Healthcare Financial News

Medicare Part D has cost the government 30% less than expected this year--a savings of $13 billion--which the Bush administration attributes to competition among insurers offering the drug benefit. But according to figures the Associated Press received from the Centers for Medicare and Medicaid Services, market forces accounted for only $6.9 billion of the savings, while lower-than-expected enrollment in the drug benefit program has resulted in savings of $7.5 billion and slower growth in drug prices accounted for $3.7 billion in savings. Spending on catastrophic drug expenses offset the total savings to $13 billion.

“Republicans would have you believe that the drug and insurance companies have sacrificed profits in the name of competition, but nothing could be farther from the truth,” Rep. Pete Stark, D-Calif., told the AP. “In fact, the dirty little secret is that costs are lower because of low enrollment and a slowdown in drug spending.” But the fact that there were significant savings in Medicare Part D may present an obstacle to Democrats’ touted goal of passing legislation to allow the federal government to negotiate directly with pharmaceutical companies for lower drug prices, according to the AP.

Private Medicare Advantage plans were paid an average 12.4% more per enrollee in 2005 compared with what the same enrollees would have cost in the traditional Medicare fee-for-service program, according to a new report from the Commonwealth Fund. The extra payments to Medicare Advantage plans amounted to $922 over fee-for-service costs for each of about 5.6 million Medicare beneficiaries enrolled in Medicare Advantage plans, for a total of more than $5.2 billion. The bulk of these extra payments were mandated by the Medicare Modernization Act of 2003, which were intended to expand the role of private plans in Medicare.

“Medicare should carefully examine whether extra payments to Medicare Advantage plans are the best use of dollars for the beneficiaries the program is designed to serve,” said Commonwealth Fund president Karen Davis. “These payments could instead be used to provide better benefits and reduce out-of-pocket costs for seniors and the disabled.” Eliminating extra payments to private plans could save Medicare a projected $30 billion over five years, according to the study’s authors.

CMS has issued a final rule establishing the requirements for hospitals notifying Medicare inpatients of their discharge appeal rights. Based on public comments, CMS made changes to the Notification of Hospital Discharge Appeal Rights proposed rule to allow hospitals to use a revised form of the Important Message from Medicare notice to outline patients’ discharge rights instead of having to create a new discharge notice. Hospitals must give patients the message within two days of admission and obtain the beneficiary’s or representative’s signature. Beneficiaries who request an appeal must receive a more detailed notice. The new process will take effect July 1, 2007.

CMS withdrew Medicare funding from the heart transplant programs at Wake Forest University Baptist Medical Center in North Carolina and Montefiore Medical Center in New York for failing to perform at least 12 transplants annually, which is Medicare’s standard. And a third heart transplant program at St. Louis University Hospital voluntarily withdrew itself from federal funding, reports the Los Angeles Times. Last year, neither Montefiore nor St. Louis University performed a single transplant, and Wake Forest performed only two. All three hospitals said they plan to keep their heart transplant programs running. Wake Forest and Montefiore have 30 days to challenge CMS’s sanctions.

Barry Straube, Medicare’s chief medical officer, told the Times that other underperforming transplant centers may also lose federal support and that CMS’s recent sanction should serve as a warning. “It might be possible that people were not taking this seriously enough and thinking that we would not take this action,” he said. In an investigative report in June, the Times found that nine lung transplant programs did not meet Medicare’s standards for survival or volume, as did 36 heart programs. CMS has said that it will be issuing new rules for transplant programs by the end of the year.

Nine hospitals in New York state have been earmarked for closure by the state Commission on Health Care Facilities in the 21st Century. The long-awaited recommendations by the commission, which was charged with “rightsizing institutions” to relieve the financial crisis faced by the state’s hospitals, will become law unless Gov. George Pataki or the state legislature rejects the entire proposal. In addition to closing nine hospitals--including five in New York City--the commission recommended that 48 others merge, cut beds, or become clinics or outpatient facilities. The commission said its recommendations will save $806 million annually in savings to Medicaid and other payers, and the total estimated benefit to providers will be around $721 million annually. After eight years of the state’s hospitals losing money, the commission said it had to “act decisively” to prevent additional hospital bankruptcies. “These recommendations will help to avoid future calamities that would further destabilize the system and compromise patient care,” said David Sandman, executive director of the commission.

The New York Times reports that some of the commission’s recommendations will prove to be challenging, such as merging two private hospitals or merging a private hospital with a state hospital. Kenneth E. Raske, president of the Greater New York Hospital Association, told the Times that hospitals will have to offer fewer services as a result of the recommendations. “The level of restructuring, which goes beyond closure--the size of the restructuring is astronomical,” he said. “The amount of money this will pull out of medical spending in New York will be in the billions. There is going to be service inadequacy and some real difficulty for hospitals.” Read the executive summary.

Consumers place the highest priority on finding quality-of-care information when they are making key decisions about treatment options, hospitals, primary care physicians, and specialists, according to a new study by the Blue Cross and Blue Shield Association. In selecting a hospital or clinic, 77% of consumers surveyed ranked quality over cost; in selecting the best treatment option, 86% of consumers searched for quality information compared with 47% who searched for cost information first.

The study found that nearly two-thirds of consumers who made healthcare decisions in the past year have actively researched information to support their decision. Sixty-four percent felt it was important to obtain information from sources in addition to their physician, and most consumers were interested in general treatment information (77%), treatment success rate (57%), and information about the treating physician (52%). In selecting a hospital or clinic, consumers typically looked at average length of stay, patient satisfaction on quality of care received, patient satisfaction on care coordination across medical teams, and hospital complication rates. Consumers said they had trouble, however, finding valuable information on individual providers’ complication rates, mortality rates, and how they ranked in comparison with other providers on quality of care.

The Centers for Medicare and Medicaid Services has published a final rule revising requirements in the hospital conditions of participation for completing history and physical examinations, authenticating verbal orders, securing medications, and completing post-anesthesia evaluations. The new rule gives hospitals and practitioners greater flexibility in meeting needs of patients and addresses concerns of the healthcare community that the old regulations were outdated and unduly burdensome.

The new H& P requirement expands the timeframe for completion of the H&P and the number of individuals who may perform the H&P. The regulation for authentication of verbal orders requires that all orders, including verbal orders, must be dated, timed, and authenticated by the prescribing practitioner within 48 hours--with a temporary exception. For a five-year period beginning with the date of publication of the final rule, verbal orders no longer need to be signed by the prescribing practitioner but can be authenticated by another practitioner responsible for the care of the patient. CMS believes this temporary revision to the authentication requirement will provide flexibility for hospitals until health IT is sufficiently advanced to allow the prescribing practitioner to authenticate his or her own orders promptly.

The regulation on security of medications requires that all drugs and biologicals be kept in secure areas and locked when appropriate. This regulation maintains flexibility for hospitals in determining control of nonscheduled drugs and biologicals and is more patient-focused and outcome-oriented. Finally, the requirement for post-anesthesia evaluation permits the evaluation of inpatients to be completed and documented by any individual qualified to administer anesthesia rather than restricted to the individual who administered the anesthesia. The final rule becomes effective Jan. 26. Read the press release.

The Certification Commission for Healthcare Information Technology has announced that the Department of Health and Human Services has authorized and funded the commission to expand its certification scope of work for ambulatory electronic health record products to begin addressing some medical specialties and specialized care settings.

CCHIT will begin by establishing an objective process for prioritizing which specialties should be addressed first, because it will be able to tackle only two or three specialized areas in the coming year. Factors in this prioritization will include the amount of criteria development work required, the readiness of the specialty to participate in development, and the potential positive impact certification could have on EHR adoption in the specialty. CCHIT is an independent, not-for-profit organization that has a contract with HHS to develop and evaluate the certification criteria and inspection process for EHRs and the networks through which they interoperate. Read the press release.

Medicaid spending fell for the first time since the entitlement program was created in 1965, reports USA Today. According to a Bureau of Economic Analysis report, Medicaid spending dropped by 1.4% during the first nine months of 2006 (or 5.4% after adjusting for healthcare inflation). The two primary reasons for the drop are states’ efforts to reform their Medicaid programs and Medicare Part D now covering prescription drug costs for the elderly poor. Without the Medicare drug benefit, Medicaid spending would have been flat, according to a USA Today analysis.

