Healthcare Financial News

A new report from the U.S. Department of Health and Human Services outlines the ways health insurance reform can lower healthcare costs for small businesses. Among the findings presented in Lower Premiums, Stronger Businesses: How Health Insurance Reform Will Bring Down Costs for Small Businesses are the following:

• On average, small businesses pay up to 18 percent more than large firms for the same health insurance policy.
• In a recent national survey, nearly three-quarters of small businesses that did not offer benefits cited high premiums as the reason.
• Thirty-six percent of workers in small firms spent more than 10 percent of their household income on out-of-pocket medical expenses in 2007, compared with 27 percent of workers in larger firms.

According to the report, health insurance reform will bring down costs for small businesses by creating a health insurance exchange, providing a small business tax credit, ending the “hidden tax” on small businesses that provide health insurance, and preventing arbitrary premium hikes.

House speaker Nancy Pelosi (D-Calif.) today unveiled an $894 billion reform bill that would provide insurance to up to 36 million people by expanding Medicaid and offering subsidies to moderate-income Americans to purchase insurance privately or through a new public plan option. 

As proposed, reimbursement rates in the public plan would be negotiated between providers and federal health officials; they would not be based on Medicare rates.

The bill would expand Medicaid eligibility levels to 150 percent of the federal poverty level for all adults, a higher level than in earlier drafts of the legislation.

The bill would impose a new income surtax on individuals earning more than $500,000 and couples earning more than $1 million. In this respect, it differs from the measure under development by Senate majority leader Harry Reid (D-Nev.), which would impose a tax on high-cost insurance policies in lieu of a personal income surtax.

According to the Congressional Budget Office, the House bill would reduce future federal deficits by about $30 million over the next 10 years.

The Centers for Medicare & Medicaid Services (CMS) has announced the inpatient hospital deductible and the hospital and extended care services coinsurance amounts for services furnished in CY10 under Medicare Part A, effective Jan. 1, 2010.

The CY10 inpatient hospital deductible will be $1,100. The daily coinsurance amounts for CY10 will be: (a) $275 for the 61st through 90th day of hospitalization in a benefit period; (b) $550 for lifetime reserve days; and (c) $137.50 for the 21st through 100th day of extended care services in a skilled nursing facility in a benefit period.

CMS also announced the standard monthly Part B premium rate of $110.50 for CY10 and the annual deductible amount of $155.00 for CY10. The standard premium rate of $110.50 for next year reflects an increase of $14.10 over the CY09 rate of $96.40.

Read the CMS notices about Medicare Part A and Part B in the Federal Register.

Outbound medical tourism has experienced a slowdown since 2007, driven by the economic recession and consumers putting off elective medical procedures, according to a new Deloitte Center report, Medical Tourism: Update and Implications. An estimated 540,000 Americans traveled abroad for medical care in 2008 (a 20 percent decrease) and a projected 648,000 (a 10 percent decrease) did so in 2009. The economic recovery may help spur a sustainable 35 percent annual growth rate for the medical tourism industry by 2010.

Inbound medical tourism, or foreigners visiting the United States to receive medical care, is expected to grow relatively slowly, with up to 561,000 travelers expected annually by 2017.

Other highlights of the report include the following:

• Eight percent of respondents sought healthcare services outside of their immediate community; more than 40 percent said they would travel outside of their immediate area for care if their physician recommended it or for a 50 percent cost savings; 1 percent reported using an offshore healthcare provider; 9 percent said they’d be likely to do so; and 69 percent said they’d be unlikely to do so.
• Several health insurers have launched medical tourism pilots as part of health benefit plans.
• The Joint Commission International has increased the number of approved foreign medical sites from 76 in 2005 to more than 220 in 2008.
• India’s medical tourism sector is expected to grow 30 percent annually from 2009 to 2015.
• Healthcare reform will likely propel growth in the elective outpatient market, particularly if flex account expenditures are limited to $2,000 or less, and elective cosmetic and dental procedures are not considered “basic benefits.”
  

The U.S. healthcare system wastes between $600 billion and $850 billion annually, according to an analysis published by Thomson Reuters. The report identifies the most significant drivers of wasteful spending based on a review of published research and analyses of proprietary healthcare data.

Unnecessary care represents an estimated 40 percent of healthcare waste, according to the report. This category, which includes unwarranted treatment such as the over-use of antibiotics and the use of diagnostic lab tests to protect against malpractice exposure, accounts for $250 billion to $325 billion in annual healthcare spending.

