CMS sent the following message to its physician email distribution list this afternoon:"The Centers for Medicare & Medicaid Services (CMS) is working with Congress, health care providers, and the beneficiary community to avoid disruption in the delivery of health care services and payment of claims for physicians, non-physician practitioners, and other providers of services paid under the Medicare physician fee schedule. As you are aware, the Department of Defense Appropriations Act of 2010 provided a zero percent (0%) update to the 2010 MPFS effective for dates of service January 1, 2010, through February 28, 2010.
We believe Congress is working to avoid the negative update that will take effect March 1. Consequently, CMS has instructed its contractors to hold claims containing services paid under the MPFS for the first 10 business days of March. The holding of MPFS claims will only affect claims with dates of service March 1, 2010, and forward. This hold should have a minimum impact on provider cash flow because, under current law, clean electronic claims are not paid any sooner than 14 calendar days (29 for paper claims) after the date of receipt. Be on the alert for more information about the 2010 Medicare Physician Fee Schedule Update."
March 3 Update
CMS sent the following message to its Medicare fee-for-service provider distribution list today:"On March 2, 2010, President Obama signed into law the “Temporary Extension Act of 2010.” Among other things, this law extends through March 31, 2010, the zero percent update to the Medicare Physician Fee Schedule that was in effect for claims with dates of service January 1, 2010, through February 28, 2010. Consequently, effective immediately, claims with dates of service March 1 and later which were being held by Medicare contractors will be released for processing and payment. Please keep in mind that the statutory payment floors still apply and, therefore, clean electronic claims cannot be paid before 14 calendar days after the date they are received by Medicare contractors (29 calendar days for clean paper claims).
In addition, the new law extends through March 31, 2010, the exception process for therapy claims reaching the annual cap, retroactive to January 1, 2010. Affected providers may submit claims for exceptions to the annual therapy caps, with dates of service January 1 through March 31, 2010, using the KX modifier, following the pre-January 1, 2010, requirements for therapy cap exceptions."
An attempt to delay a 21 percent cut in Medicare payment to physicians has failed, with the cuts to take effect on Monday, March 1.
A provision to delay the cut by 30 days was part of a Senate bill designed to delay a number of expiring programs, including expanded unemployment benefits. However, Congressional Quarterly is reporting that Senator Jim Bunning (R-Ky) has been a "one-man filibuster" against the bill. The Senate has adjourned and likely will not be able to pass the bill until later next week, after the physician cuts take effect.
As reported previously by HFMA News, potential reduction in Medicare's physician payment arises regularly as a result of the sustainable growth rate (SGR) formula that is used to determine payment rates. Physician groups and others have called for a correction to the formula, and some healthcare reform proposals included that change, despite the increase in healthcare costs that would result.
In response to today's inaction, American Medical Association President J. James Rohack, M.D. said, “Our message to the U.S. Senate is stop playing games with Medicare patients and the physicians who care for them. It is shocking that the Senate would abandon our most vulnerable patients, making them the collateral damage of their procedural games.”
Three quarters of hospitals participating in new HFMA Healthcare Financial Pulse research report reducing costs over the past 12 months, and one-fifth achieved cost savings of more than 5 percent. Hospitals with 300 to 500 beds were the most likely to have cut costs.
Cost-containment efforts in the past year focused primarily on the traditional areas of supplies and labor, but respondents expect to use more strategic approaches to cost and margin management in the next year. More than four-fifths report that process improvement will be used to contain costs. More than one-third of respondents plan to reduce or freeze capital spending in 2010. New construction is the area most likely to be targeted for capital spending reduction. On the other hand, more than a quarter of respondents expect an increase in IT expenditures.
Respondents displayed a modicum of optimism about the financial outlook for FY 2010, with nearly half expecting operating margins to grow through a combination of cost reduction and revenue growth.
Half of respondents anticipate reversing 2009’s cost control measures if the economy improves, suggesting that many of the cost cuts made in 2009 were stop-gap cuts necessitated by the severe nature of the recession.
The research findings are based on an email survey of finance leaders and executives in hospitals and health systems that was conducted in January. HFMA’s Healthcare Financial Pulse project is sponsored by McKesson and RelayHealth.View the HFMA Healthcare Financial Pulse executive summary and slide deck.
President Obama wrapped up a daylong bipartisan meeting at the White House the way he started it—by urging lawmakers to focus on areas of agreement between the two parties. At the same time, he said that "we cannot have another year-long debate about this," implicitly rejecting Republican calls to start from scratch with an incremental approach to reform legislation. "Baby steps don't get you to the place where people need to go,” the president said. “They need help right now.”In his closing remarks, Obama summarized areas of agreement, including the need for insurance market reform and the concept of health insurance exchanges designed for small businesses and individuals to buy health insurance. He also conceded that “philosophical differences remain.”Discussions at the nationally televised meeting, which was streamed live on the White House web site, revolved around four main themes: controlling costs, reforming insurance markets, reducing the federal deficit, and expanding coverage.
An underlying driver of higher insurance premiums—the growing market power of hospitals and physicians to negotiate higher payment rates—has gone largely unexamined, according to a Center for Studying Health System Change (HSC) study published online today by Health Affairs.Funded by the California HealthCare Foundation, the study examined the growing market power of many California hospitals and physicians, finding that providers are using various strategies, such as tighter alignment of hospitals and physician groups, to negotiate significantly higher payment rates from private insurers."Provider market power is the elephant in the room that no one wants to talk about in the national healthcare reform debate," said HSC Senior Consulting Researcher Robert A. Berenson, M.D., of the Urban Institute, a coauthor of the study with HSC President Paul B. Ginsburg, Ph.D., and Nicole Kemper, M.P.H., a former HSC research analyst.
