Wal-Mart, the nation’s largest private employer, sent a letter to President Obama and congressional officials expressing support for an employer mandate that would require large companies to provide health insurance to their workers. As reported by Kaiser Health News and the Associated Press, Wal-Mart’s chief executive, Michael Duke, was joined in signing the letter by Andrew L. Stern, president of the Service Employees International Union, which represents more than a million healthcare workers, and John Podesta, who leads the Center for American Progress. The letter also states that any employer mandate should be balanced by a healthcare cost containment guarantee, perhaps through a trigger mechanism that would impose reductions if designated spending targets were not met.
A new report from the Institute of Medicine recommends 100 health topics that should get priority attention and funding from a new national research effort to identify which healthcare services work best. The report also spells out actions and resources needed to ensure that this comparative effectiveness research initiative will be a sustained effort with a continuous process for updating priorities as needed and that the results are put into clinical practice.
A committee convened by the IOM developed the list of priority topics at the request of Congress as part of a $1.1 billion effort to improve the quality and efficiency of health care through comparative effectiveness research outlined in the American Recovery and Reinvestment Act of 2009. The committee’s report provides independent guidance—informed by extensive public input—to Congress and the secretary of HHS on how to spend $400 million on research to compare health services and approaches to care.
The Agency for Healthcare Research and Quality’s annual release of state-by-state quality data continues to give states mixed reviews for the quality of care they provide. The 2008 State Snapshots provide quality information that includes strengths, weaknesses, and opportunities for improvement. The information used to create the State Snapshots is drawn from the 2008 National Healthcare Quality Report, which was released in May by HHS.
The 2008 State Snapshots summarize healthcare quality in three dimensions: type of care (preventive, acute, and chronic care), care setting (hospitals, ambulatory, nursing homes, and home health care) and by clinical areas (cancer, diabetes, heart disease, maternal and child health, and respiratory disease). The dashboard for each state now contains revised graphics that succinctly display all of the summary measures on healthcare quality and allow a clear view of the range of each state’s performance.
HHS has also released state-by-state reports on the healthcare status quo.
HHS has announced that the administration will rescind all or part of three Medicaid regulations that were previously issued and delay the enforcement of a fourth regulation.Each of these rules, in whole or in part, had been subject to Congressional moratoria set to expire on July 1, 2009. By this action, CMS and HHS are:
•Rescinding a rule that would have limited the outpatient hospital and clinic service benefit for Medicaid beneficiaries to the scope of services recognized as an outpatient hospital service under Medicare.
•Rescinding provisions of an interim final rule which would have restricted beneficiary access to case management services.
•Rescinding a final rule that would have eliminated reimbursement for school-based administrative costs and costs of transportation to and from schools.
•Delaying until June 30, 2010, the enforcement of portions of a regulation that clarified limitations on healthcare-related tax programs so that CMS could determine whether states need additional clarification or guidance. CMS may also further review the potential impact of the regulation, and give additional consideration to alternative approaches.
Read the CMS press release.
HHS has released a series of concise reports on healthcare cost and quality at the state level that are intended to underscore the need for health reform. Data available in the reports include the increase in family health insurance premiums since 2000, percentage of state residents without health insurance, changes in the percentage of state residents with employer-sponsored coverage, and overall quality ratings for health care in each state.
Increases in physicians’ overall compensation in both primary and specialty care did not keep up with inflation in 2008, according to the Medical Group Management Association (MGMA) Physician Compensation and Production Survey: 2009 Report Based on 2008 Data. Physicians in primary care reported a 2 percent increase (-1.73 percent adjusted for inflation) to a median of $186,044. Specialists’ compensation rose 2.19 percent (-1.59 percent when adjusted for inflation) to a median of $339,738. Inflation in 2008 amounted to a 3.8 percent increase in the U.S. Consumer Price Index. Physicians in internal medicine fared the worst among their primary care counterparts, posting an increase of less than 1 percent in compensation in 2008 (-3.37 percent with inflation considered). Among specialists, emergency medicine physicians, dermatologists, and general surgeons all reported flat salaries before inflation was factored in, with declines of up to -3.2 percent after inflation. Gastroenterology, up 7.38 percent, and pulmonary medicine, up 6.65 percent, were among the few specialties that posted moderate gains in compensation in 2008.
Read the press release.
Nearly one in four people (22.7%) report having had trouble paying medical bills during the past year, according to a survey conducted in May by the Robert Wood Johnson Foundation. The survey also found that almost a quarter (22.4%) report that they or a family member delayed seeing a doctor when it was necessary because of concerns about cost. The Robert Wood Johnson Foundation Health Care Consumer Confidence Index is described as the first-ever monthly measure of consumer confidence in American health care. It will be released the third week of every month.
The potential savings that can be achieved through health reform vary markedly, depending on whether or not a public insurance plan option is included and how it is structured, according to a new analysis from The Commonwealth Fund. The report compares three different scenarios: one that includes a public plan option in which healthcare providers would be paid at rates that fall midway between current Medicare rates and private plan rates, among other payment reforms; one that includes a public plan option that links payments more closely to Medicare rates; and one that includes no public plan, relying exclusively on private plans.
Cumulative health system savings between 2010 and 2020, compared with projected trends for that period, would range from a high of $3.0 trillion under the approach that includes a public plan paying providers at Medicare rates in competition with private plans, to $2.0 trillion for a public plan paying providers at rates midway between current Medicare and private plan rates, to $1.2 trillion in the private plan scenario, according to the study.
Under all three scenarios, near universal coverage would be achieved. Assuming reforms start in 2010, the number of uninsured Americans would drop to 4 million by 2012 (1 percent of the population) and remain low. Without reform, the number uninsured is expected to rise to 61 million by 2020.
Hospital and physician revenues would continue to grow under all three scenarios, but at a slower rate. Reforms that insured everyone and raised Medicaid’s payment rates to Medicare’s would infuse new revenues and eliminate the need for implicit cross-subsidies built into current charges to private insurers, according to the study.
