Leaders of the National Governors Association (NGA) and the National Conference of State Legislatures (NCSL) have called on congressional leaders and the Administration to take early action to stabilize the nation's economy.

Twenty states already have cut $7.6 billion from their fiscal year (FY) 2009 budgets, and 30 states have identified additional shortfalls totaling more than $30 billion. Twenty-five states also have identified shortfalls of $60 billion for FY 2010. However, these numbers tell only a portion of the story, with previous budget actions and the continuing downturn producing cumulative budget gaps of more than $140 billion for FY 2009 and FY 2010. Additionally, states feel the greatest impact on their budgets in the year after a recession ends, primarily because Medicaid growth occurs late in the recession and employment growth lags the recovery. Thus, the repercussions of this downturn will last for several years--and will be much worse without swift action.

The governors and state legislators are calling on the federal government to look to existing federal-state programs because these programs are on-going and therefore the funds can be obligated quickly and expedited efficiently. They specifically request that an economic recovery strategy include a temporary enhancement for at least two years of the Federal Medical Assistance Percentage, which determines the federal government’s share of state Medicaid expenditures.

Read the full release.

Children of farm workers are three times as likely as all other children and almost twice as likely as other poor children to be uninsured, according to a report in the December issue of Archives of Pediatrics & Adolescent Medicine, one of the JAMA/Archives journals.
 
Children of farm workers face a variety of health challenges, according to background information in the article. Most are Latino, a group that already has less than optimal access to pediatric health services. In addition, Mexican American migrant children who move around the United States with their farm-worker parents are two to three times more likely to be rated in poor or fair health than non-migrant Mexican American children. Farm workers’ children are often exposed to pesticides and are more likely to engage in dangerous agricultural work themselves.
 
Roberto L. Rodriguez, M.D., M.P.H., of the University of Texas Medical Branch–Austin and Dell Children’s Medical Center of Central Texas and colleagues analyzed results of a national survey of 3,136 farm workers with children younger than 18 years. Among the farm-worker parents, 32 percent reported that their children were uninsured, including 45 percent of migrant-worker parents. Parents who were older, had less education, had spent less time in the United States and who lived in the Southeast or Southwest were more likely to have uninsured children.
 
Read abstract.

Medicare patients who receive ventricular assist devices (a type of heart pump) have high rates of death, illness, and prolonged hospital stays, with resulting high costs of care, according to a study in the November 26 issue of JAMA.
 
A ventricular assist device consists of a mechanical pump that takes over the function of a damaged ventricle of the heart and helps restore normal blood flow. In 2003, Medicare expanded coverage of ventricular assist devices as permanent therapy for end-stage heart failure. Little is known about the long-term outcomes and costs associated with these devices.
 
Researchers analyzed trends in use, outcomes and costs of ventricular assist devices for all Medicare fee-for-service beneficiaries from February 2000 through June 2006. This study included beneficiaries who received a ventricular assist device as primary therapy (primary device group) or after heart surgery (postcardiotomy group). The researchers found that overall 1-year survival, regardless of subsequent heart transplantation or device removal, was 51.6 percent in the primary device group and 30.8 percent in the postcardiotomy group. For patients in the 2000 through 2005 groups, the average Medicare payment to hospitals for inpatient care in the first year after implantation of a ventricular assist device was $144,298 per patient. One-year Medicare payments for inpatient care of primary device patients totaled approximately $228 million, and was about $151 million for inpatient care of postcardiotomy patients.
 
Read abstract.
 

The median deductible required by employers for individual coverage in PPO health plans jumped to $1,000 in 2008, up from $500 last year, according to the National Survey of Employer-Sponsored Health Plans. This survey is conducted annually by Mercer, a global consulting firm.

In 2000, only about half of employers imposed a deductible for PPO coverage (compared to about four-fifths today) and when they did the median amount was just $250.  PPOs are the most popular type of health plan, enrolling 69 percent of all covered employees. What makes this finding more dramatic is that it refers to traditional PPOs--not the high-deductible health plans where a deductible of at least $1,100 is required in order to deposit tax-free money in a Health Savings Account, or HSA. These plans are spreading rapidly as well.

