Many of the health issues that plagued rural America a decade ago are still prevalent today, research finds. "It is very discouraging," says the director of Southwest Rural Health Research Center.
We know the healthcare challenges facing the 60 million Americans living in rural areas, a population that is generally older, less-healthy, and less-affluent than people living in urban areas.
The health issues for rural America are variations on a theme. In one region, the leading health concern might be diabetes and obesity. In another area it might be substance abuse, or mental health, or oral health.
The underlying problem that ties these all together, however, is access. The plain fact is that there aren't enough providers in rural America to cover the people who live there.
A new guidebook out this week from Texas A&M School of Public Health makes this abundantly clear. Rural Healthy People 2020 is a follow-up report coming a decade after the highly successful Rural Healthy People 2010.
Thumb through this reference book, which compiles stats and data from a number of sources, and you get the impression that living in rural America is hazardous to your health.
For example, RHP 2020 notes that people with a health emergency who live more than 30 minutes from a hospital emergency department have a 46% mortality rate, compared to a 21% mortality rate for people living within 30 minutes of an ED.
RHP 2020 notes that while 17% of the U.S. population lives in a rural area, only 9% of primary care physicians practice in rural areas.
Jane Bolin, PhD, JD, BSN, senior editor of Rural Healthy People 2020 and director of the Southwest Rural Health Research Center, says it's difficult to determine if rural healthcare delivery has progressed over the past 10 years.
"I wouldn't say the problems have gotten much worse, but the priorities have remained the same and many of the problems, not for lack of trying, have remained the same," Bolin says. "People are trying to address these issues, but it's difficult."
"The takeaway we found for Rural Healthy People 2020 a decade later is that many of the issues remain the same, many of the goals have not been met. There has been some modest progress in target areas, but there continue to be significant concerns expressed about access to healthcare, either insurance, emergency care services, and primary care services."
The study ranks the top issues facing rural healthcare providers, based on the survey responses of more than 1,200 providers from across the country.
The closure of more than 50 critical access hospitals across the nation in the past five years–and the threat of a nearly 300 hospitals closing in the near future–represents the greatest threat and challenge to rural health.
"It is very discouraging when we are continuing to deal with closures of critical access hospitals and reduced payments to doctors," Bolin says. "These small rural hospitals are doing everything they can, they're operating with no margins. They're losing money. It's really tough for them."
Health Challenges
Nutrition and weight status in rural America moved from No. 10 in RHP 2010 to No. 2 in the latest survey, just ahead of diabetes.
"Many people consider those to be part and parcel of the same issue," Bolin says. "People are becoming more obese, yet they seem to live in food deserts where there is just junk food, and diabetes rates are continuing to climb."
Mental health and access to mental health services climbed to No. 4 on the list. That's not surprising, Bolin says, because more than 85% of mental health professional shortage areas are in rural areas.
"Depression and diabetes go hand in hand. They have high rates of comorbidities," Bolin says.
"There hasn't been the same concern shown for reimbursement for mental healthcare services, although that is beginning to be addressed under the Affordable Care Act. In many rural areas, their only recourse for someone acting out violently or who is causing disturbances with mental health problems is to put them in jail. That is hardly adequate for someone who needs mental healthcare services."
Topping off the Top 5 is substance abuse, tracking right behind mental health issues, which really is no surprise. People who don't have access to proper mental health services likely will self-medicate with whatever may be more readily available. For example, nonmedical prescription opioid abuse is raging in many parts of Appalachia.
Other areas of concern identified in the survey include heart disease and stroke, a lack of physical activity, and tobacco use.
Poverty Pervasive
Many of these problems affecting rural America play out in a backdrop of grinding poverty. The study notes that two-thirds of rural counties in this country have poverty rates at or above the national average. In rural Florida, for example, the poverty rate is at the historically high level of 20.3%.
Related to this poverty is the scarcity of jobs, the relatively low pay of the jobs that do exist, and the higher mortality and injury risks associated with jobs in agriculture, mining, fishing, and other manual labor common in rural areas.
Bolin and the team at A&M who compiled Rural Healthy People 2020 should be commended for providing a valuable resource that doesn't sugarcoat the problems facing rural America.
If you care about rural health, download the study and keep it as a reference. Better yet, make sure that every media source you know, and every elected official from the town selectmen to your U.S. Senator has a copy of this reference.
The problems are right there in front of us, in every state in the union. The job of rural advocates is to make sure people see them.
