Healthcare Financial News

Even in markets where physician-owned hospitals captured more than 10 percent of admissions, community hospitals’ profit margins appeared stable through 2004, according to a new report by the Medicare Payment Advisory Commission. Using two additional years of data and a larger number of physician-owned specialty hospitals, MedPAC issued an updated report on the cost of inpatient care at specialty hospitals. The number of physician-owned specialty hospitals doubled from 2002 to 2004, primarily in parts of the country with above-average population growth and without certificate-of-need laws, according to the report. Specialty hospitals’ inpatient services are not less costly than community hospitals, with inpatient costs at orthopedic/surgical hospitals running about 20% higher. Both types of specialty hospitals, however, have 20% to 25% shorter lengths of stay. And even though specialty hospitals took profitable procedures away from community hospitals, the study found that competing hospitals found ways to compensate by cutting staff, increasing their own profitable services, and increasing prices. Read the report.

Get tools for strategic business planning at HFMA’s upcoming Healthcare Accounting and Financial Reporting Conference.

California lawmakers have cleared the way for a bill that would permit the state to fine hospitals up to $50,000 when they put patients in “immediate jeopardy” for significant injury or death. Less serious infractions would carry fines of up to $17,500. The bill (S.B. 1312), which amends certain sections of the state’s Health and Safety Code pertaining to healthcare facilities, is expected to pass this week, according to the Los Angeles Times. C. Duane Dauner, president of the CHA, told the Times he believes the bill “is reasonable under the circumstances to serve the best interests of patients and of hospitals.”

Attend HFMA’s Nov. 2 audio webcast, “Safety Data in Action: Mitigating Risk, Improving Quality, and Getting Paid for It.”

A review of 49 states’ pandemic flu plans found widespread disparities in measures to detect and control respiratory disease pandemics, according to a report by the Research Triangle Institute International. The confusion among the state plans prompted the researchers to call for federal health officials to provide additional direction and guidance as well as answers to epidemiological questions so that states are better prepared. The report, published in Emerging Infectious Diseases, found that few state plans included guidelines for personal avoidance steps during a pandemic, such as staying home from work, keeping sick children at home, and avoiding mass gatherings. The state plans also lacked specificity in proposing practical containment measures in the community. Eight states were developing procedures for screening international travelers, but international airport hubs such as Chicago and Atlanta did not yet include plans for international traveler quarantine and testing. State plans also lacked an agreed-upon definition of geographic clustering of cases or the number of people infected that would trigger the declaration of a pandemic.

Adult obesity rates continued to rise in 31 states over the past year while government policy efforts have consistently failed to provide viable solutions to the growing obesity crisis, according to a new report from Trust for America’s Health. In nationwide rankings, Mississippi was the heaviest state, with an adult obesity rate of 29.5%, followed by Alabama and West Virginia. Colorado was the least heavy state, with an adult obesity rate of 16.9%. Obesity rates remained the same in 18 states and Washington, D.C.

The report cites a survey of 26 state-level government experts on disease prevention, who name the three biggest barriers to effectively addressing obesity: inadequate funding of health initiatives, the political view that obesity is more of a personal responsibility issue than a public policy issue, and lack of political will to solve the obesity problem. The report offers numerous recommendations to address the obesity epidemic’s health burden and financial costs. While personal responsibility is critical to adopting and sustaining healthy behaviors, the report notes that “individual behavior change will not work in isolation.”

The percentage of Americans without health insurance coverage rose from 15.6% to 15.9% from 2004 to 2005, to 46.6 million people, according to the U.S. Census Bureau report, Income, Poverty, and Health Insurance Coverage in the United States egion>: 2005, released on Monday. During the same time period, real median household income in the United States rose by 1.1%, reaching $46,326, and the nation’s official poverty rate remained statistically unchanged at 12.6%.

According to the report, the percentage of people covered by employment-based health insurance declined slightly from 59.8% to 59.5% between 2004 and 2005. While the number of people covered by government health programs increased from 79.4 million to 80.2 million, the percentage of people covered by government health insurance remained at 27.3%. There was no statistical difference in the number or percentage of people covered by Medicaid--38.1 million and 13%. The percentage and number of uninsured children increased from 10.8% to 11.2%, or from 7.9 million to 8.3 million children.

The uninsured rate, as well as the number of uninsured, remained statistically unchanged from 2004 to 2005 for whites (at 11.3% and 22.1 million) and for blacks (at 19.6% and 7.2 million). The rate for Asians increased to 17.9% in 2005, up from 16.5% in 2004. The number of uninsured Asians was 2.3 million, up from 2 million. The uninsured rate for Hispanics was 32.7% in 2005--statistically unchanged from 2004. The number of uninsured Hispanics increased from 13.5 million to 14.1 million. Based on a three-year average, 29.9% of people who reported American Indian and Alaska Native as their race were without coverage, and the three-year average for Native Hawaiians and other Pacific Islanders was 21.8%.

The uninsured rate for those in the South increased from 18.2% to 18.6% between 2004 and 2005 and in the West from 17.4% in 2004 to 18.1% in 2005. The Midwest and Northeast had the lowest uninsured rates in 2005, at 11.9% and 12.3%, respectively. Texas had the highest percentage of uninsured (24.6%), while Minnesota had the lowest (8.7%). Read the report.

Access HFMA’s resources on the uninsured.

Detroit hospitals and clinics are being recognized as leaders in the new field of population health, which explores why some individuals get better care than others and finds ways to improve health for people at risk for not getting adequate care, reports the Detroit Free Press. The University of Michigan is conducting the largest federally funded study of barriers to mental health care among African-Americans, for example, and Eastern Michigan University, among others, is working to overcome privacy issues that prevent Asian Indian women from getting screened for breast cancer. Initiatives to reach individuals who aren’t receiving basic medical care may add as little as $7 million to the $41 million per year spent to reimburse hospitals for uninsured care, according to the Kaiser Family Foundation. Others argue that the nation’s first priority is to beef up its network of outpatient clinics and primary care physicians in order to steer patients away from expensive hospital care, and to let state and local governments find ways to provide care for all their citizens rather than expecting the federal government to extend healthcare coverage to all Americans.

The mobile hospital that treated 7,400 patients in Mississippi during a six-week period following Hurricane Katrina could provide a model for rapid medical responses to future mass casualties, according to an article to be published online in the Annals of Emergency Medicine. For the first two weeks post-Katrina, five emergency physicians, three trauma surgeons, an orthopedist, and two anesthesiologists--as well as nurses, paramedics, pharmacists, and a radiation technician--treated 25 to 300 patients a day. A slightly smaller staff continued to treat patients for another month. The first and only hospital of its kind in the world, Carolinas MED-1 incorporates an emergency department, surgical suite, critical care beds, and general treatment and admitting area. Consisting of two 53-foot tractor-trailers, the unit expands to a workspace of 1,000 square feet and supports an environmentally controlled awning structure that incorporates up to 130 beds. It carries its own generators, oxygen, x-ray and ultrasound capability, and diagnostic lab. “We designed Carolinas MED-1 as a fast and flexible resource to be adapted for use in the event of a weapon of mass destruction or pandemic,” said Thomas Blackwell, MD, of the Carolinas Medical Center in Charlotte, N.C.

The Alabama Supreme Court has ruled that Richard Scrushy must repay HealthSouth Corporation $51.5 million in bonuses he earned while he was CEO of HealthSouth. A Jefferson County Circuit Court judge had ruled in January that Scrushy’s bonuses were based on the false accounting entries that led to the $2.64 billion fraud perpetrated by HealthSouth executives. Scrushy, however, argued that the amount in question was part of his regular pay earned from 1997 through 2002. And although prosecutors insist Scrushy is worth at least $287 million, Scrushy says repaying HealthSouth would put him “on the brink of financial disaster,” reports The Birmingham News. Scrushy was found not guilty of participating in the fraud, but he was convicted of bribing former Gov. Don Siegelman for a spot on a hospital regulatory board. Scrushy’s lawyer says his client has not decided whether he will ask the Alabama high court to reconsider the ruling or appeal the decision to the U.S. Supreme Court.

Learn lessons from the HealthSouth experience at HFMA’s Healthcare Accounting and Financial Reporting Conference.

Despite having continuous health insurance, 17% of Kansas farmers report having medical debt, according to a report by the Boston-based Access Project. Among individuals under age 65, however, 29% said they had medical debt, compared with only 5% of those age 65 and older. The median amount of medical debt was $2,500. Many respondents with debt reported going without care to avoid accruing new debt, and many struggled to pay down their bills using savings and by transferring debt to credit cards. According to the report, approaches that advocate shifting more of the costs of health care onto policyholders may leave increasing numbers of insured people at risk for financial difficulty. “We were surprised to learn that so many hard-working farm families that thought they were protected by their health insurance had fallen into medical debt,” said William Lottero, an analyst with the Access Project.

Hispanics have mortality rates that exceed those of whites, a phenomenon that has puzzled researchers since the 1970s and runs counter to expectations that a population that is financially disadvantaged is less healthy, reports the Los Angeles Times. According to data from the Centers for Disease Control and Prevention, the national age-adjusted mortality rate for 2003 was 621 per 100,000 individuals for Hispanics, which is 25% less than for whites and 43% less than for blacks. National Hispanic infant mortality rates were about the same as for white infants and 58% less than for blacks. The Times explored research that shows that Latinos’ strong social support and family connections may reduce stress and keep individuals healthier. Immigrants who live in Latino neighborhoods had a 5% incidence of asthma compared with 22% for those who didn’t live among other Latinos, for example. Diet and lifestyle preferences also keep Latinos healthier, although children of immigrants tend to not to follow the habits of their parents. Obesity, for example, is very high in Mexican children, warn researchers.