The Mercer survey includes private and public employer health plan sponsors with 10 or more employees. Nearly 2,900 employers participated in 2008.

Read a summary of the survey results.

The Centers for Medicare & Medicaid Services (CMS) has announced a proposal to clarify its policies for Medicare coverage of bariatric (weight loss) surgery as a treatment for beneficiaries with type 2 diabetes.

CMS proposes to not cover bariatric surgery for patients who do not meet the definition of morbid obesity, but do have type 2 diabetes. While recent medical reports claimed that bariatric surgery may be helpful for these patients, CMS did not find convincing medical evidence that bariatric surgery improved health outcomes for non-morbidly obese individuals.  CMS seeks comments from the public about this evidence and its implications for coverage, and about which groups of patients should be covered for this surgery.

The proposed decision notes that type 2 diabetes is one of the co-morbidities CMS would consider in determining whether bariatric surgery would be covered for a Medicare beneficiary who is morbidly obese. An individual with a body-mass index of at least 35 is considered morbidly obese.

Read the proposed decision memorandum.

The cost of failing to fix our broken health care system is greater than the price tag of comprehensive health reform, according to “The Cost of Doing Nothing: Why the Cost of Failing to Fix Our Health System Is Greater than the Cost of Reform,” a new report and interactive online state guide released by the Health Policy Program at the New America Foundation.

The report found that the average cost of a family employer-sponsored health insurance plan will climb to more than $24,000, or over 45 percent of median household income, by 2016.  Under this scenario, half of American households would need to spend more than 45 percent of their income in order to secure health insurance for themselves and their families. 

The report also found that the U.S. economy lost as much at $207 billion in 2007 because of the poor health and shorter lifespan of the uninsured.

Read the report. 

The U.S. Department of Health & Human Services has issued a final rule for Patient Safety Organizations (PSOs), which becomes effective on Jan. 19, 2009. It provides final requirements and procedures for PSOs, new entities with which clinicians and healthcare providers can work to collect, aggregate, and analyze data within a legally secure environment of privilege and confidentiality protections to identify and reduce patient care risks and hazards.

Under interim guidance issued on Oct. 8, the Agency for Healthcare Research & Quality has already listed 15 PSOs. During the remainder of the interim period, these organizations will maintain their status as PSOs. However, these and other PSOs listed throughout the interim period are expected to comply with the final rule once it takes effect.

The listing of PSOs is authorized by the Patient Safety and Quality Improvement Act of 2005 (Patient Safety Act). The Patient Safety Act is intended to encourage voluntary, provider-driven initiatives to improve the safety of health care through the establishment of legal protections to ensure that providers who report patient safety information do not incur new legal liability; to promote rapid learning about the underlying causes of risks and harms in the delivery of health care; and to share those findings widely, thus speeding the pace of improvement.

Read the final rule. 

A new report from The Joint Commission offers guiding principles and actions for the hospital of the future to meet the daunting challenges of older and sicker patients, patient safety and quality of care, economics, and the work force. As these challenges escalate, hospitals can lead the effort to meet these demands.

The report--titled Health Care at the Crossroads: Guiding Principles for the Development of the Hospital of the Future--contends that hospitals must respond in new ways as escalating healthcare costs are hitting record highs and the conditions and care needs of hospitalized patients are growing more complex. The report is the work of an expert panel comprising hospital executives and clinical leaders, as well as experts in technology, healthcare economics, hospital design and patient safety. The roundtable analyzed how socio-economic trends, technology, the physical environment of care, patient-centered care values, and ongoing staffing challenges will affect the hospital of the future. 

The report recommends action in five core areas, including economic viability, technology adoption, patient-centered care, staffing, and hospital design.

Read the report.

With our nation's economic troubles, fewer patients are seeking hospital care while at the same time a growing proportion of patients need help paying for care, according to a new report from the American Hospital Association.  The report also notes that hospitals, which employ 5 million people nationwide, could be facing uncertain times as their financial health falters and ability to borrow funds for improving facilities and updating technology is squeezed.