"Health insurers have been squarely in the crosshairs and blamed for the high cost of private insurance, while the role of growing hospital and physician market power has escaped scrutiny," Berenson said.The study also points out that California offers a cautionary tale for reform proposals that encourage hospitals and physicians to form tighter relationships through accountable care organizations."Reform proposals that encourage hospitals and physicians to integrate have the potential to improve quality and increase efficiency, but the savings may not be passed on to private payers if provider market power to command higher prices goes unchecked," Ginsburg said. The authors conclude that "unless market mechanisms can be found to discipline providers' use of their growing market power, it seems inevitable that policy makers will need to turn to regulatory approaches, such as putting price caps on negotiated private-sector rates and adopting all-payer rate setting. Indeed, some purchasers who believe strongly in the long-term merits of increased integration of care delivery believe that price regulation may be a prerequisite for payment reforms that encourage integration."
Competition in the health insurance industry is disappearing with more markets across the country dominated by one or two insurers, according to the American Medical Association’s newly released edition of Competition in Health Insurance: A Comprehensive Study of U.S. Markets.In 24 of the 43 states reported in the new AMA report, the two largest insurers had a combined market share of 70 percent or more. Last year, just 18 of 42 states had two insurers with a combined market share of 70 percent or more.The study analyzed 43 states and 313 metropolitan markets against an index used by federal regulators for measuring market concentration. Markets that rate “highly concentrated” according to the federal index are areas of the country where insurer consolidation may have harmful effects on patients, physicians, employers and the economy.By reviewing enrollments in private health maintenance organizations (HMOs) and preferred provider organizations (PPOs), the study found:
View the AMA press release.
The U.S. Food and Drug Administration (FDA) and the National Institutes of Health (NIH) today unveiled an initiative designed to accelerate the process from scientific breakthrough to the availability of new, innovative medical therapies for patients.As part of the effort, the agencies will establish a Joint NIH-FDA Leadership Council to spearhead collaborative work on public health issues. The Joint Leadership Council will work together to help ensure that regulatory considerations form an integral component of biomedical research planning, and that the latest science is integrated into the regulatory review process.In addition, the NIH and the FDA will jointly issue a Request for Applications, making $6.75 million available over three years for work in regulatory science. The research supported through this initiative is intended to add to the scientific knowledge base by providing new methods, models or technologies that will inform the scientific and regulatory community about better approaches to evaluating safety and efficacy in medical product development.
View the press release.
Recovery audit contractors (RACs) are primarily responsible for identifying Medicare overpayments and underpayments. However, a new report from the Office of Inspector General (OIG) draws attention to a secondary responsibility of RACs: identifying instances of potential fraud.
During the three-year RAC demonstration project, RACs only referred two cases of potential fraud to the Centers for Medicare & Medicaid Services (CMS)—and neither of those referrals were related to specific providers.
To increase fraud referrals, the OIG recommends that CMS provide RACs with mandatory training on identifying and referring potentially fraudulent activity during claim reviews. OIG also recommends that CMS develop a fraud referral database. CMS concurred with all OIG recommendations—and is in the process of providing training to RACs and developing a database.
With only a week remaining before a scheduled 21.2 percent Medicare physician pay cut takes effect on March 1, American Medical Association President J. James Rohack, M.D., on Feb. 22 wrote to every member of Congress urging them to enact a permanent fix to the flawed Medicare physician payment formula.“Kicking the can down the road with yet another short-term action magnifies the problem and makes it very difficult for physicians to continue caring for seniors and military families,” wrote Dr. Rohack. “Congress must step back and recognize that the enormous deficit in the Medicare physician payment system is one of its own creation. . . Each year Congress fails to address the underlying cause of the problem, the deficit grows even larger; the cost of future fixes and the size of future cuts explodes.” The AMA and other medical groups have long called on Congress to scrap the SGR formula that Medicare uses to set physician pay. The formula triggers a pay cut whenever Medicare expenditures on physician services in the prior year exceed a designated target. Congress has postponed SGR-mandated cuts for 2003 and every year since then with one-year "patches” but each postponement has made the next year's reduction deeper.
Two hospital-acquired infections (HAIs)—sepsis and pneumonia—killed 48,000 people in 2006, according to a new study in the Archives of Internal Medicine. Treating patients for these two HAIs increased U.S. healthcare costs by $8.1 billion that year. Specific findings include:
The researchers analyzed 69 million discharge records from hospitals in 40 states, conducting the largest nationally representative study to date on the cost of these two common HAIs.
The use of medical technology in the United States increased dramatically between 1996 and 2006, according to Health, United States, 2009, the federal government’s 33rd annual report to the President and Congress on the health of all Americans.
The Centers for Disease Control and Prevention (CDC) data show that the rate of ordered or provided magnetic resonance imaging and computed and positron emission tomography scans tripled between 1996 and 2007 (3.9 visits per 100 persons in 1996 to 12.6 visits per 100 persons in 2007). In addition, the rate of adults aged 45 and over discharged from the hospital after receiving at least one knee replacement procedure increased 70 percent from 1996 to 2006 (26.5 per 10,000 population in 1996 to 45.2 per 10,000 in 2006).