Hospitals are hoping their construction projects stay on schedule, because a delay of only a few months could add millions to the final cost, reports the Birmingham Business Journal. The construction industry had a 10% cost increase in 2005 and expects another 6% to 10% jump in 2006. Steel prices have skyrocketed by 25% in the past few months, fueled by heavy demand by the Chinese as their robust economy allows them to rebuild the country and prepare for the 2008 Olympics. And oil and copper prices have also increased. HCA Inc. says it forecasts its construction costs by inflating the cost of previous projects by 10% annually, and Vanderbilt estimates that a new patient tower will cost $322 per square foot to build. Average costs for hospital construction range between $265 and $275 per square foot. “I worry about this for our industry because reimbursements haven’t changed and these healthcare guys are having to provide the same quality of care for the same reimbursement, but the costs keep going up and up and up,” Jim Poole of the Birmingham, Ala.-based construction firm Robins & Morton Group told the Journal.

An estimated 800 to 1,000 nurses at the Robert Wood Johnson University Hospital in New Brunswick, NJ, went on strike Aug. 24. Under the contract terms the hospital proposed, nurses would have received a 9% salary increase over three years, a 10% increase in pension contributions, and changes in healthcare coverage that would have “reduced cost and improved access.” But Local 4-200 of the United Steelworkers Health Care Workers Council maintains that the hospital’s health insurance plan is inferior and inadequate, and constitutes a “penalty” for nurses who come from four states to work at the hospital and don’t necessarily live close to the healthcare facilities in the network. “Our 1,300 nurses work with some of the finest physicians in the country to deliver the highest quality health care to our patients,” said local union president Jerry Collins in a statement, “but our health coverage doesn’t provide the same level of care for ourselves and our families.”

The hospital says it has replaced striking nurses for the duration of the job action with nurses it has recruited nationally. The replacement nurses were chosen for their experience in the specialty and subspecialty services that the hospital offers, and they also meet all New Jersey licensing requirements. “Daily reports from the New Jersey Department of Health and Senior Services, as well as feedback from doctors, patients, and their families all confirm that the nurses who have joined our staff are upholding the highest professional standards,” said a statement issued by the hospital.

HHS Secretary Michael Leavitt discussed his vision for a new healthcare system for New Orleans while visiting the 40-member committee of city, state, and private experts charged with planning new hospitals and clinics to rebuild those that were destroyed by Hurricane Katrina one year ago. Replacing the former medical system of separate facilities for the poor and for the insured will be a prevention-based network of primary care clinics that will provide a medical home for every patient. Electronic health records will ensure that doctors can provide seamless care to any patient, and price and quality information will be readily available, Leavitt told The Times-Picayune of New Orleans. Although Leavitt said he is in a hurry to rebuild New Orleans’ medical care, he also acknowledged that changing the way people view health care will take time. “It’s not the thing you build all at once and then flip the switch on,” he said. “There’ll be some bricks and mortar that’ll have to be put into place--clinics to be built, health records to be safeguarded--and it won’t just be systems. It’ll have to be sociology that’ll have to change.”

Meanwhile, the city’s emergency physicians are discouraged by the progress of rebuilding emergency departments, according to a survey conducted by the American College of Emergency Physicians. More than half (52%) report little to no progress in the recovery of the emergency care system in their communities. The vast majority of emergency physicians (93%) said the shortage of beds is at least 25% below what is needed to care for patients, with 29% saying the shortage is 50% below what is needed. More than one-third (36%) of emergency physicians said that if the post-hurricane recovery is not sufficiently improved in one more year, they would consider leaving to practice in another state. “It’s frustrating for patients and doctors to see so little progress in one year,” said James Moises, MD, of Tulane Medical Center.

The Federal Trade Commission has alleged that two Kansas City independent practice associations (New Century Health Quality Alliance, Inc., and Prime Care of Northeast Kansas, LLC) and 18 physician practices engaged in anticompetitive conduct by refusing to deal with healthcare plans, except on collectively agreed-upon terms, including price. According to the FTC’s complaint, the 127 primary care physicians who are members of the IPAs agreed to refuse to deal, and refused to deal, with health plans regarding fee-for-service contracts with individual physician practices. They also acted together to increase their bargaining power with payers and attempted to force payers to accept the terms agreed upon through the IPAs on behalf of their combined membership. The FTC’s complaint charged that their actions unreasonably restrained competition. In settling the FTC’s charges, they will refrain from engaging in such anticompetitive conduct in the future. The commission is accepting public comment on the consent order for 30 days, after which it will decide whether to make it final.

During the entire four-year period from 2001 through 2004, 6.6% of the American population under age 65 (16.9 million people) were uninsured, according to a statistical brief from the Agency for Healthcare Research and Quality. For the last two years of that period, 31.2% of the population was uninsured for at least one month, and 10.3% were uninsured the entire two years. Young adults (18 to 24) were the mostly likely to be uninsured for at least one month during 2003 through 2004 (55.1%), as were Hispanics (49.5%). Although Hispanics comprise 15.4% of the under-65 population, they accounted for 37.9% of the individuals without insurance during 2001 through 2004, making them disproportionately represented among the long-term uninsured.

Access PATIENT FRIENDLY BILLING® project tools to better serve the uninsured.

Nearly 14,000 hospitalizations in Pennsylvania involved a serious form of staphylococcus infection in 2004, according to new research by the Pennsylvania Health Care Cost Containment Council. Pennsylvania was the first state to publicly report hospital-acquired infection numbers last year. Patients with a methicillin-resistant Staphylococcus aureus infection had mortality rates of 8.9% (compared with 2.1% of patients without the infection), had their hospital stays extended by eight days, and had average hospital charges of $87,990 versus $28,711 for patients without MRSA. The report did not distinguish between community- and hospital-acquired MRSA infections. The report also found that about half of all hospitalizations with MRSA infections were among patients with respiratory diseases, disorders of the circulatory system, and infectious and parasitic diseases, and 54% of hospitalizations with MRSA infections were for patients age 65 and older.

“There is a shared responsibility among hospitals, nursing homes, and physicians to identify and implement best practices and strategies that are most effective at preventing MRSA transmission,” said the Hospital & Healthsystem Association of Pennsylvania in response to the report. Carolyn Scanlan, president and CEO of HAP, enumerated the hospital initiatives under way across the state to prevent hospital-acquired MRSAs and said, “Consumer education is critical, as patients, family members, hospital visitors, as well as community leaders must have access to resources that explain how they can be part of the solution.”

A new report by the Commonwealth Fund identifies several promising practices that hospitals can incorporate in treating their diverse populations. The practices are drawn from the programs of several hospitals that have successfully overcome language and cultural barriers to provide effective healthcare interactions. To conduct the study, the American Medical Association’s Ethical Force Program and the Health Research and Educational Trust, an affiliate of the American Hospital Association, conducted eight hospital site visits to learn about patient-centered strategies being used to improve communication with vulnerable patients. The hospitals were chosen based on several criteria, including location, patient diversity, creativity of strategies, and the potential for using those strategies at other organizations.

The nine practices are based on themes that recurred as the hospitals developed their various approaches to clear communication. They include encouraging passionate champions throughout the organization, collecting information on patient needs, engaging communities, developing workforce diversity and communication skills, involving patients, encouraging awareness of cultural diversity and low health literacy, providing effective language assistance services, using clear language, and evaluating organizational performance over time. Read the report.

As our population becomes more culturally and linguistically diverse, there has been a greater focus on how to deliver high-quality care to patients with limited English proficiency. A policy brief by Mathematica Policy Research found that providing face-to-face interpreters for the 22,000 Medicaid beneficiaries with limited English proficiency in Connecticut would cost $4.7 million annually. A 50% federal matching rate would reduce the cost of these services by $2.35 million. And although Medicaid managed care plans--which cover three-fourths of Connecticut’s Medicaid patients--provide interpreters, Mathematica found that many providers were unaware of the service. To secure federal matching funds for interpreters, Mathematica recommended that Connecticut reimburse interpreter services as a Medicaid-covered expense to allow the state to monitor costs and trends and build on existing payment structure.

WellPoint, Inc., has announced that it will make its consumer-directed health plan products and services available in all states and to all markets beginning Jan. 1, 2007. Previously, WellPoint offered CDHPs only to national employers. Although the number of WellPoint’s members with CDHPs rose 30% since the end of 2005, fewer than 700,000 of WellPoint’s 34 million members have enrolled in CDHPs, according to The Indianapolis Star. CDHPs still have not been embraced by all Americans, a spokesperson for the Center for Studying Health System Change told the Star. “If they’re going to become mainstream, they have to gain more than the toehold they have right now in the employer market,” she said. Read the WellPoint announcement.

A Canadian study of 4 million emergency department visits at 110 Ontario hospitals found that diverting patients without medical emergencies didn’t improve the timeliness of care given to those with urgent problems, reports the Houston Chronicle. According to the study, to be published in the online Annals of Emergency Medicine, each patient without a true emergency increased the wait for other ED patients by just 32 seconds. “Caring for patients with minor ailments doesn’t lead to clinically important delays, and turning them away isn’t very patient-focused,” study author Michael Schull of the Institute for Clinical Evaluative Sciences in Toronto told the Chronicle.

Many U.S. emergency medicine experts agree that EDs aren’t crowded simply because people use them as clinics. But officials at Harris County’s public hospitals in Texas, which just instituted a new policy of redirecting ED patients with nonurgent problems, maintain that Canadian EDs cannot be compared with U.S. ones, and said that in just three weeks, significantly fewer individuals with minor medical problems have been showing up at the county hospitals’ EDs.

Although healthcare spending has been predicted to be 25% of the gross domestic product by 2030, some leading economists see little wrong with making health care “the driving force in the economy,” reports The New York Times. Nobel laureate Robert Fogel, at the University of Chicago Graduate School of Business, told the Times that food, clothing, and housing consume only about a third of U.S. household income today, leaving plenty of room to afford health care that will prolong life. Harvard economist David Cutler agrees that the country is rich enough for a 45-year-old to spend $30,000 more to treat cardiovascular disease than he would have spent in 1950 to increase his life span by three years. Other economists argue, however, that spending more on health care doesn’t necessarily result in better health. Half the money spent on health care is wasted, Princeton economist Angus Deaton told the Times. In Medicare, “there isn’t anybody who has responsibility for making sure the money gets spent well,” he says. “Some huge improvements will have to be made as the consequences of that waste get greater.”

