CMS has announced that Medicare payments to nursing homes will increase by approximately $560 million in 2007. The 3.1% increase will be reflected in Medicare payment rates to nursing facilities that furnish certain skilled nursing and rehabilitation care to Medicare beneficiaries. The SNF prospective payment system update notice also outlined several initiatives, including plans to develop an integrated system of post-acute care payment to make payments for similar services consistent regardless of where the service is delivered; encourage the increased use of health IT in the delivery of post-acute care; make information about healthcare pricing and quality accessible and understandable; and accelerate quality improvements for nursing home residents. Read the announcement.
The GAO has released its survey report on the executive compensation practices at 65 not-for-profit hospital systems, which was requested by William Thomas, chairman of the House Ways and Means Committee. The survey was intended to report on hospital compensation policies, not to draw conclusions about their adequacy or adherence to laws and regulations, said the GAO.
The GAO survey found that most of the 65 not-for-profits had executive compensation committees, had conflict-of-interest policies governing the compensation committees and consultants, hired outside compensation consultants, and relied on market data in determining compensation for executives. Much more varied, however, were practices concerning executive benefits and perquisites. Although 50 hospitals provided supplemental executive retirement plans, 34 hospitals provided 457(f) plans and 46 offered 403(b) plans to top executives. Paying for car expenses and memberships for social and recreational clubs was common, but only 25 reported paying for financial or tax planning for CEOs, seven provided attorney fees, and 13 paid for personal travel expenses for the spouse of the CEO. Less than half (28) paid for their CEOs to attend sporting events, and 17 paid for CEOs’ attendance at theater performances. Thirty-nine hospitals said they require an internal audit of CEO entertainment expenses, but only nine use an external audit.
HFMA recommended to the House Ways and Means Health Subcommittee that hospitals provide patients before-service estimates of their out-of-pocket expenses for specific medical procedures, taking into account their condition and insurance coverage. This type of pricing information is more meaningful to patients than a published list of average prices, said HFMA in submitting its comments for the record of the subcommittee’s July 18 hearing on price transparency in the healthcare sector. The letter from Richard Clarke, HFMA’s president and CEO, also described how HFMA’s PATIENT FRIENDLY BILLING® project is intended to assist hospitals in providing high-quality customer service standards in patient financial communications.
Clarke also outlined HFMA’s 11-step call to action to help providers embrace consumerism; the measures payers and employers must take to make price transparency effective; and recommendations to government to improve clinical quality, adequately fund care to end cost-shifting to other payers, and eliminate regulatory barriers to rational price strategies. Hospitals alone can’t solve the problem of accelerating healthcare costs, Clarke concluded. “Achieving meaningful price transparency is a vastly complex endeavor, requiring collaboration among government, providers, payers, employers, and the consumers themselves. It is up to stakeholders in the healthcare industry to work together and fulfill their mission of patient care.”
Being designated a critical access hospital may allow small rural community hospitals to achieve profitability and financial stability and enhances the ability of rural hospitals to receive investment grade ratings, according to a report by Fitch Ratings. In the past 7 years, one in five of the country’s hospitals has converted to CAH status. But although Fitch predicts that Medicare spending for the CAH program will grow, increased scrutiny of the program may cause some hospitals to lose the designation. And the designation alone does not necessarily result in an investment grade rating, because these hospitals remain inherently more vulnerable to industry pressures and adverse events.
Fitch counsels all CAH hospitals to focus on good management practices and cost controls. “Fitch expects investment grade CAHs to demonstrate a low-cost structure relative to their peers and a solid track record of operating profitability prior to and after receiving the designation,” the report says. “Solid liquidity is also important as it provides flexibility for a CAH to absorb adverse events and fluctuations in operating performance.” Fitch also advises CAHs to expand clinical programs and enhance physician coverage by partnering with their tertiary referral institutions; maintain low nurse turnover rates to avoid agency costs; tightly manage construction projects to avoid delays and excessive costs; and balance future capital spending without damaging financial flexibility. Read the report (requires registration).
To encourage people to make better plans for their future long-term care needs and to protect the stability of the Medicaid program, CMS has announced a set of steps to keep coverage secure and improve care for people with Medicare and Medicaid. These policies include new incentives for people to buy private long-term care insurance, improved rules governing the transfer of assets to prevent inappropriate use of taxpayer-funded programs, and improved coordination of care for dual-eligibles who are in managed care plans.
Medicaid rules normally require applicants to have spent their assets before they qualify for Medicaid and its long-term care benefit. State Medicaid programs may disregard assets that match, dollar for dollar, the amount paid to an applicant by a private long-term care insurance policy when determining if the applicant meets the asset limits for Medicaid eligibility. Changes made by the Deficit Reduction Act will allow those same assets to later be deducted from the amount the state must recover from the beneficiary’s estate.
Under the new program, only individuals who purchase long-term care insurance policies that meet certain requirements will be eligible to protect assets from estate recovery. The DRA also provides protections to individuals who otherwise would be subject to periods of ineligibility, by strengthening the hardship waiver process.
CMS also announced steps to improve access to coverage in special needs plans that serve dual-eligible Medicare beneficiaries. Three guides provide clarification of Medicare and Medicaid rules that have created administrative difficulties for special needs plans and confusion for beneficiaries. CMS said it will soon issue a new policy that will allow plans to serve certain segments of the dual-eligibles, such as only the disabled or only the elderly.
Parkland Memorial Hospital in Dallas, along with the district attorney’s office, is investigating 142 patients alleged to have lied about where they live and how much they earn in order to receive free medical care at the public hospital. Some of the patients reside outside Dallas County, making them ineligible for charity care from Parkland, while others live in the county but claimed to have a lower income than they actually did, reports The Dallas Morning News. One patient, for example, owns a large home in Collin County and a business in Arkansas, but received breast cancer treatment at Parkland at a cost of $100,000. The cumulative cost of the care that was fraudulently received since last September amounts to $4 million. The individuals may be criminally charged with theft by deception, and Parkland may also file civil charges against them to recover the cost of their medical care. At least two patients who provided false information have agreed to pay their medical bills. “This has been going on for far too long with no consequences,” Commissioner Kenneth Mayfield told the Morning News. “They think Parkland is free. We want to get that out of people’s minds.” Parkland has since installed an automated system to verify patients’ residency and income.
U.S. Rep. Pete Stark, D-Calif., announced on Tuesday a bill to provide universal medical insurance for all U.S. residents beginning in 2010. Under the AmeriCare Health Care Act, individuals would receive coverage through either their employer or a program modeled on Medicare. Employers that do not offer health insurance for workers would be required to contribute 80% of the premium for AmeriCare coverage for full-time employees and a prorated portion for part-time workers. Premiums would be kept affordable, according to Stark, by using Medicare’s administrative infrastructure and by large-volume discounts. AmeriCare would also require the secretary of the Department of Health and Human Services to negotiate with the pharmaceutical industry for affordable prescription drug prices and expand the use of health IT. Cost-sharing would be subsidized for those who earn between 200% and 300% of the federal poverty level, and others would pay a $350 deductible for individuals and $500 for a family plus a 20% copay up to a maximum of $2,500 per individual and $4,000 per family.
AmeriCare would initially cost $50 billion to $60 billion annually, but Stark maintains that cost savings would soon emerge as currently uninsured individuals begin to seek early medical treatment instead of waiting until they have intractable problems, reports the San Francisco Chronicle. Stark’s bill is endorsed by the AFL-CIO, Consumers Union, and the American Pediatrics Association. “Everyone should benefit from this bill, with the exception of the bankruptcy bar and collection agencies,” said Stark.
States will receive $150 million over 2007 and 2008 to fund research and to transform their Medicaid systems to increase quality and efficiency of care, CMS has announced. Funds for the Medicaid grants were authorized by the Deficit Reduction Act of 2005 and are aimed at helping states develop innovative programs to streamline and modernize Medicaid to get more value out of the money they spend.
CMS is encouraging states to look at particular areas of program operations for improved efficiency, including methods for reducing patient error rates through electronic health records and e-prescribing; improving rates of collection from estates that owe money to Medicaid; increasing the use of generic drugs; developing care management programs to prevent complications and duplicative services; using performance-based payment programs to reward high-quality care; emphasizing prevention; and implementing medication risk management programs.
Unite Here, a large labor union, has been ordered to pay nearly $17.3 million in damages for defaming Sutter Health and its affiliated hospitals. A jury in Placer County, Calif., found Unite Here acted with “fraud, malice, or oppression” when it mass-mailed postcards to women of childbearing age in northern California, suggesting that Sutter used linens that were inadequately cleaned by an outside commercial laundry service used by scores of northern California hospitals. The alarmist postcard incited phone calls to Sutter Health hospitals from anxious patients. At the time the postcard was mailed, Unite Here, which represents hospitality and laundry workers, was in a labor dispute with the laundry service.
