Andrew E. Blustein, Esq., responded quickly when asked what he came away with after talking to providers at last week's 17th annual HIPAA Summit at the Wardman Park Hotel in Washington, DC.

"People are shell-shocked," says Blustein, partner and co-chair of Garfunkel Wild & Travis, PC's Health Information and Technology Group in Great Neck, NY, and Hackensack, NJ.

Blustein and David A Mebane, Esq., senior vice president for legal affairs at Saint Barnabas Health Care System in West Orange, NJ, teamed to present on breach notification at the event.

HHS released its interim final rule on breach notification August 24 calling for greater—and more swift—notification requirements when there is a breach of unsecure PHI.

It's one requirement among many in the HITECH Act that has providers worrying about compliance. The HITECH Act, signed into law February 17, 2009, calls for increased HIPAA enforcement, stiffer monetary penalties for privacy and security violations, and more patient rights on their medical records.

"I think that people are just a little overwhelmed," Blustein says.

Providers have a tough enough time complying with HIPAA's Administrative Simplification Act, Blustein says.

"They're very complicated," he says. "They're like a puzzle."

Times have changed at the HIPAA Summit. In the days shortly after the HIPAA law passed in 1996, providers buzzed at the conference and showed some spark about compliance.

"People were excited," Blustein says. "They were getting amped up about things like 'minimum necessary.'"

Today, Blustein says they feel like Roberto Duran in his 1980 WBC welterweight title against Sugar Ray Leonard. Duran quit in the middle of Round 8, reportedly saying, "no mas," Spanish for "no more."

"People are saying there are so many hospital regulations flying at us, and they're saying, ‘no mas,'" Blustein says. "How much more can we get? And more's coming."

Kate Borten, CISSP, CISM, president, The Marblehead Group, in Marblehead, MA, also feels from her time at the HIPAA Summit that providers are just not ready.

Fellow speaker J. David Kirby, president of Kirby Information Management Consulting, LLC, made the great point that "most healthcare still takes place in small practices," Borten says.

"From my work and personal experience and anecdote, the small providers are woefully out of compliance (not sure it's willful though)," Borten wrote in an e-mail to HealthLeaders Media. "And I bet few of them are even aware of these new regulations. …  When [covered entities] and [business associates] still believe in 2009 that a patient name alone, without a dx code, is not PHI, it's pretty scary."

When acute care hospitals and health systems are developing marketing and growth strategies, which are especially important in this economic downturn, post-acute care opportunities frequently fall to the bottom of the list. Undeniably, post-acute care programs are not as sexy or headline-grabbing as the latest robotic surgical device, the high-tech cardiac interventional procedure that is pending FDA approval, or the neonatal ICU that is capable of caring for the most vulnerable newborns. However, like the tortoise that is slow and steady yet wins the race, post-acute programs consistently offer a strong return on investment to those providers with the insight to include these programs in their planning efforts.

Post-acute programs make sense, particularly in recessionary times, for three primary reasons:

• There is strong demand for post-acute programs
• Post-acute programs generally make money
• Implemented effectively, post-acute programs improve long-term clinical outcomes

As hospitals face declining (and negative) margins, who wouldn't want a program that draws high demand, makes money, and improves patient outcomes? But these benefits often take a back seat because hospital administrators and planners don't fully understand this market.

Post-acute demand
Although post-acute programs (defined by CMS to include inpatient rehabilitation, skilled nursing, home health, and long-term care hospitals), account for only 15% of Medicare Fee-For-Service expenditures, MedPAC reports that close to 40% of Medicare acute care patients are discharged to some level of post-acute care.

Our experience suggests that the actual demand for post-acute care programs might be greater than this estimate, in part because not every acute care program has sufficient access to every level of post-acute care. In fact, in markets in which there is sufficient access to most post-acute programs, the use of these programs by Medicare acute care patients is often between 40% and 50%.

Post-acute ROI
With the negative impact of this latest recession hitting hospitals' bottom lines hard, most health systems are eagerly seeking out services that still appear to offer a positive financial contribution. Given that, post-acute programs should definitely be in the planning mix. Post-acute programs contribute to the financial performance of a health system in two ways. First, post-acute programs can help manage the acute care length of stay for many patients, particularly patients with the greatest clinical needs. This helps both by reducing the acute care stay, and improving the financial return on a DRG payment, and also by freeing up an acute care bed for a subsequent admission. In fact, although most acute care programs currently generate positive margins often the greatest financial return post-acute programs provide is the ability to function as a "pressure valve," to assist acute care providers in managing throughput of acute care patients.

As an example, a recent evaluation of an acute care hospital concluded that strengthening the integration of existing post-acute programs into the acute care discharge planning efforts would improve the acute care financial performance by $7.5 million. Clearly, this is not an insignificant impact in these challenging times.