The total health benefit cost rose by 6.1% in 2006, the same pace as last year, to an average of $7,523 per employee, according to the National Survey of Employer-Sponsored Health Plans, conducted annually by Mercer Health & Benefits. Employers predict another 6.1% increase in average cost for 2007. Average deductibles, copays, and out-of-pocket maximums, which rose rapidly from 2000 to 2005, showed only modest growth last year. With employee cost-shifting off the table for many employers, reducing this rate further, or even maintaining it, will require other cost management strategies, Mercer said. Asked to rate the importance of six cost management strategies to their organizations over the next five years, care management and consumerism were each rated important or very important by 43% of all employers (and about two-thirds of those with 500 or more employees). The percentage of all employers offering a consumer-directed health plan tripled in 2006, from 2% to 6%. Five years from now, 60% of large employers say employees will be offered one or more CDHPs, including 10% that say they will offer only CDHPs. More than a third of small employers believe they will offer CDHPs.

A group of bipartisan legislators are advocating that states be allowed to try their own approaches to providing medical care to the uninsured, improving quality of care, and controlling medical costs instead of waiting for Congress to create wholesale healthcare reform for the nation, reports the Milwaukee Journal Sentinel. Three bills have been introduced in Congress urging states to develop their own reform plans, which would then be reviewed by a commission or task force and the most likely to succeed would proceed to Congress for quick approval. Supporters of the concept say that using states as a laboratory for healthcare reform has several advantages. Implementing change on a small-scale level would reveal which ideas may work for the country and which are doomed to fail. Also, because states differ economically and politically, perhaps states are better off developing solutions that uniquely suit their populations. And because Congress is so deadlocked on healthcare reform, states may have to be the catalyst for any improvement in health care in the near future. “Universal coverage is necessary,” U.S. Sen. Russ Feingold, D-Wis., told the Sentinel. “But I think states will vary on exactly how they go about it. The excitement of this is that it doesn’t feel ideological. It feels like different ideas getting a chance to fairly compete with each other.”

A 13-hospital pilot project by the Institute for Healthcare Improvement to increase the amount of time nurses spend with patients and reduce work inefficiencies has resulted in a dramatic reduction in nurse turnover--from an average of 15% to 5%, reports The Boston Globe. Called Transforming Care at the Bedside, the initiative guides hospitals on how to make practical improvements to nurses’ jobs, such as moving medications and supplies closer to patients. At the M.D. Anderson Cancer Center in Houston, for example, nurses now use a spreadsheet to transfer patients at the end of a work shift instead of holding meetings, which often caused nurses to stay late. In one year, the hospital saved $80,000 in overtime on just two surgical units. At Prairie Lakes Healthcare System in Watertown, S.D., the nursing turnover was a staggering 65% before the hospital participated in the pilot program. Six years later, it’s 10% or lower. “Now, when we have an open position on this unit, we have 10 qualified applications for the job,” Jill Fuller, chief nursing officer at Prairie Lakes Healthcare, told the Globe. “The reputation of the unit has changed so much that people want to work here. That wasn’t the case six years ago.”

The Leapfrog Group is asking its members--large employers and other healthcare purchasers--to sign a letter of support for President Bush’s executive order on healthcare transparency at the request of HHS Secretary Michael Leavitt. By signing the letter of support, purchasers commit through their healthcare procurement strategies to support the following: use of health IT, provision of information on provider quality to enrollees using nationally standardized measures of performance, provision of provider pricing information to enrollees, and means to align incentives for high-quality and cost-effective health care. Leavitt also released a new employer tool kit that Leapfrog helped develop to assist employers in using their purchasing power by collaborating with health plans to advance the goals of the executive order. Read the press release.

Sen. Chuck Grassley, R-Iowa, chairman of the Committee on Finance, has publicly praised the Catholic Health Association’s recently proposed Hospital Community Benefit Report, which Grassley said ensures better reporting of hospitals’ charitable care. At the same time, he criticized the American Hospital Association’s “decision to perpetuate a murky picture” of charitable care. In a statement, Grassley said, “I hope all tax-exempt hospitals will use the CHA reporting guide. . . . Right now, reporting standards are all over the map, and it’s nearly impossible to know what’s real and what’s accounting gimmickry. That’s why I’m disappointed that the American Hospital Association isn’t echoing the good work of the CHA and instead is calling on tax-exempt hospitals to report to the federal government and the public on bad debt as part of community benefits. Bad debt isn’t necessarily a reflection of charitable care and community benefit. It clouds the picture.”

Two Des Moines hospital systems that agreed to relax their charity care policies last year miscalculated the demand, reports The Des Moines Register. After a coalition of religious organizations called A Mid-Iowa Organizing Strategy asked the hospital systems to give discounts to the uninsured and increase financial assistance to low-income patients, Mercy Medical Center spent $9.7 million on charity care during the past fiscal year, which was 70% more than the hospital system budgeted. And Iowa Health-Des Moines will spend approximately $9 million this calendar year on charity care--29% more than budgeted. Several thousand additional patients applied for financial assistance as a result of the more liberal policies. Both hospital systems said they will continue offering the extra financial assistance.

The Centers for Medicare and Medicaid Services has posted Medicare payment information for physicians and hospital outpatient departments on the CMS web site at www.cms.hhs.gov/HealthCareConInit/. The data include payment rates for more than 70 physician services provided in nonoffice settings as well as 19 services usually performed in a physician’s office. The outpatient hospital payment data also give information on commonly performed procedures. The new information will allow consumers and users of the data to compare the costs and procedures, which vary depending on the site of service, and to select the most appropriate setting for the delivery of high-quality, efficient care, said CMS. Read the press release.

The Pennsylvania Health Care Cost Containment Council has released a hospital-specific report on hospital-acquired infections, which identifies the actual number of infections reported by Pennsylvania’s 168 general acute care hospitals. The first-of-its-kind report also includes information on mortality, average length of stay, and average charges for cases with and without hospital-acquired infections. Because completeness of reporting still varies across facilities, PHC4 believes this report is more appropriate to use as a tool to ask providers informed questions and as a baseline to measure individual hospital improvements over time rather than direct hospital-to-hospital comparisons.

The sources of hospital-acquired infections appear to be more strongly linked to poor infection control in hospitals than to how sick patients are when they are admitted, reports The Washington Post. Three new studies published in the American Journal of Medical Quality find that age and severity of illness were not risk factors for infection. David Nash, the journal’s editor and chairman of the department of health policy at Thomas Jefferson University in Philadelphia, told the Post that hospital staff should take greater care in hand washing and wearing gowns during procedures, limiting operating room traffic, isolating patients, and using antibiotics sparingly. “It’s the process, not the patients,” he said.

Although the number of Medicare Part D plans will expand further in 2007, most of the stand-alone prescription drug plans and Medicare Advantage prescription drug plans offered will not provide full prescription drug coverage in the infamous “doughnut hole,” the coverage gap in the standard Part D benefit that occurs between $2,250 and $5,100 of total drug spending in 2006. So report researchers from the Henry J. Kaiser Family Foundation in a comprehensive Medicare Part D status update, published in Health Affairs online.

This year, only 4% of the 22.5 million Part D enrollees are in plans offering doughnut-hole coverage for both brand-name and generic drugs, and another 8% have coverage in the doughnut hole for generic drugs only, say the report’s authors. Subtracting out the 9.3 million low-income beneficiaries who qualify for subsidized coverage in the doughnut hole “leaves 48 percent of all Part D enrollees . . . liable for 100 percent of their drug costs if their total spending exceeds $2,250 in 2006,” according to the authors. This figure rises to 55 percent of all Part D enrollees (12.4 million beneficiaries) if those with generic-only gap coverage are included.

The number of national plan sponsors will increase to 17, up from nine this year, and there will be 31% more stand-alone prescription drug plans across the country in 2007. But the authors report that the number of plans offering full coverage in the doughnut hole remains limited.

“It is not yet clear how the Medicare Part D marketplace will evolve over the next several years, in terms of plan participation and benefits offered,” Cubanski said. “But with many new plans available next year and some notable changes to plans between 2006 and 2007, beneficiaries would be well advised to evaluate their drug plan options during the open enrollment period.” Read the report.

A major national survey of families affected by cancer has found that one in four families say the experience led a family member with the disease to use up all or most of their savings, and one in eight say they borrowed money from relatives. The illness also made it harder for some to find and keep health insurance--with about one in 10 saying they couldn’t buy health insurance because they had been diagnosed with cancer, and 6% saying they lost their coverage as a result of the disease.

Conducted jointly by USA Today, the Kaiser Family Foundation, and the Harvard School of Public Health, the survey shows how health care and health insurance systems can fail to protect people when they are most in need. Having health insurance at all times during treatment helped to limit the financial consequences of a cancer diagnosis, but even those with consistent coverage faced difficulties--one in five used up all or most of their savings, one in 10 borrowed money from relatives, and 9% were contacted by a collection agency.

