CMS announced adjustments to fiscal year 2010 payment rates Friday that the agency said will help "better reflect the cost of caring for Medicare beneficiaries in nursing homes."
The final rule calls for Medicare payments to skilled nursing facilities to drop by $360 million, or 1.1% lower than payments for 2009. CMS said the adjustment is a way to "rebalance an earlier adjustment to the case-mix indexes (CMIs) and better align Medicare payments with costs."
"CMS is committed to providing high quality care to those in skilled nursing facilities and to paying those facilities properly for that care," said Acting CMS Administrator Charlene Frizzera. "The adjustments to the payment rates for next year reflect that policy."
In addition to recalibrating and updating the skilled nursing facility PPS payment rates for FY 2010, CMS noted that this final rule:
Establishes a revised case-mix classification methodology (RUG-IV) and implementation schedule for FY 2011, reflecting updated staff time measurement data derived from the recently completed Staff Time and Resource Intensity Verification (STRIVE) project;
Includes information on the transition to the Minimum Data Set, Version 3.0 (MDS 3.0) redesigned nursing home resident assessment instrument, including an implementation schedule; and
Discusses comments CMS received on a possible new rate component to account for the use of non-therapy ancillaries (as recommended by MedPAC), and on a possible new requirement for the quarterly reporting of nursing home staffing data.
Though many hospitals had feared a 1.9% reduction in payment for 2010, they will actually see a 2.1% increase, according to the fiscal year 2010 IPPS final rule that CMS released on Friday.
CMS had originally proposed a documentation and coding adjustment to account for the "effect of increases in aggregate payments due to changes in hospital coding practices that do not reflect increases in patient's severity of illness," according to CMS.
However, CMS states it will continue to research the effects of the MS-DRG transition, including performing a complete analysis of FY 2008 and FY 2009 data. The agency may consider phasing in future adjustments over an extended period beginning in FY 2011, according to a CMS press release.
In addition, CMS expands the number of quality measures hospitals must report to be eligible for a full market basket update in FY 2011. New measures include Surgical Care Improvement Project (SCIP) Infection 9 (Urinary Catheter Removed on Postoperative Day 1 or Postoperative Day 2) and SCIP INF 10 (Surgery Patients with Perioperative Temperature Management).
The agency will not make any changes to the list of hospital-acquired conditions. It will, however, evaluate the impact of the existing policy on hospital practices and care.
The federal minimum wage, which Congress set at $6.55 an hour two years ago, jumped to $7.25 an hour on July 24. The 70-cent increase is the third such rise in as many years thanks to the Fair Labor Standards Act (FLSA) amendment of 2007, which brought the minimum wage up to $5.85 that year.
The annual increases have coincided with the continual decline of the economy, sparking debate as to whether or not a higher minimum wage serves to benefit troubled times through rejuvenated consumer spending, or in fact further propels the downward spiral as a result of greater job loss numbers.
The dispute has far from evaded the long-term care industry. With already tight budgets, the latest minimum wage increase may force many nursing homes to make adjustments in order to hire or maintain enough staff.
"Any increase in the minimum wage could impact the financial stability of long-term care facilities that pay workers at or below the amount," says Jeannie Adams, an attorney at Hancock, Daniel, Johnson & Nagle, PC, in Richmond, VA.
Although the national average wage for nursing aides is $11.84 an hour, according to the May 2008 National Occupational Employment and Wage Estimates, approximately 10% of nursing aides earn less than $8.34 and hour, which is only $1.09 higher than the new minimum wage amount.
"Fortunately, most certified nursing assistants [CNA] are already paid higher than minimum wage," says Sue LaBelle, MSN, RN, RAC-CT, a senior healthcare specialist at PointRight in Lexington, MA. "However, if nursing homes are paying entry level CNAs or members of the housekeeping or maintenance staff lower than minimum wage, the new amount could have a ripple effect across the board."
Lisa Truong's $28,000 bill from a San Francisco hospital is just one reason the California Department of Managed Health Care ordered two unlicensed companies offering fraudulent "discount health cards" to shut down and a third company selling health coverage to apply for a license or stop operating.
Additionally, the state plans to make a plea to hospitals, physicians, and clinics to have their intake workers report those instances when patients appear with such cards expecting they are covered, instead of letting the incidents slide unreported.
If the practice isn't stopped, patients will continue to have their credit records tarnished for non-payment, and hospitals and other providers will be left on the hook for increasing amounts of unpaid care, state officials said.
