HFMA NEWS

Operating costs rose faster than revenue in many medical group practices in 2006, according to the Medical Group Management Association (MGMA) Cost Survey: 2007 Reports Based on 2006 Data--two in-depth reports for multispecialty and single-specialty practices. The data underscore the need for change in how physicians are reimbursed for their services.

OB/GYN groups, for example, experienced a 2.3 percent bump in median total medical revenue per FTE physician, but their median total operating cost per FTE physician rose 7.1 percent. Multispecialty practices fared about the same--a 7.4 percent cost increase outpaced a 1.8 percent rise in revenue.

Several specialty practices watched their revenues decline or flatten. Cardiology practices, for example, posted a 0.7 percent decrease in median total medical revenue and a 3 percent increase in total operating cost. Family practice fared about the same with a 0.65 percent decline in revenue and a 2.1 percent bump in cost. General surgery groups reported a decline in revenue of nearly 2.9 percent and a 1.2 percent increase in cost.

“This year’s data show that the disturbing trend of operating costs rising faster than revenues continues unabated,” said William F. Jessee, MD, president and CEO of MGMA. “The disparity between practices’ costs and revenues is fast approaching the breaking point.” Read the press release.

On Oct. 24, 2007, the Centers for Medicare and Medicaid Services (CMS) awarded the contract for the Jurisdiction 12 (J12) A/B Medicare Administrative Contractor (MAC) to Highmark Medicare Services, Inc. Highmark will be responsible for the workload in Delaware, District of Columbia, Maryland, New Jersey, and Pennsylvania. Highmark will immediately begin implementation activities and will assume full responsibility for the work no later than September 2008.

The following day, CMS announced it has awarded the contract for the Jurisdiction 1 (J1) A/B MAC to Palmetto GBA. Palmetto will be responsible for the workload in American Samoa, California, Guam, Hawaii, Nevada, and the Northern Mariana Islands. Palmetto will assume full responsibility for the work no later than June 2008.

Three other MAC jurisdictions were awarded previously:
* Jurisdiction 3 went to Noridian Administrative Services for Arizona, Montana, North Dakota, South Dakota, Utah, and Wyoming (awarded July 31, 2006).
* Jurisdiction 4 went to TrailBlazer Health Enterprises for Colorado, New Mexico, Oklahoma, and Texas (awarded Aug. 2, 2007).
* Jurisdiction 5 went to Wisconsin Physicians Service Health Insurance Corporation for Iowa, Kansas, Missouri, and Nebraska (awarded Sept. 5, 2007).

The remaining MAC awards are to be made by September 2008. Access the background sheets.

With universal healthcare coverage high on the national agenda, Standard & Poor’s (S&P) Ratings Services credit analysts warned investors of the pitfalls and potential of three major segments of the healthcare industry should universal coverage come to pass. At S&P’s Health Care Hot Topics Conference, “Politics and Leverage May Be Hazardous to Your Health,” held Oct. 22, analysts said the impact of any reforms on corporate ratings in those industries would take some time to become clear. Further discussion can be found in the Oct. 24, 2007, special issue of CreditWeek.

Pharmaceutical companies would be especially vulnerable to regulatory changes down the road, because some proposed reforms would increase the government’s power to negotiate drug prices. That would not necessarily be an issue in the short term, but longer term, it could prove troublesome, said one analyst. Also, the uncertainty of a new federal healthcare paradigm could hurt many other companies that heavily depend on government reimbursements, because the size and scope of these cannot be known until any proposals are enacted. For companies with already weak financials, any cut in government reimbursements--most likely undertaken to reduce the nation’s overall health bill--could result in lowered ratings. For more information, call (212) 438-6634.

The cost of uncompensated hospital care in the United States totaled $31.2 billion in 2006, up from $28.8 billion in 2005 and $21.6 billion in 2000, according to the latest data from the American Hospital Association’s (AHA) Annual Survey of Hospitals. Underpayment by Medicare and Medicaid reached nearly $30 billion in 2006, up from $25.3 billion in 2005 and $4 billion in 2000. Medicare reimbursed 91 cents and Medicaid reimbursed 86 cents for every dollar hospitals spent caring for these patients. AHA president and CEO Rich Umbdenstock said the data “show what we’ve been hearing from the field--that hospitals are seeing more and more patients while future financing is uncertain, emergency departments continue to be overcrowded, and fewer workers are available to provide care.” Access the data.

An October 2007 survey conducted jointly by National Public Radio (NPR), the Kaiser Family Foundation, and the Harvard School of Public Health examines the public’s views and opinions of the State Children’s Health Insurance Program (SCHIP) and the pending legislation surrounding its reauthorization. The survey assesses the public’s familiarity with the SCHIP debate, whether or not they support the renewal and expansion of the program, and who they believe should be eligible for health coverage through SCHIP. NPR is reporting findings from the poll in its coverage of the SCHIP reauthorization on its news magazines Morning Edition, The Bryant Park Project, and All Things Considered.

The poll was conducted after President Bush vetoed legislation to reauthorize and expand SCHIP. A nationally representative sample of 1,527 adults were interviewed from Oct. 8 to Oct. 13. Access the report.

The Internal Revenue Service announced that it is offering one-day workshops for small and mid-sized section 501(c)(3) exempt organizations during fall and winter 2007 and spring 2008. The workshop is designed for administrators, volunteers, or tax practitioners who are responsible for an organization’s tax compliance. Each workshop is limited to 200 attendees and will be filled on a first-come, first-served basis. The nonrefundable cost is $45 and includes a text and other IRS forms and publications. Preregistration is required.

The workshops will explain what 501(c)(3) organizations must do to keep their tax-exempt status and comply with tax obligations. Each workshop will cover the benefits and responsibilities of tax-exempt status and actions that could jeopardize that status; unrelated business income and gaming; employment issues; an explanation of Form 990 and the new “e-Postcard” filing requirement; and required disclosures. Workshop leaders will also discuss how the Pension Protection Act of 2006 affects exempt organizations.

The workshop does not cover how to apply for tax-exempt status or compliance requirements for non-501(c)(3) organizations. Access details and registration information.

