Healthcare Financial News

About 80 percent of college students aged 18 through 23 had health insurance in 2006, according to a report released March 28 by the Government Accountability Office (GAO). Analyzing data collected from 340 colleges on the availability of student insurance plans and the characteristics of available plans, the GAO learned that 67 percent of college students were covered through employer-sponsored plans, 7 percent were covered through other private health insurance plans, such as student insurance plans, and 6 percent were covered by public programs, such as Medicaid.

Most insured students were covered as a dependent on a policy under another person’s name. About 20 percent of college students aged 18 through 23 (1.7 million) were uninsured in 2006, and certain groups of students--such as part-time students, nonwhite students, and students from families with lower incomes--were more likely than others to be uninsured.

Colleges and states have taken a variety of steps to increase the number of insured college students, said the report. For example, GAO estimated that about 30 percent of colleges nationwide required students to have health insurance in academic year 2007-08, and some states also have health insurance requirements for college students. Download the report.

Starting tomorrow, the first phase of the new requirement on the use of tamper-resistant prescription pads in the Medicaid program will go into effect.

To be considered “tamper-resistant,” such prescription pads must contain at least one of the following three characteristics by April 1, 2008, and all three characteristics by Oct. 1, 2008: one or more industry-recognized features designed to prevent unauthorized copying of a completed or blank prescription form; one or more industry-recognized features designed to prevent the erasure or modification of information written on the prescription pad by the prescriber; one or more industry-recognized features designed to prevent the use of counterfeit prescription forms.

States are free to exceed the baseline standard as to what constitutes a tamper-resistant prescription pad. Each state Medicaid agency has issued its own guidance on this requirement, and this information can be obtained by contacting the state Medicaid agencies. Read the fact sheet.

From January 2007 to September 2007, the number of Americans uninsured at the time of the National Health Interview Survey (NHIS) was 43.7 million (14.7 percent) for people of all ages, according to a report released March 27 by the Centers for Disease Control and Prevention--up from 43.6 million a year earlier. And 54.5 million (18.4 percent) Americans of all ages were uninsured for at least part of the year prior to the interview. Also, 31.2 million (10.5 percent) had been uninsured for more than a year at the time of the interview.

Working-age adults were almost twice as likely to experience this lack of coverage (23.9 percent) as children under the age of 18 (12.9 percent). The percentage of children uninsured during at least part of the year prior to the interview decreased from 18.1 in 1997 to 12.9 in the first nine months of 2007. The percentage of children under the age of 18 who were uninsured at the time of the NHIS interview was 9.2 in the first nine months of 2007. Since 1997, there has been a decreasing trend in the percentage of children who were uninsured at the time of the interview. Read the report.

Responding to what it says is member demand for a trusted outlet to share experiences about the healthcare industry, Angie’s List, an Indianapolis-based service rating company, has expanded its ratings coverage area to include physicians, dentists, facilities, pharmacies, and health insurance providers.

“Consumers want and deserve to have a trustworthy source to find the healthcare service providers that best fit their specific priorities. Seventy-six percent of our members say they want this added service,” said Angie Hicks, founder of Angie’s List. “We already offer … ratings for 280 categories of local services; bringing in healthcare providers is a natural step.”

With the other categories rated in the subscriber-only service, such as contractors, plumbers, and electricians, list members report on how well service companies they hired perform regarding price, quality, responsiveness, punctuality, and professionalism, assigning an A-F grade to each component. As of March 24, members can share their real-life experiences with local physicians, detailing their bedside manner and the level of customer care they provide, among other factors.

“Service companies across the country use Angie’s List to gauge customer satisfaction and to adjust their practices, if necessary,” said Hicks. “It’s time the healthcare industry had a similar tool.” Read the press release.

In their annual report, the Medicare trustees announced on March 25 that both the Medicare hospital trust fund and the supplementary medical insurance trust fund expenditures are growing faster than the rest of the economy. Expenditures were $432 billion in 2007, or 3.2 percent of gross domestic product (GDP), and are projected to increase to nearly 11 percent of GDP in 75 years.

According to the report, Medicare’s hospital insurance (HI) trust fund will become insolvent earlier in 2019 than reported last year. HI expenditure growth is estimated to average 7.4 percent each year over the next 10 years, a higher rate than either GDP or consumer price index (CPI) growth. This year the HI trust fund will spend more than its income, and from 2009 through 2017, about $342 billion will need to be transferred from the federal treasury to cover beneficiaries’ hospital insurance costs. Download the report.

An annual analysis intended to help health leaders identify areas of healthcare delivery that need quality improvement now includes information such as each state’s rate of obesity, health insurance coverage, mental illness, and the number of specialist physicians. Those and other measures, called “state contextual factors,” are part of the 2007 State Snapshots released March 26 by the Agency for Healthcare Research and Quality (AHRQ). The updated State Snapshots web tool also tracks states’ progress toward reaching government-set health goals for 2010.