“We are pleased that leaders of Unite Here have been held legally accountable for recklessly frightening patients and the public through outrageous and false allegations,” Michael Roosevelt, chair of the Sutter Health board of directors, said in a statement. “We truly hope this decision encourages labor unions like Unite Here to think twice before using shameful scare tactics that ultimately hurt patients in an attempt to advance a political agenda.” A spokesperson for Unite Here told the San Francisco Business Times that the union intends to appeal the decision. “We see this as an attack on labor unions and our ability to protect workers,” said the spokesperson. “We are very confident that we will prevail on appeal.”
The proliferation of heart institutes, cancer centers, orthopedic hospitals, and other niche specialty centers has resulted in a new medical arms race between hospitals and physicians as they compete for patients, according to an article by the Center for Studying Health System Change published in the journal Health Affairs. Although public policy attention has focused on physician-owned specialty hospitals, rapid proliferation of specialty services across settings is a “more pervasive development,” the authors state, and is raising threats to hospitals’ financial health and sparking additional concerns about increasing healthcare costs. And although both hospitals and physicians are claiming that their own service lines are “centers of excellence,” there are scant data that allow consumers to substantiate those claims.
In the 12 nationally representative markets the article examined, hospitals and physicians were developing single-specialty service lines, with the most common focusing on heart (33), cancer (24), and orthopedic care (18). Health plans and purchasers in the 12 communities “believe that modest reductions in prices as a result of increased competition over particular service lines are offset by increased volume of those services as a result of (1) aggressive marketing by providers directly to consumers and (2) specialist physicians’ ability to induce demand for services,” the article states. One way to moderate the competition for patients is for Medicare and private insurers to “narrow the payment gap” between lucrative and less profitable services, the authors write. Read the article.
New Mexico Gov. Bill Richardson has announced a proposal to provide health insurance to 59,000 residents while state officials evaluate the feasibility of adopting a universal coverage program similar to the one legislated in Massachusetts. The proposal will expand Medicaid coverage for low-income adults, require companies that do business with the state to offer health insurance, do outreach to state employees who turn down health insurance, and expand the State Coverage Insurance program to give small businesses affordable insurance options. Richardson, who may be considering a presidential bid in 2008, said his proposal will cost $77 million per year and will ultimately cover 70% of the state’s low-income uninsured adult residents, according to The New Mexican.
A new GAO report recommends that the Department of Homeland Security “clearly delineate” how the federal government will provide assistance to state and local governments during the evacuation of patients from hospitals and nursing homes and how it will address the needs of patients during evacuations, including making relocation arrangements. The difficulties faced by hospital and nursing home administrators in transporting patients during Hurricane Katrina has called into question the role of the federal government in lending evacuation assistance. Currently, the National Disaster Medical System steps in only when patients have already been moved to a mobilization center, such as an airport, and, therefore, does not help with removing patients from facilities. The NDMS also is limited to evacuating patients requiring hospitalization and doesn’t include nursing home residents. Although state and local governments bear the primary responsibility for evacuating patients, the federal government should become involved when capabilities are overwhelmed, DHS confirmed. All of the NDMS federal partners--DHS, the Department of Defense, HHS, and Veterans Affairs--are currently reviewing the NDMS to clarify its roles and responsibilities, the GAO report states.
In a paid supplement to the American Journal of Cardiology, 27 physicians published a guideline that men age 45 to 75 and women age 55 to 75 receive routine screening for heart disease using CT scans and ultrasound at a total cost of $250 to $750 per patient. The authors paid to get their article published, with financial help from Pfizer, maker of the cholesterol-lowering drug Lipitor, which meant that it was not peer-reviewed, reports The Boston Globe. Although the authors claim that routine screening to identify calcium deposits in blood vessels of the heart and to monitor the thickness of carotid arteries will uncover early heart disease, they also acknowledge that they were hoping their article would spur enough interest to generate funding for a study to determine whether the screening would be effective. Critics of the guidelines, however, argue that routine screening will not prevent heart attacks and that such tests expose people to radiation. Insurers say they will not pay for routine cardiac screening, according to the Globe, and the National Heart, Lung, and Blood Institute expressed no interest in funding a study. The journal article also stirred debate over whether medical publications should accept contributions in special supplements that are underwritten by companies or physicians who have financial interests in the content.
The AQA alliance and the Hospital Quality Alliance have formed a new national Quality Alliance Steering Committee to give consumers helpful healthcare information through the Internet and expand the scope, speed, and adoption of the work of AQA and HQA. The AQA is an alliance of physician organizations, consumers, employers, and health plan representatives that makes available quality information about physician care; the HQA is a coalition of hospitals, nurses, physician organizations, accrediting agencies, government, consumers, and businesses that shares quality information about key aspects of hospital care.
The steering committee, which will work closely with the Centers for Medicare and Medicaid Services and the Agency for Healthcare Research and Quality, will coordinate and expand several ongoing pilot projects designed to combine public and private information to measure and report on performance, such as AQA’s project compiling data on the quality of physician performance across care settings. The committee will also assist the two organizations in developing a more uniform approach to measuring and reporting hospital and physician performance. Read the press release.
CMS has announced a new project to test the feasibility of integrating Medicare claims history information with other Internet-based tools to allow Medicare beneficiaries to track their medical services and monitor their health care, which is expected to lead to improved quality and more efficient care.
CMS recently awarded two six-month contracts to test the transfer of Medicare claims data into personal health records to ViPS and Capstone Government Solutions. The $500,000 project will also assess how to best communicate data from existing CMS systems to personal health record tools; evaluate the information included in existing personal health records and assess how they would best help Medicare beneficiaries’ care; and evaluate how existing personal health records address security and privacy issues.
Hackensack University Medical Center and Horizon Blue Cross Blue Shield of New Jersey are participating in a two-year pilot program to implant a VeriChip radio frequency identification microchip in the arms of patients with chronic diseases. The chip is intended to provide emergency department staff easy access to those patients’ medical information, as well as to help avoid medical errors. Horizon, which is paying to implant the RFID chips, hopes to recruit 300 patients for the program and will analyze whether the chips save healthcare costs by reducing the numbers of duplicate lab tests, drug interactions, and misdiagnoses, reports eWeek.com.
Each patient’s unique 16-digit identifier found within the microchip will tie into his or her individual electronic health record stored by the VeriMed Patient Registry and will be accessible by physicians. Each record will contain information related to the patient’s condition, family contacts, lab test data, and pharmacy records. Read the press release.
Although nearly 24% of office-based physicians report using an electronic medical report--a 32% increase from 2001--only one in 10 physicians is using a full electronic health record, characterized by computerized orders for prescriptions and tests and the reporting of tests results and physician notes. The National Ambulatory Medical Care Survey, conducted by the Centers for Disease Control and Prevention, found that physicians in the Midwest (26.9%) and West (33.4%) had a higher EHR adoption rate than physicians in the Northeast (14.4%). “Although these estimates show that progress has been made toward the goal of universal electronic health records, there is still a long way to go,” according to the survey report. Solo practitioners--one-third of all physicians--lag in EHR use, for example, and the EHR features of public health reporting and clinical reminders are not yet widely used.
HCA Inc., the nation’s largest hospital chain, has announced the execution of a definitive merger agreement with Bain Capital, Kohlberg Kravis Roberts & Co., and Merrill Lynch Global Private Equity, under which affiliates of the private equity sponsors and HCA founder Thomas F. Frist, Jr., MD, will acquire HCA. The transaction, valued at approximately $33 billion, includes the assumption or repayment of approximately $11.7 billion of debt. Under the terms of the agreement, HCA stockholders will receive $51 in cash for each share of HCA common stock they hold, representing a premium of approximately 18% to HCA’s closing share price on July 18, the last trading day prior to press reports of rumors regarding a potential acquisition of HCA.
The board of directors of HCA has approved the merger agreement and has resolved to recommend that HCA’s stockholders adopt the agreement. Pending the receipt of stockholder approval, as well as satisfaction of other closing conditions, the transaction is expected to be completed in the fourth quarter of 2006.
“It makes sense for a company like HCA to operate in private,” Sheryl Skolnick, an analyst with CRT Capital Group LLC in Stamford, Conn., said in a July 20 Bloomberg interview. “They don’t use their equity for acquisitions or compensation. They are more likely to need to shed assets.”
Frist, who founded the company along with his father, physician Thomas Frist, Sr., owns 16.9 million shares, or 4.4 percent, according to data compiled by Bloomberg. His brother, Bill Frist, R-Tenn., Senate majority leader, said in January that he sold his HCA shares in 2005.
Read the HCA press release.
