Workers’ Comp Premiums Down Almost 10%

Yes premiums are down almost 10%. California employers are feeling relief from overbearing premiums, but maybe for all the wrong reasons. The Insurance Journal sites the following:

The California Workers’ Compensation Institute cited a number of factors leading to the drop in premium, including:

• a decline in claim frequency,
• the economic recession which has pushed the state’s unemployment rate to 12.6 percent (with more than 350,000 jobs lost in the past year alone), and
• a string of rate reductions following the 2002-2004 legislative reforms, which resulted in a soft market that has continued despite rising claim severity.

Read more: http://www.insurancejournal.com/news/west/2010/06/08/110520.htm#ixzz0rKBwIG00

DWC Searching for Workers’ Comp Claims E-Filers

The DWC is looking for more E-Filers. We urge all workers’ compensation providers to participate in this e-forms trial. Some of the forms and documents that can be e-filed inclued:

• Case Opening Documents  
• Application for Adjudication  
• Amended Application  
• Death Application  
• Notice of Application  
• Answer to Application  
• Application for Discretionary Payments from the UEF
• Declaration of Readiness to Proceed  
• DOR for Satellite Office  
• Expedited DOR  
• Notice and Request for Allowance of Lien  
• Lien Filed in Companion Cases  
• Lien Claimant Name Field  
• Lien ClaimantsLien Claim Representatives  
• Lien Claims and EDEX  
• EDD Liens Only  
• Attorney Fee Lien  
• Disability Evaluation Unit  
• Request for Consultative Rating  
• Settlement Documents  
• E-filed Walkthrough Settlements  
• Case Opening Walkthrough Settlements  
• Appearance Only Filing  
• SIF Application  
• Cover Letters  
• Medical Reports  
• Notice of Representation Substitution of Attorney  
• Proof of Service  
• Service of Your E-Form  
• Subpoenaed Records  
• Trial Exhibits  

To sign up for the e-forms trial:

• Sign the E-form trial agreement
• Read the E-form trial additional conditions #2 May 18, 2010
• Read the E-form trial additional conditions #1
• Take the Computer based training (CBT) (Note: the test is not currently required)
• Review the webinar slides below

For More Information Please visit: http://www.dir.ca.gov/dwc/EAMS/EAMS_EformsFilers.html

Senate Passes Physician Payment Fix, 72-Hour Rule

In a voice vote today, the Senate passed a bill restoring Medicare reimbursement to physicians with a 2.2 percent increase for a six-month period ending November 30, 2010. The bill also includes provisions on the 72-hour rule, which would prevent hospitals from rebilling to correct inpatient claims that contain unrelated services as defined under current law.

The bill must now be approved by the House of Representatives before it takes effect. A vote in the House is expected next week.

Final Rule Establishes Temporary EHR Certification Program

The Office of the National Coordinator for Health Information Technology’s (ONC) final rule, released June 18, 2010, establishes processes that organizations will need to follow in order to be authorized by the National Coordinator to test and certify electronic health record (EHR) technology.

Providers who seek to qualify to receive incentive payments under provisions in the Health Information Technology for Economic and Clinical Health (HITECH) Act are required to use “certified EHR technology.” EHR technology certification is intended to assure healthcare providers that the EHR technology they adopt has been tested and includes the required capabilities they need in order to use the technology in a meaningful way to improve the quality of care provided to their patients.

The ONC expects to publish the final rule for the permanent certification program this fall. For more information about the temporary program, visit http://healthit.hhs.gov/certification.

Nori Corp. Website Unveiled

Study: Calif. Workers’ Comp Claimants Getting Care They Want

Division of Workers’ Compensation releases latest study on access to medical care in California’s workers’ compensation system Injured workers are getting the care they need, according to a recent study on access to medical care in teh California workers’ compensation system. The California Division of Workers’ Compensation (DWC) study, conducted by the University of Washington, Seattle (UW), shows four out of five injured workers are satisfied with their care, and the level of access to quality care appears unchanged from a similar study done in 2006. “We’re pleased to see that injured workers continue to get proper care,” said DWC acting Administrative Director Carrie Nevans. “At the same time, this study does show that when workers have barriers inhibiting access to care they are more likely to be off work longer.” Among the nearly 1,000 injured workers surveyed between May and July of 2008, the vast majority reported they were able to see a doctor right away, did not have to travel more than 15 miles to see their doctor, and were satisfied or very satisfied with their overall care. Most injured workers rated their overall quality of care good, very good, or excellent. However, nearly half of injured workers reported experiencing one or more barriers to accessing care. Those facing such barriers were found to experience longer durations of disability. Workers who encountered access barriers were more likely to be older, have a back or neck injury, have multiple injuries, not speak English well or at all, and have an attorney involved in their case. “While we have a very effective Spanish-language outreach program for injured workers, we’re always evaluating how we can do a better job of communicating about services and resources available to help workers navigate what can be a complex system,” Nevans said.

Broadspire Alternative Dispute Resolution, What does this mean for you?

Broadspire is going to be implementing Alternative Dispute Resolution for Workers’ Compensation. Will this benefit medical providers and is this a viable alternative to the WCAB? See the exerpt below from PRNewswire.com

Broadspire, working in conjunction with Workers Compensation Solutions LLC (WCS), a leading ADR consulting firm, leverages key legislation and employs nurse advocates to assist an injured worker through a structured claims management process. This systematic methodology has been proven to help expedite medical care, reduce the amount of time an injured employee is off work and drastically diminish formal litigation. “Through partnering with WCS, Broadspire is able to bring to market a program with an exceptional track record for reducing medical and litigation costs,” Williams says.

Please provide us with your feedback.

