Healthcare Financial News

On Wednesday, President Bush signed the Tax Relief And Health Care Act Of 2006. As reported when the bill passed Congress, the law will delay the scheduled 5.1% Medicare physician pay cut for one year, and will provide a payment incentive if physicians report on quality measures. In addition, the law expands the amount that individuals may contribute to HSAs; any individual may contribute $2,850 per year, and families can contribute $5,650, even if those amounts are more than the annual deductible. Read the White House Fact Sheet about the act.

In a class action lawsuit against six hospitals in the Detroit area, RNs are alleging that the hospitals have unlawfully conspired to keep their wages at artificially low levels. The lawsuits were filed in federal court against Bon Secours Cottage Health Services, Detroit Medical Center, Henry Ford Health System, McLaren Health Care Corp., Oakwood Healthcare Inc., and St. John Health Partners. A statement by the plaintiffs’ lawyers, Cohen, Milstein, Hausfeld & Toll, P.L.L.C., and James & Hoffman, PC, claims that the hospitals “have deliberately, secretly, and systematically exchanged detailed, non-public, current information about the wages each is paying its nurses.” As a result of this information exchange, the hospitals have suppressed nurses wages, thereby contributing to the nursing shortage. According to the law firms’ preliminary estimates, nurses in Detroit on average each have been underpaid approximately $5,000 per year.

The lawsuit is asking for $340 million for 16,800 full-time RNs, reports The Detroit Free Press. The Detroit Medical Center said RNs received a 6% raise this year, while management and other staff received 2% increases. "And they will get double the raises the rest do next year," Mike Duggan, chief executive officer of the DMC, told the Free Press. "This is the last group I thought would say their wages were held down." The other defendants either would not comment or had no immediate response to the lawsuit.

The law firms also filed litigation earlier this year in Albany, Chicago, Memphis and San Antonio, alleging conspiracies among hospitals in those areas to depress nurse pay.

With many Democrats and Republicans concerned that healthcare reform cannot wait much longer, both parties are viewing Massachusetts’ universal health coverage law as model legislation for individual states and also the nation, reports The Boston Globe. Senator Edward Kennedy (D-Mass), the new chairman of the Senate Committee on Health, Education, Labor, and Pensions, said he will propose his state’s reform program as a national model, and Senators Trent Lott (R-Miss.) and Jeff Sessions (R-Ala.) also said they were interested in exploring aspects of the Massachusetts plan, which mandates that all residents have health insurance and that all employers contribute to coverage.

Two dozen states are also considering universal coverage proposals, even though the cost may be significantly higher in states with more uninsured people than Massachusetts. Timothy R. Murphy, Massachusetts secretary for health and human services, has talked about his state’s plan to officials in Minnesota, California, Missouri, and Texas, and has received numerous requests from other states.

When the Oregon Health Plan was enacted in 1989, it was hailed as an innovative approach to expanding Medicaid to more people by rationing services. But today the plan is “covering both fewer services and fewer people, and the elimination of entire benefit categories and rollback in enrolled beneficiaries looks more like the arbitrary cuts common in other states than the rational and equitable model of prioritization to which Oregon aspired,” says Jonathan Oberlander in a new Health Affairs article.

In analyzing what went wrong, Oberlander says that Oregon failed to anticipate how price-sensitive OHP enrollees were and how much difficulty they would have navigating the system, which represents “a cautionary tale for states enamored with consumerism and the prospect of having Medicaid recipients put more ‘skin in the game’ through added cost sharing.” He also details how OHP became fiscally unstable and lost its political support.

The most important lesson of the Oregon experience for other states “is that the task is not simply to enact coverage expansions--it is to sustain them,” according to Oberlander. He suggests that the strongest challenge to sustainability is increasing medical costs, which leads to a Catch-22: Avoiding cost controls, and thus avoiding fights with medical industry stakeholders, “is perhaps the key to short-term political success.” However, the absence of cost control “may be, in the long run, the Achilles’ heel of state-led health reforms.”

Various proposals to cover New York’s 2.8 million uninsured people are detailed in a new report by the United Hospital Fund and the Commonwealth Fund. The net cost of each of the three scenarios is roughly $4 billion, but the distribution of that spending by individuals, state, and federal government varies greatly depending on the role employers will play. The report models two options for employers with 10 or more workers that don’t currently offer health insurance: pay a small fine of $400 per worker, or contribute 8% of payroll to offset the state’s cost of expanding public programs. Reforms limited to simplifying and expanding public health programs to increase participation by all eligible people, along with a program to subsidize health insurance for moderate-income New Yorkers, would only reduce the number of uninsured people by one-third. New York will achieve universal coverage only if all individuals are mandated to have health insurance, according to the report.

The Public Company Accounting Oversight Board has proposed for public comment a new standard on auditing internal control over financial reporting and other related proposals. The proposed standard would supersede the Board’s existing internal control standard, Auditing Standard No. 2, and is designed to focus the auditor on the matters most important to internal control; eliminate unnecessary procedures; simplify and shorten the standard by reducing detail and specificity; and make the audit more scalable for smaller and less complex companies.

In addition to the proposed internal control standard, the Board also proposed for public comment a new auditing standard on considering and using the work performed by internal auditors, management and others in an integrated audit of financial statements and internal control, or in an audit of financial statements only. This proposed standard is intended to further clarify how and to what extent an independent auditor may use that work to reduce the work the auditor otherwise would have to perform. In addition, the Board proposed to revise the independence requirement that currently is embedded in the text of AS No. 2, which requires the auditor to seek specific pre-approval by the audit committee of any internal control related service. Finally, the Board also proposed certain changes to its other standards to conform to the changes being brought about by this rulemaking.

In addition, last week the Securities and Exchange Commission proposed an interpretive guidance for managements regarding their evaluations of internal control over financial reporting. The SEC says its proposed risk-based approach addresses many of the concerns that have been raised to the Commission including: excessive testing of controls generally; excessive documentation of processes, controls, and testing; and the ability to scale the evaluation to smaller companies. The SEC’s proposed guidance along with the PCAOB’s proposed changes are intended to make complying with Section 404 of the Sarbanes-Oxley Act of 2002 less burdensome and less expensive.

The law firm Reed Smith LLP, filed a class action lawsuit in U.S. District Court for the District of Columbia, Civil Division, last Friday on behalf of nursing-home resident Louise Bailey and other diabetic Medicare Part B beneficiaries in skilled nursing facilities. The suit alleges that Michael Leavitt, Secretary of the Department of Health and Human Services, Leslie V. Norwalk, Acting Administrator of the Centers for Medicare and Medicaid Services, and Mutual of Omaha Insurance Company in its role as a medical contractor enforce policies that deny coverage for medically necessary blood glucose tests to institutionalized diabetic patients.  The complaint asks the court to recognize that decisions concerning the medical necessity and frequency of blood glucose tests for Medicare nursing home residents be made only by physicians. 