The data in this year’s snapshots are drawn from the 2007 National Healthcare Quality Report. That report, released earlier this month, showed the quality of health care improved by an average 2.3 percent a year between 1994 and 2005, a rate that reflects some important advances but points to an overall slowing in quality gains.

“This year’s State Snapshots do more than illustrate the wide variations in healthcare quality among states,” said AHRQ director Carolyn M. Clancy, MD. “They also show a handful of the important challenges that states face as they work to improve the quality of care.” Access the web page.

About one-quarter of disabled workers under age 65 who start receiving Social Security disability income (SSDI) are uninsured during the two years they must wait to obtain Medicare benefits, according to a study published March 25 on the Health Affairs web site. Employers cover about half of those in the waiting period. Federal legislators have introduced bills to eliminate the waiting period during each of the last two Congresses.

Using longitudinal data from the University of Michigan’s Health and Retirement Study, the researchers followed through time a randomly selected, nationally representative sample of Americans born during the period 1936-41. By tracking each individual’s health insurance from age 55 to age 65, they found that half of the people who lacked insurance during the Medicare waiting period were uninsured before they began receiving SSDI.

Rather than eliminating the waiting period entirely, Congress might consider eliminating it only for disabled workers without access to employer-sponsored insurance, the researchers suggest. Read the abstract.

Previous studies have asserted that Medigap policyholders incur as much as 25 percent more Medicare expenditures than beneficiaries with fee-for-service (FFS) Medicare only because Medigap generally provides coverage on a first-dollar basis. However, a new study by America’s Health Insurance Plans (AHIP), published in the March-April issue of Health Affairs, shows that nearly half of this apparent increase in Medicare expenditures can be explained by controlling for the use of services received through the Veterans Administration (VA) or at military facilities. Thirteen percent of FFS-only beneficiaries relied on the VA or military facilities as their primary source of care, compared with just 1 percent of Medigap purchasers. These services are not billed to Medicare, causing Medicare costs for FFS-only beneficiaries to appear artificially low compared with beneficiaries with Medigap coverage.

Further, beneficiaries’ health status may explain much of the remaining difference in health costs between these two groups. Previous studies argued that Medigap policyholders were healthier than FFS-only beneficiaries, but those studies relied on beneficiaries’ self-reported health status. AHIP conducted a detailed analysis of Medicare beneficiaries’ expenditures for the most costly health conditions and found that, for each condition and across age groups, the incidence of illness was actually higher among Medigap policyholders than among all Medicare beneficiaries. Read the abstract.

A new method of paying for some items of medical equipment and supplies means that Medicare beneficiaries who use those items in 10 select regions of the country will see average savings of 26 percent, according to a March 21 press release from the Centers for Medicare and Medicaid Services (CMS). The savings will be realized through the first round of a new competitive bidding program that will be used to price certain durable medical equipment, prosthetics, orthotics, and supplies.

The first round of the program begins July 1, 2008, in Charlotte, N.C.; Cincinnati; Cleveland; Dallas; Kansas City; Miami; Orlando, Fla.; Pittsburgh; Riverside, Calif.; and San Juan, P.R. Suppliers that wished to participate in the program submitted bids last year. CMS will announce the contract suppliers once all contracts have been executed.

Because of these savings, beneficiaries living in the 10 first round communities will be choosing a new Medicare contract supplier. Medicare will work with local partners to inform beneficiaries about the changes. Suppliers that are not contract suppliers may continue to provide certain rented DME equipment and oxygen and oxygen equipment for existing clients in the Medicare program if they elect to continue furnishing the items as “grandfathered” suppliers. Read the announcement.

As of May 23, 2008, the National Provider Identifier (NPI) will be required for all Health Insurance Portability and Accountability Act (HIPAA) standard transactions. This means that for all primary and secondary provider fields, only the NPI will be accepted and sent on all HIPAA electronic transactions (837I, 837P, NCPDP, DDE, 276/277, 270/271, and 835), paper claims (UB-04 and CMS-1500), and standard paper remittance advices. The reporting of Medicare legacy identifiers in any primary or secondary provider fields will result in the rejection of the transaction.

Now that the NPI is required on all Medicare claims in the primary provider fields, Medicare fee-for-service providers whose claims are being successfully processed with NPI/legacy pairs (and most are) should begin testing claims using the NPI alone. If the Medicare NPI crosswalk cannot match the NPI to the Medicare legacy number, the claim with an NPI-only will reject. If the claim is processed and the provider is paid, that provider should continue to increase the volume of claims sent with only the NPI. Access the NPI web page.

The Medicare administrative contractor (A/B MAC) award for Jurisdiction 12 has been restored to Highmark Medicare Services of Camp Hill, Pa. The entire workload will be transitioned into the new MAC contract by the end of 2008. Highmark will be the A/B MAC for Delaware, Maryland, New Jersey, Pennsylvania, and the District of Columbia. The MACs are replacing fiscal intermediaries and part B contractors as the first point of contact for the processing and payment of Medicare fee-for-service claims from hospitals, skilled nursing facilities, physicians, and other healthcare practitioners.