“This is one of the most disturbing of the hundreds of surveys we have done,” said Kaiser Family Foundation president and CEO Drew E. Altman, PhD. “When people with cancer are deferring care and experiencing such serious financial hardships because of inadequate insurance or because they have no health insurance, it casts a new light on the need to address our nation’s health insurance problems.”

Insurers are projecting medical cost trends in 2007 of 11.9% for preferred provider organizations, 11.8% for health maintenance organizations/point of service/exclusive provider organizations, and 10.7% for consumer-driven health plans, according to a new report, Behind the Numbers: Medical Cost Trends for 2007, by PricewaterhouseCoopers’ Health Research Institute. These estimates of the growth of medical costs are exclusive of any plan design changes or cost-containment measures, so actual premium increases for 2007 will be lower. The report notes that healthcare costs results from a balance of “inflators” and “deflators.” Primary inflators of medical costs, according to the report, are the explosive growth of new diagnostic technologies that allow doctors to order more tests, overutilization of medical services by workers protected from the true cost of medical care, more chronic diseases caused by the aging of the population and the nation’s obesity crisis, and hospital cost shifting. Deflators of medical costs, on the other hand, are greater cost-sharing by workers, price transparency, electronic medical records to reduce administrative costs and duplication of medical tests, and employer-sponsored wellness programs. Read the abstract.

Despite intense cost pressures, firms covering more than 90% of the nation’s workforce view health benefits as an important tool to attract and retain qualified workers, according to a study by researchers at the Center for Studying Health System Change and The Commonwealth Fund published in Health Affairs. Firms employing two-thirds of all workers, including those that do not offer health benefits, agreed that “all employers should share in the cost of health insurance for employees, either by covering their own workers or by contributing to a fund to cover the uninsured,” the study found.

Many employers were willing to undertake administrative changes designed to expand coverage. For example, four-fifths of firms stated they were very or somewhat willing to reduce an eligible employee’s withholding tax by the amount of any available health insurance tax credit. Half of firms were interested in a program that would allow their workers and dependents to obtain coverage through their state’s public employee insurance program, with the employer contributing part of the premium. With respect to quality improvement, 63% of employers offering health benefits were very or somewhat interested in offering workers high-performance provider networks, even if it meant limiting the number of network providers.

When asked about the most effective way to reduce administrative costs, small employers were somewhat more focused on immediate relief from costs, and large employers were more focused on achieving efficiency through standardization. For example, small employers were more likely to say that joint purchase of health insurance by employers and public insurance programs would be most beneficial in reducing administrative costs. Large firms were more likely to say that universally accepted quality performance measures for providers would be most beneficial in lowering costs.

The Office of the Inspector General of the Department of Health and Human Services has issued an advisory opinion on a specific hospital’s proposed gainsharing arrangement under which cardiac surgeons will share 50% of the hospital’s savings for one year. Substantial savings are expected to result from 24 “cost-saving opportunities” involving the surgeons eliminating medical supply waste and substituting less costly supplies during cardiac surgery. The hospital was concerned that the arrangement may run afoul of the Social Security Act, which prohibits providers from limiting Medicare or Medicaid services, and the anti-kickback statute.

The OIG concluded that the hospital’s arrangement with the surgeons is an “improper payment” under the act and it would potentially violate the anti-kickback statute, but the OIG said it would not impose sanctions on the hospital because of the safeguards in place to protect patients from an inappropriate reduction of services. The OIG noted that several characteristics of the cost-saving plan limited the potential for abuse, such as its transparency, medical evidence that the proposed cost savings will not negatively affect patient care, the surgeons being allowed to use the same cardiac devices as they did previously, and baseline thresholds on the gainsharing. Regarding the arrangement’s potential to induce illegal referrals, the OIG said the risk was slight because only surgeons already on the medical staff would be allowed to participate in the arrangement and, then, only the cardiac surgeons. The OIG reiterated its concern that hospitals and physicians sharing cost savings “pose a high risk of fraud or abuse” if the arrangement “cannot be adequately and accurately measured for quality of care,” such as an arrangement that “rewards physicians based on overall cost savings without accountability for specific cost reduction measures. Moreover, arrangements structured so as to pose a heightened potential for patient steering and unfair competition would be considered suspect.”

Ten hospitals in the Los Angeles area are under investigation for improper patient discharge practices, reports the Los Angeles Times, and the Los Angeles City Attorney has filed both civil and criminal charges against one of them, Kaiser Foundation Hospitals. The scrutiny stems from Kaiser’s alleged “dumping” on skid row of a homeless 63-year-old hospital patient with dementia. The American Civil Liberties Union of Southern California, which plans to file another lawsuit on behalf of the patient, said the case is the first in the nation involving “a joint effort by government and civil rights groups to halt the practice of hospital dumping.” The City Attorney’s criminal complaint charges Kaiser with two criminal counts, including false imprisonment and dependent adult endangerment. The civil lawsuit against Kaiser alleges two claims under the California Business and Professions Code for unlawful and unfair business practices with respect to the hospital’s treatment of homeless patients and its failure to follow state law mandating appropriate discharge planning for all patients. The suit seeks civil penalties for $2,500 for each violation, including each day Kaiser failed to adopt and implement appropriate written policies relating to patient discharge.

A Kaiser spokeswoman told the Times that the lawsuit came as a surprise, because Kaiser had changed its practices since the incident with the patient occurred in March. “As soon as we heard about it, we said this is not how we do business,” said Diana Bonta, vice president of public affairs for Kaiser Southern California. “And we apologized. Since then, we have been talking not only with the city attorney’s office, but we’ve worked with the agencies that service the homeless.” Kaiser now uses a van to transport discharged patients to skid row instead of taxis, a shelter on skid row is notified in advance that a patient is arriving, and the driver must bring the patient inside the facility. Read the City Attorney's news release.

HCA Inc., which owns and operates 172 hospitals and 95 freestanding ambulatory surgery centers, has announced that shareholders have approved the proposed merger agreement providing for the acquisition of HCA by an investor group including Bain Capital, Kohlberg Kravis Roberts & Co., Merrill Lynch Global Private Equity, HCA founder Thomas F. Frist, Jr., MD, and HCA management. Valued at $33 billion, this is the largest leveraged buyout in U.S. history, reports The Tennessean. Jack O. Bovender, Jr., who has invested $20 million in the deal, will remain as chairman and CEO of the privately held HCA. Bovender said that HCA won’t have to sell hospitals to pay debt, but that the company will sell poorly performing hospitals or those that are no longer part of the company’s strategic plan while looking for other hospitals to buy.

In an interview with The Tennessean, Bovender talked about the advantages of operating HCA as a private company: “If you look at the hospital industry over time, and you look at the demographics that will drive volumes, I think the long-term outlook, both investor-owned and not-for-profit, is very sanguine. I think we have a long-term positive outlook, but as has always been the case with hospitals, you have ups and downs with that, and the public market is not tolerating those kinds of ups and downs. They’re very concerned about volumes and the uninsured, and that’s as you well know pushed our performance down the past year and pushed the value of the stock down. Private equity is much more willing to take a longer viewpoint and not be influenced by these ups and downs of the operating characteristics of the company.” Read the HCA announcement.

As the new chairman of the Senate Health, Education, Labor and Pensions Committee, Sen. Edward Kennedy, D-Mass., outlined his top priorities for the 110th Congress. Although Kennedy’s long-term goal for health care is universal coverage for the country, he says that in the immediate future he will promote expanding and improving coverage for more children under the Children’s Health Insurance Program and passing legislation that will allow the federal government to negotiate directly with drug companies for discounted drug prices for Medicare beneficiaries. Kennedy also intends to get the Wired for Health Quality Act passed to improve the quality and efficiency of health care through better health IT. And as a first step toward universal coverage, Kennedy said he will focus on expanding Medicare coverage in his Medicare for All bill. “In Massachusetts, all parts of the political spectrum came together to reach a solution that everyone could support, and that bipartisan spirit of compromise is a model for success in Washington, too,” Kennedy said in a statement.

