President Barack Obama holds the Cleveland Clinic up as an institution that can be a model for delivering high-quality and cost-effective healthcare. But trying to replicate the clinic's approach across the U.S. would pose difficult challenges, according to this article from the Wall Street Journal.
As Congress considers requiring small businesses to provide health insurance for their employees, Massachusetts provides an example of how such a law affects companies. The 2006 Massachusetts universal health-insurance law requires businesses with 11 or more full-time employees to offer coverage or else pay a penalty of $295 per employee per year. While most companies have complied, many say they are cutting elsewhere to cover the cost.
The number of community-based health information exchanges (HIEs) that transfer data electronically among physicians, hospitals, health plans, and patients increased by nearly 40% from the previous past year, according to the new sixth annual survey and study released by the nonprofit group, eHealth Initiative (eHI).
Approximately 193 active initiatives are now involved in HIEs across the country and 153 participated in the survey. Among the different stakeholders in those HIEs, hospitals (21) and physician practices (19) were anticipating to see returns on their investments during this year, according to the study.
In 2009 and 2010, HIEs are expected to see new opportunities with the American Recovery and Reinvestment Act through which the federal government is anticipated to spend at least $300 million in support of HIE activities. "While it is impossible to predict the impact of future funding, ARRA has helped energize the field in recent months," the study said.
More HIEs were exchanging data, with increases in the types of data exchanged rising across the board:
Laboratory data increased to 49 initiatives in 2009, up from 28 in 2008.
Outpatient laboratory increased to 45 initiatives, up from 25.
Radiology results increased to 39 in 2009, up from 23 in 2008.
Emergency department episodes increased to 36 initiatives, up from 27.
Cost savings resulting from HIEs were reported by 40 operational HIEs in the following areas: Reduced staff time spent on handling lab and radiology results (26 initiatives); reduced staff time spent on clerical administration and filing (24); decreased dollars spent on redundant tests (17); decreased costs of care for chronic patients (11); and reduced medication errors (10).
The primary drivers of HIEs did not change very much since the previous year, according to the survey. The top drivers in 2008 remained in the same order for 2009. They were:
Improving the quality of healthcare (112 initiatives)
Improving patient safety (109)
Inefficiencies experienced by providers who need information to support patient care (104)
Increased emphasis on health information exchange and health information technology at the national level (99)
As reimbursements decrease and department budgets are slashed, hospital leaders may want to work a little harder to ensure teaching faculty members are still feeling fulfilled.
If faculty members leave, not only will you be faced with the cost of recruiting new physicians, but residency and fellowship accreditation may be jeopardized. The Accreditation Council for Graduate Medical Education (ACGME) has standards for how many teaching faculty are sufficient to teach and provide supervision to trainees. Additionally, an insufficient number of faculty members can lead to other accreditation red flags, such as inadequate number of patient cases for residents to participate in and a lack of evaluation and feedback.
The issue for hospital leaders is that faculty dissatisfaction may not always be obvious. Disgruntled faculty members won't throw up their hands and stop caring for patients. Instead, they're more likely to find little ways to express their frustrations, says Barbara Schuster, MD, MACP, campus dean of the Medical College of Georgia and University of Georgia Partnership Medical Campus in Athens.
According to Schuster, faculty members usually show their discontent by missing meetings and deadlines, and showing a general disregard for their teaching responsibilities.
If you notice these behaviors, have a conversation with the faculty members involved before their poor behavior escalates and formal action needs to be taken. If you deal with their actions early on, a casual conversation can typically solve problems. Do not approach faculty members in an accusatory manner. You're more likely to find a solution when faculty members perceive concern rather than criticism, Schuster explains.
Patient acuity and turnover are two more reasons why faculty members may consider looking for a new job elsewhere.
"Patients in the hospital are of higher acuity and turn over faster than ever before," Schuster says. "Faculty and residents say it's like a rotating door: You admit patients; you discharge them. There's no break."