The Centers for Medicare and Medicaid Services (CMS) made the announcement following the resolution of a protest filed with the Government Accountability Office (GAO). On Nov. 5, 2007, another MAC had filed a protest against the award with the GAO, but that protest has been dismissed by the GAO. Access the MAC jurisdiction fact sheet.

All Medicare physicians, providers, and suppliers billing the Medicare fee-for-service (FFS) program who were selected to participate in the Medicare Contractor Provider Satisfaction Survey (MCPSS) for 2008 are being asked to complete the survey or respond to follow-up calls from the survey contractor, Westat. Responses may be submitted via a secure web site, mail, fax, or telephone. Currently the average response rate is 32 percent; CMS’ goal is to reach a 65 percent response rate. Data collection ends in April.

The MCPSS offers providers the opportunity to contribute directly to CMS’ understanding of contractor performance as well as to aid future process improvement efforts of Medicare administrative contractors (MACs) and durable medical equipment MACs. The survey is used by CMS as an additional measure to evaluate contractor performance; all MACs will be required to achieve performance targets on the MCPSS as part of their contract requirements by 2009.

The survey focuses on seven major parts of the provider-contractor relationship: provider inquiries, provider outreach and education, claims processing, appeals, provider enrollment, medical review, and provider audit and reimbursement. CMS plans to make the survey results publicly available in July 2008. Access the MCPSS web page.

A recent survey by the Harvard School of Public Health and Harris Interactive, as part of their ongoing series, Debating Health: Election 2008, finds that Americans are generally split on the issue of whether the United States has the best healthcare system in the world (45 percent believe the U.S. system is the best; 39 percent believe other countries have better systems; 15 percent don’t know or refused to answer) and that there is a significant divide along party lines. Nearly seven out of 10 Republicans (68 percent) believe the U.S. healthcare system is the best in the world, compared with just 32 percent of Democrats and 40 percent of Independents who feel the same way. The telephone survey of 1,026 respondents was conducted among a nationwide cross-section of adults age 18 and over.

How might this issue affect how Americans vote in the upcoming presidential election? When asked if they would be more likely to support or oppose a presidential candidate who advocates making the U.S. healthcare system more like health systems in other countries--specifically Canada, France, and Great Britain--only 19 percent of Republicans say they would be more likely to support such a candidate, compared with 56 percent of Democrats and 37 percent of Independents.

The view that the U.S. healthcare system lags other countries seems largely driven by the view that the United States is behind in controlling healthcare costs and providing affordable access to everyone. For example, 40 percent of Republicans believe the U.S healthcare system is better than other countries when it comes to making sure everyone can get affordable health care, compared with just 19 percent of Democrats and 22 percent of Independents. Read the survey results.

Hospitals face growing tensions and tradeoffs when allocating nurses between the competing priorities of direct patient care and quality improvement efforts, according to a study released March 20 by the Center for Studying Health System Change (HSC). Commissioned by the Robert Wood Johnson Foundation (RWJF), the study included interviews with hospital leaders in Detroit, Memphis, Minneapolis-St. Paul, and Seattle to examine the role of nurses in hospital quality improvement activities.

According to the HSC study report, The Role of Nurses in Hospital Quality Improvement, hospital organizational cultures set the stage for quality improvement, including nurses’ involvement. Hospitals with supportive leadership, a philosophy of quality as everyone’s responsibility, individual accountability, physician and nurse champions, and effective feedback reportedly offer greater promise for successfully involving nurses in quality improvement activities.

Even when hospitals are committed to including nurses in quality improvement, they often face various problems, including a shortage of nurses; growing demands to participate in more, often duplicative, quality improvement activities; the burdensome nature of data collection and reporting; and shortcomings of traditional nursing education in preparing nurses for their role in today’s contemporary hospital setting, the study found. Read the report.

Physicians who refer the most patients to physician-owned ambulatory surgical centers (ASCs) disproportionately send privately insured patients to these ASCs while sending Medicaid enrollees to hospital outpatient departments, according to a new study of referral patterns in the Pittsburgh and Philadelphia metropolitan areas, published March 18 as a Health Affairs web exclusive.

The study was designed to test whether having an ownership stake in an ASC would affect the types of patients a physician would refer to the facility. Because no public records identify physician-owners of ASCs, lead author Jon Gabel and colleagues analyzed the referral patterns of physicians who accounted for the top 50 percent of physician-referrers to each physician-owned ASC, then compared referral patterns for these physicians with the referral patterns of high referrers to hospital outpatient departments and nonphysician-owned ASCs.

They found that in calendar year 2003, the top 50 percent of physician-referrers to physician-owned ASCs in the two metropolitan areas referred strikingly few Medicaid and self-pay/indigent patients either to the physician-owned ASC or to other facilities. Even though 11 percent of Pennsylvanians are enrolled in Medicaid and 10 percent of the state’s population is uninsured, Medicaid patients made up only 1.4 percent of all referrals for these high referrers/physician-owners, and self-pay indigent patients accounted for only 1.8 percent of referrals for this group. Read the abstract.