The report was prepared by the CDC's National Center for Health Statistics from data gathered by state and federal health agencies and through ongoing national surveys.
Conducting comparative effectiveness research is not enough to improve health outcomes and reduce healthcare expenditures, according to a new Robert Wood Johnson Foundation policy paper. The research needs to be part of a larger effort to encourage the implementation of evidence-based medicine, say authors Elizabeth Docteur and Robert Berenson.
“Difficulties accessing and interpreting research findings and the limited incentives and support for incorporating research findings into practice limit the effect of these findings on clinical decision-making,” according to the authors. In one study cited, there was a 17-year lag between the discovery of more effective treatments and the adoption of those treatments into routine patient care.
The White House has released a new healthcare reform proposal in anticipation of the Feb. 25 summit for congressional leaders. The proposal is designed to bridge differences between the bills passed by the House and the Senate. The proposal also incorporates selected Republican proposals, such as greater emphasis on fraud and abuse and enhanced federal support to states for Medicaid. In addition, the proposal includes a new Health Insurance Rate Authority “to review and rein in unreasonable rate increases and other unfair practices of insurance plans.”
The President's proposal leaves in place the substantial reductions to disproportionate share hospital (DSH) and Medicare severity-diagnosis related group (MS-DRG) payments--accomplished through corrections to the market basket update for productivity--that are in the current House and Senate bills. More important, it keeps measures that are designed to shift the basis for payment to value rather than volume. These measures include value-based purchasing (not included in the House version); reduced payments for hospitals with high rates of readmissions and hospital-acquired conditions; and payment pilots for medical homes, payment bundling, and accountable care organizations. The President's proposal also leaves in place an Independent Medicare Payment Advisory Board (a more powerful version of the current Medicare Payment Commission).
Against this backdrop, The Hill is reporting that Senate Majority Leader Harry Reid will present a “final” healthcare bill Monday night, and Democrats will use reconciliation process so the measure can be passed with 51-vote majority. He expects bill to be passed within 60 days.
Almost 3.3 million more people were enrolled in state Medicaid programs in June 2009 compared with the previous June, according to a new analysis by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured. It was the biggest ever one-year increase in terms of absolute numbers, and boosted the June monthly Medicaid enrollment by 7.5 percent to 46.9 million people. It was the first time in decades that every state experienced an increase in Medicaid enrollment, and in 32 states, enrollment grew at least twice as fast as the year before, according to the analysis.
The increase in enrollment reflects the role that Medicaid plays in reducing the numbers of people who become uninsured when the economy falters, with many people turning to the program for help after being laid off and losing their employer-based health insurance. Millions more who were not eligible for Medicaid likely joined the ranks of the nation’s uninsured.
The U.S. Department of Health and Human Services announced a temporary reduction in the amount that states will have to pay the federal government to offset the cost of Medicare coverage for prescription drugs for state residents eligible for both Medicare and Medicaid, known as clawback payments. The total financial relief is $4.3 billion.
This adjustment will be applied for the period October 1, 2008, through December 31, 2010, although President Obama's budget calls for an extension through June 30, 2011. The adjustment arises from the American Recovery and Reinvestment Act, which increased the federal share of Medicaid costs. HHS will apply this increase to clawback payments.
The U.S. not-for-profit healthcare sector has begun to stabilize after a very difficult period, according to a new Standard & Poor's Ratings Services report "U.S. Not-For-Profit Health Care Sector Moves Toward Stability, But Its Long-Term Outlook Is Uncertain."
"While the recession contributed to many downgrades and weaker median financial ratios, based on current financial results, the sector is showing signs of stabilization and this has led to more positive rating actions recently," said Standard & Poor's credit analyst Martin Arrick. "While we believe many questions remain about the longer-term health of the sector, including significant uncertainties about the future of health care reform in the wake of the recent failure to pass major legislation, the sector's performance is rebounding from last year's weakest moments. But current stabilization for our rated providers is at levels generally below prior peaks."
Based on this evidence, Standard & Poor's believes its ratings and outlooks will likely stabilize in 2010. Credit stabilization in the sector began in the 2009 fourth quarter and has continued through early 2010 with an increase in upgrades and favorable outlook revisions to stable from negative or to positive in some cases.
The U.S. Department of Health and Human Services has released a new report that highlights health insurance premium increases in states across the country. The report comes shortly after Anthem Blue Cross announced proposed rate increases of up to 39 percent on its California customers, although Anthem’s parent company, Wellpoint Incorporated, earned $2.7 billion in the last quarter of 2009. “This shocking increase isn’t unique,” the report notes. "Over the last year, America's largest insurance companies have requested premium increases of 56 percent in Michigan, 24 percent in Connecticut, 23 percent in Maine, 20 percent in Oregon, and 16 percent in Rhode Island, to name just a few states," said HHS Secretary Kathleen Sebelius. "Premium increases have left thousands of families that are already struggling during the economic downturn with an unpleasant choice between fewer benefits, higher premiums, or having no insurance at all. Hard-working families deserve better."
The report says health insurance reform will fix our broken insurance system, help drive down costs, put consumer power and choice in the hands of the American people, and ensure that all Americans receive the healthcare services they need. In announcing the report, Sebelius called on Congress to pass healthcare reform legislation. "Premium hikes in California and across the country are a wakeup call," Sebelius said. "It's time for Congress to pass reform and hand control over healthcare decisions back to American families and their doctors."