If this is an issue at your hospital, leadership should look into providing more ancillary services, such as nurse practitioners, PAs, or hospitalists. Having more support staff members can bring a positive effect on quality. Although there will be an initial cost to adding personnel, a higher quality of care can lead to benefits, such as better reimbursements rates.
Setting clear expectations for faculty members before hiring them also staves off discontentment. It can be disconcerting for faculty members when expectations and reality do not match.
"If a clinical faculty member comes on board with a job description divided 70% clinical and 30% teaching, the people at the top have to be very supportive of that time distribution," Schuster recommends.
Before you hire faculty members, ensure that you can keep up your end of the bargain.
When it comes to quality healthcare, is it possible to put an actual value on it when paying for it? The Mayo Clinic, along with several other healthcare organizations, think so and have been asking policymakers considering healthcare reform at the federal level to examine ways to compensate for value instead of volume.
The clinic’s solution: inserting a value index into various aspects of the Medicare payment system such as physician fee schedules and hospital rates.
"What the value index would do in our opinion is create incentives for physicians and hospitals to work better together to coordinate and integrate care for patients," said Bruce Kelly, Mayo Clinic's director of government relations.
"There are many examples around the country of areas that have very high quality of care and much lower overall costs. And the key to achieving that seems to be basically better coordination of care," he said. "[These are] the incentives that we're trying to build into the reimbursement system."
To get started, the use of a value indexing within a reimbursement system is proposed. An equation is used in which "V" stands for value: V=Q/C. Quality (Q), for instance, represents clinical outcomes, safety, and patient satisfactions, while cost (C) represents the costs over time.
"So the better your quality and the lower your total costs, then the higher your index number would be," Kelly explained. In turn, a provider's payment could be bumped up to reflect that quality care.
"We're trying to emphasize value. We're saying if you want value, you've got to pay for value. And so, if you're going to pay for value, you've got to measure it and then adjust reimbursements accordingly," Kelly said.
The use of value indexing can be applied using current payment formulas and payment areas, such as physician fee schedules. It also can use state-related data, for instance, obtained from the Commonwealth Fund or the Agency for Healthcare Research and Quality. No particular measures, though, are specified in the value index proposal since there are a variety of sources out there to measure quality, Kelly noted.
Aside from creating incentives for physicians, hospitals and other providers to better coordinate patient care, the approach Mayo advocates eliminates the need to focus on line items or micromanagement of services, such as imaging or lab utilization, Mayo told the Senate Finance Committee in a comment paper on policy options earlier this year.
Kelly does note that by looking at general quality measures that are out there—and looking at the Dartmouth Atlas data—"that we have a pretty good idea" of which states and small regions "are producing good quality at a lower cost—and so we could kind of in general figure out initially who would come out better under this and who would not."
"But, the beauty of this is that if you currently don't do well under this [model]—because your quality is not that good or your costs are real high, then that's even more incentive then to get the physicians and hospitals in that area to start working together and say: 'Hey, we've got to get our quality scores up and get our costs down; otherwise we're just killing ourselves,'" he noted. "That's part of the feedback that we think is a very integral part of this model."
And, attention is being paid at the federal. Two bills were introduced in Congress last month promoting the use of a value indexing. Sen. Amy Klobucher (D-MN) introduced S. 1249, the Medicare Payment Improvement Act of 2009, which proposes to create a value indexing mechanism for the physician work component of the Medicare physician fee schedule. Rep. Ron Kind (D-WI) introduced a companion bill (HR 2844) in the House.
During last week's deliberations by the House Ways and Means Committee during hearings on the Tri-Committee health reform bill (HR 3200), Rep. Kind told the committee that not enough was being done "to change the incentives so reimbursement will be based on the value, rather than the volume, of services."
So will Congress consider a way to incorporate value indexing immediately into healthcare reform as it continues deliberations in the House and Senate? The Mayo Clinic is hoping so. In a July 22 letter to Congress that it co-signed with a dozen other healthcare organizations, it said that "'pay for value' is the only tactic that will 'bend the cost curve'" and improve quality of care.
Now is the time to find out.
