Moody’s Investors Service cautions that the increasing number of health savings accounts may present risks for hospitals. Consumers who have HSAs may skimp on their elective medical care, especially preventive services, which may result in declining net patient revenues for community hospitals. The high deductibles that accompany HSAs may also result in patients’ not being able to pay their medical bills, as hospitals have experienced with increasing insurance copays and deductibles. Hospitals will also have to improve their information systems and revenue collection cycles in order to generate invoices and collect from self-pay patients. The Moody’s report, however, says it remains unclear how pervasive HSAs will become. For more information on this report, call 212-553-7814.
Tenet Healthcare Corporation has reached a broad settlement agreement with the U.S. Department of Justice and other federal agencies that will conclude investigation by the department and a number of U.S. attorneys into Tenet’s receipt of Medicare outlier payments prior to 2003, physician financial arrangements, and Medicare coding issues. Tenet has agreed to pay $725 million plus interest over four years and is forgoing $175 million in Medicare payments for past services. Tenet admits to no illegal behavior but admits it made mistakes and says it has imposed higher standards for the corporation along with reforms in clinical quality, corporate culture, management, transparency, governance, compliance, and strategy.
The company has also entered into a multiyear corporate integrity agreement with HHS’ Office of Inspector General in exchange for not being excluded from federal programs. Among other changes, Tenet will retain an independent review organization to oversee compliance in the areas of Medicare coding, physician financial relationships, hospital charges, and quality of care. In addition, Tenet announced plans to divest 11 hospitals to enhance the company’s profitability, expand capital investments in its remaining 57 hospitals, and fund the settlement. Read the news release.
The Financial Accounting Standards Board has issued a proposed staff position that defines an obligor (or debtor) of a conduit municipal bond traded on a public exchange, or market, as a public entity. A conduit municipal bond is an offering by a governmental entity that is not for its own use but for the use of a private party (conduit bond obligor). The proposal addresses questions concerning whether a conduit bond obligor with publicly traded conduit debt securities should be considered a public entity and apply certain existing authoritative accounting literature. The proposed staff position would amend Accounting Principles Board Opinion No. 28, Interim Financial Reporting; and FASB Statements No. 69, Disclosures about Oil and Gas Producing Activities; No. 109, Accounting for Income Taxes; No. 126, Exemption from Certain Required Disclosures about Financial Instruments for Certain Nonpublic Entities; No. 131, Disclosures about Segments of an Enterprise and Related Information; and No. 141, Business Combinations. The comment deadline is July 31. Read the FASB news release.
CMS has proposed to increase the work relative value units assigned to the Medicare Evaluation and Management codes for more than 400 services. The work component for RVUs associated with an intermediate office visit--the most commonly billed physician’s service--will increase by 37%, for example, and a visit requiring moderately complex decision making will increase by 29% in an office setting and by 31% in the hospital. “We expect that improved payments for evaluation and management services will result in better outcomes, because physicians will get financial support for giving patients the help they need to manage illnesses more effectively,” said CMS Administrator Mark McClellan in a press release. The changes, which CMS estimates will increase expenditures by approximately $4 billion, reflect the recommendations of the RVS Update Committee of the American Medical Association.
CMS is also proposing changes to the way Medicare calculates the practice expense portion of physician fee schedule payments. The proposed change would make the practice expense methodology more transparent, easier to understand, and consistent across procedures, and would use data that have been collected by specialty societies and reviewed by the AMA RUC. If adopted, the RVU revisions would be fully implemented on or after Jan. 1, 2007, while the practice expense revisions would be phased in over a four-year period.
One of the first of more than 40 class-action lawsuits against hospitals alleging overcharging of uninsured patients was settled last week when the seven-hospital Providence Health System in Oregon agreed to refund or discount previous hospital bills for about 1,000 uninsured patients. The settlement also stipulates that the not-for-profit hospital chain give the same discounted rates to all patients for the next two years, according to an AP story. Providence now provides a discount for all uninsured patients of the same “preferred provider” rates paid by most of its insured patients. In the Portland area, that discount currently amounts to 32%. Plaintiffs’ attorney Brian Campf estimates that the settlement could result in millions of dollars in discounts for more than 40,000 patients. A Providence release states that the health system expects to provide charity care of more than $60 million in 2006, a 71% increase since 2004.
With a 52% profit margin last year, the Orthopaedic Hospital of Wisconsin may be one of the most profitable businesses in the Milwaukee area, reports the Milwaukee Journal Sentinel. The seven-bed hospital, which had an average 49% profit margin in the three previous years, considerably beat the 13% profit margin national average for specialty hospitals. And two other specialty heart hospitals in Milwaukee haven’t fared nearly as well; one folded and the other has yet to turn a profit. Orthopaedic Hospital, which is owned jointly by surgeons and the not-for-profit hospital system Columbia St. Mary’s, claims its high profits result from running the hospital at capacity, superior efficiency, and low overhead. But the Sentinel article also highlights that the hospital’s Medicaid patients accounted for only 4% of its volume, and that it spent less than $50,000 (.4% of net income) on charity care last year. Although the Medicare Payment Advisory Commission has proposed that reimbursement for orthopedic procedures be cut by 8.2%, the hospital’s administrator told the Sentinel that the facility will continue with its expansion plans to become a full-service orthopedic hospital.
The New York State Health Accountability Foundation has released an interactive report that provides data on the quality, volume, length of stay, and pricing of care provided by the state’s health insurers and hospitals, searchable by county. For the HMOs, 26 measures of quality care are included, and hospital performance is reported for 18 measures. The report card also provides each New York hospital’s Medicaid cost, length of stay, and average “self-pay” charge for each of 15 common diagnoses and procedures. In addition, each commercial insurer’s individual and family premiums for a standardized HMO plan are published.
The report card shows a significant amount of variation in quality and cost within counties. For example, hospitals in Brooklyn charge self-paying patients between $6,460 and $22,608 for an appendectomy, while hospitals in Long Island charge from $8,788 to $23,985. “Our ultimate goal is to provide a way to present quality and cost in a manner that describes each hospital’s and HMO’s efficiency,” says Anthony Shih, MD, vice president of IPRO, the Medicare Quality Improvement Organization for New York. “This report card represents a first step.” Access the report card.
As of last week, Mississippi hospitals are being taxed 1.5% on their gross revenues to make up for a $360 million shortfall in the state’s Medicaid budget, reports The Clarion-Ledger. In the past, only public hospitals bore the assessment, but at a lower rate of .35% on gross revenues. Hospitals say the tax will “cripple” them and force them to cut staff and services. “Hospitals, as a business in this state, will be the only business that will have a tax on their gross revenue,” Sam Cameron, president and CEO of the Mississippi Hospital Association, told The Clarion-Ledger. The state’s attorney general is currently investigating whether Gov. Haley Barbour can impose the tax without legislative approval.
Worried about competition from retail store clinics and the price sensitivity of patients paying their own medical bills, primary care doctors are finding ways to make their practices more service oriented, reports The New York Times. The American Academy of Family Physicians, for example, is spending $8 million to advise doctors on how to make it easier for patients to make appointments and be seen the same day. Some physicians are using web-based scheduling for their patients’ convenience, holding clinics at noon with a guarantee that patients with be seen in 30 minutes (and at prices similar to those at retail store clinics), and leaving as much as 70% of their day unscheduled to accommodate walk-in patients. “It’s a big trend,” a spokeswoman for the American Academy of Family Physicians told the Times.
The FDA’s enforcement of food and drug laws has dropped dramatically over the past five years, and the FDA routinely rejects enforcement recommendations of its staff, according to a report by the House Committee on Government Reform. According to the report, commissioned by Rep. Henry Waxman, D-Calif., the number of warning letters issued by the FDA fell by over 50% in the past five years, from 1,154 in 2000 to 535 in 2005--a 15-year low. The largest decrease in warning letters came from the department responsible for ensuring the safety of medical devices. Better compliance by manufacturers does not account for fewer warnings, because the number of violations remained constant. Rather, the FDA overruled field inspectors and failed to bring enforcement actions in 138 cases involving drugs and biological problems, according to the study. The report also called the FDA’s responses to requests for records of enforcement decisions “haphazard, incomplete, and untimely.”
The FDA says it has been concentrating on products that present high risk to consumers and that it has aggressively prosecuted firms who have violated the law, reports The Washington Post. “FDA enforcement cannot be properly judged by counting the number of actions taken by the agency,” Office of Enforcement Director David Elder said in a statement. “FDA has increasingly used an enforcement strategy based on efficient risk management principles that focus on combating the greatest public health risks and maximizing our deterrent effect against potential violators.”
With 150 people accessing electronic health records during a typical hospitalization--and many more translating data into billing information--patients should worry about the security of their medical records, reports the Los Angeles Times. The article raises a concern that only one consumer representative participates in the American Health Information Community, which, under the auspices of HHS, is advising those setting policies for standardizing electronic records, securing data, protecting privacy, and certifying electronic products. The other 16 committee members represent federal and state government, industry, employers, and hospital or physician groups. Experts agree that maintaining patient privacy is a priority and recommend that electronic records be decentralized, with data staying in physicians’ offices or in hospitals. “I would be worried if there were a central database in the basement of the White House that could be hacked, but we are not building that,” John Halamka, MD, chief information officer for Harvard Medical School and chairman of HHS’ Health Information Technology Standards Panel, told the Times.
