Healthcare Financial News

With states confronting a weakening economy, enrollment in Medicaid began to rise last year with states expecting even larger increases for FY09, according to a new 50-state survey released Sept. 29 by the Kaiser Family Foundation’s Kaiser Commission on Medicaid and the Uninsured (KCMU). With the increased enrollment, Medicaid spending is also rising more rapidly than in the recent past, raising the potential for program cutbacks as states confront the combined impact of more enrollees and fewer available resources.

The survey finds that Medicaid enrollment across the country grew 2.1 percent in FY08, more than erasing a slight decline in enrollment experienced the previous year. States also experienced spending growth of 5.3 percent, up significantly from the previous two years. For FY09, states expect to see even larger increases in Medicaid enrollment (3.5 percent) and spending (5.8 percent).

The survey report, Headed for a Crunch: An Update on Medicaid Spending, Coverage and Policy Heading into an Economic Downturn, comes as states face serious financial constraints, with 30 states having confronted significant budget shortfalls as they prepared their FY09 budgets. Medicaid directors attributed the growth in enrollment and spending to the weakened economic outlook facing their states. Access the report.

The Department of Health and Human Services (HHS) on Sept. 29 announced $36 million in new grant programs to 28 states to help older Americans and veterans remain independent and to support people with Alzheimer’s disease to remain in their homes and communities. Just over $19 million of this funding involves a new collaboration with the Department of Veterans Affairs (VA). In addition, HHS Secretary Mike Leavitt announced a $17 million investment to improve the delivery of home and community-based services to people with Alzheimer’s disease and their family caregivers. The joint effort is part of a Nursing Home Diversion grants program.

The new program will be administered by HHS’s Administration on Aging (AoA) in collaboration with the Veterans Health Administration. Under the program, $10.5 million is being provided by HHS through AoA, and $5.7 million by the states. VA estimates purchasing at least $3 million in veteran-directed home and community-based services for older veterans and for recently returned veterans with long-term care needs. The number of veterans over age 85 has tripled during the past decade, creating a significant expansion in the need for long-term care. Read the press release.

In its first search for programs developed to subsidize physician adoption of health IT over the past two years, the Certification Commission for Healthcare Information Technology (CCHIT®) found 90 initiatives in the public and private sectors. The 90 programs in the CCHIT Incentive Index™ catalog represent at least $700 million in potential funding for electronic health record (EHR) software and implementation costs.

Of those programs, 50 have been launched by hospital organizations in response to federal “safe harbor” regulations announced in 2006. Under those rules, hospitals can subsidize up to 85 percent of certain costs for physicians to acquire, implement, and maintain EHRs that are certified by CCHIT for their offices. Also, 40 incentive programs are being offered by government agencies, insurance plans, employer coalitions, and public-private partnerships, of which 20 explicitly call for CCHIT-certified technology.

The programs include the federal government’s biggest initiative to date, the $150 million Medicare demonstration project that will provide incentive payments to 1,200 physician practices for using certified EHRs to improve quality of patient care. The largest known regional commitment to accelerate adoption of certified interoperable EHRs is in New York, which is distributing $157 million already to regional networks and community alliances of physician practices representing more than 18,000 physicians. Read the press release.

The Centers for Medicare & Medicaid Services (CMS) will hold a series of national provider calls that will provide an overview of ICD-10-CM and how it differs from ICD-9-CM. The presentations will include the major impacts providers should consider when planning to update any systems with ICD-10 codes. Issues such as differences in code length, alpha-numeric characters, and increased details captured by the codes will be explained. For the provider, payer, vendor, and publishing community, this overview will help them think about future reporting, system updates, and training, considering that ICD-10 may be implemented in the future.

Separate conference calls have been scheduled for each provider type: hospital staff (Oct. 14), other Part A and Part B providers (Nov. 12), and physicians (Nov. 17). The same information will be presented at each conference call. Read the press release.

The Senate on Sept. 24 approved legislation (HR 1343) that would provide funding for community health centers. The bill would authorize $13.1 billion for the centers through FY12. President Bush, who has touted the centers as a key resource for the uninsured, in his FY09 budget proposed a $27 million increase in funding for the centers to about $2.1 billion. The Senate measure would provide $2.2 billion in FY09, increasing to $3.3 billion in FY12. The Senate also approved an amendment to the bill that would reauthorize programs that encourage health providers to practice in medically underserved areas and health programs for rural areas. The bill now returns to the House. Download the bill.

In announcing the 2009 Medicare prescription drug and Medicare Advantage plan options on Sept. 25, Centers for Medicare & Medicaid Services (CMS) Acting Administrator Kerry Weems encouraged Medicare beneficiaries to review how their prescription drug plans (PDPs) are changing and what other options are available to them. Approximately 97 percent of beneficiaries enrolled in a stand-alone PDP will have access to Medicare drug and health plans in 2009 whose premiums would be the same or less than their coverage in 2008.