Enrollment in consumer-driven and high-deductible health plans increased in 2007, but still makes up a small segment of the overall insurance market, according to the third EBRI/Commonwealth Fund Consumerism in Health Care survey released March 18.

The survey found that consumer-driven plan enrollees are in better health, are less likely to smoke, are more likely to exercise, and to be white, male, and higher-income. In terms of behavior, enrollees in consumer-driven plans are more cost-conscious about their health care than are people enrolled in more comprehensive plans, are less satisfied with their plans overall, and are more likely to say they avoided needed care because of cost.

According to the survey report, enrollment in high-deductible plans stood at 11 percent of the privately insured adult population in 2007, up from 7 percent the previous year. And the percentage of consumer-driven plan enrollees with household incomes above $100,000 increased to 31 percent in 2007, from 22 percent in 2005. Just 19 percent of adults with consumer-driven plans were in households with incomes of under $50,000 in 2007, down from 33 percent in 2005. Read the report.

Approximately 10 million baby boomers will develop Alzheimer’s disease in the United States, according to a new report released March 18 by the Alzheimer’s Association.

According to 2008 Alzheimer’s Disease Facts and Figures, more than 5 million Americans are living with Alzheimer’s disease, including people with young-onset Alzheimer’s or other dementias. Experts predict that by 2010, there will be almost a half million new cases of Alzheimer’s disease each year, and by 2050, that figure is expected to increase to a million new cases annually.

The financial burden of the disease on individuals, families, government, business, and the nation’s health and long-term care systems is considerable. In 2007, there were nearly 10 million Americans age 18 and over providing 8.4 billion hours of unpaid care to people with Alzheimer’s disease valued at $89 billion--four times more than what Medicaid pays for nursing home care for people with Alzheimer’s and other dementias. In 2005, Medicare spent $91 billion on beneficiaries with the disease, and is projected to spend $160 billion by 2010 and $189 billion by 2015.

The Centers for Medicare and Medicaid Services (CMS) announced March 18 that National Government Services (NGS) has been awarded a contract of up to five years for the combined administration of Part A and Part B Medicare claims payment in Connecticut and New York. NGS will serve as the first point of contact for the processing and payment of Medicare fee-for-service claims from hospitals, skilled nursing facilities, physicians, and other healthcare practitioners in the two states.

As the A/B MAC contractor, NGS will immediately begin implementation activities and will assume full responsibility for the claims processing work in its two-state jurisdiction no later than November 2008. Headquartered in Indianapolis, NGS is the sixth new Part A/Part B MAC to be named by CMS. By 2011, a total of 15 new Part A/Part B Medicare contractors will cover every state and the District of Columbia. Read the press release.

Patient satisfaction with their inpatient hospital experience has, for the most part, increased since 2003, with the most significant gains between April and October last year, according to the 2008 Hospital Pulse Report: Patient Perspectives on American Health Care, released today by Press Ganey Associates, Inc. In January 2003, the patient satisfaction rating was 83.4 percent; by October 2007, it had risen to 84.7 percent. The study examined the experiences of more than 2.7 million patients treated at nearly 2,000 hospitals nationwide in 2007, including trends in overall patient perceptions, and variations based on metropolitan areas, services provided within the hospital, hospital size, and patient age.

Among the findings was the fact that patients age 65-79 were the most satisfied age group; patients age 35-49 were the least satisfied.

Also, according to the respondents, the top three opportunities for hospitals to improve are responding to concerns/complaints, addressing emotional needs, and including patients in treatment decisions. Those factors are strong indicators of success in the Hospital Consumer Assessment of Healthcare Providers and Systems (HCAHPS®) public reporting process, which provides transparency and public accountability of healthcare quality through public reporting. The most highly predictive factor of HCAHPS success is communication among caregivers, said the report. Read the report.

Fitch’s 2008 outlook for the continuing care retirement community (CCRC) industry continues to be stable despite the weakening of the housing market and overall softening of the U.S. economy, according to Jim Mitchell, senior director, Fitch’s Public Finance Group. Although Fitch expects financial performance of CCRCs to decline in 2008, the downturn should be moderate and not materially affect credit quality.

“Fitch expects that demand for independent living units will remain strong, resulting in solid cash flows, sound debt service coverage, and good liquidity in 2008,” said Mitchell. “However, investment returns are likely to be down as a result of the softening U.S. economy, and those credits that are dependent on investment income to generate positive financial performance could be adversely affected.”

Fitch’s portfolio of rated CCRCs has performed well over the past several years, with operating performance and financial indicators improving, and these gains should provide a measure of cushion from the current economic instability. Nevertheless, Fitch expects that downgrades will exceed upgrades in 2008 due more to a suppression of favorable performance that may limit upward rating action.

For more information, call (212) 908-9186.

