place more trust in a physician if they are wearing a white coat? If so, you are not alone. According to a study published in the Journal of the American Medical Association, patients are more likely to judge physicians in white coats as professional and experienced. And the white coat is such an iconic symbol of the medical profession that medical schools use white coat ceremonies to mark the transition of medical students into the realm of professional medical practice.
Remarkably, until the late 19th century, there was little in the dress of Western physicians that distinguished them from the general middle class. A doctor would be well dressed, yes, but not distinctively so. The profession’s adoption of white coats coincided with its—initially hesitant—embrace of Joseph Lister’s focus on antisepsis.

Documentation of the transition can be seen in two works by American realist painter Thomas Eakins. In Eakins’ classic work Portrait of Dr. Samuel D. Gross (The Gross Clinic), which was painted in 1874, the four doctors conducting surgery under world-famous American surgeon Dr. Gross are wearing dark suits with ties. Gross himself even wears a vest under his suit jacket as he holds a scalpel in his hand. 

But just over a decade later in Eakin’s representation of The Agnew Clinic (circa 1889), the doctors are clad in white.

The white coat, with its pristine appearance, quickly became a symbol of purity and authority, distinguishing physicians from laypeople and underscoring their commitment to patient care.

But, just as infection control considerations drove the adoption of white coats, they are now driving the change away from their use. According to protocols published by the Society for Healthcare Epidemiology of America, a Bare Below the Elbows or "BBE" approach in healthcare settings allows for better hygiene in healthcare settings.

So, it is okay to go ahead and put your trust in the physician wearing a pocketed-vest over scrubs. And keep in mind that healthcare policy will continue to be driven by emerging science.
On our calendars
Under review/On the docket
Applied Policy is paying particular attention to the following rules under review at the Office of Management and Budget:

  • Medical Devices; Laboratory Developed Tests
  • Clinical Laboratory Improvement Amendments of 1988 (CLIA) Fees; Histocompatibility, Personnel, and Alternative Sanctions for Certificate of Waiver Laboratories (CMS-3326)
  • Contract Year 2025 Policy and Technical Changes to the Medicare Advantage, Medicare Prescription Drug Benefit, and Medicare Cost Plan Programs, and PACE (CMS-4205)

See all rules under OMB review here.
From the headlines
Insight joke of the month for September
Why did the biologist and the physicist break up?
September's podcast recommendation:
Science Vs
If you like to keep abreast of trending topics, but are tired of unsupported buzz, consider Science Vs, an engaging podcast dedicated to getting to the truth behind the noise.  

A great show for data nerds, Science Vs regularly "takes on fads, trends, and the opinionated mob to find out what’s fact, what’s not, and what’s somewhere in between.”

Science Vs is like having your own team of fact checkers arming you with the truth about topics from wellness trends (how much water do you really need to be drinking?) to housing policy. You'll come away from each episode prepared to do battle with social media myths. Find Science Vs wherever you listen to podcasts.
Applied Policy, L.L.C., is a health policy and reimbursement consulting firm strategically located minutes from Washington, D.C.