Last night, the House passed a revised bill to expand and extend the State Children’s Health Insurance Program (SCHIP)--but without enough votes to override the veto threatened by President Bush. At 265 to 142, the vote was less than the two-thirds necessary to override a veto.

The bill had been amended from its original version, which passed the Senate several weeks ago with a veto-proof vote. But in considering that original bill on Oct. 18, the House fell 13 votes short of the number needed to override Bush’s veto.

To meet some Republican concerns, the bill was amended to clearly end coverage of childless adults, ban coverage of illegal immigrants, and prohibit coverage of children in families with incomes above three times the federal poverty level. However, the bill passed yesterday by the House, like the original bill, would still add $35 billion to SCHIP, providing a total of $60 billion over the next five years.

According to The New York Times, although House Republicans had urged Democrats to delay the vote on the new bill because many of the House members were in California supporting constituents affected by the wildfires, House majority leader Steny Hoyer, D-Md., said the absent lawmakers would not have changed the outcome of the vote.

The two California entities regulating the healthcare industry--the California Department of Managed Health Care (DMHC) and the California Department of Insurance--announced on Oct. 23 that they would issue joint regulations to protect consumers purchasing health coverage in the individual market, and pledged that they would work together to end the practice of illegal rescissions.

The DMHC has released draft regulations to end illegal rescissions of health insurance policies by major California health plans, and the California Department of Insurance is drafting parallel regulations. The DMHC regulations will clarify existing law, which states that a consumer must willfully misrepresent his or her health history before a health insurance policy can be rescinded. It will also require that health plans conduct medical underwriting before issuing a policy and fully investigate questionable responses on health history questionnaires.

Since late 2005, the DMHC has been investigating the underwriting practices of five of seven health plans offering individual policies in California for engaging in the illegal practice of post-claims underwriting. To date, Blue Cross of California was fined $1 million in March 2007 for routinely rescinding health insurance policies, and had previously been fined $200,000 in September 2006 for illegally rescinding the health insurance policy of one of its members. Kaiser Foundation Health Plan has also been fined a total of $325,000 for two illegal rescissions. Read the press release.

Oct. 29, 2007: By this date, all carriers, A/B Medicare administrative contractors (MACs), and durable medical equipment MACs will be rejecting claims where the national provider identifier (NPI)/legacy identifier combination used in claims cannot be validated against the NPI crosswalk. Informational edits will no longer be issued once this happens, but will be replaced by reject reports that will assist providers in determining why the claim is being rejected.
Jan. 1, 2008: As of this date, 837-I electronic claims and UB-04 paper claims without an NPI in fields identifying the primary provider (billing and pay-to) will be rejected. Legacy identifiers paired with NPIs in the primary provider fields on the claim will still be acceptable, as will legacy-only numbers in secondary provider fields.

The Centers for Medicare and Medicaid Services (CMS) has not yet announced the date by which an NPI will be required for primary provider fields on 837 professional electronic claims and 1500 paper claims processed by carriers, A/B MACs, and DME MACs. This will occur prior to May 23, 2008; a specific date will be announced once available.

May 23, 2008: In keeping with the contingency guidance issued on April 3, 2007, CMS will lift its NPI contingency plan, meaning that only the NPI will be accepted on all HIPAA electronic transactions (837I, 837P, NCPDP, 276/277, 270/271, and 835), paper claims, and standard paper remittance advice. This also includes all secondary provider fields on the 837P and 837I. The reporting of legacy identifiers will result in the rejection of the transaction. CMS will also stop sending legacy identifiers on coordination-of-benefits crossover claims at this time.

Reminders regarding claims processing
The following problems/errors are due to providers billing with incompatible NPI/legacy pairs:
* The type of NPI you use (entity type 1 or entity type 2) must match your Medicare enrollment provider identifier number (individual or organization). When compatible NPI/legacy pairs are submitted on a claim, there is a much higher success rate for finding a match on the NPI crosswalk, thus further ensuring timely and accurate processing of your claim.
* Those who are enrolled with Medicare as individuals but obtained an organization (entity type 2) NPI through the National Plan and Provider Enumeration System (or vice versa) need to ensure their enrollment records are correct and their NPIs were obtained appropriately.
* On professional claims (837P and CMS-1500), the NPI/PIN combination should identify the billing, pay-to, and rendering provider (the pay-to provider is identified only if it is different from the billing provider). This includes claims that are submitted by corporations that physicians and nonphysician practitioners have formed or by physicians and nonphysician practitioners who bill Medicare directly.

Other problems identified include:
* Providers are not taking proactive action based on the Part B informational edits and reject reports, despite extensive outreach and educational activities designed to make providers aware of the need to take action. Pay attention to the informational edits prior to Oct. 30 and the reject messages thereafter.
* CMS has received reports of clearinghouses and billing services that may be stripping the NPI from the claim and later adding the NPI back on the remittance advice. Make sure this is not unknowingly happening to your claims. If you suspect that your clearinghouse or billing service is stripping your NPI from claims, please contact your contractor to confirm that an NPI was not received.

Clarification
At the beginning of October, CMS issued a notice that referred to institutional claims. It is further clarifying that effective Jan. 1, 2008, NPIs will be required to identify the primary providers (the billing and pay-to providers) in Medicare electronic and paper institutional claims (i.e. 837I and UB-04 claims). You may continue to use the legacy identifier in these fields as long as you also use the NPI in these fields. This means that 837I and UB-04 claims with only legacy identifiers in the billing and pay-to provider fields will be rejected starting on Jan. 1. (Pay-to provider is identified only if it is different from the billing provider.)

You may continue to use only legacy identifiers for the secondary provider fields in the 837I and UB-04 claims until May 23, 2008, if you choose.

Reminder for residents at teaching hospitals and academic medical centers
If the hospitals’ residents want to enroll in Medicare, you will need to obtain NPIs before applying (enrolling) as a Medicare provider.
• Other health plans may require you to obtain NPIs as a condition of enrollment.
• If you prescribe medication, the pharmacies may need to know your NPI before dispensing the medications and submitting claims to health plans.
• If you order or refer services, your NPI may be required on the claims from providers who actually furnished the services.
• Future employers may require you to obtain NPIs as a condition of employment.