Many hospitals are beginning to see the effects of the economic downturn, with more than 30 percent of survey respondents reporting a moderate to significant decline in patients seeking elective procedures and nearly 40 percent of respondents reporting a drop in admissions overall.  The majority of hospitals surveyed also noted an increase in the proportion of patients unable to pay for care.  Uncompensated care was up 8 percent from July to September versus the same period last year, according to the report.
 
Hospitals have seen the immediate impact of the economic downturn in other ways.  According to the report, total margins fell to negative 1.6 percent in the 3rd quarter of 2008 as opposed to positive 6.1 percent during the same period last year.  Like many institutions, hospitals rely on investment income as one of the ways to help make ends meet, especially since government payers do not cover the costs of care.  However, recent turmoil in the stock market has turned investment gains to losses, further worsening hospitals' financial condition.

Read the report.

America’s Health Insurance Plans (AHIP) has proposed guaranteed coverage for people with pre-existing medical conditions in conjunction with an enforceable individual coverage mandate.

Under the new proposal, health plans participating in the individual health insurance market would be required to offer coverage to all applicants as part of a universal participation plan in which all individuals were required to maintain health insurance. The AHIP statement also said that premium support for moderate-income individuals and broad spreading of risk was necessary to promote affordability and maintain premium stability in the individual health insurance market.

To ensure that all Americans can access coverage, health plans also reiterated their long-standing support for making eligible for Medicaid every uninsured American living in poverty and strengthening the Children’s Health Insurance Program.

Read the release.

The transition team for President-elect Barack Obama has indicated that former Sen. Tom Daschle (D - S. D.) has accepted an invitation to serve as Secretary of the U.S. Department of Health & Human Services in the new administration if, as expected, he is confirmed by the Senate.

In an exclusive interview with hfm magazine, Sen. Daschle said, “There’s something wrong when a business like General Motors spends more on health care than they do on steel.” He thinks it is time to stop requiring that businesses manage health care, believing instead “that it is the responsibility of the country to help those who don’t have the means to pay for [health care] for themselves or their families.” “Leadership also means going on the offensive,” Sen. Daschle has told HFMA members, in a sign of what may be coming in the new administration. “Acting swiftly and in the early--and strongest--days of the next presidency will be the best way to not get caught in the stasis of the status quo.”

Sen. Daschle spent 26 years in Congress from 1978 to 2005, including eight years in the U.S. House of Representatives (1978-1986) and 18 years in the U.S. Senate (1986-2005). He served as Minority Leader of the Senate from 1994 to 2001 and from 2003 to 2005, and Majority Leader from 2001 to 2003. Since leaving the Senate, he has served as an advisor to the law firm of Alston & Bird in Washington, D.C., where he provides strategic advice on public policy issues such as health care, energy, financial services, trade, agriculture, tax policy, and telecommunications. Earlier this year, Sen. Daschle authored Critical: What We Can Do About the Health-Care Crisis (Thomas Dunne, 2008), which lays out his proposal for major reform of the U.S. healthcare system.

In a statement prepared for the U.S. Senate’s Committee on Finance, the Government Accountability Office (GAO) reports that the state and local government sector faces growing fiscal challenges, driven largely by rapidly rising healthcare costs.

The GAO’s fiscal model for state and local governments suggests that the sector is currently in an operating deficit, with simulations showing a continually widening “fiscal gap” between receipts and expenditures in coming years. The GAO calculates that closing the fiscal gap would require action today equal to a 7.6 percent reduction in state and local government current expenditures.

Looking specifically at healthcare costs, the report estimates that expenditures for Medicaid by state governments will rise quickly, as will health insurance costs for state and local government employees and retirees. The GAO assumes that the excess cost factor for health insurance costs alone--the growth in these costs per capita above GDP per capita--will average 2.0 percentage points annually through 2035. The projected rise in these health-related costs is the root of the long-term fiscal difficulties that the GAO’s simulations suggest will occur.

Read the report. 