In October 2005, Mutual of Omaha denied coverage for Bailey to get four blood glucose tests a day for her advanced diabetes. According to the complaint, CMS allowed Mutual of Omaha’s enforcement of a Local Coverage Determination that denied coverage for blood glucose tests for diabetics under Medicare Part B.  When Bailey challenged the LCD before the HHS Departmental Appeals Board, Mutual of Omaha withdrew the LCD.  But Bailey’s lawyers claim that Mutual of Omaha will continue to apply the LCD coverage policies to future claim reviews, even though they are now invalid” and that “neither Mutual nor CMS have taken any action to suggest that any of Mutual’s previous denials of blood glucose testing coverage for thousands of other Medicare beneficiaries in the proposed class will be reopened or reviewed as a consequence of the LCD withdrawal.” The complaint also references a letter from Senators Susan Collins and Blanche Lincoln to HHS Secretary Leavitt on December 7, urging CMS to revise a newly issued rule that establishes different glucose testing regulations for Medicare Part A and Part B and requires a separate order and certification for each test. The senators say the rule is confusing and burdensome and could prevent diabetics in skilled nursing facilities from having their blood glucose adequately monitored.

With Medicaid paying 35% more in some cases for prescription drugs than pharmacy benefit managers pay, the Centers for Medicare and Medicaid Services has announced a proposed rule to save $8.4 billion in state and federal funds over five years, or a reduction of 5.6% of Medicaid’s spending on drugs, reports The New York Times. Fulfilling a mandate of the Deficit Reduction Act of 2005, CMS is proposing to recalculate the “average manufacturer price” for brand-name and generic drugs, which states use to set Medicaid reimbursement rates for drugs, effectively limiting payment for prescription drugs for which a generic equivalent is available. Drug manufacturers will be required to offer Medicaid the same discounts and best prices they offer pharmacy benefit managers, but 90% of the savings from the proposal will come from pharmacies that will have to find sources of generic drugs at prices below the new limits. (Read more about the proposed rule.)

But Bruce Roberts, executive vice president of the National Community Pharmacists Association, called the proposal “shortsighted and dangerous” because it will force community pharmacists out of the Medicaid program, leaving Medicaid beneficiaries without access to prescription medications. “Under this plan, pharmacists would be losing an average of $3 to $4 for every generic prescription dispensed,” Roberts said. “More than half of all prescriptions dispensed by retail pharmacies are for generic medications, so losing money on every one dispensed to a Medicaid patient is a recipe for economic disaster.” Approximately 25% of all prescriptions dispensed by independent pharmacists are to Medicaid patients.

Hospital patients define medical errors much more broadly than the traditional clinical definitions of medical errors, and include communication problems, lack of responsiveness, and falls as medical errors, according to a study published in the January 2007 issue of the Joint Commission Journal on Quality and Patient Safety. The study of more than 1,600 patients at 12 Midwestern hospitals shows the importance of explaining exactly what is meant by the term “medical error” if patients are to be effectively engaged in programs to prevent them.

The study found that most patients felt a high level of medical safety, but 39% experienced concern about at least one type of medical error during their hospitalization. Certain groups of patients were more likely to be concerned about medical errors--middle-aged patients, parents of pediatric patients, and blacks. In addition, patients who experience longer lengths of stay or more severe illnesses, or who were admitted through the emergency department, were likely to experience more concerns. Patients who received care in small and rural hospitals reported the fewest types of concerns, regardless of the severity of illness.

A single concern about a medical error was enough to significantly affect patients’ perceptions of their entire hospital experience, potentially altering adherence and willingness to return for care. The study recommends that hospitals consider routine real-time measurement of patient concerns about medical errors as part of patient satisfaction efforts. In addition, there is a need for additional research into the factors that generate concerns among patients about medical errors, how best to encourage patients to express these concerns, and what strategies effectively reassure patients about their medical safety.

Many city and state governments are finding that their practice of using pension funds to pay healthcare costs for retired employees--estimated at $1.1 trillion--is threatening both promised pensions and healthcare benefits, reports The New York Times. For retired Chicago Transit Authority workers, for example, money for healthcare benefits could be depleted by early next year, and the pension fund may be gone by 2012. In Battle Creek, Mich., retiree health benefits for police and firefighters have increased from $60,000 a year in 1980 to $1.8 million today with no funds left to pay future health bills. When investment returns on pension funds were healthy in the 1990s, many local governments used those gains to finance healthcare costs for retirees. But today’s lower returns and accelerating healthcare costs have created a financial crisis for pension funds. Solutions for rebuilding pension funds to accommodate retiree health benefits are so unattractive--raising taxes, selling bonds or public assets, or increasing mass-transit fares--that few governments are seriously considering them, according to the article.

For the eighth consecutive year, nurses are at the top of Gallup’s annual list of occupations rated for their honesty and ethical standards, with 84% of Americans rating nurses’ ethics as “very high” or “high.” Four of the five next most highly regarded professions are also in the medical field: pharmacists, veterinarians, physicians, and dentists, with more than 6 in 10 rating the honesty and ethics of these workers as very high or high. Just over one-third of Americans give high praise for honesty and ethical standards to psychiatrists and chiropractors. The good news for these professionals is that the balance of public opinion is more neutral than negative about them. Those receiving about equal levels of positive and negative ratings include journalists, state governors, stockbrokers, and business executives. About half of Americans consider the ethics of each of these to be average. Car salespeople are at the bottom of the list, with a majority (55%) of respondents saying they have low or very low ethics. Other than car salespeople, the professions that stand out for receiving substantially more negative than positive ratings include congressmen, health maintenance organization managers, advertising practitioners, insurance salespeople, senators, and lawyers.

Frontline healthcare workers are growing faster (32.6%) than other healthcare occupations (28.3%) and far more rapidly than all other occupations in the United States (14.8%), yet these 6.5 million workers don’t command the attention of research studies in the same way that physicians, registered nurses, and healthcare executives do. The Robert Wood Johnson Foundation has released a new publication, Workers Who Care: A Graphical Profile of the Frontline Health and Health Care Workforce, a 248-page resource that is the first comprehensive source of state and national data on the occupational growth outlook, per capita employment, demographic information, and wage outlook and trends for 32 frontline occupations, including medical assistant, health educator, pharmacy technician, recreational therapist, and home health aide.

Despite frontline workers’ vital and growing responsibilities, most earn under $40,000 a year and lack credentials, access to training, and opportunities for advancement. A growing and aging population will intensify the need for frontline health workers, according to the report, and with proper training and support, incumbent workers could fill many of the better-paying, more senior positions, such as supervisory roles. The report offers recommendations for healthcare employers to support training and advancement for frontline workers. Download the report.

Building clinical research into the Nationwide Health Information Network will enable faster discovery and verification of treatments and cures by giving researchers access to data in electronic health records, according to a report released by FasterCures, a not-for-profit promoting the acceleration of medical solutions. The report details steps to help speed the implementation of EHR systems and suggests four strategies to include a research component in the NHIN, the federal government’s planned “Internet for health care.” By incorporating clinical research into the NHIN, researchers could conduct post-marketing surveillance (Phase 4) studies as a beneficial test case for other types of research and to improve patient safety; conduct population-based research across the spectrum of exposures, outcomes, and interventions; and identify potential subjects for clinical research, a major obstacle to clinical trials today. The report is based on recommendations developed at a meeting sponsored by FasterCures, the Agency for Healthcare Research and Quality, and the National Institutes of Health’s National Center for Research Resources.