Small but important steps to improve the accuracy of Medicare inpatient hospital payment rates “could lead to the most important modifications since Medicare instituted the inpatient prospective payment system more than 20 years ago,” writes Paul B. Ginsburg, president of the Center for Studying Health System Change in the Nov. 16 New England Journal of Medicine. But Ginsburg cautions that there is no guarantee the Centers for Medicare and Medicaid Services “will follow through on” comprehensive changes to inpatient payment rates to better identify the severity of patients’ conditions and the resources hospitals use to care for patients, noting that “doing so will require a continued commitment to improving payment accuracy in the face of resistance from affected stakeholders.” Yet without such reforms, “providers will increasingly gravitate toward the medical problems and procedures that boost their bottom line, and the care we receive may not be the care we need,” Ginsburg concludes.

The Leapfrog Group, comprising the country’s largest corporate purchasers of health care, called on hospitals to commit to its new Never Events policy when a patient experiences one of the National Quality Forum’s 28 serious reportable events in a hospital facility. “Never events” are rare medical errors, such as surgery performed on the wrong body part, a foreign object being left inside a patient after surgery, or an infant discharged to the wrong person. Hospitals that adopt the policy will be given public recognition through the 2007 Leapfrog Hospital Quality and Safety Survey, said the organization.

When a never event occurs, Leapfrog is asking hospitals to apologize to the patient and/or family; report the event to the Joint Commission on Accreditation of Healthcare Organizations, a state reporting program, or a patient safety organization; perform a root cause analysis; and waive all costs directly related to the never event and not seek reimbursement from the patient or a third-party payer.

“We agree that these ‘never’ events should never occur and we are working hard to make sure they are not only rare, but more and more rare each day,” Richard Umbdenstock, president-elect of the American Hospital Association, told the Chicago Tribune. “We certainly agree that when they do occur, and it can be tragic, we need to reach out and make it right. They are very much doing this already.” Although Umbdenstock said he thought most hospitals would support the Leapfrog Group’s policy, he also stated that hospitals and patients would have to arrive at their own resolution of a never event, since each case would be unique.

In commentary on the National Committee for Quality Assurance’s 2006 report on the clinical performance of the nation’s health plans, the Commonwealth Fund finds evidence of “hope for overall improvement in the performance of the U.S. healthcare system.” The brief notes that commercial health plans are “approaching perfection” on the performance measure of giving beta-blocker treatment after heart attack and challenges plans to achieve similar results on other Health Plan Employer Data and Information Set measures. Also, significant quality improvement progress has been made with 30 states now requiring health maintenance organizations to be accredited through NCQA or to report HEDIS measures to NCQA or to the state. But the authors also note that there continues to be room for improvement. Some performance measures may be poorly designed, which may account for the persistent poor quality of mental health care, for example. The authors suggest that it would behoove the rest of the country to learn from the highest-performing plans and to find ways to assist those who fall beneath the benchmark.

A new national survey gauging Americans’ attitudes toward the financing and provision of health insurance shows that consumers want more coverage and choice but don’t want to pay higher insurance costs. The survey, published online in Health Affairs, also finds that the uninsured are more likely to reject policies that mandate the purchase of health insurance, and more than 25% are comfortable with charging obese people higher premiums for their benefits.

Researchers from NORC at the University of Chicago found that Americans have difficulty making tradeoffs to reform the health system and make coverage more broadly available, preferring instead to put the onus on government and employers.

The survey also suggests that support for mandatory health insurance depends on a person’s situation. More than three-quarters of those who lack health insurance reject the idea of mandating that it be purchased. Researchers say that this could be because they have consciously chosen to avoid coverage and want to reserve the right to make that choice, or because coverage is too expensive. In addition, consumers increasingly support making people pay more for unhealthy behavior. A majority believe that smokers should pay more for health insurance, and a sizable minority believe that charging obese people higher premiums is appropriate. Read the report.

Just a small fraction of U.S. healthcare spending--about $1.1 billion in federal, state, and local government funds annually--is used to provide publicly supported care to undocumented immigrants, according to a RAND Corporation study published in Health Affairs. In contrast, $88 billion in government funds were spent on health care for all nonelderly adults in 2000.

Researchers developed their national estimates by analyzing information collected by the Los Angeles Family Neighborhood Study, which interviewed nearly 2,400 English- and Spanish-speaking adults throughout Los Angeles County during 2000 and 2001. Overall, immigrants use relatively few health services, primarily because they are healthier than American-born citizens, according to the study. Although the foreign-born make up 45% of Los Angeles County’s population, they accounted for just 33% of the region’s health spending in 2000. One-quarter of the foreign-born had never had a medical checkup, and one in nine had never visited a doctor--twice the rate seen among the native-born. Only 58% of undocumented immigrants had visited a doctor in the past year and only 11% had been hospitalized in the past two years. Foreign-born people also reported fewer health problems.

Researchers say some of the differences may be explained by the younger age of immigrants and a lower rate of diagnosis caused by their limited access to health services. But even when those factors are considered, immigrants appear healthier than the native-born.

Despite the increasing momentum of pay-for-performance programs, a new report shows that only about 20% of hospitals participate in them. The report, by Mathematica Policy Research Inc. for the Centers for Medicare and Medicaid Services, showed that large hospitals accredited by the Joint Commission on Accreditation of Healthcare Organizations were most likely to have participated in pay-for-performance programs. About 30% of these hospitals, compared with 6% of small, non-JCAHO-accredited hospitals and 16% of medium, JCAHO-accredited hospitals, participated in at least one pay-for-performance program in summer 2005.

Of hospital executives interviewed for the report, nearly 40% whose hospitals engaged in pay for performance said financial benefits were the most important reason they participated, while 20% cited quality improvement as most important. Hospital officials overwhelmingly support pay for performance--93% said they favor a future CMS pay-for-performance initiative. The report cautioned, however, that selecting the right measures will be a critical part of CMS success in the pay-for-performance arena.

A coalition of primary and specialty care providers in the St. Louis area is teaming up with IBM to develop computer technology that will direct patients who use the emergency department for routine services to a primary care provider. The St. Louis Business Journal reports that several local hospitals and care agencies that are part of the St. Louis Integrated Health Network have contributed $625,000 for the first two phases of the program. Total cost of the three-phase program is expected to reach between $4 million and $5 million.

The program is expected to produce substantial savings. According to the St. Louis Regional Health Commission, the average cost of a primary care office visit is $120, compared with $560 for an ED visit. IHN research indicates that 37% of local emergency visits are for primary care or nonemergency services. Referral coordinators already are in some St. Louis EDs to help patients find primary care doctors. The electronic triage system “can make patient data available in real time to ensure care is appropriate, tests are not being duplicated and doctors are aware of a patient’s conditions and medications,” Brooke Sehy, chief of staff for the St. Louis Regional Health Commission, told the Journal. Implementation of the computer technology is expected to begin in March.

The Scottsdale Institute, a not-for-profit dedicated to healthcare information management and process improvement, has announced a web-based tool to allow healthcare organizations to normalize their IT costs against anonymous peers. After submitting data on key IT cost and staff metrics, organizations will receive comparison reports and a link to a virtual community to collaborate on IT costs. Each organization is assigned an identification number so data will be kept anonymous. To participate, contact Ricki Levitan at rlevitan@scottsdaleinstitute.org.

America’s Health Insurance Plans has released a proposal calling for federal legislation to provide significant financial incentives to states and to change federal tax policy to give uninsured Americans access to affordable health insurance coverage. The plan is designed to expand access to health insurance to all children within three years and to 95% of adults within 10 years. AHIP estimates that implementing this proposal would cost the federal government approximately $300 billion over 10 years.

Key elements of the AHIP plan include: expanding the State Children’s Health Insurance Program for all uninsured children from families with incomes under 200% of the federal poverty level; expanding Medicaid to include single adults with incomes under 100% of the FPL; and establishing a universal health account so individuals can purchase any type of healthcare coverage and pay for qualified medical expenses with pre-tax dollars, with federal matching grants for contributions made by working families. The proposal also establishes a health tax credit of up to $500 for low-income families who secure health insurance for their children and creates a new $50 billion federal performance grant to assist states in expanding access to coverage.

A new report by the New York Center for Health Workforce Studies at the University at Albany’s School of Public Health finds that the District of Columbia has the most registered nurses per capita in the country, with 2,093 RNs per 100,000 population. California has more than 200,000 actively practicing RNs, the most of any state, but has the fewest RNs per capita (588). The United States Health Workforce Profile details the supply, distribution, and education of health personnel in all 50 states and the District of Columbia using data from 2004. The report provides a description of the country’s health workforce at state, regional, and national levels and includes information on health status indicators and healthcare employment by setting.