In response to a letter by Sen. Rick Santorum (R-Pa.) asking for a delay in the implementation of the Medicare hospital inpatient prospective payment system proposed rule for FY07, CMS Administrator Mark McClellan implied that the final rule may reflect changes in the transition period. McClellan wrote that the public comment period for the proposed rule generated many “constructive comments,” including “what transition steps are needed to avoid any disruptions from sudden changes in the payment system, and what steps can be taken to limit any short-term impact of the proposal.” The final rule that will be issued on Aug. 1 will “reflect modifications” to “achieve the goal of smooth and effective implementation,” wrote McClellan. “Clearly, any changes to make hospital payments more accurate should be implemented in a way that causes the least disruption to the healthcare system.”
Despite concerns that Medicare’s efforts to control spending on physician services will curtail beneficiaries’ access to physicians, a new GAO report found that more Medicare beneficiaries are receiving physician services--44.8% of Medicare beneficiaries received physician services in 2005 compared with 41.3% in 2000. Also, the volume of physician or provider services has increased by 14% in the past five years, from 3,433 services per 1,000 beneficiaries in 2000 to 3,925 in 2005. During this time period, the number of physicians accepting Medicare patients did not decline, and only 7% of patients nationwide reported having major difficulties finding a physician or scheduling appointments. Those who had the most problems obtaining care from providers were in poor health, under 65 and disabled, not white, and had no supplemental health insurance.
There is at least one medication error per hospital patient per day on average, according to a new report from the Institute of Medicine of the National Academies. Medication errors harm at least 1.5 million people every year--400,000 of those drug-related injuries occur in hospitals--and inpatient drug errors alone cost an extra $3.5 billion per year to treat. Medication errors for Medicare patients alone added $887 million in extra medical costs.
The committee recommended steps to increase communication and improve interactions between healthcare professionals and patients, as well as steps patients should take to protect themselves. The report also recommends that healthcare organizations make it a standard procedure to inform patients about clinically significant medication errors made in their care, whether the mistakes lead to harm or not; that the FDA work toward standardizing the text and design of medication leaflets to ensure that they are comprehensible to all consumers; and that the National Library of Medicine create a web site to serve as a centralized source of comprehensive, objective, and easy-to-understand information about drugs for consumers. The report advises all providers to use e-prescribing systems and all pharmacies receive prescriptions electronically by 2010. It also suggests ways to improve the naming, labeling, and packaging of drugs to reduce confusion and prevent errors, and urges the funding of a national network of telephone help lines to assist people who may not be able to access or understand printed medication information and to report medication-related mistakes or problems.
Affordable health insurance is available in 76% of the country’s 100 most populous cities, with premiums at less than $100 per person per month for a family policy with a $2,000 deductible and 20% co-insurance, according to a new e-HealthInsurance survey. Texas, which has the largest number of uninsured children in the country--20%, or 1.3 million children--offered policies with affordable premiums for children, and Arizona, with 17% of its population uninsured, also had inexpensive insurance options for families. Premiums to insure a family of four ranged from $159.06 per month in Grand Rapids, Mich., to $962.00 per month in Spokane, Wash., with states that had community rating and guaranteed issue laws ranking among the most expensive. One purpose of the survey was to demonstrate that parents can purchase inexpensive insurance for their children even if they cannot afford a family policy.
A federal court has invalidated Maryland’s mandated health benefits law, which required nongovernmental for-profit employers with 10,000 or more employees to spend a minimum of 8% of payroll on healthcare insurance for workers or contribute to a state Medicaid fund. A lawsuit brought by the Retail Industry Leaders Association alleged that Maryland’s Fair Share Health Care Fund Act violated the federal Employment Retirement Income Security Act, which establishes a national standard of employers’ benefit plans. “My finding that the act is preempted is in accordance with long established Supreme Court law that state laws which impose employer health or welfare mandates on employers are invalid under ERISA,” ruled Judge J. Frederick Motz. The only employer affected by Maryland’s law is Wal-Mart, which, as a multistate employer, has the right under ERISA to “maintain nationwide health and welfare plans, providing uniform nationwide benefits and permitting uniform national administration,” wrote Motz.
RILA issued a statement that Motz’s decision “sends a clear signal that employer health plans are governed by federal law, not a patchwork of state and local laws. It also is a clear message that similar bills under consideration in other states and municipalities violate federal law as well.”
Maryland’s state attorney general will likely appeal the decision, and state legislators said they would write a new bill if the appeal does not succeed, according to The New York Times. “To continue to allow this huge corporation to take profits out of the state without providing adequate healthcare coverage would be wrong,” said the Democratic president of the Maryland Senate, Thomas V. Mike Miller Jr.
Read the judge's ruling. Read the New York Times article. Read the RILA statement.
Twenty-eight states are initiating or are in the process of developing plans for health IT adoption and health information exchange, and an additional seven states have their plans completed, with implementation under way, according to new survey findings from the eHealth Initiative Foundation. About half of the states have an executive order or a legislative mandate in place to stimulate the use of health IT. The most common provisions of legislation establish a task force to study the impact of health IT, or authorize a committee to create a strategy for the development, implementation, and adoption of electronic health records and/or a health information infrastructure. Most executive orders authorize a planning committee to develop a health IT strategy or policy. The survey also found that states vary in their level of involvement, with 38 states participating in a statewide or local dialogue related to health IT and health information exchange, while 21 states are actually convening stakeholders for planning, communication, and coordination; and 17 states are providing funds to support regional and local efforts.
“We are seeing a trend in smaller states with no regional activity, to plan for a statewide exchange initiative,” said Janet Marchibroda, eHI’s CEO. “In larger, more highly populated states that already have regional or community activities in place, the state tends to serve as a coordinating body to drive consensus on standards and policies that promote higher-quality health care through HIT adoption by removing barriers and acting as a central resource for information and education.” The full survey report will be released in September.
The House Ways and Means Subcommittee on Health heard testimony on July 18 on the importance of increasing price transparency in health care, its impact on slowing spending growth, and current efforts to provide the true cost of medical services.
Ha T. Tu, senior researcher at the Center for Studying Health System Change, offered several lessons on price sensitivity learned from studying consumers who pay out of pocket for LASIK surgery, in vitro fertilization, and cosmetic rhinoplasty. Few of these consumers price shop for these procedures, preferring to rely on other patients’ recommendations or referrals from their physicians as a proxy for quality. And although Tu emphasized the importance of price and quality transparency for medical procedures, he added, “We need to be realistic about the magnitude of the potential for improvement if consumers become more effective shoppers for health care.”
Hospitals are doing their part to make prices available to consumers, testified Stephen Brenton, president of the Wisconsin Hospital Association. The WHA has “the most comprehensive private-sector price transparency initiative in the nation,” said Brenton, and it is working with seven other states to develop similar programs. The PricePoint web site contains hospital-specific information on inpatient prices for all DRGs, aggregate reduced prices taken by public and private payers, totals of charity and uncompensated care, and a link to quality and patient safety information. But the burden of price transparency should not fall on hospitals alone. “We believe that health plans currently involved in marketing HSAs and high-deductible products must offer up information to their consumers as an essential, value-added service,” said Brenton. “Similarly, a focus totally on hospitals fails to generate necessary information from physician offices, freestanding diagnostic centers, and pharmacies.”
The committee also heard from Robin Downey, product development head for Aetna, who said that up to 1,000 consumers each month in one pilot-test city have logged on to Aetna’s web site to get information on actual discounted rates for physician visits, diagnostic tests, and minor procedures. This August, Aetna will provide price and quality data for nearly 15,000 specialists and pricing for up to 30 procedures for each of 70,000 physicians. In the future, Aetna says it will add pricing information for hospitals and ancillary providers. Read the testimony.
As part of the AMA’s “National House Call” campaign to stop Medicare cuts, the AMA visited Florida with a warning that the state stands to lose $295 million next year and nearly $19 billion over the next nine years in federal healthcare dollars, more than any other state. As a result, Medicare beneficiaries and military families covered by TRICARE, which ties its rates to Medicare, will face great difficulty finding physicians to care for them. “Medicare payments will be cut 37% over the next nine years, while at the same time the cost of caring for patients will rise 22%,” said AMA board member Jeremy A. Lazarus, MD. “Nearly half (45%) of the physicians surveyed by the AMA say that next year’s Medicare cut will force them to either decrease or stop seeing new Medicare patients.” Consequently, Florida’s 2.9 million Medicare patients and 685,000 military families are in jeopardy of not receiving adequate care, said Lazarus. The AMA urged Florida residents to contact members of Congress to block the impending Medicare payment cuts.
The Joint Commission on Accreditation of Healthcare Organizations has announced the approval of an infection control standard that requires accredited organizations to offer influenza vaccinations to staff, which includes volunteers and licensed independent practitioners with close patient contact. The standard will become an accreditation requirement beginning Jan. 1, 2007, for the hospital, critical access hospital, and long-term care accreditation programs.
