Healthcare Financial News

The nation has squandered the opportunity to learn important disaster-planning lessons from Hurricane Katrina and its aftermath, says Joe Dawsey, executive director of the Coastal Family Health Center, in a conversation published Aug. 29--the second anniversary of Katrina--on the Health Affairs web site. Katrina virtually destroyed Coastal’s network of nine community health clinics in the Biloxi, Miss., area.

“If Katrina happened tomorrow, I honestly don’t believe we’d be better off,” Dawsey tells Tom Bearden, a correspondent with the “NewsHour with Jim Lehrer” who has reported extensively on post-Katrina recovery efforts.

Despite the problems that have plagued the Katrina recovery, Dawsey says that he has seen no evidence of efforts by the federal government to apply lessons from Katrina toward more effective planning for the next disaster. Asked by Bearden “Who needs to fix this?” Dawsey answers: “I think the healthcare piece would have to be [the federal Department of Health and Human Services] and [the National Association of Community Health Centers] working with local organizations to provide some national coordination.” Read the abstract.

In the August tracking poll conducted by the Kaiser Family Foundation, Iraq and health care are the top two issues that Republicans, Democrats, and independents alike want the 2008 presidential candidates to address in their campaigns. For Democrats, the same percentage mentions Iraq and health care (42 percent). Among Republicans, 32 percent cite Iraq as the most important issue, with health care coming in second at 21 percent, followed by terrorism at 16 percent and immigration and the economy, both at 15 percent.

The poll also examined people’s thoughts about the presidential candidates’ positions on, and commitment to, health care as an issue. As in the past two tracking polls, nearly six in 10 people (59 percent) said they still don’t know or can’t name a candidate who best represents their views on health, or said that no candidate represents their views. However, among the 41 percent who named a candidate, Sen. Hillary Clinton remains the top candidate on this question, with 19 percent of the public overall, and 35 percent of Democrats saying she best represents their healthcare views. Former New York Mayor Rudy Giuliani remains the top pick among Republicans, but with only 8 percent of Republicans (and 3 percent of the public overall) saying he best represents their views on health.

If the potential impact of Michael Moore’s documentary “SiCKO” were dependent solely on those who have actually seen the film, the result might be a passionate but narrow conversation among the 4 percent of adults who said they had seen it in a new Kaiser Family Foundation poll. But, with a big free media bounce reaching beyond the movie reviews to the news and talk shows, the poll finds that almost half (46 percent) had seen the movie or heard or read something about it a little over a month after its national release.

Among those familiar with “SiCKO,” 45 percent said they had a discussion with friends, co-workers, or family about the U.S. health system as a result of the movie; 43 percent said they were more likely to think there is a need to reform the health system; 37 percent were more likely to think other countries have a better approach to health care; and 27 percent said they were paying more attention to the positions of presidential candidates on health care. About equal numbers of those aware of the movie thought it accurately represents problems in the U.S. health system (36 percent) versus overstating them (33 percent), and positive impressions of “SiCKO” outweighed negative ones 48 percent to 33 percent.

“Our poll shows how the combination of good timing, a controversial director, and lots of free media attention can generate real impact for a film that very few people have actually seen,” said Kaiser president and CEO Drew E. Altman, PhD.

Health Level Seven (HL7), a healthcare IT standards development organization, announced on Aug. 27 the opening of a public comment period on the Electronic Health Record Technical Committee’s Personal Health Record System Functional Model (PHR-S FM).

While an abundance of PHR systems exist in today’s market, the industry lacks a functional standard to which these systems can conform. A PHR standard outlines guidelines for systems to follow, facilitating the exchange of health information among different PHR systems as well as between PHR and EHR systems. The HL7 PHR-S FM has the potential to be the first industry standard that specifies functionality for PHR systems.

HL7 invites the public to comment on the PHR-S FM. Members and nonmembers of HL7 can submit comments through Sept. 13, 2007, via the EHR area of the HL7 web site by downloading the relevant documents posted, completing a spreadsheet, and e-mailing it to: EHRComment@HL7.org.

CMS published in the Aug. 24 issue of the Federal Register a proposed rule with comment period regarding nonemergency medical transportation. Prior to the enactment of the Deficit Reduction Act (DRA) of 2005, a state that wanted to provide transportation as medical assistance under the state plan could not selectively contract with a broker nor provide services differently in different areas of the state without receiving a waiver under section 1915(b) of the Social Security Act. These waivers allowed states to selectively contract with brokers and to operate their programs differently in different areas of the state.

However, the DRA gives the states greater flexibility in providing nonemergency medical transportation. States are no longer required to obtain a section 1915(b) waiver in order to provide nonemergency transportation as an optional medical service through a competitively contracted broker or undergo the administrative burden of the 1915(b) biannual waiver renewal.

The number of people in the United States without health insurance coverage rose from 44.8 million (15.3 percent) in 2005 to 47 million (15.8 percent) in 2006, according to the new report Income, Poverty, and Health Insurance Coverage in the United States: 2006 Report, released yesterday. The data were compiled from information collected in the U.S. Census Bureau’s 2007 Current Population Survey Annual Social and Economic Supplement.

Particularly disturbing was the increase in the number of uninsured children--up from 8 million (10.9 percent) in 2005 to 8.7 million (11.7 percent) in 2006. Although the number of uninsured, as well as the rate without health insurance, remained statistically unchanged in 2006 for non-Hispanic whites (at 21.2 million or 10.8 percent), the number and percentage of uninsured blacks increased, from 7 million in 2005 to 7.6 million and from 19 percent in 2005 to 20.5 percent. The number and percentage of uninsured Hispanics also increased, from 14 million (32.3 percent) in 2005 to 15.3 million (34.1 percent). Access the report.

CMS yesterday issued final regulations prohibiting physicians from referring Medicare patients for certain items, services, and tests provided by businesses in which they or their immediate family members have a financial interest. This regulation--the third phase of the final regulations implementing the Stark law--responds to public comments on the Phase II interim final rule published March 26, 2004, in the Federal Register. The rule does not establish any new exceptions to the self-referral prohibition, but makes certain refinements that could permit or, in some cases, require restructuring of some existing arrangements, CMS officials explained.

