If there is any glimmer of good news out of the announcement, it is that CMS will cut private insurer reimbursement between 4% and 4.5% for 2010 rather than the 5% that was expected.
The pay cut announcement comes a month after the Obama administration implemented stricter terms for health insurers that offer Medicare Advantage. In the new regulations, health insurers will not be able to charge sick, low-income patients more than they would pay under traditional Medicare. The administration's move was a preemptive strike to prevent Medicare Advantage insurers from transferring costs onto the most vulnerable beneficiaries once the payment cuts were put into effect.
This added attention on Medicare Advantage was expected. Think about this equation: Add a Democratic president and Congress that historically haven't supported privatization of public programs with Medicare Advantage services costing the federal government 14% more than traditional Medicare.
Medicare Advantage supporters say the program offers benefits beyond traditional Medicare, including care coordination and vision and drug coverage. However, program foes paint the private Medicare program as a Bush-era giveaway to health insurers.
The truth is—as always—somewhere in the middle.
Yes, Medicare Advantage costs are higher than traditional Medicare, but Medicare Advantage offers programs not found in the classic fee-for-service program. Medicare Advantage is also the home of special needs plans, which cover institutionalized beneficiaries who are dual eligibles and suffer from disabling chronic diseases.
SNPs face the same reimbursement cuts as other Medicare Advantage plans. If traditional Medicare was looked upon as a superior offering, I would have less of a problem with payment cuts to SNPs, but the fee-for-service program does not offer the same level of services to these needy beneficiaries. Plus, traditional Medicare has its own problems, including doctors fleeing the program because of the woeful payment levels. But there could be more bad news for insurers. Medicare Advantage insurers might not get out of 2009 without getting whacked again. Congress will need to conduct its annual search for cost-cutting alternatives in order to delay the 21% physician payment cut. Medicare Advantage could be the first stop on Congress' annual cost-cutting, program-slicing jamboree.
All of these issues show that Medicare Advantage insurers face a difficult decision. Do they ride out the cuts and hope the administration doesn't come back for another round of payment cuts this year and next? Or do they get out of the private Medicare program and devote their attention to the commercial and individual markets?
If they decide to drop Medicare Advantage, private insurers would force many of the more than 10 million seniors covered by the program into a healthcare system that faces physician shortages, is devoid of care coordination, and without the ancillary services that have improved beneficiaries' quality of life.
If this was a one-time payment cut, most Medicare Advantage insurers would probably stay in the program and look for ways to cut costs while maintaining the same level of services. But with more payment cuts expected, don't be surprised if insurers pass more costs onto beneficiaries or simply drop out of the program.
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Talk of potential mergers in the medical insurance industry has doctors and hospitals worried about health plans having too much clout over consumer choices and prices. There has been speculation that some of the nation's biggest health plans may be looking to consolidate, including a possible takeover of Humana Inc. by Aetna Inc., as well as UnitedHealth Group's interest in Coventry Health Care Inc. Providers worry that increased consolidation would add to their concerns about deteriorating reimbursement from government health programs as the federal deficit rises and state budgets tighten.
Los Angeles County's public health system is once again facing budget deficits that threaten to grow into the hundreds of millions of dollars. A lifeline for many of the county's 2 million uninsured residents, the health system is expected to run a deficit of $344 million during the fiscal year beginning in July. By 2011, the annual deficit is expected to reach $1.2 billion, according to a memorandum issued the health department's interim director.
The state Legislature provided $23 million for Georgia's trauma care hospitals, less than half the money they received last year. The budgeting worries advocates who fear the cut will endanger service at the 15 trauma hospitals. The state's struggling trauma care network needs $80 million a year to shore up these hospitals and to expand services to underserved areas, advocates say.