Voting is open only until Friday, June 26 for Modern Healthcare magazine’s 100 Most Powerful in Health Care. Cast your vote for HFMA President and CEO Richard L. Clarke, DHA, FHFMA, and others who influence our industry. Dr. Clarke has been named to the list every year since its inception.
Out-of-pocket healthcare costs for a person with employer-based coverage rose 30 percent from an average of $2,827 in 2001 to $3,744 in 2006 (including premiums), according to a report released yesterday by the U.S. Department of Health & Human Services. Hidden Costs of Health Care: Why Americans are Paying More but Getting Less documents the rising cost of deductibles, copayments and out-of-pocket expenses. Other report findings include the following:
•A person with employer-based coverage paid an average of $1,522 on health care (not including premiums) in 2006, compared with $1,260 in 2001.
•Employer-sponsored health insurance premiums have nearly doubled since 2000, a rate three times faster than wages. In 2008, the average premium for a family plan purchased through an employer was $12,680.
•For preferred provider organization plans purchased through an employer, the average family deductible increased 30 percent in just two years, from $1,034 to $1,344. This effect is more pronounced for small firms, where PPO deductibles increased from $1,439 to $2,367 — a rise of 64 percent.
•In 2004, one in five people with health insurance through an employer had a copayment of more than $25, but by 2008 the number jumped to one in three.
Almost three-quarters of Americans favor including a public insurance plan in healthcare reform legislation, including 50 percent of those who identify themselves as Republicans, according to a New York Times/CBS News poll of 895 adults. Half of all respondents said the government would do a better job at providing medical coverage than private insurance companies currently do, and 59 percent thought government was better equipped to hold down health costs. But at the same time, people expressed concern that if the government guaranteed health insurance for everyone, their current health care would suffer, with 68 percent predicting that access to medical tests and treatment would be more restricted than it is now. Still, nearly 60 percent said they would be willing to pay higher taxes to ensure universal coverage for Americans.
Eighty-five percent of those polled supported healthcare reform, with an equal number stating that rising health costs were a serious economic problem. Respondents had little issue with the quality of healthcare, as 77 percent claimed they were satisfied with their own healthcare quality. The majority of respondents said they believed that the Democrats would do a better job overhauling the healthcare system than would Republicans.
President Obama announced on Saturday that pharmaceutical and biotechnology companies have agreed to discount the cost of prescription drugs to Medicare beneficiaries who incur large out-of-pocket expenses when they fall in the “doughnut hole” coverage gap in Medicare Part D plans. The agreement, which Obama said will be included in the healthcare reform legislation he expects to sign in October, is part “of the landmark pledge many health industry leaders made to me last month when they offered to do their part to reduce health spending $2 trillion over the next decade,” he said in a statement.
Pharmaceutical companies said they will provide a 50-percent discount to most beneficiaries on brand-name medicines covered by a patient’s Part D plan when purchased in the coverage gap, and the negotiated price will be applied toward beneficiaries’ out-of-pocket costs. “Importantly, the proposal would not require any additional paperwork on the part of the beneficiary nor would an asset test be used for eligibility,” said a statement from the Pharmaceutical Research and Manufacturers of America. The drug discount will cost drug makers $80 billion in revenues over 10 years, reports the Wall Street Journal/Associated Press.
HHS announced yesterday that $6 billion in new federal funds will be made available to states and U.S. territories for the Children’s Health Insurance Programs (CHIP) for fiscal year 2009. The new funds were made available by the Children’s Health Insurance Program Reauthorization Act of 2009 (CHIPRA), which was signed into law by President Barack Obama on February 4. Of the $6 billion in new funding under CHIPRA, HHS has released more than $1 billion and expects to allocate the remainder to the states and territories by the end of September. CHIPRA provides additional funding that will help states and territories maintain existing CHIP enrollment and expand their programs. In addition to increased funding, CHIPRA revised the annual allotment formula to better reflect projected state and program spending and extended CHIP through fiscal year 2013.
Read the press release.
A group of healthcare providers, technology companies, and diagnostic imaging organizations has joined forces to form the Imaging e-ordering Coalition. The coalition’s mission is to advance the use of electronic decision-support technologies that will guide clinicians in ordering diagnostic imaging tests. It also seeks to educate policy makers and healthcare providers about the patient-centered efficiencies of e-ordering and to recommend to lawmakers that they include e-ordering along with e-prescribing in developing incentives for making the healthcare system more efficient.
According to the coalition, e-ordering prevents some of the issues associated with a radiology benefit manager (RBM) model, in which healthcare insurers employ organizations to manage utilization and costs of certain diagnostic exams. Issues associated with RBMs include regulatory oversight and the burden of physicians having to seek approval before ordering an imaging service. The prior-authorization requirement often denies patients the imaging studies their physicians believe are warranted. Patients are then steered toward lower-precision tests or they are forced to wait days or weeks to receive imaging services, says the coalition. E-ordering provides physicians with real-time electronic access to decisions that are linked to published, evidence-based clinical studies and are tailored to a patient’s specific circumstances.
Members of the coalition include the American College of Radiology, Center for Diagnostic Imaging, GE Healthcare, Medicalis, Merge Healthcare, and Nuance Communications, Inc.
Read the press release.
Democrats in the U.S. House of Representatives have released their healthcare bill, which represents the work of three committees under the leadership of Henry Waxman (D-Calif.), Charles Rangel (D-N.Y.), and George Miller (D-Calif.). The 850-page bill provides for a public health insurance plan that would be run by HHS and would include up to four different options with varying benefits, reports the New York Times.