Other drivers of wasteful spending that are quantified in the report include fraud (19 percent), administrative inefficiency (17 percent), medical errors (12 percent), preventable conditions (6 percent), and lack of care coordination (6 percent).

In what has been portrayed as a turning point in the debate on healthcare reform legislation, Senate Majority Leader Harry Reid (D-Nev.) announced Monday that he will seek to bring a reform bill to the Senate floor that includes a public option. An opt-out clause in the bill would allow states to decide by 2014 not to participate in the government plan, Reid said.

Other public-option approaches under consideration include a "trigger" that would create a government plan if private insurers do not offer policies at affordable prices.

The proposal Reid discussed Monday is a merger of two bills previously approved by Senate committees.

In an effort to proactively address the ongoing pandemic, President Obama on Sunday signed a National Emergency Declaration on H1N1 influenza that allows healthcare systems to quickly implement disaster plans should they become overwhelmed.
 
As experts expected, H1N1 flu is moving rapidly throughout the country and the majority of states now have widespread influenza activity. This declaration gives authority for the Department of Health and Human Services (HHS) to waive certain regulatory requirements for healthcare facilities in response to the ongoing pandemic. Specifically, healthcare facilities will be able to submit waivers to establish alternate care sites, and modified patient triage protocols, patient transfer procedures, and other actions that occur when they fully implement disaster operations plans.

Waivers still require that specific requests be submitted to HHS and processed, and some state laws may need to be addressed as well. Requirements that may be waived include those related to Medicare, Medicaid or the Children’s Health Insurance Program (CHIP), the Emergency Medical Treatment and Active Labor Act (EMTALA), and the Health Insurance Portability and Accountability Act (HIPAA).

Philanthropic giving for health care in the United States grew by just 2.9 percent—or about $241 million—to $8.6 billion in 2008, according to a report issued by the Association for Healthcare Philanthropy (AHP). Grateful patients, businesses, foundations, and other donors made $8.588 billion in charitable contributions to healthcare facilities and organizations in 2008, the AHP’s Report on Giving determined. 

This 2.9 percent increase was about half the growth rate achieved in 2007, when donations totaled $8.347 billion.

Accounting for much of the slight advance in giving was the fact that most not-for-profit hospitals and healthcare systems closed their books before the last quarter of 2008, when U.S. gross domestic product plunged more than 5 percent. Institutions that closed their books on Dec. 31, 2008, actually saw a 0.2 percent dip in annual giving.

More than eight of every 10 donations came from individuals, whose contributions comprised 60 percent of all philanthropic funds raised by not-for-profit healthcare institutions last year. One in 10 donations were made by businesses, including business-sponsored foundations, representing 17.5 percent of all funds raised, down slightly from 2007. Noncorporate foundations accounted for less than 3 percent of donors but almost 14 percent of revenues.  Other giving sources, including hospital auxiliaries, public agencies, and civic groups, accounted for 8.6 percent of total funds raised in 2008, compared to 7.5 percent in 2007.

The U.S. Department of Health and Human Services (HHS) has awarded $17 million to fund projects to fight healthcare-associated infections, or HAIs.

Of the $17 million, $8 million will fund a national expansion of the Keystone Project, which within 18 months successfully reduced the rate of central-line blood stream infections in more than 100 Michigan intensive care units and saved 1,500 lives and $200 million. Last year, the Agency for Healthcare Research and Quality (AHRQ) funded an expansion of this project to 10 states. With additional funding from AHRQ and a private foundation, the Keystone Project is now operating in all 50 states, Puerto Rico and the District of Columbia. The new funding will expand the effort to more hospitals, extend it to other settings in addition to ICUs, and broaden the focus to address other types of infections.

AHRQ, in collaboration with the Centers for Disease Control and Prevention, also identified several high-priority areas to apply the remaining $9 million toward reducing MRSA and other types of HAIs.

HAIs are one of the most common complications of hospital care. Nearly 2 million patients develop HAIs, which contribute to 99,000 deaths each year and $28 billion to $33 billion in healthcare costs. HAIs are caused by different types of bacteria that infect patients being treated in a hospital or healthcare setting for other conditions. The most common HAI-causing bacteria is methicillin-resistant Staphylococcus aureus, or MRSA. The number of MRSA-associated hospital stays has more than tripled since 2000, reaching 368,600 in 2005, according to AHRQ's Healthcare Cost and Utilization Project.

