HFMA VIEWS

As the U.S. House of Representatives and Senate worked on the economic stimulus package and reauthorization of the State Children’s Health Insurance Program (SCHIP), a number of stories in the news this week made the case for legislative intervention.

The Department of Health & Human Services released a report showing that the number of children covered by SCHIP increased to 7.4 million in 2008, a four percent increase over 2007. The Commonwealth Fund released an analysis showing that in 2006, only nine percent of laid-off workers took up coverage under the Consolidated Omnibus Budget Reconciliation Act (COBRA). According to the analysis, a major factor in the low rate of COBRA coverage was the prohibitive cost of taking up COBRA, which is often four to six times the cost of premiums a worker paid while employed. Fitch Ratings’ nonprofit hospital and healthcare system sector outlook for 2009 emphasized the effect of increasing unemployment on depressed operating profitability. Meanwhile, a study in the Archives of Internal Medicine held out the promise of healthcare IT in reducing both morbidity and costs at hospitals.

The economic stimulus and SCHIP reauthorization bills currently working their way through Congress would direct more than $170 billion in new spending at these issues. In a post on The Wall Street Journal’s Health Blog, reporter Sarah Rubinstein notes, “You might mistake the economic stimulus package slated for a House vote today for a health-reform bill, if weren’t sprinkled with some goodies for other sectors of the economy.” The New York Times, relying on an analysis by the Congressional Budget Office, breaks down $127 billion of the money slated for healthcare stimulus spending as follows: $87 billion to increase the federal share of Medicaid, $11 billion to finance Medicaid coverage for individuals who would not otherwise qualify, and $29 billion to subsidize private insurance. The private insurance subsidies would include payments by the U.S. government of 65 percent of laid-off workers' COBRA premiums for a year. On top of the $127 billion for coverage initiatives is another $20 billion for healthcare IT.

As of Thursday, Jan. 29, both the House and Senate have approved similar versions of a bill that would expand SCHIP coverage   to more than 4 million uninsured children by 2013, while continuing coverage for the more than 7 million children already in the program. The estimated cost of this coverage is $32 billion in additional SCHIP spending over the next 4 1/2 years. The bill expands coverage to children and pregnant women who are legal immigrants, ending a current five-year ban on coverage for legal immigrants.

In the words of Representative Michael C. Burgess (R-Tex.), "It's raining money." This week’s outlook from Fitch, however, predicts that stimulus spending might be beneficial to hospitals and health systems in the long term, but does not expect that it will provide immediate relief. Share your thoughts on the stimulus package and its potential effects on providers by commenting below.

In his “From the President” column for the February 2009 issue of hfm magazine, HFMA CEO and President Richard L. Clarke reflects on President Barack Obama’s inaugural address.

“Only in America is my story possible.” This quote from then-candidate Barack Obama resonated with me as I watched him become the 44th President of the United States on January 20th.

Millions of other Americans watched his swearing-in ceremony, and billions around the world heard his speech. Almost all interviewed on that day expressed high hopes for the new President and the prospects of dealing with the many challenges facing this nation.

During his speech, President Obama urged us to embrace "hope over fear, unity of purpose over conflict and discord" when dealing with difficulties. He also noted that the challenges we face are serious and many, and that they will not be met easily or in a short time span. But he also said, “…know this, America--they will be met.” One challenge he pledged to achieve was “…to raise health care’s quality and lower its cost.”

That achievement will be no small task. The U.S. healthcare system has escaped systematic reform for decades because our leaders have failed to choose hope over fear, and unity of purpose over conflict and discord. The team President Obama has assembled to lead systematic reform efforts appears to be up to the task--so I have high hopes.

Much has been written about what is wrong with our healthcare system--high cost, inconsistent quality, millions without access to insurance coverage. Although much is also right with what we do, the status quo is no longer a viable alternative.

Healthcare financial leaders have an important role to play in this effort. We can be a positive force for change by providing insights into the consequences of decisions on resource provision and use. We can be objective in the discussions about payment, incentives, cost, and financial impact. We can be part of the solution by helping to foster unity of purpose.