The public plan’s payment would be 5 percent above Medicare rates initially, but after three years, the HHS Secretary would negotiate rates with physicians and hospitals. The government would also be charged with reducing geographic variation in medical care and remedying racial and ethnic disparities in care. After receiving start-up funding from the government, the public plan would eventually be financed only by its premiums. According to a summary of the bill, the public health plan will “be empowered to implement innovative delivery reform initiatives,” such as value-based purchasing, accountable care organizations, medical homes, and bundled payments.
The bill would also reform Medicare by decreasing preventable hospital readmissions through payment incentives, closing the “doughnut hole” on drug coverage, eliminating overpayments to Medicare Advantage plans, bundling acute and post-acute provider payments, and changing the sustainable growth rate “with an update that wipes away accumulated deficits, provides for a fresh start, and rewards primary care services, care coordination and efficiency.” The bill also provides for an expansion of Medicaid that will be federally financed and includes increased payment to primary care physicians.
The proposed legislation also requires that employers provide health insurance for their employees or pay a fee equal to 8 percent of their payroll, but small businesses would be exempted from the mandate. And individuals who do not purchase health insurance would pay a penalty based on 2 percent of their adjusted gross income. Credits to purchase health insurance would phase out at 400 percent of the federal poverty level, or $88,000 for a family of four. In addition, out-of-pocket spending will be capped to prevent bankruptcies from medical expenses. According to the Times article, the cost of reform would be covered by reducing Medicare growth and through new taxes that weren’t specified.
Members of the Senate Finance Committee held closed-door talks to find ways to lower the cost of healthcare reform, which the Congressional Budget Office now estimates at $1.6 trillion, reports the New York Times. The influential Senate committee, now in the midst of drafting proposed reform legislation, is contemplating using “an automatic mechanism” to curtail the growth of Medicare, similar to one employed to close military bases. If a Medicare spending goal that “ensures continued sustainability and bends the Medicare cost curve” fails to be met, spending reductions would automatically take place.
The Finance Committee also discussed having the Medicare Payment Advisory Committee recommend to Congress Medicare savings strategies. “Congress would take an up-or-down vote on the recommendations, which could cut payments to hospitals, managed care plans and other health care providers,” says the Times. This strategy was questioned by Sen. Pat Roberts (R-Kan.), who reportedly stated, “More cuts to Medicare? Let’s not do that right now, please.”
The Senate committee is also debating a change in the proposed employer mandate to provide insurance to workers. A new option would require employers to pay “50 percent of the national average Medicaid costs for workers enrolled in Medicaid” or pay for private health insurance for low-earning employees, but not require companies to provide insurance for all their workers. After the discussions, Sen. Max Baucus (D-Mont.), who chairs the Finance Committee, said, “There’s no doubt in my mind that we will have a bipartisan bill.”
Read the New York Times article.
Healthcare costs for U.S. employers are expected to grow by another 9 percent next year, according to PricewaterhouseCoopers’ Health Research Institute, following medical costs increases of 9.2 percent in 2009 and 9.9 percent in 2008. Behind the Numbers: Medical Costs Trends for 2010 reports that American workers are accelerating their use of health care in anticipation of losing their jobs and, potentially, their health insurance coverage. Forty-two percent of employers surveyed by PricewaterhouseCoopers said they would increase employees’ share of healthcare costs. Forty-one percent said they expect to increase medical cost sharing through plan design changes.
Twenty percent of employers surveyed said they would add a high-deductible health plan as an option to their benefit plan design over the next two years. And although two-thirds of employers are offering wellness and disease management programs, few said these programs are very effective at lowering costs because participation among employees remains low: around 40 percent for wellness programs and 15 percent for disease management programs.
Corporate benefits executives have expressed serious concerns about many features of proposed healthcare reform and say there isn’t enough attention being paid to improving the quality and containing the costs of health care, according to an annual survey conducted by the law firm Miller & Chevalier and the American Benefits Council. The Corporate Health Care Policy Forecast Survey of 213 large-company executives also found nearly unanimously agreement that maintaining the federal framework of the Employee Retirement Income Security Act of 1974 (ERISA) is vital to continuing employer-sponsored coverage.
In addition, 82 percent of respondents said they want to maintain the current tax exclusion of employer-sponsored health benefits, and three-quarters said that their companies would immediately reduce or cease offering retiree health coverage if legislation were enacted that prevented employers from modifying retiree healthcare benefits in the future. Eighty-nine percent of respondents think employees would prefer to receive health insurance through employers even if similarly priced options were available through other sources. The executives identified reporting of quality outcomes and use of wellness or chronic care programs as the areas that could have the most positive impact on their workforce.
Former Senate leaders Howard Baker, Tom Daschle, and Bob Dole released a bipartisan, budget-neutral framework for comprehensive health reform on Wednesday. The report, Crossing Our Lines: Working Together to Reform the U.S. Health System, calls for all Americans to purchase affordable health insurance; new state and regional coverage options through exchanges; refundable tax credits that limit premium contributions to a percentage of income; tax credits for small businesses that offer coverage; limited fees for employers not offering or paying for health benefits; a tax exclusion linked to the value of benefits received by members of Congress; and the establishment of an independent healthcare council to promote coordination among federal healthcare programs.
Consistent with the federal health reform model, the plan provides for initial financial and technical support to states that choose to establish competing state plan options. The reform blueprint also includes a process that allows the president to submit a plan to Congress for a vote under expedited procedures if, after five years, the HHS Secretary has certified that the existing options do not provide for affordable coverage. The $1.2 trillion plan would be funded through a combination of spending cuts and tax increases, reports the Associated Press.
Acknowledging the compromises made in developing this report, Daschle said he hoped the concessions “can begin to bridge any rifts in the debate and move forward with achieving our common goal of reforming the healthcare system.” Baker, Daschle, and Dole are members of the Bipartisan Policy Center’s Advisory Board.
The American Hospital Association released a statement that it is “deeply disappointed and concerned” that the Obama administration has proposed cuts of more than $220 billion to hospitals, in addition to the $41 billion in cuts to Medicare already proposed.