Truong, a 41-year-old legal secretary, has been paying nearly $60 to $209 monthly for six months to one of the companies, International Association of Benefits, whose agent told her the health card she was buying would pay her bills, she says.
When she needed a kidney biopsy in November, requiring a two-night stay, California Pacific Medical Center took her card information and admitted her for the procedure. But three months later, she learned the bill was not paid and she was getting letters from the hospital and her doctors saying she owed them $28,000.
The company apparently did pay two physicians who treated her for $75. But that's all.
The state has ordered another company, Prudent Choice, to shut down. And a third company, DentalPlans.com, has been ordered to seek a license and file an application by Sept. 15 or else it too will receive a cease and desist order.
Cindy Ehnes, director of the DMHC, said between 150 and 300 such companies are operating throughout the state, "defrauding tens of thousands of Californians. Their primary victims are usually limited English-speaking, lower income, and minorities employed in small businesses. These people generally do not have as much of an awareness of their rights, or who to call or what to do."
The businesses, sometimes called "discount health card companies," offer a membership program with lower fees for health providers such as doctors, dentists, drugs and hospitals, optical products, and "no pre-existing condition" limitations. While some companies offer legitimate discount cards, the problem companies offer such deals in the absence of having any contracted arrangement with the providers.
In Truong's case, the monthly premiums that started out at $67 a year ago, and was upgraded one month later to $209.95, were deducted from her debit card.
Companies of concern to the DMHC claim high discounts with risk-free cancellation policies and full refunds. Many use deceptive advertising as well.
"It's almost impossible to know how big this is, because it relies on victims complaining and knowing they can complain to the DMHC," Ehnes said. "The one thing we can say is that it's significantly underreported."
Truong, however, filed her complaint, which was immediately investigated. Her case helped Ehnes take action against IAB, which has been previously ordered to get a state health plan license, and while it initially began the process, has "since ignored repeated requests to make progress."
To date, the DMHC, the only stand-alone HMO watchdog agency in the nation, has filed cease-and-desist orders against eight such discount card companies, some of them headquartered outside the state, and is one of 14 states nationally that have taken action against such fraudulent activities.
The DMHC has jurisdiction over such companies because they promise to provide payment for healthcare services in exchange for periodic payments, which must comply with laws governing health plans.
More than half of the nearly 1,000 consumers that have complained about such practices to the DMHC say they were told they were purchasing a health insurance card, "only to discover that it is merely a discount and does not protect them from large medical bills," the DMHC said in a statement.
Much of the time, when the consumer tried to use the card, they learned the provider had had no contract with the company, or offered the same or better discount to any cash-paying patient off the street.
Especially now, with more people unemployed and without health insurance, such companies are preying on people with promises that don't hold up, Ehnes said.
She added that in those cases under investigation, "We've been able to get their finances and learned that they have been making a great amount of money."
For Ehnes, consumers like Truong are an important reason why health reform is so important. "The reality is, people are desperate for healthcare security and because of that, they are lip-smacking opportunities for these kinds of rip off schemes."
The author of a new HealthGrades study of bariatric surgery says the wild disparity in cost and quality for the procedures provide a good example of the "twisted market" that often drives elective medicine.
The HealthGrades study of 153,355 bariatric surgeries in 19 states found that, even though the majority of bariatric surgeries are elective, there is little evidence that consumers are demanding a better product at a lower price. The disregard for price may account for the eye-popping disparities in cost and outcomes.
Bariatric surgery in California costs on average about $52,224, and about $14,577 in Maryland, while bariatric surgery patients treated at top-rated hospitals have, on average a 67% lower chance of experiencing serious complications compared to patients who receive treatment at poorly rated hospitals.
"When we saw the numbers we thought that can't possibly be right so we went back and checked it again. They're right," says Rick May, MD, a senior physician at Golden, CO-based HealthGrades, and a coauthor of the Fourth Annual Bariatric Surgery Trends in American Hospitals Study.
May says the study illustrates a key cost driver for the nation's healthcare delivery—the lack of incentive among insured consumers to keep their own healthcare costs low.
"The purchaser who is going out and selecting the provider and the procedure is not the person putting out most of the money. Because of that, it drives a really twisted market," May says. "You are seeing it across healthcare. When you have consumers who are able to select their healthcare with little impact on what they pay, they're like anybody. If you could buy a car and somebody else was going to cover 90% of the cost, you are probably going to buy an Escalade. But if you are paying more of the cost, you will be much more discriminating and realistic about what you purchase."