Although states had strong revenue in FY06 and improved finances, Medicaid continues to strain state budgets, according to the biannual Fiscal Survey of States published by the National Association of State Budget Officers and the National Governors Association. At 22% of total state spending, Medicaid constitutes the largest portion of state expenditures. In FY06, Medicaid spending increased 5%, with state funds increasing by 7.7% and federal funds by 2.9%. The report noted that every state has implemented cost-containment measures, such as freezing or reducing provider payments and better drug-cost management. According to a report issued last month by NASBO, Medicaid funding shortfalls affected 18 states in FY05, and 16 states anticipated shortfalls in 2006, for an average shortfall of $5.2 billion. Also singled out for considerable concern by states are the overall cost increases in health care, the rise in state employee insurance, and the number of uninsured people.

More than half (55.9%) of nonfederal employees with employer-sponsored insurance were required to pay a deductible in 2004, which varied by the size of the firm and industry, according to a statistical brief by the Agency for Healthcare Research and Quality. For single coverage, the nonfederal deductible average was $529, with construction workers paying the highest at $737 and state and local government workers paying the lowest deductible at $393. The national nonfederal deductible average for family coverage was $1,072, with construction workers paying $1,544 and retail employees paying $1,254. More than three-quarters (77.3%) of nonfederal workers covered by employer-sponsored insurance also had required copays, which averaged $17.49. Workers in mining and manufacturing, construction, and retail industries had copays ranging from $18.17 to $19.25. The average co-insurance for a physician visit was 18.6%.

Consumer-focused health system changes and a rapidly evolving competitive landscape emerged as key themes among the topics that are front-of-mind for healthcare finance leaders for the coming year, according to HFMA’s Healthcare Finance Outlook 2007. The report compiles findings of HFMA’s 2006 survey of nearly 2,000 members, as well as commentary on critical healthcare issues as identified by healthcare financial professionals.

The survey results showed that revenue cycle improvement and cost containment continue to be top priorities. Issues involving consumer-focused practices, payment trend, and business development also scored high.

“Strategic planning is one area where a leader’s courage is truly tested,” said Richard L. Clarke, DHA, FHFMA, HFMA president and CEO. “Healthcare Finance Outlook 2007 is designed to help financial leaders understand and prepare for the forces that are shaping the world, from payment trends to the competitive business environment, so that leaders can build a strong bridge between the business side and the human side of health care.”

Highlights of the findings:

* As patient copays and deductibles continue to rise, hospitals face an unprecedented level of credit risk.
* Simplified, rational charge systems and transparent pricing has become a nationwide imperative for healthcare providers.
* The reporting of quality information must be developed in tandem with price transparency.
* Hospitals are preparing for a tougher round of payer contract negotiations as payers consolidate and build bargaining clout. Topics on the bargaining table will include changes that will allow hospitals to simplify their charge systems and elimination of nondisclosure clauses to facilitate price transparency. Read the report.

The Pandemic and All-Hazards Preparedness Act, which Congress passed earlier this month, requires the Department of Health and Human Services rather than the Homeland Security Department to lead all public health and medical responses in a public health emergency. The bill authorizes HHS to make grants to hospitals to improve surge capacity in an emergency. It also requires the department to develop evidence-based benchmarks to measure state preparedness and withdraw funds from entities that don’t meet the standards or that don’t have a pandemic influenza plan. The legislation funds a near real-time electronic national network that allows entities to share data and information to enhance the detection, response, and management of infectious disease outbreaks and public health emergencies. It also establishes a Medical Reserve Corps to provide volunteers to serve in a medical emergency and funds additional training for the public health workforce.

The recent recommendations by the New York State Commission on Health Care Facilities in the 21st Century to close nine hospitals and reconfigure 48 others will not result in immediate rating actions on nine Moody’s-rated hospitals cited by the commission for mergers and affiliations (but not for closure). According to a Moody’s Investors Services special comment, those nine hospitals could benefit from higher patient volumes and negotiating strength by eliminating competitors. But by merging with troubled hospitals, Moody’s cautions, reconfigured hospitals could also be burdened by serving poorer patients, shoring up financially precarious institutions, and executing a difficult integration. And longer term, the commission’s actions are expected to have “material impact,” says Moody’s.

For the state’s other hospitals, the long-term effect of the commission’s recommendations will likely be positive as excess hospital capacity is removed and poor-performing hospitals cease operations. “However, there may be situations where commission-recommended affiliations create stronger providers that could possibly pose a greater market threat to other providers,” writes Moody’s. For information on this report, contact Moody’s at 212-553-1653.

Ten hospitals will participate in a 16-month national program to improve the quality of language services provided to patients with limited English proficiency. Funded by the Robert Wood Johnson Foundation and administered by The George Washington University’s School of Public Health and Health Services, Speaking Together: National Language Services Network will provide each hospital a grant of up to $60,000 along with technical assistance and training to help hospital staff better structure and manage language services for more effective and timely communications with these patients.

The hospitals will test new ideas, quantify results, and share lessons learned with each other as they address their language services challenges. The ultimate goal is to share proven best practices with health professionals across the nation and give hospitals concrete and tested examples of effective language services programs and interventions that they can adopt.

First-year residents reported that working five extended-duration shifts--of 24 hours or more at a time without rest--per month led to a 300% increase in their chances of making a preventable adverse event that contributed to the death of a patient, according to a new study funded by the Agency for Healthcare Research and Quality and the National Institute for Occupational Safety and Health. Unlike previous studies that have suggested a link between resident work hours and medical errors that harmed patients, this study has a sample size large enough to demonstrate that the rate of preventable adverse events grows when interns work shifts of 24 hours or more.

According to the study, interns were three times more likely to report at least one fatigue-related preventable adverse event during months in which they worked between one and four extended-duration shifts. In months in which they worked more than five extended-duration shifts, the doctors were seven times more likely to report at least one fatigue-related preventable adverse event and were also more likely to fall asleep during lectures, rounds, and clinical activities, including surgery. Guidelines for graduate medical education in the United States allow up to nine “marathon” shifts (30 hours at a stretch) per month, even though the total number of hours worked is capped.

Researchers analyzed the results of a national, web-based survey in which 2,737 interns completed 17,003 monthly reports, and they assessed the association between the number of extended-duration shifts worked in the month and the reporting of significant medical errors, preventable adverse events, and lapses of attention. Read the press release.

America’s Health Insurance Plans and the Blue Cross and Blue Shield Association have announced that they have created a personal health record model that is a private, secure, web-based tool maintained by an insurer and containing a consumer’s claims and administrative information. Until now, the information in personal health records has not been consistent, prompting physician organizations to urge the insurance industry to identify the core data that should be included in a personal health record. Physicians identified as key data patient histories, medications, immunizations, allergies, risks, and plans of care. AHIP and BCBSA have identified the core information to include in personal health records and have pilot testing standards that will allow consumers to transfer the record data when they change coverage.

Personal health records are distinct from electronic health records, which contain detailed clinical information. Personal health records enable patients and their caregivers to view and manage health information and play a greater role in their own health care. An estimated 70 million people have personal health records through health insurers, with millions more scheduled for the service in 2007. The health insurance community has set a goal of incorporating the core data elements and implementing the standards for portability by 2008. See a chart of the types of data to be included in the personal health record.