Impact of Medicare Physician Payment Cuts on Cancer Patients: Study

A new study published online by Health Affairs examines the impact of physician reimbursement cuts in the Medicare Prescription Drug, Improvement, and Modernization Act of 2003 on cancer patients. In the first study to examine how these payment reductions affected Medicare beneficiaries, researchers found that patients recently diagnosed with lung cancer received more, rather than fewer, chemotherapy treatments.

The researchers used claims data for more than 200,000 beneficiaries diagnosed with lung cancer between 2003 and 2005. They found that the percentage of patients receiving treatment in a physician’s office one month after diagnosis increased from 13 percent before the payment reduction to approximately 15 percent after it. The research also found that use of docetaxel—a relatively more expensive and formerly less-utilized drug—increased, which may have offset some of the savings projected to result from the 2003 act.

“The ultimate message,” the authors conclude, “is that payment reforms have real consequences and should be undertaken with caution.”

GAO Outlines Strategies for Preventing Improper Medicare Payments

In recent testimony, the U.S. Government Accountability Office (GAO) describes five challenges and strategies that the Centers for Medicare & Medicaid Services faces in preventing improper Medicare payments.

• Strengthening provider enrollment process and standards
• Improving prepayment review of claims
• Focusing post payment claims review on most vulnerable areas
• Improving oversight of contractors
• Developing a robust process for addressing identified vulnerabilities

The June 15 testimony was given by GAO healthcare director Kathleen M. King to the U.S. House of Representatives Subcommittees on Health and Oversight, Committee on Ways and Means.

$250 Million Investment in Primary Care Workforce Announced

The Department of Health and Human Services has announced new investments worth $250 million to increase the number of healthcare providers—including physicians, physician assistants, and nurses—and strengthen the primary care workforce. The investments are the first allocation from the new $500 million Prevention and Public Health fund for FY10, which was created by the Patient Protection and Affordable Care Act.

The investments will support the training and development of more than 16,000 new primary care providers, including:

• $168 million for training more than 500 new primary care physicians by 2015
• $32 million for training more than 600 new physician assistants
• $30 million for encouraging more than 600 nursing students to attend school full time
• $15 million for establishing 10 new nurse-managed clinics that assist in training nurse practitioners
• $5 million for encouraging states to plan and implement innovative strategies to expand their primary care workforce by 10 to 25 percent over 10 years to meet increased demand

Additional information is available on a fact sheet.

Hospitals Score Below Expectations on Value-Based Purchasing Performance Scale

Unless they start improving their performance, U.S. hospitals stand to lose millions in Medicare reimbursements under the value-based purchasing (VBP) model that is set to go into effect on Oct. 1, 2012, according to a recent analysis by VHA Inc.

Researchers calculated VBP performance scores for hospitals nationwide based on a 2007 methodology outlined by the Centers for Medicare & Medicaid Services (CMS). The national median VBP score was 53, with patient satisfaction scores acting as a drag on the overall score. To maximize Medicare reimbursement opportunities, VHA estimates hospitals must push their scores above 70, which represents the current top decile.

Hospitals will receive CMS reimbursement incentives for either achieving the baseline performance score or for achieving a specific level of improvement relative to their baseline score, explains Trent Haywood, MD, JD, VHA’s chief medical officer and the former deputy chief medical officer at CMS.

MedPAC Recommends Strategies to Improve Quality, Efficiency

Moving away from fee-for-service structures and focusing on evidence-based care may help Medicare improve quality of care and use of resources. But to pursue such efforts, CMS will need to have greater flexibility, the Medicare Payment Advisory Commission (MedPAC) tells Congress in a new report.

The report, Report to the Congress: Aligning Incentives in Medicare, recommends giving Medicare greater authority to demonstrate and implement policy innovations, such as performance-based risk-sharing strategies where payment would be linked to beneficiaries’ outcomes through risk-sharing agreements with product developers.

Other value-driving strategies MedPAC recommends include:

• Making a significant portion of Medicare’s graduate medical education payments contingent on residency programs meeting key educational criteria, such as teaching team-based care, training in ambulatory settings, and measuring quality.
• Altering traditional Medicare’s benefit design to cap beneficiaries’ out-of-pocket costs and, at the same time, requiring supplemental policies to have fixed-dollar copayments for services such as office visits and emergency room use instead of simply filling in all cost sharing.
• Achieving efficiencies of integration and improvements in care through coordinating the care of dual-eligible beneficiaries.

CMS Extends Hold on Claims Through June 17

The Centers for Medicare & Medicaid Services (CMS) has instructed its contractors to continue holding claims for services paid under the 2010 Medicare physician fee schedule (MPFS) through June 17. This announcement applies to MPFS claims with dates of service of June 1, 2010, and later. The Senate is expected to vote this week to stop the 21 percent mandated cut in physician reimbursement.

“We understand that the delayed processing of Medicare claims may present cash flow problems for some Medicare providers. However, we expect that the delay, if any, beyond the normal processing period will be only a few days,” CMS stated in an e-mail to its contractors.

This is the second time since May that CMS has told its contractors to hold the claims. The Continuing Extension Act of 2010, enacted April 15, extended the zero percent update to the 2010 Medicare Physician Fee Schedule through May 31. CMS instructed its contractors on May 27 to hold claims for services paid under the MPFS for the first 10 business days of June.

Increases in Out-of-Pocket Expense Restricted Under Insurance Rules

Group health plans may lose protected status from new health reform requirements should they significantly raise deductibles or other out-of-pocket charges to enrollees under final interim rules issued June 14 by the U.S. Departments of Health and Human Services, Treasury, and Labor.

Under the rules, existing plans would lose “grandfather” status if they raise coinsurance charges or significantly raise deductibles or copayments. Specifically, existing plan deductibles must stay under a percentage equal to medical inflation plus 15 percent; copayments can not be higher than $5 (adjusted annually for medical inflation) or a percentage equal to medical inflation plus 15 percent.