Employers who provide health care to their workers saw their costs climb to an average of $2.59 per hour in 2005--nearly a full dollar higher than the cost just six years earlier, according to a new Kaiser Family Foundation study examining employers’ payroll and healthcare costs.

Employers offering coverage saw health costs consume an increasing share of their overall payroll costs, with the median cost of health coverage as a share of payroll rising from 8.2 percent in 1999 to 11 percent in 2005. The new analysis also finds a wide range of burden across businesses by occupation and establishment size and shows the increasing burden that healthcare costs place on employers and workers nationally.

These substantial variations have relevance for proposals to expand access to health coverage that would use a funding mechanism for health insurance coverage based on a percentage of worker payroll. Figures for hourly health costs and percentage of payroll costs are substantially larger than those discussed in the context of coverage reforms. Read the analysis.

The percentage of U.S. adults age 50 years and older getting screened for colorectal cancer is increasing, according to a study released by the Centers for Disease Control and Prevention’s (CDC) Morbidity and Mortality Weekly Report. The study uses state-level behavioral risk factor surveillance survey (BRFSS) data that have been combined to estimate that 60.8 percent of adults were current with colorectal cancer screening recommendations in 2006, compared with 53.9 percent in 2002.

Screening prevalence was lower among all racial and ethnic minorities studied compared with whites. The study also reports that screening rates continue to be lower among those without health insurance, with low income, and with less than a high school education. Access the report.

Community health centers in the United States will require $10.5 billion in financing to strengthen health center infrastructure and enable health centers to serve 30 million people by 2015, says a new report released March 12 by the National Association of Community Health Centers (NACHC).

According to the report, Access Capital: New Opportunities for Meeting America’s Primary Care Infrastructure Needs, low-cost and streamlined financing to help health centers construct new facilities, renovate, as well as purchase health IT, will be critical to support expansion and capacity building efforts. Many health centers operate out of small and often donated old buildings not originally designed for healthcare delivery. About half of the health center sites have an average age of 36 years, and nearly all (94 percent) of surveyed health centers report that they must rebuild or renovate their facilities to either continue or expand care.

The 6,300 health center delivery sites that currently operate nationwide save the healthcare system up to $17.6 billion a year. By doubling the number of patients served as projected in the Access plan, health centers can generate savings as high as $40 billion in the next eight years, said the report. Download the report.

A new analysis of the Bush administration’s FY09 budget by the American Health Care Association (AHCA) finds the combination of proposed budget cuts and intended regulatory changes will incur an average cut of $18.45 per patient day in Medicare-financed nursing home care, and will have the most significant negative impact on seniors in California, Colorado, Connecticut, Florida, Hawaii, Nevada, New Hampshire, New Jersey, Oregon, and Washington.

Based on Office of Management and Budget data from the Bush administration’s FY09 budget and the Centers for Medicare and Medicaid Services (CMS), the analysis finds that the impact of the cuts just on those 10 states will total almost $1.8 billion.

In releasing the analysis, Bruce Yarwood, president and CEO of AHCA, stated, “The combined impact of the Bush administration’s Medicare budget cuts and associated regulatory changes will severely jeopardize the growing complex care needs of America’s oldest, sickest seniors--especially when combined with the growing squeeze on state Medicaid budgets.” Read the press release.

More than 7 million children were enrolled in the State Children’s Health Insurance Program (SCHIP) in 2007--a 5.9 percent increase over the previous year, Health and Human Services Secretary Mike Leavitt announced March 12.

“While we are pleased that SCHIP continues to grow, we must do more to reach those at the lowest income levels who still need this coverage,” Leavitt said. “Toward that end, we will continue to work with Congress on the reauthorization of this vital program.”

The announcement comes as SCHIP faces reauthorization in the upcoming year. Created in 1997 with bipartisan support in Congress, the program received $40 billion in federal funds through 2007. Congress has recently extended the program until March 2009. Access the 2007 report.

Better coordination of in-home medical treatment and technological advances could improve care and greatly reduce cost, according to a new study from the Deloitte Center for Health Solutions.

The Deloitte study, Connected Care: Technology Enabled Care at Home, promotes self-care and an electronically connected patient/physician relationship as the foundation of a new model of health care--one designed to put more emphasis on prevention and the seamless coordination of medical treatment, rather than reacting to preventable chronic illness and the subsequent expense.

Effectively applying in-home technologies via the connected care model could lead to increased medication adherence, a reduction in avoidable post-acute complications, and an improvement in self-care management of chronic conditions. The eventual net result, the study projects, could be an annual savings of 20 percent or more--a potential $400 billion savings to the U.S. healthcare system. Access the report.

A coalition led by the National Association of Public Hospitals and Health Systems (NAPH), the American Hospital Association (AHA), and the Association of American Medical Colleges (AAMC), and supported by the National Association of Children’s Hospitals (NACH), on March 11 asked a federal court to prevent the Bush administration from implementing a proposed Medicaid regulation that would cut $5 billion in funding to safety net hospitals.