Among other actions, the final regulation provides enhanced flexibility in structuring nonabusive compensation arrangements, provides relief for inadvertent violations of the self-referral prohibition under certain circumstances, reduces the regulatory burden for compliance with certain exceptions, and clarifies the agency’s interpretation of existing regulations. The final rule will be published in the Sept. 5, 2007, Federal Register. Read the press release.

The Centers for Medicare and Medicaid Services (CMS) on Aug. 24 issued a proposed rule that will revise the requirements that ambulatory surgical centers (ASCs) must meet to bill Medicare for services furnished to beneficiaries. The proposed rule would update the existing ASC conditions for coverage to reflect contemporary standards of practice in the ASC community, as well as recommendations from the Department of Health and Human Services Inspector General.

Among other changes, the proposed rule would:
* Require the ASC’s governing body to be responsible for the oversight and accountability of the updated quality assessment and performance improvement program
* Add requirements for radiologic services provided in an ASC to ensure they are parallel to the requirements for furnishing laboratory services
* Expand the infection control requirement to the condition level

Public comments will be accepted until Oct. 30, 2007, and a final rule will be issued later this year. Read the press release.

National Plan and Provider Enumeration System healthcare provider data that are disclosable under the Freedom of Information Act will be disclosed to the public by the Centers for Medicare and Medicaid Services (CMS) beginning Sept. 4, 2007, via the Internet. Data will be available in two forms: a query-only database, known as the National Provider Identifier (NPI) Registry, and a downloadable file. The NPI Registry will become operational on Sept. 4, and the downloadable file will be ready approximately one week later.

CMS has posted several documents to help providers understand what the downloadable file will look like, including a “read me” file, header file, and code value document for the downloadable file on the CMS NPI web page.

The American Medical Association (AMA) on Aug. 23 launched a three-year, multimillion-dollar campaign called Voice for the Uninsured to spur action to cover the uninsured. This year the AMA is reaching out to voters and candidates to talk about the problem of the uninsured and the AMA’s solution. It has also launched a new web site to allow consumers to learn more about the AMA’s proposal, sign a petition, and share a personal story. The second year of the campaign will focus on influencing Americans to vote for president with the issue of the uninsured in mind. The third year, post-election, the AMA will urge members of Congress to pass legislation to cover all Americans.

“The AMA campaign is grounded in the sad fact that one in seven Americans is uninsured,” said AMA president-elect Nancy Nielsen, MD, at the National Press Club in Washington, D.C. “That’s not just a statistic, it’s a tragedy. The campaign gives a voice to these 45 million uninsured patients who desperately need one.”

Pay for performance, which rewards physicians and hospitals for improvements in the care they provide, is considered key to healthcare payment reform, but so far it’s been only a Band-Aid on a fundamentally broken payment system, according to a report on pay-for-performance programs among 10 of the nation’s largest commercial health insurers released Aug. 22 by PricewaterhouseCoopers. Pay for performance would get an “incomplete” report card right now, says PwC’s Health Research Institute, which found a lack of agreement about the definition of quality or cooperation on standards, resulting in a ballooning number of diverse measures, and insufficient financial incentives to change physician behavior.

For example, nearly 60 different indicators of physician performance are being used among the 10 plans surveyed. Of those indicators, not a single indicator was used by all 10 plans. No two plans reward providers for performance in the same way, and all the plans administer their programs in widely different ways.

According to the PwC report, Keeping Score, the industry must agree on a universal set of quality measures and take an all-payer approach, wherein all hospitals and physicians strive for the same set of quality goals and receive equal incentives to care for all patients, regardless of whether a patient has health insurance or not.

The Centers for Medicare and Medicaid Services (CMS) on Aug. 22 issued a final rule to refine and update the home health prospective payment system (HH PPS) for CY08. The home health market basket increase for CY08 is 3 percent, which results in $430 million in additional payments to home health agencies in CY08.

Home health agencies (HHAs) that submit the quality data as required under current regulations will receive payments based on the full home health market basket update of 3 percent; HHAs that do not submit quality data will receive only a 1 percent update for CY08.

CMS analysis of the latest available home health claims data, from CY05, indicates a 12.78 percent increase in the observed case mix since 2000--11.75 percent of which is due to changes in coding practices and documentation rather than to treatment of more resource-intensive patients. To account for the changes in case mix that are not related to home health patients’ actual clinical conditions, this final rule implements a reduction in the national standardized 60-day episode payment rate for four years. That reduction will be taken at 2.75 percent per year for three years beginning in CY08 and at 2.71 percent for the fourth year in CY11. CMS is requesting comment on the aspect of the final rule concerning the fourth year’s 2.71 percent reduction to the payment rates. Read the press release. Read a fact sheet with a side-by-side comparison of the 2008 refinements versus current policy.

The Centers for Medicare and Medicaid Services (CMS) has announced the start of participant recruitment for the post-acute care payment reform demonstration (PAC-PRD). Participating providers include acute care hospitals and four post-acute care settings--long term care hospitals, inpatient rehabilitation facilities, skilled nursing facilities, and home health agencies.

A key goal of this project is to generate recommendations for improving CMS payment models based on data collected in the demonstration. The goals of payment reform include aligning incentives among the four PAC settings with a particular focus on patient populations seen in more than one PAC setting. Other areas to be explored include the examination of discharge patterns and the comparison of outcomes between settings.

Recognizing that improvements are needed to make the new Medicare diagnosis-related group (DRG) cost-based weights more accurate, an industry workgroup has identified certain changes to hospitals’ Medicare cost reporting practices. The workgroup identified the following as obstacles to a more accurate calculation of DRG weights:

• The method used by the Centers for Medicare and Medicaid Services (CMS) to group hospital charges for the Medicare Provider Analysis and Review (MedPAR) files is different than that used by hospitals to group Medicare charges, total charges, and overall costs on the cost report.
• Hospitals’ grouping of their Medicare charges, total charges, and overall costs in different departments on their cost reports for various reasons.
• Hospitals’ completion of their cost reports in different ways as allowed by CMS.
• CMS’s new approach for categorizing all charges and costs into 13 specific categories may not yield the most appropriate cost-to-charge ratio for each cost category.