However, while the greatest financial impact of post-acute care to healthcare systems typically rests with the ability to manage the acute care patient populations, post-acute programs continue to outperform other programs on direct financial return as well.

Additionally, although post-acute programs are not generally expected to be the cash cows of a health system, a simple financial impact analysis suggests that health leaders may be well advised to implement strategies to increase post-acute utilization. Not only can incremental admissions help facilitate an acute care discharge more rapidly, but each incremental admission can also have a strong impact to the organization's financial performance.

Click here to view the Estimated Annual Medicare Contribution Margin by Post-acute Setting

While the previous examples illustrate the financial impact of generating incremental Medicare admissions into post-acute care, it is important to note that other payers (with the frequent exception of self-pay and Medicaid) typically generate a financial return at least as great as Medicare patients.

Clinical Return
No one would likely deny that acute care hospitals are at their best when managing patients with relatively brief, highly acute episodes of care. The typical hospital is constructed and staffed, and medical teams are trained in the art and science of tending to patients with urgent, emergent, and critical care needs. For a variety of reasons, most importantly including the major financial drivers, most acute care hospitals today are not organized and staffed most effectively to manage patients with longer term, often-chronic disabling conditions that are the core of post-acute programs. The length of stay in a post-acute program is typically at least 14 days (the Medicare ALOS for inpatient rehabilitation) and will often extend beyond 60 days (for home healthcare and skilled nursing.) By comparison, the acute care ALOS is 4.8 days.

With its longer lengths of stay, the clinical goals of post-acute providers go beyond completion of a specific event or intervention that might occur in the acute care setting, such as a surgical procedure, a medical intervention or stabilizing and treating a critical care patient. In a post-acute setting, an integrated clinical team typically completes a comprehensive medical, functional, and social evaluation of the patient, and develops an interdisciplinary plan of care to either return the patient to the community in the most independent manner possible, or at a minimum transition the patient to a lower level of care. While the "sicker and quicker" dynamic has certainly increased the overall acuity of patients in most post-acute programs, patients in post-acute care generally are more medically stable than those in the acute care setting with less need for intensive interventions or diagnostic procedures.

Because of this, the clinical strengths of post-acute programs tend to be the mirror opposite of their acute care counterparts. These programs function best at improving the medical and functional status of patients, frequently elderly/Medicare patients, who cannot be discharged directly home from the acute care setting. As such, appropriate placement of many patient populations into post-acute programs results not just in a better managed acute care length of stay, but a patient outcome that improves medical stability and functional independence for both the patient and the family.

Seizing the opportunity
While all evidence suggests that post-acute programs can benefit not just patients but also healthcare providers, success in this arena will not occur by happenstance. Healthcare leaders will need to plan effectively to both identify those post-acute programs that might make the most sense for their community and their health system and to also ensure that post-acute utilization achieves its goals once programs are operational. The key components of these plans typically include:

• Demand analysis. Evaluating post-acute demand for each specific program both within the local acute care system and within the broader primary and secondary service areas.
• Competitive analysis. Assessing not just the capacity and market strength of existing post-acute competitors, but also emerging treatment options such as "hospital without walls" that might offer additional competition.
• Regulatory assessment. Identifying state/local barriers to entry that might exist (Certificate-of-Need) along with Medicare Conditions of Participation for each program type.
• Financial analysis. Assessing the direct and indirect financial impact of the proposed post-acute program on the health system, including the potential reduction in length of stay for acute care.
• Implementation plan. Developing a work plan with specific time frames including those activities expected of administrators, clinical staff, medical staff, and other team members.

Moving forward
In addition to the current strong case for addressing potential post-acute opportunities, the prospect of significant healthcare reform in the not-too-distant future makes this assessment even more critical. In fact, the financial returns previously discussed likely understate the potential return following healthcare reform efforts. Although there are many components in play as health reform discussions move forward, the notion of a bundled payment (whereby Medicare makes one single payment for the acute episode of care and all post-acute required for 30 days following discharge from the acute care setting), as well as proposed financial penalties for any readmission into acute care within 30 days, make it incumbent upon each and every provider to assess their health system's post-acute needs.

With financial incentives among all players being more tightly integrated than at any time in the past, acute care providers will need to ensure not just appropriate access to post-acute care, so that patients don't return prematurely to the acute care setting, but that the post-acute programs that they are reliant upon (either internal or external programs) are delivering cost-effective outcomes that meet or beat their peers. While certainly important today, the value and potential return or post-acute programs will only continue into the future.