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The incentive money is there to implement EHRs, but most HIM professionals and hospital executives know that deploying the technology is not as simple as pressing a button to go live.
Several industry experts have weighed in on this question: What is the single most important tip you could provide to someone regarding an effective EHR implementation? Their answers, summarized below, are quite telling.
Tip #1: Realize that the EHR will not solve your problems.
"EHRs do not necessarily fix poor processes, but rather, they tend to expose them. Create workflows that depict current scenarios and then revise those workflows once you've implemented the EHR. Use a team approach with IT, HIM, physicians, nurses, and other users of the EHR." –Jean S. Clark, RHIA, CSHA, service line director for HIM at Roper St. Francis Healthcare in Charleston, SC
"One of the most significant mistakes a provider can make is to implement the EHR so it matches the current practices and workflow. This is a new tool, and providers must map how the business/medical practices must change to increase quality and efficiency before selecting a vendor. This will help them take advantage of the tools the technology has to offer and assist them in finding the right EHR that addresses the specific practice/business needs.
"As an example, one of my clients completed the business process analysis and examined what it needed to improve the practice. In this case, the EMR needed to accommodate sound prescription management, given the client operates a pain clinic. Without the initial assessment, the client would not have necessarily selected an EMR that suited its needs and allowed it to address quality and efficiency.
"The bottom line is it is generally far more important to complete the business analysis rather than jumping right to the implementation phase." –Chris Apgar, CISSP, president of Apgar & Associates, LLC in Portland, OR
Tip #2: Identify EHR stakeholders and involve them in the implementation process.
"Solicit input from those who you know the EHR will affect." –Kelly McLendon, RHIA, president of Health Information Xperts in Titusville, FL
"Involve every department that touches a medical record or uses it in any way. Start with the administrators and directors, but be sure to solicit input from end users—especially when you begin to customize the system." –Donna Walker-Thomas, MBA, RHIA, CPC, CMA, manager of coding and transcription for William W. Backus Hospital in Norwich, CT
"Create a steering committee that represents all end users of the proposed EHR system. The capital and political costs associated with EHR implementation are so substantial that a rush to implement can be extraordinarily expensive and, if done poorly, can sour an entire medical staff to any EHR technology. The planning team should also include experienced technical advisors and legal counsel so that the final implementation plan does not include technical or legal time bombs that go off just before or during cut-over." -William Roach, Jr., MS, JD and Heidi Echols, McDermott, Will & Emery, LLP in Chicago
Tip #3: Keep it simple with as few systems as possible.
"Our challenge was that we had too many systems. We began our EHR implementation in 1991 by scanning medical records into the electronic patient file (EPF). After that, many other systems have been implemented to create a truly electronic system. Several of the new systems have not been able to feed into the EPF. We have either had to print and scan documents into the EPF or go to that separate system to retrieve records. This is very cumbersome for record requests." –Phyllis A. Santillanez, RHIA, HIM director for Kaweah Delta Medical Center in Visalia, CA
Tip #4: Remember that communication is essential.
"It is difficult to make sure you keep the necessary players in the loop. As you prepare to move to an EHR, I think it is critical to create a leadership team that is made up of individuals who trust each other and who are ready to communicate the major steps along the way. You need players who are willing to share the good, the bad, and the ugly about the system. Then your team needs to be prepared to problem solve, remain positive, and look for ways to improve processes." –Betty Lanzrath, MA, RHIA, director of HIM for Newton Medical Center in Newton, KS
"At our facility, we were fortunate enough to have a well-versed vendor lead us in our transition from paper to the EHR. The most advantageous action we took was to consult with every area in the hospital over the course of one week. During that week, we held a 'white board' session during, which a registered health information administrator (RHIA) from the vendor led each department in a discussion of how employees currently accessed the record and how that would change with the EHR.
"The RHIA also conducted a small educational session on how the EHR functioned and pointed out some of the benefits (i.e., more than one person could access information at the same time, workflow or work lists could be triggered off of a document type or admit type, and the current record would be available before discharge).