HCA has alerted its patients that 10 computers were stolen from a regional office that was a “secured building, protected by keypad lock technology, and video surveillance.” The computers contained “thousands of files listing unpaid bills from Medicare and Medicaid patients for hospitals in eight states,” HCA said in a statement on its web site. Some files listed patients’ Social Security numbers. The FBI has begun an investigation, and HCA reports that authorities believe the computers were stolen for their hardware, not the files. The organization has set up a call center to assist Medicare and Medicaid patients with overdue accounts whose personal information may be contained in the stolen computers.

The Centers for Medicare and Medicaid Services has announced that it is making available Medicare payment information for 61 procedures performed in ambulatory surgery centers. In June, Medicare posted what it pays for 41 inpatient procedures. The ASC data are intended to help consumers select the most appropriate setting for high-quality, efficient care for surgical procedures. The data, posted at www.cms.hhs.gov/HealthCareConInit/, will include charge and Medicare payment for ASC facility costs for commonly performed procedures at the county, state, and national level. CMS is also concurrently releasing data on “Other Commonly Performed Procedures in ASCs,” which contain similar charge and payment data, but for facility costs related to services of high utilization.

CMS also announced a new Medicare pilot project that is intended to provide more comprehensive and personalized information on quality and cost that builds on private-sector quality measurement efforts. The quality information will be based on services provided to Medicare and Medicaid beneficiaries, and individuals with private health insurance in select states--Arizona, California, Indiana, Massachusetts, Minnesota, and Wisconsin--and will be available to providers, other insurers, employers, and the public. Read the press release.

President Bush signed an executive order on Tuesday requiring federal agencies that administer or sponsor federal health insurance programs--the Department of Health and Human Services, the Defense Department, the Department of Veterans Affairs, and the Federal Employees Health Benefits Program--to gather price and quality data on medical procedures they purchase and to share them with each other and consumers by Jan. 1, 2007. Medicare beneficiaries, health insurance beneficiaries at the Department of Defense and Department of Veterans Affairs, and federal employees represent about one-quarter of Americans covered by health insurance. The executive order builds on the federal government’s efforts to release Medicare payment information for individual healthcare providers.

Bush’s order also directs the agencies to collaborate with the private sector and government sources to develop programs that assess medical quality, to identify practices that promote quality, and to use interoperable health IT. Each agency must also require that the health IT systems of providers, health plans, or insurers meet recognized interoperability standards. Consumers will be able to access the pricing and quality information from a variety of potential sources, including insurance companies, employers, and Medicare-sponsored web sites.

On Aug. 21, Aetna announced that physician-specific information on healthcare costs, clinical quality, and efficiency is now available to its members. The roll-out gives online access to price, clinical quality, and efficiency information for physicians in 12 geographic regions: Cincinnati; Cleveland; Columbus, Ohio; Connecticut; Dayton, Ohio; South Florida; southeast Indiana; northern Kentucky; Maryland; Springfield, Ohio; northern Virginia; and Washington, D.C. Price information only is available for physicians in Kansas City, Las Vegas, and Pittsburgh.

The physician-specific clinical quality and efficiency information is taken from Aetna’s Aexcel network option, designed to help consumers select specialists and mitigate increases in medical costs. Aexcel-designated specialists undergo an evaluation process that reviews their care based on measures of clinical performance and efficiency, including prevalence of complications and repeat procedures. Aetna members will see the actual rates specific to their health plan for office visits, diagnostic tests, minor procedures, major procedures, and other services. Rate information is included for up to 30 of the most widely accessed services by specialty. For physicians who are Aexcel-designated, the web page will show whether he or she has met the Aexcel criteria for clinical performance, efficiency, and volume of Aetna members treated.

Nearly all the growth in Medicare spending from 1987 to 2002 can be attributed to the 20% increase in patients being treated for five or more conditions, according to the results of a new study published in Health Affairs. In 1987, 31% of Medicare beneficiaries were treated for five or more conditions, which accounted for half of total Medicare spending. Fifteen years later, more than half of Medicare beneficiaries had five or more conditions, accounting for three-fourths of total spending. The authors of the report point to the rise in obesity as a major contributor to increased Medicare spending. While obesity has doubled in the Medicare population since 1987, medical spending to treat obese beneficiaries has nearly tripled, from 9.4% to almost 25%. An 11% increase in spending for mental disorders can also be linked in part to obesity, say the authors, because patients with diabetes and obesity have a high incidence of depression. In addition, physicians are more aggressively treating patients with five or more conditions. In 1987, 33% of the chronically ill said they were in good or excellent health compared with 60% in 2002. For Medicare to control spending for chronic illnesses, however, it must adopt strategies for lifestyle modification and care coordination, necessitating an overhaul of its fee-for-service payment model, say the authors.

Forty-two percent of Americans reported experiencing poorly coordinated, inefficient, or unsafe care at some time during the past two years, according to a new survey of 1,023 adults from The Commonwealth Fund Commission on a High Performance Health System. Respondents reported that they received unnecessary care or treatment recommended by a physician, received duplicate tests, were victims of medical errors, and/or that their physicians or nurses failed to receive test results or important information about their care. The survey found strong public support for efforts to improve care coordination, and a belief that expanded use of IT and teams could improve the quality of care.

The survey also revealed that 48% of respondents in middle-income families ($35,000 to $49,999 annual income) reported serious problems paying for health care and health insurance. One-third of adults with family incomes between $50,000 and $74,999 a year, and one-fifth with incomes over $75,000, also reported serious medical bill problems. Three-quarters of respondents--both Republicans and Democrats--said the healthcare system needed either fundamental change or complete rebuilding, a view that was shared across income groups and regions of the country. The four top priorities for the president and Congress, according to respondents, are: ensuring that Medicare remains financially sound long term, controlling the rising costs of medical care, ensuring that all Americans have adequate and reliable health insurance, and lowering the cost of prescription drugs. Read the report.

Emergency patients who require follow-up outpatient treatment frequently don’t receive it, putting patients with chronic diseases such as diabetes and asthma at extreme risk. Two articles in the Annals of Emergency Medicine depict a healthcare system inadequate to the needs of emergency medicine’s most vulnerable patients: the uninsured and the suicidal. With only 68% of physicians willing to provide charity care, the uninsured or underinsured often don’t have access to physicians outside the emergency department. The situation is even worse for patients who have attempted suicide. Studies show that patients who survive suicide attempts are at risk for repeat attempts with more lethal methods. More than 50% of the study’s respondents in California said their ED had no mental health professional to evaluate suicidal patients. “Emergency physicians provide care to many of our nation’s most at-risk patients,” said Frederick Blum, MD, president of the American College of Emergency Physicians. “Unfortunately, once they leave the emergency department, they have to fend for themselves.”

A new study by the Joint Commission on Accreditation of Healthcare Organizations found that hospitals ranked as the “best” for heart care by U.S. News & World Report are among hundreds of hospitals across the country where patients can receive care that measures up to or exceeds the care provided in those facilities. The study, published in the American Heart Association journal Circulation, compared the performance of 774 hospitals, 41 of which were listed among U.S. News & World Report’s 50 best heart and heart surgery hospitals. The hospitals were compared with each other using 10 measures that are based on clinical treatment guidelines from the American College of Cardiology and the American Heart Association.

The researchers found that 13 hospitals not in the magazine’s list of top performers did better in adhering to the treatment guidelines than any of the top 41 identified by U.S. News & World Report. Furthermore, when all 774 hospitals included in the study were ranked based on their adherence to specific evidence-based care practices, 313 nonranked hospitals did as well as the top half of hospitals ranked by the magazine.

Three medical systems in Texas alone have spent $110 million on electronic health records, reports the Houston Business Journal in an article that documents the progress of several large hospital systems in adopting EHRs. Texas Children’s Hospital will spend $60 million over five years to switch over from paper records to electronic ones, a transition that “will result in cultural and organizational process changes,” David Finn, Texas Children’s vice president, told the Journal. “We’re considering this a capital project that is really part of an expansion of our healthcare services,” he said. M.D. Anderson Cancer Center couldn’t find an EHR system that would support both research and clinical applications, so it built its own. “Other people have tried to develop their own in-house system, but the labor was so horrendous, most gave up,” said Lynn Vogel, M.D. Anderson’s chief information officer. The Methodist Hospital is spending $43 million over eight years and is rolling out the system all at once instead of department by department, as many other hospitals have done. Many of the 4,000 Methodist staff who have already been trained in the new EHR report that the conversion is overwhelming. And Baylor College of Medicine has spent $10 million so far to make EHRs operational in all internal medicine departments. Within the next year, all Baylor clinics plan to use EHRs.

Heart transplant centers may be lucrative for hospitals, but five in the Philadelphia area is just too many, charge critics who maintain that there aren’t enough patients requiring transplants to allow surgeons to do enough of the procedures to ensure good outcomes, reports The Philadelphia Inquirer. The region has the same number of heart transplant centers as Los Angeles, but with only half the population. Last year, three of the Philadelphia-area programs did fewer than 12 transplants, the minimum Medicare sets for funding. And although surgeons at the smaller transplant centers expect their numbers to grow, heart transplants have been decreasing as less invasive procedures have been developed to treat heart failure. In 2003, there were 93 heart transplants in the Philadelphia area compared with 175 in 1997. Five transplant programs “is not competition. It’s just stupid,” Abraham Shaked, director of the University of Pennsylvania Transplant Center, told the Inquirer. Two programs would be sufficient, he said.

A state panel in Massachusetts has set proposed rates for the state’s landmark health insurance law that passed in April. According to The Boston Globe, lower-income single adults would pay between 1% and 4.5% of their income, depending on how much they earn annually, and lower-income couples would pay between 1.5% and 6.6% of their income. Children will receive coverage through Medicaid. The law mandates that all Massachusetts residents have health insurance by next summer. Other states are watching Massachusetts closely as they try to find solutions for their uninsured populations. State regulators will vote on the proposed rates later this month.

Although medical quality experts advocate that medical errors be disclosed in order to ultimately improve patient safety, more than half the physicians in a recent study were not willing to admit an error to a patient when presented with scenarios that clearly put the physician at fault. The survey of 2,637 Canadian and American physicians by University of Washington researchers and published in the Archives of Internal Medicine found that 56% of the physicians would tell the patient there was an adverse event without using the word “error,” and only one-third would offer an apology. Although surgeons expressed more of an intent to admit to an error than medical physicians, the researchers found that they actually disclosed less. The study attributed physicians’ unwillingness to disclose mistakes to the desire for perfectionism ingrained in the “culture of medicine.”

