Healthcare Financial News

A new revenue model available in HFMA’s online Resource Library provides a platform to analyze shifts in revenue and changes in net income that would result from a government-run option in the health insurance market. The model is based on financial information that users can enter for a particular hospital. It displays results based on assumptions used in perspective models developed by third-party research groups, including the Commonwealth Fund and The Lewin Group. The spreadsheet-based model also provides an opportunity for users to create their own scenarios. 

Learn more about the Government-Run Option—HFMA Hospital Revenue Model.

Expanding Medicaid eligibility to people with incomes up to 133 percent of the federal poverty level would cover an estimated 17 million uninsured Americans, according to a new study released by the Robert Wood Johnson Foundation and the Kaiser Commission on Medicaid and the Uninsured. Health insurance subsidies for those with incomes between 133 percent and 399 percent of the poverty level would benefit 16.3 million uninsured adults, according to the study authors.

The groups also published projections of the number of uninsured parents, childless adults, and children who would gain health insurance coverage under healthcare reform scenarios being considered by Congress. Childless adults make up 57 percent of uninsured Americans; parents represent a quarter of the uninsured.

HFMA has posted a new fact sheet to our online Resource Library in the focus area Reimbursement/Medicare. The FY10 Skilled Nursing Facility PPS Payment Update Final Rule Fact Sheet provides information about key provisions of the Centers for Medicare & Medicaid Services (CMS) final rule updating Medicare payment rates under the prospective payment system to skilled nursing facilities (SNFs) for FY10, which was published by CMS on Aug. 11. The payment rates are applicable for services provided by SNFs beginning October 1, 2009.

Moody’s FY08 not-for-profit hospital medians show a weakening of credit measures across all major ratios, including operating performance and balance sheet measures, and all broad rating categories. Operating performance declined for the third consecutive year. According to the August 2009 report, Not-for-Profit Hospital Medians for Fiscal Year 2008, the rate of operating decline is among the highest in recent history. Moody’s expects that operating measures will continue to come under pressure in 2009.

Moody’s notes that previous economic downturns have at times bypassed stronger organizations but the current situation is having a material effect on credits across the rating spectrum. For example, the median operating cash flow margin for Aa-rated credits declined to 9.8 percent in FY08 from 10.5 percent in FY07, A-rated credits declined to 9.1 percent from 9.7 percent and Baa-rated credits declined to 7.5 percent from 7.8 percent.

Rating pressure has continued to be significant through the first two quarters of 2009. Pressure has been most significant among the more highly rated credits, suggesting that “size may be a porous barrier to the ill effects of the economy.”

Moody’s currently views healthcare reform as mixed to largely negative for the sector. It is unlikely that the sector outlook will be changed to stable before potential reform-related changes are understood, the rating agency says.

A new Joint Commission Sentinel Event Alert issued today urges healthcare leaders to step up efforts to prevent errors by taking the zero-defect approach used in other high-risk industries such as aviation and nuclear energy. The Joint Commission is advocating greater involvement of healthcare trustees, executives, and physician leaders, contending that the overall safety and effectiveness of a healthcare facility depends on administrative and clinical leaders who set the tone, create the culture, and drive improvements.

The Sentinel Event Alert features 14 suggested actions that senior leadership can take to help prevent errors. Among its other recommendations, the Joint Commission encourages senior leadership to make a visible commitment of time and money to improve systems and processes needed to defend against hazards and minimize unsafe acts. For example, some organizations create an emergency patient safety fund.

Read the Joint Commission Sentinel Event Alert.

Aetna has established new policies requiring healthcare facilities, physicians, and other healthcare professionals to take action to prevent medical errors and changing the way they are paid when medical errors do occur.

Aetna also has established new policies regarding serious reportable events (SREs). SREs are conditions, such as leaving a foreign object in a patient after surgery, that could reasonably have been prevented through application of evidence-based guidelines. SREs include events that should never occur in health care, so-called never events. These include performing the wrong surgery or surgery on the wrong person or the wrong part or side of the body.

Aetna's new policies require healthcare facilities to take the following steps to identify improvements in care processes to prevent future events when any of 28 designated SREs occur when caring for an Aetna member:

• Notify Aetna and at least one of the following agencies: The Joint Commission, a state reporting program for medical errors, or a patient safety organization
• Perform analysis to understand the basic or causal factors and identify improvement to the facility's patient care systems and processes
• Communicate with the affected member and/or member's family about the event
  

Additionally, facilities, physicians and other healthcare professionals will be required to waive all charges related to the three never events. Healthcare facilities will also be required to waive charges that are directly and solely related to eight other specific SREs. Aetna will not allow providers to bill members for charges related to these events.

Healthcare costs are expected to increase on average 10.5 percent in the next 12 months, according to a new report by Aon Consulting. In a survey of more than 60 healthcare insurers, representing more than 100 million covered lives, Aon found that healthcare costs are projected to increase by 10.4 percent for HMOs, 10.4 percent for point of service (POS) plans, 10.7 percent for preferred provider organizations (PPOs), and 10.5 percent for consumer-directed healthcare (CDH) plans. These are slightly lower than one year ago, when HMO cost increases were 10.6 percent and POS plans were 10.5 percent. PPOs and CDH plans remain steady at 10.7 percent and 10.5 percent, respectively.