Grandfathered plans also can not significantly cut or reduce benefits, significantly lower employer contributions, or tighten annual limits on the amount insurers will pay for covered services.
All health plans, regardless of grandfather status, must provide certain benefits to enrollees for plan years starting on or after September 23, 2010 including:

• No lifetime limits on coverage for all plans
• No rescissions of coverage when people get sick and have previously made an unintentional mistake on their application
• Extension of parents’ coverage to young adults under 26 years old

An accompanying fact sheet and Q&A document also were released.

Gundersen Lutheran Recognized for Supply Chain Innovation

The Association for Healthcare Resource & Materials Management announced today that Gundersen Lutheran Health System is the 2010 winner of The Award for Excellence in Healthcare Supply Chain Innovation. Gundersen Lutheran’s winning submission was titled: “Improving and Managing the Sterilization Process Through the Use of Surgical Instrument Management Software and Lean.”

“Gundersen Lutheran Health System is very honored to accept this prestigious award. Our CEO, Jeff Thompson, has instilled in all employees a drive to attain excellence in care for our patients. The central service staff exemplifies this goal by their efforts to provide the highest quality surgical instrument trays for our physicians to perform surgery,” said Jan Jarvinen, director of materials management.

HFMA reports on other Gunderson Lutheran initiatives—including how the health system is building an electronic health record that meets meaningful use criteria—in the most recent Leadership report, “Collaborating for Results.”

Uninsured Are Twice as Likely to Die in Hospital of Heart Attack or Stroke

Uninsured patients, ages 18 to 64, hospitalized with acute myocardial infarction (AMI) were 52 percent more likely to die than their privately insured peers, according to a new study in the Journal of Hospital Medicine.

Uninsured stroke patients faced similar odds—49 percent—of dying in the hospital compared to the privately insured. In addition, pneumonia patients with Medicaid had a 21 percent higher hospital mortality rate than privately insured patients with the disease, according to the analysis of more than 150,000 hospital discharges in 2005. Length of stay was significantly longer for Medicaid recipients for all three conditions, while hospital costs were higher for Medicaid recipients for stroke and pneumonia, but not AMI.

Compared with the privately insured, uninsured and Medicaid patients were generally younger, less likely to be white, more likely to have lower income, and more likely to be admitted through the emergency department (ED). The researchers speculated that being admitted through the ED could indicate more severe illness at admission, possibly due to a delay in seeking treatment.

Employers’ Medical Costs to Rise in 2011: Report

Medical costs are expected to increase by 9 percent in 2011, according to a report from PricewaterhouseCoopers LLP. Although the increase is down 0.05 percent from the 2010 growth rate, it still is expected to outpace the rate of inflation. For the first time, the majority of the American workforce is expected to have a health insurance deductible of at least $400 as more employers return to indemnity-style cost sharing by raising out-of-pocket limits, replacing co-payments with co-insurance and adding high-deductible health plans.

Hospital and physician costs, which make up 81 percent of premium costs, are the biggest inflators of the 2011 medical cost trend. Hospitals shifting costs from Medicare to private payers and employers is seen as the top reason for higher medical cost trends. In 2011, Medicare will reduce payment rates to hospitals for the first time after seven years of increases that almost matched or exceeded inflation increases. Some hospitals that benefitted from higher payments in 2008 and 2009 may be able to manage this type of cut by tapping their reserves, but many hospitals are likely to shift more costs to commercial payers during their negotiations, according to the report.

In addition, increasing consolidation among physician practices is expected to increase their bargaining power. Payers expect to see more negotiating power and higher prices in the short term, but efficiencies created by consolidation will moderate future rate hikes.

The report findings are based on a survey of more than 700 employers from 30 industries and interviews with health plan actuaries.

AMA: Insurers Inaccurate 20 Percent of Time

One in five medical claims are processed inaccurately by health insurers, according to the 2010 National Health Insurer Report Card, the American Medical Association’s third annual report examining the nation’s commercial health insurers and the systems they use to manage and pay claims.

According to the AMA’s findings, the health insurance industry as a whole has about an 80 percent accurate rate for processing and paying claims. Coventry Health Care Inc. came out on top of the seven commercial health insurers for accuracy (88.41 percent). Rounding out the list was Anthem Blue Cross Blue Shield (73.98 percent).

Others areas examined include the insurers’ payment timeliness and type, claim edit sources and frequency, denial trends, and improvements of claims cycle workflow.

Consumers Anxious About Health Reform Changes: Survey

Eighty-two percent of consumers consider themselves “well” or “adequately” insured, and nearly all of this group (96 percent) are somewhat or very satisfied with their health plans overall, according to a new Deloitte poll.

Many are concerned that health reform will significantly change their current coverage. Sixty-one percent of consumers enrolled in employer-sponsored health plans believe that their employer will reduce benefits for dependents and retirees and 32 percent think their employer will probably pay a penalty and discontinue health coverage for employees altogether.

Consumers also expressed concern about the cost of reform. Seventy-six percent of respondents anticipate increases in taxes, 65 percent expect rising insurance premium costs (including both premiums and out-of-pocket expenses), and 66 percent believe higher hospital and physician services costs will result from reform.

“Our research indicates that health insurance plans and employers may need to collaborate more than ever to help ease the anxiety of plan participants and employees as new health reform measures are implemented,” said John T. Bigalke, vice chairman and Deloitte’s health sciences and government industry leader.

Recession May Be Compromising Hospital Quality: New Research

Researchers at the University of Michigan Health System and St. Joseph Mercy Health System say the current recession may be causing hospitals to make cutbacks that are compromising the quality and safety of healthcare delivery, according to a new analysis published in the May/June issue of the Journal of Hospital Medicine.