Although hospitals report that short-term measures, such as higher pay and temporary staff, have helped ease nurse shortages, serious doubts remain about hospitals’ ability to meet future nursing needs, according to a study by the Center for Studying Health System Change published in Health Affairs. A lack of nursing school capacity remains an important barrier to meeting long-term nursing needs, despite such hospital efforts as subsidizing faculty salaries and loaning their own nurses to serve as nursing faculty, the study found. Many hospital executives also were concerned that heavy reliance on temporary or inexperienced nurses could affect patient care. Half of the 32 hospitals in the study reported either achieving or planning to apply for “nurse magnet” status, an American Nurses Association initiative that recognizes hospitals’ performance on quality indicators and standards of nursing practice that contribute to nurse retention and quality of care.
With a forecast of a shortage of more than 1 million nurses by 2012, the authors call for public financial support to address the shortage of nurse faculty and for policymakers to use nursing quality measures by the National Quality Forum to recognize high-performing hospitals.
Massachusetts spends more money on health care than any other place in the world, according to a study by Boston University’s School of Public Health. The study, which analyzed 2004 healthcare expenditures, found that Massachusetts spent $7,075 per person--33.2% higher than the U.S. average of $5,313, reports The Boston Globe. New York, which spent $6,635 per person, was the second most expensive state for health care, and Utah, which spent $4,043 per person, was the least expensive. Massachusetts also had the highest increase in healthcare spending from 2000 to 2004. The reason for Massachusetts’ high healthcare costs is that the state has too many physicians, no incentive to contain costs, and a large number of teaching hospitals, said the study’s authors. And health insurance premiums will rise even higher as the state begins to implement universal coverage for all residents, the authors add. The Massachusetts Hospital Association argues that the state offers the best healthcare in the world and that hospitals are attempting to lower costs through better efficiency.
The Washington, D.C., area has one of the most competitive healthcare markets in the country, and as hospitals undergo expansions, they are adding numerous service amenities to keep affluent, well-educated consumers using local hospitals, reports The Washington Post. The article highlights hospitals that have hired consultants from the Ritz-Carlton and the Walt Disney Company to help develop patient-friendly hospital environments. Some hospitals are making flat-screen televisions and CD players standard issue in patient rooms, others are upgrading towels and sheets and adding robes for an extra $200/day, creating ultra-quiet floors conducive to healing, or serving high-quality meals. “We want [patients] to leave here and then brag about it,” John Fitzgerald, president of Inova Fair Oaks in Fairfax County, told the Post. “There’s a competitive nature to health care, and we want to be first. And part of that is the service.” Other hospital administrators, however, say that funds are better spent elsewhere. Brian A. Gragnolati, president of Suburban Hospital in Bethesda, Md., said, “I would rather put money into nursing care and staffing and making sure our doctors are there. At the end of the day, it’s about taking care of patients.”
The American Medical Association Ethical Force Program has released a consensus report that offers guidelines and measurable expectations for healthcare organizations to improve communications with patients of diverse backgrounds. More than 22 million people do not speak English well and 95 million lack the literacy skills to understand basic written instructions--a communication gap that can lead to medical errors, says the AMA. The report advises institutions to take a patient-centered approach to healthcare communications by understanding their specific patient demographics and communication needs, employing a workforce that reflects the diversity of its patient population, educating employees on patients’ cultural beliefs that affect healthcare decisions, inviting community groups to help devise communication policies, and determining literacy levels in developing strategies for communicating medical information. “If organizations put greater emphasis on effective communication, health care quality and safety will improve," says AMA board member Dr. Ardis Hoven. Click here to download the report.
The AMA’s recommendations are also relevant for communicating financial issues with patients. HFMA’s PATIENT FRIENDLY BILLING® project provides guidance on how to make financial communications clear, correct, concise, and patient-friendly. The latest report from the project outlines how healthcare professionals can respond to consumerism in health care, particularly with respect to price transparency.
The Centers for Disease Control and Prevention has issued an analysis about the more than 1 billion visits that Americans made to physicians’ offices, emergency rooms, and hospital outpatient departments in 2004. Hospital outpatient departments accounted for 85 million of those visits, representing 29.5 visits per 100 people. About 70% of the visits were to not-for-profit hospitals, and government sources paid for 46.3% of those visits. Females had higher number of outpatient department visits than men--35.1 per 100 people compared with 23.6 per 100 for men--and African Americans had higher rates of visits than did whites--50.3 per 100 versus 27 per 100. Females made three-quarters of preventive care visits, and Hispanic patients had twice the rate of preventive care visits than non-Hispanics. Screening and diagnostic services were performed at 90% of visits, half of visits involved therapeutic and preventive services, and medications were ordered at 67.4% of visits.
In a separate report on emergency room visits, the CDC analysis found that the amount of time a patient waited before seeing a physician in the emergency department increased from 38 minutes in 1997 to 47 minutes in 2004. On average, patients spent 3.3 hours in the ED. Patients were admitted in 13% of ED visits and were transferred to other facilities in 2% of visits.
Healthcare providers can collect and report race and ethnicity data as part of a program of quality improvement, says a policy brief prepared for the Robert Wood Johnson Foundation by several faculty at the George Washington University School of Public Health and Health Services Department of Health Policy. In the absence of federal guidelines on disclosure of these data, providers have been concerned that they may be violating federal civil rights laws and state human rights laws by collecting patient ethnic and racial information. But the brief states that such data are vital to understanding and eliminating disparities in healthcare, and they are used by CMS, the Agency for Healthcare Research and Quality, and the Veterans Administration in efforts to improve quality. “The act of examining disparities as part of quality improvement becomes the higher form of civil rights compliance; in effect, the goal of health care quality improvement simply cannot be realized without addressing equality in the rendering of health care treatment,” write the authors.
Twenty-nine healthcare organizations have formed a coalition, the Alliance for Cardiac Care Excellence, to ensure that all hospitalized cardiac patients receive care consistent with nationally accepted standards. Today, 85% of adult cardiac patients receive treatment that follows clinical guidelines for seven basic quality measures, according to an ACE statement. ACE wants to push that rate up to 95% of patients by the end of this year and has set a goal that 95% of cardiac patients will receive care based on the full set of 12 quality measures by the end of 2007. To help hospitals deliver quality cardiac care, ACE intends to educate providers and hospitals on appropriate care for heart attack and heart failure patients; inform hospitals not engaged in quality improvement programs of programs that will work in their facilities; support public reporting of compliance with nationally accepted standards of care; remove barriers, such as regulatory, payment or other policies that may impede improved patient outcomes; and share successful strategies resulting in improved performance and patient care.
Over the next two years, the group will announce additional goals to improve the quality of cardiovascular care in areas such as discharge instructions for hospitalized patients, appropriate screening for cardiac risk factors in outpatients, and incorporating quality improvement into medical education and certification. Coalition members include the AHA, CMS, the Agency for Healthcare Research and Quality, the American Heart Association, and the American College of Cardiology.
PATIENT FRIENDLY BILLING®, a national project to make healthcare billing clearer to patients, has released its Consumerism in Health Care report. It addresses the key area of price transparency and puts forth that price information provided to consumers must be meaningful to them. Ultimately, the objective is to provide patients with easy and timely access to information that explains their financial obligation. Ideally, in most cases, consumers could receive price information in advance of receiving services. The document includes 11 points for hospitals and physicians to consider to address the impact of consumerism and help patients better understand the financial aspects of their health services. Download the report.
The rising cost of health care-and the increasing share borne by the patient--is a key driver behind this radical change. It forces patients to be much more involved in their care decisions and active participants in demanding price and quality information. The healthcare industry can expect consumerism to have substantial impacts throughout the entire revenue cycle, from the point of pre-registration through patient account settlement. "Consumerism gives providers the opportunity--and challenge--to enhance the patient experience," says Dr. Richard L. Clarke, president and CEO of Healthcare Financial Management Association (HFMA). "The goal of this report is to present practical strategies that will help the healthcare industry adapt to consumerism and take advantage of those opportunities." Through the report, HFMA and other Patient Friendly Billing project partners, encourage providers to review and consider on how to successfully transition to a consumer-oriented revenue cycle. The report outlines 11 areas to consider when preparing for consumerism in health care:
"Addressing the implications of consumerism is a vastly complex endeavor, requiring collaboration among government, providers, payers, employers and consumers themselves," says Dr. Clarke. " It is up to stakeholders in the healthcare industry to work together and fulfill their mission of patient care."
For a complete copy of the report or information concerning the Patient Friendly Billing project visit www.patientfriendlybilling.org.
Physicians' net income from the practice of medicine declined about 7% between 1995 and 2003 after adjusting for inflation, according to a national study by the Center for Studying Health System Change. Primary care physicians fared the worst with a 10.2% decline in real income between 1995 and 2003, while surgeons' real income declined by 8.2%. But medical specialists' real income essentially remained unchanged. Declining incomes, primarily caused by flat or declining fees from payers, make physicians reluctant to do charity care or serve on hospital committees, said the study. In contrast to physician incomes, wages for other professionals rose about 7% during the same time period.