"While we're seeing a slight decrease in the trend rates, it's still at double digits, and this year, it's compounded by a struggling economy, lower wage increases, and in some cases, salary freezes," said John Zern, Aon Consulting's U.S. Health & Benefits Practice director.

According to the Aon survey, prescription drug costs are expected to increase 9.3 percent, which is slightly lower than the 9.4 percent trend rate one year ago. In addition, healthcare rate increases for retirees over the age of 65 are projected to be 6.6 percent for Medicare Supplement plans and 7.3 percent for Medicare Advantage plans, down from 7.3 percent and 7.7 percent, respectively, one year ago.

Read the Aon Consulting press release.

Connolly Healthcare, the Medicare recovery audit contractor (RAC) for Region C, has initiated automated audits of seven hospital outpatient and physician codes on Medicare claims paid since Oct. 1, 2007, in Florida. For more information about RAC audits, visit the RAC section of HFMA’s online Resource Center.

More than 4 million “medically uninsurable” people are potentially eligible for enrollment in state-administered high-risk health insurance pools (HRPs) but fewer than 200,000 were actually enrolled in 2008, according to a report from the U.S. Government Accountability Office.

A growing number of states—35 as of June 2009—have created HRPs primarily to provide coverage to individuals whose health status limits their access to coverage in the private individual health insurance market. HRPs—typically state-run not-for-profit associations—often contract with a private health insurance carrier to administer the pool and offer a range of health plan options to such individuals, who are commonly referred to as medically uninsurable. Because of the higher health care costs typically incurred by medically uninsurable individuals, all pools operate at a loss.

In 2008, the average annual deductible for the most popular plan offered by each HRP was $1,593—almost three times as high as the average annual deductible of $560 among employer-sponsored health insurance plans. About 63 percent of enrollees in these most popular HRP plans had deductibles of $1,000 or greater. In comparison, almost 88 percent of enrollees in employer-sponsored plans had a deductible of under $1,000 or no deductible. Premiums for HRP health plans are higher than for plans offered to healthy individuals in the private health insurance market; however, these premiums are capped to limit enrollees' costs and are thus insufficient to cover the costs of enrollee claims.

Recent healthcare reform proposals call for an expanded role for HRPs to enhance health insurance options for the medically uninsurable.

The U.S. Department of Health and Human Services announced more than $25.7 million in grants to increase and improve health and support services at federally funded health centers.

Overseen by the Health Resources and Services Administration at HHS, the health center system served more than 17 million medically underserved people in 2008, up from 10 million patients served in 2001. Since the economic downturn began, the health center patient population has grown by another 1 million people. By law, patients are accepted regardless of their ability to pay.

A total of 180 grants worth more than $21.9 million will give existing health centers the funds to add or increase mental health/substance abuse, enabling (i.e., outreach, transportation, case management services), oral health, or pharmacy services. Additionally, 48 planning grants totaling more than $3.8 million will be distributed to organizations in areas hit hard by the economic downturn that do not have health centers to help them develop new service delivery sites. New health center sites must meet federal requirements for governance, community involvement, quality of care, and financial feasibility.

Read the HHS press release.

For the eighth consecutive year, HFMA President and CEO Richard L. Clarke, DHA, FHFMA, has been named to Modern Healthcare magazine’s list of the 100 most powerful people in health care. He is one of only 12 who have made the list every year since its inception in 2002.

Nominees for the list were chosen from thousands of reader nominations. This year, readers submitted more than 25,700 nominations, up 76 percent from 14,600 last year. Modern Healthcare placed the 301 people who received the most nominations on a final ballot.  Readers then voted for 10 candidates from the list of 300.

The number of hospital stays in which patients left the hospital against medical advice (AMA) grew by 39 percent between 1997 and 2007 to 368,000 stays (1.2 percent of all hospitalizations in 2007), according to new research from the Agency for Healthcare Research and Quality. The growth in these stays exceeded that of all other stays combined during this period (13 percent).

Uninsured and Medicaid stays accounted for nearly half of all AMA stays but less than 20 percent of all other stays.

Three of the top five reasons for hospitalization among AMA stays were for mental health and substance abuse conditions. Patients hospitalized for alcohol and substance-related disorders were 11.6 and 10.8 times more likely, respectively, to leave the hospital AMA than other patients. Nonspecific chest pain and diabetes with complications were 3.6 and 2.7 times more common in AMA stays than other hospital stays.

Nationally, family premiums for employer-sponsored health insurance increased 119 percent between 1999 and 2008, and could increase another 94 percent to an average $23,842 per family by 2020 if cost growth continues on its current course, according to a new Commonwealth Fund report.