It was found that the mismatch between MedPAR charges and cost report cost-to-charge ratios can distort the resulting DRG weights; also, it is important to note, the cost report was not designed to support the estimation of costs at the DRG level.

The workgroup recommended the following steps to overcome the most significant problems with the current methodology:

• All hospitals should prepare their Medicare cost reports so that Medicare charges, total charges, and overall costs are aligned with each other and with the categories currently used in the MedPAR file.
• This approach should be supported by educational materials to be developed and disseminated by the national, state, regional, and metropolitan hospital associations in collaboration with HFMA.
• Hospitals should focus on the reporting of medical supply costs and charges on the cost report as the most significant problem area because of two issues:
• First, many hospitals include medical supply charges in different ancillary departments. Because of inconsistencies in how these flow through the cost report, the cost-to-charge ratio for medical supplies is, for the typical hospital, often misstated (usually understated). Such misstatements distort the cost-based weights for DRGs containing significant medical supply charges.
• Second, problems can occur when hospitals choose (as allowed by CMS) to allocate total charges and costs on the cost report for some medical supplies to the departments where the supplies are used. Supply costs and charges might be allocated to the operating room (OR) and the emergency department (ED) in addition to the medical supply cost center. Many of these hospitals achieve consistency in their cost reports by allocating the Medicare charges on the Provider Statistical and Reimbursement (PS&R) report to the OR, ED, and medical supply cost center. Although this practice is allowed by cost report instructions, it will result in charge groupings that do not match the way charges are grouped in the MedPAR file. MedPAR groups all medical supplies on line 55 of the cost report. Because the MedPAR groupings are used to establish the 13 categories used to set the cost-based DRG weights, the practice described above will result in cost-to-charge ratios that do not match the charges to which they are applied.
• Hospitals should examine how they are completing their cost reports and adopt the approach of classifying all billable medical supply costs and charges to line 55 of the cost report and mapping the 27X Revenue Summary codes from the PS&R report only to line 55. Although it is preferable to do this within the hospital’s accounting systems, it also can be accomplished through a reclassification on worksheet A-6 of the cost report. It is the workgroup’s understanding that most, if not all, hospital revenue accounting systems have the ability to report charges by Revenue Summary code by department. Charges containing the 27X Revenue Summary codes would be reclassified to line 55 from any department mapped to lines other than 55. In addition, the cost of the billable medical supplies should also be reclassified to line 55 from any department mapped to lines other than line 55.

In the inpatient prospective payment system final rule, CMS has given its backing to the workgroup’s recommendations, which are also supported by HFMA, the American Hospital Association, the Association of American Medical Colleges, and the Federation of American Hospitals. Read the cost report workgroup’s recommendations.

A motel owner, a restaurateur, and the proprietor of an air-conditioning company, all of whom claimed to be indigent in order to receive free health care at Parkland Memorial Hospital in Dallas, were discussed in a story aired on ABC’s “Good Morning America” Aug. 16. The topic of the story was Dallas County’s prosecution of insurance fraud cases--16 to date, with 190 more pending. Healthcare “scofflaws” have cost the county $25 million by claiming to be unable to pay for their health care, said the news story. According to the story, the federal government estimates that as much as 10 percent of U.S. healthcare expenditures are the result of fraud. (Read “Lessons Learned at Parkland: How One Hospital Reworked Its Front End,” in the March 2007 issue of hfm.)

The national contractor for the Section 1011 program, TrailBlazer Health Enterprises, will host the first of three “Ask the Contractor” teleconferences on Thursday, Aug. 30, 2007, from 1:00 to 3:00 p.m. CDT. This hospital-specific, question-driven teleconference will provide an overview and updates of the program, established by Section 1011 of the Medicare Prescription Drug, Improvement, and Modernization Act of 2003. Providers will have the opportunity to participate in a live question-and-answer segment.

Questions should be submitted in advance through the close of business Friday, Aug. 24, 2007. E-mail questions to mailto:section.1011@trailblazerhealth.com with the subject line “Ask the Contractor.” Register for the teleconference on the “calendar of events” page of the Section 1011 web site.

The Section 1011 program provides $250 million each year for FY05 through FY08 for payments to eligible providers of emergency services furnished to undocumented and other specified aliens. Providers have received more than $58.1 million in Section 1011 funds for services furnished during FY05 and $192 million for services furnished during FY06. As of May 23, 2007, more than 15,766 providers have enrolled in the Section 1011 program.

The share of seniors without drug coverage dropped significantly under Medicare’s Part D drug benefit, according to a Health Affairs web exclusive article based on a survey of more than 16,000 seniors. Seniors with drug coverage from any source were less likely to face high monthly drug costs or to skip prescribed medications because of cost than were seniors who remained without drug coverage. However, seniors who enrolled in a Medicare Part D plan did not fare as well as those who relied on other sources of drug coverage, such as employer-sponsored coverage or benefits from the Department of Veterans Affairs (VA).

Among the key findings, only 8.5 percent of seniors lacked drug coverage in 2006--compared with about 33 percent of seniors without drug coverage in 2005, before Medicare Part D was enacted. However, 20 percent of seniors in a Part D plan reported that they had not filled, or delayed filling, a prescription due to costs during the past 12 months. Part D enrollees had slightly lower rates of cost-related skipping than seniors without any drug coverage (23 percent), and substantially higher rates than seniors getting prescriptions from an employer plan (8 percent) or the VA (12 percent). Read the abstract.

CMS has released a State Medicaid Director letter to provide guidance to states interested in peer support services under Medicaid. Peer support services, which can be an important component in a state’s delivery of effective treatment, are an evidence-based mental health model of care that consists of a qualified peer support provider who assists individuals with their recovery from mental illness and substance use disorders.

States may choose to deliver peer support services through several Medicaid funding authorities in the Social Security Act. The letter describes how states may provide peer support services under Medicaid and includes the requirements for supervision, care coordination, and minimum training criteria for peer support providers.