Death rates at hospitals that rank at the top of the Centers for Medicare and Medicaid Services’ Hospital Compare web site aren’t significantly different than those at hospitals rated at the bottom, according to a new study published in JAMA. Researchers from the University of Pennsylvania examined hospitals’ performance in 2004 on Medicare quality-of-care measures for treating heart attacks, heart failure, and pneumonia. They found that the highest-ranked hospitals had death rates associated with heart attacks and pneumonia that were only 0.5% lower than hospitals that performed the worst on the quality measures, reports the Associated Press. And although it may appear that 9,000 lives per year might be saved if patients went only to the highest-ranked hospitals, the real numbers are lower, because not everyone can access hospitals at the top of the Hospital Compare rankings, said the researchers. An accompanying JAMA editorial questioned whether Hospital Compare is a valuable assessment of hospital quality, but CMS told the AP that evaluating hospitals based on all 22 quality measures would have yielded large differences between hospitals.

In 2007, 10% of large firms say they are very or somewhat likely to eliminate subsidized coverage for some future retirees, according to a new survey of 302 large private-sector employers conducted by the Kaiser Family Foundation and Hewitt Associates. Large employers also say they will require retirees to pay more for their health benefits next year: 64% said they will increase retiree contributions to premiums, 26% will increase cost-sharing requirements, 20% will raise drug copayments, and 18% report that they will raise out-of-pocket limits. At the same time, 78% say they will offer drug coverage to their retirees and accept subsidies from the federal government to offset some of those costs.

The survey also assesses the cost of retiree health coverage for new retirees. Overall, employers report a 6.8% increase in total retiree health costs between 2005 and 2006--a rate of growth consistent with the increases reported for active workers in other studies and significantly higher than the rate of inflation during that period (4%). Some firms report taking steps to reduce the number of people eligible for retiree health benefits in the future. Between 2005 and 2006, 11% of surveyed employers eliminated benefits for a group of future early retirees and 9% did the same for a group of future Medicare-eligible retirees.

The Institute for Healthcare Improvement has announced its 5 Million Lives Campaign to prompt hospitals to accelerate their patient safety measures to protect patients from 5 million incidents of medical harm over the next two years. The new campaign builds on the success of the 100,000 Lives Campaign, in which 3,100 participating hospitals reduced inpatient deaths by an estimated 122,000 in 18 months, and adds six new interventions to the existing six. The new interventions are: prevent Methicillin-resistant Staphylococcus aureus infection; reduce harm from high-alert medications, starting with anticoagulants, sedatives, narcotics, and insulin; reduce surgical complications; prevent pressure ulcers; deliver reliable, evidence-based care for congestive heart failure; and get boards of directors involved in accelerating the improvement of care.

IHI estimates that between 40 and 50 incidents of harm occur for every 100 hospital admissions, which translates to 40,000 incidents each day, and 15 million annually. Hospitals that join the 5 Million Lives Campaign must adopt at least one intervention and regularly report hospital profile and mortality data.

A study funded by the National Heart, Lung, and Blood Institute will likely reduce the 1 million angioplasties performed in the United States each year, reports The Washington Post. The study, published in The New England Journal of Medicine and presented at an American Heart Association meeting, determined that having an angioplasty more than three days after a heart attack provided no more benefit to stable patients than drug therapy. The finding was surprising to cardiologists who have long thought that closed arteries should always be opened. The study results have already changed the practice of Mandeep Mehra, head of cardiology at the University of Maryland School of Medicine. When Mehra recently saw a 76-year-old man three days after a heart attack, he treated him with medical therapy, even though “traditionally we would have felt compelled” to order an angiogram and probably an angioplasty, he said.

Patients are more likely to receive higher-quality care in not-for-profit hospitals than in for-profit hospitals for three common medical conditions (congestive heart failure, heart attack, and pneumonia), reports a Harvard Medical School analysis published in the Dec. 11 Archives of Internal Medicine. Federal and military hospitals had the highest performance, however, which is likely the result of the Veterans Health Administration’s long experience in quality improvement, say the researchers. In general, hospitals with higher registered nurse staffing levels performed better on all quality measures, but licensed practical nurse staffing was associated with lower performance. Hospitals that served greater proportions of Medicaid patients had low quality of care across all conditions studied. And hospitals in the Midwest and Northeast (not in rural areas) had better performance, as did hospitals with more advanced technology available.

Besides assessing the quality of care in more than 4,000 U.S. hospitals, the researchers examined the relationships between the various quality measures. This analysis suggests that rather than examining quality by disease (e.g., acute myocardial infarction, CHF, or pneumonia), it might be more useful from a quality improvement perspective to examine quality measures according to functional roles in the hospital. They created composite measures in the areas of treatment and diagnosis and counseling and prevention as well for each of the three diseases, but found that quality varied more by functional roles in the hospital than by the particular disease being treated. “Therefore, efforts to improve quality in hospitals should focus on core competencies that can improve care across multiple diagnoses,” the researchers write. Read the news release.

An Illinois task force created by the state legislature has proposed sweeping healthcare reform that will provide universal coverage to all the state’s residents, including undocumented workers and college students, reports the Chicago Tribune. Insurance coverage would be mandated, with individuals paying a penalty if they choose to do without, and employers paying a fee if they fail to offer it. All insurers selling coverage in the state would have to offer policies to individuals and small groups. In addition, the state would subsidize premiums for low-income residents and provide financial incentives to small employers to defray the cost of purchasing healthcare insurance. Medicaid would also be expanded. Insuring approximately 1.7 million uninsured people is estimated to cost the state $3.6 billion a year and employers, $1.5 billion a year.

Opposition has been voiced by some lawmakers who say the only way to fund universal coverage is by raising taxes, and by the insurance industry, which claims that mandated insurance stifles the competition required to keep rates low and that employers will leave the state because of the added costs of doing business in Illinois. In 2004, Illinois passed legislation stating that the state has a “policy goal” of providing all its residents with affordable coverage, and the governor’s office and Blue Cross and Blue Shield of Illinois are also developing their own healthcare reform proposals.

A study comparing the quality of care provided by group practices of various sizes has found that larger primary care groups outperformed smaller groups on four of six quality measures, reports The Washington Post. According to the report, published in the Annals of Internal Medicine, 73% of eligible patients in large groups received mammograms, compared with 58% of patients in smaller groups. Differences were also noted in rates of Pap smears and eye exams conducted for diabetics, but not in use of asthma medication and prescriptions for beta-blockers after heart attack. The researchers, from the University of Pittsburgh and the Harvard School of Public Health, speculate that because younger doctors are more apt to join larger practices, the difference in quality may reflect their more recent medical training.

Healthcare workers who employ physical restraints and seclusion when treating patients must undergo new, more rigorous training to ensure the appropriateness of the treatment and to protect patient rights, according to a final regulation issued by the Centers for Medicare and Medicaid Services. The rule also allows trained registered nurses or physician assistants to conduct the patient evaluations required within an hour of a patient being restrained or secluded for violent or self-destructive behavior, provided the physician or other licensed independent practitioner treating that patient is consulted as soon as possible.