The report, Paying the Price: How Health Insurance Premiums Are Eating Up Middle Class Incomes, State Health Insurance Premium Trends And The Potential Of National Reforms, finds that national reforms that slow healthcare cost increases by 1 to 1.5 percent per year would yield substantial savings for families and employers. By 2020, slowing the annual rate of growth by 1 percent would yield more than $2,500 in reduced premiums for family coverage, and slowing growth by 1.5 percent would yield more than $3,700 in premium savings compared to projected trends.

The report found that insurance premiums have been rising much faster than income across states. As a result, by 2008 total premiums—including employee and employer shares—equaled or exceeded 18 percent of the average household income for the working age population in 18 states, compared to just three states in 2003.

Vice President Joe Biden today announced the availability of grants worth nearly $1.2 billion to help hospitals and healthcare providers implement and use electronic health records (EHRs). The grants will be funded by the American Recovery and Reinvestment Act of 2009 and will help healthcare providers qualify for new incentives that will be made available in 2010 to doctors and hospitals that meaningfully use EHRs.

The grants include $598 million for the purpose of establishing approximately 70 Health Information Technology Regional Extension Centers, which will provide hospitals and clinicians with hands-on technical assistance in the selection, acquisition, implementation, and meaningful use of certified EHR systems.

Grants totaling $564 million to states and qualified state-designated entities will support the development of mechanisms for information sharing within an emerging nationwide system of networks.

The Extension Center grants will be awarded on a rolling basis, with the first awards being issued in FY10. Grants to states will be made in FY10.

The U.S. Department of Health and Human Services will also provide additional assistance to healthcare providers through the Health Information Technology Research Center (HITRC). The HITRC will gather relevant information on effective practices from a wide variety of sources across the country and help the Regional Extension Centers collaborate with one another and with relevant stakeholders to identify and share best practices in EHR adoption, effective use, and provider support.

There is no hard evidence that identifies particular areas in which U.S. healthcare quality is truly exceptional as compared with healthcare in other countries, according to a new analysis from the Urban Institute and the Robert Wood Johnson Foundation. The authors find that the evidence for American superiority in quality of care (or lack thereof) is a mixed bag, with the nation doing relatively well in some areas—such as cancer care—and less well in others—such as mortality from treatable and preventable conditions.
 
And while the evidence base is incomplete and suffers from other limitations, it does not provide support for the claim that the “U.S. health care is the best in the world.” Addressing the American public’s widespread concern about the potential negative impact of health reform on the quality of care they currently receive, the authors conclude that reform should be seen as an opportunity to systematically improve quality of care.

Read the issue brief from the Robert Wood Johnson Foundation.

Read a health reform message to HFMA members from HFMA President and CEO Richard L. Clarke.

Hospital total margins recovered in the first quarter of 2009 with approximately 30 percent of hospitals operating at a loss, according to a new report from Thomson Reuters. In comparison, half of hospitals experienced operating losses in the third quarter of 2008, the analysis stated.

Median total margin improved for all 500 hospitals in the study, rising from 0.17 percent to 3.1 percent. However, results for individual hospitals in the first quarter of 2009 varied widely, from -1 percent or below in the bottom quartile to 7 percent or more in the top quartile.

Inpatient discharges for all hospitals began to decline shortly after the recession started but the rate of decline varied by type of hospital, researchers said. Expense growth was nearly flat in the first quarter of 2009, which researchers attributed to careful management of labor costs.

Hospital cash reserves continued to be stressed in the first quarter of the year, with median days cash on hand close to 90 days.

Download the report from Thomson Reuters (free registration required).

New regulations requiring healthcare providers, health plans, and other entities covered by the Health Insurance Portability and Accountability Act (HIPAA) to notify individuals when their health information is breached were issued today by the U.S. Department of Health and Human Services (HHS).

These "breach notification" regulations implement provisions of the Health Information Technology for Economic and Clinical Health Act, passed as part of American Recovery and Reinvestment Act of 2009.

The regulations require healthcare providers and other HIPAA covered entities to promptly notify affected individuals of a breach, as well as the HHS Secretary and the media in cases where a breach affects more than 500 individuals. Breaches affecting fewer than 500 individuals will be reported to the HHS Secretary on an annual basis. The regulations also require business associates of covered entities to notify the covered entity of breaches at or by the business associate. 

To determine when information is "unsecured" and notification is required, HHS is also issuing an update to its guidance specifying encryption and destruction as the technologies and methodologies that render protected health information unusable, unreadable, or indecipherable to unauthorized individuals. Entities that secure health information as specified by the guidance through encryption or destruction are relieved from having to notify in the event of a breach of such information. This guidance will be updated annually.

The HHS interim final regulations are effective 30 days after publication in the Federal Register and include a 60-day public comment period.

Read the HHS press release.

Wholesale prices for hospitals rose for the fourth consecutive month, increasing 0.1 percent in July, according to preliminary data released yesterday by the U.S. Bureau of Labor Statistics (BLS). Prices had increased 0.2 percent in June. In July 2008, the wholesale hospital price index rose 0.3 percent. For the 12-month period ending in July, the hospital Producer Price Index (PPI) rose 2.5 percent as compared with 3.4 percent for the year-ago period.