According to findings in the American Medical Group Association’s (AMGA) 2007 Medical Group Compensation and Financial Survey, most specialties saw modest increases in compensation in 2006. In that year, 92 percent of the specialties experienced increases in compensation, with the overall average increase around 4.8 percent. The primary care specialties saw about a 4 percent increase in 2006, while other medical and surgical specialties averaged around 6 percent. The survey also found that, on average, only organizations in the Western region were operating at a profit ($17,317 per physician), whereas organizations in the Southern region were operating at a significant loss (-$6,049 per physician).

The survey found that during 2006 the specialties experiencing the largest increases in compensation were pulmonary disease (11.51 percent), infectious disease (9.63 percent), psychiatry (7.54 percent), and cardiology-cath lab (7.08 percent). Interestingly, cardiac/thoracic surgery saw one of the largest decreases in compensation in 2006 (-2.13 percent), after having one of the largest increases in 2005 (11.47 percent), and cardiology saw only a modest increase in 2006 (1.99 percent) after a substantial increase in 2005 (10.21 percent). Read the press release.

The Centers for Medicare and Medicaid Services (CMS) has released guidance through a State Medicaid Director letter providing baseline requirements to states to define and implement tamper-resistant prescription pads as required by law. The law requires that all written, nonelectronic prescriptions for Medicaid outpatient drugs be executed on tamper-resistant pads in order for them to be reimbursable by the federal government. In the letter, CMS clarifies that to be considered tamper resistant on Oct. 1, 2007, a prescription pad must contain at least one of the following characteristics: industry-recognized features designed to prevent unauthorized copying of a completed or blank prescription form, the erasure or modification of information written on the prescription by the prescriber, or the use of counterfeit prescription forms. Beginning Oct. 1, 2008, a prescription pad must contain all three characteristics to be considered tamper-resistant.

The tamper-resistant requirement does not apply when a prescription is communicated by the prescriber to the pharmacy electronically, verbally, or by fax; when a managed care entity pays for the prescription; or in most situations when drugs are provided in designated institutional and clinical settings.

Many communities that deliver high-quality health care are still a long way from achieving the kind of excellence in treatment that should be expected from healthcare providers, a new report from the Deloitte Center for Health Solutions study has concluded.

The report, Pay for Quality: A Strategic Perspective, focuses on health care in Topeka, Kan., where most public report cards rate hospital and physician performance as being of good quality. Topeka was selected as the research focus because it is a typical mid-sized American community whose residents generally receive acceptable care. But bridging the gap between good and great medical care would not only mean better overall treatment for residents but also could mean the saving of 152 lives a year.

The path from good to excellent care may be short, but a commitment to excellence includes improving care coordination and a greater reliance on evidence-based practices, according to the report. Performance-based payments and transparency are essential, but they depend on input from all affected stakeholders. Download the report.

In a State Health Official letter issued Aug. 17, the Centers for Medicare and Medicaid Services (CMS) released guidance to state Medicaid agencies clarifying the application of existing statutory and regulatory requirements in state requests to extend eligibility under the State Children’s Health Insurance Program (SCHIP) to children in families with effective family income levels above 250 percent of the federal poverty level. These requirements ensure that extending eligibility to children at these higher effective income levels does not interfere with providing child health assistance to the core SCHIP population of uninsured targeted low-income children.

Provisions of the Social Security Act requires that state child health plans include procedures to ensure that SCHIP coverage does not substitute for coverage under group health plans (known as “crowd-out” procedures). As CMS has developed more experience and information from the operation of SCHIP programs, it has become clear that the potential for crowd-out is greater for higher-income beneficiaries.

The Centers for Medicare and Medicaid Services has released additional guidance on the Medicaid cost-sharing provisions under Section 1916A of the Social Security Act and announced the availability of new funds for the establishment of alternative nonemergency service providers. Certain provisions of the Deficit Reduction Act amended the Social Security Act to provide states with new flexibilities in cost-sharing and opportunities to work with the federal government to implement reforms to slow spending growth while maintaining needed coverage.

The State Medicaid Director letter announcing the guidance highlights technical changes and clarifications to the provisions under Section 1916A; provides specific guidance on cost-sharing related to nonemergency care use of the emergency room; and announces the availability of $50 million in grants funds over a four-year period for the establishment of alternate nonemergency service providers and describes the state application process.

Grant information may be accessed directly under Funding Opportunity No. HHS-2008-CMS-ANESP-0005.

The proportion of physicians in solo and two-physician practices decreased significantly from 40.7 percent in 1996-97 to 32.5 percent in 2004-05, according to a new national study released Aug. 16 by the Center for Studying Health System Change (HSC).

However, despite the shift away from the smallest practices, physicians are not moving to multispecialty practices, the study found. The proportion of physicians in multispecialty practices also decreased--from 30.9 percent to 27.5 percent between 1998-99 and 2004-05. The study results showed that physicians increasingly are practicing in mid-sized, single-specialty groups of six to 50 physicians (17.6 percent of physicians in 2004-05 versus 13.1 percent in 1996-97).

Changes in physician practice setting and organization have important implications for the practice of medicine and the care patients receive. Some experts believe that large, multispecialty practices are the organizational structure with the greatest potential to provide consistently high-quality care.

Through Medicaid and the State Children’s Health Insurance Program (SCHIP), the United States has continued to make great progress in increasing health coverage for the nation’s children, but many eligible children remain uninsured, two researchers from the Agency for Healthcare Research and Quality (AHRQ) report in a Health Affairs web exclusive published yesterday.

Eligibility for Medicaid and SCHIP stayed relatively constant between 2001 and 2005, yet increased enrollment caused the number of children with public coverage to increase from 16.2 million in 2001 to 21.0 million in 2005. The number of children with private coverage declined from 13.5 million to 11.4 million over the same period. Because public coverage increased faster than private coverage fell, the percentage of children who were uninsured declined. As of 2003, the uninsurance rate among children dropped for the first time below levels last seen in the 1970s, and by 2005 the uninsurance rate stood at 11.7 percent.

The researchers hail the success of Medicaid and SCHIP in reducing uninsurance among children, but they caution that “we must not lose sight of the enrollment (and retention) shortfalls demonstrated by the number of eligible but uninsured children.” Read the abstract.