A survey by The Physicians’ Foundation depicts widespread frustration and concern among primary care physicians nationwide, which could lead to a dramatic decrease in practicing doctors in the near future. The survey examined the causes behind the doctors’ dissatisfaction, the state of their practices, and the future of care. The resulting findings show the possibility of significantly decreased access for Americans in the years ahead, as many doctors are forced to reduce the number of patients they see or quit the practice of medicine outright.  

An overwhelming majority--78 percent--of physicians believe that there is an existing shortage of primary care doctors in the United States today. Additionally, nearly half of them--49 percent, or more than 150,000 practicing doctors--say that over the next three years they plan to reduce the number of patients they see or stop practicing entirely.

The reported reasons for the widespread frustration among physicians include increased time dealing with non-clinical paperwork, difficulty receiving reimbursement, and burdensome government regulations. Physicians say these issues keep them from the most satisfying aspect of their job: patient relationships.

Read the report.

Enrollment in consumer-directed or high-deductible health plans eligible for a tax-preferred savings account increased to 9.8 million adults this year, with participants more likely to have higher incomes and be in better health than those with traditional health coverage, according to survey results released by the nonpartisan Employee Benefit Research Institute (EBRI).

In addition, the fourth annual survey found that those in consumer-directed and high-deductible plans exhibited more cost-conscious behavior in their healthcare decision making than individuals with traditional health insurance. Results of the EBRI Consumer Engagement in Health Care Survey appear in the November 2008 EBRI Issue Brief.

Consumer-directed plans, which involve high deductibles coupled with tax-favored savings accounts that consumers can use to pay for their care out of pocket, are intended to make consumers more active participants in decisions about their health care, including cost issues. In recent years, employers have turned to consumer-directed plans as a way of managing rising health insurance premiums, writes Paul Fronstin, director of the EBRI health research and education program and author of the Issue Brief.

Read the report. 

The Center for Medicare & Medicaid Services (CMS) reports that improper payments for Medicare fee-for-service (FFS) decreased from 3.9 percent in fiscal year (FY) 2007 to 3.6 percent, or $10.4 billion, in FY 2008. 

In addition to improved Medicare FFS payments for FY 2008, CMS reports its first Medicare Advantage improper payment rate of 10.6 percent, or $6.8 billion, in payments made in Calendar Year (CY) 2006. Also being reported for the first time are the FY 2007 national composite error rates for Medicaid and for SCHIP. The Medicaid composite error rate is 10.5 percent, or $32.7 billion, of which the federal share is $18.6 billion. For SCHIP, the rate is 14.7 percent, or $1.2 billion, with a federal share of $0.8 billion.

The Medicare, Medicaid, and SCHIP improper payment rates are issued annually as part of the HHS Agency Financial Report. Improper payment rates include those payments that may have been paid incorrectly and do not necessarily reflect fraud. For Medicare FFS, most improper payments are due to claims for services that were medically unnecessary or incorrectly coded.  The vast majority of Medicaid and SCHIP errors are due to inadequate documentation. Providers either did not submit information to support their FFS or managed care claims or did not submit additional data when requested, a similar trend seen with Medicare Parts A and B in previous years.  Other errors are due to services provided under Medicaid or SCHIP to beneficiaries who were not eligible for either program or who were not eligible for the services received. 

Read the release.

Although low fees discourage physicians from treating Medicaid patients, payment delays also play an important role in physician decisions to avoid Medicaid patients, according to a study by the Center for Studying Health System Change (HSC), published as a Web Exclusive in the journal Health Affairs.

Previous research has shown that about half of U.S. physicians accept all new Medicaid patients, compared with more than 70 percent of physicians accepting all new privately insured and Medicare patients. Medicaid fee levels vary considerably across states, and research has consistently shown that Medicaid participation by physicians is higher in states with higher fees than in states with lower fees. Less attention has been paid to the role of administrative burdens--including payment delays--on physicians' decisions to treat Medicaid patients. 