Congress last year put in place a moratorium that prevents the Centers for Medicare and Medicaid Services (CMS) from issuing a final rule, but the moratorium is set to expire May 25, 2008, unless Congress or the courts act soon.

The suit, filed in the U.S. District Court for the District of Columbia, asks the court to reject the CMS regulation on three grounds: CMS has overstepped its authority in dictating to states the governmental status of entities within their jurisdiction; Congress has barred the agency from imposing a cost limit on Medicaid payments to governmental providers; and CMS improperly issued the rule on the very day (May 25, 2007) that a Congressional moratorium blocking the rule took effect. Read the press release.

Recent dislocations in the insured variable-rate demand obligation (VRDO) and auction-rate securities (ARS) markets have not been related to U.S. municipal issuer credit quality, according to Fitch Rating. Although they have resulted in higher-than-normal interest rate resets and unprecedented levels of puts and failed auctions, this has not necessitated any negative actions by Fitch Rating on the underlying ratings of its U.S. municipal VRDOs and ARS to date.

Fitch does not expect most of the VRDO and ARS municipal issuers it rates to be adversely affected as long as market conditions do not suffer further and marked deterioration. The rating agency has been analyzing the credit implications for insured VRDO and ARS issuers in the various municipal sectors, including health care. Higher-rated healthcare providers have ample cash and coverage to bear elevated interest expense for several months, said the agency. Lower-rated credits have fewer options and less financial cushion but do not appear to be highly stressed, in part because VRDOs and ARS are almost always part of a diversified portfolio of debt obligations. Fitch does not see any providers in immediate danger of being downgraded. Over the medium term, however, borrowers experiencing high capital costs and restructuring difficulties may face minor rating downgrades.

For more information, call 212-908-0226.

According to the latest Kaiser Health Tracking Poll (March 2008), the economy has eclipsed health care and the Iraq war on voters’ priority list, but health care plays a role in voters’ priorities in two ways: as an independent issue and as part of the growing concern about the economy. The poll finds that among registered voters, health care ranks third as the issue that they want presidential candidates to discuss during the campaign. Party differences exist, with health care ranking second for Democrats, third for independents, and fourth for Republicans. Overall, the share of registered voters picking the economy as the issue they want to hear the candidates talk about has doubled since December 2007.

However, the poll suggests that for at least some voters, the issues of health care and the economy are intertwined. For example, 26 percent of voters name inflation or rising prices overall as the single most important economic concern facing their families, but healthcare costs are one of a number of more specific worries cited by similar shares of voters. The public also links healthcare costs with the economy overall, with 64 percent of registered voters saying that significantly lowering the cost of health care would help the overall U.S. economic situation. The March tracking poll also examines political independents and those who name health care as one of the most important issues in their vote for president. Access the report.

Consumers have an important role to play in making needed changes in American health care, but they feel these changes are unlikely to occur in the next 10 years, according to a new national consumer survey on health care and reform options.

Results of the survey, conducted by Harris Interactive from Dec. 14 to 21, 2007 on behalf of the Mayo Clinic Health Policy Center, were released March 10.

Respondents were asked about 23 different healthcare reform ideas. Resoundingly, respondents said healthcare costs are too high and change is needed. Less than half (43 percent) of respondents said they were satisfied, very satisfied, or completely satisfied with health care in America as it is practiced today. Nearly 80 percent agreed that it was very important to increase the quality of health care and reduce costs. But 66 percent are pessimistic that reform will happen in the next 10 years.

While insurers, healthcare providers, and Congress were noted as most likely to effect healthcare change, three in 10 respondents said consumers have the best potential to make change happen. “Consumers ranked themselves as more likely to make change happen than the U.S. president,” says Robert Smoldt, executive director of the Mayo Clinic Health Policy Center. “That’s an especially interesting finding during an election year.” Read the press release.

With transmittal 321 (Change Request 5928), the Centers for Medicare and Medicaid Services (CMS) has directed Medicare fiscal intermediaries and Medicare administrative contractors to accept the recommendations of an industry cost report workgroup for improving the accuracy of the inpatient prospective payment system’s (IPPS) new cost-based weights for diagnosis-related groups.

The request is effective with cost reporting periods ending on or after Sept. 30, 2007, and has a March 31, 2008, implementation date.

Among other things, the workgroup recommended that 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 utilized in the Medicare Provider and Review
file
* Focus on the reporting of medical supply costs and charges on the cost report as the most significant problem area
* 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 Provider Statistical and Reimbursement Report only to line 55

Read the recommendations.

Most performance measurement efforts operate in isolation from one another, rarely provide a consistent picture of overall quality, and represent a significant cost to the healthcare industry, according to a call for action released March 6 by the Joint Commission.

The Joint Commission’s newest public policy white paper, Health Care at the Crossroads: Development of a National Performance Measurement Data Strategy, proposes a framework for creating a data infrastructure to support performance measurement activities that improve the quality of U.S. health care. The detailed solutions, proposed by a Joint Commission roundtable, focus on creating a data infrastructure that addresses consumer expectations for data privacy, supporting a data highway that allows for data sharing and linkages, and operating under an agreed-upon set of rules and governance structure. Download the report.