Healthcare organizations involved in the manufacturing, distribution, and dispensing of pharmaceutical products have announced the creation of Rx Response--a program designed to help support the continued delivery of medicines during a severe public health emergency. The partnership includes the American Hospital Association, American Red Cross, Biotechnology Industry Organization, Healthcare Distribution Management Association, National Association of Chain Drug Stores, National Community Pharmacists Association, and the Pharmaceutical Research and Manufacturers of America. The partners are working with the U.S. Departments of Health and Human Services and Homeland Security as well as state emergency agencies to further develop the program.

The consumer website, www.RxResponse.org, also offers visitors the opportunity to print a wallet card, in English or Spanish, on which they can record a personal list of medications and other relevant medical information in case of emergency.

RxResponse will be activated when responding to severe domestic public health emergencies--when existing emergency relief plans and service programs are disrupted. Although public health emergencies will be determined on a case-by-case basis, a number of existing mechanisms will be used to help guide decision making, including a disaster declaration by the president or a U.S. governor, an American Red Cross Level V+ event, or a Department of Homeland Security “severe” classification.

Blue Shield of California announced Aug. 13 that it is awarding $31 million in bonuses to medical groups and independent practice associations in California linked to performance. That was the same amount awarded last year, according to the San Francisco Business Times. Nearly half of the payments are part of the Integrated Healthcare Association (IHA) pay-for-performance program, which rewards providers for the quality of their healthcare services, including clinical care, patient experience, and use of IT, based on criteria developed by the IHA.

Blue Shield uses the IHA standards to track physician organization performance on a range of clinical factors, including the immunization status of children in their care, control of HbA1c levels for patients with diabetes, and use of appropriate medications by those with asthma. By tracking performance and rewarding positive results, Blue Shield and other pay-for-performance health plans aim to encourage the use of best medical practices across the state. Read the news release.

The number of men in the United States with undiagnosed diabetes has declined sharply over the past 25 years, with Hispanics and African-Americans no longer more likely than whites to unknowingly have the disease, according to a RAND Corporation study issued Aug. 13. Study author James P. Smith found that in 1999-2002, about 20 percent of American men who had diabetes did not know they had the disease, in contrast to 25 years ago, when about half of the men with diabetes were undiagnosed.

Ethnic disparities among those with undiagnosed diabetes essentially disappeared during the same period, a sign that diabetes programs targeting minority groups have encouraged more people to get tested, according to the study, which appears in the August issue of the Proceedings of the National Academy of Sciences.

On a less positive note, Smith found that while disparities in undiagnosed diabetes disappeared over the past 25 years, new disparities have developed based on education levels. Less-educated American males are now less likely to have their diabetes diagnosed than those men with more schooling. Read the press release.

States should be allowed to cover young childless adults through the State Children’s Health Insurance Program (SCHIP) if they extend their Medicaid programs to cover low-to-moderate-income children, a leading expert on SCHIP argues in a paper released Aug. 13 on the Health Affairs web site.

“Despite objections by the Bush administration and some members of Congress, it is uninsured adults, not children, who experience the most serious coverage deficits where federal financing options are concerned,” writes Sara Rosenbaum, the Hirsh Professor of Health Law and Policy at the George Washington University School of Public Health and Health Services. More than 10 million young adults ages 19-26 were uninsured in 2006, “an astonishing” uninsurance rate of 33.2 percent.

In her paper, the third in a Health Affairs series on SCHIP, Rosenbaum points out that the SCHIP reauthorization debate provides the opportunity to reassess the program in light of developments in Medicaid policy and trends in coverage rates for different groups within the population. Read the abstract.

The cost to purchase and implement an electronic health record (EHR) system prevents some osteopathic physicians from using them in their practices, according to joint research released by the American Osteopathic Association (AOA) and the Medical Group Management Association (MGMA) Center for Research. The study report, Assessing Electronic Health Record Use by Members of the American Osteopathic Association, states that larger medical groups (51 or more full-time physicians) reported adopting EHRs at a rate of 55.1 percent; solo physician practices, however, reported only a 25 percent adoption rate.

Study participants rated lack of capital resources as a primary barrier to implementing EHR in their practices. Researchers found that the median EHR purchase and implementation cost was $20,000 per physician, with an additional $250 per month per physician for maintenance.

Of those that had moved to an EHR, nearly 90 percent said they would not go back to paper medical records. Among AOA members, “improved access to medical record information” ranked highest as a potential benefit to their medical practices. Other high-ranking benefits with more direct impact on practice financials were “improved accuracy for coding evaluation and management procedures” and “improved charge capture.”

As many as 4.4 million hospital stays could possibly be prevented with better ambulatory care, improved access to effective treatment, or patient adoption of healthy behaviors, according to a new statistical brief from the Agency for Healthcare Research and Quality. In 2004, hospital costs for potentially preventable conditions totaled nearly $29 billion. From 1997 to 2004, total hospital costs for potentially preventable admissions increased by 31 percent (adjusted for inflation), while the number of admissions rose by only 3 percent.

Total hospital costs for short-term diabetes complications and urinary tract infections in adults rose by more than 50 percent during the same time period. And although the admission rate for hypertension increased by 20 percent, the total hospital costs for this condition rose by almost 90 percent. Read the brief.

The Department of Health and Human Services announced on Aug. 10 that $25 million is available to hospitals and other healthcare facilities through a competitive emergency care grant program focused on hospital surge capacity, emergency care system capability, and community and hospital preparedness for public health emergencies.

The program will award grants for projects intended to help integrate public and private emergency care system capabilities with public health and other first responder systems; improve the efficiency, effectiveness, and expandability of emergency care systems and overall preparedness and response capabilities in hospitals, other healthcare facilities (including mental health and long-term care facilities), and trauma care and emergency medical service systems; and develop plans for strengthening public health emergency medical management and the provision of emergency care and treatment capabilities.

Grant applications must be received by Sept. 7, 2007, and may be filed online. Read the press release.

Since 2003, 16 states have enacted legislation requiring insurance companies to provide health insurance coverage to dependent young adults on their parents’ health plans beyond age 18 or 19, according to a new report from The Commonwealth Fund. While Utah has had such a law since 1994, recent legislative activity reflects states’ rising concern about the steady loss of coverage among young adults under the age of 30.