Test your claims now!
Medicare encourages submitters to send a small number of claims using NPIs only (no legacy identifiers). If no claims are rejected, the submitter may gradually increase the volume. Medicare will require the NPI on paper claims; be sure to begin the testing process now even if you bill paper.

Audiocast to be held Oct. 31
The Workgroup for Electronic Data Interchange will host an NPI audiocast on Oct. 31. Visit the WEDI web site to learn more. Please note that there is a cost to participate in WEDI events.

Sen. Chuck Grassley, ranking member of the Committee on Finance, and Sen. Arlen Specter, ranking member of the Judiciary Committee, on Oct. 23 introduced legislation to inject transparency into the prices medical device suppliers charge hospitals participating in federal healthcare programs.

The Transparency in Medical Device Pricing Act of 2007 would require medical device manufacturers, as a condition of receiving direct or indirect payments under Medicare, Medicaid, and the Children’s Health Insurance Program, to submit to the Secretary of Health and Human Services on a quarterly basis data on average and median sales prices for all implantable medical devices used in inpatient and outpatient procedures. Manufacturers would be subject to civil monetary penalties from $10,000 to $100,000 for failure to report or for misrepresentations of price data. The secretary would also be required to make the data available to the public on the web site of the Centers for Medicare and Medicaid Services and update the web site on a quarterly basis.

“Today, there is no level playing field when hospitals negotiate with device manufacturers,” said Grassley in a statement. “This is a major reason why many hospitals pay absurdly more than others for the same medical device. The inflated prices many hospitals pay have implications for the healthcare system on multiple levels.”

Rising healthcare costs are increasingly changing the way Americans use the healthcare system. Many of these changes are positive, but others, such as delaying seeing a physician and skipping or not filling doses of prescribed medications, could have a negative impact on patients’ health, according to the 2007 Health Confidence Survey. The survey, released Oct. 24 by the Employee Benefit Research Institute, is the group’s 10th annual assessment of the American public regarding the U.S. healthcare system.

More than six in 10 Americans with health insurance coverage (63 percent) reported an increase in the costs they are responsible for paying under their plan in the past year, the survey found. Of these, a sizeable and increasing percentage said the increase caused them to try to take better care of themselves (81 percent in 2007; 71 percent in 2005) and talk to their physician more carefully about treatment options and costs (66 percent in 2007; 57 percent in 2005).

Among other results, three-quarters of those with employer-provided health coverage (76 percent) said they would prefer $7,500 in employer-based health benefits to an additional $7,500 in taxable income. When those preferring to keep their coverage were asked how much they would need in additional taxable income to willingly give it up, the median response was $12,000. Access the report.

Cancer therapies save and prolong many lives, but cancer care that focuses solely on eradicating tumors without addressing the patient’s general well-being can increase patients’ suffering, may compromise their ability to follow through on treatment, and falls short of achieving quality care, says a new report from the Institute of Medicine.

Cancer Care for the Whole Patient: Meeting Psychosocial Health Needs proposes a new standard of care under which all oncology care providers would systematically screen patients for distress and other problems; connect patients with healthcare or service providers who have resources to tackle these issues and coordinate care with these professionals; and periodically re-evaluate patients to determine if any changes in care are needed.

Many services and resources already exist, often at no cost to patients, but oncology providers are not proactively identifying patients’ needs and helping them find and use these resources, the report notes. Because many of these services are free or are reimbursable through health insurance providers and programs, the creation of new benefits or payment mechanisms would not be necessary for the most part, the report says. Access the report.

Physicians-in-training are highly vulnerable to making medical errors that stem from teamwork breakdowns, especially a lack of supervision by experienced staff, according to a new study funded by the Department of Health & Human Services’ Agency for Healthcare Research and Quality (AHRQ). Teamwork breakdowns involving medical residents, fellows, and first-year residents also caused a significant number of errors to occur during patient handoffs, researchers found. The study, “Medical Errors Involving Trainees: A Study of Closed Malpractice Claims from 5 Insurers,” appears in the Oct. 22, 2007, issue of the Archives of Internal Medicine.

Researchers analyzed data from a random sample of 889 closed malpractice claims that had been reviewed between 2002 and 2004. The study focused on four clinical categories: obstetrics, surgical, missed and delayed diagnoses, and medications. Of the closed claims involving both error and injury, 27 percent, or 240 cases, involved trainees whose role in the error was considered to be at least moderately important, the study found. Cognitive factors contributed to the majority of trainee errors, according to the study. Nearly three-fourths (72 percent) involved errors in judgment, and more than half were caused by a lack of technical knowledge (58 percent) or were due to failure of vigilance or memory (57 percent). Teamwork factors, notably lack of supervision and handoff problems, accounted for 70 percent of the cases involving trainee errors. Read the abstract.

Congress should require insurers to cover substance abuse treatment to the same extent that they cover general medical treatment, two behavioral health experts argue in an article published yesterday on the Health Affairs web site.

The arguments for comprehensive parity are as strong for substance abuse as for mental health benefits, say Yale School of Public Health professors Colleen Barry and Jody Sindelar. Although the parity bill that passed the Senate last month and a parity bill moving through the House both include substance abuse treatment, Barry and Sindelar suggest that language in the Senate bill could allow insurers to limit substance abuse benefits.

In recent decades, the percentage of workers with some substance abuse coverage has increased, but so has the use of coverage limits on substance abuse benefits, the authors note. By 2002, roughly nine out of 10 workers with employer-sponsored coverage faced stricter limits on their substance abuse coverage--such as higher deductibles and cost sharing--than on their general medical coverage. Only 25 percent of total spending on substance abuse treatment is now paid for by private insurance, versus 32 percent in 1987, and the use of substance abuse services among those with employer-based insurance declined by 23 percent between 1992 and 2001. Read the report.

