Medical device companies like Medtronic have been under fire lately for their deals with doctors who can influence purchases of medical products, and a Boston doctor says he was fired when he complained about these types of relationships. A lawsuit filed in state court in Massachusetts by David Gossman, an interventional cardiologist formerly on staff at the Lahey Clinic hospitals in the Boston area, who says he complained about Medtronic's offering the hospital a new experimental heart-valve device "predicated on the purchase and increased utilization of other products made by Medtronic." Gossman says he was fired after he complained about the Lahey-Medtronic link in a conversation this summer with Thomas Piemonte, the director of cardiac catheterization at Lahey.
South Dakota-based Sanford Health and North Dakota-based MeritCare Health System wrapped up months of negotiations today and formally announced that they have merged to become one of the nation's largest, nonprofit, integrated rural healthcare systems.
The new health system will be called Sanford Health-MeritCare, although the southern region will continue to operate under the name Sanford Health with corporate offices in Sioux Falls, and the northern region will continue to operate under the name MeritCare, with corporate offices in Fargo.
"At the core of this new organization rest two healthcare legends that go back to the 1890's. They come forward now in a united trust that is demonstrated to each other through our combined vision and mission to be one of the nation's best health systems,” says Kelby Krabbenhoft, newly appointed CEO/President of Sanford Health-MeritCare.
Krabbenhoft says the cost of the merger was about $700,000.
Sanford Health-MeritCare will operate in six states: North Dakota, South Dakota, Minnesota, Iowa, Nebraska, and Oklahoma, with 17,400 employees and more than 800 physicians, 70 specialty areas in medicine, and 29 hospitals over 1,600 beds serving more than 2 million people in the service area. The combined annual net revenue is $2 billion.
MeritCare President/CEO Roger Gilbertson, MD, who is retiring in the coming weeks, says "together Sanford and MeritCare will bring the full potential of an integrated care system to the benefit of patients, communities, employees, and physicians. It will add value for patients, be proactive in healthcare reform, attract talent, including physicians, nurses, health professionals, and others, who will significantly advance the sophistication and comprehensiveness of services offered, and promote economic development in our communities."
Bruce Morgan, a principal at Deloitte Consulting LLP, says the merger will give both health systems an economy of scale. "It will have the ability to increase its level of efficiency and healthcare delivery for a very broad population in large contiguous service areas, and expand research activities and education programs for further improvement," Morgan says.
Sanford Health and MeritCare will each have seven representatives on the board of trustees. Organizational structures will be similar in the two regions with regional leaders assigned to respective medical centers, clinics, and networks. Development and research programs will have leadership in both regions.
The 2010 OPPS final rule released on Friday contains few surprises, but does finalize two changes that received considerable attention when CMS proposed them.
"The information CMS has finalized for physician supervision and drug reimbursement are two key areas for hospital review, though for slightly different reasons," says Jugna Shah, MPH, president of Nimett Consulting in Washington, DC.
First, CMS adopted a new standard for supervision in the hospital and for on-campus outpatient departments. The physician must be present on the same campus and "immediately available," rather than in the department. CMS defines "in the hospital" in the new regulations and discusses "immediately available" extensively.
"APC coordinators, your revenue cycle team, and compliance officers need to carefully review this and other discussion items from the final rule," says Shah.
CMS made some important distinctions in the preamble that people will need to pay attention to, says Kimberly Anderwood Hoy, Esq., CPC, director of Medicare and compliance at HCPro, Inc., in Marblehead, MA. CMS specifies that the person must be "immediately available" to step in and take over the procedure. CMS also specified that the person must be close enough to be able to step in, not simply anywhere on the campus.
"They have to be immediately able to drop what they are doing and step and take over the procedure if necessary," Hoy says. "And they have to be close enough that they would be immediately available. They can't be two blocks away."
For example, if the physician is in the hospital cafeteria, he or she would be considered "immediately available," but if the physician is in the middle of providing a procedure to a patient, he or she is unable to stop to provide direct supervision to another patient—so is not immediately available, explains Shah.
CMS also clarified that the person providing supervision would have to be able to perform the procedure under his or her license and within the scope of his or her privileges at the hospital.
CMS made clear through a regulatory change that the direct supervision requirement for off-campus provider-based departments did not change, and still requires the practitioner to be present in the off-campus department, as discussed in the 2009 final rule.
CMS finalized its proposal to permit physician assistants, nurse practitioners, clinical nurse specialists, certified nurse midwives, and clinical psychologists to provide direct supervision for hospital outpatient therapeutic services when their license allows them to do so. One change from the proposed rule is the addition of licensed clinical social workers. CMS agreed with commenters that licensed clinical social workers should also be included in the list of non-physician practitioners allowed to provide direct supervision.