The study, entitled Losing Ground: Physician Incone, 1995-2003, also found that although physicians’ overall work hours have slightly declined, they are spending a significantly larger proportion of their work time caring for patients now, 86%, compared with the mid-1990s when they spent 81% on direct patient care. The volume of physician services also increased substantially between 1999 and 2003, largely because of the growth in the number of tests and procedures, which partly explains why medical specialists have seen their incomes growing at a faster pace than primary care physicians. The report said that the income disparity between procedure-oriented specialists and other physicians may lead to a shortage of primary care physicians and other specialists that provide mostly cognitive services.
New estimates of health insurance coverage were released in a new report by the Centers for Disease Control and Prevention. In 2005, 41.2 million people--14.2% of the U.S. population--were without health insurance, down from 15.4% in 1997, according to the National Health Interview Survey of 98,300 residents. In the same time period, children experienced the greatest increase in coverage with only 8.9% without insurance in 2005 compared with 13.9% in 1997. But for at least part of 2005, over 56% of currently unemployed adults and over 21% of employed adults went without insurance. Hispanics were the most likely to be uninsured--one-third had no insurance at the time of the survey’s interview--as were young adults age 18 to 24 (28.7%). Insurance coverage varied widely among the 20 largest states, from 6.5% in Massachusetts to 24.6% in Texas. The survey found that 70% of adults and 62% of children were covered with private health insurance.
HFMA awarded the 2006 Frederick C. Morgan Achievement Award--the Association's highest individual honor--to Fred J. Lucky, FHFMA, senior vice president of the Kansas Hospital Association in Topeka, Kan. Lucky is the 48th recipient of this prestigious award that honors career-long contributions to healthcare financial management and HFMA.
Lucky has served on the HFMA National Board of Directors and has held all of the major volunteer positions for both the Heart of America Chapter and the Sunflower (Kansas) Chapter. Members of the judging committee were impressed with Lucky’s success in helping the Sunflower Chapter to forge strong relations with the Kansas Hospital Association as well as with a number of other organizations in the state to the benefit of their respective members. Lucky has also had significant civic involvement and played an integral role in obtaining additional Medicaid funding for Kansas providers.
In his acceptance speech, Lucky said, “We work in a noble profession, perhaps the noblest of all. Most of us in this room tonight…can’t provide the care and compassion for patients…but we can help provide the means, we can doggedly fight for adequate funding, we can try to correct a massively flawed payment system….That’s why membership in HFMA is so important.”
Up to $1 billion could have been saved if all patients with pneumonia or undergoing heart bypass received at least 76% of a set of basic, widely accepted care measures in 2004, according to an analysis by Premier Inc. The analysis was based on data from the hospital alliance’s pay-for-performance demonstration project with CMS. Through that project, Premier is collecting a set of 33 quality indicators from more than 250 hospitals across the country. Other projected outcomes associated with improved process delivery include 3,000 fewer deaths, 6,000 fewer complications, 6,000 fewer readmissions, and 500,000 fewer days in the hospital.
“This is dramatic proof that hospitals can take relatively simple steps to significantly reduce costs without infringing on clinical decisions regarding patients’ care,” said Douglas Hawthorne, chairman of the Premier board of directors and president and CEO of Texas Health Resources. The Premier study also examined heart failure, hip and knee replacement, and acute myocardial infarction. Preliminary results appear similar to the results for pnemonia and heart bypass, although in some complicated clinical conditions, the association between cost savings and outcomes is not as clear.
Nurses alleging that hospitals in Chicago, Memphis, San Antonio, and Albany have conspired to fix their wages have filed a class-action lawsuit in U.S. federal court against multiple hospitals in those cities, reports The New York Times. The plaintiffs’ attorney, Daniel A. Small, contends that the wage-fixing has resulted in an annual loss to each nurse of $14,000 in Memphis, $6,200 in Albany, $5,400 in Chicago, and $1,300 in San Antonio. In violation of antitrust laws, hospitals shared information about the salaries they were paying RNs and agreed to put a cap on them, the lawsuit alleges. Small said his investigation is ongoing and that he may file similar suits in other cities. The hospitals named in the suit claim that the charges are without merit. A spokeswoman for the Baptist Memorial Health Care Corporation in Memphis, one of the hospital chains named, told the Times, "We use industry-standard, legal practices to adjust salaries. Our salaries are market-based, and we use many methods to determine fair, competitive, compensation packages."
San Francisco Mayor Gavin Newsom wants his city to be the first in the country to provide universal healthcare access to its residents, reports the San Francisco Chronicle. Newsom has proposed that the city and local businesses subsidize health coverage for San Francisco’s 82,000 uninsured adults, which is projected to cost $200 million annually. The city would foot $104 million of the bill, business would be asked to voluntarily contribute $30 million, and premiums would pay for the remainder. Healthcare coverage would be limited to providers in the San Francisco area, and premiums would run $201 per month for those who earn $50,000 or more and $35 per month for individuals who earn less. The proposal has the support of providers, labor unions, and city officials, but some small business owners have expressed concerns over an alternative proposal that would force employers to contribute.
According to a new study by AARP's Public Policy Institute, manufacturer prices for nearly 200 of the most commonly used brand-name medications rose at a rate of 3.9% during the first quarter of 2006, triple the rate of inflation. This is the highest first-quarter increase in manufacturer prices for brand-name prescription drugs in more than six years. For the 12 months ending in March 2006, prices rose, on average, by 6.2%--more than one-and-one-half times the 3.5% rate of general inflation for the same time period.
Medicare, which is prohibited by Congress from negotiating drug prices, is passing those increases on to seniors enrolled in Medicare Part D plans. Over the past five months, virtually all Part D plans raised their prices for the top drugs prescribed to seniors, according to a report issued by the health consumer organization Families USA. The report examined Medicare plan price changes from mid-November 2005 to mid-April 2006 and found that the median price for the top 20 drugs rose by 3.7%. For 19 of the top 20 drugs, changes in the median Part D plan prices were virtually identical to the changes in average wholesale price established by the drug manufacturers. In contrast, the report found that the Department of Veteran Affairs paid 46% less for the most popular brand-name drugs.
Medicare beneficiaries may drop Part D coverage as a result of rising drug prices, reports The New York Times. "Higher drug prices may lead to higher premiums next year, which may discourage enrollees from joining or staying in the program, and fewer enrollees could drive premiums even higher," Stephen W. Schondelmeyer, a University of Minnesota economist told the Times.
Concern about the growing physician shortage has led the Association of American Medical Colleges to recommend that enrollment in U.S. medical schools be increased 30% by 2015 instead of the 15% AAMC proposed in February 2005. Citing current population trends and physician retirement patterns, AAMC says the number of physicians will peak by about 2020 and then drop just as the baby boomers begin to reach age 75 if medical schools don’t accommodate 30% more students. The proposed expansion would increase the number of new MD students by 5,000 annually, and AAMC suggests that it be accomplished by boosting enrollment at existing schools and by creating new allopathic medical schools.
To accommodate additional U.S. MD graduates in teaching hospital residency training programs, the AAMC policy continues to call for the removal of the cap on the number of residency positions funded by Medicare. Other key recommendations in the new AAMC workforce policy include studying the geographic distribution of U.S. physicians to identify strategies to address the paucity of physicians in many areas; increasing the National Health Service Corps awards by at least 1,500 per year to help meet the need for physicians who care for underserved populations and to address rising medical student indebtedness; and examining ways to develop a formal, voluntary process for assessing medical schools outside the United States that enroll primarily Americans, and to develop a mechanism for overseeing the U.S. clinical training of medical students enrolled in foreign medical schools.
CMS has announced a campaign to improve Medicare beneficiaries’ use of preventive services, especially among minorities who have higher mortality rates for preventable illnesses, reports the Los Angeles Times. Currently, more than 90% of Medicare spending is for treating complications of chronic disease. "We can get healthier beneficiaries and a lot lower costs related to complications if we can get more prevention," Medicare Administrator Mark McClellan told the Times. According to one Medicare analysis, reducing the hospitalization rate by only 5% for preventable complications would result in a savings of $500 million. Yet many seniors eschew prevention services. Only 36% of female beneficiaries get Pap tests, for example, and 54% of male beneficiaries get PSA blood tests to screen for prostate cancer. The promotional campaign will be launched this summer, but some experts say Medicare should go further by making all prevention services free to beneficiaries. "Cost should not be a barrier to evidence-based preventive healthcare,” Joshua Sharfstein, Baltimore’s public health commissioner, told the Times. “If something is cost-effective and it saves lives, it should be provided.”
Automatic enrollment of low-income children and families in Medicaid and SCHIP programs based on eligibility information states already have on file would provide health benefits to scores of uninsured people, according to a new study by the Commonwealth Fund. Sixty-two percent of uninsured children and two-thirds of uninsured poor parents are eligible for public health benefits but are not enrolled, says the study. Automatic enrollment, however, has greatly increased participation rates for many other benefit programs, such as 401(k) programs, where 90% of employees are automatically enrolled by employers versus 10% who sign up on their own. The study recommends that states use existing enrollment information for food stamp programs and automatically extend Medicaid and SCHIP benefits to those families. Also, 53% of uninsured parents have children covered by Medicaid, so states can enroll parents through their children’s Medicaid records. But first, states will require federal funding to upgrade IT systems so electronic databases from various public programs can communicate with each other, and a change in law is needed to give states the flexibility to apply eligibility methodologies for other public programs to Medicaid and SCHIP programs.