Fear of being sued for medical malpractice had little bearing on rates of error disclosure, the researchers found in a companion study. Even though Canadian physicians are sued much less often than American physicians and have caps on pain and suffering, Canadian physicians were equally hesitant to report errors, reports The Seattle Times. “This code of silence, this conspiracy of silence does not work for reducing errors,” Eric Larson, one of the study’s authors, told the Times. “What we know now is it does nobody any good to bury a mistake or cover up a mistake; you can’t correct what led to the mistake unless you deal with it explicitly.”

The Center for Medicare and Medicaid Services has unveiled a new draft quality standard for suppliers of durable medical equipment, prosthetics, orthotics, and supplies. According to CMS, suppliers must comply with the quality standards in order to furnish any DME, prosthetics, or orthotic services paid under Part B and in order to receive or retain a supplier billing number.

In developing the draft quality standards, CMS conducted a wide variety of activities that involved stakeholders and the public. As a result, the agency received more than 5,600 comments on the draft quality standards. Based on these comments, CMS made revisions to reduce the burden on small suppliers, such as eliminating the requirement to be open for 40 hours per week and replaced it with a requirement to maintain posted business hours. In addition, the agency clarified requirements for performance management to allow suppliers flexibility in determining indicators related to their products and services.

CMS said the quality standards would be used as part of the accreditation organization selection process. Comments on the draft quality standards will available on the CMS web site at a later date.

The U.S. not-for-profit healthcare sector performed well in the first half of 2006, according to a Standard & Poors Ratings Services report on rated hospitals and health systems. S&P reported that ratings upgrades outpaced lowered ratings by a small margin through June 30. The real story, says S&P, is the sector’s stability--of 265 rating actions in the first half of the year, 83% were rating affirmations. The favorable credit environment should continue through 2007, possibly 2008, despite some negative trends, according to S&P. Bad debt, charity care, and capital spending are important concerns, but S&P says well-managed organizations should be able to overcome these potentially harmful factors.

The 2006 median healthcare ratios for not-for-profit health systems and stand-alone hospitals also demonstrated improvement. Gains were attributed to stronger income and cashflow measures, growth in liquidity, and improvement in balance sheet measure across most rating categories. According to S&P’s U.S. Not-for-Profit Health Care 2006 Stand-Alone Hospital Medians, stand-alone not-for-profit hospitals that it rated had an overall profit margin of 5%, up from 4.1% in 2005; operating margin of 3%, up from 2.4% in 2005; and an operating cashflow margin of 10%, up from 9.6% a year earlier. In another report, U.S. Not-for-Profit 2006 Health Care System Medians, not-for-profit health systems (three or more hospitals with some risk dispersion) that S&P rated showed similar gains. Overall, from 2005 to 2006, profit margin increased from 4.3% to 5.2%; operating margin grew from 2.5% to 3.2%; and operating cashflow margin rose from 9.2% to 9.7%. A key factor in determining future credit quality will be changes in government reimbursement. For more information, call 212-438-6667.

Get tools for strategic business planning at HFMA's upcoming Healthcare Accounting and Financial Reporting Conference.

Even though Medicaid payment rates and enrollment have increased, the proportion of U.S. physicians who accept Medicaid patients has decreased slightly over the past decade. In a new report, the Center for Studying Health System Change writes that 14.6% of physicians said they received no revenue from Medicaid in 2004-05, up from 12.9% in 1996-97. However, the report’s authors said a more striking trend is that the care of Medicaid patients increasingly is concentrated among a smaller proportion of physicians who practice in large groups, hospitals, academic medical centers, and community health centers. Low payment rates and high administrative costs likely discourage physicians in solo and small group practices from accepting Medicaid patients.

Read “The Challenges of Medicaid” by Gail R. Wilensky.

The Duke Endowment has awarded a three-year $21 million grant to foster high-quality health care. The grant was awarded to Health Sciences South Carolina, a statewide collaborative of institutions that are working to advance health sciences education and research. The grant is targeted at advancing research in the areas of patient safety, clinical effectiveness, and healthcare quality. The largest award ever made by the Duke Endowment’s healthcare division, the grant will support the establishment of the Center for Healthcare Quality and Clinical Effectiveness and will enable HSSC to implement Centers of Economic Excellence Endowed Chairs programs.

Learn about balancing productivity, cost management, and quality at HFMA's upcoming Healthcare Accounting and Financial Reporting Conference.

New Fitch Ratings figures show that operating profitability of not-for-profit hospitals and health systems rated by Fitch improved substantially in 2005, exceeding expectations from the previous year’s median ratios report. Fitch’s portfolio includes ratings on 256 hospitals, healthcare systems, or related institutions. Information from 222 of them is included in the new median ratios report. The median operating margin increased to 2.8 percent last year, the highest level since 1997 and the third consecutive year of growth. In the report, titled 2006 Median Ratios for Nonprofit Hospitals and Health Care Systems, Fitch attributes the improved operating margins to solid revenue growth, better control of expenses, and improved efficiencies resulting from investment in information technology and quality initiatives. Also, some hospitals have sold off non-core, unprofitable business lines. Operating improvement was spread across all rating categories, including the lower investment-grade and below-investment-grade grade categories. Liquidity ratios and capital-related ratios also showed improvements in 2005. For information, contact Fitch at (800) 753-4824.

Learn key performance indicators for pay-for-performance and consumer-directed health care at HFMA's audio webcast.

With the House and Senate deadlocked on immigration reform, panelists and witnesses at a Congressional field hearing in Dalton, Ga., this week debated the impact of undocumented immigration on the state’s Medicaid program and its healthcare delivery system. The hearing was one of 20 such meetings that House Republicans have scheduled throughout the country this summer to boost support for their reform bill, which concentrates on border security. Supporters of the bill, including U.S. Rep. Charlie Norwood, R-Ga., say Medicaid budgets cannot support care for poor Americans and undocumented immigrants. The Atlanta Journal-Constitution reported that Georgia spent $114 million in Medicaid funds in 2005 for emergency care for 23,972 illegal immigrants. A new law enacted earlier this year requires proof of U.S. citizenship to receive Medicaid benefits, except in emergencies. Critics of House Republicans’ reform measures say undocumented immigrants are scapegoats for a troubled U.S. healthcare system. 

Get tools for improving service to the uninsured.

A new health plan being offered to employers in Minnesota will link lifestyle choices directly to the amount of deductible that employees pay. Insurer Preferred One and Aon Risk Services Inc., the plan’s developers, say it could save employers millions while encouraging employees to adopt healthier lifestyles. The plan would allow employers to give workers time to change some of their health habits, according to the Minneapolis/St. Paul Business Journal. But then nurses from an independent laboratory would evaluate employees’ blood pressure, body-mass index, tobacco use, and cholesterol and glucose levels. Based on those indicators, deductibles could range from nothing to $2,500. Regular health evaluations would allow employees to reduce their deductibles. No penalties would be levied for chronic illnesses.

Competition and choice apparently have held the line on premiums for Medicare prescription drug coverage. The New York Times reports that next year’s premiums will be about $24 a month, the same as this year and about 40 percent less than initial estimates for 2007. CMS Administrator Dr. Mark McClellan said some individual insurers that offer coverage under contract to Medicare may increase prices, but that the “vast majority” of beneficiaries will pay the same or less than in 2006. The government estimated in March 2005 that average drug premiums would be $37 a month in 2006 and $41 in 2007. Five months later the government lowered its 2006 estimate to $32 a month and in June this year reported the average premium is $24. Private insurers compete for market share by offering low premiums and extensive benefits. But some consultants have warned that insurers may be operating at or below cost to attract beneficiaries and will not be able to maintain low premiums.

A national back-to-school campaign is linking thousands of eligible students with healthcare coverage through Medicaid or the State Children's Health Insurance Program. The Covering Kids & Families back-to-school campaign is a nationwide effort encouraging parents to obtain health insurance for their children as part of their preparations for the new school year. The back-to-school campaign is a project of the Robert Wood Johnson Foundation's Covering Kids & Families initiative. The initiative is supported by HFMA. The goal of Covering Kids & Families is to reduce the number of uninsured by helping those who are eligible for Medicaid or SCHIP receive the coverage they need. Since 1997, Covering Kids & Families has helped reduce the number of uninsured children from 11 million to 8.5 million in 2005.
 
This year's back-to-school campaign activities focus on encouraging parents to take the necessary steps to find out if their children are eligible for healthcare coverage. The 2006 campaign kicked off on Aug. 9. Find out how your organization can support this initiative.

California’s independent health insurance purchasing pool for small businesses will close at the end of the year because too many health plans have pulled out. Pacific Health Advantage, commonly called PacAdvantage and based in San Francisco, is notifying 6,200 employers and 116,000 workers that their coverage ends Dec. 31. PacAdvantage officials said in a statement that the pullout of three major health plans—Kaiser Permanente, Blue Shield of California, and Health Net of California—prompted the closure. In 1994, 10 health plans had participated.

The purchasing pool was created by the state in 1992 and taken over in 1998 by the Pacific Business Group on Health to help keep health insurance affordable and available for employees and owners of small businesses. The pool was open to employers with two to 50 employees. Peter Lee, CEO of PBGH, said every effort was made to maintain the health plans’ participation. “Unfortunately, market forces kept that from happening,” he said in a statement.

CMS has published new quality standards for suppliers of durable medical equipment, prosthetics, orthotics, and other supplies. Vendors of these products must comply with quality standards to receive billing numbers from providers or other suppliers that are used to submit claims for reimbursement through Medicare. After a 60-day public comment period that ended Nov. 28, 2005, CMS had received more than 5,600 comments on a draft of the new standards that was posted on the CMS web site. Some changes that resulted from the comments include streamlining the standards from 104 pages to 14 pages, replacing a requirement for suppliers to be open 40 hours a week with one to only maintain posted business hours, and reducing the number of product-specific standards from 15 to three. CMS said it expects that many suppliers already comply with the new standards. 