Read the HHS press release.

The number of rating downgrades declined notably for the first time in the third quarter of 2009 following three consecutive quarters of unprecedented heavy rating downgrade activity, according to an analysis released by Moody’s Investors Service. The ratio of downgrades to upgrades (1.5 to 1) was also more balanced in Q3, a sharp change from the 19 to five (3.8 to 1 margin) and 17 to four (4.3 to 1 margin) ratios in the first and second quarters of 2009, respectively. However, year-to-date activity reported in Moody’s Not-For-Profit Healthcare Quarterly Review: Third Quarter 2009 still shows downgrades far outpacing upgrades with 45 rating downgrades and 15 upgrades (3.0 to 1 margin).

Citing adverse impacts of anticipated cuts in Medicare and Medicaid reimbursement, Moody’s is maintaining its negative outlook on the not-for-profit healthcare industry until federal healthcare reform is finalized, despite the apparent easing of downgrade pressure. Other potential reform-related changes would have “uncertain outcomes for the industry, but there would be winners and losers,” the rating agency said. Moody’s will continue to monitor the progress of these changes, including a tax on more costly health insurance plans, bundled payments, the advent of a public option or not-for-profit health cooperative, and quality/payment links. Moody’s also stated that any effort to significantly reduce the uninsured population would decrease hospital bad debt and charity care, thereby bolstering profits.

Wholesale prices for hospitals increased 0.2 percent in September, the Bureau of Labor Statistics reported. The increase in the Producer Price Index (PPI) compares with a price drop of 0.1 percent for the same month in 2008.
For the year ended in September, wholesale hospital prices rose 3 percent, the same as the increase for the prior year. For the 12 months that ended in August, the price increase was 2.6 percent.

Physician wholesale prices increased 0.1 percent in September, matching the price increase in September 2008. The physician PPI was up 2.6 percent for the 12-month period that ended in September, as compared with 0.7 percent for the prior year. It was unchanged from the 12 months ended in August.

The House Judiciary Committee on Wednesday approved a bill removing the federal antitrust exemption for health and medical malpractice insurers. 

The bill, which cleared the committee by a 20-9 vote, calls for ending the exemption to ensure these insurers “cannot engage in price fixing, bid rigging, or market allocations to the detriment of competition and consumers.” The exemption was granted under the 1945 McCarran-Ferguson Act, which defers insurance regulation to the states.

House Speaker Nancy Pelosi (D-Calif.) is planning to include the measure in the healthcare reform package that Democrats hope to bring before the full House in November, according to a report today in the Washington Post. A companion bill has been introduced in the Senate.

One in every four hospital professional liability claims and 24 percent of related costs are associated with hospital-acquired conditions such as infections and injuries, medication errors, objects left in surgery, and pressure ulcers, according to a study conducted by Aon Corporation in conjunction with the American Society for Healthcare Risk Management.

The study also finds that the frequency of claims is on the rise and is expected to continue increasing at 1 percent annually, after a decade of decreases. The rise is attributed to the economic downturn, changes to Centers for Medicare & Medicaid Services payment rules regarding never events, and changes in public sympathy toward healthcare providers.

Other study highlights include the following:

• In 2010, hospital loss costs per occupied bed equivalent, a major part of the total cost of risk, are expected to increase 5 percent annually to $3,170.
• Claim severity, including both indemnity and defense costs, continues to increase at a consistent rate and is projected to increase by 4 percent annually.
• In 2010, hospitals can expect to incur liability costs of $181 per birth in the obstetrics unit and $7.20 per visit in the emergency department.

Read the Aon press release.

The Centers for Medicare & Medicaid Services (CMS) has released four new FAQs regarding Recovery Audit Contractors (RACs) in the past four weeks. Excerpts from these FAQs are reprinted, in part, below.

How long is the RAC discussion period?
The discussion period begins with the time of notification (demand letter for automated reviews and the review results letter for complex reviews) through the time recoupment occurs. The discussion period normally requires written notification to the RAC. The discussion period does not extend the provider's appeal timeframes.

I heard that RAC medical record request limits will be based on my 2007 claims volume, then I heard on 2008. Which is it?
Limits in the remainder of the fiscal year ending September 30, 2009, are based on claim volume in the 2008 calendar year. This differs from our original announcement that limits in the current year would be based on 2007 claim volumes.

