Posts Tagged ‘American Hospital Association’

Non-Profit Hospitals Will Take Financial Hit If the Individual Mandate is Struck Down

Monday, May 14th, 2012

If the Supreme Court overturns the individual mandate that requires Americans to buy healthcare insurance that is contained in the Patient Protection and Affordable Care Act (ACA), non-profit hospitals will struggle with higher costs, according to Moody’s Investors Service.  The individual mandate has become the focus for legal attacks on the healthcare law.  It “would result in a significant reduction in uncompensated care delivered by hospitals” and reduce “utilization of expensive emergency room services,” the rating agency said.

“If the Supreme Court overturns the individual mandate, the private health insurance market would likely weaken under the unbalanced weight of strict provisions to cover all those who seek insurance without the counterbalancing benefit of a new, largely healthy, population segment that would be provided under the mandate,” Moody’s said.  “This scenario could become untenable for many insurers and hospitals, as costs would rise but revenues would not.”

There are additional challenges to non-profit hospitals in the ACA, specifically cuts in reimbursement rates for Medicare and reduction of funds paid to hospitals that serve a disproportionate share of Medicaid recipients, Moody’s said.  “Removing the mandate would make the negative features of reform loom much larger.”  Moody’s said the federal government could turn to a voucher system in which individuals would receive public help for them to buy health insurance, but the results for non-profits hospitals “would be more complex and hard to foresee.”

This is bad news because by a nearly five-to-one margin, hospitals expect the ACA to shrink their revenues. The result suggests that hospital executives are having second thoughts about the deal they made with the Obama administration in exchange for supporting the healthcare overhaul will help them weather the law’s financial repercussions.

According to a recent poll, 55 percent of hospitals and health systems anticipate falling revenues as a result of the law, while 12 percent expect an increase.  Twenty-eight percent were unsure of the law’s effect on revenue, indicating continued concern in the industry over the changes wrought by healthcare reform.  Hospital executives agreed to give up $155 billion in government payments over 10 years in a deal to cap costs borne by the industry as a result of the ACA.  The agreement followed a similar agreement with pharmaceutical companies and enabled the reform.  Two crucial hospital groups — the American Hospital Association and the Federation of American Hospitals — backed the law.  “Hospitals have acknowledged that significant healthcare savings can be achieved by improving efficiencies, realigning incentives to emphasize quality care instead of quantity of procedures,” Vice President Joe Biden said at the time.  “Today’s announcement, I believe, represents the essential role hospitals play in making reform a reality.”

“Hospital and health systems’ financial health has a direct impact on the benefits offered to their employees,” said Maureen Cotter, a senior principal at HighRoads, which took the poll.   “Even though 70 percent of those surveyed stated that they are committed to providing coverage in the long term, and no organizations have plans to discontinue coverage now or in the future, the coverage provided may take a new shape,” Cotter said.

There’s even more bad news in the fact that Howard Dean, a physician who formerly was chairman of the Democratic National Committee, a 2004 presidential candidate and governor of Vermont thinks that the high court will declare the mandate unconstitutional.  Dean believes that Justice Anthony Kennedy’s swing vote will side with the conservative justices when it comes to the individual mandate.  “I do believe that it’s likely the individual mandate will be declared unconstitutional.  Kennedy will probably side with the four right-wing justices. The question is going to be, is this individual mandate question, can that be considered separately from the rest of the bill?  And I think it will be.”

Dean also said the ACA can remain in place without the mandate.  “It’s definitely not necessary for the bill to succeed,” Dean said.  “It was mainly put in by academics who built the program for Governor Romney in Massachusetts, they had did it there, and for insurance companies who will benefit from extra customers.”

According to Dean, “The number of so-called free riders — people who will refuse to get insurance until they get sick — is going to be very, very small.”  Dean noted that the actual benefit of the individual mandate is “relatively small.  Everyone is a libertarian in America, whether Democratic, Republican or independent.  They don’t like to be told what to do by government.”

CMS’ Value-Based Purchasing Program Is In the Works

Wednesday, March 28th, 2012

The Department of Health and Human Services (HHS) is formulating a new initiative to reward hospitals for the quality of care they provide to Medicare patients and reduce healthcare costs.  Authorized by the Patient Protection and Affordable Care Act (ACA), the Hospital Value-Based Purchasing program marks an historic change in how Medicare pays healthcare providers and facilities — for the first time, 3,500 hospitals nationwide will be paid for inpatient acute-care services based on care quality, not just the quantity of the services they provide.