A new report from the HHS Office of the Inspector General indicates that some 9,200 medications are missing from the FDA’s National Drug Code Directory and that about 34,200 prescription drugs are listed incorrectly or no longer are manufactured. Most of the problems stem from pharmaceutical companies’ failure to comply with a federal law that requires them to list the medications they make with the FDA, according to the report.  FDA officials said they agree with much of the report and that they are beginning to address problems noted in the report by revising they way pharmaceutical manufacturers list their products with the agency. As of February 2005, the directory included 123,856 medications, compared with about 39,000 in 1990.

Many of the marketing materials that Medicare Advantage plans use for advertising and enrollment do not meet standards CMS has set so that beneficiaries can make informed plan decisions, according to the Office of the Inspector General. After reviewing marketing materials from 36 Medicare Advantage plans, the OIG found that some of the materials did not contain required information on prescription drug benefits. For example, 55 percent of benefit summaries of the plans surveyed did not state that formulary contents could change. Some of the materials also did not have basic information such as operating hours and customer service numbers that beneficiaries need to access plan information.

In its report on Medicare Advantage marketing materials, the OIG noted that CMS is working to improve its reviews of marketing materials. CMS regional staff will perform consolidated reviews of Medicare Advantage and Medicare Part D plan marketing materials, and a contractor will review the materials for consistency.

Opposition to the Bush administration’s proposed rules to cut Medicaid reimbursements to public hospitals and nursing homes is growing. The National Governor’s Association, more than 330 members of Congress and 50 senators have expressed opposition to the proposal as a threat to state budgets and the health of low-income people who rely on Medicaid programs, according to The New York Times.

The plan, part of President Bush’s 2007 budget, would cut the rate that states can tax hospitals and nursing homes and would limit Medicaid reimbursements to the actual cost of the services that hospitals and nursing homes provide. The Bush administration contends that these changes would reduce improper accounting methods that increase states’ share of federal matching Medicaid funds.

Read "The Challenges of Medicaid" by Gail R. Wilensky.

As it attempts to recover from an accounting scandal, HealthSouth Corp. of Birmingham, Ala., has announced that it is exploring ways to reposition itself in the post-acute care sector. Some possibilities include the sale or spin off of the company’s surgery centers and its outpatient rehabilitation and diagnostic divisions. HealthSouth’s inpatient division accounts for most of its revenue: 58% of consolidated net operating revenues and 86 percent of operating earnings for the quarter that ended June 30, 2006. Jay Grinney, HealthSouth president and CEO, said in a statement that the outpatient, surgery, and diagnostic divisions “compete in sectors with good growth potential. However, we have concluded that there are very few strategic or financial synergies in operating these divisions as one company.”

Learn to guide your organization through the maze of Sarbanes-Oxley regulations at the upcoming HFMA Healthcare Accounting and Financial Reporting Conference.

Experts and advocacy groups have urged Congress to add more stringent patient privacy safeguards to proposed electronic medical records legislation, the Los Angeles Times reports. A bill now in the House would establish a national structure for computerized health records, including stipulations for applying current privacy laws to information that is stored or transmitted electronically as well as reconciliation of differences in state and federal privacy laws.

But advocates—labor unions, consumer groups, and AARP—say the legislation currently does not allow patients to decide who can see their health records or to exclude their records from the system. The legislation also should include a provision that would require patients to be notified if a security breach occurs, advocacy groups say. A House-Senate conference to reach consensus is likely to be contentious, says the Times. 

The Fox Networks Group and the Kaiser Family Foundation are partnering on a new multi-platform public education campaign targeting young people (ages 15 and older) to promote smart choices and healthy life-styles. The campaign, called PAUSE, will help teens understand the power they have to make difficult decisions on a range of issues including teen pregnancy and sexually transmitted diseases, alcohol and substance use, and online safety. In addition to broadcast and cable public service announcements, the campaign will use media platforms popular with teens, including MySpace.com, and conduct health information briefings for Fox producers and writers to help incorporate messages across the network’s entertainment programs.

CMS is reminding providers that a brief hold will be placed on Medicare payments for all claims during the last nine days of the federal fiscal year (September 22 through September 30, 2006). During this nine-day hold, no interest will be accrued, no late penalties will be paid to an entity or individual, payments will not be staggered, and no advance payments will be allowed. All claims held during this time will be paid on October 2, 2006. The policy only applies to claims subject to payment and not to full denials, no-pay claims, and other non-claim payments such as periodic interim payments, home health requests for anticipated payments, and cost report settlements. Read the CMS reminder.

Access HFMA's resources on Medicare reimbursement.

Pennsylvania is poised to become one of the few states in the country to provide health coverage for all children, reports the Philadelphia Inquirer. The Pennsylvania legislature has agreed to pass the Cover All Kids bill by October and the federal government has given the program a tentative approval. The program would offer insurance to all children, with the state subsidizing the $145/month premiums based on parents’ income starting next year. Initially 15,000 uninsured children will be covered at a cost to the state of $4.4 million, expanding by another 75,000 children and $50 million by the fifth year. Illinois has already begun its universal health insurance program for children, and Massachusetts has passed a law requiring all residents to have insurance or pay a penalty.

The California Department of Managed Health Care has assessed a $2 million fine to Kaiser Foundation Health Plan for failing to provide adequate oversight of its Northern California kidney transplant center, which resulted in processing delays of patient transfers on the national transplant waiting list. In addition, Kaiser will provide $3 million in funding to Donate Life California, an organ and tissue donor registry program, to conduct a media and outreach campaign aimed at increasing organ donations. The fine was assessed after consumer complaints prompted a DMHC investigation, which found that Kaiser had inadequate oversight of its medical group, which administers the kidney transplant program; that it failed to ensure that its medical group had the administrative capacity to transfer patients from other transplant center to the Kaiser program; that it failed to provide timely accessibility to specialists in the program; and that it didn’t respond promptly to patient complaints. Kaiser is now transitioning its patients awaiting a kidney transplant to the University of California at San Francisco and at Davis.

DMHC is also conducting an additional medical survey to determine the quality and adequacy of Kaiser’s enrollee grievance and quality of care systems to determine why Kaiser officials did not hear or respond to patient and physician complaints about the transplant program. Kaiser told the Los Angeles Times it has learned from its mistakes. "This experience really has caused our organization to reflect on how we can continue to improve moving forward," said Mary Ann Thode, president of the Kaiser Foundation Health Plan and Hospitals in Northern California. Kaiser said it would not pass the fine on to enrollees in higher premiums.

CMS has posted to its web site the final version of the home health advance beneficiary notice (HHABN) (CMS-R-296) and its accompanying instructions.The form is approved by OMB for use through August 31, 2009. Home health agencies must begin using the new forms by September 1, 2006.  More detailed instructions for using the new HHABN is included in chapter 30 of the CMS manual.

Oregon Health & Science University has announced that its transparency initiative will be among the first in the nation to share aggregate outcomes and patient experience data with the public. OHSU is making new data available that reflect the experiences of all its hospital patients, not just a sample. The aggregate data are for 20 individual clinical service lines at OHSU, including number of patients, mortality, and performance comparisons with similar health centers. OHSU will also release some NRC+Picker Patient experience data. OHSU’s public reporting web site compiles other public data and contains descriptions of OHSU patient safety and improvement programs along with educational material. The educational material is important, says OHSU, so that patients can correctly interpret the quality data. OHSU officials say that although current quality measures are imperfect, starting the process of measuring and comparing healthcare quality will allow providers to “respond to patient demands for better kinds of data.” Read the announcement.

Consumers shopping for prices for healthcare services aren’t always finding the information as easily as they might wish, despite growing efforts by Medicare and hospitals to provide greater pricing transparency, reports the Chicago Tribune. In some instances, consumers who have queried insurers on what they can expect to pay out-of-pocket for various procedures have been told that the prices negotiated with hospitals and physicians are confidential. And the restaurant-type rating system that some insurers are using to compare hospitals’ “cost efficiency” isn’t meaningful, say consumers. “The market just isn’t ready yet to deliver on the promise of these new insurance products,” Larry Boress, president of the Midwest Business Group on Health, told the Tribune.

A handful of insurers, however, are experimenting with providing consumers with more meaningful price data. The Tribune highlights projects by Blue Cross and Blue Shield of Illinois that will calculate average out-of-pocket hospital costs this fall; a pilot project by Aetna that posts negotiated physician prices for more than 100 procedures; and an initiative by the Business Health Care Group of Southeast Wisconsin to get Humana to disclose bundled prices for physician and hospital services for 30 inpatient procedures and six outpatient procedures, revealing huge price variations among providers.

CMS has issued a proposed rule for payments to hospital outpatient services to make them more accurate and to promote higher quality and for ambulatory surgical centers to better align payments with hospital outpatient departments. The outpatient prospective payment system rule is based on a 3.4% inflation update in Medicare payment rates, which will result in hospitals receiving an overall average increase of 3% for outpatient services in 2007. Payment will also be tied to the reporting of quality measures. To receive the full update on outpatient payments, hospitals will be required to report quality measures for inpatient services; those that fail to do so will receive the OPPS update minus 2 percentage points. The rule also proposes to increase from three to five the number of payment levels for visits to a hospital clinic or emergency department, with payment rates based on historical hospital claims data. The maximum payment for clinic visits would increase from $92 to $133, while the maximum payment for ED visits would increase from $244 to $345.

A revised payment system for ASC services, which CMS expects to implement by 2008, will greatly expand the list of surgical procedures for which Medicare pays an ASC facility fee. CMS would specify procedures excluded from payment for safety reasons, and payment will not be made to an ASC for procedures that require active medical monitoring and care at or beyond midnight following the procedures. The proposed rule would also add 14 surgical procedures to the current list of approved ASC services for 2007 and would cap the payment for an ASC procedure at the OPPS rate for the procedure.