"This process gave utilization review, coding, nursing managers, clinical and ancillary managers, administration, and physicians a chance to see both current and future benefits of the EHR. It gave our facility buy-in and identified all of our process, policy, and procedure changes up-front so that we would not have to scramble after go-live. The transition was much smoother. At first, the idea of white board sessions seemed to be rather burdensome, but it ended up streamlining and driving all of our workflow at our facility." –Dawn Osborn, MHS, RHIA, MT, business office IT manager for St. Bernards Medical Center in Jonesboro, AR
Tip #5: Recognize that paper will never disappear completely.
"For some hospitals, scanning will continue to be a permanent or phased portion of the implementation of an EHR. It may be part of downtime procedures when clinicians and other caregivers must use paper. If the clinician/caregiver does not re-enter the information into the EHR, the forms are scanned. Some hospitals may also scan correspondence and records from other hospitals to include in their own permanent record." –Elaine Lips, RHIA, president and CEO of ELIPSe, Inc. in Los Angeles
Tip #6: Keep usability in mind.
"Effective implementation requires ease of use. All the bells and whistles won't mean much if the users find the system confusing, frustrating, limiting, and slow. Therefore, for implementation to be successful, the end user must be involved in assessing each system's usability during the selection process, including such factors as:
Logging on and off
Screen design and information displays and controls
Navigating within a screen and between screens
Entering, accessing, and transmitting data
Integrating with practice managements systems and e-prescribing systems
Automating the coding process and accuracy
Connecting with payers, labs, patient portals, etc.
Assessing functionality of decision support, guidelines, disease management, and other resources
System user requirements and user options
System feedback
System responsiveness
System speed regarding various functions and user interfaces
"The more intuitive, the better. It's not just what the system can do, but also how it performs each task and how long it takes. Providers must consider these factors if the adoption is to be effective." –Claudia Tessier, RHIA, president of mHealth Initiative, Inc. in Boston
When Congress passed the Fair and Accurate Credit Transactions Act of 2003 (FACTA), little did healthcare organizations suspect that they would be on the hook for yet another government mandate. But that's exactly what's happened, and the August 1 deadline for implementing procedures to comply with the regulations, known as the Identity Theft Red Flags Rule (16 CFR 681.2), is fast approaching.
Section 114 of FACTA required six regulatory agencies to create rules mandating organizations that deal with consumer information to monitor for identity fraud, says Robin J. Fisk, Esq., principal of Fisk Law Office in Ashland, NH. Since the agencies primarily regulate the financial industry, healthcare organizations were slow to discover that the rules might apply to them.
The Red Flags regulations define a pattern, practice, or specific activity that could indicate identity theft. In addition to financial institutions, they apply to creditors, defined as "any person who regularly extends, renews, or continues credit; any person who regularly arranges for the extension, renewal, or continuation of credit; or an assignee of an original creditor who participates in the decision to extend, renew, or continue credit."
Typical creditors include consumer organizations such as banks, auto dealers, and utility and cell phone companies. However, the Federal Trade Commission (FTC) has interpreted the regulations to apply to other organizations, including nonprofits and government agencies, Fisk says. Although the FTC usually has no jurisdiction over nonprofits, the agency has taken the position that it holds jurisdiction when a nonprofit performs functions that are similar to a for-profit. "Any person that provides a product or service for which the consumer pays after delivery is a creditor," the FTC's enforcement policy states.
To be subject to the Red Flags regulations, healthcare organizations must also maintain covered accounts, which may include consumer accounts and any other type of account that presents a reasonable risk of identity theft that could harm the patient or provider.
Although the Red Flags Rule went into effect November 1, 2008, the FTC agreed to defer enforcement until August 1 "so that creditors and financial institutions have more time to develop and implement written identity theft prevention policies," according to an April 30 press release.
To comply, healthcare organizations must develop and implement a written identity theft prevention program designed to detect, prevent, and mitigate identity theft in connection with covered accounts, Fisk says.
The prevention program may be scaled to the size and complexity of your organization, as well as the nature and scope of your exposure. However, your program must also consider guidelines regarding the Identity Theft Red Flags that were originally published in the Federal Register November 9, 2007.