Hospitals are reporting declining profits, likely the result of Americans losing health insurance as they lose jobs. An American Hospital Association report indicates that almost three-fourths of hospitals are receiving less reimbursement from insurance payers per discharge and more than half are experiencing a decrease in patient admissions. As a result, hospitals are reducing staff and delaying or cancelling plans for renovation and new construction.

The article’s authors recommend that the federal government focus on connecting hospital safety with financial stability. For example, government stimulus funds could support employment of nurse discharge advocates to reduce rehospitalizations by educating and preparing patients for discharge. Such a program, the authors assert, would serve the dual goals of preserving employment and advancing patient safety.

AHIP: Preventable Readmissions Lower for Medicare Advantage Enrollees

Medicare Advantage plan practices may be reducing likelihood that enrollees will be readmitted to the hospital by as much as 14 to 29 percent, according to a study released by America’s Health Insurance Plans (AHIP).  

Using risk-adjusted hospital readmission data from nine states, researchers determined the percentage of Medicare Advantage plan enrollees discharged from a hospital that are rehospitalized within 30 days and within 90 days. These data were then compared with traditional Medicare fee-for-service program hospital readmission rates cited in a study by the New England Journal of Medicine.

About 20 percent of the patients enrolled in the traditional Medicare fee-for-service program were rehospitalized within 30 days, and 34 percent of the Medicare FFS patients were rehospitalized within 90 days, according to the study. Medicare Advantage plan readmission rates were about 27 to 29 percent lower than the Medicare FFS readmission rates for all enrollees, and they were about 16 to 18 percent lower per enrollee actually admitted to the hospital.

About half of the Medicare FFS patients who were rehospitalized within 30 days did not have a physician visit between the time of discharge and the time of rehospitalization—a statistic suggesting that many of the patients may have returned to the hospital because of a lack of follow-up care, according to AHIP. Other practices that may be lowering readmission rates include facilitation of after-hours care and nurse help lines, follow-up telephone calls, in-home nurse visits, and transportation services to encourage fulfillment of follow-up medical appointments.

Senate Finance Chair Baucus Introduces Substitute Amendment Affecting 72-Hour Rule

An amendment to the American Jobs and Closing Tax Loopholes Act introduced by Senate Finance Committee Chairman Max Baucus (D-Mont.) would allow the Health & Human Services Secretary to redefine the services included in the Medicare 72-hour payment rule. The language would also prohibit hospitals from rebilling to correct inpatient claims that contain unrelated services as defined under current law.

The language of the amendment is the same as language included in a bill passed by the House before the Memorial Day recess.

A summary that Sen. Baucus posted on the Senate Finance Committee website states: 

Under current law, all services related to an inpatient admission are included in the bundled payment for that admission. The bill would conform the law with recent practice by preventing future unbundling of services and submission of adjustment claims seeking separate and additional Medicare payments. This provision would prevent $4.2 billion in excess spending by preventing providers from changing current practice.

State Budgets Await This Week’s Senate Review of Medicaid Extension

Having counted on Washington for money that may not be delivered, at least 30 states will have to close larger-than-anticipated shortfalls in the coming fiscal year unless Congress passes a six-month extension of increased federal spending on Medicaid, as noted by The New York Times. 

The Medicaid provision, which would extend assistance first granted in last year’s stimulus package, was considered such a sure bet by many governors and legislative leaders that they prematurely included the money in their budgeting. But under pressure from conservative Democrats to rein in deficit spending, House leaders in late May eliminated $24 billion in aid to states from a tax and jobs bill that was approved and forwarded to the Senate, as noted in the article. 

The Senate plans to take up the measure this week, and the majority leader, Sen. Harry Reid (D-Nev.), favors restoring the money. House speaker Nancy Pelosi (D-Calif.), signaled last week that her chamber was open to reconsidering the appropriation.

Campaign Launched to Fight Scams Aimed at Medicare Beneficiaries

Secretary of Health and Human Services (HHS) Kathleen Sebelius and U.S. Attorney General Eric Holder today sent a letter to state attorneys general urging them to work with HHS and federal, state, and local law enforcement officials to mount a substantial outreach campaign to educate Medicare beneficiaries about how to prevent scams and fraud.

This week the first tax-free $250 donut hole rebate checks will be mailed to Medicare beneficiaries who have fallen into the coverage gap, raising concerns about identity theft. The campaign’s focus is to prevent fraud and increased activity by criminals seeking to defraud seniors. Education and outreach efforts will include:

• Reducing the improper Medicare fee-for-service payment rate by 50 percent by 2012
• Holding a series of regional fraud prevention summits around the country over the next few months
• Scheduling regular healthcare fraud task force meetings to facilitate the exchange of information and help coordinate antifraud effort
• Doubling the size of the Senior Medicare Patrol (retired professionals and other senior citizens who are trained to recognize and report instances or patterns of healthcare fraud)
• Launching a new educational media campaign this summer to educate Medicare beneficiaries about how to protect themselves against fraud

HHS Grants Will Boost State Insurance Rate Review

Health and Human Services Secretary Kathleen Sebelius today announced the availability of $51 million in Health Insurance Premium Review Grants through the Patient Protection and Affordable Care Act. These funds are the first round of grants available to states through a new $250 million grant program to create and strengthen insurance rate review processes over the next five years.

In early May, Secretary Sebelius sent a letter to governors and state insurance commissioners urging them to review the authority they have under their state laws to determine whether they have all of the regulatory tools needed to approve health insurance rates before they take effect.

Several provisions in the Affordable Care Act strengthen HHS’ and states’ oversight of insurance premiums and rate hikes. These include the medical loss ratio, requiring insurers in the individual and small group markets to spend at least 80 percent of the premium dollar on health care, and insurers in the large group market to spend at least 85 percent of the premium dollar on health care; rate review, requiring insurers to justify unreasonable premium increases to state regulators and the Secretary of HHS; and grant funds for states to help create or strengthen reporting and review processes.