These changes come, in part, as a response to commenters, including the American Hospital Association, who complained to CMS that the rules were confusing and unclear. In the 2009 proposed rule, CMS discussed physician supervision requirements and finalized some changes for 2009, but still received considerable comments to their proposed changes in 2010.
The fact that CMS has finally conceded that it can see how there was confusion on physician supervision requirements prior to 2009 should come as a huge relief to hospitals who have been concerned that audits may occur going back many years that could result in financial take-backs, says Shah. Hospital administrators have been worried that the OIG, recovery audit contractors, Medicare administrative contractors, and other auditors would use the fact that hospitals have raised questions on this topic as a reason to begin investigations and potentially take back large amounts of money.
Because CMS agrees that, perhaps, things were confusing in the past, it stated it will not sanction audits or reviews of the supervision requirements for 2000-2008, but also stated enforcement action would be appropriate for 2009. "I think that makes an even stronger case for concern about enforcement in 2009 and providers should take a close look at their risk for that year in light of the clarifications published in the 2009 rule," says Hoy.
The final rule does make clear that non-physician practitioners will not be able to supervise cardiac, intensive cardiac, and pulmonary rehabilitation services. A physician must still be present to provide supervision.
"I think that is something people are going to have to pay close attention to as they implement new policies allowing non-physician practitioner supervision because we have always lumped those services together with all of the other outpatient services," says Hoy.
Reimbursement for separately payable drugs
CMS finalized its new payment calculation method for the hospital pharmacy overhead costs of separately payable drugs and biologicals. In the final rule, CMS discusses payment calculations at length, yet ends up with the same reimbursement for 2010 as hospitals have today for separately payable drugs—average sales price (APS) plus 4%.
"This is deeply frustrating because the industry has worked diligently to help Medicare to understand that that ASP plus 4% is simply insufficient to cover drug acquisition costs and pharmacy handling," Shah says.
Hospital administrators generally believe they are underpaid for drugs, but CMS seems unwilling to change its position, Hoy says.
"I think it's interesting that the two sides are so far apart on such a vital reimbursement issue," Hoy says.
In addition to CMS' discussion of separately payable drug reimbursement, hospitals should be aware that CMS has changed the packaging threshold from $60 to $65 and will no longer provide separate reimbursement for 5-HT3 antiemectics. Also, current cost-based reimbursement for therapeutic radiopharmaceuticals and brachytherapy sources will migrate over to regular APC payment rates.
"Taken in sum total, these drug reimbursement changes are likely to have an impact on a hospital's bottom line," says Shah.
The Sisters of Mercy Health System announced today that it has finalized a deal with Catholic Health Initiatives to assume sponsorship of St. John's Regional Medical Center in Joplin, MO. The financial terms of the deal were not disclosed.
Mercy takes immediate and full responsibility for operating the 367-bed acute care hospital and related operations, which serve 19 counties in Missouri, Arkansas, Kansas, and Oklahoma.
St. Louis-based Mercy, the eighth largest Catholic healthcare system in the nation, operates 19 other acute hospitals, physician practices, outpatient clinics, health plans, and related health and human services in a seven-state area, including nearby hospitals, physician offices, and other operations in Springfield, MO, Rogers, AR, and Independence and Fort Scott, KN.
Gary Pulsipher will become president/CEO of St. John's Regional. Pulsipher was with Mercy from 1994 to 2002, as president/CEO of St. John's Hospital in Lebanon, MO, and regional vice president of St. John's Health System in Springfield with responsibility for five regional hospitals. Since 2002, Pulsipher has served as president/CEO for Columbus Community Hospital in Columbus, NE, and administrator of Silverton Hospital in Oregon.
Denver-based CHI, the nation's second-largest Catholic healthcare system, includes 78 hospitals, 40 long-term care, assisted and independent living and residential facilities, and two community health services organizations located in 20 states.
The health industry experienced fewer mass layoffs over the past few months, although the number of layoffs is still high compared with past years, according to a report issued by the Bureau of Labor Statistics. Ten mass layoffs occurred at hospitals in September and 14 happened in August. July had the highest total for the year at 21.
In what could be the first of a number of fines against health insurance companies, the Georgia insurance commissioner fined UnitedHealthcare and three related companies a combined $750,000 for allegedly not paying thousands of health claims promptly.
The fines involve the parent company UnitedHealth Group, Inc., as well as UnitedHealthcare of Georgia, Inc., American Medical Security Life Insurance Company, and Golden Rule Insurance Company.