Will Code N432 appear on the remittance advice for RAC adjusted claims?
CMS created code N432 to identify RAC adjusted claims, however CMS believes the code is being superseded in some of the systems by code N469 which is the Section 935 Limitation on Recoupment code. We are working to correct this problem in the system. Providers will receive demand letters for all RAC adjusted claims. These letters will allow providers to keep track of RAC adjustments versus all other claims processing adjustments.

If I am a chain provider whose FI is WPS (serving as the national fiscal intermediary) who will my RAC be?
This answer assumes the hospital originally had Mutual of Omaha as the claims processing contractor and the merger of WPS and Mutual of Omaha is how WPS became the provider's claim processing contractor. WPS currently serves as a national fiscal intermediary in CMS. They service providers in the majority of the states. These providers have not yet transitioned to a MAC. WPS will work with all 4 RACs. If WPS is your claim processing contractor (as the national fiscal intermediary and not part of the local jurisdiction) your RAC is based on your physical location. For example, if you are located in Tennessee, but WPS is your claims processing contractor your RAC is in Region C.

The Senate today voted against permanent repeal of Medicare's payment formula for doctors, with lawmakers balking at the legislation's $247 billion 10-year price tag. The bill was introduced last week by Sen. Debbie Stabenow (D-Mich.).

“Congress created the Medicare physician payment system, and Congress needs to fix this problem once and for all to fulfill its obligation to seniors, baby boomers, and military families,” said American Medical Association president J. James Rohack, MD, in a statement issued after the vote. Permanent repeal of the Medicare physician payment formula is essential to comprehensive health system reform.”

A 21 percent cut in Medicare payments to physicians is currently scheduled for Jan. 1.

Medicare-approved medical equipment suppliers have 60 days in which to submit bids for the Round One Rebid of the Medicare Competitive Bidding Program for durable medical equipment, prosthetics, orthotics, and supplies (DMEPOS) in nine communities.

The Centers for Medicare & Medicaid Services (CMS) today began accepting bids from accredited and bonded medical equipment suppliers after modifying the program and conducting a supplier outreach and education effort.  Currently, 93 percent of all medical equipment suppliers across the country—including those in the competitive bidding areas—have met Medicare’s accreditation requirements.

The Round One Rebid will include the same items as the first Round One except negative pressure wound therapy items and Group 3 complex rehabilitative power wheelchairs will be excluded.

Beneficiaries living in the competitive bidding areas won’t need to take any action before the program begins in 2011.

Read the CMS press release.

A majority of Americans support a government-run healthcare plan to compete with private insurers, according to the results of a new ABC News/Washington Post poll. A public insurance option is favored by 57 percent of all Americans, while 40 percent oppose it. Support for a public option has grown since mid-August, when 52 percent favored it.

However, Americans remain divided along party lines about the pending healthcare reform legislation, in general. Overall, 45 percent of Americans favor the broad outlines of the proposals while 48 percent are opposed. Seven in 10 Democrats back the plan, while almost nine in 10 Republicans oppose it. Independents divide 52 percent against, 42 percent in favor of the legislation.

Read the Washington Post article.

A monthly consumer confidence survey conducted by The Robert Wood Johnson Foundation found that 33.4 percent of respondents are worried about losing their health insurance at some point in the next 12 months, up from 29.0 percent in August. When the survey began in April, 21.6 percent of respondents reported worries about losing insurance. Other survey highlights include the following:

• More than three-fourths of respondents (76.1 percent) believe healthcare reform will improve their personal finances. Additionally, 62.2 percent believe that reform will improve the country’s finances.
• More than half of respondents (53.2 percent) are worried that they will not be able to pay for their future healthcare needs in the event of a serious illness. And nearly half (48.2 percent) are worried that they will not be able to afford all of the routine healthcare services they need.
• More than two-thirds (67.4 percent) of respondents believe that access to health care for the nation will improve or stay the same under healthcare reform. Additionally three-fourths (74.5 percent) believe that their personal access to care will improve or stay the same.
  

The Robert Wood Johnson Foundation Health Care Consumer Confidence Index is a monthly survey that evaluates consumer confidence in American health care. The RWJF Index is created from data collected by the Surveys of Consumers, a monthly survey of 500 households conducted by the Survey Research Center at the University of Michigan. Analysis of the data is provided by the University of Minnesota’s State Health Access Data Assistance Center.

President Obama would like to see a public option included in healthcare reform legislation but he won’t insist on it, his top advisers said yesterday on Sunday morning talk shows, according to the Associated Press.