The hospital PPI measures changes in actual or expected payment received for services across payer types, including the patient’s portion of the bill.

Wholesale physician office prices increased 0.6 percent last month compared with a 0.2 percent increase in June, the BLS reported. The physician PPI was flat in July 2008. For the 12 months that ended in July, the wholesale physician price index rose 2.5 percent as compared with 0.8 percent during the prior year.

From 1995 to 2006, hospital 30-day death rates decreased significantly for Medicare patients hospitalized for a heart attack, as did the variation in the rate between hospitals, according to a study in the Aug. 19 issue of the Journal of the American Medical Association.
 
“Over the last two decades, healthcare professional, consumer, and payer organizations have sought to improve outcomes for patients hospitalized with acute myocardial infarction [AMI],” the authors write. However, little has been known about whether hospitals have been achieving better short-term mortality rates for AMI or if there has been a reduction in between-hospital variation in short-term mortality rates, according to background information in the article.
 
Researchers examined 30-day risk-standardized mortality rates (RSMRs) for acute care hospitals in the United States in the period between 1995 and 2006 for Medicare patients. They found that the all-cause and in-hospital death rates decreased over the study period. “The 30-day mortality rate decreased from 18.9 percent in 1995 to 16.1 percent in 2006, and in-hospital mortality decreased from 14.6 percent to 10.1 percent. In contrast, the 30-day mortality rate for all other conditions was 9.0 percent in 1995 and 8.6 percent in 2006.” The RSMR, which takes into account the differences in the types of patients across hospitals and is currently being used by the Centers for Medicare & Medicaid Services (CMS) to profile hospital performance, decreased from 18.8 percent in 1995 to 15.8 percent in 2006, and a reduction in between-hospital differences in mortality rates was also observed.
 
“Between 1995 and 2006, the RSMR for patients admitted with AMI showed a marked and significant decrease, as did between-hospital variation. Although the cause of the reduction cannot be determined with certainty, this finding may reflect the success of the many individuals and organizations dedicated to improving care during this period,” the authors conclude.

Estimates of medical fraud losses range widely from $60 billion to $600 billion a year, National Public Radio (NPR) reports. According to the NPR account, Malcolm Sparrow of Harvard University says the order of magnitude is measured in hundreds of billions of dollars, but he can't say if it's $100 billion or $600 billion. Whatever the first digit is, it has 11 zeroes after it, he says. "It's just an extraordinary sum." Sparrow authored License to Steal: How Fraud Bleeds America's Health Care System (Westview Press, 2000).

The NPR segment also cites an estimate by National Health Care Anti-Fraud Association executive director Louis Saccoccio that fraud represents 3 percent of the nation's healthcare spending. Saccoccio’s estimate comes from members of the association, which include health insurers and the federal, state, and local agencies involved in fraud investigations. Given that healthcare spending is over $2 trillion a year, that's still $60 to $70 billion a year lost to fraud. "So it's a significant number no matter how you look at it," Saccoccio told NPR.

In May 2009, the Obama administration announced a new task force made up of officials from the U.S. Department of Justice and the U.S. Department of Health and Human Services to work on healthcare fraud. And the current House healthcare reform bill has a number of anti-fraud provisions. It would provide $100 million a year to fight fraud, increases penalties for perpetrators and would require that hospitals and other healthcare providers develop anti-fraud programs.

The Centers for Medicare & Medicaid Services (CMS) has announced the results of three Medicare demonstration projects—one for hospitals, one for large physician practices, and one for small and solo physician practices.

The Hospital Quality Incentive Demonstration (HQID), sponsored by Medicare in partnership with Premier, Inc., shows continued quality improvement among participating hospitals. CMS is awarding incentive payments totaling $12 million in year four to 225 participating hospitals.

All ten of the physician groups participating in the Physician Group Practice Demonstration achieved benchmark performance on at least 28 of the 32 measures reported in year three of the demonstration. Five groups that helped generate $32.3 million in savings will receive incentive payments totaling $25.3 million.

The agency also said 560 of 610 participating small and solo physician practices in four states are being rewarded with incentive payments totaling $7.5 million for performance on 26 quality measures under the Medicare Care Management Performance demonstration.

In addition, CMS announced it will operate two demonstrations to evaluate gainsharing as a means of aligning incentives between hospitals and physicians.

The Medicare Hospital Gainsharing Demonstration, which currently includes two sites, began in October 2008. The Physician Hospital Collaboration Demonstration, comprised of a consortium of twelve hospitals administered by the New Jersey Hospital Association, began in July. This demonstration is designed to track patients beyond a hospital episode to determine the impact of hospital-physician collaborations on preventing short- and longer-term complications and duplication of services.

Read the CMS press release.

The White House has signaled that it may be willing to drop the public option from its healthcare reform agenda, according to news reports from The New York Times and The Washington Post. The public option has been described as a government-backed plan available to consumers through a health exchange where people could buy insurance, public or private, that best fits their needs. Advocates envision it as a way to provide affordable insurance to the uninsured and drive down the cost of private insurance through competition. Critics contend it would be akin to a government takeover of healthcare and would undercut the private insurance market.