This initiative supports the objectives of the Partnership for Patients, a public-private partnership that will help improve the quality, safety and affordability of health care for all Americans.  The partnership has the potential to save 60,000 lives and up to $35 billion in U.S. healthcare costs over the next three years, including up to $10 billion for Medicare.  Over the next ten years, the Partnership for Patients could reduce costs to Medicare by about $50 billion and result in billions more in Medicaid savings.

“Changing the way we pay hospitals will improve the quality of care for seniors and save money for all of us,” said HHS Secretary Kathleen Sebelius.  “Under this initiative, Medicare will reward hospitals that provide high-quality care and keep their patients healthy. It’s an important part of our work to improve the health of our nation and drive down costs.  As hospitals work to improve their performance on these measures, all patients – not just Medicare patients – will benefit.”

The Hospital Value-Based Purchasing initiative is just one part of a broad effort by the Obama Administration to improve the quality of health care for all Americans, using important new tools provided by the ACA.  The Partnership for Patients brings together hospitals, doctors, nurses, pharmacists, employers, unions, and state and federal government committed to keeping patients from getting injured or sicker in the health care system and improving transitions between care settings.  The Centers for Medicare and Medicaid Services (CMS) is investing up to $1 billion to drive these changes.  Additionally, proposed rules allowing Medicare to pay new Accountable Care Organizations (ACOs) to improve coordination of patient care are also expected to result in better care and lower costs.

In essence, the program rewards hospitals that perform well on quality measures relating both to clinical process of care and to patient experience of care, or those making improvements in their performance on those measures.  Hospitals that meet performance criteria will receive higher compensation.  The hospital value-based purchasing program, which is expected to become effective in fiscal 2013 for payments for discharges occurring on or after October 1, 2012, would make value-based incentive payments based on how much the hospitals’ performance improves certain quality measures during a baseline timeframe.  The better a hospital’s performance or improvement during the performance period, the higher the hospital’s value-based incentive payment would be, according to CMS.

According to CMS estimates, approximately 50 percent of the facilities participating in this Hospital Inpatient Value-Based Purchasing program will receive a net increase in their Medicare payments.  The other half will see a net decrease.  Neither the increase nor the decrease will exceed one percent in the first year, CMS said.  The better-performing hospitals in the first year have the potential to receive value-based incentive payments totaling as much as two percent of Medicare reimbursement, or a net one percent extra,  CMS sees the program as “the next step in promoting higher quality care for Medicare beneficiaries.”  When the program gets underway, CMS said, the government will reward hospitals on the basis of “actual quality performance,” and not just data.

Jean Moody-Williams, director of the Quality Improvement Group within CMS’ Office of Clinical Standards and Quality, said the Hospital VBP Program is funded by a one percent withholding from participating hospitals’ diagnosis-related group (DRG) payments; hospitals excluded from the program will not have that one percent withheld from their DRG payments.  “The goal of CMS through the Hospital Value-Based Purchasing Program is to link payments to quality outcomes,” Williams said.  “We really are starting to get away from asking, ‘How much did you do?’ to ‘How well did you do and how was it for the patient?'”

The American Hospital Association (AHA) has serious reservations about the program, noting that “CMS has not met its requirements with respect to certain measures.  This failure will unfairly and adversely impact the hospital field and even undermine the intent of the law, which is to provide opportunities for hospitals to improve their performance.”

According to the AHA, the problem “is exacerbated in the outpatient PPS (prospective payment system) rulemaking cycle because it builds on policies that fail to comply with the law’s requirements.” AHA also expressed concern with how the agency handled the notice and comment process for the hospital VBP program, which “made significant changes to this program in three separate regulations,” and suggested that the agency choose a single regulation in which it will make any future changes to the program.

EHR Adoption Moving Forward

Wednesday, March 14th, 2012

The nation’s hospitals must demonstrate that they have collected the vital statistics of more than 80 percent of their patients in digital form if they want to continue receiving as much as $14.6 billion in federal grants for installing electronic health records (EHR) technology.  Awards as large as $11.5 million are available to hospitals that can prove “meaningful use” of the equipment, under preliminary rules issued by the Obama administration.  Physicians can apply for grants of $44,000 or $64,000, depending on whether they treat patients in Medicare or Medicaid.

