A new report released by the Kaiser Family Foundation says that higher co-insurance reduces health care use and lowers health spending, but does not adversely affect the health of the average person. The report uses findings from the seminal 1970s RAND Health Insurance Experiment along with recent data to shed light on policy debates about appropriate cost-sharing levels. Prepared by Jonathan Gruber of the Massachusetts Institute of Technology, The Role of Consumer Copayment for Health Care reviews the potential for income-related limits to balance incentives for reduced use of services.
The primary conclusions of the report are that higher co-insurance reduces healthcare use and lowers health spending; patients of average health and income see no adverse health consequences when they are in a plan with co-insurance compared with those in a plan with no co-insurance; and high-risk patients, especially those in the low-income bracket, realized important health benefits when enrolled in plans with no co-insurance. “The results are surprisingly robust and hold across many subsamples of the data: rich and poor, sick and health, adult and child,” concludes the report. “The one clear negative impact on health occurs only for those who are at high medical risk, particularly if they are also of lower income.” But given the huge treatment advances that have been made in the last 30 years, reduced care today may have more serious consequences for health outcomes than was true in the 1970s, cautions the report. On the other hand, “treatment is general has become much more expensive and intensive, so it could also be that the care that is reduced by cost sharing is still on the flat of the effectiveness curve.”
Nearly half of recent emergency department patients feel their problems could have been handled by a physician’s office visit--had they had access to a physician--according to an issue brief published by the California HealthCare Foundation. The patient survey found four primary factors that drive increased ED use by insured patients who are not critically ill: lack of same-day appointments with a primary care physician or evening and weekend appoints, lack of advice on how to handle sudden medical problems, lack of alternatives to the ED (nurse advice lines or urgent care clinics), and positive attitudes about the ED as a site of care.
Medi-Cal patients were more than twice as likely as those with private insurance to have used ED services in the past year. And they were more likely than those with private insurance to believe that, compared to a doctor’s office, the ED provides a higher quality of care. Chronically ill patients also had disproportionately greater ED visits because they feel they have few alternatives for medical needs that occur at night or during the weekend.
The need for better communication between physicians and patients was apparent from the survey findings. While 76% of primary care physicians reported encouraging patients to contact them before going to the ED, only 35% of Californians confirmed that their doctor had done this. Similarly, most primary care physicians said they were able to accommodate all or almost of their patients requesting a same-day appointment, while more than half of Californians reported being unable to get a same-day appointment the last time they were sick or needed immediate care.
Consumer advocacy groups AARP and the National Partnership for Women and Families have collaborated with the Surgical Care Improvement Project to develop a patient tip sheet that provides specific questions patients can ask their physicians and nurses before surgery to ensure they are receiving care that will reduce their risk of having complications. Steps to Safer Surgery prompts patients to ask providers about the length of time antibiotics will be given before and after surgery, what precautions will be taken to prevent blood clots, and whether other medications the patient is taking will increase risks for heart attacks.
SCIP is working to prevent complications in four areas that constitute 40% of the most common complications after major inpatient surgery: infection, blood clots, and adverse cardiac and respiratory events. The goal is to use evidence-based measures to reduce preventable surgical complications nationwide by 25% by 2010. The SCIP partnership includes such groups as the Agency for Healthcare Research and Quality, American College of Surgeons, American Hospital Association, the Joint Commission on Accreditation of Healthcare Organizations, and CMS.
Congressional Democrats have criticized the 2007 Medicare handbook sent to all Medicare beneficiaries, claiming that it favors private Medicare Advantage HMO and PPO plans over traditional Medicare fee-for-service, according to The New York Times. The handbook “presents a misleading and biased view of Medicare coverage and options,” the Democrats said last week in a letter to Michael O. Leavitt, Secretary of HHS. The handbook states that Medicare beneficiaries may be able to save money by enrolling in Medicare Advantage plans, which may also include extra benefits, such as glasses, hearing aids, and dental care. In defense of the handbook, the Bush administration said that patients could save more than $100 a month on average by enrolling in private health plans. “Our only goal is to provide information that is accurate, useful and objective,” said Lorraine A. Ryan, a spokeswoman for CMS.
Premiums for HMOs rose 6% from 2005 to 2006, the smallest change since 1997, and PPO premiums increased a modest 4%, according to the Milliman 2006 Group Health Insurance Survey. For 2007 renewals, HMOs anticipate the book-rate premiums to increase 10 to 11%, while PPOs anticipate premiums to increase 12 to 13%, although actual rate increases will differ based on group experience, contract negotiations, changes in cost sharing, and market conditions. HMO and PPO survey respondents reported that hospital inpatient costs per admission increased about 8%, while professional fees increased about 5% for HMOs and 9% for PPOs, according to 2005 and 2006 data. (Download a summary of the survey findings.)
The survey also indicates that 97% of HMOs and PPOs plan to offer employers a consumer-directed health product within the next year, although growth of CDH products has been slower than respondents predicted in prior years. The vast majority of plans either currently or will provide within the next year provider quality information and treatment option information. But those sharing hospital and physician services pricing information has stalled around 50%.
The frequency of medical malpractice claims has stabilized for the second straight year, according to the seventh annual Aon Hospital Professional Liability and Physician Liability Benchmark Analysis based on data from more than 700 healthcare facilities. The bad news is that the average size of malpractice claims continues to rise at a rate of 6%. The average amount paid to indemnify claimants, however, is increasing at a rate of only 3%, while amounts paid to defend against liability claims are growing at 17% as hospitals invest in claims management.
State-level tort reform has already had an impact on stabilizing claims, according to the study, and patient safety and quality-of-care initiatives are expected to sustain the trend. This year's study found that a statistically significant relationship exists between mortality and claim frequency in certain segments of the database. For example, after adjusting for patient volume and acuity, Texas hospitals with 200 mortalities in 2004 experienced 6 indemnity claims while hospitals with 150 mortalities experienced 4 indemnity claims.
"While it is logical to believe that organizations that reduce preventable harm to their patients will also reduce professional liability claim counts and costs, our study takes a first step at proving this true with data,” said Greg Larcher, director of Aon Risk Consultants. “In the long term, the industry would benefit from a more comprehensive measure of quality, beyond mortality, that measures the success of patient safety improvements and their impact on liability costs."
Healthcare reform may get a jumpstart if the Democrats take control of Congress in the upcoming midterm elections, say a majority of U.S. adults polled recently by USA Today and Gallup. In the poll, 60% of respondents feel that the Democrats would pass legislation to provide health insurance to the uninsured, and 79% would agree with that decision. Moreover, 52% think that the Democrats also would allow purchase of prescription medications from other countries with 72% supporting the measure. House Minority Leader Nancy Pelosi (D-Calif.), who is set to become the first female House speaker if the Democrats win control, has said she would aim to lift the ban on the government negotiating directly with pharmaceutical companies for reduced drug costs for Medicare patients, USA Today reports.
The Washington Hospital Center in Washington, DC, is demonstrating that the model of physicians making house calls can considerably reduce hospitalization costs for elderly patients, reports the Washington Times. Washington Hospital estimates that the house calls, which cost $35,000 per year per patient, prevent $75,000 in hospital costs for each patient annually. Medicaid reimbursement for the home visits is “very progressive,” say the physicians who run the program, which has 17 staff members, including social workers. About 150 to 170 patients weekly are served by the program and all patients live within a 10-mile of the physicians' offices. Several other hospitals have inquired about the program, but a city has to have a large population of needy elderly patients to make house calls pay off, Rick Wade, senior vice president for communications for the American Hospital Association, was quoted as saying.
U.S. charitable contributions to healthcare facilities and organizations rose by a record 16% in 2005 to $7.089 billion, according to a report issued by the Association for Healthcare Philanthropy. The number of donors grew by 4.6% and the number of gifts received grew by 2.2% from FY04 to FY05.
Individuals provided 60% of all funds raised; businesses, including corporate foundations, supplied 18.2% of the funds; foundations other than corporate, 12.7%; and other sources (hospital auxiliaries, public agencies, civic groups, etc.), 9.9%. Approximately 84% of donors were individuals, unchanged from the previous year. Businesses, including corporate foundations, made up 10.9% of the donors but provided 18.2% of the funds. Nonphysician employees represented 18.9% of individual donors, higher than the 15.9% share in FY04. The next largest group was patients at 16.5% of all individuals, followed by physicians (5.5%) and board members (4.9%).
AHP estimates that cash contributions to U.S. member institutions/organizations totaled $5.105 billion, 72% of total funds raised, including the sale of securities ($305,000,000), and nonmonetary gifts ($50,000,000). Nearly $2 billion of total funds raised was pledges, with the major portion of that secured but not yet paid (20.6% of total funds raised). Planned gifts secured but not yet paid represented more than $400 million. Read the AHP announcement.