Under the proposed rule, hospitals would, for the first time, be required to report consistent measures on patient satisfaction with hospital care and to report risk-adjusted outcomes measures--including 30-day mortality measures for acute myocardial infarction, heart failure, and pneumonia--to receive a full inpatient PPS update. In addition, the proposed rule would require hospitals to file claims with the intermediary with jurisdiction over the hospital’s geographic location until a Medicare administrative contractor--which will handle Part B claims from physicians, laboratories, and other suppliers in addition to hospital claims--replaces the intermediary. CMS is proposing that all providers and suppliers generally be assigned to a Medicare administrative contractor based on geographic location, except that a chain would be permitted to file claims with the MAC having jurisdiction over its home office. Read the news release.

CMS’s proposed rule revising payment rates and policies under the Medicare physician fee schedule includes the statutory formula that requires CMS to implement an expected –5.1% update in payment rates for physician-related services. The negative update is projected for 2007 because spending on physicians’ services and other Part B services has been growing at a much faster rate than target spending. Preventive services, however, will continue to expand under the proposed rule. Abdominal aortic aneurysm screening, for example, will be covered by Medicare, more beneficiaries on steroid therapy will qualify for bone mass measurement, and diabetes outpatient self-management training and medical nutrition therapy will be covered for beneficiaries in underserved areas.

The proposed rule continues the 25% reduction in payment for the technical component of multiple imaging procedures on contiguous body parts (in the 2006 rule, CMS had indicated plans to increase the reduction to 50%), and will cap payments for multiple imaging procedures under the physician fee schedule at the amount paid for the same services when performed in hospital outpatient departments. CMS proposes to apply the multiple imaging reductions first, followed by the OPPS imaging cap, where applicable, which will result in a higher payment than if the OPPS imaging cap were applied first.

In addition, the proposed rule would place restrictions on the types of space ownership or leasing arrangements that will qualify under the physician self-referral regulations or in-office ancillary services exception, and amend reassignment regulations including provisions that would allow employees who reassign benefits unrestricted access to the billing information submitted on the employee’s behalf. Read the news release.

Although the number of children with private insurance has declined by 5% from 1997 to 2004, there is a 31% increase in children enrolled in public programs, according to a new study, The State of Kids’ Coverage, commissioned by the Robert Wood Johnson Foundation. The number of uninsured children in America has decreased by 20%--2 million children--since the government-funded State Children’s Health Insurance Program was approved by Congress in 1997. States with the greatest increase in percentage of kids enrolled in SCHIP and Medicaid since 1997-98 are Alaska (139%), Maryland (139%), Indiana (132%), Wyoming (114%) and Arkansas (109%). But despite the success of public programs, 8.3 million children remain uninsured nationwide. More than 70% of these children, however, are likely eligible for coverage through SCHIP or Medicaid but have not yet enrolled. According to the report, uninsured children are twice as likely not to receive any medical care in a given year, compared with children with insurance, and 35% of uninsured kids don’t have a personal doctor or nurse.

U.S. not-for-profit healthcare organizations reported an average total return of 6.3% on operating funds in FY05, according to the Commonfund Benchmarks Study® Healthcare Report 2006. This was down from an average 8.2% reported in FY04 and 14.1% reported in FY03. For most institutions, operating pools include insurance reserves, endowment/foundation assets, reserves, working capital, and other assets. Funded depreciation asset reserves continue to be the largest category of assets not included in operating funds.

Three- and five-year average returns on operating funds were 10.5% and 4.9%, respectively, up from 6.3% and 4.0% the previous year. The average total return reported for defined benefit pension funds was 7.7% versus 10% in FY04 and 18.1% in FY03. However, three- and five-year defined benefit returns jumped up to 13% and 4.6%, respectively, versus 6.9% and 4.0% the previous year.

This year’s study also showed that size of gifts and donations increased an average of 111%, average total debt decreased for all institutions, and there was a continued shift of asset allocations out of domestic equities and fixed income and into alternative strategies and international equities in FY05.

Late yesterday, CMS announced a “strategic and implementing plan” as part of a report to address issues regarding physician investment in specialty hospitals. The moratorium on payments to certain specialty hospitals for services furnished to Medicare beneficiaries as a result of a referral from a physician with an investment interest in the hospital, imposed by the Medicare Modernization Act, expired yesterday. The plan announces CMS’s position that nonproportional returns on investments and non-bona fide investments may violate the physician self-referral statute and are suspect under the anti-kickback statute.

The plan includes new approaches for implementing gainsharing and value-based payment approaches as a means to align physician and hospital incentives, while achieving measurable improvements in quality of care.

It also contains transparency of investment initiatives, whereby hospitals will be required to provide CMS information concerning physician investment and compensation arrangements, and to disclose to patients whether they have physician investors. Hospitals that do not comply with this new disclosure requirement may face civil penalties of $10,000 per day that they are in violation of the law.

Other components of the plan include providing further guidance concerning what is expected of hospitals that do not have emergency departments, and changes in the enrollment form to identify specialty hospitals.

According to the report, CMS intends to pursue aggressive collection of payments received during the moratorium that were prohibited under certain conditions. CMS has identified potential overpayments of $12.1 million.

Within a few weeks, President Bush will sign an executive order requiring all Medicare providers to adopt quality measurement and reporting tools and uniform IT standards, HHS Secretary Mike Leavitt told the National Governors Association at its annual meeting over the weekend. In conversations with large employers, Leavitt said most of them are planning to require the same standards of the providers with whom they contract, and Leavitt told the governors that they should expect no less from those who treat state employees and Medicaid beneficiaries, reports The Washington Post. The IT standards in the executive order will cover functions relating to registering patients, reporting lab results, writing prescriptions, and providing secure communications between providers and patients. Although Leavitt admitted that some physicians aren’t convinced quality of care will be measured accurately, he maintained that many physicians desire care standards.

Children covered by Medicaid or who have no insurance have significantly higher rates of hospitalization for vaccine-preventable illnesses, asthma, diabetes, and ruptured appendix than children with private insurance, according to a new study published in Pediatrics. Researchers studying pediatric patients in Colorado from 1995 to 2003 and the United States in 2000 found that children with public or no insurance also have twice the mortality rate and almost double the number of emergency department visits. However, for illnesses such as cancer, trauma, and appendicitis, which are not influenced by primary care, the hospitalization rates were nearly the same for children with and without insurance, reports The Denver Post. The researchers estimate that ensuring that children receive adequate primary and preventive care could save the United States more than $5 billion a year in preventable hospitalizations. Yet the study’s authors found that only 23.9% of pediatricians in Colorado were willing to treat Medicaid patients in 2003.

The Center for Health Workforce Studies has issued a new report examining the demographics of emergency medicine personnel in the United States and identifying several trends that may significantly affect future emergency care services. According to The Emergency Care Workforce in the U.S., increasing concerns over bioterrorism and events that result in mass casualties have resulted in calls for increased emergency department capacity and more staff. The aging of the population--and of current ED staff--will result in increased need for emergency services but fewer numbers of personnel to deliver them. New technologies will increase the efficiency of emergency medical care, but staff will need new skills to use them. The country’s increasing ethnic and cultural diversity may also cause language barriers and other cultural competency issues for emergency personnel, who remain relatively homogeneous. And with 12% of open nursing positions estimated to be in the ED, lack of nursing staff is already affecting the delivery of emergency services.

The report also found that people in urban and rural states do not significantly differ in how often they use EDs. Visits per 100 people averaged 36.9 in urban areas versus 42.3 in rural areas in 2001. But the credentials of physicians serving EDs in urban and rural areas were quite different. Of physicians who worked in rural EDs, 67% had no emergency medicine credentials, compared with only 28% in urban areas who lacked formal emergency medicine training.

Based on not-for-profit hospitals’ record profitability in 2005, Moody’s predicts a stable outlook for 2007. According to Moody’s Fiscal Year 2005 Not-for-Profit Health Care Medians, 82% of the 395 not-for-profit hospitals that Moody's rates reported operating profits, compared with 79% in 2004 and 48% in 2000. (Rated hospitals tend to perform better than the median of all not-for-profit hospitals.) Total operating revenue median grew 8.5% as the median expense growth rate declined to 7.6% from 8.0% in 2004. Operating margins improved to a median of 2.8% in 2005 from 2.0% in 2004. Excess and operating cash flow margins, maximum annual debt service coverage, and debt-to-cash flow measures also improved. Rating activity was favorable with upgrades outpacing downgrades for the first time since 1997. “The key factors driving the stable outlook include: relatively good Medicare reimbursement, continued growth in operating revenues that have outpaced operating expenses, strengthened liquidity positions, a solid national economy with improving financial performance of most state and local economies, and better hospital financial management,” said the report.

However, for hospitals to sustain the performance they had in 2005, they will have to reverse declining outpatient and inpatient trends and grow service lines. Median inpatient admissions growth rate declined to 1.2% in 2005 compared with 1.9% in 2004, outpatient surgeries had a 0.5% growth rate compared with 1.4% in 2004, and outpatient visit growth rates declined to 2.9% in 2005 from 3.2% in 2004. Beyond 2007, the following trends may have negative effects on hospitals: potential Medicare cuts, consumer-driven health care, physician and employee shortages, pay-for-performance reimbursement, and riskier investment portfolios, according to the report. For more information, e-mail healthcare@moodys.com.

In response to a series of recent investigative reports by the Los Angeles Times, CMS sent letters last week to 35 organ transplant centers, asking them to verify data on their programs before CMS determines which centers to sanction, including possibly withdrawing federal funding, according to the Times. The newspaper discovered that nearly 50 transplant centers--one in five--did not meet Medicare’s minimum standards of survival rate and number of transplants done each year. “We want to make sure that there’s due process here,” Barry Straube, MD, CMS’ chief medical officer, told the Times. “We’ll be taking action soon.” Straube said CMS will announce the names of the centers that are eventually sanctioned and also that it will release plans to improve its oversight of all transplant centers.

Former HHS Secretary Tommy G. Thompson last Friday released a plan to revamp Medicaid, urging that the federal government take increased responsibility for planning, delivering, and paying for services for the elderly--especially long-term care services--while the states take on greater responsibility for caring for those under 65. In an address to the National Governors Association, Thompson said that by realigning responsibility of the poor elderly to the federal government, it can provide services to the population it knows best and the states can focus on providing care to the other segments of the Medicaid population, including pregnant women, children, and the disabled. “Medicaid right now is a failing program,” said Thompson. “It is costing too much. It does not adequately meet the healthcare needs of the diverse population it is meant to serve. And what’s more, lines of responsibility are so crossed between the federal government and the state government that no one really knows who’s in charge.”