Rich Umbdenstock, AHA’s president and CEO, singled out cuts to Medicare and Medicaid Disproportionate Share Hospital (DSH) programs. “Even with today’s DSH payments, federal health programs pay hospitals more than $32 billion below the cost of caring for patients on average,” said Umbdenstock. “These programs go beyond covering care for the uninsured and serve as a lifeline to hospitals struggling to meet the growing needs of patients and communities. Because of that, we urge lawmakers not to cut DSH programs before coverage expansions are universal and fully implemented as part of reform, and Medicare and Medicaid shortfalls are addressed.”
Umbdenstock also said a proposed productivity adjustment for hospitals “does not make sense” because the measure was not intended for health care. “Instead, our focus needs to be on ensuring that patients receive the right care at the right time in the right setting,” said Umbdenstock. “In addition, the new proposals for long-term care and rehabilitation hospitals are problematic and could serve as a barrier to better coordination of care for patients. Reform must improve care for patients without crippling hospitals’ ability to care for patients and communities.”
The Congressional Budget Office and the Joint Committee on Taxation have analyzed the draft healthcare reform legislation released last week by the Senate Committee on Health, Education, Labor and Pensions (HELP). They conclude that enacting major provisions of the draft Affordable Health Choices Act would result in net increases of federal budget deficits by $1 trillion over the next decade, while decreasing the number of uninsured by only about 16 million.
In a letter to Sen. Edward Kennedy (D-Mass.), who chairs the HELP Committee, CBO director Douglas Elmendorf also estimates that once the legislation was fully implemented, there would still be up to 37 million uninsured people. “When fully implemented, about 39 million individuals would obtain coverage through the new insurance exchanges,” states Elmendorf. “At the same time, the number of people who had coverage through an employer would decline by about 15 million (or roughly 10 percent), and coverage from other sources would fall by about 8 million, so the net decrease in the number of people uninsured would be about 16 million or 17 million.”
The CBO’s cost analysis covers only provisions related to health insurance coverage, not the entire bill.
The Medicare Payment Advisory Committee (MedPAC) has released its June 2009 report to Congress. The report focuses on how incentives in the Medicare payment system should be amended to reward value instead of volume.
The report explores how voluntary and mandatory versions of accountable care organizations (ACOs) could promote care coordination, increase quality, and lower cost growth. Bonuses would be awarded to ACOs that meet quality and cost targets, while poor-performing ACOs would receive lower Medicare payments. The report also discusses traditional Medicare benefit design and whether cost sharing can be used as a tool for increasing the value of care while ensuring beneficiary access to services.
Other issues addressed by the MedPAC report include graduate medical education; the relationship between physicians’ financial interest in imaging equipment and spending on imaging tests; options for reforming the Medicare Advantage program; results of CMS’s chronic care demonstration programs; and CMS’s preliminary estimate of the physician update for 2010.
In his address to the American Medical Association at its annual meeting on Monday, June 15, President Obama tried to assuage the group’s concerns about his proposal to create a public health plan as part of healthcare reform. He told the physicians, “The public option is not your enemy, it is your friend,” reports the Washington Post. The AMA has come out against a public plan that would mandate participation by all doctors who treat Medicare patients or one that is based on Medicare rates.
“I understand that you are concerned that today’s Medicare rates will be applied broadly in a way that means our cost savings are coming off your backs,” the President told the audience of physicians. “These are legitimate concerns, but ones, I believe, that can be overcome. What are not legitimate concerns are those being put forward claiming a public option is somehow a Trojan horse for a single-payer system. So, when you hear the naysayers claim that I’m trying to bring about government-run health care, know this–they are not telling the truth.”
President Obama also told the AMA that he is open to reducing medical malpractice lawsuits as a way to cut healthcare costs, but that he will not agree to cap malpractice awards. In addition, he said he wanted to investigate “a range of ideas” that emphasize patient safety, evidence-based guidelines, and letting doctors concentrate on practicing medicine, reports the New York Times. “That’s how we can scale back the excessive defensive medicine reinforcing our current system of more treatment rather than better care,” he said.
The RN shortage in many areas of the country is easing as the recession and job insecurity of spouses cause older nurses to delay retirement or return to the workforce and part-time nurses to become full time, according to a study published on the Health Affairs web site. But a new RN shortage looms in the next decade as baby boomers retire from the nursing workforce.
The researchers project a shortfall of RNs developing around 2018 and growing to about 260,000 by 2025. Although these projections represent a smaller shortfall than earlier estimates, the magnitude of the 2025 deficit would still be more than twice as large as any nurse shortage experienced since the introduction of Medicare and Medicaid in the mid-1960s. Avoiding this shortfall will require expanding the capacity of nursing education programs, which since 2002 have turned away 30,000 or more qualified applicants annually, the researchers say.
A shortage of medical isotopes has resulted in U.S. hospitals limiting or canceling diagnostic tests, reports Reuters. An aging Canadian nuclear reactor, which produces a third of the world’s medical isotopes, has been shut down for a leak and may be closed permanently.
The University of Southern California in Los Angeles and the University of Chicago Medical Center told Reuters that they have been forced to switch to more costly tests, such as positron emission tomography scans, which Medicare doesn’t cover, and to delay tests. The Society of Nuclear Medicine said 60 percent of its member hospitals are delaying procedures and 31 percent are canceling them as a result of the shortage.
During his weekly address to the nation on Saturday, June 13, President Obama announced a Medicare and Medicaid savings proposal that would contribute another $313 billion to the $635 billion already identified in the administration’s FY2010 budget to fund healthcare reform over the next 10 years. With the addition of the new proposed savings, Medicare’s Hospital Insurance Trust Fund would remain solvent until 2024, according to a fact sheet on the White House’s web site.