“The public option, whether we have it or we don’t have it, is not the entirety of healthcare reform,” President Obama reportedly said at a town-hall-style meeting on Saturday in Grand Junction, Colo. “This is just one sliver of it, one aspect of it.”
A proposal for a nonprofit health cooperative being developed in the Senate is perceived by some as a compromise that would help broaden support for passage of reform legislation. The co-op, modeled after rural electric and agricultural cooperatives, would offer insurance through a nonprofit, nongovernmental consumer entity run by its members.

A 1.0 percentage point increase in the unemployment rate results in a 0.59 percentage point increase in the uninsured, according to studies cited in a new report from Changes in Health Care Financing & Organization, an initiative of the Robert Wood Johnson Foundation. While few employers actually drop coverage, they may cut costs by changing the benefit and/or restructuring cost-sharing with employees. Typically, employers in low-wage jobs (or those working in small firms) are most likely to be uninsured after losing their job, but this recession is affecting a broader swath of the workforce.

The report pulls together research findings to explore how health care is affected by the current economic cycle. The effects of the economy also include changes in the demand for (or access to) health care—as well as the financial status of practitioners and health organizations. Reports from across the U.S. describe falling revenues due to decreased demand for less non-urgent or elective care, more patients unable to pay their medical bills, significant losses in investment income, less charitable giving, and cuts in state and federal healthcare funding.

HealthDataInsights, the Medicare recovery audit contractor (RAC) for Region D, has initiated automated audits of seven hospital outpatient and physician codes on Medicare claims paid since Oct. 1, 2007. The states in Region D are Alaska, Arizona, California, South Dakota, North Dakota, Hawaii, Idaho, Iowa, Kansas, Missouri, Montana, Nebraska, Nevada, Oregon, Utah, Washington and Wyoming. For more information about RAC audits, visit the RAC section of HFMA’s online Resource Center.

One of the most controversial issues in health reform is the concept of an employer mandate—a requirement that most employers would either have to provide health insurance for their employees, or pay a percentage of total payroll costs to the government. Health Affairs and the Robert Wood Johnson Foundation (RWJF) explore the concept—as well as the current state of employer-sponsored insurance (ESI), which provides coverage for 61 percent of the nonelderly population—in the latest in a series of Health Policy Briefs that provide objective, nonpartisan analysis of policy proposals related to health reform.

The series brings together experts from the Harvard School of Public Health, the University of Michigan and Health Affairs to consider arguments both for and against employer mandates. The brief shows that in recent years, health insurance coverage has eroded, leaving one in four full-time workers without insurance sponsored through their employer. Supporters of an employer mandate argue that it would spread the risk and cost of insurance among a larger population, and that requiring all employers to provide insurance would level the playing field for businesses. They also say a mandate would help reduce job-lock, where employees avoid changing jobs in order to maintain their current coverage benefits. Opponents assert that a mandate on employers would burden businesses—especially smaller businesses—with additional expenses at a time when they are already struggling from a contracted economy. They say that increasing employers’ costs for mandatory benefits would lead to more job losses.

Read the Issue Brief.

The following ICD-10-CM publications are now available from the Centers for Medicare & Medicaid Services Medicare Learning Network free of charge.

ICD-10-CM/PCS Myths & Facts, which presents correct information in response to some myths regarding the ICD-10-Clinical Modification/Procedure Coding System, is now available in print format. To place your order, visit the Medicare Learning Network’s General Information Page, scroll down to “Related Links Inside CMS” and select “MLN Product Ordering Page.” Registration is required. The document may also be downloaded from the CMS site without registration.

ICD-10-CM/PCS Bookmark (revised August 2009), which provides information about the ICD-10-Clinical Modification/Procedure Coding System including the benefits of adopting the coding system, recommended steps to be taken in order to plan and prepare for implementation of the coding system, and where additional information about the coding system can be found, is available in downloadable format.

The compliance date for implementation of ICD-10-CM  is Oct. 1, 2013.

In its annual Median Ratios for Nonprofit Hospitals and Healthcare Systems report, Fitch Ratings says that after nearly a half decade of consistent improvement or stability in hospital financial metrics, the 2009 medians for acute care hospitals showed declines for most financial indicators. Many 2009 medians fell to figures comparable to those of three to five years ago, but generally remained adequate relative to the individual rating categories.

According to the report, large losses in hospital investment portfolios, as high as 30 percent to 40 percent, took their toll on liquidity, while bottom-line profitability and coverage by earnings before taxes, interest, depreciation, and amortization (EBITDA) were squeezed by the significant year-over-year drop in investment income and higher cost of capital. As a result, median figures for days cash on hand, excess margin, and coverage by EBITDA fell 14 percent, 50 percent, and 24 percent, respectively, year over year.

Fitch currently maintains a negative outlook for the not-for-profit hospital and healthcare system sectors as a whole. Fitch anticipates that many of the negative pressures facing its rated borrowers will continue to exert varying levels of stress over the near term and, over the next 12 to 24 months, downgrades will exceed upgrades, although with affirmations remaining the most common rating action.