“Plans do change their offerings from year to year,” said Weems. “Some beneficiaries may see significant premium increases or changes, such as reduced coverage in the gap, if they stay in the same prescription drug plan in 2009.”

In every state, beneficiaries will have access to at least one prescription drug plan with premiums of less than $20 a month, except in Alaska, where the premium is $23 a month. Those who qualify for the full Medicare subsidy will pay no premiums or deductibles in these plans. The national average monthly premium for the basic Medicare drug benefit in 2009 is projected to average approximately $28. Read the press release.

The proportion of Americans in families with problems paying medical bills increased to 19.4 percent in 2007, up from 15.1 percent in 2003, according to a national study released Sept. 24 by the Center for Studying Health System Change (HSC). The study’s findings are detailed in a new HSC tracking report, Trade-Offs Getting Tougher: Problems Paying Medical Bills Increase for U.S. Families, 2003-2007.

The growth translates to more than 57 million Americans in families with medical bill problems in 2007--an increase of 14 million people since 2003, according to findings from HSC’s 2007 Health Tracking Household Survey, a nationally representative survey with information on 18,000 people.

Among people who reported problems paying medical bills, more than half reported that their healthcare providers suggested a payment plan to pay off the bills. Less frequently reported actions included providers offering a discount (16.2 percent), informing patients about sources of free care (6.8 percent) and public assistance (14.6 percent), suggesting that patients take out a loan (11.5 percent), and referring patients to another provider (7.1 percent). Read the report.

Premiums for employer-sponsored health insurance rose to $12,680 annually for family coverage this year--with employees on average paying $3,354 out of their paychecks to cover their share of the cost--and the scope of that coverage has changed, with many more workers now enrolled in high-deductible plans, according to the 2008 Employer Health Benefits Survey released Sept. 24 by the Kaiser Family Foundation and the Health Research & Educational Trust (HRET). Key findings from the survey were also published as a Health Affairs web exclusive.

The survey showed that premiums have more than doubled since 1999, when total family premiums stood at $5,791 (of which workers paid $1,543). During the same nine-year period, workers’ wages increased 34 percent and general inflation rose 29 percent.

The shift has been most dramatic for workers in small businesses with three to 199 workers, where 35 percent of covered workers must pay at least $1,000 out of pocket before their plan generally will start to pay a share of their healthcare bills--up from 21 percent last year. For workers facing deductibles in preferred provider organizations, the most common type of plan, the average deductible rose to $560 in 2008, up nearly $100 from 2007. Read the survey report.

The Department of Veterans Affairs (VA) on Sept. 23 announced changes in the way it will evaluate traumatic brain injuries (TBI) and burn scars for purposes of determining the appropriate level of compensation veterans receive for these injuries. At the same time, the department announced it will substantially increase disability benefits for veterans with mild traumatic brain injuries. Compensation payments now will be as much as $600 per month, compared with the $117 veterans with symptoms including headaches, dizziness, sensitivity to light, ringing in the ears, irritability, and insomnia currently receive. The new payments, which will begin in 30 days, will affect between 3,500 and 5,000 veterans annually. VA estimates the added benefits will cost an additional $120 million through 2017.

The new benefits alter a 1961 rating schedule that assesses mild brain trauma that did not recognize some brain injuries, such as those from blasts. More than 90 percent of combat-related TBIs are closed head injuries, with most servicemembers sustaining a mild TBI or concussion. As of this month, there are more than 22,000 veterans being compensated for TBI, of whom more than 5,800 are veterans of the conflicts in Iraq and Afghanistan. Download the final rule.

An increase in executive and physician leadership and improvements in general infection prevention practices are needed to help prevent healthcare-associated infections (HAIs) and improve patient care, according to a survey of more than 930 infection preventionists nationwide. The report of the survey, conducted by the Association for Professionals in Infection Control and Epidemiology and the Premier healthcare alliance, was released Sept. 23.

Only 15 percent of survey respondents indicated that executive and physician leadership are actively engaged and leading the charge against infections in their facilities, though 30.3 percent suggested executives and physicians are the most important resource to meet HAI challenges. When asked how HAI data are shared between infection preventionists and executives, 57.6 percent of respondents cited regular agenda discussions at board meetings, but only 15.3 percent responded that senior leadership provides feedback and recommendations.

Survey respondents cited removing unnecessary indwelling urinary catheters (55.5 percent) as the most challenging HAI prevention intervention to implement. Measuring compliance with hand hygiene practices recommended by the Centers for Disease Control and Prevention was also identified by 35.5 percent of the respondents as a significant challenge. Read the survey summary.

Medicare on average provides less generous benefits to seniors than they would receive under a typical large-employer health plan or the most popular plan available to federal employees--even with the program’s new drug benefit, according to a new Kaiser Family Foundation analysis.

The study finds that seniors on average would expect to receive Medicare benefits valued at $10,610 in 2007. In comparison, they would expect to receive benefits valued at $12,160 in the typical large-employer PPO and $11,780 in the federal workers’ plan.