Other key findings of the report are that Massachusetts had nearly 50% more physicians (303 per 100,000) than the national average and nearly double the ratio of Mississippi (157). The nation’s 50,000 physician assistants were most heavily concentrated in the Northeast, but Alaska and South Dakota had the most PAs per capita, and Mississippi and Arkansas had the fewest. The number of PA degrees awarded rose 1,700% in the past decade. Arkansas, D.C., Louisiana, North Dakota, and West Virginia led the nation in licensed practical nurses per capita. D.C., Maine, Delaware, Vermont, and Connecticut were the top five states for social workers per capita.

Conversations about money between physicians and patients often are awkward, but a new study advises physicians to talk about the cost of medications and insurance coverage when they write new prescriptions for their patients. The study, in the November issue of The American Journal of Managed Care, examined patient and physician surveys and audiotapes of 185 office visits with 15 family physicians, 18 internists, and 11 cardiologists in two Sacramento, Calif., healthcare systems.

The findings showed that for only one-third of new prescriptions physicians wrote did they talk about any aspect of cost, insurance, or how patients would obtain the medication. Cardiologists were more likely than internists or family physicians to initiate these discussions. Because medication cost is a critical part of patient compliance, the authors suggest that “interventions should target improving physician knowledge about helping patients achieve affordable medication regimens, as well as stressing the importance of recognizing and addressing cost and acquisition issues with patients.”

Changing technology could allow specialists other than gastroenterologists to perform most colon cancer screening tests, predicts the American Gastroenterological Association’s Future Trends Committee. Although the demand for colonoscopy has increased dramatically, improvements in CT scans, fecal occult blood testing, and camera-containing pills could replace the traditional test, meaning that radiologists and internists, for example, could perform it, according to The New York Times.

However, some experts say traditional colonoscopy still will be needed to confirm CT scan results and to remove colon polyps. And even if the need for gastroenterologists to perform colonoscopies lessens, the specialty won’t be out of business. “We have a lot of organs,” one gastroenterologist told the Times. “The esophagus, the stomach, the small bowel, the liver, the pancreas. I think we’ve got a lot to do.”

Significant private support, consumer loyalty, and lack of competition earns children’s hospitals a “stable outlook” view as well as stable bond ratings for the next one to two years, according to Moody’s Investors Service. In a special comment, Moody’s reports that as adult hospitals have closed pediatric units, children’s hospitals have experienced rising patient volumes and longer lengths of stay. The average occupancy rate for a pediatric hospital is over 80% compared with 70% for adult hospitals, and the median length of stay is 6.0 days for pediatric patients versus 4.7 for adult patients. The median operating margin for pediatric hospitals increased to 4.7% in 2005 from 1.9% in 2001, while that for adult hospitals was 2.8%.

But, Moody’s warns, as children’s hospitals take on increasing debt to expand their facilities to accommodate demand, they will face challenges of maintaining adequate reimbursement from commercial insurers and also Medicaid as states reform their public assistance programs. In addition, Moody’s says, “As the nation increasingly focuses on hospital charges and costs, we believe children’s hospitals are at risk of greater scrutiny because of the high-cost nature of their services and necessary charges to cover those costs, emphasizing the importance of focusing on quality and outcomes measurements to support charge structures.” For more information about this special comment, call 212-553-1653.

The Bush administration says there is no room for compromise on one of Democrats’ key initiatives in the new Congress--legislation that would allow the government to negotiate lower drug prices for Medicare enrollees. In an interview with The New York Times, Department of Health and Human Services Secretary Michael Leavitt said market forces, not government price controls, should determine Medicare drug prices. “A robust marketplace with a lot of competitors has driven down prices,” he told the Times.

Rep. Nancy Pelosi, D-Calif., in line to be the next House speaker, has said the House will begin work on legislation to repeal the ban on government negotiation of Medicare drug prices within the first few days after Democrats regain control of the House. According to The Boston Globe, Pelosi’s home state already has taken similar action. With little fanfare, the California legislature passed a bill earlier this fall that allows the state to negotiate drug prices for lower income and underinsured residents, including Medicare enrollees. The state hopes to obtain 40% to 60% discounts on brand-name and generic drugs.

The American College of Cardiology, American Heart Association, and other key partners have launched a new, national quality initiative aimed at providing more timely care for patients with heart attacks. Called “Door to Balloon (D2B): An Alliance for Quality,” the program is designed to help hospitals adhere to guidelines that recommend opening patients’ blocked arteries with balloon angioplasty within 90 minutes after they arrive in the emergency department.

Some strategies that can reduce door-to-balloon times include having an emergency physician activate the catheterization laboratory, having a cath lab team ready within 20 to 30 minutes, and using a team approach in treatment. These strategies are based on a study of 365 hospitals to identify processes that decrease door-to-balloon time. The program launch and study findings were announced simultaneously at an AHA meeting in Chicago and in The New England Journal of Medicine. The Associated Press reported that 1,250 of the 5,000 U.S. hospitals that perform emergency angioplasty are being invited to join the initiative.

Although hospitals and healthcare organizations received a record $7 billion in donations in 2005, some clinical services continue to receive fewer donations than the popular fundraising choices of cancer, hospice, and pediatrics, reports The New York Times. Hospital psychiatric services, for example, are underfunded by private dollars because of the long-standing stigma associated with the care and the inability of patients of those services to make donations. Foundations are also often not interested in funding “run-of-the-mill services,” such as emergency or uninsured care, or any hospital services at all, since their guidelines may prevent giving to community hospitals. And hospitals usually have to hook corporate support by tying fundraising to a special event and, then, only if the hospital is in the same area as the corporation’s headquarters. Hospitals that have been successful in raising funds for mental health have found sophisticated ways of targeting family members of patients. Community hospitals, however, are finding greater support from small manufacturing companies and privately held businesses, according to the article.

Physicians in smaller practices continue to lag well behind physicians in larger practices in having clinical IT in their offices, according to a national study by the Center for Studying Health System Change.

The proportion of physicians reporting access to IT for each of five clinical activities increased across all practice settings between 2000-01 and 2004-05. But adoption gaps between small and large practices persisted for two of the clinical activities (obtaining treatment guidelines and exchanging clinical data with other physicians) and widened for the other three (accessing patient notes, generating preventive care reminders, and writing prescriptions).

In the case of access to IT to write prescriptions, the adoption gap between small (1-9 physicians) and large (51-plus physicians) group practices tripled between 2000-01 and 2004-05, the study found. In 2000-01, 8% of physicians in small group practices reported access to IT to write prescriptions, with the proportion growing to 13% in 2004-05. In contrast, 19% of physicians in large group practices reported access to IT to write prescriptions in 2000-01, but the proportion grew to 47% by 2004-05.

The study also found physicians in practices treating more underserved and vulnerable patients--low-income, minority, or rural patients and those with chronic conditions--generally were no less likely to report access to IT in their practices than other physicians. The study cautioned that the findings should be considered an upper bound on the proportion of physicians regularly using clinical IT in their practices. Read the report.

Hospitalizing a child for influenza may cost closer to $13,000--not the $3,000 to $4,000 previously estimated, according to a study by researchers from The Children’s Hospital of Philadelphia. Published in the November issue of Pediatrics, the study found that children with low-risk conditions had hospital costs averaging $9,000 each, compared with those with high-risk conditions--such as heart disease, chronic lung disease, and asthma--whose costs averaged $15,000 each.

Previous studies, said the researchers, underestimated the true costs of influenza by including children with pneumonia and bronchitis, which are less expensive to treat. The highest-cost patients in the study were 18- to-21-year-olds and those who had particular high-risk chronic conditions, such as cardiac, metabolic, neurological, and neuromuscular diseases. The study concludes that annual influenza vaccinations for children are more cost effective than originally thought.

A draft report by Mathematica Policy Research for the Texas Department of State Health Services found that limited-services hospitals are growing and now represent 6% of all licensed hospitals in Texas--up from 2% in 2000. Admissions to niche hospitals increased 12.7% from 2000 to 2004, compared with 6% for general hospitals, and inpatient surgeries performed in niche hospitals grew 11.6% compared with less than 4% in general hospitals.

Such hospitals can be an expensive proposition, however. Houston surgeon Garth Davis and his surgeon father, Robert, decided to become two of the 75 physician owners of the new $40 million University General Hospital because they will have more control over their patients, what surgical equipment they use, and how the hospital is run. But the “huge financial risk” he and his father took to invest in the hospital “scares me more than anything,” Davis told the Houston Chronicle. “It costs over $100,000 a day to keep this place running. So there’s certainly the potential to even lose money,” he said. Davis admits that the physician-owners of University General have been fighting with major insurers for six months to secure in-network status, a problem that caused physician-owners to recently default on the lease of the 10-month-old Houston Town & Country Hospital. Still, physicians’ desire for more control over their hospital practices and Texas’ growing population has created a boom in physician-owned hospitals. One Houston-area hospital is scheduled to open this month, and two more are slated for next year, according to the Chronicle.