Some hospitals are finding that offering free, continuing basic care to uninsured patients with chronic conditions can save on healthcare costs, reports The New York Times. The Seton Family of Hospitals in Austin, Texas, for example, uses both its revenue and donations to fund nearly free care for almost 5,000 patients in the belief that providing regular care for patients with chronic conditions such as diabetes is less costly than paying for patients’ frequent trips to the emergency department. The Catholic hospital system not only identifies patients who are frequently in the ED or hospitalized, but also those who have incomes just above the threshold for charity care or those outside the county, and provides them free care. The intervention saved $475,000 in hospitalizations in one year for 631 asthma patients alone.
Americans struggling with rising healthcare costs say these increases cut into personal savings and affect household finances, according to the 2006 Health Confidence Survey released by the Employee Benefit Research Institute. Thirty-six percent say increased healthcare costs result in a decrease in savings for retirement, up from 25% in 2004, while 28% reported difficulty in paying for even basic necessities, up from 18%.
When asked specifically about employment-based coverage, most Americans value those health benefits more than an increase in salary. Workers said they would need at least $11,000 in additional taxable income to willingly give up employer-sponsored health care. Although 59% of respondents rated the healthcare system as fair or poor, consumers still use quality rather than cost as their primary consideration when making decisions about care, according to the survey. They give more weight to quality when choosing a provider for open heart surgery (89%) and cancer treatments (87%), while others consider quality over cost when seeking lesser treatments like immunizations or an annual physical (72% each). Read the survey report.
Consumer-directed health plans can reduce healthcare use and lower costs, but it is debatable whether these high-deductible plans can accomplish this without deterring consumers from seeking needed care, according to a RAND Corporation study published on the Health Affairs web site. RAND researchers estimate that if all privately insured, nonelderly Americans were moved from low-deductible health insurance plans to consumer-directed plans, the result would be a one-time reduction in healthcare utilization of 4% to 15%. However, pairing such high-deductible plans with health savings accounts could offset those reductions by as much as half.
Although people who pay more out-of-pocket for health care tend to spend less on “inappropriate” or “unnecessary” care, it’s not known whether these plans will deter people from getting necessary and needed health care. The 1974-82 RAND Health Insurance Experiment found that increased cost-sharing prompted consumers to forgo appropriate and inappropriate care alike--but with no apparent adverse health effects. RAND is undertaking a four-year, $4 million study co-sponsored by the California HealthCare Foundation and the Robert Wood Johnson Foundation to examine the effect of high-deductible health plans--with and without spending accounts--on use and quality of care, including differential effects based on health status, income, and other factors.
Despite greater awareness of diversity and initiatives to provide equal health care, racial disparities still exist, according to two new studies published in JAMA. Racial minorities are less likely to receive certain types of care, such as appendectomies, heart bypass surgery, or basic tests and drugs for heart disease and diabetes. Moreover, minority patients are less likely to have surgical procedures performed at high-volume hospitals. One study found that clinical performance on Health Plan Employer and Data Information Set outcome measures was 6.8% to 14.4% lower for blacks enrolled in a Medicare health plan. The other study found that blacks were only 71% as likely as whites to receive an abdominal aortic aneurysm repair at a high-volume hospital and that Medicaid beneficiaries and patients without insurance consistently received surgical procedures at low-volume hospitals. Some of the reasons for the disparity in choice of hospitals, according to the study, may be a lack of patient understanding about the effect of volume on quality, inadequate transportation to high-volume hospitals, and the fact that physicians treating black patients are less likely to be board certified.
“Everyone wants to improve quality, but it’s difficult,” Clifford Y. Ko, MD, a co-author and professor of surgery at UCLA, told The Washington Post. “Not everyone can go to these high-volume places. I personally think that instead of identifying one out of however many hospitals that people should go to that might have good outcomes, we should try to improve care at all hospitals.”
Of the hospitals that it rates, not-for-profit hospitals have continued to strengthen their financial performance and market positions, giving them an overall credit edge over for-profit competitors, says Moody’s Investors Service in a newly released special report, A Look Inside For-Profit Hospital Companies: Less of a Threat to Not-for-Profit Hospitals Today Than in the Past.
Although for-profit hospital companies were once viewed as highly efficient operators that were rapidly expanding through acquisition of not-for-profit hospitals, the demise of Columbia/HCA, numerous federal investigations, and the Balanced Budget Act of 1997 have cast a pall over the for-profit sector. “Many for-profit companies are experiencing senior management turnover, costly stock repurchases, and increases in bad debt and charity care, which is a new phenomenon for many of them,” states Moody’s senior vice president Lisa Goldstein, who wrote the report.
Today, partly due to the threat from the for-profits, not-for-profit hospitals are stronger competitors as they have improved their operations, sharpened their focus, added new management and finance expertise, and learned to reap better advantage from the economies of scale of multihospital systems. The return to core acute care operations and the shedding of unprofitable ventures also contributed to stronger results.
Moody’s currently maintains ratings on 10 for-profit hospital companies representing about 470 hospitals and on 543 not-for-profit hospitals and health systems representing about 1,200 hospitals. Most of those for-profit hospital companies are rated below investment grade. By contrast, of the not-for-profit hospitals that Moody’s rates, only 10% are rated below investment grade, and most of these represent downgrades from prior investment grade status. For more information about the report, call 212-553-4431.
Family practice medical groups, unable to fully absorb a 6.3% increase in operating costs and continued declines in reimbursement, reported a decline in margins (total medical revenue after operating cost) of 3.5% overall in 2005, according to the Medical Group Management Association’s Cost Survey: 2006 Reports Based on 2005 Data. The single-specialty report found that the financial health of group practices varied considerably by medical specialty, however. For example, ob/gyn practices reported a decline in margins of 2%, while anesthesiology groups experienced a 3.9% increase in margins.
For multispecialty groups, several cost categories seem to be responsible for a 7.6% overall increase in general operating cost per FTE physician. Building and occupancy cost per FTE physician rose 11.2% in 2005 to $40,878, and medical/surgical supply costs rose 11.1% to $9,355 per FTE physician. IT costs increased 10.9% in 2005 to $10,093 per FTE physician, suggesting that groups are purchasing new IT systems in hopes of realizing future benefits. Support staff costs for these groups inched up to 8.6% overall. Even with these increases in operating cost, multispecialty groups boosted margins by 7.3% to $253,230 per FTE physician in 2005. This increase can be attributed to a rise in overall production by 5.9% (measured by total procedures per FTE physician). Read the press release.
As healthcare organizations strive to increase diversity among their leaders, persons with disabilities are still overlooked in executive suites, the American College of Healthcare Executives reports in a study with the Rehabilitation Institute of Chicago, The Prevalence and Impact of Disability Among Healthcare Executives. In a survey of 832 ACHE affiliates, 7.6% of respondents reported some sort of disability. Just 21% said that their disability kept them from performing fully at work, compared with the remaining 79%, who reported that their job was not affected. Yet, seven respondents felt they had experienced job discrimination because of their disability, three reported being turned down for a promotion, and three said they had been denied a workplace accommodation. Some of the disabled respondents said they attempted to hide their disabilities to obtain or hold positions, and others said co-workers did not take their disability seriously.
With nearly 30% of respondents agreeing that healthcare executives should develop a greater understanding of people with disabilities, ACHE notes four main actions healthcare organizations can take: improve all affiliates’ understanding of persons with disabilities; develop ways to meet the needs of persons with disabilities; recruit persons with disabilities into the profession and provide them with support; and advocate for reform.
Although voters show considerable concern about the rising costs of health care, according to a new Kaiser Family Foundation poll, that issue likely will not dominate in the upcoming Nov. 7 congressional elections. The poll shows that 46% of voters are “very worried” about rising healthcare and insurance costs. Still, when this group of voters was asked to identify the most important election issue, 30% named the Iraq conflict, more than twice as many who named any other issue. Moreover, health care may not get as much attention because 37% said that they plan to vote mainly on candidates’ personal characteristics, according to the poll. Another 24% will vote based on their general sense of what is happening in the nation. Only 35% plan to vote based on issues. Although Iraq dominates in the public’s mind, the poll does show an “underlying feeling” that Congress needs to further address domestic issues, such as health care.
U.S. Sen. Charles Grassley, R-Iowa, chairman of the Senate Finance Committee, announced that he will seek a six-month extension of Section 508 of the Medicare Prescription Drug, Improvement and Modernization Act of 2003, which is set to expire in March 2007. The provision affects 120 hospitals that are entitled to obtain geographic reclassifications for purposes of using a more appropriate wage index and receiving more accurate Medicare payments. “Medicare hospital payments need to adequately account for differences in wages so that hospitals are able to obtain staffing in a competitive workforce environment,” Grassley said. Grassley is also seeking a long-term solution to problems with the area wage index in addition to the six-month extension. Read the release.
The Centers for Medicare and Medicaid has created a tip sheet that providers can give to seniors to help protect them from scams when they enroll in Medicare prescription drug plans starting in November. CMS advises beneficiaries, for example, to never release their Medicare number to unsolicited callers or on the Internet unless they are enrolling in a drug plan online. The tip sheet also lists Medicare’s rules on what plans are forbidden to do, such as charge a fee to enroll in the plan, ask for payment over the phone or online, or enroll a beneficiary over the phone unless the individual initiated the contact. CMS also provides hotline numbers to report fraud and lists other resources to assist seniors in spotting scams and to help resolve complaints.