HHS will take applications for a second round of state grants beginning in FY2011, after new regulations regarding rate review take effect. Second-round grants will allow states to further strengthen their rate review, and begin to provide the Secretary of HHS with the rate data required under the law.

CMS Provides Guidance On ACOs

The Centers for Medicare & Medicaid Services (CMS) has released a preliminary Q & A that summarizes and clarifies provisions of the Patient Protection and Affordable Care Act related to the organization and makeup of accountable care organizations (ACOs).

In the document, CMS confirms that ACOs may be physicians and other professionals in group practices or in networks of practices; partnerships or joint venture arrangements between hospitals and physicians/professionals; hospitals employing physicians/professionals; and other forms that the Secretary of Health and Human Services may determine appropriate.

Voting Now Open for Modern Healthcare’s Top 100

Voting is now open for Modern Healthcare magazine’s 100 Most Powerful People in Healthcare. 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 will remain open through June 25.

FTC Delays Red Flags Rule Enforcement

The Federal Trade Commission has announced that it is delaying enforcement of the identity theft red flags rule until Dec. 31, 2010, while Congress considers legislation that would affect the scope of the entities covered by the rule. The red flags rule requires many businesses and organizations to implement a written identity theft prevention program designed to detect the warning signs, or red flags, of identity theft in their daily operations.

The final red flags rule took effect on Jan. 1, 2008, with full compliance originally required by Nov. 1, 2008. The FTC has issued several enforcement policies delaying enforcement of the rule. Most recently, the FTC had announced in October 2009 that at the request of Congress, it was delaying enforcement of the rule until June 1, 2010, to allow Congress sufficient time to finalize legislation that would limit the scope of businesses covered by the rule.

At the time of the October 2009 announcement, the House of Representatives had already unanimously approved HR 3763, a bill that would exempt from coverage of the red flags rule any healthcare, accounting, or legal practice with 20 or fewer employees, as well as certain other businesses. On May 25, 2010, Sen. John Thune (R-S.D.) and Sen. Mark Begich (D-Alaska) introduced S 3416, a bill to amend the Fair Credit Reporting Act to exempt from red flag guidelines certain businesses, including any healthcare practice with 20 or fewer employees.

Hospital-Owned Practices Attracted the Most Physicians in 2009

Physicians were more likely to take a position with a hospital-owned practice in 2009 than a practice not owned by a hospital, according to a physician placement salary survey from the Medical Group Management Association.

Sixty-five percent of established physicians who changed positions in 2009 were placed in a hospital-owned practice. In addition, 49 percent of physicians hired out of residency or fellowship were placed within hospital-owned practices.

One potential reason: Hospital-owned practices offered higher first-year compensation to both primary care and specialist physicians than nonhospital-owned practices. “There is uncertainty of reimbursement for the future,” said Brenda Lewis, president of B.E.L. & Associates, Inc., and MGMA survey advisory committee member. “Physicians are looking to sustain income to pay office overhead and have a paycheck to take home, and those with large Medicare populations are more likely to want to move to hospital-employed positions.”

AHRQ Analysis Increases Hospital Readmission Rate

A new database of hospital visits in 12 states shows that 40 percent of patients who sought acute hospital inpatient or emergency department (ED) care in 2006-07 were readmitted to the hospital during the two-year period, according to an Agency for Healthcare Research and Quality (AHRQ) report. Most readmission studies report information on patients who have had multiple hospital inpatient stays, excluding those who were treated in the ED, according to the report. Including patients who accessed hospital care in both the inpatient and ED settings increased the rate of multiple visits by more than one-third, from an average of 1.5 to 2.1 acute care hospital visits per patient, AHRQ reported.

Factors associated with all-cause readmission rates for inpatients included patient’s age, insurance type, and medical condition. Readmission rates increased with age, from 1.3 admissions for adult patients under 45 to 1.8 admissions for patients 65 years and older. Medicare patients had the highest readmission rates, averaging 1.9 stays per Medicare patient. Privately insured patients had the lowest readmission rates, averaging 1.3 stays per patient.

Among ED patients, revisit rates were highest among younger patients (2.0 visits per patient), those covered by Medicaid (2.5 visits), and those living in the poorest communities (2.0 visits).

HSA and HRA Enrollees Are Rolling Over Larger Assets

The number of health savings accounts (HSAs) and health reimbursement accounts (HRAs) has been growing steadily, according to a new report from the Employee Benefit Research Institute. In 2009, there were 5 million HSA/HRA accounts, and a total $7.1 billion invested. In comparison, there were 4.2 million accounts in 2008, and 1.2 million in 2006.

The number of enrollees rolling over funds at the end of the year has also been increasing—as well as the total assets being rolled over. The average rollover increased from $595 to $1,295 between 2006 and 2009, according the report entitled Health Savings Accounts and Health Reimbursement Arrangements: Assets, Account Balances, and Rollovers, 2006-2009.

Enrollees’ education level had a significant impact on their account balances, independent of income and other variables. In addition, four cost-conscious decision-making behaviors were linked to either higher account balances or higher rollover amounts.

• Developing a budget to manage healthcare expenses
• Talking to a physician about treatment options and costs
• Using an online cost-tracking tool provided by the health plan
• Asking a physician to recommend a less costly prescription drug

HHS, IOM Launch Community Health Data Initiative

The Department of Health and Human Services (HHS) and the Institute of Medicine (IOM) have launched the national Community Health Data Initiative (CHDI) to help citizens, clinicians, and local leaders use data to improve health and the value of health care. To accomplish its goals, the CDHI is using technology—including the Internet, mobile phone applications, and social media—to make health data accessible to raise awareness of health status and trigger improvement efforts.