The rules continue carrying out an initiative in the American Recovery and Reinvestment Act (ARRA) as a step toward overhauling the nation’s healthcare system, specifically in the Health Information Technology for Economic and Clinical Health (HITECH) Act.  Hospitals and doctors should achieve “substantial benefits” from adopting digital records, including lower record-keeping costs, fewer pointless tests, shorter hospital stays and reduced medical errors.

The percentage of U.S. hospitals that have adopted electronic records more than doubled between 2009 and 2011, to 35 percent, according to the American Hospital Association.  Approximately 85 percent of hospitals told the association that they plan to take advantage of government incentives by 2015.  The government expects that by 2019, 96 percent of hospitals will adopt electronic records and at least 36 percent of doctors’ practices.

In this second stage of adoption of EHR, the government is emphasizing making sure that electronic systems can talk to one another – or are “interoperable.”  According to Kaiser Health News, it’s “a real push ahead,” said Farzad Mostashari, the national coordinator for health information technology.  The rules require systems be able to transfer patient information across platforms.  A “summary of care” — including past diagnoses, procedures and test results – must be able to follow patients across referrals and changes in health care provider.  Additionally, the information should be available to some patients, who under Stage 2 requirements must be allowed to view their records online, as well as download and transfer information.  Finally, some patients must be able to communicate with their doctors through a secure, online system.

According to a survey of 302 hospital IT executives, more than one-quarter said they had already proven to the Centers for Medicare and Medicaid Services (CMS) that they have met the government’s standard for the first stage of meaningful use of health IT.  That means they have demonstrated that they have the baseline capabilities in their CMS-approved health IT system to collect and submit data.  Stage 2 also deals with security of exchanging patient information electronically, particularly the risk of a doctor mistakenly leaving his laptop or iPad accessible to the public.  “A huge, huge, huge portion of all breaches don’t occur because someone hacked into the system; they occur because people left their laptop on the train and they didn’t encrypt it,” Mostashari said.

Writing on the practicefusion.com website, Robert Rowley, M.D., says that “Stage 2 is about connectivity.  So let us take a step back and re-assess the larger picture.  Stage 1 Meaningful Use is about adoption of EHRs into the daily practice of clinicians and hospitals.  It is about moving the documentation of healthcare away from paper, and onto a digital platform.  The platform didn’t really have to connect with anything, though the capability to connect needs to be built for the technology to be Certified.  Stage 2 is about connectivity.  Now that EHRs are adopted, implemented and used meaningfully, the next stage is intended to be about connecting the silos together.  Stage 3, to come later, will be about inserting Decision Support between the connections, so that best practices (as well as authorizations) become part of the daily fabric of healthcare.”

A little-known fact is that EHR adoption is having a positive impact on healthcare IT job creation.  According to job resource Medzilla, an estimated 50,000 new jobs have been created in the health IT field since 2009, when the government passed the HITECH Act, which authorized funding for the EHR incentive program.  “The statistics over the past few months have been more than encouraging,” said Del Johnson, director of client relations at Medzilla.  “Here you have two, previously separate industries that are rapidly growing into one another.  Where the two meet you have an opportunity to explore a completely new labor pool.”

Super Committee’s Failure Raises Questions About Healthcare Funding

Wednesday, December 7th, 2011

Now that the Super Committee has failed to identify $1.2 trillion in cuts from the federal budget, automatic cuts totaling billions for everything from Medicare to biomedical research, start in 2013.  Some healthcare sectors will fare better than others.  The primary health entitlement programs, Medicare and Medicaid, are protected under the law that created the Super Committee.  Automatic cuts will not impact Medicaid, the joint federal-state health program for the poor.  Medicare would be cut by two percent – all from payments to hospitals and other providers.

The bad news is that unless Congress reworks the legislation mandating the automatic cuts, a series of across-the-board reductions will begin in 2013.  The House and Senate appropriations committees must decide how to spread the cuts among various programs.  And some of the larger, better-financed lobbies may be able to influence what is cut and what is kept.

Even though the Medicare cuts are limited to hospitals and other medical providers and would not exceed two percent, they argue that is too much and that they sacrificed plenty in the Patient Protection and Affordable Care Act (ACA).  Rich Umbdenstock, president and CEO of the American Hospital Association, said sweeping cuts would hurt Medicare beneficiaries and their families and “also have an impact on the ability of hospitals to provide essential public services to the communities they serve given the impact that Medicare has on the entire healthcare system.”