A California appellate court dismissed a defamation lawsuit Integrated Healthcare Holdings Inc. brought against its former chief of staff, reports the Los Angeles Times. Michael W. Fitzgibbons, MD, wrote an e-mail message to other physicians, asserting that Western Medical Center-Santa Ana “appears to be underwater” after IHHI acquired the hospital and then defaulted on $80 million in loans in 2005. Integrated later made a payment on the loan, but it claimed that the hospital lost $500,000 from a contract that Blue Cross postponed after seeing Fitzgibbons’ e-mail. The court said that IHHI cannot use the legal system to stifle criticism and ordered the company to pay Fitzgibbons’ $100,000-plus legal fees. IHHI had offered to settle with Fitzgibbons in December, the Times notes, but the offer was declined.
In the discussion of the court’s opinion, Justice Richard Aronson wrote, “We have little trouble concluding Fitzgibbons's e-mail message concerned ‘a public issue’ and ‘an issue of public interest’ under section 425.16, subdivision (e)(4).” Aronson noted that the acquisition and operation by IHHI of four hospitals in Orange County had been the subject of public hearings before the California Senate and the Orange County Board of Supervisors, and had also been discussed in articles in newspapers and other periodicals. “The hearings and articles focused on IHHI's financial ability to successfully operate the hospitals, and the potential harm to the public should IHHI fail,” he wrote. “Fitzgibbons's e-mail message expressing concern for IHHI's financial health and its ability to operate WMC falls squarely within these issues.”
The deadline expired last week for 550 tax-exempt hospitals to return questionnaires to the IRS on their billing practices, amount of charity care, operations, and compensation formulas. But many hospitals have asked for extensions, claiming that the 80-item questionnaire required an “overwhelming” amount of detail, reports The New York Times. Responding to legislators’ criticism that not-for-profit hospitals are acting more like for-profit entities in a highly competitive market, the IRS says it wants to determine whether hospitals are meeting tax-exempt standards and giving away sufficient amounts of charity care, and whether they are denying care to uninsured patients.
Formal audits will likely follow. “Our audit rates are too low,” Mark W. Everson, the commissioner of internal revenue, admitted to the Times. Only 350 of 7,000 not-for-profit hospitals and healthcare organizations have been audited by the IRS in the last decade. Sen. Charles Grassley (R-IA) is also calling for the IRS and the Treasury Department to clamp down on not-for-profit hospitals that argue that the extensive benefits they provide to their communities compensate for a lack of charity care.
The California Public Employees’ Retirement System--which manages health insurance for 1.2 million California public employees, dependents, and retirees--has proposed higher copays for those who seek care at hospitals and emergency departments, reports the Los Angeles Times. Known for its generous health benefits, CalPERS is under pressure by the state to bring down premium costs, which ran $4.3 billion this year. Among the proposals on the table, in hopes of steering people to less expensive treatment, are making copays for hospital treatment much larger than copays for ambulatory surgery centers ($250 versus $25, respectively) and increasing emergency department copays from $50 to $75, compared with $25 for urgent care centers. Another proposal is to create a new PPO with a greatly restricted number of physicians for a 7.5% premium savings. If all the changes are approved by CalPERS's 13-member board on Wednesday, CalPERS would realize a $120 million savings in premiums. The public employee’s unions strongly oppose the cost-shifting, and CalPERS's board chairman said he would likely oppose the higher copays this year, but that changes will soon have to be made in the health benefits.
As tax-exempt hospitals face increased scrutiny of their charity care practices by Congress, the media, and consumer groups, they must help build a common ground for informed discussions about tax-exempt standards, according to preliminary research from PricewaterhouseCoopers Health Research Institute. The research findings underscore the need for tax-exempt hospitals to find solutions to more fairly and efficiently provide and report charity care and community benefit. The preliminary report describes how hospitals can establish common ground, their tax-exempt responsibility, and leading practices to address issues such as charity care measurement, provider pricing, and community benefit reporting. Final recommendations and best practice solutions will be published in the report My Brother’s Keeper in September.
Among the initial findings are that tax-exempt hospitals need to quantify the community benefits they provide by appointing a community benefits manager to supervise the reporting of a hospital’s community benefits programs; use a universally accepted model to issue the report; and conduct community needs assessment to identify needs of the population. For charity care reporting, the hospitals should focus on cost, not charges; clearly distinguish charity care from bad debt; simplify the charity care application process; and involve the board in setting charity-care policies. To satisfy demands for transparency, the hospitals should post charges or average price for common procedures; formulate rates for the uninsured based on managed care prices or Medicare rates; and establish a process to respond to patient requests for pricing. The preliminary report also makes recommendations on best practices for reporting executive compensation and joint ventures.
The Institute of Medicine released three new reports that find the nation's emergency care system is fragmented, stretched to the breaking point, and severely compromised in its ability to handle disasters. The reports call for Congress to establish a pool of at least $50 million to reimburse hospitals for uncompensated emergency and trauma care. According to the reports, lawmakers should significantly increase funding to provide hospitals with resources needed to handle disaster situations. The reports also say that Congress should allocate $88 million to be disbursed as grants over five years for projects that can test ways to promote greater coordination and regionalization of emergency care, and that it should appropriate $37.5 million each year for the next five years to the Emergency Medical Services for Children Program, to address deficiencies in pediatric emergency care.
Hospitals also need to tackle problems with patient flow and end the practices of diverting ambulances and "boarding" patients until beds become available, the reports say. They recommend that federal programs revise reimbursement policies to reward hospitals that appropriately manage patient flow and to penalize those that fail to do so. The reports also recommend that the Joint Commission on Accreditation of Healthcare Organizations reinstate strong guidelines to reduce crowding, boarding, and diversion, and they call on CMS to convene a working group to develop standards to address these problems.
St. Barnabas Corp., the largest private healthcare system in New Jersey and second largest employer in the state, agreed to reimburse Medicare $265 million to settle two federal lawsuits brought by three whistle blowers. St. Barnabas and nine of its hospitals were alleged to have inflated charges for inpatient and outpatient care to obtain outlier payments from Medicare from October 1995 to August 2003. Although federal investigators believe the fraudulent charges could have reached a half billion dollars, the U.S. Attorney for New Jersey wanted St. Barnabas to continue operating and, therefore, agreed to limit the penalty and allow it to be paid in six yearly installments, reports The New York Times. "[A]t some point we made a decision to go the route of civil settlement rather than criminal charges,” Ralph J. Marra Jr, first assistant U.S. attorney for New Jersey, said at a news conference. “We do not want to put them out of business, and so their ability to pay was a consideration in the settlement." The settlement, which is not an admission of guilt by St. Barnabas, also requires the hospital chain to have an outside monitor overseeing its Medicare billings for six years.
The American Nurses Association and nurses associations in two states, New York and Washington, have filed a lawsuit in U.S. District Court alleging that the U.S. Department of Health and Human Services is endangering patients by allowing hospitals that fail to meet federal nurse staffing requirements to participate in Medicare. The nurses associations want to prevent HHS from permitting the Joint Commission on Accreditation of Healthcare Organizations to use its own standards for nurse staffing in its accreditation of hospitals, which the nurses claim do not ensure “immediate availability” of an RN for bedside care and do not specifically require staff schedules to be reviewed and revised to meet patient needs. The lawsuit seeks a court order requiring HHS to ensure that JCAHO will use standards that are “at least equivalent” to HHS standards. Nurses in New York and Washington claim that hospitals in both states have failed to hire and assign enough nurses, thereby jeopardizing the health and safety of nurses and patients.
Aetna announced that as of August 18, consumers will have online access to physician-specific actual costs, clinical quality, and efficiency information in select markets for 14,800 specialists and 70,000 physicians. Aetna launched a transparency pilot project in the Cincinnati area in August 2005 that gave consumers physician-specific pricing for 5,000 physicians and physician groups, and found that between 600 and 1,000 consumers a month accessed the information. In the expanded version of pricing and quality data, Aetna members can view actual rates specific to their health plan for office visits, diagnostic tests, minor procedures, major procedures, and other services. The physician-specific clinical quality and efficiency data are taken from Aetna’s Aexcel network, which vets specialists for their delivery of care, including prevalence of complications and repeat procedures. The web site will show whether the physician has met the Aexcel criteria for clinical performance, efficiency and volume of Aetna members treated. Aetna claims it is the first insurer to provide such extensive cost and quality information on physicians. (Read the Aetna announcement.)
To recruit and retain veteran nurses, hospitals must “quickly transform the work environment so that older nurses are welcomed, accommodated, appreciated and used wisely,” according to a study that surveyed 377 older nurses. The study, supported by the Robert Wood Johnson Foundation, found that older nurses wanted greater flexibility in scheduling and innovative new nursing positions, such as mentor, research assistant or safety officer. To decrease the time nurses spend walking on the job and the physical demands of their work, nurses suggested mechanical patient lifts, decentralized storage of supplies, and better lighting at the bedside. Nurses also called for adequate training in the use of technology, as well as input in the choice of technology purchases. In general, nurses seek greater autonomy and participation in decision making. “Nurses are tired of doing a difficult job under stressful conditions and of not having their contributions acknowledged,” the report states. And respondents also said ongoing learning is especially critical to retaining senior nurses promoted to managerial or innovative positions that require new skills.