In a study of 21,298 patients treated for adverse drug events in U.S. emergency departments between Jan. 1, 2004, and Dec. 31, 2005, researchers found that drugs for which regular outpatient monitoring is used to prevent toxicity accounted for 54.4% of estimated hospitalizations among patients age 65 or older, and for more than 41% of estimated hospitalizations overall. The study, reported in the Oct. 18 issue of JAMA, was conducted to determine the frequency and characteristics of outpatient ADEs that result in ED visits in the United States. The researchers analyzed data obtained through the National Electronic Injury Surveillance System–Cooperative Adverse Drug Event Surveillance project involving 63 nationally representative hospitals.
Unintentional overdoses accounted for the greatest number of cases (7,249) as well as the highest percentage of hospitalizations (27.8%). The three highest numbers of cases by condition were for dermatologic, gastrointestinal, and neurological conditions.
Based on their results, the authors estimate that more than 700,000 patients are treated for adverse drug events in EDs each year. Safety interventions designed to prevent adverse drug events “have long been available but use of these interventions varies,” write the authors. “The data from our study emphasize the national scope of the adverse health outcomes due to outpatient ADEs that could be addressed through targeted implementation of current safety interventions.”
The United Network for Organ Sharing is battling allegations that it is not resolving transplant problems at hospitals, according to an investigative report by the Los Angeles Times. The newspaper found that UNOS has been aware of severe and life-threatening situations, complications arising with transplant patients, and even falsification of donor criteria, but is essentially punishing the hospitals at fault with what amounts to a slap on the wrist. “It’s kind of like the fox guarding the chicken house,” said U.S. Sen. Charles Grassley, R-Iowa, in the Times. Grassley has ordered an investigation of the U.S. transplant oversight system by the Government Accountability Office. The UNOS board recently voted to revise its policies, including making public the names of hospitals on probation and accelerating some investigations.
The Centers for Disease Control and Prevention is calling on hospitals and other healthcare facilities to make comprehensive infection control programs a priority and to take aggressive steps to reduces rates of drug-resistant infections. CDC’s new guidance, Management of Multidrug-Resistant Organisms in Healthcare Settings, advises hospitals and healthcare facilities to take the following steps: ensure that prevention programs are funded and adequately staffed; carefully track infection rates and related data to monitor the impact of prevention efforts; ensure that staff use standard infection control practices and follow guidelines regarding the correct use of antibiotics; promote best practices with health education campaigns to increase adherence to established recommendations; and design robust prevention programs customized to specific settings and local needs.
If those recommendations don’t improve infection rates, CDC advises that healthcare facilities implement more stringent measures, including screening of all patients at high risk for carrying drug-resistant bacteria to make sure the correct precautions are used for the right patients. Read the guidelines.
Contrary to popular belief, the Deficit Reduction Act of 2005 does not require hospitals to provide training to new employees, agents, and contractors on their rights as whistleblowers and on the hospital’s policies and procedures for detecting and preventing fraud, waste, and abuse in federal healthcare programs. The original Senate bill required such compliance training, but the final legislation does not. Section 6032 of the DRA does, however, mandate that entities have written policies that detail procedures for detecting fraud and abuse, and that outline the penalties for making false claims and the protections accorded employees as whistleblowers. The hospital’s false-claims policy must also be included in employee handbooks.
Three Houston physicians have created a 24-hour freestanding emergency care facility with all the services of a hospital emergency department but at a fraction of the wait, reports the Houston Business Journal. When the $9 million Emergency Health Centre at Willowbrook opens in March, patients will receive a promise that they will be seen by a physician within 30 minutes and that they will stay in the facility no longer than 90 minutes. Patients can also preregister at the facility to save time, so that a swipe of a card can instantly deliver a medical history and insurance information.
Eight emergency physicians, four nurse practitioners, a radiologist, and a lab director will staff the facility, which is expected to treat 60 to 90 patients a day. Unlike most of the other 20 freestanding emergency facilities that will populate the Houston area in the next few months, Emergency Health Centre distinguishes itself by keeping the same hours that hospital EDs do. The facility, however, will not accept Medicare patients, and it is positioning itself as an upscale emergency care center with valet parking and gourmet coffee. The physicians say they have plans to open as many as 20 more centers in the next three years if the model is successful.
Cancer Treatment Centers of America is banking on the consumer-directed healthcare movement to fuel its planned expansion, believing that patients will opt for facilities that offer conventional as well as alternative cancer treatment, reports the Chicago Tribune. The privately owned company currently has three cancer hospitals in Zion, Ill.; Tulsa, Okla.; and Philadelphia, and has submitted a proposal to build a $76 million hospital in the Seattle suburb of Kent, while looking for additional sites in the Southeast and Southwest. With 95% of its business consisting of patient self-referrals, CTCA spends $35 million annually on direct-to-consumer advertising and offers such patient amenities as organic food, massage, and laugh and vitamin therapies. “At most organizations, the doctor is the center of the healthcare system and that is not the case here,” Edgar Staren, CTCA’s chief medical officer, told the Tribune. Community hospitals in Kent, Wash., however, are trying to block CTCA from building a new oncology hospital by making the case to state regulators that the area has ample cancer services. CTCA vows to go to court if its proposal is turned down.
The U.S. Government Accountability Office has found that 13% of Medicaid beneficiaries also had private health insurance for at least part of the year that they were covered by Medicaid, according to the Census Bureau’s annual population survey covering 2002-04. The private insurance was typically obtained through employment. Of the 39 states that responded to GAO’s request for information, 27 of them said they had difficulties verifying whether Medicaid beneficiaries had other health coverage, and 35 said they were unsuccessful collecting payment from third-party insurers after Medicaid paid claims.
Provisions in the Deficit Reduction Act of 2005 require states to have laws in effect that could help address some of these problems. The GAO recommends that the Centers for Medicare and Medicaid Services provide guidance to states in regard to time frames for enacting laws in accordance with those DRA requirements as well as which entities are required to provide states with healthcare coverage data. CMS concurred with the GAO’s recommendations. Read the GAO report.
In March 2006, the Wisconsin Hospital Association surveyed its 132 member hospitals and asked them to describe and quantify the programs, services, and activities they provide at or below cost to fulfill a health need in the community. Those results are now available on the association's ServePoint web site, where consumers can look up individual hospitals to learn what community health services and programs those hospitals offer. The web site also includes information on the total costs hospitals absorbed to provide those benefits, such as community education and outreach programs ($20 million) and 80,000 visits at free and reduced-fee clinics (almost $7 million) in 2005. The survey results, along with personal patient stories illustrating the impact the free services have made on their lives, also have been compiled into the WHA community benefits report, Wisconsin Hospitals Connecting with Their Communities. In total, Wisconsin hospitals last year provided almost $160 million in charity care and sustained more than $500 million in Medicaid losses.
Hospitals will be well served to take a holistic approach to mounting legal and public scrutiny of the charity care and community benefits hospitals provide, according to a new PricewaterhouseCoopers report My Brother’s Keeper: Growing Expectations Confront Hospitals on Community Benefits and Charity Care. Based on roundtable discussions with hospital executives, interviews with industry leaders, and a review of the literature, the report makes recommendations regarding hospitals’ accountability in reporting, pricing, and managing community benefit relationships. (Click here to download the PwC report. Click here to access HFMA's P&P Board statement on reporting charity service and bad debt.)
Included in best practices for reporting community benefits and charity care, the report advises hospitals to keep the public informed about the real progress they are making in improving the health of the community; to report cost of charity care, not charges; to educate employees on charity care policies; and to adopt the Catholic Health Association/VHA Community Benefit Guidelines for community reporting on IRS Form 990. In developing pricing strategies, hospitals should publish quality indicators alongside pricing; base rates for the uninsured on managed care; and be ready to offer pricing quotes when patients ask. And in structuring business relations, the report recommends that hospitals retain the right to exit joint ventures if their exemptions are threatened; that the executive compensation process be accompanied by a written policy and external and internal communications plan; that an accountable plan be used to reimburse travel and business expenses; and to annually review any potential conflicts of interest by board members.
C. Henry Hottum, Jr., FHFMA, CPA, a longtime volunteer leader of HFMA who was one of three members to incorporate the organization and was once elected its president, died Sunday in his hometown of Memphis, Tenn. He was 93 years old.
Hottum was well respected for his wealth of contributions toward distinguishing healthcare finance as a distinct discipline and profession. Before HFMA was founded as the American Association of Hospital Accountants in 1946, few in the hospital industry understood the need for accountants who were intimately familiar with hospital management as well as the principles of accounting. That began to change as the organization reached out to hospital accountants throughout the country to address the specialized needs of these professionals.