The Obama administration outlined the following sources of new savings to offset the cost of reform:
•Incorporate productivity adjustments into Medicare payment updates—savings of $110 billion over 10 years.
•Reduce payments to hospitals for uncompensated care as more uninsured people obtain health insurance—savings of $106 billion.
•Save $75 billion on the cost of Medicare Part D drugs, such as by reducing drug reimbursement for beneficiaries eligible for Medicare and Medicaid.
The following changes would amount to $22 billion in savings over a decade:
•Increase the equipment utilization factor for advanced imaging such as MRI and CT from 50 percent to 95 percent so that payment reflects actual usage of imaging services.
•Implement MedPAC’s 2010 recommendations for skilled nursing facilities, inpatient rehabilitation facilities, and long-term care hospitals based on variables such as quality, access to care, and adequacy of payment.
•Reduce waste, fraud, and abuse by scrutinizing the practices of certain physicians.
Of the $635 billion described in Obama’s FY2010 budget to create a healthcare reserve fund, $309 billion would be realized through Medicare and Medicaid savings. Those saving proposals include reducing Medicare overpayments to insurers; improving Medicare and Medicaid payment accuracy; reducing hospital readmissions; and making a portion of Medicare payments for acute inpatient hospital services dependent on hospitals’ performance on quality.
Read the White House fact sheet.
Unless hospitals and physicians are held accountable for the cost, quality, and utilization benchmarks achieved by their best-performing peers, healthcare costs won’t be contained, states a white paper by Health CEOs for Health Reform (HC4HR), a coalition of healthcare leaders whose mission is a “willingness to transform their business models to create a more sustainable health system.”
Realigning U.S. Health Care Incentives to Better Serve Patients and Taypayers advocates that CMS pay providers outcome-driven bundled payments based on shared risk. “Providers willing to accept greater shares of the risk within a shorter time-frame should be allowed to capture a greater share of the savings,” says the report. And for providers whose costs are higher than the median and who don’t follow integrated models of care, HC4HR recommends that CMS freeze or reduce their annual update factors. Rigorous quality standards should dictate payment for high-cost and overutilized services, while only regional “Centers of Excellence” would deliver the mostly costly and resource-intensive services.
The group would also like to abandon the Sustainable Growth Rate formula for physician payments and replace it with a value-based payment system. Other reforms outlined in the white paper include changes to medical malpractice laws, regulation of insurer billing to reduce administrative costs to hospitals and physicians, and enactment of laws to give clinicians a share of cost savings from better quality and efficient care.
June 11, 2009
Ralphs Company, Permissibly Self-Insured; and Sedgwick Claims Management Services, Inc. (Adjusting Agent)
Case No. ADJ347040 (MON 0305426)
74 Cal. Comp. Cases 736
The Appeals Board held that: (1) the repeal of section 139.5 terminated any rights to vocational rehabilitation benefits or services pursuant to orders or awards that were not final before January 1, 2009; (2) a saving clause was not adopted to protect vocational rehabilitation rights in cases still pending on or after January 1, 2009; (3) the vocational rehabilitation statutes that were repealed in 2003 do not continue to function as “ghost statutes” on or after January 1, 2009; (4) effective January 1, 2009, the WCAB lost jurisdiction over non-vested and inchoate vocational rehabilitation claims, but the WCAB continues to have jurisdiction under sections 5502(b)(3) and 5803 to enforce or terminate vested rights; and (5) subject matter jurisdiction over non-vested and inchoate vocational rehabilitation claims cannot be conferred by waiver, estoppel, stipulation, or consent.
PDF Version of En Banc Decision Available At:http://www.dir.ca.gov/wcab/EnBancdecisions2009/WCAB_ENBanc_L_Weiner.pdf
“Health reform that covers the uninsured is AMA’s top priority this year,” the American Medical Association said today in a statement. However, the AMA sought to clarify the type of public health plan option it would support, in response to a story that appeared today in The New York Times that characterized the AMA as opposed to a public plan option as part of healthcare reform legislation.
The AMA’s statement said that the organization opposed a public health plan “that forces physicians to participate, expands the fiscally-challenged Medicare program, or pays Medicare rates.” However, the AMA held out the possibility that it could support some approaches to a public plan, including “a federally chartered co-op health plan or a level playing field option for all plans.”
President Obama is scheduled to address AMA members at the association’s annual meeting next week.
Minority women in every state continue to fare worse than white women on 25 measures of health, health care access and other social determinants of health according to a new study by the Kaiser Family Foundation. Putting Women’s Health Care Disparities on the Map: Examining Racial and Ethnic Disparities at the State Level found that American Indian and Alaska Native women had among the worst outcomes on many health indicators, often twice as high as white women. Their rate of serious psychological distress was more than 1.5 times that of white women, and they had the highest rates of smoking and cardiovascular disease and considerably greater access-of-care problems.
Tremendous variation also exists among states within racial and ethnic groups. Among women who are Asian American and Native Hawaiian, for example, 10 percent in Ohio had late or no prenatal care compared to 34 percent in Utah. Forty-three percent of Hispanic women in Oklahoma had not had a mammogram in the past two years, compared to 14.5 percent in Massachusetts.
To emphasize the need for healthcare reform, earlier this week HHS also released a report on the stark differences in health among minorities and whites. For example, 48 percent of all African Americans adults suffer from a chronic disease compared to 39 percent of the general population. And while 15 percent of African Americans, 14 percent of Hispanics, and 18 percent of American Indians develop diabetes, only 8 percent of whites have diabetes. Health Disparities: A Case for Closing the Gap also notes that about one-third of the uninsured have a chronic disease, and they are six times less likely to receive care for a health problem than the insured.