As U.S. companies begin to negotiate HMO plan rates for 2007, preliminary data from human resources company Hewitt Associates show that rates will increase approximately 11.7%, representing the fourth consecutive year of declining rate increases. HMO rate increases were 12.4% in 2006 and 13.7% in 2005. Companies, however, are still facing double-digit increases and continue to make plan design changes to share more of the cost with employees. The number of companies requiring $20 office copays increased from 25% in 2005 to 29% in 2006, while the number of employers requiring $10 copays dropped to 17% in 2006 compared with 22% in 2005. Employers are also trying to control costs by increasing copays for specialty care and emergency department visits. The percentage of employers who require more than a $50 copay for an emergency department visit has reached 52% in 2006, a significant increase from 33% in 2005, while the percentage requiring only a $50 copay decreased to 32% in 2006, compared with 55% in 2005.
The Institute for Healthcare Improvement announced that U.S. hospitals have bested the goal of the 100,000 Lives Campaign by preventing an estimated 122,300 unnecessary deaths through better patient care. The 18-month effort involved more than 3,000 hospitals, representing 75% of U.S. hospital beds, which pledged to implement up to six evidence-based interventions. More than 20 facilities reported they have had no cases of ventilator-associated pneumonia in more than a year; hundreds of hospitals instituted rapid response teams; and participating hospitals showed great process in delivering evidence-based care for acute myocardial infarction, preventing adverse drug events, and preventing surgical site and central line infections. Hospitals that have demonstrated success with specific interventions are sharing their experience with other hospitals aiming to achieve excellence in those areas. Healthcare leaders applauded hospitals for voluntarily collaborating to rapidly make significant changes in patient care.
The American Medical Association voted at its annual meeting this week to require individuals making more than 500% of the federal poverty level ($49,000 for an individual and $100,000 for a family of four) to obtain a minimum of catastrophic and preventive healthcare coverage. That description fits 11% of the 46 million of uninsured Americans, or about 5 million people, reports the Chicago Sun-Times. The AMA recommends using the tax code to enforce mandatory health insurance for higher income earners by making those who refuse to get coverage pay higher taxes and giving tax credits to those who obtain coverage. "This policy is the newest addition to the AMA's plan to cover the uninsured," said AMA board member Ardis Hoven, MD. "The AMA plan now includes tax credits for the purchase of insurance; individually selected and owned health insurance; the expansion and formation of new insurance options; changes in health insurance market regulations; and individual responsibility." The AMA will advocate for federal legislation to implement its plan.
On Monday, New Jersey’s Atlantic Health System delivered 7,500 letters to the office of the state’s governor, Jon Corzine, protesting against a proposed monthly tax of $1,424 per hospital bed, which is intended to raise $430 million for the state’s coffers. With a vote on the governor’s proposed budget due by July 1, New Jersey hospitals are scrambling to add to the 30,000 messages of opposition the governor has already received. Half of the $430 million generated by the “sick tax” would be used to garner matching federal funds for the state’s Medicaid program, which would be redistributed to hospitals based on their Medicaid volume. But according to the New Jersey Hospital Association, only 25 hospitals would realize a net gain, while 49 hospitals would lose money on the tax, some as much as $6 million annually. Hospitals say they will have no choice but to shift costs to private insurers, forgo new medical technologies, eliminate services, and fire staff, reports the Philadelphia Business Journal. Virtua Health in Malton, N.J., for example, told the Journal that if the tax is approved, the health system would put on hold its plan to build a new hospital and several ambulatory care centers.
Corzine’s budget also would freeze charity-care subsidies at 2002 rates and eliminate $65 million in grants to hospitals to cover charity care. In an open letter to Corzine, Gary Carter, president and CEO of the New Jersey Hospital Association, warns that federal approval of the tax scheme to get additional matching funds may take months or years--if it is granted at all. “If your Administration banks on this $215 million--and then the banker says no--New Jersey hospitals will never again see the full amount they paid in,” writes Carter. A more prudent course to receive greater federal matching funds, he says, is to first peg the $55 million in state taxes hospitals already pay.
Although advocates of health savings accounts point to their rapid rise as an indication that Americans are embracing them (3.2 million people were enrolled in high-deductible plans as of January), surveys show that most HSAs are not funded, reports the San Francisco Business Times. A survey by Inside Consumer-Directed Care published by Atlantic Information Services found that only 26% of people with a high-deductible plan had opened and deposited money in an HSA. Many who chose a high-deductible plan for the low premiums say they cannot afford to put money away in an HSA, even though 57% say they have set money aside to pay for medical care. The problem, say experts, is that HSAs are confusing, people don’t trust them, or consumers don’t believe they will receive tax advantages from them. One provider of HSAs predicted it will take 5 to 10 years before HSAs are viewed with the same trust as 401(k)s and are used properly.
Medicare spends 11% more for beneficiaries in Medicare Advantage plans than for people in fee-for-service Medicare, according to new data released by the Medicare Payment Advisory Commission. In 2004, MedPAC data suggested that MA plans were paid 107% of the cost of care for Medicare fee-for-service. That same year, CMS announced that MA enrollees were healthier than traditional beneficiaries, and that their care cost on average 8% less. The total overpayment was calculated to be 115%. MedPAC, however, found that MA plans are now paid, on average, 111% of what it would cost to care for the same beneficiaries in fee-for-service Medicare. “It is past time for Congress to enact legislation eliminating government overpayments to HMOs,” said U.S. Rep. Pete Stark (D-CA), Ranking Democrat on the Ways and Means Subcommittee on Health, in response to the MedPAC data. “MA plans should be paid the same as traditional Medicare. Republicans in Congress wrote this payment policy for the insurance industry. It should therefore come as no surprise that insurers continue to make huge profits at taxpayers’ expense.”
With the number of obese Americans continuing to rise, to the point that one-third of the U.S. population is now considered obese, hospitals are investing in separate wings and floors for morbidly overweight patients, as well as beds and OR tables that can accommodate 1,000 pounds, ceiling lifts to transport patients to sturdy toilets, and wider doors, according to a Reuter’s story. Generously reimbursed bariatric surgeries have quadrupled in number since 2000, and the number of hospitals that offer obesity programs rose 45% from 2002 to 2004. Beth Israel Deaconess Medical Center in Boston, for example, built 30 new patient rooms for its new bariatric unit; the 425-bed Froedtert and Medical College of Wisconsin spent $3,200 extra per patient room to outfit 7% of new rooms for obese patients; and Laguna Honda Hospital in San Francisco put ceiling lifts in 24 new bariatric rooms. "We are planning for the future, for this burgeoning obesity epidemic nationally," Lawrence Funk, associate administrator at Laguna told Reuters. "We would be remiss if we did not." Hospitals that cater to obese patients also expect to treat them for the additional medical problems their obesity creates. "You are going to have the large population show up at your door if you do these surgeries," said Paulette Sams, director of general surgery for Tenet Healthcare Corp.
After holding out against managed care for eight years, Mayo Clinic in Scottsdale and Mayo Clinic Hospital in Phoenix have just inked a contract with Cigna HealthCare, reports the Business Journal of Phoenix. The profitable Arizona Mayo facilities--the hospital reported $21.9 million in net income in 2004--weren’t boycotting managing care. Rather, Mayo claims it didn’t like the erstwhile restrictions of managed care plans, Dr. Robert Gorman, medical director for contracting at Mayo, told the Journal. It’s a different story today, now that there are no referral requirements for two-thirds of Cigna’s members to receive specialty care. "As managed care has evolved, we have evolved in terms of understanding if we're going to be able to offer our services to a greater number of people and a more interesting mix of people, we need to be able to adapt as well," Gorman said.
For Cigna, the contract with Mayo will shore up its enrollment, which dropped when it lost its contract with the state of Arizona two years ago. Gorman adds that although he continues to talk to other insurers, he wants to proceed slowly and first determine how Cigna enrollees will affect capacity and demand at the Mayo facilities before signing other contracts.
Since the Deficit Reduction Act gave states more flexibility to revamp their Medicaid programs, several states have taken up the challenge to make Medicaid resemble private insurance rather than a welfare program, and the nation’s governors are watching closely, reports the Washington Post. In September, Florida will privatize Medicaid in Jacksonville and Broward County, paying only for the amount of care each beneficiary’s health warrants and requiring beneficiaries to choose from 19 plans, each with different benefits. Kentucky is assigning different benefits to Medicaid patients based on their age and health--an approach Oklahoma’s legislature just approved--and is requiring higher copays and prescription limits for adults. West Virginia is making some benefits dependent on a pledge beneficiaries sign to maintain their health, and Kentucky is rewarding patients who sign up for disease management programs with additional benefits. Containing costs is behind all of the changes, with states hoping that an emphasis on preventive care and larger copays will prompt beneficiaries to take care of their health and temper their use of medical services. "We are doing it for the right reasons," Alan Levine, secretary of Florida’s Agency for Health Care Administration, told the Post. "I just hope it works."