The initiative will make publicly available federally generated community health data. HHS will deploy an online health indicators warehouse, which will provide currently available and new HHS data on national, state, regional, and county health performance on indicators such as rates of smoking, obesity, diabetes, access to healthy food, and utilization of healthcare services. The warehouse also will include information on ways to improve performance on specific indicators. Users will be able to view the data on the warehouse website, download the data for free, and integrate it into their own websites and applications.

MedPAC: Recoup Hospital Overpayments

Estimates by the Centers for Medicare & Medicaid Services (CMS) regarding overpayments to hospitals resulting from the adoption of the Medicare severity diagnosis-related groups (MS-DRGs) are correct, and CMS should recover all overpayments, the Medicare Payment Advisory Commission (MedPAC) stated in a letter to CMS last week. CMS adopted the MS-DRGs in 2008 to improve payment accuracy under the hospital inpatient prospective payment system (IPPS).

In commenting upon proposed changes to the hospital IPPS, MedPAC said its analysis shows that implementing MS-DRGs resulted in substantial overpayments to hospitals in 2008 and 2009 and that overpayments continue for 2010 and will continue into the future. MedPAC estimates that overpayments could reach $19 billion for 2008 through 2012. Cumulative overpayments are increasing about 3.9 percent per year in 2010 and will increase 1 percent in 2011 after CMS’s proposed recovery adjustment is adopted, according to MedPAC. CMS actuaries hold that the 3.9 percent overpayment in 2009 amounts to about $4.5 billion. As a result, “the reductions in payment rates that CMS has proposed to offset the effects of coding changes do not represent payment cuts, but rather offset unintended overpayments to hospitals,” MedPAC stated.

MedPAC recommends a change in law that allows CMS to reduce payments less sharply—by up to 2 percent—for three years so all overpayments are recovered and future overpayments are prevented. Hospitals would continue to get scheduled payment updates during the three years so they would not experience the full impact of these reductions, according to MedPAC.

MedPAC says current law has two flaws that should be changed:

• It does not allow for CMS to fully recover overpayments accruing in 2010 through 2012.
• It requires deep short-run reductions in payments to recapture 2008 and 2009 payments.

Hold June Claims Paid Under Physician Fee Schedule, CMS Tells Contractors

The Centers for Medicare & Medicaid Services (CMS) has instructed its contractors to hold claims that include services paid under the 2010 Medicare physician fee schedule (MPFS)—including anesthesia services—for the first 10 business days of June. The Continuing Extension Act of 2010, which was enacted on April 15, 2010, extended the zero percent update to the 2010 MPFS through May 31, 2010. Because CMS believes Congress is working to avert the negative update scheduled to take effect today, the agency imposed the hold to avoid disruption in the delivery of healthcare services to beneficiaries and payment of claims for physicians, nonphysician practitioners, and other providers of services paid under the MPFS.

Hospital Health Center Patients More Likely to Get Specialty Care: Report

Hospital-affiliated community health centers are more likely to get appointments for specialty procedures such as diagnostic tests and follow-up visits for their patients, according to a Commonwealth Fund report. Based on a survey of 795 executive or clinical directors at U.S. federally qualified health centers, the report says many community health centers provide high-quality, well-coordinated care, but the Patient Protection and Affordable Care Act could increase demand for their services. The reform law provides $11 billion in funding for community health centers over the next five years—twice the current funding.

Community health centers serve 16 million patients who are mostly low income, uninsured, or insured through Medicare or Medicaid.

The report suggests the following areas for improvement:

• Payment incentives to encourage high-quality care
• Policies and incentives that encourage centers to take steps to function as patient-centered medical homes
• Infrastructure support, such as health IT, to allow the centers to better meet patients’ needs

IT Cost Benchmarking Survey Participation Sought

Scottsdale Institute, an association for health system executives, is conducting its 2010 IT cost benchmarking data survey. Developed with input from Spectrum Health, the IT benchmarking program collects IT cost data from healthcare organizations, develops comparative databases, and offers participating organizations opportunities to collaborate so they can compare their practices and share insights.

Nonmember organizations may participate in the survey. There is no charge to nonmembers for data entry, validation, and the resulting database. Visit the Scottsdale Institute website for more information on participating.

Reform Will Increase Employers’ Healthcare Costs: Survey

Although reducing healthcare costs is a goal for most employers, few expect healthcare reform to contain costs, according to a survey on healthcare reform by Towers Watson, a professional services company. The survey of 650 mid- to senior-level benefit professionals found that 88 percent of respondents plan to pass increased health benefit costs on to employees and 74 percent plan to reduce health benefits and programs. Yet 82 percent of employers remain committed to providing workforce health improvement and wellness initiatives.

Eighty-eight percent of respondents plan to continue to provide health benefit coverage in 2014, when employers must offer minimal essential coverage to FTEs or pay a penalty. Eighty-five percent of respondents believe that fewer large employers will offer retiree medical benefits under reform, and 43 percent of respondents that currently offer retiree medical coverage plan to reduce to eliminate it.

The excise tax cap on high-cost benefit plans is a primary cost driver that could affect 60 percent of employers when it takes effect in 2018, according to Towers Watson. Yet only 46 percent of respondents believe they will be subject to the excise tax.

The $5 Billion Allocated for High-Risk Pools Falls Far Short of Need

While 5.6 million to 7 million Americans may qualify for health coverage through the new temporary national high-risk pool program, the $5 billion allocated until 2014 will cover only a small fraction of those in need, potentially as few as 200,000 people a year, according to a new policy analysis from the National Institute for Health Care Reform (NIHCR).