According to the study report, How Does the Benefit Value of Medicare Compare to the Benefit Value of Typical Large Employer Plans?, the average senior in 2007 (with $14,270 in total Medicare spending) would pay 26 percent of total costs out of pocket under Medicare, but 15 percent in a typical large-employer plan and 17 percent in the federal workers’ plan. Read the report.

The combined average premium and out-of-pocket costs for health coverage for a U.S. worker are projected to increase by nearly 9 percent in 2009, to $3,826 per year, according to an annual study by Hewitt Associates. For the study, Hewitt evaluated data on employer-sponsored health plans from more than 300 major businesses with an average of 16,000 employees, encompassing more than 13 million health plan members.

According to the study, Survey Findings: Two Roads Diverged: Hewitt’s Annual Health Care Survey 2008, premium contributions for workers enrolled in individual plans are expected to increase by 8 percent to an average of $1,946 per year, or $162 monthly, and out-of-pocket costs are projected to increase by 10.1 percent to $156 per month. The study also projected that health insurance costs for companies will increase by 6.4 percent in 2009 to $8,863 per employee. Access the report.

The Centers for Medicare & Medicaid Services has announced that the standard Medicare Part B monthly premium will be $96.40 in 2009, the same as that for 2008. This is the first year since 2000 that there was no increase in the standard premium over the prior year.

Normally, the Part B premium increases at the same rate as average Part B expenditures from year to year. However, because of the more-than-adequate asset level expected at the end of 2008, no increase is needed in the Part B premium to maintain an adequate asset level for 2009.

The Part B deductible was increased to $110 in 2005 and, as a result of the Medicare Modernization Act, is currently indexed to the annual percentage increase in the Part B actuarial rate for aged beneficiaries. In 2009, the Part B deductible will be $135, the same as in 2008.

CMS also announced that the Part A deductible and premium for 2009 will be $1,068--an increase of $44 over that in 2008. Read the fact sheet.

Despite regulatory changes allowing hospitals to help physicians purchase electronic medical records (EMRs), hospitals are proceeding cautiously, according to a study released Sept. 18 by the Center for Studying Health System Change (HSC).

Under August 2006 exceptions to the federal physician self-referral and anti-kickback laws--both intended to prevent hospitals from offering financial incentives to physicians in return for patient referrals--hospitals can subsidize up to 85 percent of the upfront and ongoing costs of EMR software and related IT support services for physicians. Physicians must pay the full cost of any hardware, and the exceptions are scheduled to sunset on Dec. 31, 2013, when physicians must assume any ongoing EMR costs.

Although a few hospitals in the study had begun small-scale, phased rollouts of subsidized EMRs, the burden of other ongoing hospital IT projects, budget limitations, and lack of physician interest were among the factors impeding hospital action, according to the study. The study’s findings are detailed in a new HSC issue brief, Despite Regulatory Changes, Hospitals Cautious in Helping Physicians Purchase Electronic Medical Records. Read the issue brief.

In yet another sign of the earthquakes shaking the financial markets this week, the London interbank offered rate (LIBOR)--the rate that member banks of the British Bankers Association charge each other for large loans--more than doubled on Sept. 16, from 3.10 percent to 6.44 percent. That jump is the largest on record, said The Wall Street Journal.

Central banks responded the next day with an infusion of $200 billion to try to unfreeze bank lending, and the overnight rate fell. The three-month LIBOR remains high, however, and was only slightly affected by the central banks’ actions. If LIBOR remains at a high rate, access to capital for healthcare providers “will be limited or in some cases not available at all,” said HFMA president and CEO Richard L. Clarke, DHA, FHFMA. “Default rates on auction rate securities, variable rate demand bonds, and pricing of bank letters of credit often are based on LIBOR, which could indicate an increase--maybe substantial--in interest cost, and could foretell increased default on bonds, which in the past has been very unusual.”

The LIBOR jump is a reflection of the shift in capital for very low-risk investments like Treasuries.

Read the WSJ article (subscription required). Read HFMA leaders’ response to the credit turmoil.

Nine research teams from across the country on Sept. 17 unveiled innovative prototypes of personal health record (PHR) applications that provide a glimpse of the “next generation” of PHRs. The prototypes range from a medication management system to help children with cystic fibrosis manage their disease (housed in an age-appropriate form, like a stuffed animal or cell phone), to a sophisticated “conversational assistant,” a computerized tool that helps people with congestive heart failure manage their health from home through a series of voice-activated questions and responses that they can quickly share with their medical providers.

The nine design teams are supported by Project HealthDesign, a $5-million national program of the Robert Wood Johnson Foundation. Each team created applications that help move the perception of PHRs from static repositories of health information to dynamic, tailored applications that allow people to easily and actively manage their health as they go about their daily lives. The project also ensured that these PHR tools can readily share common technical functions and operate on a common technology platform.

Over the next several months, the grantee teams will work to publish details about their findings, as well as extend the use of their applications to the clinical practices connected to their institutions. Read the press release.