The causes of Medicare spending growth have changed significantly over the past two decades, according to an article published today by Health Affairs. Twenty years ago, most of the increases were due to inpatient hospital services, especially for heart disease, but recent annual increases are the result of outpatient treatment of chronic conditions such as diabetes, arthritis, hypertension, and kidney disease, based on findings by Kenneth E. Thorpe, Lydia L. Ogden, and Katya Galactionova, published in the article “Chronic Conditions Account For Rise In Medicare Spending From 1987 To 2006.”
This study analyzed data about disease prevalence and about level of and change in spending on the ten most expensive conditions in the Medicare population from 1987, 1997, and 2006. Among the key findings: heart disease ranked first in terms of share of growth from 1987 to 1997. However, from 1997 to 2006, heart disease fell to tenth, while other medical conditions--diabetes the most prevalent--accounted for a significant portion of the rise. The authors suggest that increased spending on diabetes and some other conditions results from rising incidence of these diseases, not increased screening and diagnoses: “The changing mix of medical conditions driving the rise in Medicare spending had consequential effects. More than half of the beneficiaries are treated for five or more chronic conditions each year. System fragmentation means that chronically ill patients receive episodic care from multiple providers who rarely coordinate the care they deliver, and chronic disease management programs are notably absent in traditional fee-for-service Medicare. As Congress, the administration, providers, insurers, and consumers debate reshaping the U.S. health system, they must address these changed health needs through evidence-based preventive care.”
Medical practice leaders cited many administrative challenges with reporting data for Medicare's Physician Quality Reporting Initiative (PQRI), according to Medical Group Management Association (MGMA) research. Respondents took issue with the arduous process for accessing feedback reports, and expressed little to no satisfaction with the feedback reports.
Of responding practices that attempted to participate in the 2008 PQRI, only 48 percent were able to successfully access their 2008 PQRI feedback report, down from the 51 percent that were able to retrieve their 2007 PQRI feedback report, according to the research. The majority (60 percent) of the practices that accessed their 2008 feedback reports were dissatisfied or very dissatisfied with the report’s presentation of the information. And 67 percent were dissatisfied or very dissatisfied with the 2008 PQRI report’s effectiveness in providing guidance to improve patient care outcomes. It collectively took almost nine hours, on average, by all practice staff and physicians to successfully download the 2008 PQRI feedback reports, compared with approximately five hours to access their 2007 PQRI feedback reports.
MGMA maintains that for the PQRI to truly improve patient care, it should provide timely and actionable clinical information to physicians. MGMA calls on Congress and the Centers for Medicare & Medicaid Services to establish a PQRI appeals process and for CMS to be given needed resources so it can give participating providers interim feedback.
MGMA conducted the research in January 2010. The data include feedback from 429 respondents representing 11,419 providers in medical practice.
The Centers for Medicare & Medicaid Services (CMS) announced that Marilyn Tavenner has been named as the principal deputy administrator, the No. 2 position at CMS. Tavenner’s previous experience includes positions as group president of outpatient services at Hospital Corporation of America and CEO of Johnston-Willis Hospital and Chippenham Medical Center in Richmond, Va. Most recently, Tavenner served as Secretary of Health and Human Resources for the state of Virginia, where she oversaw 18,000 employees and a $9 billion annual budget, and directed the state’s Medicaid program.
Tavenner’s appointment is part of a “proposed modest realignment” to allow CMS to focus on the key areas of beneficiary services, program integrity, and strategic planning. Along with the position of principal deputy administrator, the realignment establishes the Office of External Affairs and Beneficiary Services, and four Centers led by deputy administrators (Center for Medicare; Center for Medicaid, CHIP and Survey & Certification; Center for Program Integrity; and Center for Strategic Planning).
Peter Budetti will be joining CMS as deputy administrator of the Center for Program Integrity, the new entity formed to head up the agency’s anti-fraud efforts. Budetti, an attorney and physician, recently held academic posts dealing with healthcare fraud and public health issues.
In a Feb.16 email communication to CMS employees about the proposed changes, CMS Acting Administrator Charlene M. Frizzera said that the realignment is expected to take effect within the next 60 days, following clearance and approval by HHS Secretary Kathleen Sebelius.
The healthcare reform bill passed by the U.S. Senate in December would reduce employer-sponsored insurance premiums by 2 percent between 2013 and 2019, according to a new analysis from the RAND Corporation. Individuals buying insurance through health benefit exchanges would see premiums 3.7 percent lower than expected.
Premiums would be driven down by a 2 percent increase in overall healthcare spending due to a surge in newly insured people accessing health services. The RAND analysis concludes that the Senate bill would reduce the number of uninsured by 53 percent and cost the federal government about $899 billion through 2019—a conclusion that is generally consistent with Congressional Budget Office estimates.
The RAND analysis, which was completed using a microsimulation model, also investigates the potential impact of changing various scenarios in the Senate bill. Highlights include:
Health plans have launched an initiative to simplify information flow between the plans and physicians’ offices, and between the plans and hospitals, similar to what ATMs did for banks and consumers. America’s Health Insurance Plans and the Blue Cross and Blue Shield Association are sponsoring regional and statewide initiatives to assess how best to offer physicians access to multiple insurers through the same information channel, such as a web portal, in a given geographic region to conduct key office tasks. The plans estimate the initiative can save hundreds of billions of dollars as the entire healthcare system achieves efficiencies through similar moves to automation and consistent business practices.
The initiative is being led by New Jersey health plans representing more than 95% of state residents with private health insurance, and major statewide physician organizations. Although the first year constitutes a pilot, the initiative is designed to be permanent. The goal is to develop regional services that span the entire country.
