In-House Counsel Increasingly Must Focus on Data Analytics

by Paul R. DeMuro

March, 2016

The following article was published in the February 2016 edition of In-House Counselor, a publication of the American Health Lawyers Association.

The Obama Administration plans to move billions of dollars in Medicare payments into contracts that radically alter how hospitals and physicians are paid. The idea is to find alternative payment mechanisms to Medicare’s fee-for-service system that base payments on quality and cost-effectiveness. This movement is not confined to Medicare, but also extends to commercial payers and certain Medicaid programs.

Particularly interesting is the Centers for Medicare & Medicaid Services (CMS) mandatory bundled payment program known as the Comprehensive Care for Joint Replacement (CJR) Model, which is effective on April 1, 2016.1 The program applies to nearly 800 hospitals. Throughout the United States, these hospitals must accept one payment (a bundled payment) for all services for hip and knee replacements. This payment will cover the hospital admission, the services of the physicians and other professionals, any subsequent admissions for 90 days, and skilled nursing facility (SNF) stays during that time period, along with any other hospital outpatient services, e.g., physical therapy, home health, and hospice services during the 90-day period.

The idea appears to be to require that hospitals coordinate the care of these hip and knee replacement patients across multi-disciplinary teams, facilities, and services. Many view this initiative as just the start of the transformation of our health care system to one where payment is based on quality, outcomes, and cost-effectiveness, rather than on the volume of services provided.

But what does this really mean on a practical basis and to in-house counsel specifically? It would seem that hospitals should know their costs of providing these services. Rather than relying on Medicare cost reports, hospitals could turn to true cost accounting concepts to determine both their variable and fully allocated costs for this population. Thus, the finance and accounting functions should be integrally involved. However, the analysis should not stop there. Hospitals also will need to employ and/or contract with individuals and/or companies facile with data analytics. In-house counsel will need to take the lead not only on the contract issues, but also the regulatory issues associated with these agreements and arrangements. As a result, in-house counsel must understand the flow of funds and the underlying data analytics that their internal clients are using.

In what setting should these procedures be performed? What physicians should be providing them, and what other health care personnel should be involved? If a patient needs to be in an SNF, to which SNF should she go? What about the physical therapy and home health and hospice services, if any are needed? Who will provide these services? In-house counsel will be asked whether the proposed arrangements are “legal,” and to draft the documents establishing these relationships.

Physicians have medical staff privileges at hospitals permitting them to perform certain procedures at those hospitals. What are hospitals going to do or try to do to ensure that those physicians are key players in coordinating care for these patients, managing their costs across the surgical team and beyond?

Hospitals likely will want to analyze many types of data, including the types of hip and knee replacement patients that the hospital and its physicians have treated in the past. How much surgical time has been used by each physician? What implants have been used? What are their costs? Can they be standardized across clinicians and the hospital to obtain better pricing? What types of patients are best suited to what settings? The health system’s finance and accounting department likely will want to turn to one of their data analysts to help determine what data is available and how it could be analyzed. In-house counsel might be asked whether it is possible to obtain such data and in what form. Not only might privacy and security issues surface, but also questions about how the data is being transmitted, and whether the form of transmission is compliant with applicable law and regulations? Is the data “clean?” How might the various databases be queried to obtain the information needed by the business units and is the approach consistent with applicable law and regulations?

Hospitals will need to identify the highest-cost factors and what might be done to reduce those costs. All of which should be addressed in the context of ensuring that the care is based on evidence-based medicine. Hospitals and physicians treating hip and knee replacement patients might want to agree on practice parameters and protocols for the treatment of these patients. These practice parameters and protocols also should be based on evidence-based medicine principles. The data analytics professionals can play a key role in the development of these practice parameters and protocols, but care must be taken to ensure that only the medical providers are making the medical decisions. In addition, all involved will need to ensure they are making decisions in a manner that minimizes any regulatory risks. Undoubtedly, in-house counsel will be asked to review many of these arrangements, which may be based on certain data analytics concepts.

Many health care systems employ electronic health records, a clinical decision support system, and computerized physician order entry. Although these systems make it possible to collect considerably more patient data to facilitate successfully employing various forms of value-based purchasing and bundled payment models, a plethora of anticipated and unanticipated legal issues can result. When systems further employ telemedicine, mHealth, and social media in the care delivery process, it is certainly possible to better manage patient care toward greater quality in a more cost-effective manner, but doing so involves analyzing a considerable amount of data and data analytics. Thus, it is important for in-house counsel to understand not only these models (or have advisors or outside counsel that understand), but also the technologies facilitating their successful implementation along with the data analytics they are employing. For example, will the systems do what they are intended to do or what the providers want them to do, and if not, what redress will in-house counsel advise their clients that they have?

Having quality data and using the information to develop better ways of providing high-quality, cost-effective care to patients will be important. Data analytics can help in the monitoring of care and the tracking of outcomes. The goal should not be to exclude low-performing hospitals and physicians from providing services to hip and knee replacement patients, but rather to use data analytics, cost accounting, and finance principles to help them improve their care processes. In-house counsel will want to be a key member of the executive team that is addressing the improvement in care processes to help ensure they are doing so consistent with applicable law and regulations.

In-house counsel will need to work closely with compliance professionals, who will be using data analytics in their monitoring and evaluation functions. In-house counsel will need to enhance their skill set to include an understanding of data analytics, as well as the health information technologies that their organizations use. Their failure to do so may make them less-effective members of their executive teams and less effective in the legal advice they provide. Health care attorneys will need to increasingly focus on data analytics to continue to provide top-tier legal services to their clients.