Speaking on NBC’s “Meet the Press,” Obama senior adviser Valerie Jarrett said: "He's not demanding that it's in there. He thinks it's the best possible choice."

Obama "will obviously weigh in when it's important to weigh in" on the possibility of a public option, chief of staff Rahm Emanuel told CNN’s “State of the Union.”

The White House and lawmakers are trying to blend five House and Senate committee versions of healthcare reform legislation into a bill that will pass both houses. House Democrats are advocating the government-run plan, or public option. Senate Republicans and some Democrats oppose the measure, meaning it would not win the 60 needed votes unless some lawmakers change their position.

Consumer prices for hospital services increased 0.7 percent in September, up from 0.5 percent in August, the Bureau of Labor Statistics reported. For the 12-month period ended Sept. 30, the seasonally adjusted Consumer Price Index (CPI) for hospitals climbed 7.1 percent, the same as the year-ago period.

In September, the CPI for physician office services rose 0.2 percent for the third consecutive month. For the 12-month period ended in September, the physician index increased 2.9 percent as compared with 3 percent during the year-ago period.

New tips and information to help seniors and Medicare beneficiaries deter, detect and defend against medical identity theft were released today by the Office of the Inspector General of the U.S. Department of Health and Human Services. The tips and a printable brochure are available now at www.StopMedicareFraud.gov and www.oig.hhs.gov/fraud/idtheft.

The materials remind beneficiaries to beware of offers of free medical equipment, services, or goods in exchange for their Medicare numbers. Beneficiaries are also encouraged to regularly review their Medicare Summary Notices, Explanations of Benefits statements, and medical bills for suspicious charges and to report suspected problems.

The effort to help prevent medical identity theft is one part of the Obama Administration’s work to crack down on Medicare fraud.  Antifraud efforts also include the May 2009 establishment of an interagency effort, the Health Care Fraud Prevention and Enforcement Action Team (HEAT), to combat Medicare fraud. The HEAT team includes senior officials from DOJ and HHS. HEAT team efforts include the expansion of joint DOJ-HHS Medicare Fraud Strike Force teams that have been fighting fraud in South Florida and Los Angeles to additional cities including Detroit and Houston.

In results released today by the Medical Group Management Association (MGMA) from its study of MGMA member satisfaction with major health plans, members gave top marks to Medicare Part B on questions related to responsiveness, transparency, prompt payment, and overall satisfaction with general administrative functions. The study focused on seven large payers.

"Despite the fact that Medicare consistently underpays and places member practices in an increasingly difficult financial situation–with a looming 21 percent cut to physician payments–MGMA members were positive about the standardized and predictable nature of how the program is administered," said MGMA President and CEO William F. Jessee, in a press release.

MGMA members expressed a high level of satisfaction with the major private health plans regarding their provider credentialing processes, but citied dissatisfaction with this process for Medicare.

More than 1,700 practice professionals participated in the poll. Results reflect MGMA members’ perceptions of the payer environment in areas of payer communications, provider credentialing, contracting, payment policies, system transparency, and overall satisfaction. The study did not address payment levels.

The Center for Medicare & Medicaid Services (CMS) is expected to notify state Medicaid programs within the next 30 days that states may exempt hospitals from a federal mandate to collect national drug codes (NDCs) on physician-administered infusion products and injectable drugs if such drugs are billed at their “purchasing cost” as defined under a state’s Medicaid plan. The CMS transmittal will also advise the states that if a hospital drug qualifies for the exemption, it is not subject to a rebate under the Medicaid drug rebate program.

The CMS action follows settlement of August 2008 litigation filed against the federal agency, which was announced by the Safety Net Hospitals for Pharmaceutical Access, representing about 500 safety-net hospitals. That lawsuit attempted to reverse the implementation of the July 2007 CMS Medicaid regulation mandating the NDC reporting by hospitals. The hospitals said the reporting requirement would cost them millions of dollars and would be very difficult to implement, and sought a permanent injunction prohibiting the federal government from requiring and encouraging state Medicaid agencies to collect the information.

Lawmakers on both sides of the aisle have reacted strongly to a report released Sunday by America’s Health Insurance Plans (AHIP) criticizing the reform bill that was passed by the Senate Finance Committee yesterday. The AHIP report said selected provisions of the bill could increase premiums 18 percent more than they would otherwise rise in the next decade, to an average of nearly $26,000 for families and $9,700 for individuals in 2019.