The federal government is awarding nearly $1 billion in stimulus funds to help healthcare providers advance the adoption and use of health IT and train workers for future healthcare jobs. The awards are intended to make health IT available to more than 100,000 hospitals and primary care physicians by 2014 and train thousands of people for careers in health care and IT.
Of the more than $750 million being awarded by the Department of Health and Human Services, $386 million will go to 40 states and qualified state-designated entities to facilitate health information exchange at the state level, and $375 million will go to an initial 32 not-for-profit organizations to support the development of regional extension centers that will help health professionals as they work to implement and use health IT. This assistance at the state and regional levels will facilitate healthcare providers' efforts to adopt and use electronic health records in a meaningful manner.
The more than $225 million being awarded by the Department of Labor will be used to train 15,000 people in job skills needed to access careers in health care, IT, and other high-growth fields. Through existing partnerships with local employers, the grant recipients have identified about 10,000 job openings for skilled workers that likely will become available in the next two years in areas such as nursing, pharmacy technology, and IT. The grants will fund 55 separate training programs in 30 states to help train people for secure, well-paid health jobs and meet the growing employment demand for health workers.
2009 marked the fourth consecutive year in which bond rating downgrades outpaced upgrades among rated not-for-profit healthcare organizations, according to Moody’s 2009 Not-for-Profit Healthcare Year-End Rating Review. Moody’s downgraded 54 organizations and upgraded 21 last year.
The report cites soft volume trends, revenue pressures, and uncompensated care as reasons for the high number of downgrades. Economic optimists can find a silver lining in the Moody’s report: Downgrades declined significantly during the second half of 2009, compared with the first half.
Anthem Blue Cross agreed to a two-month delay in implementation of a rate increase for individual coverage in California, the firm announced on Saturday, Feb. 13. The delay comes in the face of objections from U.S. Health and Human Services Secretary Kathleen Sebelius and a request from the California Department of Insurance for more time to review the increase, which would have raised rates for some individuals by up to 39%. "We welcome the regulatory review and are confident that our rates reflect anticipated medical costs," said Brian A. Sassi, President and Chief Executive Officer of Anthem's Consumer Business Unit. Sassi placed the rate increase in the context of unsustainable increases in medical costs afflicting the entire healthcare system.
Sebelius acknowledged that the delay "offers some temporary relief," but insisted that "what California families need is long-term health insurance security, so that they don’t face sharply higher prices or fewer benefits. This rate increase underscores the urgency of passing real health insurance reform.”
President Obama will make available a new healthcare reform proposal within the next two weeks, according to an invitation sent today to Congressional leaders from both parties for a Feb. 25 summit to discuss healthcare reform. The invitation said that prior to the meeting "we will post online the text of a proposed health insurance reform package" designed to control costs, regulate insurance practices, and reduce the deficit. The invitation asked congressional Republican leaders to "put forward their own comprehensive bill to achieve those goals and make it available online as well."
Sen. Max Baucus (D-Mont.) today announced a jobs bill that would have delayed implementation of Medicare physician payment cuts of up to 21%, as reported earlier by HFMA News. However, The Hill is reporting that later in the day, Senate Majority Leader Harry Reid (D-Nev.) announced that he would instead introduce a scaled-back jobs bill that would not delay the physician pay cut. Other healthcare-related provisions that were in the earlier version of the bill but not in the scaled-back version include an extension of the exceptions process for Medicare therapy caps and extension of payment provisions for mental health providers, the rural hospital flexibility program, and improved payments for outpatient services in hospitals in rural areas. The physician payment reductions are scheduled to go into effect by March 1.
The cost of providing health care to immigrants is lower than the cost of providing care to U.S. natives, according to a study published today by Health Affairs. Immigrants are not contributing disproportionately to high healthcare costs in public programs, such as Medicaid, according to the article “Trends in Health Care Spending for Immigrants in the United States,” by Jim P. Stimpson, Fernando A. Wilson, and Karl Eschbach. The study analyzed data on healthcare spending from the Medical Expenditure Panel Survey (MEPS) between 1999 and 2006 for adult naturalized citizens and immigrant noncitizens, including some undocumented immigrants. The study also found that noncitizen immigrants were more likely than U.S. natives to have a healthcare visit classified as uncompensated care, although uncompensated care declined across all groups during the period.
Healthcare spending increased for all groups over the period studied, but the average expenditures for noncitizens were half the amount spent for U.S. citizens. Half of the noncitizens had public per capita expenditures of $200 or less, whereas half of naturalized citizens had public per capita expenditures of up to $1,100. Moreover, established immigrants had higher expenditures than recent arrivals had. The authors concluded that noncitizens probably had lower expenditures because of a lower need for services and increasing barriers to care, such as fear, lack of insurance, or lack or a regular provider.
Released today, the 2010 Economic Report of the President summarizes the unsustainable trajectory of healthcare spending and shows ways in which controlling health spending would improve the U.S. standard of living “by freeing up resources that could be used to produce other goods and services.”
This annual report is written by the Chairman of the Council of Economic Advisors. It reviews the nation's economic progress and is transmitted to Congress no later than ten days after the President submits his budget proposal.
According to the report, both the House and Senate healthcare reform bills would significantly reduce the healthcare spending rate of growth after a spending increase “in the very short run” due to coverage expansion. The report lists the following standard-of-living benefits of slowed spending growth:
The report concluded that controlling healthcare spending is the most important factor in resolving the nation’s long-term financial challenges.