Hospital charges rose 8 percent to $943 billion in 2006 nationwide, up from $873 billion the prior year, according to the latest News and Numbers from the Agency for Healthcare Research and Quality. The steep increase occurred even though hospitals admissions increased only slightly, from 39.2 million to 39.5 million.

Between 2005 and 2006, hospital charges increased by 15 percent for the uninsured (to $44 billion). Charges increased 9 percent for Medicaid patients, 8 percent for Medicare patients, and 6 percent for patients with private insurance.

The information is based on data from The National Bill: The Most Expensive Conditions by Payer, 2006 (H-CUP Statistical Brief #59). Read the statistical brief.

America’s farm and ranch families are paying top dollar for health insurance that inadequately covers their needs and causes them significant financial risk, according to a report released Sept. 16 from The Access Project and sponsored by the Robert Wood Johnson Foundation.

The 2007 Health Insurance Survey of Farm and Ranch Operators shows that while nine in 10 farm and ranch operators have health insurance, nearly a quarter (23 percent) report that insurance premiums and other out-of-pocket healthcare costs are causing financial difficulties for themselves and their families. These families report spending 42 percent of their income on healthcare coverage and medical costs. In addition, 44 percent report spending at least 10 percent of their annual income on health insurance premiums, prescriptions, and other out-of-pocket medical costs. Farm and ranch operators are especially hard hit because they are often forced to buy insurance on the individual, nongroup market, where insurance costs more and often covers less. Read the report.

A new report from AARP released Sept. 12 looks at why millions of low-income adults cannot get Medicaid. The report, Millions of Low-Income Americans Can’t Get Medicaid: What Can Be Done? from AARP’s Public Policy Institute, outlines key policy options for improving Medicaid coverage for low-income adults. Current federal law prohibits Medicaid from covering adults--no matter how poor--unless they are pregnant, caring for dependent children, severely disabled, or elderly.

“The major misconception is if you’re poor, Medicaid is available, and that’s just not true,” said Susan Reinhard, head of AARP’s Public Policy Institute. “This lack of coverage hits adults 55-64 years old especially hard. We must encourage more discussion of potential solutions to help millions of low-income adults afford basic health care. This report highlights a number of possible fixes.”

Policy options to help low-income adults include expanding the Medicaid program with additional federal assistance, allowing Medicaid to cover all individuals below a certain income level, and allowing flexibility for states to include others in Medicaid. Download the report.

Regardless of their personal political affiliation, corporate benefit professionals expressed concerns with both presidential candidates’ healthcare proposals, according to a survey conducted in July and August by Miller & Chevalier Chartered and the American Benefits Council. The results of the 2008 Corporate Health Care Policy Forecast Survey, measuring the perspectives and attitudes of corporate benefit professionals on the direction of healthcare policy in the coming year, were announced today.

Three-fourths (74 percent) of respondents say that a repeal of the employee tax exclusion for employer-sponsored health coverage (a proposal of Republican presidential candidate John McCain) would have a strong negative impact on their workforce. Respondents clearly rejected the assertion that altering the tax exclusion for employer-provided health coverage would not affect employer sponsorship of plans.

Also, 46 percent of respondents said that requiring employers to “pay or play” (a proposal of Democratic presidential candidate Barack Obama) would have a strong negative effect on their workforce--more than three times the number of respondents (14 percent) who viewed the idea positively.

Respondents also said that they would like to see more focus on cost (58 percent) and quality (74 percent) issues. Read the survey report.

The average annual total return on investable assets for FY07 for 179 not-for-profit healthcare organizations participating in the 2008 Commonfund Benchmarks Study of Healthcare Organizations was 8.0 percent (net of fees), down significantly from 10.6 percent for FY06, but up from 6.3 percent for FY05.

The lower year-over-year return can be attributed largely to weaker investment performance in domestic equities and international equities, both of which saw returns decline by half compared with FY06, said the report. For participating healthcare organizations, domestic equities returned 6.3 percent in FY07 versus 13.9 percent in FY06, while international equities returned 12.1 percent compared with the previous year’s 24.7 percent return.

Perhaps the most noteworthy finding in this year’s study was a marked change in participating healthcare organizations’ asset allocation, in which the average share of portfolios committed to alternative strategies rose to 17 percent from 13 percent last year. Read the report.

What are the key factors and potential problems raised by the health reform plans of presidential candidates Sen. John McCain (R-Ariz.) and Sen. Barack Obama (D-Ill.)? How might the plans be improved, and how might the best elements of the two proposals be combined in a compromise package? Those are the topics examined in three papers published today on the Health Affairs web site.

University of Michigan professor Thomas Buchmueller and coauthors argue that the McCain plan would strip consumers of protections while producing few actual gains in the number of Americans with health coverage. Meanwhile, Joe Antos of the American Enterprise Institute and coauthors fault the Obama plan for attempting to impose behavioral changes through top-down regulation, rather than addressing the perverse economic incentives that drive healthcare costs. In a final paper, Wharton’s Mark Pauly outlines a strategy for blending the McCain and Obama approaches to produce a compromise reform plan.