These guidelines, which will be updated periodically, are intended to assist creditors in creating and maintaining a program that satisfies the requirements of the Red Flags regulations. The guidelines cover risk factors for identifying red flags, categories of red flags, and methods for preventing and mitigating identity theft.
Your board of directors, or your senior executive if your organization doesn't have a board, must appoint someone to develop your compliance program, Fisk says. The Red Flags compliance officer's first order of business is to determine whether your organization maintains covered accounts.
Next, the compliance officer must conduct a risk assessment of your covered accounts, including the methods you provide to open and access accounts and your organization's previous experiences with identity theft.
Your compliance program must include reasonable policies and procedures to identify red flags for covered accounts and ensure that the program adequately addresses them. The program should instruct staff members on how to respond appropriately to prevent identity theft and to mitigate any effects from identity thefts that occur. The program must also include a process that incorporates updates to keep pace with changes in patient risk and to your organization's programs.
This article was adapted from one that originally appeared in the July 2009 issue of The Doctor's Office, a HealthLeaders Media publication.
The AMA's endorsement last week of the House healthcare reform bill caught some by surprise.
There were no significant caveats or conditional demands in the AMA's letters to the House committees behind the bill, despite grumblings earlier in the year about a public option. Although the country's largest physician organization has traditionally played a pivotal role in torpedoing healthcare reform, the AMA made it clear that history would not repeat itself in 2009.
Not all physicians are happy with the stance. About 17 state medial associations and specialty physician groups are drafting a dissenting letter that opposes the public option in principle and the House bill in its current form.
But there is a reason behind the AMA's acquiescence to reform: It provides an opportunity to once and for all break away from the Sustainable Growth Rate formula that keeps physician reimbursement depressed and annually on the verge of double-digit cuts.
Sure, the AMA also supports improving coverage, emphasizing wellness, and other tenets of reform. But it knows that if this effort fails, there may not be another chance to kill the SGR until 2013 at the earliest, and 2017 more likely.
As blogger Kevin Pho, MD, puts it in his own reluctant endorsement of the bill, "It's quite possible that preserving the status quo will be far worse for doctors going forward than the current proposals."
But will the new method of determining physician reimbursement levels really be better?
The Obama administration wants to create a five-member Independent Medicare Advisory Council, made up of physicians and health policy experts, that will make two annual reports dictating updated rates for Medicare providers, including physicians, hospitals, skilled nursing facilities, home health, and durable medical equipment.
Instead of making toothless recommendations that are ultimately approved or changed by Congress, as MedPAC currently does, the new council would actually have authority to enact changes, unless blocked by Congress or the White House within 30 days.
The goal is to separate politics and policy by putting reimbursement decisions in the hands of people who aren't subject to lobbying campaigns and worried about reelection. Lawmakers are often more interested in delivering more federal Medicare dollars to their districts than curbing the overall growth in spending, after all.
But physicians are among those lobbying groups competing for lawmakers' attention. If physician groups hadn't lobbied Congress to block scheduled payment cuts the last few years, physician reimbursement could actually be much lower.
That may no longer be an issue if reimbursement is detached from the SGR formula, but some specialty physician groups are worried about being cut off from the decision-making process. The Alliance of Specialty Medicine has come out against a similar proposal to give MedPAC more authority, arguing that unelected appointees can't be held accountable for their decisions.
The organization claims that their opposition has nothing to do with divisions between specialists and primary care, but that denial may reveal their real concern.
MedPAC has concluded that primary care services are undervalued and some specialist services are overvalued, and by lobbying Congress, specialists have helped defer major readjustments for a while. An independent council may be more inclined to redistribute reimbursement from specialists to primary care than elected representatives.
So the answer to the earlier question, about whether the new method will be better than the SGR, may depend on what type of medicine you practice.
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Mayo Clinic and more than a dozen co-signers took a more conciliatory tone in a statement issued on Wednesday than its previous letter about healthcare reform, but still underscores Mayo's continued concern: Reform legislation needs to include methods that reflect pay for value and quality—not quantity.