Download the report (458 pp, PDF).
In a Feb. 9 news conference after meeting with Congressional leaders from both parties, President Obama restated his goals for healthcare reform, saying any plan will be held to this test: "Does it bring down costs for all Americans as well as for the federal government...? Does it provide adequate protection against abuses by the insurance industry? Does it make coverage affordable and available to the tens of millions of working Americans who don't have it right now? And does it help us get on a path of fiscal sustainability?" To achieve those goals, the President offered conditional interest in new ideas. "I'm going to be starting from scratch in the sense that I will be open to any ideas that help promote these goals," he said. However, the President said he was not interested in extensive committee hearings, but in true bipartisan compromise based on "factual accuracy."
The President offered tort reform as an example of how compromise might work, saying that if facts show tort reform will lower healthcare costs, he would "be willing to work on that," but that if it's established that tort reform has only a modest effect on costs, he would insist on exploring other reforms as well.
The President has invited Republican and Democratic Congressional leaders to a summit on health care on February 25.
Read the news conference transcript.
Public opinion is almost evenly divided on the overall healthcare reform plan as it currently stands (46% in favor, 49% opposed), according to a new Washington Post-ABC News poll. Yet 63% of respondents say Washington legislators should keep trying to pass comprehensive healthcare reform rather than abandoning the effort. The American public again divides evenly over whether comprehensive healthcare reform legislation can be enacted this year (48% say yes, 46% say no).
Americans favor some aspects of healthcare reform, such as banning limits on pre-existing conditions (80%), favoring a mandate that employers offer health insurance to their full-time employees (72%), and requiring all Americans to have health insurance (56%). But 60% of respondents say the proposed healthcare changes are too complicated, while 35% say reform has to be this complex to achieve the goals, according to the poll. Of the respondents who have private health insurance, 74% say they trust their insurance company to handle their claims fairly.
A jobs bill introduced by Senate Democrats proposes delaying physician Medicare pay cuts of 21% scheduled to take effect by March 1.
Potential reduction in Medicare's physician payment arises regularly as a result of the sustainable growth rate (SGR) formula that is used to determine payment rates. Physician groups and others have called for a correcton to the formula, and some healthcare reform proposals included that change, despite the increase in healthcare costs that would result.
In the absence of such a change, the Democrats' proposed jobs bill delays implementation of the payment reduction until October 1.
Recent research shines the spotlight on current Medicare payment structures. published online in the journal Cancer, one study found that the number of outpatient endoscopic bladder cancer procedures doubled in one New York practice—after Medicare increased payments to physicians for these outpatient procedures in 2005. The authors did not see a correlating decrease in hospital-based surgeries. Overall, costs to Medicare rose 50%.
Another study released last week found that many community oncology practices are not paid enough by Medicare to cover the costs of providing infusion services. The oncology practices surveyed received Medicare payments equivalent to 56.53% of the costs incurred to provide infusion services.
U.S. Department of Health and Human Services Secretary Kathleen Sebelius sent a letter to Anthem Blue Cross on Monday, calling on the firm to publicly provide a detailed justification for its decision to raise premiums for its California customers by as much as 39%. In the Feb. 8 letter, she stated, “These extraordinary increases are up to 15 times faster than inflation and threaten to make health care unaffordable for hundreds of thousands of Californians.” Sebelius also called on Anthem to make public information on the percentage of its individual market premiums used for medical care versus the percentage used for administrative costs. She noted that Anthem’s parent company, Wellpoint Incorporated, earned $2.7 billion in the last quarter of 2009, making the rate increases “even more difficult to understand.”
On Feb. 5, California Insurance Commissioner Steve Poizner said that he had instructed his department to hire an outside actuary to examine Anthem’s rates to ensure they are in compliance with state law, and he advised the public to shop around for health insurance.
Update, Feb. 10: The House Energy and Commerce Committee's Subcommittee on Oversight and Investigations will hold a hearing on Wednesday, February 24, about the reported Anthem Blue Cross price increase. The committee and subcommittee chairmen sent a letter to the President and CEO of WellPoint (owner of Anthem Blue Cross), requesting her testimony at the hearing as well as information and documentation about the rate increase.
Update, Feb. 11: Brian A. Sassi, President and CEO, Consumer Business Unit, WellPoint sent a five-page letter today to HHS Secretary Sebelius, defending the proposed Anthem rate increase. Sassi wrote that "Anthem's profit margin in California is in-line with and below that of many of our competitors.... For example, Anthem's net income no a per-member-per-month basis was $12.62 during 2008, which compares to $18.45 and $13.22 for our two large not-for-profit competitors." Sassi pointed out that the rate increase affects only the individual insurance market, and that a change in insurance product would mitigate the increase for affected individuals. In addition, Sassi recommended policy changes to "mitigate volatile individual market rate increases."
Sebelius responded to the letter with a statement that began, "It remains difficult to understand how a company that made $2.7 billion in the last quarter of 2009 alone can justify massive increases that will leave consumers with nothing but bad options."
Although healthcare policymakers and private insurers champion pay for performance (P4P) as a tool for improving the quality of health care, a large P4P initiative failed to produce either a major improvement in quality or notable disruption in care, according to “Can You Get What You Pay For? Pay-for-Performance and the Quality of Healthcare Providers,” by Kathleen J. Mullen, Richard G. Frank, and Meredith B. Rosenthal, published in the Spring 2010 issue of the RAND Journal of Economics. Researchers recently analyzed performance reports from medical groups that worked with a large network HMO before and after implementation of two P4P programs in California. Although the researchers found that some incentivized measures of quality may have improved in response to P4P, they did not find evidence of positive spillovers to other related aspects of care.