Signed physician election forms for the 2007 Medicare Part B Drug Competitive Acquisition Program must be postmarked by Nov. 15 to the physicians’ local carriers. CAP physician election allows physicians who are not participating in the CAP to join once a year. Physicians who are currently participating must also submit an election form to stay in the program. Physicians who participate in the CAP obtain Medicare Part B drugs not paid on a cost or prospective payment system basis through CAP vendors, who bill Medicare for the drugs and bill beneficiaries for co-pays and deductibles. Read the CMS release.

Attention to healthcare legislation is likely to increase with the Democrats’ mid-term election victories, according to lawmakers and industry analysts. “With the Democrats in control of both the House and Senate, the attention to healthcare will be much greater than we have seen,” says Richard L. Gundling, FHFMA, Vice President of HFMA. “I am expecting to see much more focus on approaches to healthcare policy that rely on a greater role of the federal government in addition to those that are solely market-based solutions.”

In their new position of power, Democrats are vowing to curb healthcare costs by lowering prescription drug prices to Medicare beneficiaries and paying less to insurers that offer Medicare Advantage plans. House Democratic leader Nancy Pelosi has pledged legislation that will allow the government to negotiate directly with pharma to reduce the cost of drugs offered through Medicare Part D, a measure drug makers liken to price controls, reports the Associated Press. Democrats say they will also close the “donut hole” in Medicare drug coverage. And Rep. Pete Stark (D-Calif.) is expected to target insurers of Medicare Advantage plans, having claimed that Medicare is overpaying them by at least 10%, according to The Hartford (Conn.) Courant.

Shares of Humana, the largest provider of Medicare Part D plans, fell 5.9% on Wednesday, and shares of UnitedHealth Group, the largest provider of Medicare Advantage plans, dropped 3.2%. Shares of drug stocks also fell in response to election results.

Some policy experts, however, believe that the shift in power in Congress will have only a modest impact on health care. Uwe Reinhardt, professor of political economy, economics, and public affairs at Princeton University, told ABC News that, although insurers “will find a less-friendly audience” in a Democrat-controlled House, “whatever House Democrats might want to legislate, they are constrained by the federal government's large fiscal deficit and the president's veto pen. But I do believe a different mindset will rule, in the House at least.”

The IRS issued a report discussing accomplishments and initiatives related to tax-exempt organizations in 2006 and outlining its work plan for 2007. The IRS says it will publish its findings on the Executive Compensation Initiative Project, which is designed to stop tax-exempt organizations from overpaying their executives, late this year. In 2007, the IRS will specifically examine how hospitals determine compensation for their executives and other insiders based on the compliance check letters and questionnaires that were sent to hospitals in May and define “next steps, which could include education, guidance, examinations, and/or additional compliance check activity.”

Other priorities for 2007 include enacting the Tax Increase Protection and Reconciliation Act of 2005 and the Pension Protection Act of 2006, which significantly change laws governing tax-exempt organizations; redesigning Form 990; and assisting organizations with total assets of $10 million or more adhere to new electronic filing requirements.

Medicaid cuts mandated by the Deficit Reduction Act have not been “materially harmful to the credit strength of not-for-profit acute care hospitals” so far, said Moody’s Investors Service in a special comment. But as future Medicaid cuts are likely--and greater amounts of charity care provided by hospitals as a result--Moody’s says the long-term credit impact of Medicaid reform is “uncertain.”

Fortunately, Medicaid cuts will not have a dramatic effect on most hospitals, since Medicaid represents only 10.5% of gross patient revenues for the typical not-for-profit hospital, according to Moody’s. And the DRA allows states greater latitude to reform their Medicaid programs, although the effect of those initiatives are not yet known. The report explores the credit implications of several states’ Medicaid reform efforts and includes a reference chart with various Medicaid statistics and Moody's ratings by state. For more information about this special comment, call 212-553-1653.

Toyota Motor Corporation is building a $9 million medical clinic to offer workers primary and preventive care in its new San Antonio plant, reports The Detroit News. Intended for employees, families, and suppliers, the clinic will offer lab tests; pediatric, dental, and optometry services; physical therapy; and primary care. Toyota, which now pays healthcare costs of $11,000 annually per U.S. plant worker, is hoping that workers will have fewer hospitalizations and need for specialty care if the company makes it easy for them to take care of medical problems early. While employees don’t have to use on-site doctors, workers will pay higher co-pays and deductibles if they seek primary care elsewhere.

Seventy percent of obstetricians-gynecologists have changed their practices because of the lack of available or affordable medical liability insurance, and 65% have made changes because of the risk or fear of liability claims or litigation, according to findings from the latest medical liability survey conducted by The American College of Obstetricians and Gynecologists. Between 7% and 8% have stopped practicing obstetrics altogether because of either insurance affordability or availability issues or the risk or fear of being sued while 33% have decreased the number of high-risk obstetric patients. As a result, there are now populated areas with no ob-gyns actively practicing the specialty, and pregnant women must travel long distances--60 miles or more in some instances--to find a physician willing to provide obstetric care, said ACOG.

According to the survey results, 89% of ob-gyns reported having had at least one liability claim filed against them during their professional careers, for an average of 2.6 claims per ob-gyn. Plaintiffs’ attorneys, however, dismiss or settle without payment 67.4% of claims against ob-gyns.

As state and local governments attempt to pare down pensions of government workers, retiree health benefits are also in jeopardy, reports The New York Times. Once considered inviolate, public workers’ pensions are now being cut in San Diego, Oregon, Rhode Island, several cities and towns in Texas, and in Milwaukee County as governments claim they don’t have the money to pay what they promised, writes the Times. And in some cases, governments expect to pay retiree health benefits out of pension funds, which is even more problematic when there is a fund shortfall, since health claims must be paid immediately, unlike the gradual payment of pensions.

The U.S. should establish a new center for comparative effectiveness information to help make better coverage and spending decisions, Gail Wilensky, a senior fellow at Project HOPE and former administrator of the Health Care Financing Administration during the administration of George H. W. Bush, writes in a new Health Affairs article.

The new center would not make centralized coverage decisions. Instead, it would assess the comparative effectiveness of alternative therapies and all types of medical interventions for the benefit of payers, patients, and providers. The center would fund prospective trials to address gaps in effectiveness evidence and review existing research currently performed by the Agency for Healthcare Research and Quality, the Blue Cross Blue Shield Association, and other private-sector U.S. organizations, and comparative effectiveness centers in other countries. But, Wilensky warns, “Unless all major payers regard the placement and financing of such a center as being consistent with the production of objective and unbiased data, the information it produces will be of little use.”

Wilensky offers the idea of locating the new center in a type of entity called a “federally funded research and development center,” which receives the bulk of its funding from the federal government--likely the Medicare Trust Fund--and is generally sponsored by an agency--probably AHRQ. At the same time, FFRDCs can accept up to 30% of their funding from private sources, and Wilensky suggests that a small charge “could be assessed on all users, providers, or suppliers of health care services or on health plans.”

The Alliance on Health Reform issued a briefing on the “troubling evidence” that minorities continue to receive lower-quality healthcare--even when they have insurance and share the same social class as whites--despite many efforts to end the disparities. And while some measures of quality are improving for blacks, the briefing listed numerous instances where they are not, such as inadequate pain control for hospitalized blacks (and Latinos); lower rates of necessary lung surgery; fewer kidney transplants; and fewer referrals for catheterization and bypass grafting. Among the causes cited for the racial and ethnic disparities are a lack of minority providers, problems accessing high-quality doctors and facilities, doctors who treat minorities lacking board certification, and some minorities’ preference for home remedies. On the positive side, however, many health plans and hospitals are collecting data on race and ethnicity of patients to better target disparities in care, and there continues to be strong interest in funding initiatives to find solutions. 

It will take a major collapse of the U.S. healthcare system with hospitals closing and doctors inaccessible to many patients before Americans will push for a single-payer system, Robert Blendon, professor of health policy at the Harvard School of Public Health, told The Christian Science Monitor. “There is a cultural resistance to even considering this very serious option,” he says. The article examines the receptiveness of Americans to a radical change in healthcare and finds most experts agree that people don’t trust the government to fix the healthcare system and they want to continue to have a variety of choices in their medical care. With 85% of Americans receiving decent medical care, there is little incentive to alter the healthcare system, says Daniel Callahan of the bioethics research group The Hastings Center. And special-interest groups such as insurers, pharmaceutical companies, and Wall Street investors have considerable political clout and desire to keep additional government regulation at bay, according to the article.