Hottum--who retired in 1977 as the administrator of the Methodist Hospitals in Memphis, where he worked for 30 years--became actively involved in the HFMA early in its history. In 1955, he was appointed chairman of the organization’s board of examiners, which developed an eight-hour written exam that members could take to achieve Fellowship, the highest level of distinction in the organization. Hottum was the elected president of the organization in 1957-58. Hottum was a mentor to many members of HFMA, and he maintained his membership until his death. In recognition of his contributions to HFMA’s educational program, a chapter award, the C. Henry Hottum Award for Educational Performance Improvement, was named in his honor.
The Catholic Health Association of the United States has developed a template to help hospitals accurately, consistently, and thoroughly report the community benefits they provide on IRS Form 990 in accordance with CHA’s recent revised community benefit guidelines and IRS guidance. The template has two sections: a qualitative description of community benefit and how the hospital is meeting the community’s health needs, and a section that details the financial amount of charity care provided, net expense of community benefit services, and unpaid shortfalls from government programs for the indigent. Hospitals will file information from the template as an attachment to Part III of IRS Form 990; the tool is designed to supplement Part III, not provide a full response. CHA also recommends that numerous individuals within the organization familiar with the hospital’s community benefits contribute to preparing the supplement.
Insurers have been hiring nurses as health coaches to reduce rehospitalization rates and save on overall hospital costs for chronically ill elderly patients, reports an Associated Press article. The nurses make sure that patients understand their prescriptions and guide them in taking a more active role in their care. A study published in the Sept. 25 issue of Archives of Internal Medicine found that 8% of elderly patients assigned a coach following a hospitalization were readmitted after 30 days compared with 12% of those with no intervention. After six months, 9% of those with a coach were readmitted versus 14% of the control group. Hospital costs were $2,058 for those with a coach compared with $2,546 for those without at six months. CMS is also conducting a three-year demonstration project to provide coaching to 115,000 Medicare patients who have heart failure or diabetes after discharge from the hospital, with results expected next summer.
Americans say that high costs and the lack of insurance and access to care are the most pressing healthcare problems for government to address, according to an article published in Health Affairs. Writing a month before the 2006 congressional election, the researchers also say that health care overall is a “second-tier issue” for the American public, ranking behind the war in Iraq, the economy, and gasoline prices as a priority for government action.
In an April 2006 survey sponsored by Harvard and the Robert Wood Johnson Foundation, 43% of Americans surveyed named high costs as one of the two most important healthcare issues for government to address, while 34% flagged the lack of insurance and access to health care. Issues related to Medicare and the drug benefit finished a distant third, named by only 15% as one of the two most important healthcare issues, while low-quality care was even further behind at 11%.
Although Americans express dissatisfaction with what they have to pay for health care, they rate their medical care favorably, according to the article. Of the three-fourths of Americans who have received medical care in the past year, more than four out of five rated the services and physician care they received as excellent or good. And contrary to the opinion of many experts, most Americans consistently say that both overall U.S. healthcare spending and government healthcare spending are too low.
A typical patient, on average, has a 69% lower chance of dying at the nation’s five-star-rated hospitals compared with the one-star hospitals, according to the Ninth Annual HealthGrades Hospital Quality in America Study. This “quality chasm” between the highest- and lowest-performing hospitals has grown by approximately 5% since last year’s study, even as overall mortality rates have improved by nearly 8%. The study, which analyzed 40.6 million Medicare hospitalization records from 2003 to 2005, claims that 302,403 Medicare lives could have been saved during that time period if all hospitals performed at the quality level of top-rated hospitals across the 18 procedures and diagnoses studied. Fifty percent of the potentially preventable deaths were associated with four diagnoses: heart failure, community-acquired pneumonia, sepsis, and respiratory failure. According to the study, five-star-rated hospitals improved their risk-adjusted mortality rates over three years by 19% more than the U.S. hospital average and 57% more than one-star-rated hospitals.
The Leapfrog Group has named 59 hospitals to its first Top Hospitals list based on its quality and safety survey of 1,263 hospitals. On two patient safety fronts, hospitals have made significant progress, according to the survey; 90% have implemented procedures to avoid wrong-site surgeries, and 80% require a pharmacist to review all medication orders before medication is given to patients. But Leapfrog singles out several areas where hospitals fall far short of the group’s standards: 90% have not implemented computer physician order entry; at least 90% fail to meet standards in performing coronary artery bypass graft surgery and abdominal aortic aneurysm repair; 70% don’t enlist intensivists in the intensive care unit according to Leapfrog’s standards; and 50% don’t have explicit protocols to ensure adequate nursing staff.
Leapfrog cites studies that indicate that if all nonrural hospitals in the United States implemented CPOE, ICU physician staffing, and evidence-based hospital referral, more than 65,000 lives per year could be saved and more than 907,000 serious medication errors prevented, saving the healthcare system approximately $41.5 billion annually. Read the news release.
Mark McClellan, former administrator for the Centers for Medicare and Medicaid Services, will join the AEI-Brookings Joint Center for Regulatory Studies as a visiting senior fellow. In his work at AEI and Brookings, McClellan will focus on improving care and eliminating excess healthcare costs by identifying and implementing steps in the public and private sector to speed the development and use of safe and effective new treatments, and to reform payment and regulatory systems to increase access to high-quality, innovative care at low cost. During his time as a visiting scholar, McClellan will remain an associate professor of economics and medicine at Stanford University, from which he was on leave during his government service. Read the announcement.
A quarter of Americans say they or a family member had difficulties paying medical bills in the last 12 months even though 69% have health insurance, according to a poll of 1,201 adults conducted by ABC News, the Kaiser Family Foundation, and USA Today. The number of Americans reporting financial hardship as a result of medical costs was the highest since Kaiser began its surveys in 1997. In addition, 28% of respondents said they have delayed medical care because of the cost, and 60% said they are worried about not being able to afford insurance in the future. And although 80% said they are dissatisfied with the overall cost of healthcare, 89% said they are satisfied with the quality of care they received. The results of the survey are being highlighted in weeklong reports on ABC News, ABCNews.com, and in USA Today.
CMS has launched a new initiative to pay physicians in solo to medium-sized group practices for the quality of the care they provide to seniors and disabled beneficiaries with chronic conditions. Approximately 800 practices in Arkansas, California, Massachusetts, and Utah will be recruited to participate in the three-year demonstration. Physician groups will continue to be paid on a fee-for-service basis, and they will submit data annually on up to 26 quality measures related to the care of patients with diabetes, congestive heart failure, and coronary artery disease, as well as on preventive health services such as immunizations and cancer screenings to high-risk patients with a range of chronic diseases.
In its first year, the program will be a “pay-for-reporting” initiative to provide baseline information on quality and to help physicians become familiar with the quality measurement process. In subsequent years, practices will be eligible to earn an annual incentive of up to $10,000 per physician and up to $50,000 per practice year based on their performance on the quality measures. The quality measures being used are similar to those being used in other CMS pay-for-performance demonstrations.
Although 63% of hospitals treat patients with limited English proficiency daily or weekly, only 3% receive direct reimbursement for language services, according to results of a national survey conducted by AHA’s Health Research and Educational Trust. A majority of hospitals (82%) said they used staff interpreters most often to communicate with patients, usually via telephone. Not being able to predict when patients required interpreters and cost were the most frequently cited barriers to providing adequate language services.
The surveyed hospitals said they wanted training on how to respond to patients with limited English, as well as on cultural competency, and a third reported that they had embarked on initiatives to improve language services. “Hospitals that commit to providing high-quality language services to their patients likely will be rewarded with greater patient and staff satisfaction, which can provide them with a competitive advantage as demographics of the United States continue to change,” concludes the report.
CMS awarded a contract to the Durable Medical Equipment, Prosthetics, Orthotics, and Supplies Competitive Bidding Implementation Contractor, Palmetto GBA, LLC. CMS says that awarding this contract is a key step in timely implementation of the Medicare DMEPOS Competitive Bidding Program, which will reduce beneficiary out-of-pocket expenses and save the Medicare program money while ensuring beneficiary access to quality DMEPOS items and services. Using bids submitted by DMEPOS suppliers to establish payment amounts changes the way that Medicare pays for these items under Part B of the Medicare program.
Visits by men to emergency departments increase significantly in the hours following televised sporting events, according to a new study released this week during the annual meeting of the American College of Emergency Physicians. There were approximately 50% more men in the emergency department following a professional football game than during the contest. Thirty to 40% more men sought care following a baseball game. The study’s author speculates that men delay care because they don’t want to miss the games, but he cautions that ignoring symptoms of a medical emergency could mean that it is “the last game they ever see."
Sixty-nine percent of U.S. healthcare organizations report difficulties retaining critical-skill workers compared with 43% of companies across industries overall, according to a survey of 110 healthcare providers by Watson Wyatt Worldwide and the American Society for Healthcare Human Resources Administration. Retaining registered nurses is the most difficult staffing challenge facing healthcare providers, with 84% listing it among their top three staffing challenges, followed by pharmacists (39%) and rehab therapists (33%).