Under the new regulations, hospitals must provide the patient or family member with a formal notice of their rights at the time of admission, which include freedom from restraints and seclusion in any form when used as a means of coercion, discipline, convenience for the staff, or retaliation. There are also stricter standards in reporting the death of a patient associated with the use of restraints and seclusion. The regulation becomes effective Feb. 6, 2007.

Before adjourning for the year, Congress passed legislation that will delay the scheduled 5.1% Medicare physician pay cut by one year, reports CQ Today. Medicare payments to physicians will be maintained at 2006 rates, and physicians will also receive a 1.5% bonus if they report on quality measures. But next year, Congress will again have to grapple with the Medicare formula that mandates the payment cuts. In the spring, however, the Medicare Payment Advisory Committee will issue a report to Congress with recommendations to replace or change the physician payment formula, and it will likely have a pay-for-performance component to it.

The bill also expands the amount of money that can be contributed tax-free to health savings accounts, reports The Washington Post. Currently, individuals are limited to making a contribution that cannot exceed their annual deductible. The new law, which awaits President Bush’s signature, allows any individual with an HSA to contribute $2,850 per year, and families can contribute $5,650. The larger HSA tax benefit is expected to cost the government $1 billion in tax revenue.

The Congressional Budget Office has examined not-for-profit hospitals’ use of tax-exempt bonds to earn “arbitrage points on their investments” and the advantages they incur in issuing tax-exempt bonds. The analysis was performed at the request of Bill Thomas, chairman of the House Committee on Ways and Means. For its analysis, the CBO broadened the definition of tax arbitrage to include earnings from assets not currently considered bond replacement proceeds but that still contribute to securing bonds. This broader definition would reduce the amount of tax-exempt debt that not-for-profits would issue and “improve the federal government’s net fiscal condition,” writes the CBO.

“Hospitals would have to reduce their new issues of tax-exempt bonds (either reducing investment in operating assets or switching to taxable debt) by 28% (or by 9% if the policy accommodated precautionary savings). For example, if tax-exempt bonds provide $1.8 billion in annual tax benefits to nonprofit hospitals, as estimated for 2002, over time the broadened definition of tax arbitrage would save $504 million per year (or $162 million if allowance was made for precautionary savings).”

Americans overwhelmingly want to have electronic copies of their medical reports and believe that having greater access to their information would reduce medical mistakes and costly repeat procedures, according to a survey commissioned by the Markle Foundation, which works to accelerate use of technology, particularly in health care and national security. Sixty-eight percent also say that having their medical information available online would give them more control over their own health care.

But eight in 10 Americans are very concerned about identify theft or fraud and the possibility of their data being used by marketers without their permission. Three-quarters said the government has a role in establishing privacy and confidentiality protections for electronic health information.

Seasonally adjusted hospital employment rose by 6,300 workers in November from the previous month--a 6.3% increase--with 88,700 employees added since November 2005, according to the U.S. Department of Labor’s Bureau of Labor Statistics. (Not adjusted for seasonal fluctuations, hospital employment rose by 11,000 employees from October to November, and increased by 90,000 workers since November 2005.) The nation’s total unemployment rate remained virtually unchanged from October to November at 4.5%.

The Bureau of Labor Statistics also released the third-quarter employment cost index for hospitals, which rose 3.9% over third-quarter 2005. The employment cost index for nursing and residential care facilities rose 3.4% over third-quarter 2005.

Despite the expectations of some policymakers that the lower premiums and tax benefits of consumer-directed health plans would substantially reduce the number of people without health insurance, adults in these plans were no more likely to have been uninsured before enrolling in their plans than were those with more comprehensive insurance coverage, according to an annual survey by the Employee Benefit Research Institute and The Commonwealth Fund. Ten percent of consumer-directed plan enrollees were uninsured before being covered by their current plan, compared with 20% among high-deductible health plan enrollees, and 24% among those with comprehensive coverage.

The survey also found that enrollment in CDHPs has not grown in the past year, even with the widespread attention they’ve received. About one-third of the 1.3 million adults in CDHPs do not receive employer contributions to their accounts, and nearly one in five does not contribute their own money to the accounts. Forty-four percent of adults in CDHPs spend 5% or more of their income on medical costs and premiums--double the rate of those with more comprehensive coverage. Despite the emphasis on the need for information on the cost and quality of providers to enable people in CDHPs to make informed decisions about their health care, adults in these plans were significantly less likely than those in more comprehensive health plans to report that their plans provided such information. If they had a choice, 36% of those in CDHPs--a 10% drop from a year ago--said they would stay with their plan, compared with 63% of those with comprehensive coverage. Read the issue brief.

From an analysis to help inform the debate on whether not-for-profit hospitals are providing enough community benefits to justify their tax exemption, the Congressional Budget Office found that not-for-profit hospitals provided more uncompensated care than did for-profit hospitals in general, but that there were large disparities among individual hospitals. Using 2003 data from five states--California, Florida, Georgia, Indiana, and Texas--the CBO found that the cost of uncompensated care as a share of hospitals’ operating expenses was 13% at government hospitals, 4.7% at not-for-profits, and 4.2% at for-profits. After adjusting for hospitals’ size and location and local population characteristics, not-for-profits provided between $100 million and $700 million more in uncompensated care than for-profits did in those five states. Not-for-profits were also more likely to perform financially unrewarding services, such as intensive care for burn units, emergency department care, high-level trauma care, and labor and delivery as a community service than were for-profits.

However, for-profit hospitals provided care to more Medicaid patients compared with not-for-profits, since for-profit hospitals tend to be located in areas with higher rates of poverty and uninsured patients. Not-for-profits had Medicaid shares that were 1.3 percentage points lower than for-profit hospitals.

A national survey conducted by the Kaiser Family Foundation and the Harvard School of Public Health finds widespread support across the political spectrum for a number of health initiatives likely to be taken up by the new Congress, as well as a view by 64% of the public that government should do more to address the high cost of health care.

When asked to pick their top healthcare priority, most people point either to expanding coverage for the uninsured (35%) or reducing healthcare costs (30%). Substantial majorities see healthcare prices as unreasonable compared with other goods and services, including hospital charges (86%), brand-name drugs (83%), health insurance premiums (70%), nursing home charges (63%), and physician fees (59%). Only 18% of Americans said their first priority would be to improve the Medicare drug benefit, and a mere 6% ranked reducing spending on government health programs as their top wish. But partisan differences emerge on priorities, with Democrats placing a much higher priority on expanding coverage, Republicans emphasizing reducing costs, and Independents split.

When faced with a choice between the government trying to solve the healthcare cost problem by dealing directly with providers and insurers and limiting what they can charge versus giving consumers tax incentives to buy high-deductible coverage and encouraging them to shop for lower prices and better quality, most people (59%) chose direct government action over the more market-oriented solution (34%). Overall, however, Iraq by far tops the list of policy priorities for the public, with 46% naming it as one of the two issues they would most like the president and Congress to act on next year. Health care and the economy came next, but followed far back at 15% each.

After a two-year moratorium on Medicare’s outpatient therapy caps in 2004 and 2005, Congress reinstated the caps at the beginning of last year and allowed for exceptions to the payments caps for one calendar year, ending Dec. 31, 2006. But numerous questions have arisen on the process that lets Medicare beneficiaries obtain additional therapy, and the Centers for Medicare and Medicaid Services has published an article in MLN Matters to clarify it.