Instead of fine-tuning the current Medicaid program, Thompson’s plan advocates changing the focus of health care from treatment to prevention, with an emphasis on encouraging individuals to play an active role in their own health care through increased health literacy and healthcare homes that provide more cohesive care. Encouraging competition among states, such as vaccinating the most children, could further improve the health of residents and the quality of care, according to Thompson.

To help rein in costs, states should shift Medicaid recipients who qualify for private insurance into commercial health insurance plans, and should also offer Medicaid families more options to meet their healthcare needs, such as providing subsidies to cover the cost of obtaining commercial insurance through employer-based programs. Also, states would be encouraged to recognize and reward high-quality care and to deploy health IT.

Patients have inundated the Vassar Brothers Medical Center in Poughkeepsie, N.Y., with calls following disclosure from the medical center that a laptop with personal information on 257,800 patients was stolen in late June, reports the Poughkeepsie Journal. The stolen laptop was secured to a mobile cart in a secured room in a restricted area that medical personnel can access only with a key card. The patient information was not encrypted but was protected by a password and was stored on the laptop for a backup admissions database to the emergency department in the event of a power outage. The laptop was also used during two disaster drills. Besides helping patients file fraud alerts with credit bureaus, Vassar Brothers has tightened security on its data storage and access to laptops. “We intend to make sure, through various means, that something like this never happens again,” said Daniel Aronzon, president and CEO of the medical center.

Now available for industry review are the ASC X12N Additional Information to Support a Health Care Claim or Encounter (275) Implementation Guide (005010X210), and the ASC X12N Health Care Claim Request for Additional Information Implementation Guide (005010X213). The documents were developed by the patient information transactions and claim status work groups within the healthcare task group of the insurance subcommittee of X12. X12 is an accredited standards committee under the American National Standards Institute.

The Additional Information to Support a Health Care Claim or Encounter Implementation Guide describes the use of the ASC X12 Patient Information (275) transaction set to provide additional information, such as operative notes or ambulance mileage, to a healthcare payer and/or local, state, or federal government agency regarding a healthcare patient claim or encounter. The guide is based on version 005010 of the ASC X12 family of standards.

The 277 implementation guide allows a healthcare payer to request additional information to support a healthcare claim or encounter. The guide is based on version 5010 of the ASC X12 family of standards. The public review period for both guides will close on Aug. 30, 2006. Download the 275 and 277 guides for review.

The Agency for Healthcare Research and Quality has issued a brief documenting the degree of racial and ethnic disparities in preventable hospitalizations in 2003. Blacks had the highest rates of preventable hospitalizations, followed by Hispanics, whites, and Asians. Admissions were almost five times higher for blacks compared with whites for uncontrolled diabetes without complications and for hypertension, while Hispanics were 3.6 times more likely to be hospitalized for uncontrolled diabetes and more than 2.4 times more likely to be hospitalized for hypertension than whites. Blacks also had the greatest number of admissions for adult and pediatric asthma, perforated appendix, dehydration, and low birth weight. Hispanics has the most hospitalizations for elderly asthma, pediatric gastroenteritis, and urinary tract infections. The only condition for which Asians had higher rates of hospitalizations than whites was elderly asthma. For chronic obstructive pulmonary disease, hospital rates were similar for whites, blacks, and Hispanics.

State and local government spending on healthcare and welfare IT is expected to grow from $7.6 billion in FY06 to $12.2 billion by FY11, according to a report recently released by INPUT, which helps companies develop government business. Major program integration along with the advancement of health IT initiatives are the major factors behind the market’s growth over the next five years.

INPUT’s State & Local Health Care/Welfare MarketView also projects that state and local IT spending will be driven by the pressing need for program efficiencies as well as fraud and abuse reduction, which will inevitably result in the consolidation of healthcare and welfare systems. In the short term, states will begin exploring data warehousing projects to pull data from multiple sources for reporting and trending purposes that predicate the larger effort. The next 18 months will “be a watershed period,” said James Krouse, acting director, public sector market analysis at INPUT, in a statement, “as key prototypes and studies are concluded and related legislation makes its way through Congress, resulting in a large influx of funding and more clearly defined direction for the allocation of these funds.”

Blue Cross and Blue Shield Plans have announced a database, called Blue Health Intelligence, that the Blues say will contribute to greater healthcare transparency by ultimately providing “unmatched detail about healthcare trends and best practices.” The Blues claim their database, which comprises claims information from 79 million lives, is significantly larger than existing healthcare data warehouses and, consequently, that the precision of the measures and benchmarks will exceed that of their competitors.

Initially, employers will be the beneficiaries of BHI to better manage and provide greater value in the healthcare benefits they offer their employees. BHI also will support analyses in trend identification, benchmarking, and predictive modeling. In the future, BHI will be available to consumers to help them make healthcare decisions and to providers to give them information about the efficacy of treatments and technologies and on emerging trends in healthcare delivery. Twenty Blues plans currently are participating in BHI, and access to the aggregate data will be available only to them. BHI is currently being pilot-tested and will be operational by 2007.

Sens. Chuck Grassley, R-Iowa, chairman of the Senate Committee on Finance, and Ranking Member Max Baucus, D-Mont., have introduced legislation to give the Centers for Medicare and Medicaid Services an opportunity to develop a process to accurately adjust inpatient hospital payments for differences in area labor prices. After a federal appellate court ordered CMS to apply the occupational mix adjustment to 100% of the wage index effective for FY07 instead of a 10% adjustment CMS had been making for FY05 and FY06, CMS hurriedly collected data based on only three months and has not had sufficient time to analyze them fully and determine their accuracy. Grassley and Baucus said that their bill--the Medicare Wage Index Improvement Act of 2006--would maintain the current 10% occupational mix adjustment for the next two fiscal years and require CMS to conduct a study on the collection of data and the manner in which the occupational mix adjustment is calculated. “Both of these actions will give hospitals more time--and more information--to better understand the effect of the occupational mix adjustment,” said Baucus. “This bill will ensure that any unforeseen consequences of phasing in of the occupational mix adjustment can be spotted early and controlled or avoided.”

A panel of prominent healthcare leaders has issued a report stating that the United States falls far short of providing high-quality, safe, well-coordinated, and efficient care accessible to all Americans, and that we are failing to deliver adequate value for the very high proportion of resources we devote to health care in this country. According to the Commonwealth Fund Commission on a High Performance Health System, the most crucial failings of the current health system are a lack of incentives to make sustained improvements; payment structures that are misaligned and provide financial incentives for inefficient care; not enough investment in health IT; and a persistent lack of accountability. The commission also stated that central to improving U.S. health care is the need to establish more organized systems of care so that individual practitioners and hospitals can have structures for implementing known quality and safety improvements and IT advances; a sufficiently broad base to enter into pay-for-performance contracts; the ability to provide reliable and objective public comparison of results among systems and providers; and the ability to care for patients across a range of needs for acute and chronic services.

The commission plans to release an annual national scorecard to monitor how the country is performing on key health indicators. The scorecard, to be released this fall, will be the first to provide scores on all key dimensions of healthcare system performance as well as specific achievable benchmarks for improvement.

The Centers for Medicare and Medicaid Services has issued a final rule for Medicare’s inpatient prospective payment system reforms, effective for discharges on or after Oct. 1, 2006. The changes will be phased in over a three-year period instead of requiring hospitals to fully transition to the new system in 2007 as earlier proposed. The payment reforms align hospital payments more closely with the costs of a patient’s care by using hospital costs rather than charges, and by accounting more fully for the severity of the patient’s condition.

Payment to all hospitals will increase by an average 3.5% for FY07 when all provisions of the rule are taken into account. In addition, while some diagnosis related groups have significant payment increases, no DRG has an FY07 payment reduction of more than 5.4%. More than 1,000 hospitals in rural areas will see an average increase of 3.7% in FY07; urban hospitals will see an average increase of 3.4%, and cardiac specialty hospitals will see an average increase of only 1.2%. About 2% of hospitals will experience payment decreases due to certain wage index changes. Overall, the final rule is estimated to increase payments to acute care hospitals by $3.4 billion.

Based on public comments, CMS has refined the methods used to determine average costs per case at the DRG level. For example, it has expanded the number of distinct hospital departments used in the calculations from 10 to 13; included more hospital data in the final calculations by applying less stringent criteria for eliminating statistical outliers; and accounted for hospital size when evaluating the markup of charges over costs. Together, these refinements result in substantially smaller changes in payment than CMS proposed earlier this year. In addition, CMS is announcing steps to further evaluate hospital charging practices--particularly for expensive items like medical devices--as part of further improvements for 2008.

CMS is also implementing a significantly lower threshold for cost “outlier” status than had been proposed earlier this year. The law requires that Medicare provide additional payment if a hospital’s costs for treating a case exceed the usual Medicare payment for that case by a set threshold. In FY06, a hospital had to lose more than $23,600 on a case to receive additional Medicare payment. For FY07, CMS had proposed to increase this threshold to $25,530. The final rule for 2007 sets a threshold of $24,475. Further, CMS also changed how it calculates the loss threshold based on comments from hospital stakeholders. Medicare expects the additional payments for high-cost cases will equal 5.1% of total inpatient payments. Read the news release.

Inpatient rehabilitation facilities are projected to receive approximately $7 billion in payments from the Medicare program in FY07 under a final rule announced yesterday by CMS. The rule updates payment rates and modifies payment policies for services furnished to Medicare beneficiaries for discharges occurring on or after Oct. 1, 2006, through Sept. 30, 2007. The rule’s provisions are estimated to increase Medicare payments to approximately 1,240 IRFs in FY07 by approximately $50 million. The rule provides for an update to IRF payment rates of 3.3%, and implements certain provisions in the Deficit Reduction Act of 2005 affecting IRFs.