As he has done numerous times, President Obama held up the Mayo Clinic, headquartered in Rochester, MN, as an example of an organization focusing on quality care in his Wednesday evening press conference. "Part of what we want do is to free doctors, patients, hospitals to make decisions based on what's best for patient care. And that's the whole idea behind Mayo," the President said.
In the initial Mayo letter, concern centered around the continued use of Medicare rates and how old and "flawed" government-set payment methodologies were still being used to pay hospitals and physicians. Mayo called for inclusion of a "value index" that would define, measure, and pay for value while holding down costs.
"There are many examples around the country of areas that have very high quality of care and much lower overall costs. And, the key to achieving that seems to be basically better coordination of care," said Bruce Kelly, the Mayo Clinic's Washington-based director of government relations.
"[These are] incentives that we're trying to build into the reimbursement system," said Kelly. And so, "the better your quality—the lower your total costs."
In the July 22 letter, the healthcare organizations, while saying they "wholeheartedly support" the president's call for reform, also urged that any legislation still under consideration "include a method that pays for quality and value, rather than the quantity of medical procedures." This includes the Senate Finance Committee, which is expected to unveil its measure any day, and the House Energy and Commerce Committee, which is continuing to mark up the Tri-Committee health reform bill this week.
In particularly, Mayo noted that "Medicare pays more to 10 states that often provide poorer outcomes, safety and service at higher cost," and much less to other parts of the country where the organizations show better outcomes, safety and service as lower cost. These latter parts of the country include Minnesota, Wisconsin, Iowa, Oregon, and Washington State, according to Kelly, where many of the letter signers are located.
With lower reimbursement under Medicare, many providers—both hospitals and physicians—are reaching a point where they cannot afford to see Medicare patients, according to the letter. Expanding any "Medicare-type plan without a method to define, measure and pay for healthy outcomes for patients" will move providers over a threshold where they cannot provide care, which would "ultimately hurt the patients who seek our care."
The healthcare letter-writers did note that they "were encouraged" by other ideas that move toward paying for value"—such as a expanding the powers of the Medicare Payment Advisory Commission at the federal level—to develop "value-based payment methodologies for Medicare." During the past few days, the White House has put more emphasis on creating this independent board of physicians and hospitals.
In addition to the Mayo Clinic, the letter was signed by leaders from the following organizations: Altru Health System, Dartmouth Hitchcock Health, The Dartmouth Institute for Health Policy and Clinical Practice, Group Health Cooperative, Gunderson Lutheran Health System, HealthPartners (MN), Lahey Clinic, Marshfield Clinic, McFarland Clinic, Northwest Physicians Network, North Texas Specialty Physicians, Scott & White Healthcare, Sutter Independent Physicians, College of Medicine Health Science Center, Texas A&M University, and Virginia Mason Health System.
If Sen. Charles Grassley has his way, nonprofit hospitals will have to prove they spend at least 5% of expenses on charity care if they are to keep their tax-exempt status. But a review of what's happened in Maryland suggests such a rule would be unrealistic and largely inappropriate.
That's the conclusion of a report, published today in the online edition of the journal Health Affairs, which found extremely wide variation in levels of all types of community benefit each hospital reported.
For example, charity care, a subset of community benefit defined generally as that care given to patients without any expectation of payment, varied from .05% to 6.33%. Only two hospitals reported contributing 5% or more.
But total community benefit, which included other categories of uncompensated care, such as health professionals' education, community health services, and "mission-driven" programs and research, varied from 1.17% to 14%.
"As charity care is now counted in its reporting system, 95% of Maryland's hospitals would not meet the standard proposed," the authors wrote. "This raises serious doubt about whether a 5% threshold is sensible, particularly because Maryland's hospitals face no deterrent to providing care other than the effort needed to determine eligibility." A state agency reimburses them an amount that includes costs for charity care and bad debt.