Francine Machisko and Dan Walter are senior principals with the Noblis Center for Healthcare Innovation. They may be reached at Francine.machisko@noblis.org and Dan.walter@noblis.org, respectively.

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Most employers and account holders using health savings accounts and HSA-qualified health plans are satisfied with their coverage, spend less, and are more engaged in managing health benefits, two HSA industry-sponsored surveys indicate.

The surveys, conducted last spring, examined employer and account holder selection and use of HSAs as well as health plan participation, behaviors related to plan usage, and satisfaction with product features.

The surveys, sponsored by HSA administrators ACS and subsidiary Buck Consultants, found that:

• 84% of account holders say their HSA-qualified plans are affordable.
• 72% of account holders say they pay the same or less than a traditional type of health plan.
• After moving to an HSA, more than half of account holders say they more closely monitor their healthcare costs, while 48% read their medical bills more closely than when they did not have an HSA, 46% have a better understanding of where their money goes, and 40% more closely evaluate costs before electing medical services.
• 81% of account holders said the ability to personally control healthcare costs is an important factor that caused them to select an HSA.
• Of the employers offering HSAs for more than three years, 86% indicated that plan costs were the same or less than the previous year.
• 96% of employers claimed that HSAs allow the company to continue offering group-sponsored health insurance.

California health officials yesterday issued another 11 monetary fines to hospitals where staff made harmful and avoidable mistakes.

The latest report of hospital mistakes includes $25,000 fines per facility for placing patients in immediate jeopardy or actually causing them serious injury or death. In at least three of the 11 hospitals, the incidents led to the patient's death.

The mistakes included:

• The placement of a pathology report in the wrong patient's chart resulted in a Los Angeles man undergoing a leg amputation for cancer he never had. The surgeon never received the patient's corrected file, according to the report.
• The face of a Santa Monica patient undergoing an eyelid blepharoplasty procedure reportedly caught fire after someone used excessively high settings on a cauterization device, resulting in second and third degree burns and a transfer to another hospital's burn unit.
• Six hospitals from Chula Vista in San Diego County to Fortuna in Humboldt County left a clamp, hemostats, towels or sponges or a quarter-sized ring sizer inside patients, requiring all of them to undergo repeat surgery to remove them. In one case, a guide wire that was left by Mendocino physician in a heart procedure migrated up to the patient's neck, requiring an emergency transfer to another hospital's catheterization lab to remove it, according to the state.

Kathleen Billingsley, deputy director for the California Department of Public Health, said the 11 new fines bring the total of 115 monetary penalties against 80 hospitals to $2.87 million under a law that took effect Jan. 1, 2007. She has made public announcements about other batches of fines seven times previously, most recently Sept. 3.

The funds will pay for efforts to determine root causes of such mistakes as well as help hospitals implement strategies for avoiding them.

Of the $2.87 million, $1.6 million has been collected for 75 of the 115 fines. The others are on appeal, or have recently been issued and the 10-day appeal deadline has not yet passed.

The 11 incidents occurred in 2007 or 2008, but Billingsley says that assessing a fine "reflects a thoughtful process [and] is not something we treat lightly. We clearly recognize the importance of this in terms of its enforcement, but also its impact on the hospitals. We're very careful to make sure that the event corresponds with state law regarding the definition of immediate jeopardy."

So far, about 32% of the fines have been levied against hospitals for making avoidable medication errors or pharmacy mistakes. Another 19% were levied for leaving foreign objects inside patients during surgery.

Also, 19% involved patient care issues, 7% were caused by equipment failures, 3.5% were the result of patient abuse, 2.6% improper food handling, 2.6% problems with staffing or training, 1.8% were caused by diagnostic or lab tests errors, and .9% involved surgical errors.

The latest batch of fines included the following incidents:

1. At USC University Hospital in Los Angeles, Los Angeles County, which was owned by Tenet at the time, a patient hospitalized after a leg fracture agreed to a leg amputation after his surgeon reportedly told him incorrectly that the pathology report of the biopsy said he had B-cell lymphoma. In fact, the pathologist had placed another patient's pathology report in the hospitalized patient's chart, according to the state.

Though the mistake was corrected in the lab's electronic system a few moments after it was placed, the hospital reportedly failed to communicate the mistake to the surgeon that there was a change in the record. "There was no indication that any verbal or other communication was made to the physician of record, or to interested parties, alerting them to the change in diagnosis," according to the report.

Part of the problem was that the facility's computerized chart system listed records in reverse chronological order, so the newest report went to the bottom and the oldest report went to the top of the patient's file.

The state added that Tenet Health officials failed to report the incident to state officials as the law requires, and as a result were fined $30,300, an amount they have not yet paid, according to state documents. Records show Tenet has appealed the fine.