The Joint Commission developed the standard in response to recommendations by the Centers for Disease Control and Prevention. Although the CDC has urged annual influenza vaccination for healthcare workers since 1981, fewer than 40% of healthcare workers are immunized each year. The new standard requires organizations to: establish an annual influenza vaccination program that includes at least staff and licensed independent practitioners; provide influenza vaccinations on-site; educate staff and licensed independent practitioners about flu vaccination, non-vaccine control measures (such as the use of appropriate precautions), and diagnosis, transmission, and potential impact of influenza; annually evaluate vaccination rates and reasons for nonparticipation in the organization’s immunization program; and take measures to increase participation.
The updated Guidelines for Design and Construction of Health Care Facilities calls for single-patient rooms in medical/surgical and postpartum units to become standard for all newly constructed hospitals, the American Institute of Architects has announced. This is the first such recommendation since the guidelines were originally published by the federal government in 1947. Updated every four years by the Facility Guidelines Institute and published by the , the guidelines are currently used by 42 state governments to regulate hospital licensing and construction.
The recommendations were unanimously approved by a committee of physicians, hospital administrators, infection control experts, engineers, and architects, according to an AP story. Private rooms are more conducive to patient healing and recovery, said the committee, and they prevent disease transmission, reduce medical errors, and protect patients’ privacy. “Initial costs for all private rooms in hospitals will pay for themselves very quickly, and nursing units with private rooms are far less costly to operate,” said Scot Latimer, president of the AIA Academy of Architecture for Health. “Hospitals will actually be able to run at a higher occupancy rate, as well as reduce the costs and safety risks that are associated with patient transfers.”
The first ambulatory electronic health record products have been certified by the Certification Commission for Healthcare Information Technology, HHS Secretary Mike Leavitt announced on Tuesday. Twenty EHR products achieved CCHIT certification after undergoing inspections that demonstrated 100% compliance with CCHIT’s published criteria, which ensure that products provide a broad foundation of functionality, will evolve to be interoperable with other systems, and include security features that protect the privacy of personal health information. Inspections are continuing, with additional results to be announced at the end of July and quarterly thereafter.
“This seal of certification removes a significant barrier to widespread adoption of electronic health records,” said Leavitt. “It gives healthcare providers peace of mind to know they are purchasing a product that is functional, interoperable, and will bring higher-quality, safer care to patients.” HHS awarded CCHIT, a private-sector voluntary certification body, a three-year contract in September 2005 to develop and evaluate criteria and an inspection process leading to certification of the first ambulatory (office- and clinic-based) EHRs, followed by inpatient EHRs and their networks.
View a list of the certified products.
CMS has announced a “comprehensive and systematic approach” to combating Medicaid fraud with funds that will increase from $5 million in 2007 to $75 million by FY09 and each year thereafter. The new Medicaid Integrity Program was created by the Deficit Reduction Act of 2005 and specifically requires the use of contractors to review the actions of those seeking payment from Medicaid, conduct audits, identify overpayments, and educate providers and others on program integrity and quality of care. Congress also mandated that the agency devote at least 100 full-time staff to the project.
The MIP will employ several major strategies, including targeting vulnerabilities in the Medicaid program; providing training and technical assistance to states while also conducting oversight of their activities; supporting criminal investigations of suspect providers while concurrently seeking administrative sanctions; employing lessons learned in developing guidance and directives aimed at fraud prevention; and developing effective ROI strategies. “Together with our state partners, we are implementing unprecedented steps to assure that Medicaid funds do not support criminal activities within the system,” said CMS Administrator Mark McClellan.
Communities with high levels of uninsured, Hispanic, or immigrant residents generally have lower rates of per-person hospital emergency department use than other communities, according to a study by the Center for Studying Health System Change published in Health Affairs. The study found that ED use in 12 nationally representative communities varied considerably from the national average of 32 ED visits per 100 persons in 2003, ranging from a high of about 40 ED visits per 100 people in Cleveland to a low of 21 ED visits per 100 people in Orange County, Calif. But Cleveland, which has low rates of uninsured (7.9%) and noncitizen residents (2.6%), has high ED use, while Orange County, which has a large population of uninsured (18.2%) and immigrant residents (15.6%), has low ED use.
Although a rapid influx of immigrants may contribute to ED crowding in some individual hospitals, immigration is not a major contributing factor to ED crowding nationally, even in many communities that have a large population of Hispanic immigrants. Noncitizens in 2003 on average had about 17 fewer ED visits per 100 people than citizens, while uninsured people had 16 fewer visits on average than Medicaid patients, about 20 fewer visits than Medicare beneficiaries, and roughly the same rates as privately insured people. Variation in ED use across communities is not explained by differences in population and health system characteristics, and “reducing emergency department use defies simple solutions such as expanding insurance coverage or restricting access for undocumented immigrants,” said study author and senior HSC fellow Peter J. Cunningham. Rather, high ED use in part reflects patient preference for using EDs, regardless of income and insurance status, as well as practice patterns among physicians and other providers that favor greater use of EDs.
The Department of Justice announced a consent decree under the Americans with Disabilities Act with a community hospital that it hopes will serve as a model to other hospitals in providing medical care to deaf or hard-of-hearing patients. The consent decree resolves allegations that the hospital did not appropriately respond to requests to provide qualified sign language interpreters or other auxiliary aids for patients or companions.
Under the decree, the hospital will assess the communication needs of individuals with speech or hearing impairments upon their arrival or at the time an appointment is scheduled; provide qualified interpreters (on-site or video interpreting) within specified time limits, especially in circumstances involving lengthy or complex interactions such as admissions and detailed discussions of symptoms, diagnosis, and treatment; provide auxiliary aids to companions as well as to patients; and meet certain standards for video interpreting services, including high-quality, delay-free, full-motion video and audio over a dedicated high-speed Internet connection. This is the Department’s first agreement that includes criteria for video interpreting services, and the Department cautions that these services must be carefully monitored in hospital settings where patients may not be able to use their arms or be positioned appropriately to view the screen or to perform sign language.
In a July 13 memo to state survey agency directors, the Centers for Medicare and Medicaid Services addressed the issue of hospitals preventing emergency medical service staff from transferring patients from their ambulance stretchers to a hospital bed or gurney. According to the memo, many of the hospital staff engaged in this practice believe that unless the hospital “takes responsibility” for the patient, it is not obligated to provide care or accommodate the patient.
The CMS memo reiterates that this practice may result in violations of the Emergency Medical Treatment and Labor Act as well as the Conditions of Participation for Hospitals for Emergency Services, which require hospitals to meet the emergency needs of patients in accordance with acceptable standards of practice.
While recognizing “the enormous strain and crowding many hospital emergency departments face every day,” says the memo, “this practice is not a solution. ‘Parking’ patients in hospitals impacts the ability of the emergency medical service personnel to provide emergency services to the rest of the community.”
When Medicare starts paying hospitals based on costs adjusted for patient severity rather than on charges, hospitals may see payments for complex treatments and new technologies cut by 20% to 30%, according to The New York Times. Payments for hip and knee replacements may be cut by 10%, reimbursement for implanting a defibrillator could drop by 23%, and payment for a procedure to open clogged arteries may decrease 33%. Basing Medicare payments on cost rather than charges will start this October, and severity-adjusted payments will begin in October 2007.
Several patient advocacy groups have written to the government, complaining that the new payment system will hurt seriously ill patients, and 200 members of Congress have petitioned for a one-year delay in the use of the payment methodology. Although the new payment system is intended to prevent specialty hospitals from profiting from lucrative procedures, many not-for-profit hospitals will be affected as well. The president of the North Dakota Healthcare Association told the Times that the new payments will cause “random and inequitable” reimbursement among the state’s 52 hospitals. Other critics say payments will not reflect the true cost of care because the government did not factor in new technology in its formulas. The article also discusses concerns that the developer of the new payment system, 3M Health Information Systems, is now advising hospitals to buy its software so that they can easily transition to the new Medicare system.
A U.S. District Court judge has approved the agreement between Ford Motor Co. and the United Auto Workers to require hourly retirees to begin paying for their healthcare coverage, most likely starting Aug. 1, according to The Detroit News. Out-of-pocket expenses are capped at $370 per year for individuals and $752 for families, and annual increases to that cap cannot exceed 3%. Ford also limited next year’s contributions for healthcare coverage to salaried retirees to 2006 levels. The cost-cutting measure is expected to result in an annual pretax savings of $650 million and an annual cash savings of $200 million for Ford.
In the first of possibly multiple lawsuits, Duke University Health System has been sued by a patient who alleges he suffers disabilities after developing a severe infection as a result of having back surgery with surgical instruments washed with used elevator hydraulic fluid. The error may have exposed 3,800 patients to tainted surgical instruments in November and December 2004 after an elevator repair company put the hydraulic fluid in empty detergent barrels and a supply company distributed the barrels as a cleaning solution. The lawsuit says Duke was negligent in accepting the unsealed barrels as detergent and in not investigating quickly when employees complained of greasy instruments, according to The News & Observer of Raleigh. According to the article, other patients are also preparing lawsuits against Duke.