Another dictum of the free market—you get what you pay for—is also challenged in the HealthGrades study, which found that higher costs don't translate into better outcomes; quite the opposite, in fact.
"There is a correlation, but it's an inverse correlation," May says. "The more expensive places for bariatric surgery tend to have higher complications."
That makes sense when you consider that bad outcomes increase costs. May says the biggest driver of outcomes is experience. HealthGrades found that high bariatric surgery volumes correlate with better outcomes. Hospitals with more than 375 bariatric cases in three years had a 32% lower risk of in-patient complications than lower-volume hospitals with less than 75 cases over three years.
For patients, that expertise translates into shorter hospital stays. Patients having surgery at top-rated hospitals, on average, spent 2.15 days in the hospital. Patients having surgery in low-rated hospitals spent 2.72 days in the hospital. A state-by-state comparison is even more dramatic. Vermont patients, on average, spent 3.26 days in the hospital, while Nevada patients spent 1.56 days in the hospital.
"The really good programs are really good at multiple levels," May says. "They're really dedicated to making a better product. They are looking at the whole spectrum of care. They are looking at proper patient selection. They're looking at educating patients before surgery. They're looking at what are they going to do to optimize the patients medically before they bring them into the hospital. They are standardizing their post-operative care. They are looking at providing good diets. They've been very proactive at addressing everything soup to nuts."
The study analyzed outcomes in 19 states that provide all-payer information for the most common gastric bypass procedures, such as less-invasive laparoscopic procedures, including gastric banding, malabsorbtive procedures, and combined malabsorbtive/restrictive procedures.
May says the disparities in price and outcomes may widen as more insurance companies cover the procedure, more and more increasingly overweight Americans opt for it, and more hospitals, surgeons, and other providers take up the lucrative business line with little if any experience in the field.
"Bariatrics is exploding in terms of how many surgeries are being done because obesity is growing off the charts and that drives a huge expansion in a procedure," May says. "That forces another segment of the provider community to start doing stuff they haven't been doing before. Now you are talking about a huge range of experience between hospitals that have done thousands of these procedures verses hospitals that have done 10, or surgeons that have done hundreds of these procedures versus surgeons who've done five."
If the consumer isn't considering the cost of the procedure, May says maybe the insurance companies should more-aggressively take it upon themselves to find better deals in other hospitals and states. "Frankly, if you are a health insurance company in California, you are better off putting your patients in a first-class seat and flying them to Maryland and having the procedure there and saving a pile of money," he says.
With the House already gone and the Senate set to clear out by August 7 for a month-long recess, the battle over healthcare reform will continue. Republicans will assail the government coverage plan that Democrats and President Obama are advocating as a recklessly expensive federal takeover of healthcare. And Democrats will counter that GOP opposition represents an endorsement of insurance industry abuses.
President Obama, Congressional Democrats and leading advocacy groups are laying the groundwork for an August offensive against the insurance industry as part of a coordinated campaign to sell the public on the need for reform. The effort will feature town-hall-style meetings by lawmakers and the president, grass-roots lobbying efforts, and a blitz of expensive television advertising. It is intended to drive home the message that revamping the healthcare system will protect consumers by ending unpopular insurance industry practices.
The White House team is retooling its message and strategy on healthcare reform, hoping a more modest approach will reinvigorate President Obama's effort. Polls show that support for Obama's handling of health reform has declined as anxiety deepens about its effect on middle-class, insured Americans. And guided by polls, the administration intends to emphasize insurance market reforms.
California Gov. Arnold Schwarzenegger has signed a revised annual budget to close California's $24 billion shortfall, including a $1.4 billion cut to Medi-Cal. In addition, California slashed $178.6 million from Healthy Families, its version of the Children's Health Insurance Program. In all, California's cuts could raise the number of uninsured children in the state to two million, up 915,000 from about 1.1 million in 2007, estimated the Children's Defense Fund.
A draft Senate bill would provide up to $10 billion annually for a "prevention and public health investment fund," a portion of which could be used for infrastructure projects, such as bike paths and farmers markets meant to curb chronic and costly conditions like obesity. But though some lawmakers believe these initiatives could cut healthcare costs in the long run, others consider them pork-barrel spending.