Officially known as the Joint Select Committee on Deficit Reduction, the Super Committee was unable to meet its deadline to come up with $1.2 trillion of deficit reduction required by the law that created it, much less the $4 trillion that deficit hawks said was necessary to stabilize the finances of the U.S. government, whose debt has topped $15 trillion.  The failure ensures that the fiscal debate between Democrats who want to protect social programs and increase revenue by raising taxes on the wealthy; and Republicans who want smaller government and have pledged to reject tax increases will be a fundamental choice confronting voters in 2012.

“After months of hard work and intense deliberations, we have come to the conclusion today that it will not be possible to make any bipartisan agreement available to the public before the committee’s deadline,” Representative Jeb Hensarling,(R-TX), and Senator Patty Murray, (D-WA) said.  The co-chairs thanked committee members, staffers and “the American people for sharing thoughts and ideas and for providing support and good will as we worked to accomplish this difficult task.”

Writing for Politico, David Nather speculates on whether the Super Committee’s failure has harmed efforts to reform Medicare and Medicaid.  It would be easy to conclude that the Super Committee’s failure means the big, expensive health care entitlement programs — Medicare and Medicaid — are untouchable.  It also would be wrong.  The timing was off, coming too close to a presidential election.  The co-chairs weren’t powerful enough.  The work came too soon after a summer debt deal that Democrats hated.  Republicans couldn’t give the kind of concessions on taxes that Democrats needed.  And the alternative to a Super Committee deal on healthcare entitlements — the two percent automatic cuts in healthcare payments and defense funding that will now take place in 2013 — wasn’t harsh enough to force a deal on Medicare and Medicaid. In fact, it might even have been the easier way out.  All of which means Medicare and Medicaid are not off the table forever.”

The Hill’s Sam Baker offers a different perspective. “The Super Committee’s demise is a mixed bag for the American Medical Association and other groups that wanted the 12-member panel to tackle Medicare’s payment formula, known as the sustainable growth rate (SGR).  The AMA — with bipartisan support in Congress — pushed hard for the supercommittee to include in its deficit-cutting package a long-term fix to the SGR.  The formula calls for automatic annual cuts in doctors’ payments, which add up as Congress consistently delays each cut from taking effect.  Aspirations of a long-term SGR patch should be put to rest, healthcare lobbyists said. But they questioned whether the supercommittee push was ever realistic, because an SGR fix would add to the deficit.”

“I never once believed that the Joint Select Committee would be the one to do that,” said Julius Hobson, a senior adviser at the Washington, D.C.-based law firm Polsinelli Shughart and a former AMA official.

ACO Rules Revised to Attract Providers

Thursday, October 27th, 2011

The Obama administration has issued revised regulations to encourage doctors, clinics and hospitals to take greater responsibility for improving patients’ care.  The rules will reward healthcare providers who enter into partnerships to cut the cost of caring for Americans while also boosting quality — two goals of the Patient Protection and Affordable Care Act (ACA).  Known as Accountable Care Organizations, or ACOs, these partnerships have been promoted by many experts as the most promising remedy for the high costs that typify the American healthcare system.

Supporters believe that ACOs could save taxpayers billions of dollars by better coordinating patient care and replacing the current fragmented system in which patients bounce between doctors and hospitals with minimal communication between providers.  “ACOs can represent a very big step forward in helping to transform Medicare, Medicaid and the Children’s Health Insurance Programs so they can help assure high quality, seamless and less costly healthcare,” said Dr. Donald Berwick, who runs the Medicare and Medicaid programs and helped to write the new rules.

“We have made changes in response to what we heard,” Berwick said. “I think they make the program more attractive.”  During the early days, between 50 and 270 ACOs may enroll in the program and save the Medicare program as much as $950 million over four years, according to independent estimates.

Among the changes are increased flexibility in eligibility to participate in the Shared Savings Program; a choice of start dates in 2012; a longer agreement period for those starting in 2012; more flexibility in the governance and legal structure; more streamlined quality performance standards; changes to the financial model to enhance financial incentives to participate; increased sharing caps; no downside risk and first-dollar sharing in Track 1; removal of the 25 percent withholding of shared savings; increased flexibility in timing for the evaluation of sharing savings (claims run-out reduced to three months); more flexibility in antitrust review; enhanced flexibility in timing for repayment of losses; and more options for participation of Federally Qualified Health Centers and Rural Health Clinics.