DUHS has issued a statement that it “stands by the results of independent studies and our own analyses. These confirmed that the surgical instruments were fully sterile; in addition, the independent scientists at RTI found only a minuscule residual on the instruments.”
The U.S. House of Representatives has passed a bill that is intended to generate more competition in the credit rating industry and improve the quality of ratings, reports CFO.com. If the Credit Rating Agency Duopoly Relief Act of 2006 passes the Senate, the Securities and Exchange Commission will no longer be able to designate credit rating companies as “nationally recognized rating agencies.” Rather, the companies with at least three years’ experience would be allowed to register with the SEC as a “statistical ratings organization.” The bill also gives the SEC expanded authority to inspect credit rating companies. Currently, Moody’s and Standard & Poor’s have 80% of the credit rating market. “The lack of competition in the credit rating industry has lowered the quality of ratings, inflated prices, stifled innovation, and allowed abusive industry practices and conflicts of interest to go unchecked,” said the bill’s sponsor, Rep. Michael Fitzpatrick, R-Pa. The bill (H.R. 2990) has the support of the Association for Financial Professionals.
S&P, in testimony before Congress, said the bill “is not constitutionally viable. Publishers are free, by long-standing case law, to freely disseminate their opinions. And rating agencies are members of the financial press, the financial press being equally protected by case law.” Read the article at CFO.com.
The Congressional Budget Office projects that current federal spending for Medicaid will almost double by 2015, rising to $363 billion, or 2% of gross domestic product, according to testimony by acting director Donald B. Marron before the U.S. Senate Special Committee on Aging. The largest growth in Medicaid enrollment will be among the elderly and disabled, who currently account for 70% of Medicaid spending. Medicaid’s payments to hospitals and physicians are estimated to grow by 6.5% per year, while payments for prescription drugs and noninstitutional long-term care will rise 11.2% annually.
While acknowledging that the federal government has options for controlling Medicaid spending, Marron said that “all of them involve difficult trade-offs.” If the feds reduce contributions to Medicaid by making block grants to states or cap federal funds when allotments are spent, states would have incentives to limit spending and Medicaid spending would be more predictable, said Marron. But states might also trim needy beneficiaries from Medicaid rolls or reduce crucial health benefits. Some individuals might purchase private insurance as a result, but many others would become uninsured. The same outcome might occur if the feds reduced mandatory benefits or restricted criteria for Medicaid eligibility. Medicaid spending for long-term care, however, might be tempered if the government required individuals to use more home equity, assets, and gross income for care before they become eligible for Medicaid, said Marron. Another cost-cutting strategy with potential is to require Medicaid enrollees to share more of the costs of care or pay premiums, which would reduce spending even more if enrollees were more judicious about using services. Medicaid program directors could also limit services that are not cost-effective and encourage beneficiaries to use services that have higher value, such as community-based alternatives to nursing home care, Marron said.
Hospital outpatient bills in Maryland have risen nearly twice as fast as those on the inpatient side--14.15% in the year ending April 30 compared with an 8.43% increase for inpatient charges--prompting the state’s Health Services Cost Review Commission to reconsider how it controls outpatient costs. Currently the commission limits what hospitals can charge for a particular outpatient service, but it is now developing the measures to control outpatient costs on a per-case basis similar to the controls it imposes on inpatient costs, reports The Baltimore Sun. And although Maryland’s rate of increase in outpatient spending has averaged 2.1% less than the national average for the past six years, the state says the costs are still too high.
To refine its measurement methodology, the commission has started releasing data on ambulatory surgery costs, which showed that one hospital’s costs were 29.5% below the state average while another’s were 78.7% above the average. The preliminary comparative data underestimate costs of training physicians and don’t accurately adjust for case complexity, complain some hospitals. The commission, which acknowledges that its measurements are a work in progress, also wants to tackle emergency department costs.
WellPoint, Inc., has announced that it is teaming up with the Society of Thoracic Surgeons in a pay-for-performance initiative that will reward hospitals for superior outcomes on cardiac surgical procedures, including open-heart surgery. The project marks the first time the society will provide a health plan with performance information about hospitals and surgery groups, based on outcomes measures from its National Adult Cardiac Surgery Database, which includes outcomes information from more than 700 participants on more than 3 million cardiac procedures.
The society will provide WellPoint with a series of reports on the performance of hospitals and medical groups--but not on individual doctors--on 15 measures, which includes use of beta-blockers before and after surgery, as well as infection and mortality rates. Initially, it will supply reports for WellPoint plans in Indiana, Kentucky, and Ohio, and talks are under way with Virginia hospitals to share data with WellPoint. Hospitals that demonstrate that they’ve improved quality of care for cardiac patients may be able to receive a 2% to 4% increase in reimbursement for cardiac procedures, WellPoint’s executive vice president and chief medical officer, Sam Nussbaum, MD, told The Indianapolis Star.
In testimony before the U.S. Senate Special Committee on Aging, G. Richard Wagoner, Jr., chairman and CEO of General Motors Corp., recommended ways that Congress and private and public stakeholders can make health care “more affordable, accessible, and accountable” based on GM’s experience as the largest private purchaser of health care in the country. As a company that has seen a 335% increase in prescription drug costs over the past 12 years, Wagoner emphasized the need for a “vigorous and robust competitive prescription drug market” for more affordable pharmaceuticals, and information that allows consumers and physicians to choose the most effective drugs and treatments. Wagoner also called for the Health Care Wired Act to be enacted into law this year and for the government to disclose all Medicare data on provider cost and quality. To create a more competitive healthcare market, finding more efficient treatment for high-cost illnesses is crucial, he said.
Wagoner also highlighted several initiatives GM has undertaken to improve health care for its employees and retirees. One project in Flint, Mich., that aims to get physicians to follow guidelines for evaluation and management of chronic heart-failure patients has resulted in a 22% decline in the 30-day readmission rate and a drop of 27% in the 30-day mortality rate. A project launched this summer will pay hospitals a financial incentive if they strictly follow selected clinical guidelines, and consumers will be informed on how well hospitals are performing. GM has also worked with more than 400 hospitals and healthcare organizations to teach them how to be more efficient and eliminate waste from their processes. Average results: “a 60% productivity increase, a 46% inventory reduction, and a 51% lead line reduction,” said Wagoner. An e-prescribing initiative has eliminated thousands of potential drug errors, and helping insurers better negotiate with hospitals “that are restricting competition in the marketplace” has resulted in savings of $90 million in one year in Dayton, Ohio. Read the written testimony.
A UnitedHealth Group three-year study has found that costs for individuals in consumer-driven health plans decreased 3% to 5% as a result of fewer hospital admissions and emergency department visits while they increased 8% to 10% among PPO participants. The CDHP study compares cost and utilization trends among approximately 40,000 participants in high-deductible plans connected to health reimbursement accounts with data from roughly 15,000 individuals enrolled in PPOs. Among the findings: 5% more of the CDHP members sought preventive care services than did PPO enrollees; individuals enrolled in a CDHP had 22% fewer hospital admissions and 14% fewer ED visits without adverse health effects or outcomes compared with an increase in those services for those in a PPO; and CDHP enrollees with a chronic illness had 8% fewer hospital admissions and 12% fewer ED visits but continued to visit their primary care physician at the same rate as chronically ill members enrolled in traditional plans.
“These are interesting numbers,” Steve Parente, an assistant professor at the University of Minnesota’s Carlson School of Management who studies consumer-driven health plans, told the Minneapolis Star Tribune. “The results say these plans are working. But at the same time, the results might be preliminary.”
U.S. not-for-profit hospitals and healthcare systems exceeded expectations and showed significant improvement in profitability in 2005, according to Fitch Ratings’ 2006 Median Ratios for Nonprofit Hospitals and Health Care Systems. Profitability ratios, which are at their highest levels since 1998, improved largely due to increasing revenues and improved operating controls.
Operating margins improved to 2.8% in 2005 from 2.1% in 2004, and excess margins sharply increased for the third consecutive year to 4.8% from 3.7% in 2004. This strong operating performance also contributed to a growth in liquidity as the 2005 median for days cash on hand improved to 163.9 days, up from 157.8 days in 2004. The 2005 median for earnings before interest, taxes, depreciation, and amortization debt service coverage also improved, to 3.5 times from 3.3 times in 2004.
The report will be released during the week of Aug. 7. For more information, call (212) 908-0508.
Higher Medicare Part B expenditures will result in an estimated 11.2% increase in seniors’ premiums next year, to $98.40/month. According to a CMS fact sheet, Part B expenditures through 2010 will be $30 billion higher than estimated in the president’s budget as a result of significant increases in the volume and intensity of physician and hospital outpatient services, such as imaging, minor procedures, physical therapy, lab tests, and evaluation and management services. “Use of many of these services varies substantially across practices and geographic areas, with no clear impacts on patient health,” necessitating the need for reforms, says CMS. “Medicare needs to do more to move away from a system that pays simply for more services, regardless of their quality or impact on beneficiary health.”