The new study in Health Affairs, titled “Do Reimbursement Delays Discourage Medicaid Participation by Physicians?”, examined the effect of variation in average reimbursement times across states on physicians' willingness to accept Medicaid patients, finding that payment delays can offset the effects of higher Medicaid payment rates on physician participation.

Read the article.

The Department of Health and Human Services (HHS) today released the first-ever inventory of quality measures that are used for reporting, payment, or quality improvement by its agencies and operating divisions. The HHS measure inventory, which is available on the National Quality Measures Clearinghouse™, a web site of the Agency for Healthcare Research and Quality (AHRQ), is designed to advance collaboration within the quality measurement community and to synchronize measurement.

The measures currently can be sorted by agency or operating division and can be downloaded in their entirety. In the next several months, the inventory will be enhanced so the measure can be sorted by condition, setting, or measure domain.

"The release of this inventory is an important step in providing healthcare providers, clinicians, patients, policymakers and others with reliable, comprehensive information on the department's efforts to measure and improve health care quality," said AHRQ Director Carolyn Clancy, M.D. "I hope this is the start of a longer term effort for the department to develop further an overarching strategy that can be aligned with public and private efforts to accelerate improvements in quality and value for all Americans."

The nonprofit Network for Regional Healthcare Improvement (NRHI) has issued a report titled “From Volume to Value: Transforming Health Care Payment and Delivery Systems to Improve Quality and Reduce Costs.” The report urges fixes that could save billions of dollars and make expanding health insurance to the uninsured more affordable.

A summit of more than 100 leaders from across the country--doctors, hospitals, insurers, academics, foundations, government, regional healthcare collaboratives, and others--generated the recommendations. All endorse a profound transformation in the way hospitals, doctors, and other health care professionals are paid.

According to the report, our healthcare payment system is built to reward the quantity, not the quality, of treatment. This payment system penalizes doctors and hospitals financially for eliminating unnecessary tests and treatments, preventing infections, and keeping people healthy. The report recommends that insurers pay doctors and hospitals a single amount that covers all the services a patient needs instead of separate fees for each service. Moreover, insurers should change the system from paying more to correct errors and preventable complications to rewarding healthcare providers for successfully treating patients.

Read the report. 

A new study published in the American Medical Association’s Disaster Medicine and Public Health Preparedness journal finds that consistent, evidence-based performance measurements are needed to accurately evaluate hospitals’ ability to manage patient care during a disaster. The study will be published in the journal’s December issue.

Healthcare institutions have invested considerable resources in emergency management preparedness, but because major disasters are rare, they continue to be challenged in evaluating the strengths and weaknesses of their emergency programs. Evidence-based preparedness policies are needed that model current healthcare quality improvement programs.  One way to create such models is to evaluate hospital procedures during times that approach disaster levels. Traditional hospital quality measures, like wait times and missed diagnoses, can be applied, and the results can be compared to peer hospitals to determine strengths and weaknesses.

“It is important that performance standards be established for times of disaster to ensure uniformity across institutions, systems, and regions,” said Dr. Lazar. “Ultimately, we must advance achievable recommendations in performance measurement to guide resource allocation during emergencies. Hospital emergency management strategies are essential to our nation’s preparedness.” Read abstract.

The Centers for Medicare & Medicaid Services today announced the selection of four personal health record (PHR) companies to participate in the new Medicare PHR Choice Pilot in Arizona and Utah. Beginning in early 2009, this pilot program will offer beneficiaries with Original Medicare the opportunity to choose one of the selected PHR companies to maintain their health record information electronically.

The four selected companies are Google Health, HealthTrio, NoMoreClipboard.com, and PassportMD.  These choices offer beneficiaries a range of product choices from ones that are free to ones that have “concierge” service as well as a diverse set of connections to healthcare providers, pharmacies, and other sources of health information.

PHRs are tools that can help consumers manage their health and health care services.  A PHR, which is controlled by the consumer, is different than an electronic health record, which is owned by and under the control of the physician. Sometimes it only contains data entered by the individual or his or her provider, but it can also include information from a health plan--as is the case in this pilot, where Medicare will provide health information from its claims database. Read the announcement.