ACOs are a key provision in the ACA to decelerate rising health costs while delivering high-quality care to Medicare patients.  They are designed to change the incentives that influence how doctors and hospitals operate.  Today, most hospitals and doctors get paid more by delivering more, not necessarily better, care.  ACOs will reward healthcare providers for keeping costs down and meeting certain quality measures, including cutting hospital readmissions or emergency room visits.  ACO’s goal is to replicate the highly respected models of care at the Mayo Clinic in Rochester, MN, and the Geisinger Health System in Pennsylvania where hospitals and doctors coordinate their efforts within the same organization.

George Roman, senior director of health policy at the American Medical Group Association, which represents approximately 400 large provider organizations, described the changes as “music to my ears.  We asked for almost all of these things.”

“We are very pleased at the number of significant changes in rules.  They have made the program look more attractive,” said Linda Fishman, senior vice president of the American Hospital Association.  “But it remains to be seen how many hospitals will find these changes to be motivation enough to enter the program.”

The 696-page document includes more generous shared savings incentives, leaves out 32 of the 65 original quality measures, and gives potential ACO participants extra time to formulate their plans.  One vital change is that the rule no longer mandates that 50 percent of participating physicians be approved under meaningful use requirements for electronic health record use. The revisions provide more opportunities for new ACOs to participate without absorbing risk in the earlier years, as well as major changes in at least 10 other critical areas.  Thanks to the revisions, many in the healthcare industry think more providers will be encouraged to sign up.

Writing in the Washington Post, Sarah Kliff notes that “It’s a big moment in health policy wonk land right now: the Obama administration has just published the final Accountable Care Organization rule.  Sound dull?  Let’s rephrase: The Obama administration has just released a regulation that could decide whether the American healthcare system moves past the broken, expensive fee-for-service model.  The idea is to encourage groups of providers to band together into ‘accountable care organizations’ and accept a flat fee for all care related to a particular patient or condition.  If they could deliver high-quality care in a cost-effective way, they could keep the money they saved.  The hope is to do nothing less than change the basic business model of American medicine from making money by getting patients to spend more money to making money by saving patients money.  There.  That’s better.  This is not the administration’s first crack at encouraging ACOs.  A proposed rule in April, which detailed the requirements to become an ACO, was greeted with howls of protest by the provider community.  In hundreds of comment letters, hospital and doctor groups blasted the program as unattractive, with too much risk and not enough reward.  The American Medical Group Association warned CMS that virtually none of its members would participate.  The group called the rule ‘overly prescriptive, operationally burdensome, and the incentives are too difficult to achieve to make this voluntary program attractive.’

“There are two things that really irked healthcare systems here. First, if an ACO ended up spending more money than the target set by Center for Medicare and Medicaid Services (CMS), it would have to pay back some funds. Second, any ACO would have to show savings above two percent before they could reap any of the financial rewards.  The rule eliminates both of those barriers to entry.  It creates an ACO track with no ‘downside risk.’  The two percent gap gets cut, too: under the final rule, ACOs share in any savings from the very first penny.  CMS made a lot of other adjustments too that make the program easier to participate in, like lowering the quality reporting requirements and eliminating requirements that ACOs show significant use of electronic medical records.  As one CMS official put it this morning, the agency wanted to ‘smooth the on-ramp’ into the program.”

Medicare Bundling Payments to Save Money

Wednesday, September 21st, 2011

The Centers for Medicare and Medicaid Services (CMS) has a new program that would bundle insurance payments for multiple procedures with the goal of improving patient care while saving money.  CMS invited providers to help develop four models to bundle payments.  The program encourages hospitals, doctors and other specialists to coordinate in treating a patient’s specific condition during a single hospital stay and recovery.  “Today Medicare pays for care in the wrong way,” Health and Human Services Secretary Kathleen Sebelius said.  “Payments are based on the quantity of care, and not on the quality of that care.  There is little financial incentive for the kind of care coordination that can help patients from returning to the hospital.” 

The models give providers flexibility regarding how they get paid and for which services, and provides financial incentives to avoid needless or duplicate procedures.  “Hospitals and other providers recognize that they have to accommodate the current (fiscal) environment,” said Nancy Foster, vice president for quality at the American Hospital Association. 