Geisinger Health System in Pennsylvania reduced hospital admissions by 20 percent and saved 7 percent in total medical costs by providing a patient-centered medical home (PCMH) model of care--including around-the-clock access to primary and specialty care, and physician and patient access to electronic health records (EHRs)--according to first-year results from pilot-test sites. The findings, released in the September-October issue of Health Affairs, provide the first evidence that the PCMH model can improve quality of care and reduce healthcare costs.

Geisinger’s innovations show considerable promise for improving quality and enhancing value. For their best practices and care models to spread more broadly, health policies to align payment incentives, encourage greater organization of care delivery, and adoption of modern IT are needed, write the authors. Read the article.

The Robert Wood Johnson Foundation (RWJF) has awarded the first round of grants to 15 junior faculty nurses from around the country to develop the next generation of academic nurse leaders and strengthen the academic productivity and overall excellence of schools of nursing.

The RWJF Nurse Faculty Scholars program will provide $28 million over the next five years to outstanding junior nurse faculty to promote academic careers and thereby address the nursing faculty shortage that contributes to the national nursing shortage. The program is working to strengthen the link between institutional reputation and faculty success by providing research funds and career development opportunities for junior faculty.

Each of the 15 nursing faculty selected will receive a three-year grant of up to $350,000 to help them advance as educators and scholars in their field by providing mentorship, leadership training, salary, and research support. This year’s scholars will examine a diverse range of healthcare-related topics, from health disparities in high-poverty urban neighborhoods to vitamin D deficiency among pregnant women in the rural northern plains. Read the press release.

The House on Sept. 10 voted 417-0 to approve a bill (H.R. 1527) that would establish a three-year pilot program to allow “highly rural” veterans enrolled in four of the Department of Veterans Affairs’ (VA) 21 healthcare networks to receive health services through outside providers. The bill defines highly rural as veterans seeking primary care who live more than 60 miles from the nearest VA facility; veterans seeking acute hospital care who live more than 120 miles from a facility; and those seeking tertiary care who live more than 240 miles from a facility. The bill also would allow veterans to access care at other facilities if VA determines that travel would be difficult for veterans or subject them to hardship.

Separately, the House voted 418-0 the same day to approve a bill (S. 2617) that would provide a cost-of-living increase in disability benefits for veterans and dependents and indemnity compensation for the families of veterans. The increase, which will be calculated as of Sept. 30, is expected to be about 2.8 percent, compared with 2007’s increase of 2.3 percent. If approved, the new rate would take effect on Dec. 1. According to House Committee on Veterans’ Affairs Chair Bob Filner (D-Calif.), the increase would affect more than 3 million veterans and roughly 300,000 survivors in FY09, according to VA figures.

The exchange of health information electronically between physicians, hospitals, health plans, and patients is decreasing the cost of care and improving outcomes, according to a new survey released by the not-for-profit eHealth Initiative on Sept. 11. The 2008 Fifth Annual Survey of Health Information Exchange at the State and Local Levels, which included responses from 130 community-based initiatives in 48 states, shows the significant impact fully operational initiatives are having on improving healthcare delivery and efficiency.

Among the key findings:
* A majority (69%) of the fully operational exchange efforts report reductions in healthcare costs. These respondents say health information exchange allows them to decrease dollars spent on redundant tests; reduce the number of patient admissions to hospitals for medication errors, allergies, or interactions; decrease the cost of care for chronically ill patients; and reduce staff time spent on administration.
* About half (52 percent) of fully operational exchange efforts report positive impacts on healthcare delivery, including a decrease in prescribing errors.
* For the first time, a majority (69 percent) of the fully operational respondents report a positive ROI for their participating stakeholders, including health plans, hospitals, laboratories, and physician practices. In 2007, just 31 percent reported a positive ROI. Access the report.

The Association is sad to report the passing of Sister Mary Gerald Hartney, CSC, FHFMA, on Sept. 10. A founding member of HFMA (then known as the American Association of Hospital Accountants), she served as elected president for two terms from Jan. 1, 1954, to Dec. 31, 1955. While president, Sister Gerald held the first meeting of chapter presidents, helped launch the first correspondence course for hospital accounting, aided in developing standard accounting procedures for hospitals, and provided leadership, education, and support for hospital accountants.

She also helped plan the first HFMA annual meeting, known as the Indiana University Institute, and was instrumental in planning subsequent Annual National Institutes. After her presidency, she also served as a field consultant in financial management for the Catholic Hospital Association, among many other responsibilities. At the time of her passing, she was serving as a consultant for the Sisters of the Holy Cross in Notre Dame, Ind.

Retail clinics are less expensive for patients than care received in a physician’s office or an urgent care clinic, but there is not yet evidence that their increased use has led to a reduction in overall healthcare costs, according to a study in Minnesota published in the September/October issue of Health Affairs.