The P4P program rewards healthcare providers with bonuses for high marks in areas of preventive medicine, such as blood sugar testing for diabetics. The Institute of Medicine recently recommended that Medicare join private insurers in offering better quality, incentive-based care. However, the research shows that P4P might persuade providers to focus on incentivized areas rather than shift resources toward general quality improvement.
Medicare paid for 45 percent of all stays in rural hospitals in 2007, while private health insurance paid for 25 percent of such stays, according to a statistical brief from the Agency for Healthcare Research and Quality. In urban hospitals, on the other hand, Medicare paid for 35 percent and private health insurance paid for 36 percent of all stays. Medicare accounted for 55.7 percent of aggregate costs in rural hospitals, compared with 44.3 percent in urban hospitals in 2007. Medicaid was the primary payer for about 20 percent of rural hospital stays, and patients living in the lowest income communities accounted for about 54.7 percent of all rural hospital stays.
Rural hospitalizations accounted for 12.8 percent of all hospitalizations and 9.6 percent of aggregate hospital costs in 2007. On average, costs per stay in rural hospitals were $6,500, compared with $9,000 in urban hospitals. The length of stay was shorter in rural hospitals (3.9 days) than in urban hospitals (4.7 days). In general, the most common principal diagnoses and principal procedures among rural hospital stays and urban hospital stays were similar. The top five principal procedures performed in rural hospitals were circumcision, cesarean section, blood transfusion, upper GI endoscopy, and arthroscopy of knee.
Patients involved in car crashes are more likely to have private insurance than other types of emergency department (ED) patients, according to recent research from the Agency for Healthcare Research and Quality (AHRQ). Fifty-five percent of ED visits related to motor vehicle crashes were covered by private payers in 2006. In comparison, only 34 percent of other types of ED visits were covered by private payers.
A January AHRQ statistical brief also provides hospital leaders with insight on how car crashes affect patient flow. For example, about 85 percent of motor vehicle victims were released from EDs after treatment for minor injuries, such as sprains. ED visits related to car crashes resulted in hospital admission about half as often as ED visits related to other causes (8 percent versus 15.6 percent).
A new publication from the Centers for Medicare & Medicaid Services may help patients understand how hospital status—or whether a patient is an inpatient or outpatient—affects Medicare payment to hospitals and skilled nursing facilities. The free, online publication clarifies that patients on observation status are considered outpatients. It also explains that a patient can spend the night at the hospital and still be considered an outpatient—if a physician did not write an order to admit that patient.
Applications are now being accepted for HFMA’s High Performance Award in Revenue Cycle. The award criteria identify hospitals that are distinctive, innovative and effective in revenue cycle process improvements and patient satisfaction. In addition, it recognizes sustainable financial performance that serves the mission of the organization.
The award is sponsored by 3M Health Information Systems.
The award criteria are based on HFMA's Revenue Cycle Key Performance Indicators, developed by HFMA’s KPI Task Force, and on research for the latest PATIENT FRIENDLY BILLING® report, Strategies for a High-Performance Revenue Cycle, published in 2009.
The High Performance Award in Revenue Cycle was first presented at ANI: The Healthcare Finance Conference in 2009. The Second Annual High Performance Award in Revenue Cycle will be presented at the 2010 ANI to up to 15 hospitals that meet or exceed the award criteria. Award recipients will be recognized at several special events at ANI, including a presentation of the awards at the Monday morning general session. HFMA will also recognize the winners in its online communications and print publications, and will provide winners with press materials they can use to announce the award to their communities. Finally, award winners will become part of a distinguished peer group of healthcare finance leaders who are helping to define best practices for a high performance revenue cycle.
All applications must be submitted by March 12, 2010. To learn more about the award and to apply, visit www.hfma.org/award.
Growth in U.S. national health expenditures (NHE) is expected to have increased faster than the growth in the gross domestic product (GDP) in 2009, according to a report issued today by the Centers for Medicare & Medicaid Services (CMS) and published online by Health Affairs. In 2009, NHE is projected to have reached $2.5 trillion and grown 5.7 percent, up from 4.4 percent in 2008 (the latest available historical year), while GDP, with the economy still in recession, is anticipated to have declined 1.1 percent. Health spending estimates for 2009 are projected because data for all of CY09 are not yet available.
The projected acceleration in growth for 2009 was due in part to faster spending growth for the Medicaid program (9.9 percent, up from 4.7 percent in 2008), reflecting increasing growth in enrollment associated with the recession. Also contributing to the acceleration was faster growth in the use of a variety of healthcare services as many people sought treatment for the H1N1 virus and an expected increase in the take-up rate for coverage provided through COBRA in response to the government's subsidies for COBRA premiums. As a result of NHE growth outpacing GDP growth in 2009, the health share of GDP is expected to have increased from 16.2 percent of GDP in 2008 to 17.3 percent in 2009, which would represent the largest one-year increase in history.
Spending growth in three of the major healthcare sectors is expected to have accelerated in 2009. Hospital spending growth is expected to have increased 5.9 percent in 2009, up from 4.5 percent in 2008, and reached $760.6 billion. Physician and clinical services spending growth is expected to have increased 6.3 percent in 2009, up from 5.0 percent in 2008, and reached $527.6 billion.