Medicare Part A expenditures are also expected to be $17 billion higher than estimated over the next five years. “While growth in long-term care hospitals and inpatient rehabilitation facilities has moderated as a result of recent payment reforms, the substantial growth in Part A expenditures highlights the need for appropriate incremental reforms now” to ensure “effective, well-coordinated care in a broad range of settings that are contributing to rapid growth in Part A costs,” says CMS. Medicare Part D expenditures, however, are expected to be $34 billion lower through 2011 as a result of aggressive drug price negotiation and inexpensive coverage for generic drugs.
Although Florida’s population grew 25% between 1994 and 2004, emergency department volume increased even more--by 40%--promoting many hospitals to expand their EDs and take measures to accommodate greater numbers of uninsured patients and those frustrated at having limited access to primary care physicians. The Miami Herald reports on several hospitals in South Florida, such as Broward General, that reduced wait times from an average of 4 hours to 3 hours by doubling their ED’s capacity. Others are speeding up visits by putting labs, pharmacies, and radiology directly in the ED, using pneumatic tubes to transport lab samples, and computerizing lab results. Jackson Memorial Hospital hopes to reduce ED visits by 10,000 this year by giving patients without medical emergencies same-day appointments with primary care physicians. But expanded EDs soon will be filled to capacity again, complain ED directors. “We need more beds, but more beds seem to beget more patients,” Richard Dellerson, MD, director of emergency services at Miami Children’s Hospital, told the Herald. “Where’s the end of it?”
Blue Care Network of Michigan may be the first insurer in the country to offer a health plan that financially rewards employers and workers for healthy lifestyles. Starting Oct. 1, employers can save an average of 10% in premiums if they enforce a smoke-free workplace, provide healthy foods in cafeterias, and promote physical activity. To take advantage of lower copays and deductibles, enrollees must complete a health risk appraisal during the first 90 days of coverage and meet with their primary care physicians to develop an individualized care plan, as necessary, that may include Blue Care Network’s free smoking cessation and weight loss programs. If they do not follow their physicians’ recommendations, they will lose the discounts, which will vary by employer. Also, employers will not know which of their employees are receiving discounted benefits. Blue Care Network plans to enroll 5,000 to 10,000 members the first year. Read the release.
In a letter to CMS Administrator Mark McClellan, Sens. Chuck Grassley, R-Iowa, and Max Baucus, D-Mont., chairman and ranking member of the Senate Committee on Finance, respectively, asked CMS to implement the cost-based weights and the consolidated severity DRG changes in the inpatient prospective payment system in FY08. They want stakeholders to have the opportunity to analyze the recommendations made last year by MedPAC and to make sure there is enough time for hospitals to adjust to a new system. The senators state that they have a concern that “CMS’ proposed method of basing the DRGs on costs has the potential to pay inaccurately for certain procedures.” They encourage CMS to give people the information and tools to be able to fully review the proposed changes and to make the new proprietary DRG system available for a nominal charge. Grassley and Baucus also urge CMS to implement the consolidated severity DRGs with the cost-based weights “to avoid the ‘whipsaw’ effects of wide swings in hospital payments that each of these proposed changes is expected to cause.” Read the letter.
CMS has announced it will provide Medicare beneficiaries with consumer-directed health plans in the Medicare Advantage programs in 2007. In addition to new medical savings account coverage, beneficiaries will have the option of getting coverage through health saving account-type plans through a demonstration program that permits Medicare Advantage organizations to offer more flexible accounts.
While Medicare’s total payment to the plans will be the same as under current rules for Medicare Advantage MSA plans, improvements and alternative benefit designs may make these plans more attractive to Medicare beneficiaries. The more flexible features include a minimum deductible and a separate limit on an enrollee’s out-of-pocket expenditures (with cost sharing permitted); coverage of services after the deductible is met, prior to reaching the out-of-pocket expenditure cap (with cost sharing permitted); reduced cost sharing permitted for in-network services; and coverage for preventive services. Although CMS does not have the authority to allow plans to offer a Medicare Advantage prescription drug product as part of the demonstration product, plans may offer a stand-alone product. Plans will also be required to provide their enrollees with cost and quality information on healthcare services so beneficiaries can make decisions about their health care.
“We also expect increasing participation from Medicare beneficiaries as time goes on, as more beneficiaries who already have an HSA enroll in Medicare and want to keep it, and as Medicare beneficiaries become familiar with the coverage,” said CMS Administrator Mark McClellan.
Some registered nurses are worried that they may lose their collective bargaining if the National Labor Relations Board rules that charge nurses are supervisors and, therefore, exempt from union membership. If the NLRB expands the definition of a supervisor, unions, which represent 12.5% of U.S. workers, will see a further reduction in their members, reports The Boston Globe. Unions plan to picket this week to voice their opposition to the pending ruling, which would affect RNs, factory foremen, retail managers, and others. “We have had collective bargaining for 30 years, and we don’t want to lose it now,” Beth Piknick, president of the 20,000-member Massachusetts Nurses Association, told the Globe. “That would be a terrible backwards step if the most effective advocates for patients were stripped of protections,” added Mike Fadel, executive vice president of the Service Employees International Union Local 1199. Employers, however, maintain that supervisors who report to management have conflicted loyalties if they remain union members. The NLRB is expected to make a decision within the next two months.
New York City has developed an emergency plan to cope with an outbreak of avian flu that could infect as many as 2.5 million New Yorkers and result in 56,000 deaths. In announcing the plan, New York Mayor Michael Bloomberg said it was imperative that city officials make preparations for a potential medical disaster instead of waiting for help from Washington, reports The New York Times. Lines of communication between physicians and city officials have been bolstered to relay immediate reports of a flu outbreak. Also, the Department of Health and Mental Hygiene says it can now track 60,000 pieces of information each day, including emergency department visits and pharmacy sales, and laboratory capacity to accommodate large numbers of tests for flu virus has been expanded. The plan also makes provisions for how hospitals will treat flu patients while continuing to provide other medical services.
“The fact that New York is a major gateway to the nation and one of the world’s most densely populated cities means the possibility of pandemic flu, however remote, is one that we must take extremely seriously,” Bloomberg said.
Oregon’s U.S. senators will introduce a bill in Congress this week that merges the Democrat’s goal of universal healthcare coverage with the Republican’s private-market approach to providing low-cost insurance. Republican Gordon Smith and Democrat Ron Wyden are co-sponsors of the Catastrophic Health Coverage Promotion Act, which establishes four to six pilot programs that states can offer residents to protect them from high out-of-pocket medical costs, according to The Register-Guard. One project would assist states in offering health plans with a primary care benefit and high-deductible coverage for catastrophic medical expenses with federal subsidies for those with low income. Another project would assist those who have out-of-pocket expenses of $10,500 or more per year through high-risk pools, supplemental catastrophic policies for small businesses, and other private-public arrangements. Both senators sit on the Senate Finance Committee, which they say they intend to leverage to gain support for their bill. The pilot projects are estimated to cost $50 million to $100 million and would initially be tried in four states, according to The Register-Guard.
Suburban hospitals in Pennsylvania have greatly increased their volume of angioplasty and open-heart surgeries, siphoning patients from well-known academic heart centers such as Temple University Hospital and Hahnemann University Hospital, reports The Philadelphia Inquirer. New technologies such as stents containing anti-clotting drugs are reducing the need for surgeries, and hospitals such as 327-bed St. Mary Medical Center in Lower Bucks County are eager to offer the cardiac procedures. Although 10 years ago St. Mary did not perform angioplasties or open-heart surgery, in 2004 it did 1,272 angioplasties and had the fifth largest open-heart surgery program in southeastern Pennsylvania, from which the hospital made $18.2 million on $226 million in revenue. But Hahnemann’s open-heart surgeries fell by 76%, from 1,463 in 1997 to 357 in 2004.
Some patients, however, do need bypass surgery, and experts warn that some suburban hospitals may not offer the best options. “There is concern that as total volume dwindles, very small programs might be at risk for poor outcomes,” David B. Nash, chairman of Thomas Jefferson University’s department of health policy, told the Inquirer. “Cardiac surgeons must be on guard to maintain high standards in order to avoid legislation as in New Jersey, where they set a minimum number of operations.” New Jersey requires hospitals to perform 350 open-heart surgeries each year or meet other quality requirements.
CMS won’t be releasing the names of physicians and hospitals that performed heart-defibrillator implants on 45,000 patients when it posts complication rate data on its web site, reports The New York Times. CMS Administrator Mark McClellan told the Times that names of providers will be given to researchers who agree to keep them confidential, but that publicly posting them would violate patient confidentiality. The Times says CMS’s decision may spur more debate on consumers’ right to have provider-specific performance data in order to make better decisions about their medical care. An analysis of the implant data by the Times found that 4% of the patients had complications and that 131 patients died, a 0.3% death rate.