“From a patient perspective…you want your doctors to collaborate more closely with your physical therapist, your pharmacist and your family caregivers,” CMS Administrator Donald Berwick said.  “But that sort of common sense practice is hard to achieve without a payment system that supports coordination over fragmentation.  We’re taking steps that will save Medicare, seniors and taxpayers $28 billion over 10 years. Medicare is paying much more than the private sector for equipment like wheelchairs and walkers.  By expanding our successful competitive bidding program, we can ensure that Medicare pays a fair rate for these goods.”

According to CMS, the initial round of competitive bidding has added up to savings of 35 percent compared to the fee schedule.  Questions in the 1st quarter of 2011 totaled less than 0.9 percent of calls to Medicare’s call center; Medicare received just 45 complaints during that time.  CMS will conduct the second phase of the program for a similar set of products in 91 major cities.  Competition begins this fall; the new prices go into effect on July 1, 2013.  “The success we’ve had in the first phase tells us that we can achieve these savings with no disruption for patients’ access and no negative effect on patients’ health,” said Jonathan Blum, deputy CMS administrator and director of the Center for Medicare. “We remain confident in our bidding methodologies that will produce tangible savings while ensuring adequate choice of qualified suppliers.”

The CMS Innovation Center, created under President Barack Obama’s Patient Protection and Affordable Care Act (ACA), has been investigating bundling payments as part of a larger effort to both improve patient care and reduce costs.

There is some disagreement over whether the CMS bidding program is successful.  Economists, consumer groups and some in Congress are on record opposing the program.  They cite reduced access to care, flaws in the program design and impact on local jobs.  “There’s a reason why more than 30 patient advocacy groups, 244 economists and auction experts and 145 members of Congress oppose this program: it undermines quality of care and it increases costs,” said Tyler J. Wilson, president of the American Association for Homecare.  “Because of this bidding program, beneficiaries will spend more time in expensive institutions, rather than in the far more cost-effective setting for care – their own homes.” 

Tim Size, executive director of the Rural Wisconsin Health Cooperative, is concerned about the impact on rural hospitals.  “Washington has created a new ‘super committee’ to find more cuts.  Some call it a super Congress to remind us this is a small group given powers usually kept by Congress.  Most economists say Washington needs a coherent policy for both additional cuts and additional revenue.  But politics seems to have taken new revenue off the table.  Most people believe the super committee will deadlock.  If Congress fails to act, cuts will be implemented across the board.  Most federal programs will be cut.  Across-the-board cuts harm efficient programs along with the inefficient.  Across-the-board cuts harm necessary along with the less necessary. The country deserves better than bulldozers driven by blindfolded drivers.  Most rural hospitals are financially just holding their heads above water.  Under-payment by government programs has left them vulnerable.  A sluggish economy and an increasingly competitive healthcare marketplace are taking their toll.  Medicare and Medicaid are rural hospitals’ largest payers. Additional cuts are likely to tip many rural hospitals into the red and eventual closure.”

Senators Question CMS Rules for ACOs

Wednesday, August 24th, 2011

Some Senators want the rules for Accountable Care Organizations (ACOs) rewritten to increase their acceptance by providers. “An ACO model that can increase provider coordination and patient accountability would be a step in the right direction compared to today’s fragmented delivery system,” wrote the senators, led by Mike Enzi (R-WY) to Department of Health and Human Services (HHS) Secretary Kathleen Sebelius and Centers for Medicare and Medicaid Services (CMS) Administrator Dr. Donald Berwick. “However, it is increasingly clear that this proposed rule misses the target.”

According to the Senators, the ACO rules have misaligned incentives and accountability, as well as an unclear return on investment for physicians and other providers. The Senators highlighted healthcare providers who have raised concerns about the ACO rules, including the American Hospital Association, which released a study that estimated six to 14 times higher start-up costs for the new entities than estimated by CMS.

The AHA study determined that the costs of elements to successfully manage the care of a defined population is considerably higher – $11.6 to $26.1 million – than the $1.8 million estimated by CMS in its proposed rule for start-up and one year of operations. “CMS’ estimate falls short of the mark,” said Rich Umbdenstock, president and CEO of the AHA. “The shared savings rate with ACOs should be adjusted to reflect these costs in order to encourage and enable participation in this important program.” Specific areas of concern include network development and management , care coordination, quality improvement and utilization management ; clinical information systems; and data analytics.