Evidence already suggests that liability concerns cause physicians to exit particular medical specialties, such as obstetrics and surgery. Now, a study in the current issue of The Journal of Law & Economics demonstrates that physicians may also decrease their workloads as liability risks rise.
Employing a new liability measure, the researchers found that the hours physicians worked per week decreased by 2.85 percent when expected liability costs increased 10 percent. This decrease is equivalent to 1 out of every 35 physicians leaving the workforce. The linkage between rising liability and reduced work hours was strongest for physicians 55 and older. Sole proprietors also exhibited a relatively strong reaction.
The study also found that a $1 increase in expected liability is linked to a $0.70 to $1.05 increase in malpractice premiums.
Despite the growing use of the Internet, consumers are not embracing the consumer-directed electronic personal health record (PHR), according to industry experts quoted in a Feb. 2 iHealthBeat article. Revolution Health, a health company started by AOL co-founder Steve Case, implemented an online personal health record in 2007 and will shut it down at the end of February, according to iHealthBeat.
Several industry experts commented that the do-it-yourself health record is too much work for consumers to gather and input information. Consumer-controlled health records that receive data automatically have the potential to be more widely accepted by consumers in the future, according to the experts. More useful would be applications that accept data from a data utility later, such as lab results or information about medical office visits, and put the data into a useful format. One good example that was cited is a new PHR model called Keas, which collects data from several sources and then translate the information into action plans for patients, according to the report. iHealthBeat is a service of the California HealthCare Foundation.
Hospitals may soon be able to refinance all types of existing loans—including financing related to IT, facility, and equipment needs—under the Section 242 hospital mortgage insurance program, according to a newly proposed rule.
The proposed rule from the U.S. Department of Housing and Urban Development (HUD) eliminates the current requirement that refinancing can only be related to construction or renovation expenditures. “By expanding FHA's Hospital Mortgage Insurance Program … HUD believes it can contribute to alleviating financial stress on hospitals and maintaining the availability of hospitals in many communities,” according to HUD.
Comments on the proposed rule are due by March 30.
Both Moody’s Investors Service and Fitch Ratings are maintaining a negative outlook for the not-for-profit healthcare sector in 2010.
The recovery of not-for-profit hospitals likely will be delayed until well after the broad economy heals, Moody’s states in its Annual Sector Outlook for Not-for-Profit Healthcare for 2010. The rating agency cites high unemployment, consumer pessimism, weakened employer insurance coverage, and unprecedented government budget deficits at the federal and state levels as the dominant factors driving its negative outlook. Moody’s expects decreased Medicare spending due to projections of deep multiyear federal budget deficits.
Negative factors cited by Moody’s include sluggish patient volumes, pressure on all hospital revenue streams, increased difficulty cutting more costs following deep expense reductions last year, debt structure and liquidity risks, high capital needs, and the conclusion of the federal stimulus program in December 2010. Positive factors include strong management capabilities, benefits from a partial recovery of the equity and debt markets, and an anticipated increase in merger and acquisition activity.
Fitch Ratings is maintaining a negative outlook based on several strategic, operational, financial, and environmental factors. In its 2010 Nonprofit Hospitals and Health Systems Outlook, Fitch states that evolving elements of healthcare reform, lingering recessionary effects, continued instability in the financial sector, and the government's cost-containment efforts will pressure many hospitals' and health systems' revenues, operations, profitability, and capital access over the short term.
Like Moody's, Fitch anticipates that providers will have difficulty making further cuts and that cuts that have been made may not be sustainable. The agency also believes negative rating pressure will continue to be felt more by lower-rated organizations. Fitch anticipates provider payment methodologies to continue to favor those that deliver measurably effective and efficient services. In addition, Fitch expects rating downgrades to moderately outpace upgrades over the next year, driven by the expectation of a continued difficult operating environment over the next few years. However, as in years past, Fitch expects the majority of rating actions this year to be affirmations.
President Obama’s FY11 budget, released today, proposes legislative and administrative changes designed to control Medicare and Medicaid waste, while enhancing IT and supporting providers in underserved areas.
The FY11 Health and Human Services budget requests $1.7 billion to combat healthcare fraud, including $561 million in Health Care Fraud and Abuse Control discretionary funding—an increase of $250 million over the FY10 enacted level—to strengthen Medicare and Medicaid integrity activities. The budget includes a set of new program integrity proposals that will give HHS tools to combat healthcare fraud by enhancing provider enrollment security, increasing claims oversight, improving Medicare’s data analysis capabilities, and reducing overuse of Medicaid prescription drugs. The investments are projected to save $9.9 billion over 10 years from increased recoveries and prevention efforts.
In addition, the budget includes $3.6 billion, an increase of $186 million over FY10 funding, to strengthen the Centers for Medicare & Medicaid Services (CMS) by revamping IT systems and increasing staffing. The increase includes $110 million to be used to transform CMS’s data environment from one focused primarily on claims processing to one also focused on state-of-the-art data analysis and information sharing.
The Budget also includes $78 million, an increase of $17 million, to the Office of the National Coordinator for Health Information Technology to accelerate health IT adoption. Also in FY11, incentive payments to support adoption and meaningful use of electronic health records will begin; those payments are estimated at $20.6 billion over 10 years.
In addition, the budget includes $995 million to address the shortage of healthcare providers in underserved areas and increases funding to expand services at health centers by $290 million.
Other items of note:
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