For the first time, Medicare has agreed to pay for a lifestyle intervention program for patients with coronary heart disease in recognition of the value of preventive measures, reports the Los Angeles Times. Medicare will reimburse for the cardiac wellness programs created by Dean Ornish, MD, and Herbert Benson, MD, which are already being offered in a handful of states. Although details of the coverage are still being negotiated, the Times article says that Medicare will pay for 36 sessions over 18 weeks with a possible extension to 72 sessions for 32 weeks. The programs emphasize exercise, stress management, nutrition, and support groups. "The programs of Dr. Ornish and Dr. Benson focus on a prevention model," a spokesperson for CMS told the Times. "Now we are going to take even individuals with mild cardiovascular disease and show them how to ameliorate it or reverse it to avoid more serious disease."
Effective July 1, people applying for Medicaid must document their citizenship with actual documentary evidence, rather than merely checking a box on a form, in compliance with requirements established by the Deficit Reduction Act of 2005. In many instances, a single document, such as a passport or certificate of naturalization or U.S. citizenship, will be enough to establish both citizenship and identity. Secondary documentation, such as a U.S. birth certificate, will establish proof of citizenship, but individuals will also need evidence of identity, such as a driver’s license. Additional types of documentation, such as school records, may be used for children. Current beneficiaries will not lose benefits while they are making a good-faith effort to provide documentation to the state. The new regulations have been criticized as being overly burdensome for poor people who may not have received birth certificates or for immigrants who cannot show legal residency papers. In California alone, about 650,000 people who are entitled to Medicaid benefits may not have the proper documentation to continue receiving benefits, according to a report by the California Budget Project cited by the San Francisco Chronicle.
Developers of walk-in retail clinics and the nurse practitioners who staff them say the clinics are a low-cost option for the uninsured to receive medical care and a way to keep people out of emergency departments, not a strategy for usurping traditional physician visits, reports the Chicago Tribune. Retail clinics are projected to grow in number to several hundred by the end of this year, compared with only a half dozen five years ago. In announcing the development of its first 20 clinics, Walgreens Company said it would charge $48 to $68 per visit, although those with health insurance will pay less. The American Medical Association says, however, it is concerned that in some states, physicians are not required to closely oversee nurse practitioners’ work, creating the potential for missed or late diagnoses. And some physicians feel threatened that the clinics may appeal to their suburban patients. "I don't think you will find any of these clinics in the inner city," one physician told the Tribune. At its House of Delegates meeting this week, the AMA is expected to develop recommendations that physicians be involved in creating protocols for the clinics and that nurse practitioners refer certain problems to physicians.
The Blue Cross and Blue Shield Association has launched a nationwide program called Blue Distinction that it says will create an “unprecedented level of healthcare transparency” for 94 million Americans. The program has three components: cost information that will allow consumers to compare average prices of procedures or episodes of care by hospitals and physicians, access to hospital quality data from CMS and the Agency for Healthcare Research and Quality, and identification of high-quality programs for bariatric surgery and cardiac care based on clinical data from hospital registries. Currently, 17 Blues plans are participating in demonstration projects to identify and test the most effective way to help consumers learn about the absolute and relative costs of physician and hospital services. Members in those markets will be able to view different sets of data, from cost ranges for a specific diagnosis or procedure to rankings by hospital and physician from least expensive to most expensive. On July 1, members can also access a national provider locator to find bariatric surgery and cardiac care centers that meet the Blues’ requirements for quality and outcomes. Click here for more information about Blue Distinction.
It’s just a matter of time before more specialists rely on outsourced assistance, predicts the Los Angeles Times, which examined the trend of radiologists working in Switzerland, England, France, Australia, and the Middle East making and confirming diagnoses for patients in the U.S. Hospitals are using the outsourcing to relieve stress and night hours for radiologists here; however, there is also the potential for cost savings. Although the contract radiologists abroad are American trained, board certified, and licensed from the state where the images are taken, critics of the outsourcing worry that the practice is damaging quality of care, that lines of accountability are unclear, and that hospitals will be held liable for malpractice committed abroad.
Restricting the number of hospitals participating in its inexpensive insurance plan is one option officials in Massachusetts will consider as they work out the details of healthcare reform that will grant near-universal health insurance to the state’s residents. During the first board meeting of the Commonwealth Health Insurance Connector Authority, a state Medicaid official quoted prices ranging between $1,800 and $5,300 charged to deliver an underweight infant, reports the Boston Globe. "Don't let anyone tell you there aren't huge savings in cost while maintaining quality," Brian Wheelan, assistant director of Medicaid, was quoted as saying, while urging the board members to limit the network to less expensive hospitals in order to achieve a premium of $300 per month. Board members expressed interest in cutting the number of hospitals rather than benefits. Other options the board is considering to keep prices low include charging larger premiums to smokers, using health savings accounts, and eliminating state mandates that require coverage for certain medical services.
CMS has extended the physician election period for the Medicare Part B Drug Competitive Acquisition Program to June 3 through June 30. Physicians whose completed elections forms are returned to the carrier within the new election period will begin participation in the CAP starting on August 1, while physicians whose election forms were received by the carrier by June 2 will begin participation in the CAP on July 1, 2006. The CAP implementation is scheduled for July 1, 2006. Also, to allow physicians and their staff to learn more about the CAP and the extended period, CMS and Noridian Administrative Services, the designated carrier for the CAP will host a second "Ask the Contractor" teleconference today, June 12, 2006, at 2:00–3:00 p.m. Eastern Time.
URAC, a nonprofit healthcare accrediting organization, has formed a Pharmacy Benefit Management Standards Committee to advise the organization on the creation of requirements for the first accreditation programs addressing pharmacy benefits management in the Medicare, commercial insurance, and health plan arenas. "One out of every five healthcare dollars is spent on prescription drugs, and there is presently no independent accreditation program ensuring quality in pharmacy benefits management," said Alan Spielman, URAC's president and CEO. "The potential to enhance patient safety, assure timely access to prescription medications and to improve medication therapy management in this area is enormous." (Click here to download the announcement.)
With the introduction of the Medicare Part D prescription drug benefit, the number of Americans enrolled in PBM programs is expected to grow dramatically, along with the need to establish quality standards that support informed consumer choice. The PBM accreditations will include standards relating to organizational integrity, clinical quality and benefits management programs, pharmacy network access, and consumer education and support. The committee will create standards for four related accreditation programs for health plans and PBMs providing services to both Medicare and commercially insured populations, and URAC will launch the accreditation programs in 2007.
Massachusetts has been ordered by the inspector general for HHS to repay $86.6 million in Medicaid overcharges for targeted case management for children referred to social services as a result of potential or actual neglect or abuse. The audit of the state’s Medicaid billings during 2002 and 2003 cites a 2001 CMS letter to state Medicaid directors that “specifies that allowable Medicaid case management services do not include direct medical, educational, or social services to which the Medicaid-eligible individual has been referred.” Contrary to that rule, Massachusetts charged Medicaid for “social workers’ salaries for providing direct social services, such as child protection and welfare services,” said the report. (Click here to download.)
The total unallowable Medicaid charges amounted to $171.1 million, with $86.6 million comprising the federal share. Still in doubt is whether an additional $26.5 million for care plans, referrals, and monitoring and follow-up are allowable charges to Medicaid or whether they were reimbursed under other federal programs. State Medicaid officials, however, said an agreement with HHS in 1994 permitted them to bill for the targeted case management services the audit claimed were unallowable, and they vowed to contest the findings, which they called “seriously flawed and erroneous,” according to the Boston Globe.
The U.S. Department of Labor has awarded a $202,000 grant to Maryland’s Department of Labor, Licensing and Regulation to conduct a study aimed at finding ways to retain older workers in healthcare careers. The one-year project will examine what incentives or conditions would persuade healthcare employees nearing retirement to continue in their jobs. Results from the study will be made available to others in the healthcare field. The DOL’s Employment and Training Administration will draw on the study’s results to help its work in leading a federal interagency task force on older workers. Partners in this project include Johns Hopkins Hospital, Cedars-Sinai Health System, and the Hospital Corporation of America. Read the announcement.
Physician access to practice-based clinical information technology has grown significantly, according to a national study released by the Center for Studying Health System Change. The study measured the proportion of physicians with access to IT between 2000-01 and 2004-05 and found that using IT to obtain treatment guidelines grew from 52.9% to 64.8%; exchanging clinical data with other physicians grew from 40.6% to 50.1%; accessing patient notes increased from 36.6% to 50.4%; generating reminders grew from 23.6% to 29.3%; and writing prescriptions increased 11.4% to 21.9%. Yet many physicians still don’t have access to practice-based clinical IT. “For example, nearly 80% of physicians surveyed couldn’t use IT to write prescriptions, and a third didn’t have IT for the easiest-to-implement activity--accessing guidelines and treatment alternatives,” said study author Marie Reed. The study also found that the proportion of physicians reporting their practice has IT access for four or all five of the clinical activities nearly doubled over the period, growing from 11.1% to 20.9%. And the percentage of physicians in practices with IT for no more than one clinical activity dropped from 50.6% to 37.0%.