Because a majority of uninsured young adults have low incomes, extending eligibility for Medicaid and the State Children’s Health Insurance Program (SCHIP) beyond age 18 would be an important policy solution to cover this group, the authors say. The SCHIP reauthorization bill recently passed in the House of Representatives would allow states to extend coverage up to age 25. Currently, Medicaid and SCHIP coverage for children typically ends at age 19.

The report, Rite of Passage? Why Young Adults Become Uninsured and How New Policies Can Help, finds that 13.3 million young adults ages 19 to 29 were uninsured in 2005, up from 12.9 million in 2004. Young adults also continue to represent the largest age group without health insurance. Despite making up only 17 percent of the under-65 population, they account for 30 percent of the uninsured in that group.

The analysis is based on the latest updated Census Bureau data, and is an update of a May 2006 Commonwealth Fund report. Read the overview.

National Plan and Provider Enumeration System (NPPES) healthcare provider data that are disclosable under the Freedom of Information Act (FOIA) will be disclosed to the public via the Internet by the Centers for Medicare & Medicaid Services (CMS) beginning Sept. 4, 2007. Data will be available in two forms: a query-only database known as the National Provider Identifier Registry, and a downloadable file.

CMS is extending the period of time in which enumerated healthcare providers can view their FOIA-disclosable NPPES data and make any edits they believe are necessary prior to the initial disclosure of the data. To ensure that edits are reflected in the NPI Registry when it first becomes operational and in the first downloadable file, healthcare providers need to submit their edits no later than Aug. 20, 2007. Healthcare providers who submit edits on paper need to ensure that they are mailed in time for receipt by that date.

The NPI Registry will become operational on Sept. 4, and the downloadable file will be ready approximately one week later. Get more information.

As the second anniversary of Hurricane Katrina’s landfall approaches, new analysis by the Kaiser Family Foundation of its household survey of people in the New Orleans area shows that more than four in 10 (43 percent) adults reported at least one healthcare access problem in the aftermath of Hurricane Katrina. Underscoring the racial disparities documented generally in the Kaiser household survey, 70 percent of the one in four adults without health insurance in Orleans Parish were African-Americans. The survey also found that 33 percent of African-American adults in that parish were uninsured versus 12 percent of white adults.

The newly released Health Challenges for the People of New Orleans is a follow-up to the May 2007 report, Giving Voice to the People of New Orleans: The Kaiser Post-Katrina Baseline Survey. The new 65-page report examines the healthcare status of the adult population of Greater New Orleans based on a fall 2006 household interview survey of residents of the parishes of Orleans, Jefferson, Plaquemines, and St. Bernard, and details their health coverage and access to healthcare services after the disaster.

Some of the most frequently reported health access problems included deterioration in the ability to have health needs met now compared with before Katrina (22 percent), having a harder time getting to their place of medical care now (18 percent), and having a different medical provider after Katrina (16 percent). Access the report.

http://www.kff.org/kaiserpolls/7659.cfm

The Kaiser Family Foundation released a new primer on Aug. 8 that explains recent trends in healthcare costs in the United States and the factors that contribute to their growth. Prepared by Foundation staff, Health Care Costs: A Primer examines the rapid growth in the nation’s healthcare costs since 1970, when the average growth in health spending exceeded the growth of the economy as a whole by an average of 2.5 percentage points. The share of the economy devoted to health care grew from 7.2 percent in 1970 to 16 percent in 2005, and is projected to increase to 19.6 percent by 2016. Between 2000 and 2006, insurance premiums for family coverage rose 87 percent, more than four times the growth in wages.

The primer describes the types and sources of healthcare spending, the demographic factors associated with higher or lower levels of spending, and the impact of higher premiums and out-of-pocket costs on families. It also discusses other factors that influence healthcare spending growth, including the use of new medical technology, population changes, and changes in disease prevalence.

The Workgroup for Electronic Data Interchange (WEDI) is seeking comments on its new draft Health Identification Card Implementation Guide. A draft published by the group last year garnered 100 pages of comments; as a result, the workgroup has rewritten the implementation guide to address every comment.

The intent of the guide is to enable automated and interoperable identification using standard machine-readable health identification cards. The guide standardizes present practice and hopes to bring uniformity of information, appearance, and technology to the more than 100 million cards now issued by healthcare providers, health plans, government programs, and others.

A one-day forum on the guide will be held Aug. 22, 2007, at the Hyatt Fair Lakes in Fairfax, Va. Ideas and comments can also be sent to HealthID@wedi.org. The workgroup anticipates presenting the final draft to the WEDI board of directors for approval in mid-September.

Income volatility causes many children to cycle into and out of eligibility for Medicaid and the State Children’s Health Insurance Program (SCHIP), putting these children at risk for injurious gaps in coverage, researchers report in a Health Affairs web exclusive published Aug. 8. Unlike previous research findings, this study attributes the phenomenon to changes in eligibility status as well as administrative barriers.

Two-thirds of all surveyed children were eligible for Medicaid or SCHIP, or both, at some point during the four-year period from 1996 to 2000, in the early years of SCHIP. Almost half of the surveyed children (48 percent) experienced interruptions in eligibility, and 41 percent of these “sometimes eligible” children had multiple spells of eligibility. In addition, children also moved frequently from eligibility for one program (Medicaid or SCHIP) to eligibility for the other during the survey period. The study’s authors encouraged Congress to protect children from gaps in coverage. Read the abstract.

Increasing revenues and improved operating controls directly supported a continuation of solid profitability levels for the not-for-profit hospitals and healthcare systems in Fitch’s portfolio in 2006, as shown in a Fitch Ratings special annual report titled 2007 Median Ratios for Non-Profit Hospitals and Heath Care Systems. Fitch’s not-for-profit healthcare portfolio includes underlying ratings on 262 stand-alone hospitals, healthcare systems, or related institutions, 218 of which are included in this special median ratios report.

Overall, Fitch’s portfolio exhibited sound improvement in most financial indicators in 2006. Except for Fitch’s AA rating category, liquidity ratios remained flat or declined, which Fitch largely attributes to sizable capital spending that took place throughout the calendar year. The median operating margin for 2006 remained at 2.8 percent, the same level as in 2005. Operating margins remained static across all rating categories except the AA category, which increased to 4.1 percent in 2006 from 3.4 percent in 2005. The 2006 results reflect continued implementation of management best practices, a relatively stable revenue environment with favorable rate increases from managed care payers, improved expense control, and operating efficiencies that can be attributed in part to investment in quality and IT. For more information, call 212-908-0526.