The U.S. Department of Health and Human Services (HHS) has announced the release of $13.4 million for loan repayments to nurses who agree to practice in facilities with critical shortages and for schools of nursing to provide loans to students who will become nurse faculty. The funds were made available by the American Recovery and Reinvestment Act.

The awards come from two programs administered by HHS’ Health Resources and Services Administration: the Nurse Education Loan Repayment Program (NELRP) and the Nurse Faculty Loan Program (NFLP).

Funding announced today under the NELRP totals $8.1 million. Those funds, awarded competitively, will help 100 registered nurses pay their nursing education debts. The program repays 60 percent of the loan balance of registered nurses in exchange for two years of service at facilities with a critical shortage of nurses. Participants may be eligible to work a third year and receive additional repayment assistance.

Funds announced today under the NFLP total $5.3 million. Those funds go to schools of nursing to support the training of 500 masters and doctoral nursing students who plan to become nurse faculty after completing their education.

Read the HHS press release.

According to new research conducted by the Medical Group Management Association (MGMA) the top three challenges of running a physician group practice are dealing with operating costs that are rising more rapidly than revenues, maintaining physician compensation levels in an environment of declining reimbursement, and selecting and implementing a new electronic health record (EHR).

Respondents cited collecting from self-pay patients and those with high-deductible health plans and health savings accounts as the fourth-highest challenge. Managing finances in the face of uncertain Medicare reimbursement rates rounded out the top five.

MGMA also asked study participants how the recession is affecting their medical groups and how they are responding. One-third or more of the 2,077 respondents said their practices were experiencing effects of the recession, such as postponed capital expenditures, a rise in uninsured patients, staff hiring freezes, operating budget cuts, improved billing and collections processes, or revenue decreases.

On the positive side nearly 82 percent of respondents said there was a zero probability that their group would file for bankruptcy protection. Nearly 80 percent said there was a zero probability their practice would close because of the poor economy.

Read MGMA's 2009 Medical Practice Today Research Summary.

The Centers for Medicare & Medicaid Services (CMS) seeks public comments on the following two cardiac outcomes measures, which are designed for potential use in public reporting and pay for reporting of hospital quality:

1. Complications following implantable cardioverter-defibrillator (ICD) implantation. This measure uses data from the ACC National Cardiovascular Disease Registry (NCDR) ICD Registry for risk adjustment and Medicare Part A inpatient and outpatient administrative claims data to assess complications.
2. Readmission following percutaneous coronary intervention (PCI). This measure uses data from the ACC National Cardiovascular Disease Registry (NCDR) CathPCI Registry for risk adjustment and Medicare Part A inpatient and outpatient administrative claims data to assess readmissions.

All comments are welcome, but CMS is particularly interested in comments on outcome definitions and time period of assessment, risk adjustment strategy, and Technical Expert Panel feedback.

Comments may be submitted online and must be received by August 25, 2009, 5:00 p.m. Eastern time. 
 

A commentary about healthcare reform by HFMA President and CEO Richard L. Clarke was published on Forbes.com today. Clarke’s article emphasized the need for an appropriately timed and funded transition to healthcare reform in light of the magnitude of cash and capital flow changes that could result from reform legislation.

“Reform bills before Congress must contain language and funding to manage whatever transition there is,” Clarke said. “If a transition plan--or at least, steps toward such a plan--doesn't emerge from the reform debate, the financial market turmoil of the past year will seem like child's play.”

Clarke pointed out that past healthcare payment policy shifts have not occurred suddenly. For example, the Medicare DRG system incorporated a transition of four years and was preceded by a decade of preparation--and it affected less than 12 percent of total healthcare expenditures at the time. In contrast, current reform proposals involve almost the entire $2.4 trillion healthcare system.

Realistic expectations about what must be done and when will help cushion the impact of the coming revenue shifts, Clarke concluded.

A new Congressional Budget Office (CBO) analysis concluded that expanding utilization of most preventive services leads to higher—not lower—medical spending overall. In a letter and blog, CBO cited research findings that the added costs of widespread use of preventive services tend to exceed the savings from averted illness. However, many preventive services may be deemed cost effective because the clinical benefits justify the additional costs, the agency added. Preventive care includes services such as cancer screening, cholesterol management, and vaccinations.

CBO also found limited evidence regarding the effect of wellness services, such as weight-loss counseling and smoking cessation programs, on health expenditures. As with preventive care, the agency clarified, the net budgetary effect of government support for wellness services depends on the balance of two factors—the reduction in government spending for people who cut back their future use of medical care and the costs to the government of providing or subsidizing the services. CBO will continue to examine evidence about cost savings associated with preventive care and wellness services when evaluating specific healthcare reform proposals.

CBO’s August 7 letter to senior members of the Energy and Commerce Committee was prompted by questions about whether the agency’s scoring methods reflect cost savings linked to expanded federal support of preventive care and wellness services.