Senator Edward Kennedy, chairman of the Senate Committee on Health, Education, Labor and Pensions (HELP), has released his 615-page healthcare reform legislation, which is considered to be the most liberal of the three reform bills that will emerge from the Senate and House, reports the Los Angeles Times. Kennedy’s bill has many similar provisions to those being drafted by the Senate Finance Committee and the three committees in the House, such as rewarding providers for high-quality care and prohibiting insurers from denying coverage to those with pre-existing conditions or charging higher premiums based on health status. But unlike the draft that Kennedy circulated last week, the bill released on Tuesday does not include the controversial option for a government-run health plan or the requirement that employers must provide insurance for their employees—deletions that were made to avoid alienating Republicans who oppose both principles, according to the Times.
Kennedy’s bill would expand Medicaid eligibility to Americans earning up to 150 percent of the federal poverty level and would provide subsidies to people with incomes at 500 percent of the poverty level to allow them to buy insurance. It also includes a federal long-term care insurance program with modest premiums that would allow people to receive care at home, and covers children up to the age of 26 on their parents’ insurance policies. In addition, the bill calls for all insurance plans to provide payment incentives for case management, care coordination, chronic disease management, discharge planning designed to prevent hospital readmissions, evidence-based care processes, and preventive care. Senator Christopher Dodd is leading HELP’s reform efforts while Kennedy receives treatment for brain cancer.
Voting is open for Modern Healthcare magazine’s 100 Most Powerful in Health Care. Cast your vote for HFMA President and CEO Richard L. Clarke, DHA, FHFMA, and others who influence our industry. Dr. Clarke has been named to the list every year since its inception. Voting is open until June 26.
Leaders from both sides of the aisle on the powerful Senate Finance Committee told HFMA that healthcare reform must include incentives to providers for better care coordination and quality. Max Baucus, Chairman of the Senate Finance Committee, and Chuck Grassley, the committee’s ranking member, both shared their vision of healthcare reform with with HFMA in new commentaries. In his commentary, Baucus said that reform must achieve the three key goals of lowering health costs, improving medical quality, and guaranteeing affordable health care for every American—or reform will fail. “Guaranteeing access does little if we cannot also guarantee quality,” Baucus said, which can be done in part by creating “incentives for healthcare providers to focus on delivering the best care and closely coordinating with a patient’s other doctors and providers.” Baucus reminds readers that ensuring coverage “will make the insurance markets function properly, and costs will go down for all policyholders. And we will surely not be able to sustain our system or see a return on our investment unless we lower costs significantly.” Reform is as much about reducing waste and abuse in Medicare as it is “creating a competitive insurance market where health plans compete on price and quality,” Baucus stated. And in response to Republicans’ opposition to the Democratic proposal to offer a public health plan, Baucus reiterated that reform will preserve an individual’s choice of insurance “and ensure that those who are happy with the healthcare coverage they have now can keep it.”
Grassley’s commentary focused on the principles he says both sides of the aisle must agree on to create a bipartisan bill. He criticized the option of a government-run plan for threatening to “overtake the entire market” by causing employers to stop offering coverage and physicians from refusing to participate in a public plan if payment is modeled on Medicare rates. He emphasized that people must be able to keep their coverage if they are satisfied with it.
In addition to providing affordable coverage, reform must also ensure that people can find primary care physicians to treat them. It is also imperative, said Grassley, to “fix the inefficient ways in which Medicare pays healthcare providers. One of my goals in healthcare reform is to realign the payment incentives in Medicare to reward quality and value rather than the volume of services provided. And we must provide incentives for providers across the entire episode of care to actually coordinate the care of the patient.” Grassley said, however, that he could not support comparative effectiveness research, an initiative that Congress passed in the economic stimulus bill. The government shouldn’t “interfere with a doctor’s ability to practice medicine,” he said. “I’ll continue to raise concerns about any national health board or other federal body that directs health dollars.”
A tax on employer-provided health insurance is likely to appear in the Senate Finance Committee’s health reform bill, which is expected to be released next week, reports The Washington Post. The chairman of the committee, Max Baucus, said that only employer plans that exceed $13,000 in value—the value of the basic health plan offered to federal employees—will be taxed to produce revenue to fund health reform, estimated to cost at least $1 trillion. The new tax would generate $420 billion over a decade, according to the Joint Commission on Taxation. Baucus also confirmed that he is considering other revenue sources, such as limiting medical deductions for wealthy families.
The three U.S. House committee chairmen responsible for healthcare reform-Charles Rangel, Henry Waxman, and George Miller-issued a draft proposal of their bill in order to begin deliberations with the House Democratic Caucus on the details. The four-page outline painted in broad strokes the components of their reform plan.
The bill would replace the Sustainable Growth Rate formula that governs Medicare physician payment and would increase “reimbursement for primary care providers, improve the Part D program, and implement many other MedPAC recommendations.” In addition, federal health programs, including the public plan option, will “reward high quality, efficient care, and reduce disparities” through the use of “innovative payment approaches” and will reduce preventable hospital readmissions for Medicare beneficiaries. Incentives would also be offered to entice health professionals to practice primary care.
The proposal includes a “self-sustaining” public health insurance option to compete on a “level field” with private insurers. The public plan would be offered through a health insurance exchange that will provide a “transparent marketplace” for individuals and businesses to shop for insurance plans. Insurers would also be prohibited from excluding pre-existing conditions or basing premiums on health status, age, and gender.
Individuals would be required to have health insurance, and employers would have to provide it or fund the coverage their workers obtain on their own. The smallest companies would be exempted from the so-called play-or-pay requirement, and other small businesses would receive a tax credit for providing health insurance. Low-income families would receive a subsidy to purchase insurance, and eligibility for Medicaid will be expanded, with higher payment rates designed to improve access to primary care under Medicaid.
To assuage the insurance industry’s fears that a public health plan will drive them out of business, President Obama has been highlighting that three dozen states offer a government health plan to their employees without ill effects on the private insurance market. But while the public plans cover 3 million workers, they haven’t been successful at holding down health costs, which is a cornerstone of healthcare reform, reports The New York Times. “Even the best of them are pretty far short of what most of us who advocate public plan choice want,” Jacob S. Hacker, a political scientist at the University of California, Berkeley, told the Times.