Insurers have started offering “mini-medical” plans with limited benefits to employers in Kansas at a greatly reduced cost to make healthcare coverage more affordable to employers and their employees, reports The Wichita Eagle. Blue Cross Blue Shield of Kansas launched one such plan last week that covers routine and preventive care but caps benefits at $30,000. And CIGNA Healthcare announced it will offer a plan with limited benefits next year that will save employers between 25% and 40% of the cost of traditional coverage.

After examining quality improvement efforts in more than 10 countries, PricewaterhouseCoopers’ Health Research Institute named quality and safety standards as one of the primary features needed for healthcare sustainability. The report, The Quality Conundrum: A Global Perspective on Healthcare Quality, outlines the challenges and successes countries have had in improving quality in their healthcare systems. Although all hospitals in Norway, for example, report on quality measures, there are no national definitions for clinical quality, so, currently, it is impossible to compare providers. The practice of patients seeking care in other countries is growing in Europe and elsewhere, so providers are having to figure out how to align quality information systems across countries and facilitate in-depth information sharing among providers to maintain continuity of care. And even though the countries in the European Union have accepted personal health records as a standard to be achieved, extensive use of IT is leading to new problems, such as data security and inconsistencies or gaps in transferring handwritten clinical information into electronic records.

Providers in different countries have a unique opportunity to share innovative solutions to quality issues, says the report. “As care across borders becomes increasingly common, health systems planners have the opportunity to benefit from their neighbors, not only by sharing services and providers but by sharing approaches to quality monitoring and improvement.” Read the report.

A report for the National Commission for Quality Long-Term Care by two Brown University researchers describes the current state of long-term care in the United States and outlines six key “areas of concern” to meet the needs of aging baby boomers. “Reform is necessary not only for the sake of future generations of long-term care recipients, but also for the sake of those thousands of individuals receiving inadequate care in the current environment,” said Vincent Mor, chair of Brown’s Department of Community Health. Yet, there has been no national consensus about how long-term care should be delivered and financed. The researchers maintain that the following must be addressed to create a better long-term-care system: prioritizing long-term care financing, empowering individuals and families, promoting physician and organizational change, investing in the long-term care workforce, modernizing regulatory controls and incentives, and leveraging health IT. Read the report.

Several hospitals around the country have created “fast-track” programs in their emergency departments to improve patient satisfaction and safety, both of which get severely tested when waits of six to eight hours are common, reports the Associated Press. Montefiore Medical Center in New York City, for example, has cut waits for less serious emergencies from six hours to two hours by hiring 50 more ED physicians, using electronic patient registration, and creating a separate area for these patients as part of a $35 million ED improvement effort. The patient walkout rate has dropped from 5% to 1.5%, according to hospital administrators. At Spectrum Health’s Butterworth Hospital in Grand Rapids, Mich., all ED patients are now seen within 23 minutes, as a result of the addition of 25 nurses and a physician doing a preliminary exam to order tests and X-rays in advance of treatment. And at Silver Cross Hospital in Joliet, Ill., patients receive pagers so they aren’t held captive in the ED while they wait.

Starting next year, New York will expand its state-subsidized health plan for low-income working people with a high-deductible option that is expected to lower premiums by 25% from the standard plan. The deductible for individuals is $1,150 and for families, $2,300, reports the Syracuse, N.Y., newspaper The Post-Standard. Individuals can purchase the new plan, meant to be combined with a health savings account, through insurers and can elect whether they want drug coverage. The Healthy NY plan does not cover mental health services, alcohol and drug abuse treatment, or chiropractic care, but it will include home health care, prostate cancer screening, and physical therapy next year.

A survey of more than 6,000 primary care physicians in Australia, Canada, Germany, the Netherlands, New Zealand, the United Kingdom, and the United States reveals that U.S. primary care physicians do not have as many tools or as much support to provide the best care possible to patients as physicians in other countries do. According to the Commonwealth Fund 2006 International Health Policy Survey, published on the web site of Health Affairs, the U.S. primary care system trails other countries in several areas: 28% of U.S. primary care physicians use electronic medical records compared with 92% of New Zealand physicians; 23% of U.S. primary care physicians receive computerized alerts for harmful drug doses or interactions compared with 93% of physicians in the Netherlands; and 40% of U.S. primary care physicians offer care to patients other than during working hours compared with 87% in the United Kingdom.

American primary care physicians are also among the least likely to receive incentives targeting quality. Just 30% of U.S. primary care physicians report receiving or having the potential to receive any incentives for managing chronic disease, achieving clinical quality targets, enhancing preventive care, or any other quality improvement activities in contrast to 95% of physicians in the United Kingdom. The researchers call for new U.S. national policies to support systemwide initiatives to improve access to and delivery of primary care. Read the report.

Under the Deficit Reduction Act, children born to undocumented immigrants no longer will be granted automatic Medicaid coverage for the first year of life, the Bush administration announced last week. The change in policy now requires parents to file a Medicaid application for infants, which illegal immigrants aren’t likely to do for fear of being deported, say critics of the policy, according to The New York Times. Parents also have to prove the baby’s citizenship through documents that could take weeks to obtain.

Physicians and hospitals have criticized the new policy, which “punishes babies who, according to the Constitution, are citizens because they were born here,” Jay Berkelhamer, MD, president of the American Academy of Pediatrics, told the Times. Although the intent of the DRA was to prevent illegal immigrants from fraudulently receiving Medicaid, Berkelhamer pointed out that denying necessary care to infants could cost more in the long run.

In studying a sample of 252 health maintenance organizations drawn from 41 U.S. metropolitan areas, Harvard School of Public Health researchers found that 52.1% of health plans representing 81.3% of people enrolled in HMOs used pay-for-performance programs in 2005. Physician pay-for-performance programs, which almost always included measures of clinical care quality, were more common than hospital pay-for-performance programs. About one-third of physician-oriented incentive programs rewarded only the top-rated physicians or groups and not those who improved the most, according to the study published in the Nov. 2 issue of The New England Journal of Medicine.

The authors believe the findings can serve as a useful resource for the Centers for Medicare and Medicaid Services as it goes about designing pay-for-performance programs for Medicare. For example, currently Medicare doesn’t require recipients to choose a primary care physician. The survey showed that HMOs that don’t require many of their members to select a primary care physician were less likely to use pay for performance. That finding may reflect that, when there are many physicians involved with a patient’s care, it may be difficult to attribute performance to a single physician or group. CMS may need to consider the challenges of implementing pay for performance in the absence of a primary care physician requirement. The researchers also found that HMOs tend to pay medical groups rather than individual physicians for performance. Medicare, for the most part, does not contract with groups; it may need to do so to take full advantage of pay for performance, write the authors.

White-collar retirees of Ford Motor Company who are eligible for Medicare will be dropped from the company’s health plan starting in 2008, reports The Detroit News. Having spent $3.5 billion on employee and retiree health care in 2005, Ford is looking for ways to cut its costs. Instead of healthcare coverage, Ford is offering retirees and their spouses each an $1,800 stipend, which will be placed in a health retirement account. Medicare beneficiaries typically spend $3,300 a year on health-related costs, Helen Ann Halpin, a professor of health policy at the University of California-Berkley, told the News. “If the senior is relatively healthy, this could be a gain,” she said. “But if they have any type of serious condition, they’re going to be left short.”

The Medicare Physician Fee Schedule final rule released this week by the Centers for Medicare and Medicaid Services reduces payment for physician-related services by 5.0%--slightly less than the 5.1% reduction in the proposed rule--to account for growth in volume and intensity of physician services, effective Jan. 1, 2007. The final rule also significantly increases the work component for the relative value units for patient evaluation and management. The hallmark of this rule is a stronger emphasis on the physician-patient relationship; the work component for RVUs associated with an intermediate office visit is increasing by 37%, for example, and the increase for a hospital visit requiring moderately complex decision making is 31%.

The final rule also expands the preventive services Medicare will cover, such as preventive ultrasound screening for abdominal aortic aneurysms and bone-mass measurement due to long-term steroid therapy, and it exempts the colorectal cancer screening benefit from the Part B deductible. For beneficiaries in underserved areas, Medicare will now include diabetes outpatient self-management training and medical nutrition therapy services in the federally qualified health center benefit.