The New York Times reported that Jonathan Gruber, a healthcare economist at the Massachusetts Institute of Technology, evaluated the AHIP report at the request of Senate Democrats and found it “deeply flawed.” Gruber reportedly said the report failed to account for the effects of government subsidies for the purchase of insurance and for reductions in administrative overhead costs resulting from insurance exchanges.

The Times also quoted Sen. Michael B. Enzi (R-Wyo.): “This report confirms what I have been saying all along: the combined impact of new taxes, mandates, and entitlement expansions in the Baucus bill will substantially increase the price that many Americans pay for their health insurance.”

As the debate continues, the Finance Committee bill will be merged with the Health, Education, Labor, and Pensions Committee bill before heading to the full Senate for a vote.

The Senate Finance Committee voted 14-9 to approve the pending healthcare reform bill, America’s Healthy Futures Act of 2009. Sen. Olympia J. Snowe of Maine joined Democrats in voting in favor of the bill.

The bill approved by the Finance Committee would expand Medicaid eligibility, provide tax credits to help low- and middle-income people purchase coverage, and create health insurance exchanges to facilitate the purchase of insurance by individuals and small businesses in lieu of a public plan option.
 
The draft legislation would also require that most individuals obtain insurance, with penalties of $200 per adult that begin in 2014 and reach $750 by 2017. Businesses with more than 50 employees would be mandated to pay for government insurance subsidies for which their workers may qualify.

Insurance reforms included in the bill would prohibit denial of coverage based on pre-existing conditions and preclude insurers from dropping coverage for those who become ill.

The Congressional Budget Office projects that the bill would cost $829 billion and reduce the federal deficit by $81 billion over a 10-year period.

The Senate Finance Committee was the last of five congressional committees to clear draft healthcare reform legislation. The Finance Committee’s bill must now be blended with a competing bill that was approved by the Senate Health, Education, Labor and Pensions (HELP) Committee bill before reform legislation can be voted on by the full Senate.

This article was updated on Oct. 15.

The Congressional Budget Office (CBO) estimates that implementing a typical package of tort reform proposals nationwide would reduce total U.S. healthcare spending by about 0.5 percent, or about $11 billion in 2009. That figure is the sum of a direct reduction in spending of 0.2 percent from lower medical liability premiums and an additional indirect reduction of 0.3 percent from slightly less utilization of healthcare services. (These estimates take into account the fact that because many states have already implemented some of the changes in the package, a significant fraction of the potential cost savings has already been realized.)

Over the coming 10-year period, enacting a typical set of proposals would reduce federal budget deficits by roughly $54 billion, according to estimates by CBO and the staff of the Joint Committee of Taxation. That figure includes savings of roughly $41 billion from Medicare, Medicaid, the Children’s Health Insurance Program, and the Federal Employees Health Benefits program, as well as an increase in tax revenues of roughly $13 billion from a reduction in private healthcare costs that would lead to higher taxable wages.

Typical legislative proposals for tort reform have included caps on awards for noneconomic and punitive damages, rules allowing the introduction at trials of evidence about insurance payments and related sources of income, statutes of limitations on suits, and replacement of joint-and-several liability with a fair-share rule.

Read the CBO analysis.

The cost and quality of health care, as well as access to care and health outcomes, continue to vary widely among states, according to the Commonwealth Fund Commission on a High Performance Health System's second state scorecard report. The states that led in the 2007 state scorecard generally continued to lead, often setting new benchmarks and widening the gap between leading and lagging states. Across states, health insurance coverage for adults declined, costs rose, and quality improved in areas where outcomes were reported to the public.

Health insurance coverage for adults declined in a majority of states since the first state scorecard was released in 2007. In contrast, most states made gains in health coverage for children due to federal and state support for the Children's Health Insurance Program. In addition, national efforts to publicly report performance and improve care have led to dramatic improvements in some measures of quality of care in hospitals and nursing homes, demonstrating the impact federal action and collaborative improvement efforts can have on state healthcare systems, the report found.

The Senate Finance Committee will vote next Tuesday, Oct. 13, on the pending health reform bill. The announcement came one day after a Congressional Budget Office (CBO) analysis projected that the bill would cost $829 billion and reduce federal deficits by a total of $81 billion over the 2010 to 2019 period, meeting President Obama’s main requirements. The bill would also expand coverage from 83 percent to 94 percent of nonelderly Americans over 10 years, CBO said.