According to Commissioner John W. Oxendine's office, the insurance commissioner issued a directive in 1999 that all healthcare plans licensed in Georgia are to submit claims data every quarter. Based on data submitted through March 31, 2009 by UnitedHealth and its sister companies, the Georgia insurance commissioner determined that the companies were in violation of state law that required prompt payment of claims.
"It is unfortunate that fines must be imposed to encourage compliance," Oxendine said. "Consumers and doctors deserve prompt payment. I will continue to aggressively pursue those companies who do not comply with the law."
Oxendine said in a statement that his office is reviewing data from other insurance companies and he expects more fines "in the near future."
UnitedHealth responded to the fine today with this statement: "UnitedHealthcare currently processes 97 percent of its claims within 15 days in Georgia. This settlement involves only the small percentage of claims not processed within 15 days. Timely and accurate payment is important and UnitedHealthcare processes 99 percent of claims for its Georgia customers within 30 days."
This is not the first time UnitedHealth has needed to pay a state this year. This fine is mere chump change compared to the $400 million settlements UnitedHealth made with the New York Attorney General's office in January. Those settlements involved UnitedHealth's subsidiary, Ingenix, which most insurers used to determine "prevailing" and "usual, customary and reasonable charges" for out-of-network physician services.
Critics of Ingenix complained the database did not provide the correct charges for out-of-network services and charged that a health insurer-owned company should not have overseen the databases.
The agreement required UnitedHealth to shell out $400 million, cease two databases run by Ingenix, and help fund a new independent database that will collect price information. A number of other health insurers that used Ingenix to find out-of-network costs also agreed to pay to help create the new independent database that will be run by a nonprofit company, FAIR Health, which will work with Syracuse University and a group of other state universities.
UnitedHealth Group did not acknowledge any wrongdoing in the settlements.
HCA has named Richard M. Bracken as the new chairman of HCA's board of directors, effective Dec. 15. He will replace Jack O. Bovender, Jr., 64, who will retire from the company on the same day.
In addition, R. Milton Johnson, HCA's CFO/executive vice president, was elected to the board of directors, also effective Dec. 15.
"Richard has been an invaluable asset to HCA, and his years in both hospital management and executive leadership with the company provide him with a keen understanding of strategic operations and an appreciation for its culture," Bovender says. "I could not envision a better successor or a more qualified guardian of our company's legacy."
Bracken, 57, has served as president/CEO of HCA since Jan. 1, and has served as a director of the company since 2002. He was president/COO from January 2002 to January 2009. Bracken has been a member of HCA's executive leadership for most of his career.
Johnson, 52, has served 27 years with the company, holding positions as head of HCA's Tax Department and as controller, before being named CFO/executive vice president in July 2004.
HCA, the largest privately owned hospital company in the nation, and its affiliates operate 163 hospitals and 105 ambulatory surgery centers in 20 states and England.
HCA has named Richard M. Bracken as the new chairman of HCA's board of directors, effective Dec. 15. He will replace Jack O. Bovender, Jr., 64, who will retire from the company on the same day. In addition, R. Milton Johnson, HCA's CFO/executive vice president, was elected to the board of directors, also effective Dec. 15.
The Federal Trade Commission is delaying enforcement of its identity theft Red Flags Rule for a fourth time, pushing back the November 1 deadline to June 1, 2010.
The latest delay comes at the request from Congress, which is considering a bill that amends the identity theft rule by eliminating entities with fewer than 20 employees from complying.
The House of Representatives passed that bill late last month. It is now in the hands of the Senate.
The most recent delay announcement—from August 1 enforcement to November 1—came in July. The additional three months—which came at the request of the House Appropriations Committee—was to be used to educate small businesses about Red Flags Rule compliance and to allow financial institutions and creditors more time to implement written identity theft prevention programs, according to the FTC.
Red Flags requires creditors and financial institutions to have in place identify theft prevention, detection, and response systems. The rule is mandated by the Fair and Accurate Credit Transactions Act of 2003. The FTC's Red Flags Web site includes an online compliance template that enables companies to design their own identity theft prevention program.
Red Flags was initially supposed to go into effect on Nov. 1, 2008, but it was pushed back to May 1, 2009, then to Aug. 1, 2009, then to Nov. 1, 2009, and now ultimately to June 1, 2010.
A good part of the cost of healthcare reform—perhaps as much as half—will be financed with budgetary "funny money" rather than with actual cash on hand obtained by taxing American households or enterprises, says New York Times columnist Uwe E. Reinhardt. The savings are estimated by the Congressional Budget Office in the form of deviations from a baseline forecast for the federal budget for the relevant budget period, Reinhardt says.