Refuting the belief that workers’ healthcare premiums are largely paid for by employers and the government, two policy experts aver that workers and households instead pay for health insurance through lower wages and higher prices.

Writing in a March 5 JAMA commentary, “Who Really Pays for Health Care? The Myth of ‘Shared Responsibility,’” Ezekiel Emanuel, MD, PhD, of the department of bioethics at the National Institutes of Health, and Victor Fuchs, PhD, of the department of economics at Stanford University, discuss the “misconception” that employers and the government pay a significant share of U.S. healthcare costs. According to the authors, employer-sponsored health benefits are a component of overall worker compensation, and the government increases taxes on the current population, borrows from future generations, or cuts other necessary programs to pay for increases in healthcare costs. The authors also discuss how the “myth of shared responsibility” makes it difficult to remove employers as part of efforts to overhaul the U.S. healthcare system. Read the extract.

The Medicare Payment Advisory Commission’s (MedPAC’s) proposal to mandate financial neutrality on a local level between Medicare Advantage (MA) plans and fee-for-service (FFS) Medicare ignores the different factors affecting costs for the private plans and the traditional program, Robert Berenson writes in a Health Affairs web exclusive published March 4. Berenson proposes a new method of setting the benchmarks against which MA plans bid in a way that reflects the different market dynamics faced by the two wings of the Medicare program.

The basic problem with MedPAC’s formulation of payment neutrality is that it “implicitly, but incorrectly, assumes that MA plans are subject to the same forces that determine traditional program spending,” says Berenson, a senior fellow at the Urban Institute who headed health plan contracting at the Centers for Medicare and Medicaid Services from 1998 to 2000. “The purest approach to establishing MA plan payments would be to have plans submit bids for providing a defined benefit package, without reference to preset benchmarks,” Berenson says. He advocates setting the benchmarks in accord with the empirical evidence that MA plans’ costs vary less than FFS plans’ costs.

In counties that have relatively low FFS costs, Berenson says that his model would be fairer to MA plans than MedPAC’s local-neutrality model, since plans in these areas would bid against blended benchmarks only partially reflecting the low local FFS costs. Read the abstract.

The House of Representatives on March 5 overwhelmingly passed HR 1424, the Paul Wellstone Mental Health and Addiction Equity Act of 2007, by a vote of 268-148.

The measure permanently reauthorizes and expands the current mental health parity law, enacted in 1996. It requires group health plans and group health insurers to establish parity between coverage for mental illnesses and substance abuse treatment and for medical and surgical benefits.

Specifically, the bill, which was approved by the Ways and Means Committee in September, requires health plans to cover out-of-network services for mental health and substance abuse if they cover out-of-network services for medical and surgical benefits. The House bill also ensures that plans cover mental illness and substance abuse diagnoses that have been established by the medical community. The Senate passed its own bill last September, so now the two chambers will need to negotiate a unified bill. Get more information on the bill.

Although 47 percent of adults polled say they have a favorable view of pharmaceutical companies, 44 percent have an unfavorable view of these companies. In fact, pharmaceutical companies were outranked in respondees’ distrust only by health insurance companies (54 percent) and oil companies (63 percent). Those were among the findings of a new poll, the third in a series conducted jointly by USA Today and public opinion researchers at the Kaiser Family Foundation and the Harvard School of Public Health.

Of those polled, the high cost of drugs and high profits made by drug companies were the biggest issue: 79 percent say the cost of prescription drugs is unreasonable, and 70 percent say pharmaceutical companies are too concerned about making profits and not concerned enough about helping people. Profits made by pharmaceutical companies are also seen as the biggest driver of the cost of drugs, with 79 percent citing this as a “major” factor.

Despite these negative views of prescription drug prices overall, 59 percent say prescription drugs reduce the need for expensive medical procedures and hospitalizations, and 56 percent say prescription drugs reduce healthcare costs by preventing illnesses. Read the report.

Pharmaceutical companies have substantially raised prices on 220 brand-name prescription drugs most commonly used by Medicare Part D beneficiaries since the implementation of the drug benefit in 2006, according to a report released March 5 by AARP.

The analysis found that prices of brand-name drugs most commonly used by people in Medicare Part D rose by an average of 7.4 percent in 2007--nearly two and a half times the rate of general inflation. The report concludes that rising prices threaten consumers by increasing the likelihood of higher insurance premiums and the chance that people will fall into the Medicare coverage gap.

The average treatment cost nearly doubled from $80 per year per prescription in 2002 to $151 in 2007. The study found brand-name drug prices increased far greater than general inflation since 2002, with dramatic spikes since 2006, the period when Medicare Part D was implemented. Read the report.

On March 3, Rep. Henry A. Waxman (D-Calif.), chairman of the Committee on Oversight and Government Reform, released The Administration’s Medicaid Regulations: State-by-State Impacts. The report details the effects of seven regulations issued by the Centers for Medicare and Medicaid Services (CMS) that would make major, wide-ranging changes in Medicaid.