Many not-for-profit healthcare organizations plan to voluntarily implement provisions of Section 404 of the Sarbanes-Oxley Act of 2002 within the next two to four years, according to the Ernst & Young report The Internal Controls Journey: Sarbanes-Oxley Section 404 for Not-for-Profit Health Care. Not-for-profit healthcare organizations are evaluating their financial reporting internal controls in response to greater public and government scrutiny of their tax-exempt status and in anticipation of future mandates that will require not-for-profits to demonstrate greater quality and consistency in financial reporting. In analyzing public companies’ adoption of Section 404 and efforts by not-for-profits to improve internal controls, Ernst & Young has developed a list of seven best practices for not-for-profits that are creating sound internal controls infrastructure, such as the need to get the support of the CEO and a critical sponsor to keep the initiative on track; taking a top-down approach to understand the risk of financial misstatements; involving external auditors; and reviewing core processes.
Not-for-profit healthcare organizations “should set the bar higher and start discovering aspects of their organization’s processes and practices they did not know or completely understand, with a focus on strengthening internal controls and the integrity of their financial statements, while assuring employees and the community that they are ‘doing the right thing,’” says the report. The result will lead to better businesses processes and stronger enterprises.
The National Uniform Claim Committee has announced the approval of the revised version of the 1500 Health Insurance Claim Form (version 08/05) that accommodates the reporting of the National Provider Identifier. The Office of Management and Budget has approved the 1500 claim form under OMB No. 0938-0999 with an initial expiration date of June 30, 2007. CMS will begin the renewal process for the form in January 2007.
Health plans, clearinghouses, and other information support vendors should be ready to accept the revised 1500 claim form by Oct. 1, 2006. Providers can use either the current or revised versions from Oct. 1, 2006, to Feb. 1, 2007, after which the current version will be discontinued. For Medicare, the new Form CMS-1500 will be effective for optional use starting Jan. 2, 2007, through March 30, 2007, but will be required starting April 2, 2007. Read the announcement.
The Congressional Budget Office did a cost analysis of the Better Health Information System Act of 2006--H.R. 4157--and estimates the bill will cost $4 million in 2007 and $38 million over 2007 through 2011 to implement. The bill would promote the development and adoption of health IT through $40 million in grants, develop procedures for adopting standards for the electronic exchange of health data, and create “safe harbors” that would allow hospitals and group practices, among other groups, to donate health IT to physicians without incurring sanctions or penalties. The bill will require health plans, providers, and clearinghouses to adopt updated standards to transact claims by April 1, 2009.
The CBO report predicts that H.R. 4157 “will not significantly affect either the rate at which the use of health technology will grow or how well that technology will be designed and implemented.” Any cost savings that result from health IT will not alter spending for federal programs under current law, according to the CBO.
Seniors and people with a disability who receive Medicare or Supplemental Security Income are exempt from the regulation that people applying for Medicaid must document their citizenship since they’ve already met documentation requirements, CMS announced in its interim final regulation. CMS’s new rule will save more than 8 million people from having to document their citizenship to get Medicaid benefits, according to The Washington Post. As of July 1, individuals must show documentary evidence of their citizenship before Medicaid eligibility will be granted or renewed. CMS also announced that in addition to the types of acceptable citizenship documents outlined in the regulation, states can also document citizenship and identity through data matches with government agencies, such as records for drivers’ licenses or food stamps. This change is also expected to spare millions from having to demonstrate citizenship.
Through the six months ended June 30, 2006, Fitch’s U.S. Health Care Group assigned ratings to 34 new issues, affirmed 63 ratings, upgraded 14, downgraded nine, and placed nine on Rating Watch. Of the nine downgrades, eight were in acute care and one was in long-term care. The eight downgrades and 12 upgrades that occurred in the acute care sector resulted in a downgrade-to-upgrade ratio of 0.67: 1:0, a continued improvement from 2003 through 2005, when downgrades exceeded upgrades.
Fitch also continues to see stability in the continuing care retirement community sector in 2006, supported by strong demand, high occupancy rates, and sound management practices. But downgrades may outpace upgrades in 2006 due to additional debt issuance to fund large expansion projects.
Healthcare bond issuance during the first half totaled approximately $18.4 billion, which was a slight decrease from the $18.6 billion for the same period in 2005, while the number of issues decreased 9.1% to 321 from 353.
Access the report, Health Care Rating Actions for the Six Months Ended June 30, 2006 (requires registration).
The total cost to deliver health care to a family of four in 2006 through an employer’s PPO plan is $13,382, an increase of 9.6% from 2005, according to Milliman’s second annual medical index. Nearly half--46%--of the total medical costs were for inpatient and outpatient hospital services, which rose 9.3% and 12.6%, respectively, from 2005. Physician services accounted for 36% of the total; prescription drugs accounted for 14%.
This year, a family will pay $2,210 of the total medical cost through cost sharing. The largest portion of out-of-pocket expenses is paid for physician services, followed by inpatient hospital cost sharing, pharmacy, and, finally, outpatient hospital services. As a percentage of the cost for medical services, consumers are paying 24% of pharmacy costs compared with an overall average cost sharing of 17%. Although families are paying more out of pocket for cost sharing over the past few years, their share of the total cost of medical care has risen more slowly than the increase in medical costs. Consumers will pay another $2,810 in payroll deductions, bringing employee contributions to 38% of the total cost, says the report.
Hospitals’ performance on CMS and JCAHO process measures on acute myocardial infarction is not a good predictor of 30-day mortality rates, according to a new study reported in JAMA. Although the process measures are intended to be an indicator of the quality of AMI care, hospital performance explained only 6% of the variation in short-term AMI mortality rates. The study’s authors cite several reasons for the low correlation between performance on process measures and short-term outcomes: The CMS/JCAHO measures are designed more toward improving long-term outcomes; hospitals performed similarly on the AMI measures; and other factors besides performance on process measures influence hospital mortality rates. Better performance measures are needed that will “demonstrate a strong link to outcomes, provide actionable information, target populations at high risk for poor-quality care, allow for patient exceptions that do not reflect differences in quality, include adequate risk adjustment, and be feasible to implement,” write the authors. Read the abstract.
CMS has announced that Medicare will make no payment for any claim during the last nine days of the federal fiscal year, Sept. 22-30, 2006. All claims held during this time will be paid on Oct. 2. No interest or late penalty will be paid for payment delays during the hold period. This policy does not apply to periodic interim payments, home health requests for anticipated payments, cost reports settlements, and nonclaim payment.
Ohio’s Attorney General Jim Petro is proposing new state rules to make Ohio charitable organizations, including most hospitals, more open and accountable to their donors and the public. The rules are aimed at reducing the potential for problems, such as excessive executive compensation and expense reimbursements by charities and hospitals. The proposal is also intended to foster best practices in billing, collection, and charity care, and to set standard guidelines in Ohio for reporting how charitable organizations benefit the community so the public can make meaningful comparisons of their charitable activities.
Petro’s proposal would require larger charitable organizations to either adopt a set of policies prescribed in the rules or publicly disclose their board-approved conflicts of interest, all payments to board members by the charity, insider loans, whether they have allowed insiders to approve their own compensation, and the like. Under the proposal, most hospitals, a few nursing homes, and several charities affiliated with a religious organization would be required to register as a charitable organization and file an annual report with the Attorney General. “We believe this approach will strengthen charitable organizations and hospitals in Ohio without being harsh and burdensome,” Petro said. “More transparency will improve public confidence in these organizations, which will make them more effective.” Read the proposal.
The National Association of Insurance Commissioners has launched a web site explaining the different types of health insurance and giving advice to consumers on the types of insurance they are likely to need in different stages of their lives. Recent research conducted by the NAIC indicates that confusion about health insurance is widespread, even for those with access to health insurance through their employers or through Medicare. Only 36% of young singles, for example, said they knew the difference between an HMO and a PPO, and 18% said they had declined health insurance offered by their employers as a way to save money. More than half of families did not understand that they would have to pay the full cost of their premiums under COBRA or that their coverage would end. And only 12% of older Americans thought they would be very likely to need long-term care. The web site offers tips on how consumers can control the costs of health insurance, information on the options they have for coverage, and warnings on unscrupulous companies selling discount health cards or bogus health insurance. Read the press release.
For common illnesses such as pneumonia and chronic obstructive pulmonary disease, patients likely will get equal or better care at community hospitals than they do at academic medical centers, but patients should be more careful choosing a hospital for cancer and heart surgery, reports The New York Times. The article cites one study that found that patients with pneumonia had a 72% chance of getting antibiotics within four hours at a community hospital versus a 56% chance at a medical center, presumably because smaller hospitals’ emergency departments have fewer distractions and can devote more resources to common illnesses. For heart surgery, however, patients have better outcomes with high-volume experienced surgeons regardless of the type of hospital. But for cancer treatment, patients will have the best outcomes from hospitals that treat a high volume of cancer patients, because tumor boards that review many cancer cases have expertise in matching patients with effective treatments. Survival rates doubled when patients with esophageal cancer sought treatment at a hospital that treated large numbers of patients with that type of cancer, for example. Yet the study showed that one-third of cancer patients went to hospitals that did four or fewer cancer surgeries each year.