Grateful patients and other U.S. donors increased their charitable contributions to healthcare facilities and organizations in 2006, but the 11.5 percent increase to $7.9 billion was substantially lower than the 16 percent rate of increase to $7 billion reached in 2005, according to a new Report on Giving issued Oct. 22 by The Association for Healthcare Philanthropy.

In the U.S., contributions from individuals represented 60 percent of all contributions, about the same as the year-earlier level, while the portion contributed by U.S. businesses, including corporate foundations, increased to 20.4 percent in 2006, up from 18.2 percent in 2005. Noncorporate foundations represented 12 percent of funds raised in 2006, down by 0.7 percent from the earlier year. Other giving sources, including hospital auxiliaries, public agencies, and civic groups, were responsible for 8.1 percent of the 2006 total, down from almost 10 percent in 2005.

In Canada, the report showed that Canadian contributions were up only 3.3 percent to $1.23 billion in 2006, compared with an increase of 11 percent to $1.2 billion in 2005. Individual givers provided 52 percent of funds raised in Canada, down from almost 61 percent in 2005.Canadian businesses, including corporate foundations, supplied 25.4 percent of the 2006 total, compared with 25.6 percent in 2005. Canadian foundations, other than corporate, contributed 9.7 percent in 2006, compared with 3.5 percent in 2005. Read the press release.

In the third quarter of CY07, downgrades outpaced upgrades by a ratio of 1.2 to 1, with seven downgrades and six upgrades among healthcare organizations rated by Moody’s Investors Service, according to the October 2007 Moody's Not-for-Profit Healthcare 2007 Quarterly Ratings Monitor. This is an improvement over the third quarter of 2006 and compared with historical trends. At Moody's, cumulative downgrades continue to outpace upgrades 1.3 to 1 through nine months of CY07, as compared to 1.5 to 1 through nine months of CY 2006. The dollar amount of the third quarter upgrades exceeds the dollar amount of downgrades, largely reflecting the credit strengthening of two sizable health systems whose debt accounted for 62% of the upgraded debt in the third quarter. For more information, contact Moody's at (212) 553-1653.

By a vote of 273-156, the House failed yesterday to override President Bush’s veto of H.R. 976, the Children’s Health Insurance Program Reauthorization Act, which would have reauthorized and expanded the State Children’s Health Insurance Program (SCHIP) beyond its current expiration date of Nov. 16, 2007.

Although the override had not been expected to pass, the bill did have bipartisan support. However, the roll call was nine votes short of the necessary two-thirds majority (with four not voting). The Senate passed the bill in late September with a veto-proof majority.

According to The Washington Post, another round of negotiations will likely follow in order to develop a scaled-down version of the bill that would be acceptable to more House members.

The bill apparently has significant public support. According to The New York Times, 81 percent of respondents to the most recent CBS News poll supported expanding the program, with three-quarters of those saying they would be willing to pay higher taxes to finance it.

Although some states made some small gains in critical indicators for improving women’s health, the nation as a whole and most states are falling behind in their quest to meet national goals for women’s health, a comprehensive analysis of state policies and women’s health status finds. Released Oct. 17, Making the Grade on Women’s Health: A National and State-by-State Report Card is the fourth in a series of triennial reports to grade and rank each state based on 27 health status benchmarks developed largely using goals set by the U.S. Department of Health and Human Services’ Healthy People 2010 initiative.

Making the Grade gives the nation an overall grade of “unsatisfactory.” No state receives an overall “satisfactory” grade for women’s health status, although three states receive a “satisfactory minus”--down from eight states that received a “satisfactory minus” in 2004. Vermont receives a “satisfactory minus” and ranks No. 1, followed by Minnesota and Massachusetts. Twelve states receive failing grades, up from six states that failed in 2004; Mississippi ranks last.

“The outlook for women’s health is nowhere near approaching the nation’s goals for 2010 set by the U.S. Department of Health and Human Services Healthy People initiative,” said Michelle Berlin, MD, associate professor at Oregon Health & Science University. “The nation barely improved since our last report, meeting three out of 27 benchmarks graded in this report. Failing to meet these goals undermines not only the health and well-being of women, but the well-being of our country as well.”

States are leading the charge for U.S. healthcare reform and will likely continue to play an instrumental role, according to a new Standard & Poor’s (S&P) Ratings Services report published Oct. 17. Most states have plans to expand their healthcare coverage in their FY08 budget, and the costs to provide that coverage are increasing at an exponential rate as the U.S. population ages.

“How states manage healthcare challenges will play a role in future budget balance and financial flexibility, which are important considerations in our credit review process,” said S&P credit analyst Robin Prunty. “Most state healthcare initiatives have been incremental, aimed at expanding coverage and reducing overall healthcare costs. While there have been a few notable exceptions to the incremental approach, particularly in Massachusetts, Vermont, and Maine, we haven’t viewed any of these programs as a significant credit concern in their current form.”

The report, Top 10 Reasons Why States Are Central to Health Care Reform Efforts, notes that states will stay involved and focused in part because they share in funding Medicaid, which makes up one of the biggest components of state spending.

The report is available to subscribers of RatingsDirect, the web-based source for S&P credit ratings, research, and risk analysis. For more information, call 212-438-9823.

As part of its ongoing effort to inform debate about healthcare issues in the 2008 presidential election, the Kaiser Family Foundation has released an interactive online tool to compare the healthcare proposals of presidential candidates. The tool, 2008 Presidential Candidate Health Care Proposals: Side-by-Side Summary, summarizes positions in four overall categories: access to healthcare coverage, cost containment, improving the quality of care, and financing.

The online tool allows users to customize side-by-side comparisons by selecting as many as four candidates for comparison that can then be formatted into a printer-friendly format. Users will also be able to print out documents comparing all the Democratic candidates and all the Republican candidates.

Patients have on average a 71 percent lower chance of dying at the nation’s top-rated hospitals compared with the lowest-rated hospitals across 18 procedures and conditions analyzed in The Tenth Annual HealthGrades Hospital Quality in America Study, issued Oct. 15 by HealthGrades. The study, which documents a wide variation in the quality of care between the highest-performing hospitals and all others, also found that if all hospitals performed at the level of highest-performing hospitals, 266,604 Medicare lives could potentially have been saved over the three years studied.