For the study, researchers examined 628,513 episodes of care, 3.2 percent of which occurred at MinuteClinic facilities, for members between 2003 and 2006. Researchers determined the overall cost per episode of care, which included the cost of a medical examination and laboratory and pharmacy costs, for five conditions--sore throats, ear infections, sinus infections, conjunctivitis, and urinary tract infections. Researchers compared the overall cost per episode of care that occurred in 2003, before MinuteClinic became part of the HealthPartners network, with those that occurred from 2004 to 2006.

The study found that the overall cost per episode of care for the five conditions increased by 14.1 percent during the four-year period. The average cost per episode of care for the five conditions increased by 20.3 percent in emergency departments, 12.7 percent in physician offices, 11.9 percent at urgent care centers, and 12.2 percent at MinuteClinic facilities during the four-year period, the study found. Read the abstract.

Despite the growing promise that the patient-centered medical home healthcare model offers, even many large physician practices lack the essential elements to create a medical home for patients to receive care, according to a new study published in the September/October issue of Health Affairs.

When researchers examined large medical groups with at least 20 physicians, they found that these physician practices are lagging on key measures of what it takes to create a “medical home,” a model of healthcare delivery that emphasizes comprehensive primary care to ensure the best outcomes for patients.

The largest of the groups in the study--those with more than 140 physicians--and those owned by a hospital or health maintenance organization scored highest on critical measures of the medical home model, perhaps because they have more resources to invest, said the researchers. Read the abstract.

The IRS and the Treasury Department on Sept. 8 issued new regulations that will streamline the approval process for organizations seeking tax-exempt status as publicly supported charities.

The new regulations do away with the so-called “advance rulings” that granted public charity status for an initial five-year period but required exempt organizations to demonstrate, after the initial period, that they in fact received a substantial part of their support from public sources to receive a final determination letter. The IRS was able to eliminate the advance rulings process because of the recent redesign of Form 990, the tax return filed by organizations exempt from federal income tax.

Organizations that have already received an advance ruling under the old regime, but are still in their first five years of existence, can use their advance ruling letter as their final determination letter. In addition to the streamlined approval process, the new regulations include other modifications necessary to implement the redesigned Form 990. Read the press release.

The trend in employment-based health insurance coverage for the U.S. nonelderly population (under age 65) has been heading downhill in recent years but has remained roughly constant since 1994, according to a study released Sept. 9 by the nonpartisan Employee Benefit Research Institute (EBRI).

In 2007, 62.2 percent of the nonelderly population had employment-based health benefits, unchanged from 2006, says the study, published in the September 2008 EBRI Issue Brief. Overall, the percentage of the nonelderly population with health insurance coverage increased slightly to 82.8 percent in 2007.

In the past half-dozen years, the percentage of individuals with employment-based health benefits decreased from 68.4 percent in 2000 to 62.2 percent in 2006--although compared with 1994, the percentage of individuals with employment-based health benefits is largely unchanged, the study says. Read the executive summary.

Hospitals can save more than $300 a day per seriously ill patient through the use of palliative care programs, according to a study of eight hospitals published in the Sept. 8 issue of the Archives of Internal Medicine.

According to the study, conducted by the Center to Advance Palliative Care (CAPC) and the National Palliative Care Research Center, hospitals saved from $279 to $374 per day on patients in palliative care programs, and saved $1,700 to $4,900 on each admission of a palliative care patient. Savings included significant reductions in pharmacy, laboratory, and intensive care costs, resulting in savings of more than $1.3 million for a 300-bed community hospital and more than $2.5 million for the average academic medical center.

“The potential to reduce the suffering of millions of Americans is enormous,” said Diane E. Meier, MD, director of CAPC, based at Mount Sinai School of Medicine. “This study proves that better care can go hand in hand with a better bottom line.” Read the abstract.

Department of Health and Human Services (HHS) Secretary Mike Leavitt on Sept. 3 announced that 11 more communities will join 14 others as chartered value exchanges (CVEs)--local collaborations of healthcare providers, employers, insurers, and consumers working jointly to improve care and make quality and price information widely available.

As CVEs, these communities will have access to information from Medicare that gauges the quality of care provided by physicians. These performance measurement results may be combined with similar private-sector data to produce a more comprehensive guide to the quality of care in these communities.

The Centers for Medicare and Medicaid Services expects to release performance measurement results for the 11 new CVEs by the end of this month. Read the press release.

Extra payments to private Medicare Advantage (MA) plans have been estimated to amount to $986 over fee-for-service costs for each of about 8.7 million Medicare beneficiaries enrolled in MA plans, for a total of more than $8.5 billion in 2008, according to a new report from The Commonwealth Fund, The Continuing Cost of Privatization: Extra Payments to Medicare Advantage Plans in 2008. Even if the payment reductions to MA plans mandated by the Medicare Improvements for Patients and Providers Act of 2008--scheduled to take effect beginning in 2010--had been fully in place in 2008, MA plans still would have been paid 10.6 percent more than expected fee-for-service costs.