The report was authored by Bradford H. Gray, a senior fellow at the Urban Institute, and Mark Schlesinger, professor of epidemiology and public health at Yale University. Their review included a representative sample of 20 of Maryland's 45 acute care hospitals' disclosure reports, and interviews with hospital staff on their reporting practices.
The issue is of increasing concern this year as nonprofit hospitals prepare to comply with a new federal law requiring disclosure of all community benefit spending by 2010, the so-called Schedule H of the Internal Revenue Service's Form 990.
Many see the new rules as a response to a public demand for more accountability, and as the first step toward making all hospitals justify their tax exemption status.
But as Maryland hospital reports demonstrate, the amounts reportedly spent on both charity care, and the larger category of community benefit, vary dramatically around the state, depending on the poverty level of the population served. For example, community benefit spending ranged from 1.2% at Upper Chesapeake Hospital, a small facility in Bel Air, to 14.1% at the University of Maryland Hospital in Baltimore, where poverty levels are much higher.
Second, the authors make the argument that while Grassley and Republican members of the Senate Finance Committee want hospitals to provide at least 5% of charity care, many other types of uncompensated care certainly should qualify, although currently accepted hospital accounting practices don't consider them as such.
"Part of the argument I'm making is that there's a lot of services that are reportable as a community benefit that are for all practical purposes charity care; they're just not defined that way," Gray says.
They include:
Spending on graduate medical education, or training for nursing or allied health professional students. Like charity care, this amounts to about one-third of the overall community benefit spending in Maryland for a total of two-thirds.
"Misson-driven" health services, about 20% of community benefit expenses, includes services that lose money, and which probably would not be available to the community if the hospital didn't provide them. Such programs may include hospice, cardiac rehabilitation, and mental health treatment or programs targeting immigrants, seniors, substance abusers or the homeless. They may generate some revenue, but are provided at nominal fees for people with limited ability to pay and often are provided outside the hospital.
Also in the mission-driven category are hospital's payments to physicians for being on call to provide services to a large portion of people with no ability to pay.
"To make an implicit point explicit, many services in the 'mission-driven' category are forms of charity care that do not get counted as charity care, which includes only hospital services provided to charity patients. Hospitals' expenses for providing other services, including their payments to physicians, are not counted as charity care," the authors wrote.
Another problem involves the lack of uniform requirements for what level of poverty makes an individual or family member qualify for charity care. Some may qualify at 400% of the federal poverty level, while some may qualify at 300%.
"There is no consensus in Maryland (or nationally) about how the adequacy of charitable performance should be assessed, and low-spending hospitals are not asked for explanations. This should change, particularly if the national numbers show as much variability as Maryland's do," the authors wrote.
But how do other states fare? A check of California's Office of Statewide Health Planning and Development, which keeps track of "charity care" expenditures for 174 nonprofit general acute care hospitals, finds that many wouldn't meet the Grassley test either, because charity care averaged 1.58% of expenses.
"If bad debts and/or county indigent program contractual adjustments are factored in, and they are generally not included in the definition of charity care, the percentage increases to 3.13% and 4.3%," said OSHPD spokesman David Byrnes.
Reporting community benefit is beneficial
Overall, the new trend toward public reporting of community benefit is a good thing, the authors wrote.
"When hospitals begin reporting on the IRS's new Schedule H in 2010, the revealed variability is likely to create pressure for improved performance on the measured categories," they said. "A new era of accountability begins when nonprofit hospitals start reporting on Schedule H in 2010. It would be wise now to defer further policy changes regarding tax exemption of nonprofit hospitals until the effects of Schedule H are seen. Given also the possibility of larger policy changes to address the problems of cost and the uninsured, we should hesitate to impose new charitable expectations."
Jim Bentley, senior vice president for strategic policy planning for the American Hospital Association, agreed that the issue of how much charity care should be required is an issue that is expected to become increasingly thorny.
"What we're talking about are services that hospitals provide which—were we not to do them—either the health of the public would suffer or Montgomery County would have to open up and provide the service through the taxpayers' dollars. The hospitals relieve the community of that expense."