Researchers using 2012 data find that the markup for most hospitals averaged 3.4 times the Medicare-allowable cost. By that measure, a hospital incurring $100 of Medicare-allowable costs charges $340. In a Top-50 hospital, the charge is $1,000.
For-profit hospitals comprised 49 of the nation's Top 50 hospitals with the highest charge-to-cost ratios for out-of-network and uninsured patients, according to a study published this week in Health Affairs.
Researchers Gerald Anderson from Johns Hopkins Johns Hopkins Bloomberg School of Public Health, and Ge Bai of Washington & Lee University examined 2012 Medicare cost reports from the Centers for Medicare & Medicaid Services to determine a charge-to-cost ratio. The metric shows the mark-up that hospitals charge beyond what Medicare agrees to pay.
Gerald Anderson
The 50 hospitals identified from more than 4,000 hospitals across the nation charged an average of more than 10 times the Medicare-allowed costs. Beyond that, Anderson and Bai found that the mark-up for most hospitals averaged 3.4 times the Medicare-allowable cost in 2012. By that measure, when a hospital incurs $100 of Medicare-allowable costs, the hospital charges $340. In a Top-50 hospital, the charge is $1,000.
"The main causes of these extremely high markups are a lack of price transparency and negotiating power by uninsured patients, out-of network patients, casualty and workers' compensation insurers, and even in-network insurers," the study concludes. "Federal and state policymakers need to recognize the extent of hospital markups and consider policy solutions to contain them."
The study recommends limiting mark-ups on overall charge-to-cost ratios, mandating price disclosures, and creating some form of all-payer rate setting.
Ge Bai
Community Health Systems, Inc., operates 25 of the 50 hospitals. Hospital Corporation of America operates more than one-quarter of them, and 20 of the hospitals are in Florida. Only one not-for-profit hospital, Crozer Chester Medical Center,in Chester, PA, made the list.
"For-profit hospitals only account for 30% of all U.S. hospitals. They are a minority. But on our list, they are the majority," Bai says. "They are vital players in this price-gouging game. Nobody tells these hospitals not to do that. For-profit hospitals are more profit-oriented so they have more incentive to do these high mark-ups."
Bai says HCA and CMS hospitals dominate the list most likely because they are also the largest for-profit hospital chains in the nation.
No Regulations
She says the mark-ups are not illegal because only Maryland and West Virginia have regulations limiting fees. "The problem is that the market forces have stopped working here," Bai says. "Consumers don't have the time or knowledge or ability to do comparison shopping of hospitals. We don't have the options. There are no state or federal regulations in general to protect uninsured patients, so we have a market failure."
Bai says states or the federal government could tell hospitals that "this is the maximum mark-up you could have, for example 300% of what Medicare would pay. You can't charge over that."
The lack of price regulation deeply affects the more than 30 million people in the United States without insurance. "They are the most vulnerable among us with no market power," Bai says. "Those debts will turn over to a collection agency, and the result is personal bankruptcy."
"This also costs those of us who are insured. We are not immune from this system. Our premiums are higher because our employers have to pay a higher price. We are all victims of this price-gouging game."
The Federation of American Hospitals, HCA, CHS all take issue with the study's findings.
FAH
FAH President and CEO Chip Kahn issued a 404-word rebuttal of the Anderson-Bai study, and noted that the research "does not recognize that the listed hospitals provided nearly $450 million in uncompensated care in 2012 alone."
"FAH member companies have been pioneers in creating and implementing programs that provide substantial discounts to uninsured and underinsured patients who cannot cover their out-of-pocket costs," Kahn says. "The FAH member companies cited in this study have these programs firmly in place."
Kahn says that the study's authors acknowledge "a critical limitation" in the study that omits discounts attributable to these programs. "Including these discounts would have had a significant effect on the charge-to-cost-ratio reported, and therefore the implications of the study's results," Kahn says.
"Indeed, had the authors instead compared the actual payment-to-cost ratio of these hospitals compared to the national average, they would have discovered virtually no difference between the two groups– 1.3 for the 50 hospitals and 1.2 for the national average."
"These figures illustrate, in part, the significance of discounts, and more broadly, why a myopic focus on charges misses the mark on what matters and is no justification for the menu of policy options offered."
Kahn says the for-profit sector backs price transparency, but that it still won't help the uninsured patients.
"Absent coverage, the true resolution is having programs in place, like those in our hospitals, which offer discounts so that these patients do not have to prioritize concern about their ability to pay over their own health and well-being," he says.