Most of the state plans don’t make reimbursement conditional on medical performance and quality, and they are usually administered by commercial insurers that aren’t constrained in negotiating payment rates with providers. And although Obama and the Democrats say that a public plan will maintain reserves and not be subsidized by the government, skeptics say that the government wouldn’t let its health plan fail–undermining the promised fair competition with private insurers. The Lewin Group forecasts that a public plan paying rates similar to Medicare will succeed in providing coverage to 28 million uninsured and will cause 119 million people to opt out of employer-sponsored insurance for the public plan.
President Obama stated that health reform is “a necessity we cannot postpone any longer” rather than a “luxury” in his weekly address to the nation on Saturday. And reform will succeed, said Obama, because “everyone is at the table–patient’s advocates and health insurers; business and labor; Democrats and Republicans alike.” He pointed out that the “improbable allies” of hospitals, physicians, insurers, pharma, and unions have pledged to cut $2 trillion in health costs over the next decade, a milestone that “wouldn’t have happened just a few short years ago.”
Obama also stressed that reform must not increase the budget deficit but will be paid for through “rigorous spending reductions and appropriate additional revenues. We’ll eliminate waste, fraud, and abuse in our health care system, but we’ll also take on key causes of rising costs,” he said. Obama concluded by saying, “All across America, our families are making hard choices when it comes to health care. Now, it’s time for Washington to make the right ones. It’s time to deliver.”
After receiving a letter from President Obama strongly stating that he wanted a public health plan to be part of healthcare reform legislation, Max Baucus, Chairman of the Senate Finance Committee, announced that “a bill that passes the Senate will have some version of a public option,” reports the Associated Press. But Republican lawmakers, who nearly all oppose a government-run health plan that competes with private insurers, were quick to dash Obama’s hopes for a bipartisan bill. After a Senate Finance meeting on Thursday, Chuck Grassley, the ranking Republican, said, “Our caucus is very, very much against a public option,” according to Politico. Senator Judd Gregg (R-N.H.) added, “That’s a nonstarter for us on our side of the aisle.” Although the Democrats can push their health legislation through Congress, Obama and Baucus have consistently courted the Republicans’ support to ensure that reform is sustainable. The Senate Republicans also insisted that Baucus’ goal of delivering a bill in two weeks is unrealistic.
The 161 million Americans with employer-sponsored health insurance are facing substantial increases in out-of-pocket (OOP) costs, according to a study funded by the Commonwealth Fund and published on the Health Affairs web site. In 2007, adults with employer coverage paid an average of $729 annually in OOP costs for medical services, including deductibles and other forms of cost sharing such as co-payments and co-insurance. That represents a 34-percent increase from 2004, when the average OOP burden was $545. Health plans covered a slightly smaller percentage of overall expenses in 2007 than 2004, but growth in overall health spending was the chief culprit behind rising out-of-pocket costs.
Overall, employer-sponsored insurance (ESI) paid 81.4 percent of medical bills for all workers in 2004 and 80.1 percent in 2007, which was due to increases in the percentage of plans with deductibles and in average deductible levels. Individuals who spent more than 5 percent of their income for medical services (excluding premiums) were considered underinsured. For people with incomes at 200 percent of the federal poverty level, about 20.3 percent of those with ESI exceeded this threshold in 2007, up from 16.5 percent in 2004. Affordability of coverage also declined at all incomes levels between 2004 and 2007. About 18 percent of those with family incomes at 200 percent of poverty spent more than 10 percent of their incomes out of pocket in 2007, up from 13 percent in 2004.
On Friday, Senator Edward Kennedy (D-Mass.) began circulating a draft of the America Health Choices Act, a healthcare reform plan that would require individuals to have, and employers to provide, health insurance, and would require payment structures to reward quality and wellness. The draft bill would establish a public health plan.
The draft bill is a product of the influential Senate Health, Education, Labor and Pensions Committee. Kennedy is chairman of that committee, although health problems have led to his being absent during much of its work on health reform, leaving committee leadership largely to Senator Chris Dodd (D-Conn.). The 171-page document places responsibility on employers to either provide workers with insurance coverage or help them pay for insurance. The bill calls for all insurance plans to provide payment incentives for case management, care coordination, chronic disease management, discharge planning designed to prevent hospital readmissions, evidence-based care processes, and preventive care. The bill calls for these payment structures to reflect those of the Medicare program.
Debate on the bill within the committee may begin June 15. The bill will be compared with draft legislation emerging from the Senate Finance Committee.
In a letter to Senators Max Baucus and Edward Kennedy on Wednesday, President Obama emphasized that Medicare and Medicaid spending must be reined in by $200 to $300 billion over the next 10 years to fund comprehensive healthcare reform. To help accomplish that goal, Obama said that he was “open” to allowing the Medicare Payment Advisory Commission’s (MedPAC) cost reduction recommendations to “be adopted unless opposed by a joint resolution of the Congress”—a measure that would “achieve health care reform in a fiscally responsible way,” Obama said.
Last month, Senator Jay Rockefeller IV (D- W. Va.) introduced a bill that would establish MedPAC as an independent executive branch agency, similar to the Federal Reserve Board, and give it the power to enact its reimbursement policies free “from the influence of special interests,” said Rockefeller. “Congress has proven itself to be inefficient and inconsistent in making decisions about provider reimbursement under Medicare. If we want serious improvements in our health care delivery system, then we need to reform MedPAC’s current authority to include fully establishing and implementing Medicare reimbursement rules. Congress should leave the reimbursement rules to the independent health care experts.”
President Obama’s letter also left no doubt that he believes that reform needs to include a public health plan to give Americans “a better range of choices, make the health care market more competitive, and keep insurance companies honest.” On another controversial issue, Obama stated that he supports the concept of “shared responsibility–making every American responsible for having health insurance coverage and asking that employers share in the cost.” Small businesses, however, should be exempt from the requirement of providing health insurance for their employees, Obama said.