Some Medicare beneficiaries are automatically excepted from the therapy cap (if their conditions are listed in the Medicare Claims Processing Manual), while others must request an exception if they require more therapy than the cap allows, up to a maximum of 15 treatment days. The article covers in detail the requirement and steps for granting exceptions. If an exception is not granted, however, the beneficiary will be liable for any services above the cap. The exception process ends on Dec. 31, 2006.

In an analysis comparing the costs of procedures performed in ambulatory surgery centers with those performed in hospital outpatient departments, the U.S. Government Accountability Office found that the ambulatory payment classification groups in the outpatient prospective payment system accurately represent the relative cost of procedures in ASCs. The purpose of the analysis was to find a better approach for the Centers for Medicare and Medicaid Services to update payment rates for ASCs. Unlike payments for APC groups, which are revised annually, the CMS last revised ASC payment rates in 1990, even though many more procedures have been performed in ASCs since then. Therefore, GAO recommends that ASC payments be updated annually by applying the APC groups to procedures performed in ASCs and using the OPPS as the basis for ASC payment. The GAO report also cautions CMS to take into account the lower relative costs of procedures performed in ASCs compared with hospital outpatient departments in determining ASC rates.

Approximately 30% of Americans are obese, and hospitalizations related to that diagnosis made up 6% of inpatient stays in 2004--an increase of 112% since 1996, according to a new statistical brief by the Agency for Healthcare Research and Quality. In contrast, the greatest rate of increase in hospitalizations for any other condition during that time was 13%. More than half (55.2%) of the patients hospitalized principally for obesity were age 18 to 44; 42.9% were age 45-64. Although rates of obesity are roughly the same for men and women, 82% of patients hospitalized for obesity were women. (For all other conditions, women make up 53% of inpatients.)

The mean length of stay for obesity as a primary diagnosis was 3.1 days, and the mean cost was $11,700. The 20 conditions associated with obesity accounted for 60% of all hospital stays that included obesity as a secondary diagnosis. Obese patients are at particularly high risk for coronary atherosclerosis, with an incidence 60% higher than in the nonobese hospitalized population. Nearly half the hospital stays for patients with obesity as a principal diagnosis involved gastric bypass and volume reduction surgery.

Private, for-profit healthcare companies may pose a bigger competitive threat to non-profit hospitals than public for-profit hospital chains. A Moody’s Investors Service special comment discusses the ability of these private companies, which are funded by hedge funds and private equity, to attract physician investors in high-growth markets without Certificate of Need regulations, such as Texas. As private companies, they aren’t required to disclose information about strategies, and they can more quickly expand into promising markets than can public healthcare companies. “In response, not-for-profit hospitals may be forced to accelerate capital spending and embark on new physician alignment strategies, resulting in greater debt or less cash reserves or some combination thereof to curtail the threat of these new providers," writes Moody’s. The ability of these companies to contract with managed-care plans will be the deciding factor in their success, which still remains to be seen, according to Moody’s. For more information about this special comment, call 212-553-4431.

Five major U.S. corporations are funding an independent nonprofit institute to develop Dossia, a Web-based framework through which employees, dependents, and retirees can maintain lifelong personal health records to manage their own health care, improve communications with their doctors, and provide more accurate and complete medical histories to providers. The companies--Applied Materials, BP America, Intel Corporation, Pitney Bowes, and Wal-Mart--will provide this benefit to more than 2.5 million individuals across the United States starting next year. The companies say the tool will be an important component in making the healthcare system more efficient and effective, eliminating waste and duplication of effort on behalf of consumers and providers.

Several healthcare groups are petitioning Congress to prevent the Centers for Medicare & Medicaid Services from cutting $12.2 billion from Medicaid in 2007 through the regulatory process. The American Hospital Association, the Association of American Medical Colleges, and the National Association of Public Hospitals and Health Systems sent a letter to Congress stating, “The solution to Medicaid’s problems is not harsh spending cuts.” Specifically, they said the proposed rules to limit payments to government providers would be “economically devastating” to government safety-net hospitals; redefining “public hospitals” would restrict states from obtaining Medicaid matching dollars to offset hospital losses from caring for Medicaid and uninsured patients; and decreasing the provider tax rate from 6% to 3% would have a “substantial impact” on states being able to fund their Medicaid programs. About $5.8 billion of the proposed cuts would directly affect hospital payments.

In a letter to the director of the Office of Management and Budget, the nation’s governors also objected to the proposed administrative cuts to the Medicaid program, which they said would shift $12 billion in costs to the states. The letter said the proposed cuts would “violate the federal-state partnership by fundamentally altering the funding mechanism for the Medicaid program in a manner that only benefits the federal government.” The governors asked for a meeting with OMB director before the regulations are enacted.

The Internal Revenue Service issued a reminder that exempt organizations must file returns electronically for the tax year ending on or after December 31, 2006 if they have $10 million or more in total assets and file at least 250 returns in a calendar year, including income, excise, employment tax, and information returns. In addition, the IRS has outlined new record-keeping requirements for individuals claiming charitable deductions for monetary gifts made in taxable years beginning after August 17, 2006 (for calendar year taxpayers, this new rule would begin January 1, 2007). Besides keeping a copy of the bank record for the contribution, individuals also need written communication from the donee organizations detailing the date of the contribution and amount. If contributions are made by payroll deductions, individuals must retain a document from an employer substantiating the deduction, and they must have a pledge card or written communication from the donee organization that includes a statement that the organization does not provide goods or services in consideration for the contribution.

Physicians in large group practices have successfully made quality and cost-efficiency improvements in their care after completing the first year of a three-year demonstration project sponsored by the Centers for Medicare & Medicaid Services. A new Commonwealth Fund report details the ways more than 5,000 physicians have expanded care and interventions to Medicare beneficiaries through performance payments rather than direct fee-for-service reimbursements. CMS’ Physician Group Practice Demonstration, begun in April 2005, offers financial rewards for better-than-expected performance to 10 large groups with no penalties assessed for underperformance.

The improvements made by the group practices were clustered in four broad areas. Most of the groups developed disease management programs for diabetes and heart-failure patients because of the prevalence of these diseases in the Medicare population and for their potential to reduce costs and improve quality. Specific improvements included better hospital and emergency-room discharge planning to prevent readmissions and to ensure appropriate follow-up care. Physicians also modified their practice patterns and work processes to obtain more comprehensive feedback on patients and to take a more global approach to managing a panel of patients. In addition, terminal patients received expanded palliative and hospice care. And practices enhanced their information technology capabilities to track high-risk patients, provide detailed reports on patients, and to automate physician reminders on specific patients’ needed care.

Deteriorating relations between hospitals and physicians are imperiling a wide range of healthcare objectives, researchers from the Center for Studying Health System Change report in Health Affairs. One consequence of the unraveling hospital-physician relationship is a “medical arms race,” as services once performed only in hospitals migrate to physician-owned specialty hospitals, free-standing ambulatory surgery centers, and physicians’ offices. But the estrangement between hospitals and physicians is also impeding the adoption of information technology, the implementation of pay-for-performance programs, and care for the uninsured.
Nearly half of hospital and health system CEOs identified various aspects of relations with physicians as among the top three pressures facing their hospitals. Twenty-one percent cited competition with physicians over services, and 11% cited problems assuring on-call physician emergency department coverage. Several hospitals expressed concerned that the precedent of paying physicians for ED coverage could lead to mushrooming costs down the road. For example, hospitals in Miami and Syracuse reported that physicians in specialties or at hospitals where ED coverage is not a problem have become aware that other physicians are being compensated for taking call and are starting to demand on-call payment as well.