"The notion advanced by the authors that hospital charges determine the results of negotiations with insurers is false and misleading. Insurers have tremendous market power and assert this power in arms-length rate negotiations with healthcare providers."
Kahn also questions "a puzzling disconnect between the authors' conclusion that charges drive rising health care spending, and widely known and readily available data."
"We have experienced a historic slowdown in spending growth over the last five years, while hospital price growth remains at record lows – 0.3% in April compared to the prior year," he says.
"Indulging the same arguments about hospital charges, over and over again, does not make them more meaningful and does not justify the reforms the authors recommend. It is not the time to embark on the major policy changes suggested, which could have unintended consequences or disrupt recent positive trends, especially for patients."
CHS
CHS issued this statement: "All hospitals are required by CMS to maintain a charge master – or a list of prices – for the numerous services they provide. However, these charges rarely reflect what consumers actually pay for their healthcare.
"All hospitals affiliated with Community Health Systems offer significant discounts for uninsured patients and charity care for those who qualify. Last year, our organization provided over $3.3 billion in charity care, discounts and other uncompensated care for those who can't afford healthcare services. Our hospitals also paid millions of dollars in taxes that help fund critically important services in every community where we operate.
"We support pricing transparency, but a hospital's charges, and its charge-to-cost ratio, are not relevant measures of what consumers, insurers or the government pay for services. Medicare and Medicaid determine the rates they will pay for our services, and those rates don't always cover the cost of providing care. Insurance companies negotiate the rates that they will pay. And uninsured patients are offered significant discounts or charity care. Because we know the financial aspects of healthcare can be confusing, each hospital provides financial counselors to assist our patients and to answer billing and insurance questions.
"Finally, it is important to note that the study is based on data that is approximately three years old and that one-third of the CHS-affiliated hospitals on this list were acquired from HMA two years after the reporting period."
HCA
HCA issued this statement: "The amount patients pay for hospital services has more to do with the type of coverage they have than prices listed in the charge master. As the study notes, government programs like Medicare and Medicaid determine how much they reimburse hospitals, and insurance plans negotiate rates. Uninsured patients are eligible for free care through our charity care program or they receive our uninsured discounts, which are similar to the discounts a private insurance plan gets. In addition, we were one of the first providers to make detailed pricing information publicly available; we have been providing this information on hospital web sites since 2007."
The 50 Hospitals with Highest Charge-to-Cost Ratios, 2012:
1.
North Okaloosa Medical Center
FL
2.
Carepoint Health-Bayonne Hospital
NJ
3.
Bayfront Health Brooksville
FL
4.
Paul B Hall Regional Medical Center
KY
5.
Chestnut Hill Hospital
PA
6.
Gadsden Regional Medical Center
AL
7.
Heart of Florida Regional Medical Center
FL
8.
Orange Park Medical Center
FL
9.
Western Arizona Regional Medical Center
AZ
10.
Oak Hill Hospital
FL
11.
Texas General Hospital
TX
12.
Fort Walton Beach Medical Center
FL
13.
Easton Hospital
PA
14.
Brookwood Medical Center
AL
15.
National Park Medical Center
AR
16.
St. Petersburg General Hospital
FL
17.
Crozer Chester Medical Center (NFP)
PA
18.
Riverview Regional Medical Center
AL
19.
Regional Hospital of Jackson
TN
20.
Sebastian River Medical Center
FL
21.
Brandywine Hospital
PA
22.
Osceola Regional Medical Center
FL
23.
Decatur Morgan Hospital - Parkway Campus
AL
24.
Medical Center of Southeastern Oklahoma
OK
25.
Gulf Coast Medical Center
FL
26.
South Bay Hospital
FL
27.
Fawcett Memorial Hospital
FL
28.
North Florida Regional Medical Center
FL
29.
Doctors Hospital of Manteca
CA
30.
Doctors Medical Center
CA
31.
Lawnwood Regional Medical Center & Heart Institute
Hospitals in the 29 states and Washington, D.C. that expanded Medicaid saw bad debt drop an average of 13%. Some hospitals saw reductions of 40%, but that's not the entire story, says a Moody's Investors Service analyst.
Not-for-profit hospitals operating in the 29 states that expanded their Medicaid rolls under the Affordable Care Act saw "significant" decreases in bad debt when compared with hospitals in non-expansion states, according to Moody's Investors Service.
However, Moody's also found that the Medicaid expansion did not affect the bottom-line financial performance of the hospitals. In fact, financial performance improved for hospitals in every state in 2014 thanks largely to an improving economy.