 “Medicare Advantage was intended to save the program money through the use of private plans. However, extra payments to these plans, combined with rapidly increasing enrollment, have resulted in $33 billion in additional spending over the past five years,” write the authors. “These overpayments put pressure on both Medicare and the federal budget, drain resources from other, potentially more productive, uses, and dilute the incentive for Medicare Advantage plan efficiency--which was one of the original reasons for including a private plan option in Medicare.” Access the report.

More than two-thirds of adult Americans agree that the U.S. healthcare system needs to put more emphasis on chronic disease preventive care than on treatment, and they’re willing to pay higher taxes to fund those programs, according to a new survey by the National Association of Chronic Disease Directors.

According to the survey report, Americans and Public Health: Attitudes Toward Public Funding for Public Health and Chronic Disease, Americans believe Congress needs to do more to pay for prevention programs. More than two-thirds (68 percent) don’t think Congress is doing enough to fund these programs, and 43 percent say they are more likely to vote for candidates who support increased public health spending, the survey found. More than four in five Americans (84 percent) favor public funding for programs to help prevent chronic disease.

Chronic disease accounts for the vast majority of health spending in the United States; 75 cents of every dollar spent on health care goes toward the treatment of chronic disease, according to the Centers for Disease Control and Prevention. Access the report.

Most rated not-for-profit hospitals and health systems continue to show resiliency in financial performance, with rating downgrades to upgrades nearly equal through the first six months of 2008, according to the most recent industry outlook published by Moody’s Investors Service. Although many healthcare providers have adapted to the new Medicare severity diagnosis-related group reimbursement without negative effects to their financial position, and the inpatient payment rule to become effective Oct. 1 provides a rate increase for inpatient services, Moody’s nevertheless expressed concern over the proposed “bundled payment” concept currently being tested by the Centers for Medicare and Medicaid Services.

Still, the rating agency said it expects to see “most hospitals’ financial performance in 2008 continue to stabilize or decline from 2007 given the substantially weaker economy and negative effects on patient volumes and revenues.” Among implications from the weakening economy are higher charity care levels as employers reduce or discontinue healthcare coverage, increasing bad debt expense, and potential reductions in Medicaid reimbursement. For more information, call (212) 553-4431.

More than half (59 percent) of U.S. businesses in 2009 intend to increase employees’ deductibles, copayments, or out-of-pocket spending limits, according to preliminary data of a national survey released Sept. 4 by Mercer. The preliminary results included the responses of about half of the 3,000 large companies surveyed who responded.

The survey found that healthcare costs for workers and employers will increase by an estimated 5.7 percent in 2009, the same rate as this year. According to Mercer, healthcare cost growth has been about 6 percent since 2005, and although the rate is lower than the double-digit increases in previous years, it still is growing at a faster rate than inflation or workers’ wages.

The survey also found that 47 percent of the companies are encouraging enrollment in health plans with lower premiums and higher deductibles, and that 19 percent intend to offer consumer-directed health plans. Read the press release.

Beginning in October 2008, Moody’s Investors Service will recalibrate its ratings of U.S. municipal bond issues and issuers, and migrate these ratings to its global rating scale, to facilitate comparability of credit quality across Moody’s entire rated universe. Moody’s plans to transition its municipal ratings by sector; beginning with state government general obligation ratings, the transition of ratings for a given sector, other than local governments, will take place on a single day during the transition period. The process will continue with general obligation ratings of the 50 largest issuers of local government debt and other closely related entities, then with ratings of issuers and obligations in the enterprise sectors such as health care, higher education, infrastructure and housing, and then the balance of local government ratings. The agency expects to complete the entire transition by early 2009.

During the transition period, Moody’s will assign new ratings that are consistent with the current ratings of other credits in a given sector. Prior to the migration of each sector, Moody’s will publish a sector-specific methodology that outlines its analytical approach and factors that are considered in the placement of the sector’s ratings on the global scale.

Moody’s preliminary analysis indicates that, on average, state and local government general obligation global scale ratings likely will be two notches higher than their current ratings on the municipal scale. Global scale ratings for credits in the enterprise sectors, including health care, are expected to be about one notch higher, on average. For more information, call (212) 553-4133.

According to findings in the American Medical Group Association’s (AMGA) 2008 Medical Group Compensation and Financial Survey, most specialties saw modest increases in compensation in 2007, but many provider organizations continue to operate at a significant loss.

The survey found that 91 percent of the specialties experienced increases in compensation in 2007, with the overall average increase around 3.5 percent. The primary care specialties (excluding hospitalists) saw about a 3.2 percent increase in 2007, while other medical and surgical specialties averaged around 3.7 percent. The survey reports that during 2007 the specialties experiencing the largest increases in compensation were dermatology (8.97 percent), cardiac/thoracic surgery (8.11 percent), hematology and medical oncology (7.66 percent), pathology (7.38 percent), and hospitalists (7.32 percent). It is interesting to note that cardiac/thoracic surgery saw one of the largest decreases in compensation in 2006 (-2.13 percent).