The HSC authors point to several policies that they say have contributed to the unraveling of the hospital-physician relationship, including restrictions on gain sharing between physicians and hospitals. In a separate article, Gail Wilensky, the John M. Olin Senior Fellow at Project HOPE, and co-authors lay out a far-reaching vision of gain sharing that includes sharing with physicians savings that result from appropriate use of imaging and testing, prescribing the least costly therapy, reduction of medication errors, substituting outpatient services for inpatient services, improving end-of-life care, and disease management techniques.

New Jersey’s hospitals again posted thin year-end operating margins for 2005 with almost 40% of them operating in the red, according to the New Jersey Hospital Association’s Financial Status of New Jersey Hospitals Report. In fact, New Jersey hospital profit margins have been at 2% or lower for the last nine years. The report shows total year-end 2005 hospital revenues of $17.03 billion and total expenses of $16.75 billion. The resulting $281 million gain represents a 1.6% aggregate operating margin. According to the American Hospital Association’s Hospital Statistics 2007 Edition, the national average operating margin for the same period was 3.7%. The average number of days a patient’s bill was in accounts receivable is 49 days, representing the lowest value for this indicator since NJHA began tracking it almost 30 years ago.

Based on 2005 revenues, New Jersey hospitals have no means to increase staff, upgrade facilities, or purchase new equipment, all of which could eventually affect access to patient care, according to Sean Hopkins, senior vice president of health economics for NJHA.“ Although hospitals did not sustain a loss in their operating margins, New Jersey’s current healthcare climate will not allow hospitals to remain competitive, and the results will be loss of revenue, which could result in more hospital closures,” said Hopkins.

Americans are only 0.3% healthier than they were at this time last year, according to the 17th annual America’s Health Rankings: A Call to Action for People & Their Communities, produced by United Health Foundation. This increase is significantly lower than the nation’s average annual improvement of 1.5% documented between 1990 and 2000, and only keeps pace with the 0.3% average annual national improvement since 2000. This year the report ranks Minnesota as the healthiest state in the nation for the fourth year in a row. Vermont comes in second, followed by New Hampshire, Hawaii, and Connecticut. Louisiana is ranked as the least-healthy state, while Mississippi, South Carolina, Tennessee, and Arkansas complete the bottom five.

The report also includes a state-level analysis by the Dartmouth Atlas Project of the quality and cost effectiveness of medical care, which finds that, in some states, the greater use of services is associated with poorer quality and lower satisfaction with care. The analysis also reveals that the treatment of patients with chronic illnesses varies widely among the states. For example, the average length of stay for Medicare beneficiaries during the last six months of life varies from 7.3 days in Utah to 16.3 days in New York. As a result, Medicare spending per patient varied nearly two-fold.

HFMA's Board of Directors, at its November board meeting, approved revised accounting guidelines for the reporting of uncompensated care. The board approved recommendations made by the association’s Principles and Practices Board on Statement 15: Valuation and Financial Statement Presentation of Charity Care and Bad Debt by Institutional Healthcare Providers. The 12-member P & P board is composed of leading healthcare accounting and finance experts. Read the statement.

The reporting of charity care and bad debt has come under scrutiny as health systems blamed the influx of consumer-directed health plans, along with growing numbers of uninsured, for boosting their levels of bad debt to the point of making a significant dent in their revenue, enough to get dinged by ratings agencies.

The effect of this guidance will significantly change bad debt disclosure, reflecting only those amounts initially expected to be collected with an offsetting reduction in revenue in most hospital financial statements. While the effect on the financial statement's bottom line will be negligible, the ability to distinguish true bad debt and revenues will be improved.

“Bad debt reporting and charity care disclosures have received significant attention from a wide range of healthcare financial statement users.  Confusion in classification between bad debt and charity care, compounded by wide diversity in reporting practice, necessitated a close look at the practices and policies in these areas,” Craig McKnight, Chairman, HFMA Principles and Practices Board said.
 
The complexities of charity care policies and the difficult task of documenting charity care qualification have generally resulted in many charity care patients being classified as bad debt.  The practice of reporting bad debts at gross charge also has led to reported bad debts trends often significantly above both revenue or expense growth.
 
“The HFMA Principles and Practices Board has taken an industry-leading position in recommending significant change in revenue recognition and bad debt disclosure along with changes in charity care reporting standards,” Richard L. Clarke, DHA, FHFMA, HFMA President and CEO, said.
 
While not changing the reported performance indicator, implementation of these recommendations will significantly improve bad debt and charity disclosure and comparisons of healthcare entities.

The World Health Organization Collaborating Centre on Patient Safety, the World Alliance for Patient Safety, and the Commonwealth Fund have announced a seven-country collaborative project that will leverage international experience with patient-safety solutions to prevent avoidable catastrophic events in hospitals. The WHO Collaborating Centre is led by the Joint Commission on Accreditation of Healthcare Organizations and its affiliate Joint Commission International. The overall goal of the “High 5s” initiative is to reduce or eliminate the following five highly prevalent patient-safety problems in selected hospitals in each country over a five-year period: patient care hand-over errors; wrong site/wrong procedure/wrong person surgical error; continuity of medication errors; high-concentration drug errors, and inadequate hand-hygiene practices. The Collaborating Centre will work with the participating countries (Australia, Canada, New Zealand, UK, US, Germany, and the Netherlands) to develop standardized operating protocols similar to those used in high reliability industries such as aviation and nuclear energy.

Each of the seven countries will identify a technical lead agency to coordinate the High 5s initiative within its borders. Approximately 10 hospitals in each country will be enrolled in the project, and each hospital will select up to five safety solutions from among those identified. The impact of the safety solutions will be measured using a package of tools that will include patient-safety indicators (developed by the U.S. Agency for Healthcare Research and Quality), root cause analyses of indicator events and other adverse events, periodic organization culture assessments, and economic impact indices. "We want this to be a truly collaborative effort, with all participants sharing what they’ve learned as they implement the various standardized operating protocols," said Dennis O’Leary, President of the Joint Commission. "We will have a project website that is specifically designed to exchange and disseminate knowledge and innovative ideas about improving patient safety."

A survey by the American Health Information Management Association and the American Hospital Association Central Office reveals a critical need for qualified clinical coding professionals. Three out of 10 respondents were recruiting for open coding positions and 59% had experienced open positions in the past year. Finding qualified candidates was the major challenge with 24% of respondents reporting that they were required to hire coding professionals with experience and a third saying that new graduates were not well prepared, according to an article on the survey results in The Journal of AHIMA. Nearly one in three employers had positions open for four to six months and nearly a quarter experienced vacancies of seven months to a year. Coding professionals are earning $30,000 to $40,000 with two to three years of experience, and 51% of coders with more than three years of experience earn $35,000 to $50,000.