The analysis—Health Coverage for the High-Risk Uninsured: Policy Options for Design of the Temporary High-Risk Pool—identifies key policy considerations in designing the temporary high-risk pool program created by the 2010 Patient Protection and Affordable Care Act to provide subsidized health coverage to uninsured people with preexisting medical conditions. The law includes insurance market reforms and income-based subsidies to make coverage more accessible and affordable, but most of these measures do not take effect until January 2014. To bridge the gap, the law provides for an interim national high-risk pool, modeled on those already operating in 35 states, scheduled to start July 1.

“While the law’s goal is to bridge the gap for people who can’t get affordable private insurance because of preexisting medical conditions until the full reforms occur in 2014, the limited funding means the administration will have to make hard choices to stretch the dollars as far a possible,” said Paul B. Ginsburg, Ph.D., NICHR director of research and president of the Center for Studying Health System Change.

Most Firms Plan to Apply for Early Retiree Insurance Program: Survey

Most companies that offer early retiree medical benefits plan to apply for the Early Retiree Reinsurance Program (ERRP) to offset some of the claims costs for retirees aged 55 to 64 and their families, according to a survey by Hewitt Associates. Hewitt surveyed 245 companies that offer medical benefits to more than 1.3 million retirees. About three-quarters of the employers plan to pursue reimbursement under the ERRP, a newly enacted health reform law that takes effect June 1, 2010, and ends Jan. 1, 2014, or when the $5 billion set aside for the program is exhausted.

Hewitt estimates that the average federal reimbursement will represent $2,000 to $3,000 per pre-65 retiree per year, or approximately 25 to 35 percent of total healthcare costs. Although the law requires employers to use the ERRP reimbursements to reduce the cost of the plan, approximately two-thirds of survey respondents that intend to apply for the reimbursement are undecided on how they will use the proceeds. Sixteen percent plan to use the reimbursement to reduce premiums for both employer and retirees, and five percent said they are considering reducing the retiree share of premiums only.

Report Projects State-by-State Growth in Medicaid Enrollees, Decreases in Uninsured

The expansion of Medicaid under the new health reform law will significantly increase the number of people covered by the program and markedly reduce the uninsured in states across the country, with the federal government picking up the overwhelming majority of the cost, according to a state-by-state analysis released today by the Kaiser Family Foundation’s Commission on Medicaid and the Uninsured.

States with large uninsured populations today are expected to see the biggest increases in the numbers of people who obtain health coverage through Medicaid. California and Texas, for example, two states with considerable numbers of uninsured residents, are each projected to see 1.4 million fewer uninsured adults in 2019 due to the Medicaid expansion, with the federal government covering 95 percent of the cost in Texas and 94 percent in California.

Medical Costs Rise 7.8 Percent in 2010 for Family of Four: Milliman

The medical costs paid by and on behalf of a typical U.S. family of four reached $18,074 in 2010, up 7.8 percent over the 2009 amount of $16,771, according to the 2010 Milliman Medical Index. For the third consecutive year, the annual rate of increase has been less than 8 percent, but the dollar increase is the highest in the past 10 years. Inpatient and outpatient facility services combined represent 48 percent of the total annual medical costs, up from 47 percent last year, according to the index. Physician services represent 33 percent, prescription drugs represent 15 percent, and miscellaneous services represent 4 percent.

Over the past five years, pharmacy care and facility costs, especially outpatient facility costs, increased at a higher average annual rate than physician services, the report states. The largest dollar increase in 2010 was for inpatient facility care, which rose by $498 annually. The increase includes change in both utilization and average unit cost. Average unit cost reflects the negotiated charge for each service and the service mix, according to Milliman.

Most of the hospital and physician cost increases noted in the 2010 index have been driven by average unit cost, not utilization, which frames the future cost-control effort, according to the report. Hospital and physician services contributed $820 and $301, respectively, to the increase in total annual medical costs between 2009 and 2010, while pharmacy services contributed $151.

As in 2009, medical costs in three cities (Miami, New York, and Chicago) continue to surpass the national average by at least 10 percent. Costs in all three cities now exceed $20,000 for a typical family of four, with Miami at $22,089. Phoenix and Seattle continue to have costs much lower than the national average.

HHS Seeks to Dismiss Virginia’s Challenge of the PPACA

The U.S. Department of Health and Human Services (HHS) filed a motion to dismiss Virginia’s lawsuit challenging the Patient Protection and Affordable Care Act (PPACA). The motion was filed in the United States District Court for the Eastern District of Virginia on May 24.

Virginia is among several states that have filed lawsuits challenging the federal healthcare reform law. On May 14, Virginia announced the establishment of the Health Care Reform Initiative to prepare Virginia for implementation of federal health reform by planning for the expansion of Medicaid.

Bundled Payment Could Reduce Spending, Spur Quality Improvement

A new American Hospital Association (AHA) report provides evidence on the impact of bundled payment, citing findings from eight selected demonstration projects.

• Bundled payment could potentially reduce spending on an episode of care: For example, during the five-year Heart Bypass Center Demonstration, Medicare reduced expected spending on coronary artery bypass graft (CABG) surgery by roughly 10 percent at seven participating hospitals.
• Providers’ readiness to participate in bundled payment programs varies: Of the 734 hospitals that expressed interest in Medicare’s Heart Bypass Center Demonstration, 209 submitted preapplications.
• Bundled payment can spur quality improvement: Geisinger Health System’s ProvenCare reduced average length of stay for CABG by 0.5 days and 30-day readmission rates by 44 percent over 18 months.

The AHA report, Bundled Payment, also identifies eight key questions that need to be addressed about bundled payment, including “What capabilities are needed for an organization to administer bundled payment?”

AMA-Led Lawsuit Argues Against Extending Red Flags Rule to Physicians

On June 1, physicians will be expected to comply with the federal red flags rule related to consumer identify theft. In the meantime, the American Medical Association (AMA), American Osteopathic Association (AOA), and the Medical Society of the District of Columbia (MSDC) have filed a lawsuit seeking to prevent the Federal Trade Commission (FTC) from extending these regulations to physicians.