The HealthGrades study of patient outcomes at the nation’s approximately 5,000 hospitals covers more than 41 million Medicare hospitalization records from 2004 to 2006. According to the report, mortality rates at U.S. hospitals have improved 11.8 percent from 2004 to 2006, with the nation’s top-rated hospitals improving at a faster rate (12.8 percent) than the lowest-rated hospitals (11.4 percent). Of the 18 procedures and conditions studied, those that saw the most improvement in mortality rates were pancreatitis (19.2 percent), pulmonary embolism (17.4 percent), and diabetic acidosis and coma (16.6 percent). Those with the least improvement were resection/replacement of the abdominal aorta (0.4 percent), coronary interventional procedures such as angioplasties and stents (0.8 percent), and treatment of heart attack (8.9 percent). Download the report.

After reaching an impasse in 2005, Vermont’s Republican governor and Democratic legislature were able to agree on landmark health reforms in 2006 by avoiding ideological extremes and combining coverage expansion with steps to make care more cost-effective across the board.

That’s the message delivered by Vermont Gov. Jim Douglas in an interview published Oct. 16 on the Health Affairs web site. In the interview, Douglas describes the legislation that he and the Democratically controlled state legislature enacted in 2006. The reforms coupled Catamount Health, a state-subsidized coverage program for those below 300 percent of the federal poverty level, with initiatives such as wellness programs and a statewide disease management effort known as the Blueprint for Health.

Douglas explains that he and Democratic leaders were also able to reach agreement on financing for Catamount Health with a higher cigarette tax of 60 cents per pack. Vermont did not include a requirement that all state residents purchase health insurance--known as an individual mandate--in the 2006 legislation. “An individual mandate would not get us to universal coverage in this state,” says Douglas. “It is better to reach out to the uninsured population and encourage and enable them to be insured by providing affordable options.” Read the interview.

The Centers for Medicare and Medicaid Services (CMS) has issued a special edition MLN Matters article regarding the fact that the national provider identifier (NPI) crosswalk will validate physicians’ claims if they contain a legacy number, such as a Medicare provider identification number (PIN), and an NPI. However, as of Oct. 31, if NPI/ PIN combination in physicians’ claims do not match an NPI/PIN combination in the NPI crosswalk, those claims will reject.

To prevent claim rejection, physicians should take several steps, including checking their information in the National Plan and Provider Enumeration System (NPPES) to ensure that the NPI(s) were properly obtained. For example, physicians who are sole proprietors should have an individual PIN and should have obtained an NPI as an individual (entity type 1), not as an organization (entity type 2).

Physicians who continue to get informational NPI edits even though their NPI(s) were properly obtained and the NPPES information is correct should, among other steps, ensure that their Medicare enrollment information is up to date. Read the article.

Whether Massachusetts succeeds in becoming the first state to provide greater access to affordable health care for its residents and reduce overall costs is under close national scrutiny, according to a new report by Standard & Poor’s (S&P) Ratings Services. All eyes are on that state because its plan provides an interesting test case--and perhaps no state is watching the results more closely than California, which has healthcare reform proposals of its own on the table.

The report, Do Massachusetts Health Care Reform and California Proposals Foreshadow a National Plan? shows that so far, feedback on the Massachusetts healthcare reform law’s effectiveness is mixed. However, to date, the law hasn’t caused S&P to take rating action on the commonwealth or any of its stand-alone hospitals or health systems, and healthcare reform is still viewed as credit neutral on the commonwealth’s credit quality.

The report is available to subscribers of RatingsDirect. For more information, call (212) 438-3446.

Department of Health and Human Services Secretary Mike Leavitt has announced the award of contracts totaling $22.5 million to nine health information exchanges (HIEs) to begin trial implementations of the Nationwide Health Information Network (NHIN).

The contracts are intended to advance the nation toward the president’s goal of most Americans having access to secure electronic health records by 2014, by creating a secure foundation for health information exchange that can follow Americans throughout their lives.

These contractors will participate in the NHIN Cooperative--a collaborative to test and demonstrate the exchange of private and secure health information among providers, patients, and other healthcare stakeholders.

Interim NHIN results will be shared through three public forums and other public demonstrations of real-time information exchange at the end of the first contract year (September 2008). Once created, the NHIN health information exchanges’ specifications and related testing materials will be placed in the public domain to facilitate widespread participation in the developing the NHIN. Read the press release.

The non-profit eHealth Initiative (eHI) has released its eHealth Initiative Blueprint: Building Consensus for Common Action, representing multi-stakeholder consensus on principles, strategies, and actions for improving health care through IT. Development of the blueprint involved nearly 200 organizations representing clinicians, consumers, employers and healthcare purchasers, hospitals and other providers, and many other healthcare stakeholders.

The release of the eHI blueprint represents phase 1 of a two-phase process. Over the next 12 months, as part of phase 2, eHI will disseminate the blueprint, support its implementation, facilitate the sharing of related best practices, and gain further input from additional stakeholders. The group will also encourage national dialogue to reach agreement on those areas for which there is not yet consensus, and will track and publicly report annually on progress made on the blueprint. Download the document.

Enrollment in Medicaid declined for the first time in nearly a decade, according to a new 50-state survey released Oct. 10 by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured. But faced with an improving economy, 42 states expect to expand coverage to the uninsured in the next year.

The survey reports a 0.5 percent enrollment decline in FY07 driven primarily by two factors. States reported that the new documentation requirements were causing significant delays in processing applications, affecting mostly individuals already eligible for the program. State officials also cited the good economy and lower unemployment for reducing enrollment. After an all-time low for Medicaid spending growth in FY06, Medicaid spending continued to grow slowly by 2.9 percent in 2007 due largely to the decline in enrollment and the continued transition of prescription drug costs for dual eligibles from Medicaid to Medicare. States expect enrollment and spending to increase in FY08 as they move forward with program enhancements. Many of these efforts, however, will depend on the outcome of the federal debate on the reauthorization of the State Children’s Health Insurance Program in light of the president’s veto. Access the report.