Healthcare providers are also experiencing a median 14% voluntary turnover rate, which is considerably higher than other industries. Nearly half of the respondents (47%) cited relocation as one of the top three reasons employees leave, followed by lack of promotional opportunity (41%), and pay (33%). To address staffing shortages, healthcare organizations are trying various initiatives, such as adjusting pay levels to better reflect the market, providing reimbursements and forgiving loan payments for educational studies, and implementing flexible work arrangements. Some are also improving the employer match on contributions that workers make to their 401(k) or 403(b) plans. But few employers are improving other aspects of their employee benefits, including health insurance, paid time off, or retiree medical benefits, according to the survey.
CMS published a notice clarifying instructions on how to implement the policies of inpatient PPS reconciliations. According to CMS, intermediaries can apply statewide average cost-to-charge-ratio (CCR) to hospitals that convert to inpatient PPS status or hospitals that maintain their inpatient PPS status, but received a new provider number. In addition, the intermediary or the hospital may request the use of a different CCR, such as a CCR based on the cost and charge data from the hospital’s cost report before it converted to inpatient PPS status. Use of alternative cost CCR is subject to the approval of the CMS central and regional offices.
Maryland hospitals will increase their charges by an average of 6.69% this year based on rates set by the Health Services Cost Review Commission, reports The Baltimore Sun. Maryland has an all-payer hospital rate-setting system under which all payers reimburse at the same rates, including Medicare and Medicaid. The Commission had earlier agreed to a 5.21% increase, but adjusted it to reflect more care shifting to outpatient settings and sicker patients being admitted to hospitals. The rate increase, which is retroactive to July 1, will vary by hospital, taking into consideration the number of uninsured and the severity of illness each hospital treats. Hospitals had argued for a higher rate increase to generate an additional $90 million in charges over the next three years for greater ease in obtaining bonds to fund construction projects. But state Health Secretary S. Anthony McCann disagreed with the hospitals’ position. "We are seeing a gradual, slow decline in companies offering health insurance," McCann told the commission. And setting higher hospital rates would "simply accelerate that trend."
Faced with a projected 18.3% increase in cancer patients by the end of the decade as a result of aging baby boomers, Massachusetts hospitals are submitting plans to create new cancer treatment facilities, reports The Boston Globe. Within the last two weeks, seven hospitals and two physicians petitioned the state to approve plans for new radiation oncology centers to cut patients’ typical waits of two weeks or more to begin radiation treatment. The hospitals are choosing suburban locations for cancer facilities specifically to meet patient demand for easy access.
Fewer than one in 10 physicians are using a fully operational electronic health record that collects patient information, displays test results, allows providers to enter medical orders and prescriptions, and helps physicians make treatment decisions--and only 24.9% of physicians are using EHRs with basic functionality, according to a study by the Robert Wood Johnson Foundation and the federal Office of the National Coordinator for Health Information Technology. And although surveys suggest that between 4% and 24% of U.S. hospitals have adopted computerized physician order entry systems, the study’s authors believe that as few as 5% of hospitals have fully functioning CPOE systems.
The report points to four key technology adoption drivers: financial incentives; laws and regulations; the state of the technology and organizational influences such as the size of a practice, hospital, or payer mix; and how integrated a healthcare system is. Some of the major barriers to adoption are the high cost of EHR systems, providers’ concerns about ROI, compliance with privacy regulations, and worries about specific EHRs becoming obsolete. The report was commissioned to set a benchmark for where the United States stands on EHR adoption and reflects analyses of dozens of studies and surveys by some of the nation’s leading experts on health IT.
To determine whether states are taking precautions to weed out fraudulent durable medical equipment providers from participating in their Medicaid programs, the Department of Health and Human Services’ Office of Inspector General examined the DME enrollment practices in 15 states. The analysis found that all 15 states had enrollment standards, and seven of the 15 required DME Medicaid providers to also enroll as Medicare providers, which subjects them to more stringent standards. But only two of the 15 states actually verified the enrollment information, and seven of the states did not conduct a site visit to the provider (although four of those did receive site visits from the National Supplier Clearinghouse as a condition of participating as Medicare DME providers). In addition, only six of the 15 states routinely re-enrolled providers, who then must certify that they continue to meet the state’s Medicaid standards.
With the elderly population expected to double over the next 25 years to 71 million, the Agency for Healthcare Research and Quality studied the cost of treating the leading causes of elderly hospitalizations. According to the agency’s October statistical brief, from 1997 to 2004, 10 conditions accounted for 40% of elderly hospitalizations, with congestive heart failure, pneumonia, coronary atherosclerosis, cardiac dysrhythmias, and acute myocardial infarction topping the list. But although the average length of stay for hospitalizations of the elderly decreased by nearly one day during this time period, the average cost rose by over 25%, from $7,800 per stay in 1997 to $9,800 in 2004. Specifically, the cost of treating CHF increased by about 48%, from $6,200 per stay in 1997 to $9,200 per stay in 2004. AMI also had large cost increases, from $11,900 in 1997 to $16,000 in 2004. Both conditions had the smallest declines in average length of stay, while pneumonia and stroke--which had the largest ALOS in 1997--showed the greatest decreases in hospital stays in 2004. Admissions of the elderly that were initiated in the emergency department also increased from 49% to 57% during the eight-year period.
In a comment letter to the Centers for Medicare and Medicaid Services, the American Hospital Association stated its objections to the proposed rule revising the hospital outpatient prospective payment system for 2007. The AHA takes issue with the provision of the proposed rule that reduces the outpatient PPS update for hospitals that fail to submit inpatient quality data. Linking outpatient payments to inpatient quality measures not only doesn’t make sense, says the AHA, but “data submission that predates the outpatient rule is unfair and tantamount to retroactive rulemaking.” The AHA asks that the Hospital Quality Alliance and the Ambulatory Care Quality Alliance be charged with developing outpatient quality measures.
Another point of contention is CMS’s proposal to develop new, temporary G codes for hospital clinic visits, emergency department visits, and critical care services in the absence of national guidelines. The association points out that requiring hospitals to manage two sets of codes will cause confusion and an administrative burden. Instead, “the AHA recommends that the CMS support the continued use of the current five level CPT codes, which would be assigned to the three existing APCs for hospital clinic and ED services until national coding definitions and guidelines are formally proposed, subjected to stakeholder review, and finalized.”
United Steelworkers blocked one of its union members from traveling to India to have his gallbladder removed and a shoulder repaired. The 60-year-old man had volunteered to be the first person sponsored by a U.S. employer to receive medical treatment in India, reports The New York Times. The union demanded that he have the surgeries in the United States, expressing concern about the quality of overseas care and the issue of medical liability. The employer, Blue Ridge Paper Products, in Canton, N.C., said it will limit overseas medical care to salaried employees. The 850,000-member United Steelworkers vowed to continue thwarting American companies from sending workers overseas for medical care. But others say that American companies won’t be able to resist the attraction of health care that is 80% cheaper in India and other countries.
CMS has published changes to the carriers’ implementation instructions for inpatient prospective payment system, long-term care hospital PPS, and psychiatric PPS payment policies based on the FY07 inpatient PPS final rule. The changes include the ICD-9-CM coding amendments that affect the inpatient facility PPS comorbidity adjustment. Other significant changes include:
In responding to the IRS’s Comment Request for Tax-Exempt Hospitals Compliance Questionnaire, the American Hospital Association has asked the IRS to clarify and revise certain questions to capture hospitals’ true costs in providing uncompensated care and community benefits. AHA’s letter to the IRS emphasizes that questions about uncompensated care should specify whether hospitals are being asked about costs versus charges. And queries about community services need to determine whether the hospital provides the services below cost, how often they are offered, and whether staff time is spent. The letter also recommends that some questions be rephrased to take into account contributions, such as educational programs, made by a hospital’s parent hospital system. The AHA also expressed concern that some questions requiring a “yes” or “no” answer will not be interpreted the same by every hospital, resulting in misleading information. “In sum, the questionnaire should be carefully reviewed and revised if it is to be utilized again in its current or any shortened form,” the AHA advised. Read the letter.
State revenues increased faster than Medicaid spending for the first time since 1998, according to a new 50-state survey released by the Kaiser Commission on Medicaid and the Uninsured. The survey finds that an improved economy combined with the implementation of the new Medicare prescription drug benefit has contributed to a 2.8% growth rate in Medicaid spending for state FY06--the lowest rate of growth in a decade and the fourth consecutive year in which Medicaid spending growth has slowed. Positive economic conditions also contributed to a slowdown in Medicaid enrollment growth, which in turn helped reduce spending growth. The 1.6% enrollment growth for FY06 is the lowest rate since 1999--nearly half the 3% growth predicted by Medicaid officials for the year.
Looking forward to FY07, the survey finds that five states plan to restrict eligibility while 26 plan to restore cuts from previous years, expand to new populations, or make positive changes to Medicaid’s application and enrollment process. Additionally, states are contemplating new options and implementing new requirements created by the passage of the Deficit Reduction Act, although few have used the flexibility to change benefits and cost-sharing requirements for FY07.