So as our elected leaders begin the debate about how to produce a sustainable health system that deals effectively with cost, quality, and coverage, my hope is that they will deal with differences honestly, pushing for a unity of purpose, reducing discord, and choosing hope over fear.

During his inaugural address, President Obama’s words were hopeful and inspiring. My hope is that his words turn into effective action.

Another eccentricity of the nation’s fragmented healthcare payment system was in the spotlight this week as the California Supreme Court unanimously ruled that “balance billing” is prohibited under state law.

The issue of balance billing arises when a patient who is an HMO member seeks emergency care from a provider (in this case, groups of emergency physicians) who does not have an advance agreement for payment with the HMO. California state law imposes an obligation on providers to give emergency care, but also states that providers are entitled to a reasonable payment for that care. This is all well and good, except when the provider and the payer differ on what is a reasonable payment for the service.

The California Supreme Court held that a dispute on reasonable payment is an issue between the physician and the HMO, not the patient who sought the emergency care. Physicians are entitled to directly sue the HMO if they believe they have received an unreasonably low payment, but they cannot bill the patient for the balance between what the physician thought was a reasonable charge for the care provided and what the HMO was willing to pay.

Filing a lawsuit for each disputed payment from an HMO is, needless to say, a rather cumbersome way to be paid. The Wall Street Journal Health Blog notes that the emergency physicians who brought the case argued that balance billing gave them some leverage against the plans, which would likely hear from unsatisfied members who had been balance billed.

The California Medical Association makes a similar argument about lost leverage, stating that in many cases physicians and hospitals will now simply “eat the cost of emergency medical care that HMOs refuse to cover” and place greater financial pressures on already stressed emergency departments.

From the patient’s perspective, the ruling makes sense. In a true emergency, patients are likely to go to the nearest emergency department without thinking too much about whether a particular provider has a payment agreement with their plan. They probably do think, however, that they have purchased some peace of mind along with their coverage.

The California Supreme Court’s decision made clear that the question of how to resolve disputes between physicians and HMOs was not before it in this case; it was simply resolving the issue of whether a patient/HMO member could be brought into the dispute. Now might be an appropriate time for state legislators or regulators to step in to make sure that providers and payers are playing on a balanced field. 

It’s hard to start 2009 without the sense that major change is coming in the New Year.

As a number of stories in this week’s news remind us, we’re still reeling from the effects of 2008. Challenges are on the horizon for hospitals and health systems that may face higher contributions to pension plans as weakened investments erode plan asset values, while healthcare philanthropy is also feeling the pinch of diminished portfolios. Older Americans worry they may not be able to afford healthcare costs in 2009.

Yet, regardless of one’s political affiliation, there’s an undeniable sense of anticipation in the air--and perhaps an emerging consensus around the idea that everyone is going to have to work together to start moving forward again--as we prepare for the inauguration of our next president.

Yesterday’s Senate hearings on the confirmation of Tom Daschle as the next Secretary of the Department of Health & Human Services is one place where we might see a spirit of bipartisanship taking shape. Mr. Daschle was introduced and endorsed by his former Senate colleague from across the aisle, Bob Dole, and he was given a “welcome home”  by Sen. Richard M. Burr (R-N.C.).  One observer of the hearings detected common ground on the need to improve healthcare IT and preserve medical care in rural areas, although tougher issues--the proposal for a public insurance option, for example--lie ahead as healthcare reform debates get underway.

And in a speech on the economy delivered yesterday at George Mason University, President-elect Obama urged all Americans “to set a new course for the nation.” He identified health care as a significant component in setting that course, promising immediate investments to ensure that all medical records are computerized within the next five years and pledging to continue bipartisan extensions of healthcare coverage to help Americans through this crisis.

2009 will be an interesting and challenging year. We can all afford to indulge in a little optimism and a spirit of good will as it gets underway.