Hospitals must submit a revised participation form by August 15 in order to participate in the federal quality data reporting program and receive the full market basket payment update from Medicare. The Reporting Hospital Quality Data for Annual Payment Update (RHQDAPU) initiative requires hospitals to submit data for specific quality measures for health conditions common among people with Medicare, and which typically result in hospitalization. Eligible hospitals that do not participate will receive a 2% reduction in their payment update. The revised Notice of Participation form is required for all hospitals that wish to enroll or remain enrolled in the RHQDAPU program. The form is available from the QualityNet web site.

The U.S. not-for-profit 2007 healthcare system median ratios for rated hospitals demonstrate continued strength and some financial improvement, although the rate of increase has slowed from previous years, according to a Standard & Poor’s Ratings Services report published Aug. 3. In particular, the higher rating categories exhibited some volatility in financial results this year from industry pressures. The overall trend, however, continues to be generally positive, with the ratio of system upgrades and positive outlook revisions outpacing comparable ratios of stand-alone hospitals.

The report, U.S. Not-for-Profit Health Care System 2007 Median Ratios Point to Less Robust Growth Ahead, notes that revenue growth has continued despite soft volumes in many markets this year. Operating income, however, is flat across many rating levels, indicating pressure on expenses, especially surgical supplies, pensions, and bad debt. The bottom lines remain robust as the investment markets continue to yield substantial returns. Most hospitals continue to implement IT improvements, focus on both efficiency and improved quality of care, make liberal use of consultants to refine the revenue cycle, and continue to invest substantially in capital, although even the growth rate of those expenditures, which has been quite high in recent years, slowed somewhat in 2007. For more information, call 212-438-9823.

The Federal Trade Commission has unanimously ruled that Evanston Northwestern Healthcare Corporation’s acquisition of Highland Park Hospital was anticompetitive and violated Section 7 of the Clayton Act. The FTC ordered that ENH establish separate and independent negotiating teams--one for Evanston and Glenbrook hospitals, and another for Highland Park--that will allow managed care organizations (MCOs) to negotiate contracts separately for these competing hospitals. Read the FTC statement.

In an administrative opinion and order released Monday, the FTC affirmed the October 2005 ruling of a chief administrative law judge that Evanston Northwestern’s acquisition of Highland Park Hospital violated Section 7 of the Clayton Act, but ordered an alternative remedy to restore competition. Although the administrative law judge ruled that Evanston Northwestern should be required to divest Highland Park in order to restore competition in the marketplace, “The potentially high costs inherent in the separation of hospitals that have functioned as a merged entity for seven years instead warrant a remedy that restores the lost competition through injunctive relief,” the opinion reads. The FTC cited concerns about the effect of divestiture on Highland Park’s cardiac surgery and interventional cardiology programs, as well as the ability of the hospital to use an electronic medical record system implemented at the hospital by Evanston Northwestern if the hospital were to be separated from the health system, in rejecting divestiture as a remedy.

Mark R. Neaman, President and Chief Executive Officer of Evanston Northwestern Healthcare, noted that the FTC recognized the “significant improvements” in patient care services at Highland Park Hospital, post merger, as its principle rationale to overturn divestiture. “Our investments in excess of $150 million at Highland Park Hospital have dramatically improved the breadth, depth, and quality of healthcare services in the region," said Neaman. "Our success in expanding comprehensive, quality care at competitive prices has increased patient access and treatment, not made 'victims' of select HMOs."

While the FTC stated that its alternative remedy to divesture was “not ideal,” the establishment of separate negotiating teams for managed care contracts “will allow MCOs to negotiate separately again for these competing hospitals, thus re-injecting competition between them for the business of MCOs,” the opinion reads. The FTC ordered Evanston Northwestern to submit a detailed proposal for implementing the injunctive relief called for in the ruling within 30 days.

The FTC noted that its decision not to require divestiture in the Evanston Northwestern case would likely have little applicability in future challenges to hospital mergers that have already been consummated. “Divestiture is the preferred remedy for challenges to unlawful mergers, regardless of whether the challenge occurs before or after consummation,” the opinion reads. “Thus, where it is relatively clear that the unwinding of a hospital merger would be unlikely to involve substantial costs, all else being equal, the Commission likely would select divestiture as the remedy.”

Hospitals, including acute care hospitals paid under the inpatient prospective payment system, inpatient rehabilitation facilities, and long-term care hospitals, must begin to submit “no pay” claims to their Medicare contractor for Medicare Advantage (MA) beneficiaries as of Jan. 7, 2008. This will allow for the days of those stays to be eventually captured in disproportionate share hospital calculations.

In the past, MA plans were responsible for submitting this information to Medicare as part of their encounter data. However, because MA plans are no longer required to submit encounter data, hospitals must begin to submit this information.

Hospitals may submit claims with discharge dates on or after Oct. 1, 2006, so that supplemental security income (SSI) data for FY07 and beyond will include MA patient days. To ensure that hospitals’ MA days are included in the FY07 Medicare/SSI file (due in summer 2008), hospitals should try to submit their FY07 claims to their Medicare contractor from Jan. 7, 2008, through March 2008. Read the announcement.

Despite threats of a veto by President Bush, the Senate passed a bill reauthorizing the State Children’s Health Insurance Program (SCHIP) on Aug. 2. The House passed its own version the day before. Although both bills reauthorize SCHIP and provide for part of its funding to come from an increase in the federal tobacco tax, the differences between the two versions are considerable, which could lead to hard negotiations as the chambers work out a compromise bill.

The Senate version (S. 1893), which is narrower than the House bill, would expand SCHIP by $35 billion over five years, includes a 61-cent-per-pack increase in the federal tobacco tax, and does not include any Medicare provisions. The House bill (H.R. 3162) provides for an expansion of $50 billion over five years, with a portion of that funding to be raised through a 45-cents-a-pack increase in the federal tobacco tax, a cut in spending for Medicare Advantage, and a reversal of the scheduled cut in Medicare reimbursements for physicians.