Despite the slowed growth, state Medicaid officials indicate that growing healthcare costs and the erosion of employer-sponsored health coverage are two reasons that overall pressure to constrain Medicaid spending has not subsided.
This year, the Medicare Advantage program has expanded to include regional preferred provider organization plans in addition to local health maintenance organizations, PPOs, and private fee-for-service plans. In particular, the growth of private FFS and regional PPO plans offering the MA program has caused MA enrollment to accelerate in 2006, according to a study by Mathematica Policy Research. As of April, 6.8 million individuals were enrolled in MA plans, representing 15.5% of the Medicare market. The fastest-growing MA offering is private FFS plans, which typically pay Medicare-based rates or higher and often include drug coverage, and enrollment is expected to exceed PPO enrollment this year. But if private FFS plans begin to dominate MA enrollment, Medicare may lose its leverage to negotiate rates, causing cost and utilization to rise. As a result, MA expansion may not make coverage more affordable than the current combination of Medicare and Medigap, concludes the report.
This year, U.S. companies saw the lowest healthcare cost increase in eight years--7.9%--but the overall rate of the increase continues to be a major concern for employers and employees as it outpaces inflation and salary increases, according to Hewitt Associates. For 2007, Hewitt is projecting a 7.7% average increase for employers to $8,340 per employee, and a 7.8% increase in employee contributions and out-of-pocket costs ($3,305) in 2007. But for many employees, the increase will continue to offset the average salary gain of 3.7% in 2007. An employee making $40,000 today who receives the average salary increase, for example, will use 16% of that salary increase to pay for the increase in healthcare costs in 2007. And while Hewitt’s data show a moderation in costs in 2006, a few major U.S. markets continued to experience double-digit rate increases: San Antonio (13.1%), St. Louis (13%), Hartford (12.8%), Milwaukee (11.4%), San Francisco (10.5%), and Cleveland/Akron (10%).
A Cook County, Ill., commissioner is proposing to create binding agreements with the county’s more than 50 not-for-profit hospitals to devote 8% of their operating budgets to charity care or pay it directly to the county’s public medical facilities, which are expected to incur a $94 million loss this fiscal year. Alternatively, they can opt to pay property taxes, says commissioner Larry Suffredin, whose proposal comes on the heels of an Illinois Department of Revenue ruling that strips Provena Covenant Medical Center of its tax-exempt status for failing to meet charity care standards. “This ruling suddenly gives cash-strapped local governments an opening to say, ‘Hey, maybe we should look at this charity care issue more closely,’” Stephen Weyl, a New Hampshire attorney specializing in tax-exemption issues, told Crain’s Chicago Business. The Metropolitan Chicago Healthcare Council says that nearly half of Cook County’s not-for-profit hospitals lose money on operations. If forced to absorb more free care, they would have to eliminate services, which could have the undesired effect of shifting more patients to the public hospital, according to the council.
The Department of Health and Human Services’ Office of Inspector General has issued an advisory opinion that the pharmaceutical division of a managed care company did not violate the anti-kickback law by disbursing pay-for-performance financial incentives to physicians on behalf of a state’s Medicaid program. The OIG’s opinion relates only to the details of this particular case, which are that a managed care company developed and administers a disease management program with a pay-for-performance component as a contractor to a state’s Medicaid program. The state determines the amount of the incentives and issues the funds from the Medicaid budget, which is clearly explained on all materials physicians receive about the pay-for-performance program; the managed care company merely writes the checks to the physicians. In stating that it will not impose administrative sanctions against the managed care company, the OIG wrote, “It is the substance--not the form--of an arrangement that governs under the anti-kickback statute. Superficial appearances are not controlling.”
High-deductible health plans accompanied by health savings accounts are not an affordable option for low-income families, according to a new issue brief by the Kaiser Commission on Medicaid and the Uninsured. The study found that for a family earning $25,000, the average HDHP premium offered by employers ($1,664) would consume 7% of income. Contributing $2,100 to an HSA would absorb another 15% of income--leaving only $2,200 each year for expenses other than the basics. Most low-income individuals and families do not face high enough tax liability to benefit significantly from tax deductions associated with HSAs. In addition, the high cost-shifting burden of HDHPs can make the chronically ill hesitant to seek medical care, causing people to become even sicker. And as healthier individuals migrate to HSAs, premiums for traditional health coverage will likely rise, according to the study.
Although the U.S. medical system is the most expensive in the world, Western Europeans and the Japanese live longer than Americans do, leading some critics to advocate a European-style healthcare system here. But Tyler Cowen, professor of economics at George Mason University, argues that American medical spending has made the United States first in medical innovation--which benefits the world. In the past 10 years, 12 Nobel Prizes in medicine have been awarded to Americans, three to foreign-born researchers working in the United States, and seven to researchers outside the country. The United States., says Cowen in a New York Times opinion piece, is also the leader in converting research done elsewhere into commercial technologies. America not only spends more on research and development and on drugs than other countries, but also its research is considered more competitive and permissive of waste and chaos, generating an environment that results in medical breakthroughs. Cowen maintains that Americans’ shorter longevity is due less to the quality of medical care than to less healthy lifestyle choices. American medicine also provides patients the peace of mind that everything possible will be done, which is not the prevailing practice elsewhere, says Cowen.
In a comment letter to Charles Grassley, R-Iowa, chairman of the Senate Committee on Finance, HFMA emphasizes that HFMA Principles and Practices Board Statement No. 15 on reporting uncompensated care as well as guidelines for community benefit reporting developed by the Catholic Health Association will greatly assist tax-exempt hospitals in accurately documenting and reporting community benefits. The comments are in response to the September hearing “Taking the Pulse of Charitable Care and Community Benefits at Nonprofit Hospitals.”
HFMA emphasizes that reporting standards must be flexible enough to accommodate all tax-exempt providers and that costs, not charges, should be the basis for reporting the amount of charity care provided, as outlined in the revised Statement 15. The letter from HFMA President and CEO Richard L. Clarke, DHA, FHFMA, also explains that HFMA’s PATIENT FRIENDLY BILLING® project will help hospitals improve their financial assistance policies and make their patient financial communications clear and concise. But Clarke reiterates that the most pressing issue is the growing number of uninsured Americans. “Even if every provider in the country devoted every exempt dollar they get to charity care, there would still be inadequate funds to care for the uninsured, and furthermore, vital community services, ranging from trauma centers to boarder baby programs, would be compromised,” he writes.
Moody’s Investors Service has issued a special comment on the unique credit advantages of small not-for-profit hospitals. Of the 540 not-for-profit hospitals that Moody’s rates, 119 (22%) are acute care hospitals with total operating revenues less than $175 million, and 38 are rated A3 or higher. Several common traits distinguish small hospitals with strong ratings, according to Moody’s.
One hallmark is the ability to command a leading or dominant market share, particularly in rural areas. In metropolitan areas, the hospital may be the only one in a suburb, and its reputation of high quality and patient service keeps individuals from seeking care elsewhere. Small hospitals with top ratings also are recognized as leaders in high-margin service lines and can attract stellar doctors. The hospitals also typically possess a good management team that understands the dynamics and potential risks of small hospitals. In addition, Moody’s notes that small hospitals with the best ratings “maintain superior operating, debt coverage, and liquidity ratios compared to larger hospitals with the same ratings.” For more information, contact Moody’s at 212-553-4067.
Under contract with the Office of Inspector General, Ernst & Young reviewed CMS’s financial management of the Medicaid program and made recommendations for improving it. In its report, E&Y notes that although Medicaid is one of the largest federal programs, it has no dedicated CFO to administer its financial activities. Opinions from stakeholders, however, varied on whether a CFO was necessary. Some said they believed the position would provide increased decision-making independence and transparency, while others thought a separate CFO role could possibly diffuse accountability.
E&Y’s review also found that over 10% of states were not in compliance with Medicaid eligibility requirements, yet there was limited corrective action taken by states and CMS. E&Y recommended that CMS oversee quality control systems so that the states could assess their compliance and reduce errors in determining eligibility. CMS was recently granted approval to add 200 personnel to Medicaid financial management and program integrity; to best use these resources, E&Y urges the agency to provide transparency in how federal oversight activities are conducted “and/or potentially introduce financial management oversight through a CFO organization independent of program administration activities.”
As CMS revises the standards with which it will certify heart, liver, and lung transplant programs, a debate has emerged over how many transplant centers the country really needs. Last year, nearly 10,000 adult heart, lung, and liver transplants were performed, but more than three dozen transplant centers do not meet Medicare’s current minimum requirements for number of annual transplants or one-year survival rates, reports The Washington Post. Many of those that are performing too few transplants are heart programs that are coping with a diminishing need for transplants, thanks to the advent of new cardiac drugs and interventions.
In its new rules, CMS will severity-adjust a transplant center’s survival rates instead of using the same measure for all transplant programs. At least 10% of programs will be decertified as a result, CMS estimates. CMS also is proposing to lower the minimum required number of transplants performed each year from 12 for liver and heart to nine surgeries in 30 months. Robert Robbins, president of the International Society for Heart & Lung Transplantation, argues that at least 24 transplants a year are needed to keep the transplant team sharp.