2. At Saint John's Hospital and Health Center, Santa Monica, in Los Angeles County, an electrocautery device that was supposed to be operated with the lowest possible setting was reportedly turned up to 10 watts. The blepharoplasty patient sustained second- and third-degree buns to the face, lips, nasal passage, and left eye, and was transferred to the intensive care unit. The patient was subsequently taken to a burn unit for debridement and autografting. Documents say, "a spontaneous fire broke out onto (the patient's) face from the bovie tip and the oxygen mask."

3. At Sharp Chula Vista Medical Center, Chula Vista, in San Diego County, surgical teams allegedly left a bulldog clamp inside a patient undergoing cardiac bypass surgery. According to state documents, staff disagreed about whether four or five clamps had been used in the patient. An x-ray to locate a missing clamp was unsuccessful, apparently because of confusion as to what the technician and radiologist were looking for, said the state.

The O.R. manager said the staff "did everything possible but the heart was a thick muscle and it could be hard to see behind it even with an X-ray." The clamp was finally removed 10 days later after it was identified by a chest CT.

4. At Coast Plaza Doctors Hospital in Norwalk, Los Angeles County, reports show that surgeons allegedly failed to remove two surgical clamps called hemostats used for constricting blood vessels from a patient's abdomen. Documents say that the surgical team reported that the instruments were correct. Seventeen days later, the patient came to the emergency room in abdominal pain, when an X-ray discovered the clamps. The patient underwent surgery to remove them.

5. At Alta Bates Summit Medical Center, Summit in Oakland, in Alameda County, a quarter-sized ring/band sizer used during heart valve repair was allegedly left in a patient's pericardial sac and "a major chest surgery was required to remove it. After the chest surgery, (the patient) experienced complications [that included] kidney failure." The patient's post-operative course was complicated by pooled blood that also required surgery, but it wasn't until 11 days later that a CT scan detected the sizer.

6. At Loma Linda University Medical Center in Loma Linda, in San Bernardino County, surgeons reportedly left a surgical sponge inside a patient undergoing a liver transplant. The patient had to undergo an additional surgery to retrieve the sponge about 12 hours later. The incident investigation revealed problems with the hospital's system for accounting for counts for items used during surgery, an accounting that is not placed in the patient's medical record. This is the second penalty; the first was for a potentially fatal medication overdose, according to the state.

7. At Los Angeles County University of Southern California, Los Angeles, surgeons allegedly neglected to remove two laparotomy towels and three laparotomy sponges from a gunshot patient who underwent surgery to remove the bullet.

Hospital officials reported that counts of all materials used during the procedure were correct. X-rays to detect foreign surgical objects were negative. Even the use of a fluoroscopy failed to detect the items. The items were finally detected after the patient developed a fever and rapid heart beat, and another bullet was suspected as causing the infection. After a CT scan located the towels and sponges, the patient underwent surgery for removal. This is the third penalty against LAC/USC, said the state.

8. At Redwood Memorial Hospital in Fortuna, in Humboldt County, a guideware used during cardiac catheterization, which was reportedly left inside the patient, migrated up to the patient's neck. It required an emergent transfer of the patient to another acute care hospital's catheterization lab for a second procedure to immediately remove the guide wire. "These failures placed (the patient) at potential risk for complications, internal injuries and/or death from the migrated guide wire." The involved physician allegedly told state investigators, "I spaced out and it was a regrettable incident," said the state.

9. At Mendocino Coast District Hospital, Fort Bragg, in Mendocino County, a staff nurse who was allegedly no longer qualified to conduct fetal heart rate for a woman in labor incorrectly wrote that the fetus had a 140 to 150 beat per minute heart rate.

The patient, who was giving birth, had adequately dilated and was taken to delivery but the baby was stillborn. "Review of documents . . . led to the conclusion that the staff nurse had applied the monitor incorrectly and the monitor was recording the mother's heart beat rather than the baby's. The staff nurse who was appropriately qualified was reportedly busy with another patient," said the state.

10. At Tri-City Medical Center, Oceanside, in San Diego County, a 91-year-old patient with dementia died after sustaining a femoral fracture when she fell out of bed. Documents reveal that fall precautions were ordered, but a pressure alarm was not turned on and although the patient was wearing a Posey vest, it was not attached to the bed, said the state.

11. At Kindred Hospital in Ontario, in San Bernardino County, staff failed to observe physician's orders to have a one-to-one sitter to prevent an agitated brain injury patient from pulling out a tracheostomy tube, IV lines, and feeding tubes. "There was no documentation that there was a one-to-one sitter in the room." That "resulted in (the) patient pulling out his tracheostomy tube . . . and suffering cardiac and respiratory arrest, and subsequently expiring," noted the state.