The Centers for Medicare and Medicaid Services (CMS) yesterday announced plans for a home health pay-for-performance demonstration. The agency will begin soliciting home health agencies (HHAs) for the project this fall, with the actual demonstration performance period to begin Jan. 1, 2008. The demonstration will operate for two years in seven states that provide a nationally representative sample of both HHAs and Medicare beneficiaries who utilize home health services: Alabama, California, Connecticut, Georgia, Illinois, Massachusetts, and Tennessee.

Under the demonstration, HHAs will be eligible to receive incentive payments if their quality improvement efforts result in the highest performance levels or significant improvements in patient outcomes.

Seven quality measures from the existing outcome-based quality improvement set will be used to evaluate HHA performance: incidence of acute care hospitalization and of any emergent care, and improvements in bathing, ambulation/locomotion, transferring, status of surgical wounds, and management of oral medications.

It is now feasible to talk about completely eliminating adverse events for hospital patients, says one of the leading figures in the field of patient safety in a Health Affairs interview published Oct. 9.

“The most exciting thing that has happened recently in patient safety--something that has truly changed our agenda--is that it is now apparent that we can use perfection as a benchmark,” says Lucian Leape, an adjunct professor of health policy at the Harvard School of Public Health. Leape points to “convincing demonstrations” at places such as the Johns Hopkins intensive care unit that “we can actually eliminate certain adverse events,” such as central-line infections and ventilator-assisted pneumonia. “There is no reason to think that this cannot be expanded to the whole universe of adverse events,” he declares.

Leape points to several other important patient safety developments, including team training using simulations, better ways of identifying adverse events, a national effort to ensure physician competency, and acknowledgement of the need for disclosing mistakes.

However, the “single most disappointing aspect of the safety movement for me” has been “the difficulty in getting CEOs of hospitals and healthcare systems to make safety a priority,” Leape says. “CEOs are a ‘sea anchor’ on progress, and that has to change. . . . No organization can make the significant changes that are necessary to develop a culture of safety without vigorous leadership at the top.” Read the abstract.

Within the most expensive 1 percent of Medicaid beneficiaries in acute care spending, almost 83 percent had three or more chronic conditions, and over 60 percent had five or more chronic conditions. Those were among the findings reported in The Faces of Medicaid II: Recognizing the Care Needs of People with Multiple Chronic Conditions, published this month by the Center for Health Care Strategies. The report examines the most common patterns of multiple chronic conditions within Medicaid and sheds light on significant opportunities for improving the quality and cost effectiveness of care for the program’s highest-need and highest-cost beneficiaries.

Other findings include the fact that, for Medicaid-only persons with disability, each additional chronic condition is associated, on average, with an increase in costs of approximately $700/month, or approximately $8,400 per year. Access the report.

On Sept. 28, 2007, the Centers for Medicare and Medicaid Services (CMS) issued a correction notice that corrects technical errors that appeared in the FY08 inpatient prospective payment system (IPPS) final rule with comment period. The correction notice, printed in the Oct. 10, 2007, Federal Register, was developed prior to the Sept. 29 enactment of the TMA, Abstinence Education, and QI Programs Extension Act of 2007, which, among other things, changed the IPPS MS-DRG documentation and coding adjustment from -1.2 percent to -0.6 percent for FY08. Consequently, the change to the documentation and coding adjustment for FY08 is not reflected in rates presented in the aforementioned correction notice. CMS is in the process of implementing this change in the law; further information and updated rates will be posted in the near future on the CMS web site.

Medicare claims processing systems have incorporated software updates to accommodate both the correction notice and the TMA, Abstinence Education, and QI Programs Extension Act, thus ensuring that claims with discharge dates of Oct. 1, 2007, or later are processed with the correct rates.

The percentage of individuals under age 65 without health insurance increased in 2006 to 17.9 percent, up from 17.2 percent in 2006--meaning that 46.4 million individuals under age 65 did not have health insurance last year. The numbers, based on an annual analysis of Census Bureau data by the Employee Benefit Research Institute (EBRI), showed a decline in employer-based coverage. The report appears in the October 2007 EBRI Issue Brief.

According to the report, those more likely to have employment-based health benefits than others include full-time, full-year, public-sector employees; workers employed in manufacturing, managerial and professional occupations; and individuals living in high-income families.

Individuals more likely to be uninsured include workers employed in agriculture, forestry, fishing, mining, and construction; members of low-income families; part-time workers; those who are self-employed or working in private-sector firms; and men. Also, individuals of Hispanic origin were more likely to be uninsured than other groups (35.7 percent), perhaps due in part to the fact that 51 percent of the Hispanic population reported incomes of less than 200 percent of the federal poverty level. Read the brief.

In the Oct. 5 issue of the Federal Register, CMS announced the inpatient hospital deductible and the hospital and extended care services coinsurance amounts for services furnished in CY08 under Medicare’s hospital insurance program (Medicare Part A). The Medicare statute specifies the formulae used to determine these amounts. For CY08, the inpatient hospital deductible will be $1,024. The daily coinsurance amounts for CY08 will be: (a) $256 for the 61st through 90th day of hospitalization in a benefit period; (b) $512 for lifetime reserve days; and (c) $128 for the 21st through 100th day of extended care services in a skilled nursing facility in a benefit period. The notice is effective as of Jan. 1, 2008.

On Oct. 4, Microsoft Corp. launched Microsoft® HealthVault, a software and services platform aimed at helping consumers manage their health information. The company also announced the availability of HealthVault Search, a vertical health search tool designed to work with the platform. Accessible on the HealthVault web site, the search engine organizes the most relevant online health content, allowing people to refine searches faster and eventually connect them with HealthVault-compatible solutions.

The platform is based on compatible Internet and healthcare technology standards. Users create and control their record, decide what goes into it, and determine who can see the information on a case-by-case basis. Microsoft has pledged not to use health information for commercial purposes unless the user grants permission. Read the fact sheet.

Since the publication of the home health prospective payment system final rule on Aug. 29, 2007, the Centers for Medicare and Medicaid Services (CMS) has identified technical errors. CMS will address these technical errors and corrections in the Federal Register, as a correction notice, in the near future. When the correction notice is published, the public should refer to the notice as official notification and publication of the errors and corrections.