“Our balanced approach to health reform has paid off yet again with the news today that the America’s Healthy Future Act remains fully paid for, begins to reduce the federal deficit within ten years and makes significant reductions in federal debt over the next several decades,” said Senate Finance Committee Chairman Max Baucus (D-Mont.) in a statement released by his office yesterday.  “Most importantly, it improves and expands healthcare coverage for tens of millions of American families.”

Sen. Charles Grassley of Iowa, the panel's ranking Republican member, cautioned against “a celebration of the deficit effects" that "masks who pays the bills." The package includes "hundreds of billions of dollars in new taxes and fees,” Sen. Grassley said. “Most Americans with health insurance will see their premiums increase. That's according to CBO and JCT [the Joint Committee on Taxation], the nonpartisan experts. Premiums would increase as early as 2010, before most of the health reforms, including tax credits to help people pay for health insurance, take effect."

The Congressional Budget Office (CBO) and the staff of the Joint Committee on Taxation (JCT) have issued a preliminary analysis of the Senate Finance Committee Chairman’s mark for the America’s Healthy Future Act of 2009, incorporating the amendments that have been adopted to date by the committee.
 
According to their assessment, enacting the Chairman’s mark, as amended, would result in a net reduction in federal budget deficits of $81 billion over the 2010–2019 period. The estimate includes a projected net cost of $518 billion over 10 years for the proposed expansions in insurance coverage. That net cost itself reflects a gross total of $829 billion in credits and subsidies provided through the exchanges, increased net outlays for Medicaid and the Children’s Health Insurance Program, and tax credits for small employers; those costs are partly offset by $201 billion in revenues from the excise tax on high-premium insurance plans and $110 billion in net savings from other sources. The net cost of the coverage expansions would be more than offset by the combination of other spending changes that CBO estimates would save $404 billion over the 10 years and other provisions that JCT and CBO estimate would increase federal revenues by $196 billion over the same period.

New findings from researchers at Harvard Medical School demonstrate that individuals who were either continuously or intermittently uninsured between the ages of 51 and 64 cost Medicare more than those who had continuous insurance coverage in the years prior to Medicare eligibility.

On average, those who were previously uninsured cost Medicare an additional $1,000 annually per person when compared with those who had been consistently covered. These increased costs were due primarily to complications resulting from cardiovascular disease and diabetes and from apparently delayed surgeries for arthritis.

Had these middle-aged adults been consistently covered, they would have likely cost Medicare less, the authors conclude.

The study, published early online in the Annals of Internal Medicine, was funded by the Commonwealth Fund.

Hospital employment increased 0.08 percent in September to a seasonally adjusted 4,726,600, the Bureau of Labor Statistics reported. That's 3,600 more than the previous month and 57,700 more than a year ago. Without the seasonal adjustment, hospitals employed 4,726,800 people in September, 10,600 fewer than in August but 55,800 more than a year ago.

Physician office staffing grew by about 0.2 percent in September, adding 5,300 employees. Home healthcare services grew by 0.4 percent last month, adding 4,400 workers.

If 35 percent of Americans were to get sick from the H1N1 flu virus, 15 states could run out of available hospital beds during the peak of the outbreak, according to a report from the not-for-profit group Trust for America’s Health. Twelve additional states could reach or exceed 75 percent of their hospital bed capacity. These projections are based on estimates from the FluSurge model developed by the U.S. Centers for Disease Control and Prevention.

The 15 states that would be at or exceed hospital bed capacity in this scenario include the following: Arizona, California, Connecticut, Delaware, Hawaii, Maryland, Massachusetts, Nevada, New Jersey, New York, Oregon, Rhode Island, Vermont, Virginia, and Washington.

The following 12 states would be at 75 to 99 percent of their hospital bed capacity: Colorado, Florida, Georgia, Maine, Michigan, New Hampshire, New Mexico, North Carolina, Pennsylvania, South Carolina, Utah, and Wisconsin.
In addition, some 15 million uninsured Americans could become sick with H1N1 flu and either go without care or seek care in emergency rooms, the authors say.

The full report includes a chart with state-by-state information on illnesses, hospitalizations, and flu vaccination rates.

Starting today, October 5, hospitals must submit two claims to Medicare when an erroneous surgery is reported in addition to covered services or procedures that are provided during the same stay. Erroneous surgeries include procedures involving the wrong patient, procedure, or body part, which are no-pay claims under a national coverage decision implemented by the Centers for Medicare & Medicaid Services (CMS) in January.