The rule delays by one year the existing regulations regarding the three-year phase-in to a 75% compliance threshold--a requirement that, when fully phased in, requires that at least 75% of an IRF’s patient population have one of the 13 designated medical conditions for which intensive inpatient rehabilitation services are medically necessary. Thus, for providers with cost reporting periods that start on or after July 1, 2006, and before July 1, 2007, the compliance threshold will be 60%. For providers with cost reporting periods starting on or after July 1, 2007, and before July 1, 2008, the compliance threshold will be 65%, while the 75% threshold will be imposed for providers with cost reporting periods beginning on or after July 1, 2008.

In addition, the final rule includes a 2.6% reduction in the standard payment amount for FY07, to offset the effect of changes in coding that do not reflect real changes in patient acuity. This is less than the 2.9% adjustment included in the proposed rule. As a result, the final rule increases the outlier threshold for high-cost outlier cases to $5,534 in 2007, which is less than the $5,609 in the proposed rule. At this level, CMS projects that estimated outlier payments would equal 3% of total estimated payments under the IRF PPS.

Treasury Secretary Henry Paulson, in a speech at Columbia University in New York, vowed to stop runaway spending of federal benefit programs, such as Social Security and Medicare, reports The San Diego Union-Tribune. As a former banking chief, Paulson’s credibility and clout with financial markets is expected to carry weight and spark progress in a Congress that is deeply divided over the direction of federal entitlement programs. “The entitlement challenge is difficult, but it is fixable,” Paulson said. “And given our expanding economy we can approach the issue from a position of strength.” In his first speech as treasury secretary, Paulson also admitted that rising healthcare costs are denying many Americans the benefits of a healthy economy.

Stress on hospital-physician relationships due to financial pressures can be mitigated by hospitals developing formal, written physician-hospital alignment plans that are approved by the board and created with substantial input from medical staff, according to a study by Mitretek Healthcare and the American Hospital Association’s Society for Healthcare Strategy and Market Development. Strategies for Strengthening Physician-Hospital Alignment: A National Study examines the multiple factors that make hospital leaders and physicians want to collaborate with one another and the strategies that hospitals are using to achieve physician-hospital alignment. The report provides benchmarking data on 60 such strategies and assesses their effectiveness. Examples of hospital initiatives to strengthen hospital-physician ties include collaborative decision making related to issues that affect physicians; increased communication, visibility, and accessibility of the CEO and senior managers; better economic alignment; and building a more positive organizational culture for employees, physicians, and patients. For more information, call the Society for Healthcare Strategy and Market Development at 312-422-3888.

The Department of Health and Human Services has announced final regulations supporting physician adoption of electronic prescribing and electronic health records technology with exceptions to the physician self-referral law. The final rules establish the conditions under which hospitals and entities furnishing designated health services may provide physicians with hardware, software, or IT and training used for electronic prescribing and interoperable EHRs.

More extensive than the exceptions and safe harbors proposed by the Centers for Medicare and Medicaid Services and the Office of Inspector General last year, the final regulations state that donations protected under the exception may be made to any physician by entities furnishing designated health services, and the safe harbor covers a broad array of providers, suppliers, practitioners, and health plans when they provide EHR technology to physicians and others engaged in the delivery of health care. Among other conditions, the final rules for arrangements involving the donation of EHR technology include a cost-sharing requirement. Recipients are required to pay 15% of the cost of the EHR technology items and services, and donors cannot finance the physician’s payment or loan funds to pay for IT items. In addition, the exception and safe harbor arrangements will sunset on Dec. 31, 2013. A CMS fact sheet outlines the physician self-referral exemptions for e-prescribing and EHR technology. Read the press release.

Medicare has met its target of 90% prescription drug coverage for seniors, but two million seniors who take one or more prescriptions have not enrolled, according to a study published in Health Affairs. The study shows that enrollment rates are lowest among people who are healthy now and are using no prescription drugs and among the less healthy who currently use prescription drugs but had no insurance coverage prior to Part D. The most problematic groups are widows, unmarried women, and less-educated people who were not previously covered through veterans, employer, or union plans.

The study also showed that most Medicare beneficiaries are dissatisfied with the drug benefit. More than half had difficulty understanding how the program worked and what savings it would yield. More than 90% expressed concern that coverage for specific drugs could change, and 88.4% viewed the gap in coverage as a significant drawback. More than half said that their experience with the program so far left them less satisfied with the Medicare program as a whole.

The authors caution Congress against making any immediate legislative changes to Part D, but recommend that there be increased efforts to bring nonenrolled people into the program; that insurers be required to present information on plan features and costs in an easily understood, comparable format; that the enrollment process be simplified; and that seniors be encouraged to choose plans with gap coverage.

In a memorandum to reporters and editors, Sen. Chuck Grassley, R-Iowa, chairman of the Senate Committee on Finance, said he was dismayed to see in the recent Government Accountability Office survey on not-for-profit hospitals’ executive compensation that many hospital boards “are not aware of their roles.” He cited survey results that one-third of respondents had no written criteria for selecting executive compensation committees and that, in 17% of the hospitals, top executives were members of those committees. “When the board members fail to understand the gravity of the task before them, charities suffer,” he wrote. Grassley also said he was concerned that nearly 80% of the hospitals provided supplemental executive retirement plans, which he said could lead to “exorbitant deferred compensation amounts” and was not a wise use of the public’s money. Some of the surveyed not-for-profit hospitals, said Grassley, were paying their executives benefits that mirror those in corporations. “It’s clear much more needs to be done to ensure that not-for-profit hospital executives are not being paid extravagant amounts and are being held accountable for what they’re paid,” Grassley concluded.

In a speech on Monday, Sen. John Kerry, D-Mass., called for a federal mandate that would provide universal health insurance by 2012, reports The Boston Globe. Kerry, a possible contender for the presidency in 2008, said his proposal would first cover all children by increasing the federal contributions to state Medicaid programs.

Also, all individuals and employers would be eligible to purchase the health plans offered to federal employees, and the federal government would pay for catastrophic care insurance, according to Kerry’s proposal.

Kerry’s universal healthcare plan would cost $653 billion over 10 years, which Kerry said could be funded by repealing the tax cuts given to affluent Americans earning more than $200,000 a year. In announcing his healthcare reform, Kerry blamed Democrats as well as Republicans for creating a nation of uninsured people. “We can’t triangulate this issue,” Kerry said. “The Democratic Party must stand for health care for all Americans, or we don’t stand for anything at all.”

CMS announced a 3.1% increase in Medicare payment rates to home health agencies for CY07, an additional $460 million in payments. CMS proposes to evaluate home healthcare quality by relying on the submission of 10 outcome and assessment information set quality measures that are currently being publicly reported. HHAs that submit the required quality data will receive a 3.1% increase in payments. If a HHA does not submit quality data, the home health market basket percentage increase will be reduced to 1.1% for CY07. Rural home health agencies that participate in the ongoing quality measurement effort will see an estimated 3.3% increase in payment, while urban agencies that continue to provide quality data will experience an estimated 2.9% increase in payments.

CMS is also proposing to revise the payment methodology for oxygen equipment, oxygen contents, and capped rental durable medical equipment. This proposed rule would ensure that Medicare pays appropriately for these items and would reduce out-of-pocket costs for beneficiaries who pay a 20% copay on this equipment. Read the press release.

Even one hour of ambulance diversion can result in significant revenue losses for emergency departments, but increasing intensive care unit bed capacity can greatly decrease diversion and increase monthly net revenues, according to a new study published in the Annals of Emergency Medicine.

The study examined an urban 400-bed, acute care teaching hospital with a level one trauma center that treats approximately 43,000 emergency patients each year. Every hour of ambulance diversion cost the hospital approximately $1,100 in revenues, even without including trauma patients who typically generate the highest revenues. This is due in part to the fact that ambulance patients are more likely to be admitted to the hospital and are significantly more likely to be covered by Medicare.

Visits by ambulance patients resulted in average net revenues and charges that were almost three times larger than patients arriving at the ED by other means. When the ICU beds were increased and ambulance diversion decreased, the hospital gained approximately $175,000 per month in additional revenues--a 10% increase--generated by ambulance patients.

The president of the American College of Physicians told a hearing of the House Energy and Commerce Subcommittee on Health that Medicare should pilot test a patient-centered medical home, and urged Congress to direct Medicare to institute a new model of financing and delivering care. Lynne Kirk, MD, described 10 clinical conditions for which hospitalizations can be reduced if physicians are properly paid to spend the time to delay or prevent complications. Currently, Kirk told the subcommittee, Medicare does not reimburse internists for follow-up on patient self-management plans, for coordinating care among the healthcare team, or using health IT to track care.

Along with the American Academy of Family Physicians, the ACP is advocating for a four-part patient-centered medical home. “Payments should reflect the value of services involved in coordinating care,” Kirk emphasized. “Payments should be sufficient to support practices in acquiring the needed information technologies. Physicians in a patient-centered medical home should be able to earn higher performance-based payments and share in savings from reductions in avoidable hospitalizations attributable to them.” Kirk also outlined a voluntary program that would link Medicare payments to reporting on quality measures and would allocate payment to physicians on a weighted basis. It would be funded by dedicating Part B dollars toward creating a physicians’ quality pool, said Kirk. Read the press release.

Several medical tourism companies are pitching overseas medical care to self-insured employers with claims that the bills will be two-thirds less than if employees sought care in the United States. United Group Programs in Florida is advertising cardiac bypass surgery in Thailand at savings of $60,000 to $70,000 per procedure, Insurers Health Net offers medical care in Mexico, MedRetreat will target employers with overseas medical care next year, and a bill in West Virginia would grant cash incentives and first-class travel to state employees who go to hospitals abroad, reports USA Today. Although healthcare consultants believe foreign medical care will appeal more to small companies than large corporations, three Fortune 500 companies have hired Arnold Milstein, MD, of Mercer Health & Benefits, to evaluate the advantages of sending employees abroad for major surgeries. Interest in overseas medical care is “going to spread much more widely,” Milstein told USA Today. Milstein also surveyed employees to determine what type of incentives will entice them to go abroad for care. “For small incentives, Americans are not going to get on a plane and fly to a strange country and interact with a physician they don’t know,” he says. “The incentives will need to be in the $5,000 to $10,000 range, plus travel and hotel for the employee and spouse.”