CMS has also updated the previous posting of more user-friendly versions of select tables from the final rule to include more user-friendly versions of the wage index-related addendums for non-urban and urban areas. Read the corrections document.

As announced previously, President Bush signed the Transitional Medical Assistance, Abstinence Education, and QI Programs Extension Act of 2007 on Sept. 29, delaying the implementation date for all paper Medicaid prescriptions to be written on tamper-resistant paper. Under the new law, as of April 1, 2008, all written Medicaid prescriptions must be on tamper-resistant prescription pads.

The Centers for Medicare and Medicaid Services (CMS) guidance on the tamper-resistant law, set forth in an Aug. 17, 2007, State Medicaid Director letter, contains two phases. For the first, a prescription must contain at least one of the three tamper-resistant characteristics to be considered tamper resistant. For the second, prescriptions must contain all three characteristics.

The two-phased approach is still in effect. At least one of the three tamper-resistant characteristics is required by April 1, 2008; all three characteristics are required as of Oct. 1, 2008. All other guidance that CMS has issued on this requirement contained in the State Medicaid Director letter and Frequently Asked Questions will still apply once it is implemented.

CMS has issued multiple grant awards totaling almost $52 million to states before the end of FY07, completing the award of transformation grants authorized by the Deficit Reduction Act of 2005 (DRA). The DRA appropriated $150 million for grant funds to states for the adoption of innovative methods to improve effectiveness and efficiency in providing medical assistance under Medicaid. In January, CMS awarded slightly more than $98 million for 31 grants to 26 states.

In the second round of grants just awarded, 17 grant awards were made to 16 states and Puerto Rico to implement programs for reducing patient error rates and Medicaid waste, fraud, and abuse; increasing the use of generic drugs; improving access to primary and specialty physician care for the uninsured; establishing medication risk management programs; and improving rates of collection from estates owed under Medicaid. Access the list of second-round grantee states.

Small hospitals will likely demonstrate the same general rating stability as the overall not-for-profit healthcare sector through the remainder of 2007 and into 2008, with strong hospitals performing well and weaker hospitals experiencing ongoing challenges, according to a new Standard & Poor’s Ratings Services report published Oct. 3. S&P defines small hospitals as those with less than $90 million in net patient revenue.

The 2007 U.S. not-for-profit healthcare small hospital median ratios that are tracked by S&P indicated modest improvements since 2005, although, like the broader sector ratios, there were mixed results in a few cases, according to the report, U.S. Not-for-Profit 2007 Small Hospital Median Ratios Show Modest Improvements. In general, financial performance at the highest-rated hospitals improved slightly over 2005; however, S&P witnessed a decline in a few key metrics and median ratios, most notably in operating margins and days’ cash on hand. Hospitals at the lower end of the credit spectrum demonstrated improvement across most financial metrics.

The report is available to subscribers of RatingsDirect, or you may purchase a copy by calling 212-438-9823.

The Centers for Medicare and Medicaid Services (CMS) on Oct. 2 announced a contract to the American Health Information Management Association (AHIMA) to begin assessing the impact on CMS of replacing the ICD-9 code sets now used in reporting healthcare transactions with the ICD-10 versions.

AHIMA will analyze CMS’s systems, policies, and operations to determine potential impacts of transitioning from the ICD-9 to the ICD-10, including the ICD-10’s ability to support more accurate payment for new procedures, efficient claims processing, and improved disease management.

All healthcare providers and suppliers use ICD-9 diagnosis codes, while ICD-9 procedure codes are used only by hospitals to report inpatient procedures. ICD-9codes are used for many purposes, including reimbursement, quality reporting, pay for performance, benchmarking, healthcare policy, public health reporting, and research. Read the announcement.

President Bush yesterday made good on his promise to veto legislation to expand the State Children’s Health Insurance Program (SCHIP), drawing the ire of congressional Democrats and setting the stage for an override battle in the House, which last week cleared the bill with 19 votes shy of the two-thirds majority needed to override a veto. The Senate vote was veto-proof, at 67-29. The bill would expand SCHIP by $35 billion over the next five years--enough to provide health coverage to approximately 4 million more children than the program currently covers.

Those in favor of the bill immediately expressed their disappointment with the veto. In a statement, Ron Pollack, executive director of Families USA, said, “The president’s veto is a slap in the face to America’s children. For millions of children in working families, it says ‘No health care for you.’

Speaker of the House Nancy Pelosi issued the following statement: “Despite the president’s veto, we will continue to work with a bipartisan majority in Congress and 43 governors from across the country to increase support for SCHIP in the House. . . . We remain committed to making SCHIP into law--with or without the president’s support.” The override vote is scheduled for Oct. 18.

Older adults who live in the United States are significantly more likely than their European peers to be diagnosed with costly chronic diseases, such as cancer, diabetes, and heart disease, and to be treated for those diseases, adding approximately $100 billion to $150 billion per year in U.S. healthcare spending, according to new research reported Oct. 2 in a Health Affairs web exclusive. Americans are also nearly twice as likely as those who live in Europe to be obese, say Emory University Rollins School of Public Health researchers in the first study of its kind.

The research team compared 2004 data on the prevalence and treatment of diseases among adults age 50 and older in the United States and 10 European countries (Austria, Denmark, France, Germany, Greece, Italy, Netherlands, Spain, Sweden, and Switzerland). They found that while 17.1 percent of European adults are obese, the rate is nearly double for American adults--33.1 percent. More than half (53 percent) of adult Americans are former or current smokers, while in Europe the rate is 43 percent.

Explanations for the differences in disease prevalence remain varied. While it is possible that Americans are actually sicker than Europeans, it is also possible that more aggressive diagnosis and pretreatment of chronic diseases in this country raises disease prevalence rates, the researchers say. Read the abstract.

According to the Centers for Medicare and Medicaid Services (CMS), the vast majority of institutional provider claims are being sent to Medicare with a national provider identifier (NPI), and the NPI crosswalk has been in successful operation for all institutional provider claims since June 2007. Given those favorable results, CMS is taking the next step toward full implementation of the NPI.