"The lower bad debt in and of itself is not surprising or necessarily the headline here," says Daniel Steingart, a senior analyst for Moody's and the lead author of the study. "What is interesting is the lack of difference in financial performance between the expansion and the non-expansion states. There was a lot of press coverage over the past year talking about expansion states, what a difference we are seeing, how they are pulling ahead. This is showing that this is not the entire story."
Moody's examined the unaudited interim financial reports from about 150 not-for-profit hospitals for 2014, the first full year of the Medicaid expansion. Hospitals in the 29 states and Washington, D.C. that expanded Medicaid saw bad debt drop an average of 13%. Some hospitals saw reductions of 40%.
In contrast, bad debt for hospitals in non-expansion states rose for most of 2014, although it dropped in the fourth quarter for as yet undetermined reasons.
Steingart says the numbers are just a snapshot, and could fluctuate in the coming months,
"I wouldn't look to that 13% as the final end-all be-all number," he says. "That bad debt clearly dropped throughout the year and the pace clearly accelerated throughout the year. If it ends up being 15% to 20% that would surprise me. The trend is clear."
In 2013, bad debt accounted for only 4.8% of a median hospital revenues in Medicaid expansion states. While the reduction in bad debt is a credit positive, Steingart says hospitals in expansion states have yet to shift their reduced exposure into higher cash flow of better financial results.
"They are taking the savings and putting it into other investments. They probably could flow it to the bottom line but they are not," Steingart says. "You're seeing more investment in population health strategies, putting it back into salaries and other deferred investments that have been cut over the past several years as hospitals have been laser focused on expense control."
The improved financial performance for hospitals in all states, regardless of their Medicaid expansion status, was less about reduced bad debt, Steingart says, and had more to do with "macroeconomic conditions" around an improving economy, and cost cutting and improved management by the hospitals.
"Big drops in bad debt do not necessarily lead to big improvements in operating performance," he says. "It goes to show that there are so many other factors that drive performance. Volumes, the general economic environment, are much better than they have been in the last several years. Those factors are themselves are overpowering what it is happening on the payer mix bad debt side."
In the near-term, Steingart says bad debt "will continue to trend along at whatever level it settles out at."
"I don't know that we are quite at that settled-out point. We are only now into the full 12 months of Medicaid expansion. The exchange rollout was so troubled in the first quarter that I almost don't consider that quarter as a part of the expansion. Even though Medicaid, technically, sits outside of that, it was all wrapped up in it," he says.
"We have another quarter to go to see a little more improvement and then the pace of improvement will taper off. What you will see are bad debt levels, as a share of overall revenues, will remain much lower than they were historically in the expansion states, but I do not think you will see continued major year-over-year improvements."
"The other thing to mention, the big thing that people have been waiting for is King v. Burwell," he says. "Although that doesn't impact Medicaid expansion, it does affect the exchanges. Depending upon how the Supreme Court rules, that could have a very disruptive effect on how people are accessing insurance and that in and of itself could have a spillover."
"People are dying, and if you have 283 hospitals close you are going to have something equivalent to 9/11 happening every year… all over this country, and it is completely and totally unacceptable," says Belhaven, NC, Mayor Adam O'Neal.
For the second time in two years, O'Neal and civil rights veteran Bob Zellner are marching to Washington, DC to draw attention to the plight of the nation's rural hospitals.
On Monday, the two men and 20 supporters representing 11 states, carrying an empty wooden coffin with "Save our Hospitals" written on the side, departed coastal Belhaven (pop. 1,687) on a two-week, 283-mile march to the nation's capital. Each mile of the trek represents one of the 283 rural hospital that could close because of financial stress. The march is scheduled to end on June 15 on the steps of the Capitol.
HealthLeaders Media caught up with the trekkers on the second day of their journey, just north of Plymouth, NC.
"It is a national crisis when you have 283 hospitals close," O'Neal says. "Can you imagine 283 urban hospitals closing? Do you think there would be an outcry? Well, let me tell you these rural hospitals are more important than the urban hospitals because these rural hospitals serve a radius of maybe 100 miles. In a city if a hospital closes, most times there are two or three other ones in town."
O'Neal, a Republican, acknowledges that the Republican-led North Carolina legislature and Republican Gov. Pat McCrory, are responsible for much of the misery in Belhaven because they have refused to expand Medicaid under the Affordable Care Act.