The Medicare operating payment cuts for hospitals proposed earlier this year by the Centers for Medicare & Medicaid Services for 2010 have been reversed. But that doesn’t mean providers should assume they have been spared these cuts. It is estimated that the future adjustment related to documentation and coding will be -3.3. percent.

An Overview of the Final 2010 Inpatient Prospective Payment Rule has been posted to HFMA’s online Resource Library in the focus area called Reimbursement|Medicare. This PowerPoint presentation provides an overview of the FY 2010 Medicare IPPS final rule and offers practical solutions for managing these changes.

In addition, HFMA’s new CY10 Physician Fee Schedule Proposed Rule Fact Sheet is designed to help healthcare finance professionals understand key elements of the proposed rule that would revise payment policies under the Medicare physician fee schedule. The Fact Sheet is also available in our online Resource Library.

Employment at U.S. hospitals rose 0.09 percent in July to a seasonally adjusted 4,726,300 people, the U.S. Bureau of Labor Statistics reported today. That's 4,200 more than in June and 79,500 more than a year ago. Without the seasonal adjustment, hospitals employed 4,743,500 people in July, which is 16,100 more than in June and 73,100 more than a year ago. Physician offices added 6,200 jobs, an increase of 0.3 percent.

Safety net hospitals have improved patient quality and reduced care variation as a part of a hospital value-based purchasing program, according to an analysis released by the Premier healthcare alliance. Although hospitals serving a large percentage of disproportionate share patients performed below others at the outset of the Centers for Medicare & Medicaid Services (CMS), Premier Hospital Quality Incentive Demonstration (HQID) value-based purchasing project, differences in quality lessened after three years.

The HQID project is the basis for CMS’ proposal to Congress for a national value-based purchasing or pay-for-performance program. However, concerns have been expressed that the program would reward certain classes of hospitals over others. Premier’s research found that hospitals, regardless of size or location, can succeed in value-based purchasing. However, there are differences based on the patient-payer mix. In its report, Premier recommends that value-based purchasing policies should do the following to address these differences:

• Phase in the payment policy gradually to give hospitals time to adjust
• Provide incentives for both attainment and improvement
• Give hospitals that fall below the quality benchmarks technical assistance and resources to improve, giving priority to hospitals that provide care to the underserved, have limited resources and/or have disparities in care among patient populations
• Appropriately risk-adjust outcomes measures (such as mortality and readmissions) to account for socio-economic, environmental and existing patient conditions that are beyond the hospitals’ control
  

A new report from the Robert Wood Johnson Foundation finds that privately insured patients account for the largest and fastest growing segment of emergency department (ED) users. And expansion of health insurance coverage on its own is likely to increase rather than decrease stress on overcrowded EDs, the authors conclude. The report, Emergency Department Utilization and Capacity, recommends aligning reimbursement incentives to improve hospital patient flow and reduce ED overcrowding. The authors also highlight the need to improve access to primary care, either through community providers or through delivery of primary care in the ED.

Download the report.

The inability to arrange for follow-up care for uninsured patients is a growing problem with significant effects on ED physician practice patterns and patient outcomes, according to a new report from the Kaiser Family Foundation. Emergency Departments Under Growing Pressure is based on interviews with practicing clinicians that explore the impact of the recession on hospital EDs as patient volume increases and health coverage declines.

Another new Kaiser report, Struggling With Financing: The Recession and National Health Reform Dominate State Medicaid Concerns Going into FY 2010, draws on interviews with state Medicaid directors, discusses the prospect of significant Medicaid cuts in some states, shows how federal stimulus money has been helpful but still leaves states trying to cope with budget shortfalls, and examines how state Medicaid directors see federal health reform affecting their programs. In addition, Kaiser has updated a fact sheet that examines state fiscal conditions and Medicaid.

The Medicare recovery audit contractor (RAC) for Region C, Connolly Healthcare, has posted the first set of issues eligible for RAC review. Demand letters notifying providers of coding errors and claim amounts will follow. These issues are approved for outpatient hospital and physician providers in South Carolina.

The other states and territories in RAC Region C are: Alabama, Arkansas, Colorado, Florida, Georgia, Louisiana, Mississippi, North Carolina, New Mexico, Oklahoma, South Carolina, Tennessee, Texas, Virginia, West Virginia, Puerto Rico, and the U.S. Virgin Islands.

A new report from the State Alliance for e-Health, Preparing to Implement HITECH: A State Guide for Electronic Health Information Exchange, aims to help states implement the federal Health Information Technology for Economic and Clinical Health (HITECH) Act.

The report recommends that states prepare or update their plan for adoptng health information exchange; engage stakeholders in planning efforts; establish a state leadership office; implement privacy strategies and reforms; determine a business model for health information exchange, and create opportunities for training and education.

The HITECH Act, enacted as part of the 2009 American Recovery and Reinvestment Act, expands the role of states in fostering health information exchange and adoption of electronic health records over the next five years.

The State Alliance for e-Health, composed of governors, state legislators, attorney generals and state commissioners, was created by the National Governors Association in 2006.