The AMA, AOA, and MSDC strongly disagree with the FTC’s view that all physicians who do not require payment at the time of providing medical services to patients are required to comply with the red flags rule beginning June 1. “The extensive bureaucratic burden of complying with the red flags rule outweighs any benefit to the public,” said AMA president-elect Cecil B. Wilson, MD.

While litigation proceeds, physicians can turn to online resources from the AMA to help them comply with the red flags rule.

Standard & Poor’s: The Reform Law Will Not Lower Healthcare Costs

Federal, state, and local governments will be paying 52 percent of medical bills by 2015—up from 48 percent today, according to a recent report from Standards & Poor’s Financial Services. The federal government will assume the lion’s share of the cost hike, with its portion of the bill rising from 34 to 38 percent by 2015. State and local governments will continue to pay 14 percent of the bill over the next five years.

“The government has been trying to control Medicare and Medicaid costs, mostly at the expense of the healthcare system and private payers,” says the report, Can the U.S. Economy Afford Health Care Reform? “If the trends of lower reimbursement for government-covered patients continue, the costs for private patients will go up. This could induce even more employers to drop healthcare coverage.”

Citing the current inconsistency between entitlements and taxes, the report concludes that, “There will need to be a major revision of healthcare benefits or a major tax hike to pay the rising bill.”

Some Healthcare Reform Law Changes to Medicare Take Effect in 2010

The Patient Protection and Affordable Care Act, enacted in March 2010, includes significant changes to Medicare. Some of the changes will expand benefits, and others are designed to slow the program’s growth rate. A new issue brief from Health Affairs and the Robert Wood Johnson Foundation discusses some of the changes that will take effect in 2010:

• Expanded prescription drug coverage
• Improved subsidies for drug coverage for people with low incomes
• Expanded coverage of preventive services
• Primary care improvements
• Increased premiums for high-income beneficiaries
• Increased Medicare taxes for high-income households
• Reductions in payments and other requirements for Medicare Advantage plans
• Reduction in the growth of payments to Medicare providers
• Special provisions for rural hospitals
• Encouragement for innovation in Centers for Medicare & Medicaid Services programs

Additional Rooms Added for ANI: The Healthcare Finance Conference

Demand is strong for proven practices at this year’s ANI, June 20-23 in Las Vegas. Although HFMA’s room block at the Venetian/Palazzo has sold out, rooms have been added at the adjacent Wynn Hotel (866-770-7555) at the special rate of $159/night and the nearby TRUMP International (866-939-8786) for $150/night. Please call and ask for the HFMA rate to secure your reservation. Get more information about ANI.

One-Fifth of U.S. Population Visited an ED in 2007: CDC

One in five people visited the emergency department (ED) in 2007, according to a Centers for Disease Control and Prevention (CDC) report. Adults aged 75 and older, non-Hispanic blacks, the poor, and persons with Medicaid coverage were more likely to visit the ED at least once in a 12-month period than those in other age, race, income, and insurance groups. Of those under age 65, the uninsured were no less likely than the insured to visit the ED at least once.

ED use is associated with insurance status, with Medicaid enrollees being the most likely to visit the ED, according to the report. The uninsured under age 65 were more likely to have had multiple ED visits in 2007 than those with private insurance. Health insurance status was not associated with nonurgent ED visits, and 10 percent of ED visits by persons under age 65 were considered nonurgent. Adults reporting fair or poor health status were most likely to have used the ED. Those with a usual source of medical care were no less likely to have had at least one ED visit than those without a usual source of care, according to the CDC.

Florida Hospitals to Participate in Quality-Improvement Initiative

The Florida Hospital Association and the American College of Surgeons (ACS) and its Florida chapter have launched the Florida Surgical Care Initiative to reduce surgical complications and improve the quality of care in participating hospitals. Florida hospitals will be the first in the nation to participate in this outcomes-based program.

Supported by a grant from Blue Cross and Blue Shield of Florida, the initiative will focus on four key areas: surgical site infections, urinary tract infections, colorectal surgery outcomes, and elderly surgery outcomes.

The initiative was developed on the basis of the ACS National Surgical Quality Improvement Program (NSQIP), which uses risk-adjusted, clinical, 30-day outcomes data to review and assess outcomes and complications related to surgical care. The use of ACS NSQIP has been shown to significantly reduce complications and deaths in participating hospitals and to help hospitals save money by preventing costly complications.

The initiative’s four measures were developed by the ASC in partnership with the Centers for Medicare & Medicaid Services (CMS). The measures are under review by the National Quality Forum, and if endorsed by NQF, could be implemented by CMS as national quality measures.

HFMA Announces 2010 Winners of MAP Award for High Performance in Revenue Cycle

HFMA will present the following 10 hospitals with the MAP Award for High Performance in Revenue Cycle during ANI.

• Baylor Medical Center at Irving, Irving, Texas
• CHRISTUS Schumpert Health System, Shreveport, La.
• Hospital of the University of Pennsylvania, Philadelphia, Pa.
• Riverside Methodist Hospital, Columbus, Ohio
• Danbury Hospital, Danbury, Conn.
• Saint Francis Hospital, Tulsa, Okla.
• The Valley Hospital, Ridgewood, N.J.
• Princeton Medical Center, Birmingham, Ala.
• Geisinger Medical Center, Danville, Pa.
• Brookwood Medical Center, Birmingham, Ala.

MAP (Measure, Apply, and Perform) is a new initiative that HFMA has launched to raise the level of financial performance of the entire industry by driving revenue cycle excellence. Central to MAP are revenue cycle measures, or key performance indicators, that HFMA and leaders in the field developed to be industry standards.

The MAP award is sponsored by 3M Health Information Systems. Learn more about MAP.

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