Healthcare Financial News

The Bush administration improperly issued a policy directive last year that restricts states’ abilities to expand their SCHIP programs, the Government Accountability Office (GAO) and the Congressional Research Service (CRS) said May 15 during a House Energy and Commerce Health Subcommittee hearing. The Aug. 17, 2007, policy directive requires states to enroll 95 percent of children in families with incomes up to 200 percent of the federal poverty level (FPL) before expanding coverage to children in families with incomes greater than 250 percent of the FPL. During the hearing, Morton Rosenberg, a legal specialist for CRS, and Dayna Shah, managing associate general counsel for GAO, said the directive amounted to a regulation and should have been vetted in Congress using the same process as other administrative rules.

States have argued that meeting the enrollment requirement is impossible, and several states have filed lawsuits against the federal government to block the directive. The Bush administration says the directive is aimed at preventing families from dropping private health coverage to enroll in SCHIP. Read the GAO report.

The Centers for Medicare and Medicaid Services (CMS) on May 16 announced a new demonstration for hospitals to test the use of a bundled payment for both hospital and physician services for a select set of episodes of care. The goal of the acute care episode (ACE) demonstration is to use a global payment to better align the incentives for both types of providers to improve quality and efficiency. The demonstration will also test the effect that transparent price and quality information has on beneficiary choice and provider referrals for select inpatient care.

The select sets of procedures included in the bundled payment demonstration are 28 cardiac and nine orthopedic inpatient surgical services. These elective procedures were selected because profit margins and volume have historically been high; there is sufficient marketplace competition to ensure interested demonstration applicants, the services are easy to specify, and quality metrics are available for them.

The ACE demonstration is open to applicants from Colorado, New Mexico, Oklahoma, and Texas. Access the CMS information page.