The Centers for Medicare & Medicaid Services (CMS) has announced the 60-day supplier bidding period will begin in late October for the Round One Rebid of the Medicare Competitive Bidding Program for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS). The rebid will occur in the same areas as the first round, with the exception of Puerto Rico, and will cover most of the same types of items.

The Medicare DMEPOS Competitive Bidding Program was established by the Medicare Prescription Drug Improvement and Modernization Act of 2003. Round One of the program was implemented on July 1, 2008, in 10 competitive bidding areas. As part of the Medicare Improvements for Patients and Providers Act of 2008 (MIPPA) enacted on July 15, 2008, Congress enacted a temporary delay of the Competitive Bidding Program and mandated limited changes in the program. MIPPA required CMS to terminate contracts awarded in Round One and to conduct the competition for the Round One Rebid in 2009. MIPPA also delayed competition for Round Two in 70 additional areas until 2011 and in additional areas of the country until after 2011.

Read the CMS press release.

On July 23, 2009, the Internal Revenue Services (IRS) publicly released its continuing professional education training (CPE) materials on governance. The release follows public comments from the IRS indicating that it does not plan to impose substantive regulations regarding governance issues, but instead will continue to focus on identifying guiding principles on governance practices for tax-exempt organizations. IRS Form 990, which tax-exempt organizations are required to file annually, is a major focus of the CPE materials.

The IRS plans to develop an examination checklist regarding various governance topics to explore possible links between governance and tax law compliance. The IRS also plans to incorporate Form 990 questions and responses into future compliance initiatives.
 
Access the IRS CPE materials.

Although Fitch Ratings recently revised six health insurers' rating outlooks to negative, the net effect of healthcare reform on the nonprofit acute care sector is less clear and is more likely to vary in magnitude and direction among individual hospitals and health systems. Fitch's revision of the insurers' outlooks reflects the potential financial stress of healthcare reform and results in a negative outlook for all 12 of Fitch's rated health insurance organizations. While insurer financial stress would be felt by providers, in Fitch's view the potential positive elements of reform, such as fewer uninsured, could mitigate negative pressures. Coupled with hospitals’ adaptability and operational strength, Fitch does not expect healthcare reform to lead to broad, multi-notch downgrades of hospitals and health systems. Fitch maintains a negative outlook for the nonprofit acute care sector, reflecting the expectation that downgrades will exceed upgrades for the next 12 to 24 months but that affirmations will remain the most common rating action.

Fitch's outlook for the nonprofit acute care sector has been negative since December 2008, in large measure due to the pressures of the current recession, but also factoring in uncertainties about healthcare reform. Fitch believes that major reimbursement changes are, at a minimum, a few years off. Proposals that directly reduce payments to hospitals are a concern across the sector; less clear is how changes in reimbursement methodology would affect individual hospital ratings.

Fitch views hospitals and systems with certain characteristics as better positioned to adjust and even benefit in a post-reform environment. These characteristics include solid physician alignment strategies and high levels of integration, the ability to measure, report, and deliver superior outcomes, favorable cost positions related to competitors, and sufficient scale and financial flexibility to absorb potential decreases in reimbursement without severely impairing financial standing.

Read the Fitch Ratings press release (registration required).

Authority for the administration and enforcement of the Health Insurance Portability and Accountability Act of 1996 (HIPAA) Security Rule has been delegated to the Office for Civil Rights (OCR), according to an announcement from the U.S. Department of Health and Human Services (HHS). OCR’s administration and enforcement of the Security Rule had previously been delegated to the Centers for Medicare & Medicaid Services (CMS). OCR has been responsible for enforcement of the HIPAA Privacy Rule since 2003.

The Security Rule specifies a series of administrative, technical, and physical security procedures for covered entities to use to assure the confidentiality of electronic protected health information. The Health Information Technology for Economic and Clinical Health Act, part of the American Recovery and Reinvestment Act of 2009, mandated improved enforcement of the Privacy Rule and the Security Rule.

Through a separate delegation, CMS continues to have authority for administration and enforcement of the HIPAA Administrative Simplification regulations, other than privacy and security of health information.

Read the HHS press release.

The U.S. Census Bureau today published 2006 estimates of health insurance coverage for each of the nation’s counties. Small Area Health Insurance Estimates (SAHIE) are based on models combining data from a variety of sources, including the Annual Social and Economic Supplement of the Current Population Survey, Census 2000, the Census Bureau’s Population Estimates Program, the County Business Patterns data set and administrative records, such as aggregated federal tax returns and Medicaid participation records.

Although SAHIE currently is the only source for county-level estimates of health insurance coverage status, the Census Bureau in late September will release for the first time health insurance coverage estimates from the American Community Survey (ACS). These ACS single-year estimates will be available for all geographic areas with total populations of 65,000 or more, including all congressional districts.

Among numerous combinations of age, sex, income and (for states only) race and Hispanic origin, SAHIE includes data on low-income children. SAHIE offers an important snapshot as to the location and characteristics of those with and without health insurance. These data will help local planners make decisions concerning the number of uninsured in special populations. The data pertain only to those younger than 65.