The CMS previously issued CR 6405 to provide instruction to hospitals on how to bill erroneous surgeries. It explained that, for inpatient claims, hospitals are required to submit a no-pay claim when the erroneous surgery is reported. CMS has made additional changes to the coding instructions. The billing changes and nonpayment policy are effective for claims submitted Oct. 5 or later for services delivered after Jan. 15, 2009. Further information is provided in the CMS newsletter, MLN Matters, No. MM6634.

Revenue in medical practices declined in 2008 for the first time in several years, according to the Medical Group Management Association (MGMA). The drop may be tied to smaller patient volumes and increasing bad debt due to patients' financial hardship. Medical practices responded by trimming overhead costs, but not enough to accommodate shrinking revenues.

According to the MGMA Cost Survey: 2009 Reports Based on 2008 Data, multispecialty group practices saw a 1.9 percent decrease in total medical revenue in 2008. MGMA captures data on both multispecialty groups and single-specialty practices, but uses multispecialty data as a proxy for overall trends. Falling revenues may be attributable to a decline in patient volume, indicated by a 9.9 percent drop in the number of procedures and an 11.3 percent slump in the number of patients from 2006 to 2008.
Additionally, bad debt in multispecialty group practices from fee-for-service charges increased 13 percent from 2006 to 2008.

MGMA data indicate that total operating cost increased 54 percent in multispecialty group practices in the past 10 years, while total medical revenue increased 46 percent. In 2008, multispecialty practices reduced their overhead expenses 1.4 percent, largely by cutting support staff costs by 1.5 percent – the first decline in several years. Support staff costs make up 32 percent of medical practice expenses. The total worker count remained constant, indicating that employees may have gone without raises, bonuses, or perhaps that pay cuts were made.

Read the MGMA press release.

New regulations designed to protect individuals’ genetic information were issued today by the U.S. Departments of Health and Human Services (HHS), Labor, and the Treasury.

The interim final rule will help ensure that genetic information is not used adversely in determining healthcare coverage and will encourage more individuals to participate in genetic testing.

The interim final rule with request for comments and the notice of proposed rulemaking implement Title I of the Genetic Information Nondiscrimination Act of 2008 (GINA). Under GINA, and the interim final rule, group health plans and issuers in the group market cannot: increase premiums for the group based on the results of one enrollee’s genetic information; deny enrollment; impose pre-existing condition exclusions; or do other forms of underwriting based on genetic information. In the individual health insurance market, GINA prohibits issuers from using genetic information to deny coverage, raise premiums, or impose pre-existing condition exclusions.

Further, under GINA and the new interim final regulations, group health plans and health insurance issuers in both the group and individual markets cannot request, require or buy genetic information for underwriting purposes or prior to and in connection with enrollment. Finally, plans and issuers are generally prohibited from asking individuals or family members to undergo a genetic test.

Additionally, HHS, through its Office for Civil Rights (OCR), issued a notice of proposed rulemaking with a 60-day comment period, to propose changes to the Health Insurance Portability and Accountability Act (HIPAA) Privacy Rule to prohibit health plans from using or disclosing genetic information for underwriting purposes.

View the regulations.
 

HHS has announced $40 million in grants to 69 grantees in 41 states and the District of Columbia to help them find and enroll children who are uninsured but eligible for either Medicaid or the Children’s Health Insurance Program (CHIP).

The Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA) set aside $100 million for fiscal years 2009-2013 expressly to help find and enroll eligible children. Of the total outreach amount, $80 million will be given to states and other organizations, $10 million to Tribal organizations, and $10 million for a national outreach effort. These awards are for a two year period ending Dec. 31, 2011, which will then be followed by a second round of $40 million in new grants.

As called for in CHIPRA, grants were awarded to applicants whose outreach, enrollment, and retention efforts will target geographic areas with high rates of eligible but uninsured children, particularly those with racial and ethnic minority groups who are uninsured at higher-than-average rates. 

The vast majority of grantees will be using multiple, community-based approaches. One grantee in Missouri, for example, will work with a consortium of 35 churches in low-income, minority communities. Those parishioners will go door-to-door to locate potentially eligible children and then help those families apply for CHIP or Medicaid coverage. A state school system will track children who receive free or reduced cost lunches and, with the families’ permission, share that information with state health programs, which will, in turn, mail applications for CHIP and Medicaid to those families. The state will also provide one-on-one-assistance with those applications.

Read the HHS press release.