In addition to Enzi, the letter was signed by Tom Coburn (R-OK); Jon Kyl R-AZ); Mike Crapo (R-ID); John Cornyn (R-TX); Pat Roberts (R-KS); and Richard Burr (R-NC).  According to Coburn, who is also a physician, “The letter I signed today echoes the reservations of health professionals who have expressed deep concerns about the well-intended, but ultimately unworkable, ACO regulations recently proposed by the administration. It is certainly my hope that the administration will not misread this letter as partisan, but will work to address the underlying problems of misaligned incentives and regulatory uncertainty that have elicited such concern by a range of health care institutions and providers. If the administration withdraws the regulation, they will find strong bipartisan support among Congress and stakeholders to craft a proposal that encourages broad participation in innovative models to achieve lower costs and better care.”

Berwick and CMS officials believe that organizations that participated in demonstration projects will back the rules because the results showed that Medicare saved more than $38 million in the years of the pilot program; the medical groups that participated got performance payments from the feds totaling more than $31 million. Among the participants are some of the nation’s most prestigious medical systems, including The Mayo Clinic, The Cleveland Clinic and the Geisinger Health System in western Pennsylvania.

Part of the problem, according to The Hill, is that budgetary concerns were the elephant in the room when the Obama administration wrote the proposed ACO rule. This resulted in regulations requiring stringent quality improvements that offered no upfront funding for hospitals to change their procedures. According to regulators, the proposed regulation is open for public comment and can be fine-tuned. CMS recently unveiled new tools to help hospitals start care coordination efforts, for example, by giving them the money they’re supposed to save Medicare through more efficient patient care.

According to the letter, “We have been struck by the increasingly diverse chorus of concerns many of our nation’s leading health care institutions have raised in recent days. The concerns…from some of our nation’s most knowledgeable and innovative health care providers are clear. Incentives and accountability are misaligned. Detailed requirements are complex and return on investment is uncertain.”

Although the Senators complimented the work put into the ACO rules draft, the letter said that feedback received from providers around the country brought the Senators to the conclusion that the proposed ACO regulation will not fulfill its purpose.

Another perspective is offered by Robert Tennant, a managing associate with Health Directions, who says that “I’d like to offer another point of view. Certainly, for most healthcare organizations, transitioning to an ACO will create short-term expense and disruption. At Health Directions, we are finding that healthcare organizations are not dismissing ACOs outright, but they are first asking: What do we stand to gain? In some cases the answer may be either not clear or not favorable. Regardless, there is a potential upside if the focus remains on increasing quality and efficiency of care delivery. As we weigh the future of ACOs, let’s not throw the baby out with the bathwater. The point of discussion needs to shift from whether or not to become a formally organized ACO down the road toward a more focused evaluation of which ACO-type elements are worth adopting now. A commitment to achieving meaningful use with an electronic health record (EHR) is a step in that direction, as is participating in a quality-driven pay for performance program. Both have short-term, well-defined financial rewards attached to them and both will likely increase quality of care. The key is for healthcare organizations to remain focused on the underlying thought behind ACOs — improving care and reducing costs. And that really is worth getting excited about.”

Ben Cutler: An Insurance Industry CEO Responds to Healthcare Reform

Tuesday, April 26th, 2011

Is the healthcare insurance industry the scapegoat for rising premiums?  In the inaugural episode of the Chuck Lauer Show,  presented by Alter+Care, the former publisher of Modern Healthcare Magazine talked about the insurance industry’s take on healthcare reform with Ben Cutler, Chairman and CEO of USHEALTH Group, Inc., who previously led Fortis Healthcare.  Cutler currently serves on AHIP’s Executive Committee, serves on AHIP’s Board and is also the Chairman of AHIP’s Membership Committee.  The Chuck Lauer Show is an ongoing conversation about the future of healthcare with the leaders and thinkers who are shaping a new direction for healthcare in the United States. 

Cutler, who has spent more than 30 years in the healthcare insurance industry, recalled the ongoing national debate that began nearly 20 years over HillaryCare with the objective of how to provide universal coverage for the more than 50 million uninsured Americans.  Cutler believes that the Obama administration has chosen to focus on access and doesn’t sufficiently address affordability issues.  Healthcare industry groups recognized that the day would come when reform would be a top-line issue and that we would not be well served by just saying “no”.  Cutler says “We’ve worked hard on positioning the industry to accommodate reforms and tried to be very accommodating because getting more people covered is a laudable objective.”