Bankruptcies created by medical problems increased by 50 percent from 2001 to 2007, according to a new study in the American Journal of Medicine. Illnesses or medical bills contributed to 62 percent of all personal bankruptcies in 2007, despite the fact that less than more than three-quarters of bankruptcy filers were insured and most owned homes and had middle-class occupations. The average out-of-pocket medical costs for medically bankrupt families was $17,943, with neurological disorders other than stroke leading to the largest medical debt (mean $34,167), followed by diabetes, injuries, stroke, mental illness and heart disease. Nearly half of the individuals said hospital bills were their largest out-of-pocket expense.
During his meeting with Democratic senators on Tuesday, President Obama stressed that he expected Congress to deliver a healthcare reform bill by October, reports The New York Times. He also gave his support to a public health plan favored by Democratic lawmakers while acknowledging that including the government-sponsored health plan in the bill will guarantee opposition from Republicans.
Obama also told the senators that he is open but reluctant to taxing employer-provided health insurance to help fund healthcare reform, a tax that would raise $246 billion each year, reports The Washington Post. The lawmakers are also considering proposals that would impose the tax only on the wealthiest employees, or reserve the tax for particularly rich health benefits. The Center on Budget and Policy Priorities issued a report the same day stating that financing universal coverage is unlikely unless Congress moves to limit the tax exclusion for employer-sponsored health insurance.
Hospitals that provide more intensive and costly care do not provide better-quality care, and hospitals that spent the most often deliver the worst care, says a new study recently published on the Health Affairs web site. The study examined care given to Medicare beneficiaries for acute myocardial infarction, pneumonia, and congestive heart failure and is one of the first nationwide analyses of quality and spending at the individual hospital level.
The authors found that average end-of-life (EOL) spending was $16,059 for the lowest-spending quintile of hospitals and $34,742 for hospitals in the highest-spending quintile. Hospitals that spent more actually performed worse on overall quality measures than lower-spending hospitals. When the analysis was limited to academic medical centers, there was no positive association between quality and spending. The only statistically significant finding was a negative relationship between EOL spending and the quality of treatment for heart attacks.
When each hospital was compared only to others in the same region, the negative correlation between EOL spending and the quality of treatment for heart attacks was eliminated, but strong negative correlations remained between spending and the quality of treatment for pneumonia. “This shows that the failure of higher-spending hospitals to produce better care reflects more than the fact that quality is not higher in higher-spending regions. Within each region, some hospitals are able to do more with less, achieving better quality while spending fewer dollars,” said the researchers.
Slowing the annual growth rate of healthcare costs by 1.5 percentage points would boost GDP growth by more than 2 percent by 2020 and nearly 8 percent by 2030, states a report on the economic impact of healthcare reform by the Executive Office of the President’s Council of Economic Advisers. The resulting growth in GDP would translate to a $2,600 increase in income for a family of four in 2020 and $10,000 in 2030.
The report also outlined other economic advantages of slowing health cost growth: reducing the government’s budget deficit by 3 percent of GDP by 2030, lowering the unemployment rate by one-quarter of a percentage point for several years, and raising the standard of living by devoting resources to producing other goods and services. In addition, expanding coverage to the uninsured would increase the labor supply by reducing worker disability and absenteeism, improve the way the labor market functions by removing barriers to job mobility and allowing small firms to compete for workers, and “increase the economic well-being of the uninsured by substantially more than the costs of insuring them.” Removing inefficiencies and variations in Medicare spending alone could save up to 30 percent of health care costs—or about 5 percent of GDP—without negatively affecting health outcomes, said the report.
In a new report on hospital emergency department overcrowding, the U.S. Government Accountability Office said that patient wait times are getting longer and that one-fourth of hospitals diverted ambulances from their EDs at least once in 2006. In 2003, the average time patients waited to see a physician was 46 minutes; in 2006, it was 56 minutes, according to the report. Half of the patients whose medical problem required attention within 14 minutes of arriving at an ED waited an average of 37 minutes before receiving care in 2006, a timeframe that exceeds national standards. And 74 percent of patients who should have been treated immediately waited longer than the recommended minute; the average wait was 28 minutes. The GAO attributes ED overcrowding primarily to a lack of available inpatient beds, citing hospitals’ desire to fill beds with scheduled admissions. Patients without primary care doctors and a shortage of on-call specialists also contribute to the problem
HHS Secretary Kathleen Sebelius announced the appointment of Cindy Mann to serve as Director of the Center for Medicaid and State Operations (CMSO). Mann most recently was a research professor and executive director of the Center for Children and Families at Georgetown University’s Health Policy Institute. From 1999 to 2001, Mann served as director of the Family and Children’s Health Programs at CMSO and played a key role in implementing Medicaid and the Children’s Health Insurance Program.
Several hospitals are experimenting with webcasts of surgery, surgeons Twittering during surgery, and patients blogging about their procedures in an attempt to attract new patients, reports The New York Times. The story describes a webcast of a patient’s recent brain surgery at Methodist University Hospital in Memphis, which was viewed by more than 2,000 people, previewed on YouTube by 21,000, and resulted in three new patients. The story estimates that 250 hospitals use such unconventional marketing tools as YouTube, Facebook, Twitter, or blogs to showcase their surgical expertise or fill clinical trials, among them Henry Ford Hospital in Detroit, the University of California at San Francisco, and Genesis Health System in Davenport, Iowa. “The goal is to further our reputation as well as to educate the community, who will ask their physicians about our care,” Methodist’s marketing director Jill Fazakerly told the Times. Ethicists, however, have expressed concerns that the marketing trend violates patient privacy and leads viewers to believe that results from medical and surgical interventions are perfect every time.