Hospitals can eliminate 90% of hospital-acquired infections, thereby saving millions in healthcare costs, the chairman of medicine of Allegheny General Hospital in Pittsburgh told Senate Majority Leader Bill Frist, R-Tenn., and Sen. Rick Santorum, R-Pa., when they visited the hospital, according to the Pittsburgh Post-Gazette. Recognized by the Pittsburgh business community for his work in reducing infections in hospitalized patients, Richard Shannon, MD, told the senators that Allegheny’s infection prevention practices have saved 47 lives in the past three years, improved the ICU’s operating margin by $2.2 million, and netted the hospital another $2.1 million in pay-for-performance rewards for improving quality and safety, reports the Post-Gazette. Other Pittsburgh hospitals have also led in the state’s efforts to eliminate hospital infections.
Celebrity consumer activist Erin Brockovich has filed suit against seven California hospitals and nursing homes, alleging that Medicare is footing the bill for their errors and neglect and costing taxpayers millions, reports the Los Angeles Times. Brockovich’s attorneys have also filed similar lawsuits in New Jersey and Florida under different plaintiffs’ names. The suits do not detail specific incidents of hospitals abusing Medicare to cover up substandard medical care, but rather seek to find such examples. “These are the kinds of baseless lawsuits that contribute to the high cost of health care today,” David Langness, a spokesman for Tenet California, told the Times after Tenet Healthcare Corp. was named in the suit. Brockovich became a household name after a movie was made about the settlement she helped win against Pacific Gas & Electric Company for contaminating the groundwater in Hinckley, Calif.
The Citizens’ Health Care Working Group, authorized in the 2003 Medicare Modernization Act, announced the release of interim recommendations on how to make health care work for all Americans. They will be sent to the president for review after public comments have been received, and then will be sent to Congress for hearings.
Reflecting input from more than 10,000 citizens, the recommendations urge that all Americans have affordable healthcare coverage as a matter of public policy established in law by 2012; that all Americans have access to core health benefits recommended by a nonpartisan private-public group using a transparent and scientific process; that Americans be guaranteed financial protection against very high healthcare costs; that the federal government intensify efforts to improve quality of care and efficiency; that the government develop and expand integrated community health networks; and that palliative care, hospice, and end-of-life services be restructured and financed so that terminally ill people have access to them in the environment they choose. Read the recommendations.
West Virginia’s new Medicaid program, which requires beneficiaries to pledge that they will manage their health in order to get benefits, is likely illegal, according to an analysis by the Center on Budget and Policy Priorities. The Charleston Gazette quotes a senior fellow at the think tank who says that federal law requires children to get care through Medicaid regardless of their parents’ actions, and that she would not be surprised at litigation over the new Medicaid program. But West Virginia’s Department of Health and Human Resources maintains that parents are more apt to follow pediatricians’ instructions and be more responsible about their children’s health if they know they will lose benefits for not complying with the health promises they sign. The Bush administration approved West Virginia’s plan, which is scheduled to begin July 1 in select counties and will eventually cover 160,000 children and adults.
The largest Medicaid program in the country is doing a poor job uncovering fraud and punishing unscrupulous providers, said a Centers for Medicare and Medicaid Services report on New York’s antifraud efforts. Investigative reports on New York’s Medicaid program by The New York Times last year led to the federal audit, which found that the number of staff dedicated to detecting fraud has dropped 40% since 1998--from 950 employees to 584--and that more than a quarter are contract workers. CMS also faulted New York’s Department of Health for emphasizing education of providers rather than enforcement of antifraud rules, reports the Times. Recoveries have decreased, and the state excluded just 260 out of 140,000 providers from Medicaid in the past fiscal year. The health department has recently added 81 staff to fight Medicaid fraud, but CMS says the numbers are inadequate and that the state’s approach of preventing fraud rather than fighting it is unrealistic. It’s not clear whether the HHS Office of Inspector General will take any action against New York based on the CMS’s report.
A brief by the Agency for Healthcare Research and Quality examines the demographics of the 1.7 million uninsured inpatients who ran up a $29 million hospitalization bill in 2003. Only 4.5% of hospitalizations were uninsured in 2003, despite the fact that 16.6% of the U.S. population had no healthcare coverage. Half of all uninsured hospitalizations were for people between the ages of 18 and 44, compared with one-third of privately insured hospitalizations for this age group. Nearly 60% of inpatient stays for the uninsured began in the emergency department, which was double the rate for insured patients. Inpatient stays for the uninsured were nearly identical to those for patients with insurance--an average of 3.8 days--but much shorter than the average 4.6 days for Medicaid patients. Uninsured patients also left the hospital against medical advice at a rate seven times higher than for privately insured patients.
In a separate brief, AHRQ detailed the medical conditions that caused the uninsured to seek hospitalization. One out of five uninsured hospital stays were for pregnancy, childbirth, and treatment of newborns. Injuries accounted for 11.3% of uninsured hospitalizations (compared with 6.8% for privately insured patients), and 11% of the inpatient stays were for mental health and substance abuse, a rate nearly three times higher than for the insured population. Treatment for appendicitis and alcohol and substance abuse cost 10% to 30% more than treatment provided to privately insured patients.
Rather than point fingers at providers for the rising cost of health care, California legislators and officials are shifting the blame to insurers as their profits continue to grow, reports the Los Angeles Times. Net earnings of HMOs in California rose from $640 million in 1996 to $2.7 billion in 2005, prompting the California Department of Insurance commissioner John Garamendi to introduce a proposal last week to increase the portion of premiums allocated to covering medical costs from their current level of 50%. “Health insurance today is not about health care,” said Garamendi. “It is about quarterly earnings for Wall Street’s benefits.” The California Hospital Association also attributes low reimbursement from insurers to contributing to the problems that have left 56% of the state’s hospitals operating in the red.
One bill that passed in the California Senate would restrict administrative costs and profits to 15% of health insurance premiums. Another would cap consumers’ out-of-pocket medical expenses at $5,250 for individuals and $10,500 for families. However, according to the Times, insurers argue they are simply doing business in today’s environment and that they shouldn’t be blamed for the rise in healthcare costs.
Despite the 19,420 alleged HIPAA violations Americans have filed, the government has issued no civil fines and has prosecuted only two criminal cases, according to The Washington Post. The government has closed more than 73% of the complaints, claiming there was no violation or that the provider was notified and had promised to comply with HIPAA rules in the future. The rest are pending and 309 possible criminal cases have been sent to the Justice Department. The climate of voluntary compliance suits hospitals and physicians, who say they have needed time to get up to speed on HIPAA’s complicated rules. But others say the government has failed to protect medical information, a safeguard that will only grow in importance as the nation moves toward electronic health records. “I think we’re dangerously close to having a law that is essentially meaningless,” Janlori Goldman, healthcare privacy expert at Columbia University, told the Post. Winston Wilkinson, head of HHS’ Office of Civil Rights, admits he doesn’t have the staff to do more than respond to complaints. Still, he says, “We’ve been successful with voluntary compliance, so there has not been a need to go out and look.”
Experts who predicted that HMOs would create a doctor glut by restricting treatment couldn’t have been more incorrect, according to an analysis of a nationwide physician shortage by the Los Angeles Times. Twelve states, including California, Florida, and Texas, are already reporting doctor shortages, and demand for cardiologists, radiologists, and pediatric and surgical subspecialists is currently outstripping supply. Population is exploding in certain areas, and aging baby boomers will ratchet up demand for urologists, geriatricians, and cataract surgery--which may jump by as much as 47% in the next 15 years. Retiring doctors will also contribute to reduced access to physicians. Six years ago, 9,000 doctors retired, but 22,000 are expected to leave medicine in 2020. And younger doctors, who want more balance in their lives, are expected to be 10% less productive than older doctors.
The rise of PPOs over HMOs--and less restriction on care--and medical technology that allows doctors to treat older and sicker patients is fueling the need for more doctors. The Association of American Medical Colleges is expected to ask for a 30% increase in enrollment, but many experts fear that educating more doctors won’t solve shortages quickly enough.
South Dakota’s hospital pricing web site has posted its first full year of data, a state health official announced last Friday. The site posts median prices for each hospital’s 25 most commonly performed inpatient procedures. The listing is not uniform because the most common procedures vary between hospitals.
“This site gives consumers one more tool they can use as they make health care decisions for themselves and their families,” said Doneen Hollingsworth, Secretary of Health.
The law creating the web site went into effect July 1, 2005, and required that a full year of pricing data be posted for each of the state’s 62 hospitals. Hospitals voluntarily agreed to provide data back to Jan. 1, 2005, rather than start with the July 1 effective date.
Sen. Chuck Grassley, R-Iowa, chairman of the Senate Finance Committee, has asked the IRS chief counsel to monitor and update the IRS guidance to tax-exempt organizations--specifically tax-exempt hospitals--with particular attention to the definition of charity care, the requisite level of charity care, the definition and level of community benefit, the definition of joint ventures, joint ventures involving not-for-profit hospitals, the payment of excessive compensation, and the use of tax-exempt bond proceeds. Grassley asked to be apprised of the IRS Office of Exempt Organizations’ review of tax-exempt hospital practices and how the IRS will use the information. He also urged the head of the Tax-Exempt and Government Entities Division to issue guidance and to update regulations to curb abuses of tax-exempt status.