The survey also found that medical groups were operating at an average loss of $4,728 per physician (median performance per physician), reflecting a major overall downturn from 2006. Read the press release.

A recent Supreme Court decision will likely lead to more approvals of health insurance claims submitted by employees and more litigation over those claims that are denied, a legal scholar concludes in a Health Affairs web exclusive published today.

In its June 2008 decision Metropolitan Life Insurance (MetLife) v. Glenn, the Supreme Court recognized the conflict of interest that often faces plan administrators of the Employee Retirement Income Security Act (ERISA): Under ERISA, the plan administrator often both evaluates the claims made by employees and pays the claims it decides to approve. In MetLife, the Supreme Court made it easier for this conflict to be invoked in court by employees who sue the plan administrator to reverse denied claims. The case involved the denial of a disability claim by MetLife, the plan administrator for the disability benefits ERISA plan offered to Sears employees, but the rules announced by the court in its opinion apply to lawsuits over denials of claims for health benefits as well.

The MetLife decision “clarifies issues that have divided the lower federal courts,” writes Tim Jost, the Robert Willet Family Professor in the Washington and Lee University School of Law. “Insured and self-insured ERISA plans are indeed conflicted, and although their determinations are not to be retried by the federal courts [from scratch], the lower courts should not uphold determinations simply because they are not ‘off the wall.’” Read the abstract.

Whistle-blowers have helped the Department of Justice (DOJ) recover at least $9.3 billion from healthcare providers and pharmaceutical companies that allegedly defrauded states and the federal government, according to a report published in the Sept. 2 issue of Annals of Internal Medicine.

DOJ in the 1990s began to use whistle-blowers in efforts to fight healthcare fraud, and whistle-blowers currently initiate 90 percent of such cases for the department. For the report, the researchers reviewed DOJ records from 379 healthcare fraud cases between 1996 and 2005, although they had information for only three-fourths of those cases. According to the report, the number of healthcare fraud cases has decreased in recent years, but the amount that DOJ recovered in those cases increased.

The researchers cited the need to conduct additional research on whistle-blower lawsuits to determine which types of cases are more likely to lead to recoveries to allow DOJ to expedite such cases. Read the abstract.

Three years after Hurricanes Katrina and Rita, tens of thousands of Gulf Coast households displaced by the storms still live in travel trailers provided by the Federal Emergency Management Agency (FEMA). These internally displaced persons (IDPs) suffer from high and worsening rates of depression and other chronic diseases, but they do not have adequate access to health insurance or medical care, according to a survey of Mississippi IDPs described in a Health Affairs web exclusive published Aug. 29.

The survey, the first rigorous look at the health status of Katrina evacuees who remain displaced today, reveals a mismatch between a short-term emergency planning approach and the long-term health requirements of IDPs. During a two-week period in September 2007, the researchers interviewed members of a random sampling of the 17,789 IDP households living in FEMA travel trailer parks in Mississippi. Four-fifths of the respondents reported that at least one adult in their household had a chronic condition, and almost six in ten (58 percent) said the condition was getting worse. Also, almost six in ten (57 percent) of the survey respondents met the criteria for major depressive disorder, and 72 percent reported symptoms of depression. Yet the health resources available to the IDPs have decreased. Fewer than half (49 percent) of all respondents reported having health insurance--a drop of 10 percentage points from the 59 percent who had coverage before the storm. Loss or change of employment was the most common reason cited for losing coverage.

To improve the condition of the Katrina IDPs, as well as those displaced by future disasters, the researchers call for federal legislation to ensure healthcare coverage for IDPs, either through Medicaid extensions or via a special emergency fund for the states. The researchers also call for the federal government to fund long-term mental health services for IDPs. Read the abstract.

Health systems should be based on principles of equity, disease prevention, and health promotion with universal coverage, based on primary health care. That was the conclusion of a three-year investigation by the World Health Organization’s (WHO) Commission on the Social Determinants of Health. The commission presented its findings Aug. 28 in a report titled Closing the Gap in a Generation: Health Equity through Action on the Social Determinants of Health. Among the examples the report cites is the fact that, in Sweden, the risk of a woman dying during pregnancy and childbirth is 1 in 17,400, but in Afghanistan, the odds are 1 in 8. “Biology does not explain any of this,” says the report. “Instead, the differences between--and within--countries result from the social environment.”

The “toxic combination of bad policies, economics, and politics is, in large measure, responsible for the fact that a majority of people in the world do not enjoy the good health that is biologically possible,” says the report. “Social injustice is killing people on a grand scale.” Consequently, the health sector--globally and nationally--needs to focus attention on addressing the root causes of inequities in health.

The commission makes three overarching recommendations: improve daily living conditions; tackle the inequitable distribution of power, money, and resources; and measure and understand the problem and assess the impact of action. Download the executive summary.