The report finds that the state estimates of the fiscal impact of the CMS regulations are significantly higher than the $15 billion impact projected by the administration for the next five years. States estimated that the regulations would reduce federal payments to them by nearly $50 billion over the next five years, more than three times the administration’s estimate.

The large discrepancy between the state estimates and the CMS estimates is evidence that the regulations are likely to have a much larger fiscal and programmatic impact on state Medicaid programs and state budgets than people realize. Download the report.

The quality of health care improved by an average 2.3 percent a year between 1994 and 2005, a rate that reflects some important advances but points to an overall slowing in quality gains, according to annual quality and disparities reports released March 3 by the Agency for Healthcare Research and Quality (AHRQ).

The improvement rate, reported in AHRQ’s 2007 National Healthcare Quality Report, is lower than the 3.1 percent average annual improvement rate reported in the 2006 report. It is also lower than widely documented increases in healthcare spending; the Centers for Medicare and Medicaid Services estimate healthcare expenditures rose by a 6.7 percent average annual rate over the same period.

The report shows some notable gains, such as improvements in the care of heart disease patients. However, measures of patient safety showed an average annual improvement of just 1 percent. Access the reports.

On Feb. 29, the Medicare Payment Advisory Commission (MedPAC) released its March 2008 Report to the Congress: Medicare Payment Policy. MedPAC has concluded that Congress and the Centers for Medicare and Medicaid Services (CMS) will need to make changes across a broad front to increase quality, slow the growth in Medicare expenditures, and address Medicare’s long-term sustainability. The report focuses on policy recommendations that create incentives for greater efficiency, reward quality, and modify payment rates to private plans and providers to ensure accuracy and equity.

The report reviews the financial context for Medicare and recommends updates for its fee-for-service payment systems. It also reviews recent findings and makes recommendations on Medicare Advantage plans and recommendations specific to special needs plans, reviews findings on the private plans offering the prescription drug benefit (Part D), and makes recommendations on Medicare programs for low-income beneficiaries. Download the report. Read the press release.

The Centers for Medicare and Medicaid Services (CMS) on Feb. 28 announced that $371.5 million in improper Medicare payments has been collected from or repaid to healthcare providers and suppliers as part of a demonstration program using recovery audit contractors (RACs) in California, Florida, and New York in 2007. Nearly $440 million has been collected since the program began in 2005.

The RAC demonstration program is intended to find and correct improper Medicare payments paid to healthcare providers participating in fee-for-service Medicare. Approximately 96 percent of the improper payments identified by the RACs in 2007 were overpayments collected from healthcare providers; the remaining 4 percent were underpayments repaid to healthcare providers.

“It appears that the recent CMS RAC status document may overestimate the net benefits of the RAC program,” commented Robert Corrato, MD, president and CEO of Executive Health Resources, Inc., Newtown Square, Pa. “Of note, the low RAC denial appeal and overturn rates are based only on information up to October 2007, not taking into account more recent appeals. The low appeal rate further underscores the challenges that providers face in not knowing how to conduct an effective appeal or how to manage the operational and economic barriers of the appeal process.” Corrato will speak on the topic of RAC audit preparedness plans at HFMA’s ANI June 23-26 in Las Vegas.

Read the press release.

A position paper validating the importance of telemedicine and the role of telephonic medical consults to improve access, lower costs, and enhance the quality of health care was released Feb. 28 by the Center for Health Transformation (CHT). Co-authored by Newt Gingrich, PhD, former Speaker of the U.S. House of Representatives and founder of CHT, Telephone Medical Consults Answer the Call for Accessible, Affordable and Convenient Healthcare articulates the merits of telephonic communications between physicians and patients and substantiates the benefits for consumers, health plans, employers, government and other payers.

According to the report, with the use of a freely available portable medical record, telephonic patient encounters support continuity of patient care and the evolution of a patient’s medical home. The telephone cross-coverage model, whereby physicians cover for one another via the telephone on a round-the-clock basis, is one example of how telemedicine makes medical care more accessible and convenient to patients while maintaining quality and reducing costs. Read the report.

On Feb. 25, 2008, the Centers for Medicare and Medicaid Services (CMS) released the proposed FY09 wage index public use files (PUFs). This letter addresses the criteria and process for hospitals to request corrections to their wage index data. Hospitals should submit all requests for corrections to their FY09 wage index data to their fiscal intermediaries or Medicare administrative contractors (FI/MACs) on or before March 11, 2008.

All hospitals are required to verify the accuracy of their wage data in the February PUFs. The March 11 deadline is the final opportunity for hospitals to request corrections to their wage index data before the final wage index files are posted in May. After the May PUFs are posted, changes to the wage index data will be limited to only situations involving errors by CMS or the FI/MACs that the hospital could not have known about before CMS’s release of the May final PUFs. Access the FY09 wage index PUFs.