In his letter, Grassley voiced his concern to the IRS that “some individuals are exploiting vagueness or silence in or a lack of enforcement of the laws governing tax-exempt groups to enrich themselves rather than serve the public. It’s unseemly for tax-exempt groups to function this way.”
Citing escalating health insurance costs, 61% of senior executives of businesses in southeastern Michigan said they are contemplating reducing employee health benefits, and 27% claim they may completely drop health coverage, according to the third annual survey of 203 companies conducted by public relations firm John Bailey & Associates. Of the businesses surveyed, 77% had fewer than 100 employees, and 8% had more than 500 workers. Nearly all of the respondents--86%--said their employees will be expected to pay a higher share of their health insurance premiums in the future, although 48% of executives felt that, ideally, employers should pay nearly half of healthcare costs, while government should pick up 25% of the tab and employees should shoulder 27% of the cost. A sizeable majority felt that smokers should pay a higher premium, while employees who maintain their health should pay less.
The two factors that carried the most weight in patients’ decisions to recommend a hospital to others were staff’s response to their concerns/complaints during the hospital stay, and staff’s effort to include them in treatment decisions, according to the Press Ganey 2006 Health Care Satisfaction Report. Patients were most satisfied with hospitals’ obstetrics/gynecology, intensive care, and pediatric services and least happy with gastrointestinal and psychiatry services. Hospitals with 50 or fewer beds had a four-point satisfaction advantage over hospitals with 600-plus beds, reflecting patients’ need for their hospital stay to feel personal. The satisfaction survey also revealed that the highest priorities for patients in the emergency department are feeling cared about as individuals and being kept well-informed about delays.
Most important to employees in recommending their hospital to others was that senior leadership listened to them and that the organization had enough staff to provide high-quality care. Workers just starting their careers and those near retirement reported being the most satisfied, which indicates the high degree of burnout among mid-career staff. Hospital administrators had the highest level of job satisfaction, while those with the most patient exposure--RNs and technical workers--were the least happy in their jobs. Among physicians, radiation oncologists and hospitalists were the most satisfied, while cardiovascular surgeons were the least content.
The Centers for Medicare and Medicaid Services has published a notice reminding providers to apply for their national provider identifier well before the May 23, 2007, deadline. According to CMS, the identifier helps to ensure that medical claims are processed on time and payments are made correctly. Providers are required to share their NPI with any entity that needs to identify them in a standard transaction. The agency also advised health plans and healthcare clearinghouses to make every effort to ensure that the NPI is incorporated into their systems and processes so that they can be used successfully by the May 23, 2007, deadline.
In the first of a series of steps to make healthcare costs and quality more transparent, the Centers for Medicare and Medicaid Services yesterday began posting information on what Medicare pays for 30 common elective procedures and other hospital admissions around the country. “Medicare is the nation’s largest healthcare payer, and yet it has been the missing partner” in the effort toward transparency, said Department of Health and Human Services Secretary Mike Leavitt. “Once people gain better information, they become better consumers of health care--and that helps get healthcare costs down and quality of care up.”
The new information shows the range of payments for a variety of treatments provided to seniors and people with disabilities in FY05. The number of cases treated by each hospital, as well as the range of payments, are presented by state and by county. Procedures such as heart operations and implanting cardiac defibrillators, hip and knee replacements, and kidney and urinary tract operations are included, as well as 11 common nonsurgical admissions.
The information is “an important step in an ongoing and intensive process,” said CMS administrator Mark McClellan. “It is a step toward the broader goal of providing more useful and comprehensive information on cost and quality.” In addition to the information currently posted, CMS will post payment information for common elective procedures for ambulatory surgery centers later this summer, and common hospital outpatient and physician services this fall.
“The day when comprehensive decision making is possible is closer than ever,” said McClellan.
Read the CMS statement.
Capping prescription drug benefits for Medicare beneficiaries resulted in a 28% lower pharmacy cost, but the savings were offset by higher hospital and emergency department costs, according to a study published in The New England Journal of Medicine. Researchers compared clinical and economic outcomes for Medicare+Choice beneficiaries who had a $1,000 annual cap on prescription drugs in 2003 with Medicare beneficiaries who had employer-provided supplemental insurance with no limits on drug benefits. The study found that the seniors with a drug cap had worse clinical outcomes because they took fewer antihypertensives, lipid-lowering drugs, and antidiabetic drugs. Capping annual drug expenditures did lower drug costs by 28% and physician visit costs by 4%, but the Medicare+Choice seniors had hospital costs that were 13% higher and ED costs that were 9% higher than the comparison group. Consequently, total medical costs for the group of seniors with a drug cap was only 1% lower than for the other Medicare beneficiaries, and their health was poorer.
Employers in Washington state paid more than $1 billion in 2004 to cover shortfalls incurred by hospitals and physicians serving Medicare and Medicaid patients, according to an analysis conducted by Milliman Inc. for Premera Blue Cross, which operates in Washington and Alaska. In 2004, this hidden tax cost Washington employers an average of $902 per family health insurance contract--13% of all commercial hospital and physician costs. Washington hospitals shifted $738 million to private payers to compensate for underpayment by Medicare and Medicaid. Premera estimates that Medicare and Medicaid cost-shifting, not employees’ medical care, accounted for 29.9% of the increase in employee hospital costs paid by Washington employers in 2004.
“This growing trend has serious implications for the affordability of private insurance and employee wages,” said Steve Leahy, president of the Greater Seattle Chamber of Commerce, which represents 2,500 businesses in the Puget Sound area. “We simply cannot sustain this cost shift without serious long-term repercussions.”
Bill Thomas, chairman of the House Ways and Means Committee, on May 30 urged CMS to proceed with the Medicare changes proposed for FY07 that will more accurately reflect patient severity, costs, and payments across different types of cases. He asked that CMS adopt in FY07 a new method of calculating the weights of the diagnosis-related groups to remove systematic variation in hospital markups and make DRG changes that differentiate between patients with multiple comorbidities from other cases. Thomas also called on CMS to include in its final regulation on hospital pay-for-performance requirements mandated in the Deficit Reduction Act that hospitals report a range for all their payments and an average self-pay amount for selected services; that CMS work with the industry to develop the definitions for reporting cost data; and that the Office of Inspector General’s proposed rule on exclusion from the Medicare program for excessive charges to Medicare be finalized immediately. Thomas contends that this price reporting “can be implemented within the existing successful structure for hospital reporting to CMS.”
In one year--from January 2005 to January 2006--enrollment in consumer-directed health plans jumped from 3 million to upwards of 6 million, according to a Government Accountability Office report. Employers typically contributed $500 to $750 to health reimbursement arrangement plans for individuals and up to $2,000 for families, while two-thirds of employers contributed to health savings accounts. Yet many individuals with HSAs failed to make their own contributions to the savings accounts to ensure adequate resources to pay medical bills. The report said that future growth of consumer-directed health plans will depend on their ability to control costs. Although consumers need better cost and quality data to choose more cost-efficient care, HRAs and HSAs may demonstrate cost savings as healthy employees gravitate to the plans--causing premiums of traditional plans to rise as they insure more of the chronically ill. To encourage employees to choose HRAs or HSAs, employers will have to make their contributions generous and position the plans as a way of giving employees control over their health care, rather than as a means of curtailing healthcare costs, said the report.
Seventy percent of physicians surveyed said they were more concerned about the safety of the drugs they prescribe due to recent issues affecting several prescription drugs--recalls, black-box warnings, and FDA hearings--as were 55% of consumers and 62% of pharmacists, according to The Medco Monitor, a national survey on drug safety and costs conducted for prescription drug benefit company Medco Health Solutions. Sixty-eight percent of physicians said they would prefer prescribing a drug that has been on the market for 10 years or more, and 57% of consumers would prefer to take an older-generation drug.
The survey also found that physicians trail consumers and pharmacists regarding their knowledge of and confidence in the safety and effectiveness of generic drugs. One-quarter of the physicians surveyed stated that they do not believe generic medications to be chemically identical to their branded counterparts and 27% believe generic medications will cause more side effects than brands, despite FDA rules that require generic versions of the drug be bioequivalent to the brand medication. Doctors and pharmacists also believe that many of their patients regularly engage in questionable behaviors when it comes to using prescription drugs, such as stopping drug treatment early, refilling prescriptions late, and taking a higher dose than prescribed.
Colorado hospitals are trying some unconventional strategies to recruit nurses and reduce turnover, reports the Denver Business Journal. HealthONE’s seven hospitals, for example, offers nurses a concierge service to assist with errands so they can concentrate on their jobs. Exempla Healthcare, with three hospitals in Denver, retains nurses by providing extensive on-the-job training--three months for new nurses and nine months for specialized nurses. Denver Health has had success recruiting retired nurses and credits the expansion and remodeling of its facilities with reducing nurse turnover by half to an average of 15%. The Medical Center of Aurora offers signing bonuses up to $5,000, and Centura Health reinforces the “sacredness” of nurses’ work with spirituality ceremonies. Yet the hospitals profiled agree that such measures are temporary and that nurse recruitment will become even more challenging as many nurses retire over the next decade.
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