In a strong warning to the country, Federal Reserve Chairman Ben Bernanke said in a speech to the Economic Club of Washington, D.C., this week that Social Security and Medicare must be reformed soon. As 78 million baby boomers near retirement, spending for Social Security and Medicare will skyrocket from 7% of the economy today to nearly 13% by 2030 and to more than 15% by 2050. Left unchecked, Medicare spending alone will grow from 3% of gross domestic product today to about 9% in 2050, which is more than the current spending for Social Security and Medicare combined.
Without an overhaul of the two programs, Bernanke said, “the nation will have to choose among higher taxes, less nonentitlement spending, a reduction in outlays for entitlement programs, a sharply higher budget deficit, or some combination thereof.” If Medicare and Social Security were to be financed entirely by revenue increases, said Bernanke, “the taxes collected by the federal government would have to rise from about 18% of GDP today to about 24% of GDP in 2030, an increase of one-third in the tax burden over the next 25 years, with more increases to follow.” Alternatively, financing the projected increase in entitlement spending by reducing outlays in other areas would require action equivalent to a budget cut of approximately $700 billion in nonentitlement spending, he said. Read the speech.
As the U.S. nurse shortage grows, nursing schools continue to turn away thousands of qualified applicants for lack of faculty to teach them. Last year, more than 41,000 would-be nurses were denied slots at nursing schools, up from 33,000 rejected applicants in 2004, according to annual survey data from the American Association of Colleges of Nursing. The Department of Health and Human Services has predicted that the current 10% vacancy rate for RN positions will grow to 36% by 2020, a shortage of 1 million nurses, reports USA Today. This year, nearly 8% of faculty positions at nursing schools are vacant. And although several initiatives are under way to provide funding and fast-track doctorate programs to create more nursing faculty, a large pay differential between what top-tier nurses can make in clinical practice (more than $100,000) versus in academic careers ($60,000 to $70,000) is hurting recruitment of nurses interested in teaching.
The U.S. Government Accountability Office has found 47 security weaknesses in the contractor-owned and -operated computer network used by the Centers for Medicare and Medicaid Services to communicate with providers. Although several key security controls were present in the computer system, others were missing or not effectively implemented. As a result, “sensitive, personally identifiable medical data traversing the network are vulnerable to unauthorized disclosure, and these weaknesses could lead to disruptions in CMS services,” stated the report. CMS Administrator Mark McClellan told the Associated Press that there is “no evidence that confidential or sensitive information had actually been compromised.” He also said that CMS has already eliminated 22 of the 47 security breaches.
The federal government won or negotiated approximately $1.47 billion in judgments and settlements of healthcare fraud cases in FY05, according to the annual report of the Health Care Fraud and Abuse Control Program. HCFACP coordinates law enforcement related to healthcare abuse under the direction of the Attorney General and the Secretary of the Department of Health and Human Services.
Last year, U.S. Attorneys’ Offices opened 935 new criminal healthcare fraud investigations in addition to 1,689 criminal investigations that were pending and convicted 523 people. The Department of Justice also opened 778 new civil healthcare fraud investigations in addition to the 1,334 civil cases that were pending and filed complaints or intervened in 266 cases. Since the HCFACP began in 1997, it has turned over $8.85 billion to the Medicare Trust Fund.
Missed or delayed diagnoses by physicians in outpatient settings harmed 59% of patients in 307 closed malpractice claims alleging diagnostic errors. Of those errors, 59% caused serious harm while 30% resulted in death, according to a new study in the Annals of Internal Medicine. Yet recent initiatives to reduce medical errors and improve patient safety generally have not addressed errors in diagnoses, which involve “complex, fragmented processes within healthcare systems that are vulnerable to failures and breakdowns,” said the report’s authors.
The study found that the most common diagnostic errors were failure to order a diagnostic test (55%), failure to create a follow-up plan (45%), failure to obtain an adequate history or do a thorough physical exam (42%), and incorrectly interpreting test results (37%). Faulty judgment was the main contributing factor in diagnostic errors (79%), followed by lack of vigilance or memory (59%). Awareness of the most common types of breakdowns could help identify strategies to prevent diagnostic errors, said the authors.
Surgeries on the wrong patient or wrong site or that involve the wrong procedure are likely more prevalent than medical professionals believe, and current prevention strategies are inadequate, according to a study in the September issue of Archives of Surgery. The study estimates that wrong surgeries or wrong-site operations occur between 1,300 and 2,700 times a year in the United States. Yet reporting of these surgeries is “virtually nonexistent,” with more accounts showing up in the popular press than in the medical literature, according to the study. The authors recommend mandatory reporting for all wrong-site procedures to encourage analysis of the errors and prevent future occurrences. Prevention also requires learning from “successful safety initiatives (such as in transfusion medicine and other high-risk nonmedical industries), while reducing the shame associated with these events.”
In an anxiously awaited decision, the National Labor Relations Board has ruled that full-time hospital charge nurses are considered supervisors and therefore ineligible to participate in employee unions. In a 3 to 2 vote, the NLRB said that permanent charge nurses at Oakwood Heritage Hospital in Taylor, Mich., exercised supervisory authority by using independent judgment to assign nursing personnel to specific patients as part of their normal duties. But the NLRB did not agree with the hospital that rotating charge nurses acted as supervisors for a “substantial” part of their work time.
The NLRB’s new interpretation of “supervisor” could affect 8 million workers in addition to 843,000 nurses, according to the Economic Policy Institute. AFL-CIO president John Sweeney called the ruling “devastating to workers in the healthcare industry and potentially in other industries where professional employees direct or assign the work of others.” “Today’s decision is the latest in the Bush-appointed NLRB’s legal maneuvering to deny as many workers as possible their basic right to have a voice on the job and improve their living standards through their union,” Sweeney said in a statement. Read the NLRB ruling.
The Bush administration has agreed to pay New York $1.5 billion over the next five years to close the state’s underused hospitals, slash costs of the most expensive Medicaid program in the country, and reduce Medicaid fraud. New York will also contribute $1 billion to shore up the remaining hospitals with improvements such as healthcare IT and to reduce overuse of emergency departments by moving patients without true medical emergencies into outpatient clinics, according to The New York Times.
Unlike most states that have growing populations and hospital industries, New York’s hospitals have been in a financial crisis for several years due to lack of patient demand, heavy borrowing, and tight margins on contracts negotiated with health insurers. The agreement between the Department of Health and Human Services and the state details a lengthy list of ambitious goals the state must meet, such as recovering $644 million per year from Medicaid fraud by the end of the five-year period.
Reforms that cut the bloated budget for TennCare, Tennessee’s expanded Medicaid program, has resulted in the state’s hospitals picking up the medical costs of many of the 170,000 people who were dropped from the program a year ago. According to the Tennessee Hospital Association, hospitals have had an 89.3% increase in the cost of treating uninsured inpatients and a 67.5% increase in the costs of emergency department services in the first quarter of this year compared with the first quarter of 2005. Vanderbilt University Medical Center, for example, spent $33.9 million on charity care for the fiscal year ending in June compared with $12.4 million the previous year. Yet Vanderbilt says it also plans to go through with a $234 million expansion of the medical center because it needs the space. Hospitals say they have little choice but to pass on the costs of providing the additional free care when it’s time to negotiate contracts with insurers. In the meantime, hospitals are hoping for some financial relief from Cover Tennessee, the new state program that will provide basic health insurance to the uninsured. “It’s a start,” Craig Becker, president of the THA, told The Tennessean.
Healthcare spending grew 7.4% in 2005, outpacing overall economic growth despite a robust 5.4% increase in the overall U.S. economy as measured by per capita gross domestic product, according to a study by the Center for Studying Health System Change published as a web exclusive in Health Affairs. Spending data for the first quarter of 2006 suggest continued stability--albeit at a relatively high rate of growth (7.7%).
Trends in three of the five spending categories for health services--inpatient hospital care, physician services, and other services--accelerated in 2005, while prescription drug spending grew at a slower rate for the sixth year in a row and hospital outpatient care spending growth slowed slightly. Spending on inpatient services increased 7.1% in 2005, up from 5.3% in 2004. Spending on outpatient care increased 10.4%, down slightly from 11.2% in 2004. After slowing sharply in previous years, the hospital utilization trend for inpatient and outpatient care combined increased 4.5% in 2005, up sharply from 1.3% in 2004, while hospital price growth slowed sharply to 4.3% in 2005, down from 7.1% in 2004.
For the fifth year in a row, employers increased patient cost sharing through higher deductibles, copayments, and co-insurance to try to offset the average premium increase of 7.7% in 2006. Although premiums rose higher in 2005 (9.2%), last year’s slowdown likely reflects the lagged relationship between underlying cost trends and premium trends, according to the report.