A high-profile data exchange effort that recently disbanded provides important lessons on the challenges and promises of making health information more portable, say health IT leaders in a series of Health Affairs web exclusive articles published Aug. 1.

The articles by some of the nation’s leading experts on health IT examine the Santa Barbara County Care Data Exchange, an early, ambitious effort at electronic health information exchange (HIE) that ceased operations in 2006. The project attempted to connect various healthcare providers and related organizations in Santa Barbara County through a secure network that would allow for the electronic exchange of clinical and administrative data.

Authors Robert Miller and Bradley Miller describe a project that was plagued by a variety of problems, including technology delays and uncertainty over privacy and liability issues. Once external grant funding for much of the data exchange’s development had ended, uncertainty over the value proposition of HIE made participating healthcare organizations reluctant to invest in the data exchange, which led to the shutdown of operations. The project nonetheless sparked national interest and provided valuable lessons for regional health information organizations (RHIOs) across the United States that are now promoting HIE.

By a vote of 225-204, the House passed the Children’s Health and Medicare Protection Act (H.R. 3162) on Aug. 1, reauthorizing and expanding the State Children’s Health Insurance Program. The bill would provide $50 billion over five years, to be paid for mainly by Medicare Advantage payment cuts and an increase in the federal tobacco tax of 45 cents per pack. Among other things, the bill would also halt a scheduled reduction in physician Medicare payments. The Senate is expected to pass its own, less expensive ($35 billion over five years) SCHIP bill by the end of this week, although the president has threatened to veto both the House and Senate versions of the bill. Read the bill.

All hospital transplant centers currently approved for Medicare participation (approved either under the end-stage renal disease conditions of coverage or the national coverage decisions) must submit a request for new approval under the conditions of participation established by the new regulation that was issued by the Centers for Medicare and Medicaid Services (CMS) on March 30, 2007. Requests must be submitted to CMS by Dec. 26, 2007.

If an organ transplant center does not submit a request for approval under the new conditions of participation by that date, CMS will conclude that the center no longer wants to participate in Medicare and will begin the process to withdraw Medicare approval.

There is no application form; instead, transplant centers must send a request to CMS with specific information. Transplant centers desiring first-time Medicare certification must send a request to CMS with the same information; this can be done any time the center is ready for initial Medicare certification. For a list of all transplant centers covered by the regulation and a listing of the minimum information that must be included in all requests for approval, visit the CMS transplant web page.

The Centers for Medicare and Medicaid Services (CMS) yesterday issued a final rule intended to improve the accuracy of Medicare’s payment under the acute care hospital inpatient prospective payment system (IPPS), while providing additional incentives for hospitals to engage in quality improvement efforts.

The IPPS payment reforms would restructure the inpatient diagnosis-related groups (DRGs) to account more fully for the severity of each patient’s condition, includes provisions to ensure that Medicare no longer pays for the additional costs of certain preventable conditions (including certain infections) acquired in the hospital, and expands the list of publicly reported quality measures.

Payments to all hospitals will increase by an estimated average of 3.5 percent for FY08, or by more than $3.8 billion, when all provisions of the rule are taken into account, primarily as a result of the 3.3 percent market basket increase. In addition, the rule creates 745 new severity-adjusted DRGs to replace the current 538 DRGs. The new severity-adjusted DRGs will be phased in over two years, rather than one year, as detailed in April’s proposed rule. Read the fact sheet.

CMS has issued a proposed rule that would require all Medicare suppliers of durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) to furnish CMS with a surety bond.

CMS believes such a requirement would limit the Medicare program risk to fraudulent DME suppliers and enhance the Medicare enrollment process to help ensure that only legitimate DME suppliers are enrolled or are allowed to remain enrolled in the Medicare program. The agency also hopes to ensure that the Medicare program recoups erroneous payments that result from fraudulent or abusive billing practices by allowing CMS or its designated contractor to seek payments from a surety up to the penal sum. Download the proposed rule.

Under new Medicare payment rates issued yesterday by the Centers for Medicare and Medicaid Services (CMS), Medicare payments for beneficiaries using skilled nursing facility (SNF) care will increase by approximately $690 million in FY08. The 3.3 percent increase will be reflected in Medicare payment rates to SNFs and hospitals that furnish certain skilled nursing and rehabilitation care to Medicare beneficiaries recovering from serious health problems. The final rule for the SNF prospective payment system (PPS) is expected to be published in the Federal Register on Friday, Aug. 3, 2007.

CMS uses a SNF market basket to measure changes in the prices of an appropriate mix of goods and services included in covered SNF stays. The price of items in the market basket is measured each year, and Medicare payments are adjusted accordingly. The final rule revises and rebases the SNF market basket, which currently reflects data from FY97, to reflect data from FY04.

The new payment rates also continue to include a special adjustment made to cover the additional services required by nursing home residents with HIV/AIDs. Download the final rule.

Inpatient rehabilitation facilities (IRFs) will receive approximately $6.4 billion in payments from Medicare in FY08, under a rule announced yesterday by CMS. The rule will update payment rates and modify payment policies for services furnished to Medicare beneficiaries for discharges occurring on or after Oct. 1, 2007, through Sept. 30, 2008. The rule’s provisions are estimated to increase Medicare payments to approximately 1,220 IRFs in FY08 by approximately $150 million.

The final rule, which is expected to be published in the Federal Register on Aug. 7, 2007, increases the IRF payments by 3.2 percent, based on the rehabilitation, psychiatric, and long-term care hospital market basket. The rule also increases the high-cost outlier threshold to $7,362 from $5,534 in FY07, based on an analysis of 2006 data, which indicates that this threshold would maintain estimated outlier payments at 3 percent of estimated total payments under the IRF PPS.

Finally, a policy commonly referred to as the “75 percent rule” is used by CMS to classify a provider as an IRF. Currently, in addition to a patient’s principal diagnosis, the comorbidities of a patient may be used to determine whether a provider met the requirements of the 75 percent rule. However, for cost reporting periods beginning on or after July 1, 2008, comorbidities no longer can be used to determine whether a provider meets the requirements of the 75 percent rule. Download the final rule.