Providers that are already billing using the NPI/legacy pair in the primary fields and whose claims are processing correctly are encouraged to submit to their contractors a small number of claims containing only the NPI. This test will serve to ensure that claims will successfully process when only the NPI is mandated on all claims--effective Jan. 1, 2008.

CMS recently made available a document that will assist physicians and nonphysician practitioners in completing form CMS-855I, Medicare Provider Enrollment Application: Physicians and Non-Physician Practitioners. Access the document.

Weaknesses in the Food and Drug Administration’s (FDA) information systems and management processes hinder the agency’s ability to oversee clinical trial inspections, concluded a report released Sept. 28 by the Office of Inspector General (OIG) for the Department of Health and Human Services.

The report focused exclusively on the agency’s bioresearch monitoring inspections, an important mechanism for protecting human subjects once a clinical trial is under way. OIG concluded that the FDA does not have a mechanism to identify all clinical trials and institutional review boards (IRBs); moreover, it lacks a comprehensive database for tracking its inspections of clinical trials. Previous OIG reports found similar weaknesses.

The report identified several steps the FDA could take to improve its system for overseeing clinical trials, including developing a comprehensive internal database of all clinical trials, and creating a registry of IRBs and a cross-center database that allows complete tracking of FDA inspections. Download the report.

Department of Health and Human Services Secretary Mike Leavitt announced on Sept. 28 a plan to make Medicare performance measurement information available at the community level.

The Centers for Medicare and Medicaid Services (CMS) will use Medicare data to generate physician quality performance measurement results. These will be consensus-based quality measures adopted by the Ambulatory Care Quality Alliance and endorsed by the National Quality Forum. The release of this quality measurement information supports the efforts of the value-driven health care initiative that aims to create a system of better care at lower costs.

It is anticipated that CMS will begin providing the Medicare results by summer 2008. Read the press release.

On Sept. 28, CMS posted on its web site corrections to the hospital inpatient prospective payment system (IPPS) final rule for FY08 that appeared in the Aug. 22, 2007 Federal Register. These changes are to appear in the Oct. 10, 2007 Federal Register.

CMS said it recently discovered that an inadvertent technical error was made in the calculation of hospital-specific rates for sole community hospitals and Medicare dependent hospitals. Although it did not publish these hospital-specific rates in the FY08 IPPS final rule, hospital-specific rates affect the calculation of budget neutrality factors for diagnosis-related group recalibration, the wage index, geographic reclassification, and the rural floor. Accordingly, CMS has recalculated these budget neutrality factors.

The agency also recalculated the standardized amounts and outlier threshold, and corrected unintentional technical errors in the geographic classification or reclassification for several providers. Download the document.

The standard Medicare Part B monthly premium will be $96.40 in 2008, an increase of $2.90, or 3.1 percent, from the $93.50 Part B premium for 2007. The 2008 amount is the smallest percentage increase in the Part B premium since 2001. In 2008, the Part B deductible will be $135, compared with $131 in 2007. The Centers for Medicare and Medicaid Services (CMS) announced these changes on Oct. 1.

Several factors account for the 3.1 percent increase in the premium, including growth in home health services, physician-administered drugs, ambulatory surgical center services, durable medical equipment, independent lab and physician’s office lab services, and the Medicare Advantage program, as well as a rise in other Part B services. In addition, a portion of the Part B premium increase resulted from a need to raise the contingency margin in the Part B trust fund to a more adequate level.

CMS also announced that the Part A deductible for 2008 will be $1,024, an increase of $32 from $992 in 2007.

On Sept. 29, 2007, President Bush signed the “Extenders Law,” delaying the implementation date for all paper Medicaid prescriptions to be written on tamper-resistant paper. The original implementation date was Oct. 1.

Under the new law, all written Medicaid prescriptions must be on tamper-resistant prescription pads as of April 1, 2008.

CMS will issue additional guidance on the implementation delay as it becomes available.

The Centers for Disease Control and Prevention (CDC) has awarded $35 million in funding to state and local health departments to increase HIV testing opportunities among populations disproportionately affected by HIV, primarily African Americans. Twenty-three states and major metropolitan areas will receive awards ranging from $690,000 to $5.4 million.

As part of CDC’s efforts to accelerate progress in reducing HIV among African Americans, the program is being targeted to areas of the nation in which they have been most severely affected. African Americans account for approximately half of the more than 1 million Americans currently estimated to be living with HIV, while making up 13 percent of the U.S. population.

Through this program, HIV tests will be available primarily in clinical settings, such as emergency departments and community health centers. CDC estimates that a quarter of those living with HIV--more than 250,000 Americans--do not realize they are infected. The testing effort is intended to identify undiagnosed individuals, especially among those populations bearing a disproportionate burden of HIV disease. Read the press release.

Staffing new initiatives is only one of the challenges emerging in the efforts to improve health care for returning servicemembers, according to a Sept. 26 report by the Government Accountability Office. The problems at Walter Reed Army Medical Center, reported in February by the Washington Post, had prompted broad questions about whether the Department of Defense (DOD) as well as the Department of Veterans Affairs (VA) can meet the needs of returning servicemembers.

In response to the deficiencies reported at Walter Reed, the DOD formed a joint DOD-VA Senior Oversight Committee. Both the committee and the Army have efforts under way to improve case management--especially important for returning servicemembers who must often visit numerous therapists, providers, and specialists, resulting in differing treatment plans. The Army’s approach includes developing a Warrior Transition Unit, in which each servicemember would be assigned to a team comprising a physician care manager, a nurse case manager, and a squad leader.

However, as of mid-September, over half the Warrior Transition Units had significant shortfalls in one or more of these critical positions. Also, the Senior Oversight Committee’s plan to provide a continuum of care focuses on establishing recovery coordinators, which would be the main contact for a returning servicemember. But at the time of GAO’s review, the committee was still determining how many recovery coordinators would be necessary and the population of seriously injured servicemembers they would serve. Read the highlights.