Seniors will have many more options in choosing Medicare drug plans next year. The Centers for Medicare and Medicaid Services has announced that, in 2007, eight new national insurers will offer drug plans to beneficiaries in addition to the nine national plans that were available in 2006--too many, say critics. “The incredible confusion that persisted in the past year about the Medicare drug program is about to get worse,” said Ron Pollack, executive director of Families USA, in a statement. “There will be more plans to choose from--and those plans will continue to be different from one another. And, instead of a six-month enrollment period, there will only be a one-and-one-half-month period this year.”
In touting the new and better drug plans, CMS says that 83% of beneficiaries will have access to plans with premiums lower than they are paying this year and beneficiaries will also have access to plans with premiums of less than $20 a month. The monthly premium beneficiaries will pay in 2007 will average $24 if beneficiaries stay in their current plans--about the same as in 2006. Beneficiaries also will have more plan options that offer enhanced coverage, including zero deductibles and coverage in the gap for both generics and preferred brand name drugs. In addition, plans are adding drugs to their formularies, increasing the average number of drugs covered by approximately 13%. Read the CMS press release.
The Pennsylvania Health Care Cost Containment Council has given Pennsylvania hospitals a good news/bad news report. Over a three-year period, overall patient mortality decreased, falling from 4.6% in 2003 to 4.5% in 2005. But at the same time, readmission rates increased from 18.6% to 19.2%. There were 58,937 readmissions, which resulted in almost $2.2 billion in charges and 365,000 hospital days. “Complications or infections were the cause of 14,202 readmissions, which added $631 million in charges and 106,000 hospital days,” said Marc Volavka, executive director of PHC4. “This means that if readmissions for complications or infections were reduced by just 15%, then over $95 million in charges would have been saved.”
The largest decline in mortality rate was in hemorrhagic stroke, which decreased from 33.5% in 2003 to 30.1% in 2005. The condition also had the largest increase in readmission rates, increasing from 16.0% in 2003 to 18.7% in 2005. Respiratory failure without mechanical ventilation had the highest readmission rate for complication or infection at 12.7%; vaginal hysterectomy had the lowest at 1.8%. Pneumonia was the most common reason for a readmission for a complication or infection. The largest variation in length of hospitalization was for abdominal aortic aneurysm repair, where the risk-adjusted length of stay ranged from 3.5 to 17.2 days.
Although 80% of online Americans would like to communicate with their physicians via e-mail, only 24% of physicians reported using e-mail to discuss clinical issues with patients in 2004-05, up from one in five physicians in 2000-01, according to a study by the Center for Studying Health System Change. The American Health Information Community, a recently formed federal commission, also has identified online physician-patient communication as an IT targeted for rapid development. Limited reimbursement for e-mail consultations, however, remains the largest obstacle to physician adoption, the study indicates.
Physicians in staff/group-model health maintenance organizations and medical school faculty practices reported the highest rates of adoption (47% and 43%, respectively), followed by physicians in group practices of more than 50 physicians (29%). But growth in e-mail use essentially stalled in larger practices between 2000-01 and 2004-05, suggesting that expansion beyond early adopters is not progressing. In contrast, only about 20% of physicians in practices with nine or fewer physicians reported using e-mail, but these practices did have statistically significant growth in e-mail use. Practices with high Medicaid and/or Medicare revenue, those in rural areas, and practices with a high percentage of African-American patients are the least likely to communicate with patients online, according to the HSC study.
Although the number of U.S. hospitals operating 24-hour emergency departments has decreased by 12% from 1994 to 2004, the number of ED visits has risen by 18%, resulting in overcrowding in 40% to 50% of EDs, according to a new report issued by the Centers for Disease Control and Prevention’s National Center for Health Statistics. Almost two-thirds of metropolitan EDs experienced crowding at times, and approximately one-third of hospitals reported having to divert an ambulance to another ED due to overcrowding or staffing shortages at their ED. In addition, half of EDs in metropolitan areas had more than 5% of their nursing positions vacant. Plastic and hand surgeons were the most difficult to recruit for ED on-call duty.
Medicaid patients made up 30% or more of ED patients at over 25% of hospitals, according to the report. And at approximately 20% of hospitals, the uninsured constituted 25% or more of ED visits. One-third of hospitals reported plans to increase the physical space of their EDs within the next two years.
On Friday, the Centers for Medicare and Medicaid Services announced final hospital inpatient prospective payment system rates for FY07. Although CMS completed its FY07 IPPS final rule on Aug. 1, the rates announced at that time were tentative. The rates fully adjust the hospital wage indices for occupational mix; they also affect other aspects of IPPS payments such as the diagnosis-related group relative weights, the outlier threshold, and geographic reclassifications that, in turn, affect the calculation of the final IPPS rates. Hospitals are encouraged to read the final notice for more information about the procedures for revising an FY07 reclassification and/or reinstating or applying for an FY08 reclassification.
Compared with the tentative rates announced on Aug. 1, the final rates announced on Sept. 29 do the following:* The use of occupational mix-adjusted wage indices has little or no effect on the DRG relative weights that CMS announced on Aug. 1. No DRG relative weight changed by more than 0.8% from the tentative ones announced earlier.* The use of the revised wage data has a negligible effect on the outlier threshold. From the tentative FY07 threshold of $24,475 announced earlier, the threshold increased $10--to $24,485.* The final IPPS standardized amounts will be approximately $4 less (0.1 percent) than those announced on Aug. 1.
The changes in the IPPS rates from using occupational mix data are budget neutral. Therefore, there is no change to earlier estimates of the increase in operating and capital payments. CMS is continuing to estimate that payments to hospitals will increase by $3.4 billion, or an average of 3.5 percent. Read the fact sheet.
In a closely watched challenge to a not-for-profit hospital’s tax-exempt status, the Illinois Department of Revenue on Friday affirmed its 2004 decision to deny a property tax exemption to Provena Covenant Medical Center in Urbana, Ill. Friday’s decision overruled a recommendation by the department’s administrative law judge to grant the exemption after Covenant, a Catholic-affiliated hospital, appealed the revocation of its property tax exemption.
The director of the Illinois Department of Revenue, who issued the final ruling, based his decision on 2002 financial figures that showed that Covenant’s revenues exceeded $113 million, yet its charitable activities amounted to $831,724--only .7% of total revenue. “This small amount of charitable care is so seriously insufficient that it simply cannot withstand the constitutional scrutiny required to justify a property tax exemption,” he wrote. And since 97.7% of Covenant’s revenue “was generated from the exchange of services for payment,” the hospital’s property could not have been considered used exclusively for charitable purposes. Also rejected was Covenant’s argument that nonreimbursed costs of Medicare and Medicaid be counted as charitable care.
Covenant parent Provena Health said it would quickly appeal the ruling, claiming that no hospital in Illinois could be considered a charitable institution under the ruling’s requirements. “This is a crisis for Provena Covenant and a national crisis for non-profit hospitals,” said William Foley, president and CEO, in a statement. The decision, said Foley, is “unsupported by legal precedent.” Kenneth Robbins, president of the Illinois Hospital Association, agreed that the decision is “so broadly written that we are confident it will be overturned on appeal.”
CMS has announced that 99% of the nation’s eligible hospitals (3,490 acute care hospitals) reported data on the quality of care they deliver, providing transparency on quality performance measures linked to Medicare payments. Of those hospitals eligible to receive a 2% annual payment update from Medicare for participating, 171 failed to meet the FY07 reporting requirements (143 failed the submission requirements and 28 chose not to participate). Hospitals that do not report will get a 2% reduction in their annual Medicare fee schedule update, a much greater impact than last year’s 0.4% point reduction.
For 2007, an additional 11 measures were added to the 10-measure starter set, including those for heart attack, heart failure, and pneumonia, as well as measures related to surgical care improvement. CMS proposes to expand the set of measures for FY08 to include additional surgical care improvement measures, mortality measures, and patient satisfaction using the Hospital Consumer Assessment of Healthcare Providers and Systems survey, also known as Hospital CAHPS.
A significant majority of the country’s more than 9 million uninsured children (88.3%) come from families in which at least one parent works, according to a new report by the consumer organization Families USA on behalf of the Campaign for Children’s Health Care, a coalition of 50 national organizations. More than two out of three (70.8%) uninsured children are in families with incomes below 200% of the federal poverty level ($33,200 in annual income for a family of three). This finding is significant because, in most states, these children are eligible for the State Children’s Health Insurance Program. A key issue about the SCHIP program, which Congress is expected to reauthorize in 2007, is whether sufficient resources will be made available to states to enroll all eligible children.
The report cites huge differences from state to state in the percentage of children who are uninsured. The states with the highest rates of uninsured children are Texas (20.4%), Florida (17%), New Mexico (16.7%), Nevada (16.4%), Montana (16.2%), Arizona (16.1%), and Oklahoma (16.1%). The states with the lowest rates of uninsured children are Vermont (5.6%), Michigan (6.4%), New Hampshire (6.4%), Hawaii (6.4%), Minnesota (6.6%), and Nebraska (6.6%).
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