Despite ongoing legal actions, the nurses union at Independence, MO-based Centerpoint Medical Center has agreed to allow a vote to proceed that seeks to remove the bargaining unit. The National Labor Relations Board has scheduled an election April 23-24 at Centerpoint after a group of nurses sought to decertify Nurses United Local 5126 as its representative. Centerpoint has been in talks with Local 5126 since May in an effort to reach an initial contract. Nurses at the hospital voted to join the union in November 2007. The union has filed unfair labor practice charges against the hospital, some of which have been settled and others that are still pending.
The conference center in Chicago is buzzing about the American Recovery and Reinvestment Act. Just about every hand shot up when Howard Burde, JD, a partner and health law practice group leader with the law firm, Blank Rome, LLP, asked attendees, "How many of you have a new favorite hobby: researching the ARRA?"
Providers are looking for answers to key questions:
What's in it for me?
What are the important dates and deadlines?
How do I secure the funds?
How will the feds define "meaningful use?"
During a session on strategies to manage the opportunities and risks for health IT in the economic stimulus, Burde said the ARRA, aka stimulus law, redefines government and private sector roles. "The federal government is taking over as the strategic leader," he said.
The main focus of the ARRA is to stimulate the economy, but it's also trying to reform healthcare at the same time, said Charles Christian, director of information systems and CIO at Good Samaritan Hospital in southwest Indiana. Healthcare IT can yield tremendous savings, but there are challenges to achieving those goals. For example, there is the manpower question. Do vendors and providers have enough staff members to implement all of this technology? The general consensus is no.
In addition, organizations have to revamp their processes if they are going to improve healthcare by the appropriate application of technology. "Just installing technology will not fix the problem," said Christian. "We are hoping this will give us the capital, but we are expected to do the work and show the outcome of that work before we get a nickel."
The law fundamentally redefines the language of heath IT—what is a qualified EHR and who will be the certifying agency. But one element the health IT section of the law doesn't include is accounting for disclosures, said Burde. That is in a different part of the law. "They didn't integrate a lot of the pieces together," he says. "Congress is counting on the regulatory process to fill it in."
So what will be the minimum necessary disclosure requirements? Will nurses and physicians have to enter a reason every time that want to access the EHR? Imagine the impact on workflow that would have in the provider setting. "Our job going forward will be to ensure that these disclosure requirements reflect reality," said Burde.
There are still a lot of questions about the stimulus package, but organizations shouldn't wait too long to start implementing their IT strategy, experts say. "It's not time to panic, but it is also not time to procrastinate," advised Christian.
U.S. Rep. Andrew Crenshaw (R-Fla.) advised Jacksonville physicians gathered for a town hall-style meeting to warn their patients about "rationing of healthcare" and other dire consequences of healthcare reform being debated in Washington, DC. Rep. Crenshaw said physicians are in a powerful position to sway opinion about healthcare reform. He urged local doctors to become more engaged in the public debate, and said they should be discussing their views with patients.
More than a third of Louisiana residents were uninsured at some point between the start of 2007 and the end of 2008, according to a new national study. Families USA, a Washington, DC, nonprofit organization, found that 36.2% of the state's residents younger than 65 went without insurance for at least a month. A Louisiana Department of Health and Hospitals spokeswoman said 21.2% of the state's adult population lacked insurance in 2008. The state maintains that 95% of dependent minors are covered.
A state report says California hospitals are reducing the already slim risk of death from coronary artery bypass surgery. The report, which was based on more than 32,000 operations performed in 2005 and 2006, also rated all 284 bypass surgeons in California. This is the fourth in a series of state reports that have charted a general decline in bypass surgery mortality rates from 2.9% in 2003, the first year studied, to 2.2% in 2006, the most recent year under review.
An Oregon Senate committee passed four bills aimed at improving healthcare and reducing costs. The committee approved bills to establish a council to help healthcare providers convert to electronic patient records, bring together insurers and healthcare providers to develop and use evidenced-based clinical guidelines and best practices, and establish a database on Oregon's healthcare work force size and needs.