Although general opposition to real-estate development remains strong, with one in five Americans actively opposing it, there is significant support for new hospitals, according to results of an annual survey by The Saint Consulting Group, an international analyst in land-use politics. Seventy-one percent of Americans would support a new hospital in their community—the second most favored real-estate development after single-family housing (supported by 84% of respondents), according to the survey. In contrast, 68% of Americans opposed building Wal-Marts in their neighborhood, 57% were against the development of biotech research facilities, and 76% opposed the building of quarries. Over three-quarters of respondents (78%) said they prefer to be within 10 miles of a hospital (44.2% within five miles), and 90% supported an increase in emergency room capability at their local hospitals. Almost three of four respondents (74%) supported the development of non-profit hospitals over for-profit institutions.

Yet despite favorable public opinion toward hospital expansion, considerable--and effective--opposition persists. "Anticompetitive opposition is coming from other local hospitals, which may view the new facility as competition,” said Patrick Fox, president of Saint Consulting Group. “It also comes from organized labor, which is known for its ability to influence decision makers and effect change through political pressure. In short, this opposition is not grassroots generated. We are seeing this throughout the US."

Thirty-nine percent of the estimated 2.7 million workers enrolled in employer-sponsored consumer-directed health plans had no choice of another type of health plan in 2006, according to a national study released by the Center for Studying Health System Change. And when workers were offered a choice of plans, only 19% chose CDHPs. Of the approximately 70 million American workers who obtain health benefits from their employer, about 2.7 million, or 4 percent, were enrolled in a high-deductible health plan with a savings account in 2006. while proponents of CDHPs say they offer consumers choice in health insurance, the irony is that many workers enrolled in CDHPs had no other option to select a different plan, according to the study’s authors. Read the study.

The study also examined the average cost to employers of providing CDHP coverage compared with the cost of traditional plans, finding that once employer contributions to the savings account were included in the calculation, there were no statistically significant cost differences. This was true regardless of whether the employer offered a choice of health plans or not. For example, when enrollees have a choice of plans, average monthly employer contributions for CDHPs were $297 for single coverage, including the savings account contribution, while the employer contribution for HMO, PPO, and POS coverage were $288, $303 and $307, respectively. But employee cost sharing is significantly greater in CDHPs than in traditional plans. In 2006, the average annual in-network deductible in CDHPs—when offered as a choice to workers—was $1,459 for single coverage, considerably greater than for HMO plans ($30), PPO plans ($261), and POS plans ($94).

Injuries accounted for nearly 5% of all hospitalizations, but they were also the most costly hospital stays and resulted in higher in-hospital mortality than any other condition, according to a statistical brief by the Agency for Healthcare Research and Quality. In 2004, hospital costs for injuries reached $19.5 billion, or 6.6% of all U.S. hospital care. The average cost to treat injuries in the hospital was $10,300 compared to $7,500 for all other conditions, and 12.2% of inpatients with injuries were uninsured versus 5% of all other hospitalized patients. Seniors had the highest rate of hospital admissions for injuries, comprising 36.9% of all injury-related hospitalizations, although mean hospital costs for injuries were highest in patients ages 45 to 64 ($11,000) and for Medicaid patients ($11,200). More than half the injuries requiring hospitalization in 2004 were fractures (52.4%), followed by motor vehicle accidents (15%), poisonings (11.8%), brain injuries (9.8%), and injuries to internal organs (6.3%), AHRQ reports in a separate statistical brief. Spinal-cord injuries were the most expensive to treat at $36,900. Several types of injuries also resulted in a much higher mortality rate than the overall in-hospital death rate: brain injuries (10.2%), spinal-cord injuries (5.7%), burns (4.1%), internal organ injuries (4%), and hip fractures (2.9%).

Legislation to overturn the 5% Medicare cut to physicians in 2007 is expected to be introduced in Congress, but the probability of its passing during the Senate’s lame-duck session is uncertain, since the bill is likely to be laden with other healthcare provisions, reports CQ HealthBeat News. The proposal would either replace the 5% cut with the 2006 Medicare physician payment rate or a slight increase. “Reports conflicted over whether doctors would be required to report data on the quality of their care in order to avoid the steep payment cut,” said the article.

CMS released instructions on calculating reasonable charges for claims for splints, casts, dialysis supplies, and certain intraocular lenses furnished in calendar year 2007. The payment limit for splints and casts, based on the 2006 limits, increased by 4.3 percent, the percentage change in the consumer price index for all urban consumers for the 12-month period ending June 30, 2006.

Payment continues to be made on a reasonable charge basis for splints, casts, dialysis supplies, dialysis equipment and intraocular lenses.  For intraocular lenses, payment is only made on a reasonable charge basis for lenses implanted in a physician’s office.  For splints and casts, the Q-codes are to be used when supplies are indicated for cast and splint purposes. Carriers will compute 2007 customary and prevailing charges for the services using actual charge data from July 1, 2005, through June 30, 2006.

A major trend that will affect physicians and hospitals in 2007 is the increasing competition from retailers that have opened health mini-clinics, predicts PricewaterhouseCooper’s Health Research Institute in its new report, The Top Seven Health Industry Trends of ’07. Forty-two percent of consumers surveyed by the institute said they would seek nonemergency care from a retail health clinic. In addition, large general hospitals are seeing competition from increasing numbers of smaller specialty hospitals, surgery centers, and outpatient clinics, the result of regulatory action overturning the specialty hospital ban.

Other predictions for 2007 include public health campaigns pushing the envelope on obesity through wellness programs and financial incentives to lead healthier lifestyles; a truer assessment of the public’s satisfaction with consumer-directed health plans; and more states taking the lead on developing innovative insurance programs and passing legislation to drive greater accountability and transparency from hospitals, physicians, and pharmaceutical companies.

The report also includes findings of a nationwide survey of 1,000 Americans about their perceptions of the U.S. healthcare system, revealing significant differences between how the public and the industry view healthcare problems. Ninety percent of Americans believe that greed is a major reason that U.S. healthcare costs are rising--a greater number than those citing drug prices, care for the uninsured, business inefficiencies, or malpractice costs. Read the report.

Fifty-six percent of the nation’s uninsured residents are ineligible for public programs but do not have enough resources to purchase coverage themselves, researchers from the Urban Institute report in Health Affairs online. Another 25% of the 44.6 million uninsured are eligible for public programs, and the remaining 20% have incomes high enough to afford coverage. (The researchers used an income of 300% of the federal poverty level as the affordability threshold.)

Childless adults face the most severe affordability barriers. Those who are ineligible for public coverage and cannot afford coverage on their own constitute 69% of all uninsured childless adults. In contrast, as a result of the State Children’s Health Insurance Program and other coverage expansions for children, only 11% of the country’s 8 million uninsured children cannot afford private coverage and have no public options available.

To increase the participation of uninsured people who are eligible for public programs, the Urban Institute authors state that “extensive outreach efforts and simplified enrollment and redetermination procedures, including easing requirements for documentation of income, assets, and citizenship,” would be necessary. But because most of the uninsured who cannot afford coverage are not covered by existing programs, the researchers say that much more will be needed. They suggest “sliding-scale subsidies or income-related tax credits” as well as health insurance market reforms as steps that could make coverage more affordable for the uninsured.