As the healthcare reform bill was drafted, it soon became clear that the insurance industry would have a problem with some of the issues.  Unfortunately, according to Cutler, the politicians decided they needed an enemy and “that turned out to be us.  We continue to be vilified as an industry”, a situation that could – and should — have been avoided.  The Patient Protection and Affordable Care Act will have some unintended consequences in terms of how the legislation will affect the behavior of various stakeholders who comprise the healthcare economy – consumers, providers, insurers, regulators, etc.  It is inevitable that the insurance industry will have to raise rates if they are to comply with the healthcare law, which essentially constitutes a new tax on the American people.

Cutler cites the example of the $5 billion set aside to subsidize people in high-risk pools.  The government estimated that by this time, upwards of 500,000 individuals would be enrolled in these pools.  So far, just 8,000 people have signed up, an example of where government expectations were totally unrealistic.  Additionally, there is the issue of pre-existing conditions, which the government has characterized as an industry-abusive position, and one which relates to affordability of coverage.  According to Cutler, if people buy homeowners’ insurance only after their house catches fire, the premium obviously would be higher.

Expectant Parents Beware! Not All Health Plans Cover NICU

Wednesday, January 19th, 2011

The majority of expectant parents know that their obstetrician and the hospital where their baby will be born participate in their health insurance network.  If the baby is born prematurely or needs special care in the neonatal intensive-care unit (NICU), however, the new parents may get a nasty surprise — this level of care may be out of their network.  “Some hospitals do contract with other clinical provider groups to run their NICUs,” said Marie Watteau, the American Hospital Association’s (AHA) director of media relations.  “When selecting a hospital, pregnant women should…verify that all hospital care, including NICU care and physician services, are in network.”

Three quarters of babies who require costly NICU care are born prematurely; the remaining 25 percent have other medical problems.  In 2009, one baby in eight was born prematurely, defined as before 37 weeks of gestation, according to the Centers for Disease Control and Prevention’s National Center for Health Statistics.  Although premature birth rates have fallen recently, they are still 30 percent higher than in 1981.  The Institute of Medicine reports that medical bills and other premature-related costs totaled $26.2 billion in 2005.  That’s $51,600 per premature baby.

Depending on weight and other medical criteria, some premature babies needing NICU care could be declared disabled under the Supplemental Security Insurance program.  That would make the baby eligible for Medicaid.  Although families typically must meet income guidelines to be eligible for Medicaid, “while the child is in the institution, the child’s income alone is what’s looked at for Medicaid purposes,” according to Mary Kahn, a spokeswoman for the Centers for Medicare and Medicaid Services.  After the baby is discharged, however, it is no longer eligible for Medicaid unless the parents meet the income guidelines.

Is the GOP Alone In Wanting to Repeal Healthcare Reform?

Monday, December 6th, 2010

Even though Republicans will control the House of Representatives and have a larger presence in the Senate come January, they still are likely to hit some formidable roadblocks in their attempt to repeal the Affordable Care and Patient Protection Act. Those roadblocks are such lobbying giants as the American Medical Association (AMA), the American Hospital Association (AHA) and the Pharmaceutical Research and Manufacturers of America (PRMA).  The groups are on board with the new healthcare reform law because they will gain an estimated 30 million (or more) new paying customers in the next few years.  The reform law is expected to increase payments to physicians and hospitals who have felt squeezed in recent years.  Additionally, analysts believe the new law is a major force for job creation in the healthcare sector.

“These guys were onboard for a reason,” said David Dranove, a professor of health enterprise management at Northwestern University’s Kellogg School of Management.  “Very few employers will drop private health insurance, and you will expand private insurance to 15 million people.  If this legislation stands, we are not likely to see new reforms for a generation.”

Primary-care physicians, who are likely to benefit significantly from the healthcare reform law, will see their reimbursements from government insurance programs rise – although many believe the reform law is only the beginning.  According to Dr. Cecil Wilson, AMA president, “While the 111th Congress made important improvements to our nation’s healthcare system, more work needs to be done.”  Hospitals – which have been hard hit by patients unable to pay their medical bills because of unemployment – will be in better financial shape once more Americans get health insurance subsidies in 2014.

Pharmaceutical companies, which were among reform’s earliest supporters, oppose repeal, even though analysts say it will cost them $100 billion in government rebates.  The upside is that the industry will obtain new customers who were previously uninsured and unable to afford the latest brand-name medications.  Even the much-maligned insurance companies – who will have more than 15 million new customers – oppose repeal.