As in the proposed rule, the final rule adopts a new methodology for determining practice expense RVUs, but the changes will now be phased in over four years. This methodology will be more transparent than the existing methodology, allowing specialties and other stakeholders to predict the effects of proposals to improve accuracy of practice expense payments.

Consistent with requirements of the Deficit Reduction Act of 2005, the final rule caps payment rates for imaging services under the physician fee schedule at the amount paid for the same services when performed in hospital outpatient departments. The final rule includes a list of codes to which the outpatient prospective payment system cap would apply. The rule also finalizes a policy of reducing by 25% the payment for the technical component of multiple imaging procedures on contiguous body parts. CMS will apply the multiple imaging reductions first, followed by the OPPS imaging cap, if applicable.

CMS projects that it will pay approximately $61.5 billion to more than 900,000 physicians and other healthcare professionals in 2007 as a result of the payment rates and policies adopted in this rule. Download the final rule (1,418 pages).

CMS has announced a 3.3% market basket increase for Medicare payment rates for home health services for CY07. The home health prospective payment system annual update will bring an estimated additional $410 million in wage-adjusted payments to home health agencies next year.

The final rule also changes how Medicare will pay for oxygen and oxygen equipment, as well as capped rental items, such as wheelchairs and hospital beds, and establishes new protections for beneficiaries who require these items. The final rule implements Section 5101 of the Deficit Reduction Act of 2005, which requires suppliers to transfer title of oxygen equipment to the beneficiary after 36 months of rental payments and capped rental items after 13 months. After the transfer of title, Medicare rental payments and beneficiary coinsurance on the rental payments will no longer be made. Medicare will also make certain payments after a beneficiary owns the equipment, and the final rule contains new supplier requirements to continue furnishing equipment to beneficiaries during the entire rental period and to replace equipment that does not last as long as expected. Download the final rule (416 pages).

The Centers for Medicare and Medicaid Services has released the 2007 hospital outpatient prospective payment system final rule, which includes provisions for expanding the quality reporting requirement for hospital inpatient services and increasing the list of services for which Medicare will make payment to ambulatory surgical centers in 2007. CMS will develop outpatient-specific quality measures and require hospitals to report on them starting in 2009.

The final rule includes a 3.4% market basket update to Medicare payment rates for services paid under the hospital OPPS for CY07. The rule also:

• Ties OPPS rate increases to the reporting of quality measures beginning in 2009
• Expands hospital reporting of additional quality measures for inpatient services beginning in FY08
• Revises the ASC payment and coding structure for drug administration services

In addition, the rule implements a provision of the Deficit Reduction Act that requires that Medicare payment for surgical procedures performed in ASCs not exceed the Medicare payment for the same procedures when they are performed in a hospital outpatient department subject to the OPPS. This provision will result in decreased payment for approximately 280 procedures on the ASC list beginning Jan. 1, 2007. The rule also includes three new measures from the Surgical Care Improvement Project related to the process of care for surgical procedures.

The final rule provides that hospitals will continue to report clinic and emergency department visits and critical care services using Current Procedural Terminology codes. Medicare will pay for five levels of service in the ED and in clinics, and will pay for two levels of critical care services, based on the presence or absence of a trauma response. However, CMS is not finalizing its proposal to create 12 new HCPCS codes for visits to hospital clinics, full-time EDs, or critical care services.

CMS estimates that hospitals will receive an overall average increase of 3% in Medicare OPPS payments over 2006.

Despite increasing calls for price transparency at hospitals, Moody’s Investors Service believes that consumers will continue to choose hospitals recommended by their physicians, at least for the next few years. Insurers, however, are likely to use price transparency data to provide financial incentives to consumers to choose lower-cost providers, and consumers with health savings accounts may more strongly consider using less expensive hospitals, Moody's said in a special comment. Currently, the biggest impact of price transparency on hospitals is meeting the “significant” administrative and public relations challenges of educating consumers and regulators on pricing and reimbursement and developing strategies to respond to pricing disclosure.

“Moody’s believes proactive hospital management teams should be developing plans to explain to various constituents (local political leaders, board members, donors, patients, etc.) pricing decisions and cost differences, especially in relation to nearby facilities,” Moody’s special comment states. “Just as hospitals have paid increasing attention to charity care policies in recent years, management’s attention to pricing strategies and the hospital’s cost relative to peers will be equally important.” For more information about Moody’s commentary, call 212-553-3842.

U.S. News & World Report and the National Committee for Quality Assurance have ranked nearly 700 commercial, Medicare, and Medicaid health maintenance organizations and point-of-service plans based on their clinical performance, patient experience, and satisfaction as well as their NCQA accreditation status. The top 50 commercial and top 25 Medicare and Medicaid plans are listed in the November 6 issue of U.S. News, and information for all plans is available online. In addition to the rankings, the U.S. News web site offers detailed information about clinical performance, customer satisfaction, and accreditation status for more than 500 health plans, as well as information on the more than 150 plans that chose not to report data.

"Millions of people will find this information useful in helping them select the right health plan for themselves and their families,” said NCQA President Margaret E. O’Kane. “Working with U.S. News allows us not only to identify those health plans that stand out, but also to motivate other plans to improve their performance and report the results.”

In the last five years, healthcare institutions such as Vanderbilt University Medical Center, Johns Hopkins Medical Institutions, and Cedars-Sinai Medical Center have hired professional pilots to train their critical care staffs on how to apply aviation safety rules to medical procedures, reports The New York Times. Cockpit procedures such as communication protocols, checklists, and crew briefings that have been adopted by doctors and nurses have resulted in fewer malpractice suits and post-surgical infections, according to research published in JAMA, The Journal of Critical Care, and the British medical journal BMJ. “I’m seeing errors caught virtually every day,” Timothy Dowd, chairman of the anesthesiology department at Vassar Brothers, told the Times after the hospital’s critical-care staff received training by pilots. 

HHS uses a designation system to identify where shortages of primary care providers exist so federal programs can allocate resources or provide benefits to these areas. HHS acknowledges that its methodology for designating health professional shortage areas is flawed, and the agency has been working since 1998 to correct it. A U.S. Government Accountability Office report, however, found that many problems remain. HHS, for example, ranks 1,600 federally qualified health centers with HPSA scores too low to qualify for some federal programs, and 500 rural clinics that treat uninsured patients also received HPSA scores that exempted them from benefits. Other problems are that HHS overestimates provider shortages in some areas, and some providers who no longer qualify for federal benefits have retained the HPSA designation.

GAO recommends that HHS remove HPSA designations from providers who no longer meet the criteria and complete the revision of the HPSA designation system. HHS concurred with the recommendations.

Physicians are so burned out and discouraged by the state of the healthcare system that nearly 60% of the 1,205 physicians who participated in a survey conducted by the American College of Physician Executives say they have considered leaving the practice of medicine. According to the survey findings, which are reported in the November/December issue of The Physician Executive, the top 5 factors contributing to low physician morale were low reimbursement, loss of autonomy, bureaucratic red tape, patient overload, and loss of respect. Seventy-seven percent of respondents said that fatigue was the biggest manifestation of low morale, followed by emotional burnout (66%), marital or family discord (32%), and thoughts of suicide (4%). "I think that it is safe to say that no physician is optimistic about the future of medicine at this point," one respondent wrote.

The Medicare Payment Advisory Commission asked RAND Health to help determine whether Medicare’s payment rates for the same procedure should differ based on whether it is performed in a hospital outpatient department or an ambulatory surgery center. The study examined three procedures—cataract surgery, colonoscopy, and MRI of the head, neck, and brain—and asked whether certain characteristics of Medicare patients, such as dementia, would be expected to increase the cost of the procedure and whether there were differences in risk-adjusted rates of adverse outcomes in each setting that affected cost.

The study found that patient traits that might increase the cost of the procedures were very low in all settings, no setting had consistently high rates of patient characteristics that would increase the procedure’s cost, and rates of adverse outcomes were also very low in all settings. Therefore, the report concludes, “claims data can be used to evaluate differences among sites of care and is thus an important step in addressing whether payment variations among settings are appropriate.”

Baptist Health South Florida’s five hospitals are expected to give preferential status to those among its 10,000 vendors that provide health insurance to their employees, reports the Miami Herald. The hospital system says vendors that provide insurance will likely be awarded more business and possibly receive a higher fee. This is the first initiative of its kind in South Florida and one of only a few in the United States by a non-government agency. "This is very interesting,'' Paul Ginsburg, president of the Center for Studying Health System Change, told the Herald. "It pursues a social goal...but it's probably going to boost their bottom line, too" because employees of local vendors that have insurance won’t be seeking free care.