The Massachusetts Senate has asked the inspector general to investigate magnetic resonance imaging centers to determine whether physicians have a conflict of interest in referring patients to centers in which they have a financial stake, reports The Boston Globe. Hospitals have complained that the dozen physician-owned MRI units in the state lead to higher healthcare costs as physician-owners too readily refer patients. The physicians, however, say their centers reduce wait times for MRIs and make the machines accessible to more patients rather than stealing business from hospitals. Physicians have been able to circumvent the prohibition on self-referrals by leasing MRI equipment to an imaging center, which then does the billing. Some Massachusetts physicians have also opened up centers in neighboring states where regulations are less strict. And others have bought “exemption letters” the state issued in the early 1990s for $300,000 to $500,000.
Probing why hospitals in Milwaukee have inpatient payment rates as much as 40% more than seven other Midwestern cities, a study by Milliman found that Milwaukee’s relative cost position was the result of the interaction and balance of five factors that resulted in stronger upward price pressure from hospitals and less downward price pressure from health plans and other commercial purchasers. Compared with St. Louis, Cincinnati, and Detroit, Milwaukee’s payers had smaller market shares; Milwaukee hospitals were more likely to shift risk for certain types of operating costs increases to payers; per unit hospital operating costs were 14% to 26% higher; provider systems were more geographically concentrated; and Milwaukee’s largest health systems had a greater burden for government payment shortfalls.
To reduce Milwaukee hospitals’ costs, the Greater Milwaukee Business Foundation on Health, which commissioned the study, recommended that employers, payers, and government increase their aggregate purchasing powers; that hospitals accept fixed price contracts that place them at risk for increases in operating costs; that hospitals reduce operating costs; that there be increased competition for nontertiary health services; and that the financial burden of caring for the uninsured and indigent be more equally distributed. “The impact of continued high healthcare costs could have a devastating effect on future economic development in southeastern Wisconsin,” said GMBFH’s executive director. Read the press release.
In following a new national accounting rule that requires cities and states to report the total cost of workers’ compensation including future benefits, Massachusetts has revealed that it has pledged to spend $13.3 billion on future retirement benefits for state workers. And that sum may put healthcare benefits in jeopardy, reports The Boston Globe. Massachusetts joins a handful of states that have reported their unfunded retirement benefit liabilities 18 months before the disclosure deadline. Cities and states that do not come up with solutions to fund promised retirement benefits may be downgraded by credit ratings agencies. A public policy research group has advised Massachusetts officials to consider requiring employees to contribute more toward future healthcare benefits and to maker fewer employees eligible for benefits. States will also be evaluating whether they should eliminate employees’ healthcare benefits in retirement, according to the Globe.
Another lawsuit was filed last week, challenging as unconstitutional the Medicaid rule that went into effect on July 1 that requires 50 million beneficiaries to show proof of citizenship to continue benefits. The Washington Post reports that, following a class action suit filed in Chicago, a lawsuit was filed in Washington, D.C., on behalf of individual plaintiffs and the social services organization Bread for the City, seeking to exempt the District of Columbia from the new requirement. Those who are at high risk for losing Medicaid eligibility for lack of citizenship documentation are the mentally ill, the homeless, and elderly people who never received birth certificates. Several members of Congress have also asked that the rule, which was part of the Deficit Reduction Act, be delayed. The Congressional Budget Office estimates that the rule would drop up to 35,000 people from Medicaid’s rolls and save $735 million in the next decade. Others, such as the Center for Children and Family at Georgetown University’s Health Policy Institute, say as many as 3 million Americans who are eligible for Medicaid may lose benefits.
Illinois has proclaimed that it is the only state in the country to offer affordable, comprehensive health coverage to every uninsured child. But its All Kids program may founder if reluctant physicians don’t agree to see the 43,000 children who have already enrolled, reports the Chicago Tribune. The Medicaid expansion program subsidizes coverage for children in low-income families, but physicians say that Medicaid is so slow in paying them that they don’t want to participate. Illinois’ Medicaid program has $1.5 million in medical claims outstanding. And although the state has assured pediatricians that they will be paid within 30 days, physicians say they’ve heard that promise before. Illinois is also requiring that physicians assume disease management responsibilities for 160,000 Medicaid enrollees this year and primary care case management for 1.2 million enrollees next year. Physicians have also expressed reluctance to take on those extra duties.
Nine individuals have filed a class action lawsuit against Health and Human Services Secretary Michael Leavitt, alleging that a law requiring Medicaid beneficiaries to demonstrate proof of citizenship violates the Fifth Amendment guarantee of due process, reports The Times-Picayune of Baton Rouge. The plaintiffs, who filed the lawsuit in federal district court in Chicago, include a 95-year-old woman who was never issued a birth certificate and a 75-year-old who was given away at birth. The Center for Budget and Policy Priorities says as many as 4.6 million current Medicaid beneficiaries are in danger of losing their benefits as a result of the proof-of-citizenship requirement mandated in the Deficit Reduction Act, and the Louisiana Department of Health and Hospitals says it will have difficulty enforcing the law for victims of hurricanes Katrina and Rita who lost proof of citizenship, according to The Times-Picayune.
A majority of employers are planning to curtail their retiree medical plans for current and future retirees in the next five years, according to a new study by Watson Wyatt Worldwide. In the survey of 163 companies, only 5% of employers do not expect to place any additional restrictions on their medical benefits for future retirees over the next five years and 7% do not expect to implement further restrictions for current retirees. Fourteen percent of employers plan to eliminate the benefit entirely for future post-65 retirees and 6% plan to eliminate it for their current post-65 retirees. And retirees will have to pay more for their benefits, according to 65% of respondents who anticipate increasing future retirees’ financial contributions. As more companies adopt account-based programs for current employees, 26% anticipate offering this option to their future retirees.
Many employers are currently relying on federal subsidies from the new Medicare Part D prescription drug program to offset the cost of their retiree medical plans. Of the 77% of employers that took the federal subsidy in 2006, 64% plan to take the federal subsidy in the future. But the subsidy is expected to be a short-term solution while employers find other ways to fund and deliver the benefits.
Forty-eight of the 236 transplant centers approved by Medicare do not meet Medicare’s own minimum standards for patient survival or volume, according to an investigation by the Los Angeles Times. The Times found that the 20% of heart, lung, and liver transplant centers that did not meet Medicare’s standards had 71 unexpected patient deaths in the year after transplant between 2002 and 2004. Yet Medicare rarely decertifies the active transplant centers it has approved. After a previous Times investigation this year, however, the Centers for Medicare and Medicaid Services began its own examination of transplant centers, and, according to preliminary evidence, found 25 programs to be “seriously out of compliance.” “The bottom line message is that there are too many programs in the United States that need to be shut down,” Mark L. Barr, MD, a cardiothoracic transplant surgeon and president of the International Society for Heart and Lung Transplantation, told the Times.
Barry Straube, MD, acting chief medical officer for CMS, told the Times that Medicare is now creating new requirements for transplant centers but that he personally does not believe volume of transplants contributes greatly to good outcomes, despite studies that prove otherwise or the practice of private insurers to include only high-volume centers in their networks. According to the Times, Sen. Charles Grassley, R-Iowa, chair of the Finance Committee, has sent letters to CMS and the Health Resources and Services Administration, asking why they haven’t taken action against transplant centers that don’t meet federal standards.
As consumers, payers, and government demand more transparency in the healthcare system, hospitals are realizing that there are operational, strategic, and public relations implications to their pricing. Current rate-setting methods in today’s climate often fall short, says an Ernst & Young white paper, Pricing for Leadership—A Hospital Best Practice Pricing Methodology. Often, administration and department heads do not have robust discussions on setting rates; the use of market data to price surgeries, drugs, or materials is inadequate because competitors’ pricing structures are unknown; rates that are based on current market factors may result in a reduction in net revenue; and hospitals do not have methods for communicating prices to consumers. The white paper describes a best-practice approach to devising a “rational pricing policy” using market analysis, price structure, charge structure, and communication. A detailed case study illustrates how hospitals can use the four-stage method to identify the relevant data to use in pricing, make timely decisions more strategically, understand the impact of their pricing decisions, and communicate rates positively and clearly to the public.
Occupational mix survey data submitted by inpatient prospective payment system hospitals for January through March 2006 to be used in the FY07 wage index are now on the CMS web site. Hospitals have until July 13 to notify their fiscal intermediaries of any errors in the data.
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