"The Medicaid expansion was supposed to fill that gap," O'Neal says. "When you don't accept Medicaid expansion there is nothing to bridge that gap for the cost of indigent care and those falling revenues. The states that aren't accepting Medicaid, like my state of North Carolina, need to fill the gap with some other money. They don't need to let hospitals close."
"The ACA is the law now. That's the way it is. I understand that they have some concerns with it, but they need to go to Washington and deal with it there."
O'Neal notes that 62 million Americans live in rural areas, which means that the federal government must find money to keep rural hospitals afloat. He has a solution.
"This year we are going to give away $27.2 billion to other countries in foreign aid. How 'bout we keep $300 million of that for these hospitals," he says. "One million dollars per hospital is a lot of money for these small rural hospitals. Let's give away $26.9 billion and keep our rural hospitals open. That's a good idea!"
Not Their First Walk
In 2014, O'Neal and Zellner walked a more direct route of 273 miles to Washington to protest the closure of the Belhaven's Vidant Pungo Hospital, one of the nation's first designated critical access hospitals. Now, Belhaven residents have to drive about one hour to Greenville, 49 miles away, to access emergency services. Vidant Health is building a $4.2 million, 12,000-square-foot "multispecialty center" to replace the hospital, but it won't include an emergency room. O'Neal says that's not good enough, and the town is trying to wrest control of the old hospital from Vidant.
Since Vidant Pungo shuttered last year, O'Neal says there have been two avoidable deaths, including Portia Gibbs, 48. The mother of two suffered a heart attack and died waiting for a helicopter.
"Portia Gibbs spent the last hour of her life in a high school parking lot waiting for a helicopter. She died as it landed," O'Neal says. "Before, when our hospital was open, she would have been in an emergency room physician's hands within 25 minutes."
"People are dying, and if you have 283 hospitals close you are going to have something equivalent to 9/11 happening every year to our children, our parents, and friends all over this country and it is completely and totally unacceptable."
It's not just the loss of healthcare services. O'Neal says closing rural hospitals is a huge economic blow to small towns. Hospitals are often the largest employers in their communities, and healthcare jobs are often the highest paying. It also makes it difficult to attract new businesses and residents to a town that has no hospital.
O'Neal says last year's trek created a lot of media attention for Belhaven, and he's hoping this year's walk will increase public awareness of the plight of rural hospitals across the nation and maybe prompt elected officials to stop the partisan bickering and work toward a solution.
"Back in the 1940s this country saw the need for rural hospitals and they created theHill-Burton Act. The first Hill-Burton hospital in the U.S. opened in Belhaven in 1947 and now that hospital is closed. That is a sign of how our priorities have gotten screwed up," O'Neal says. "When these hospitals close, it's not just Democrats or Republicans or Libertarians or Independents or blacks or whites or Latinos, it's everybody dies. This is something that has to go beyond politics."
"I understand the ACA is very controversial, but President Obama, the Congress, the states and governors have to work together. They can't let 283 hospitals close while they fuss and fight."
Various patient-centered and value-based programs have also generated about $1 billion in savings in 2013 by reducing costly and wasteful care duplication, according to the Blue Cross Blue Shield Association.
The nation's Blue Cross and Blue Shield plans saw $71 billion in spending directed toward patient-centered, value-based care in 2013, according to an in-house survey released this week.
That $71 billion represents about one-in-five dollars in medical spending in 2013 by the 37 BCBS companies across the nation, an increase of 9% over the $65 billion in value-based care the plans identified in 2012.
The various patient-centered and value-based programs also generated about $1 billion in savings in 2013 by reducing costly and wasteful care duplication, according to the Blue Cross Blue Shield Association, which compiled the survey.
"It's only going to go up," says Justine Handelman, vice president, legislative and regulatory policy, at BCBSA. "We are really trying to push the move away from fee for service in how we incentivize quality over quantity. This report really illustrates how we've been able to hone in on what's been working and how we can work with public payers and the government to reform the healthcare system."
Handelman says the Blue Cross plans have keyed on four strategies to shift away from fee-for-service, which she identified as:
Changing how providers are paid to include incentives for delivering better care.
Providing doctors and hospitals with tools and real-time patient data to transform their practices.
Helping consumers to become active in their healthcare.
Promoting savings by reducing duplicative or unnecessary services and tests.
"Our goal is to continue to raise the bar and move in the direction and as we learn what's working to make sure that we are adapting our system to provide the best quality care and ensure we have the best outcomes for people," Handelman says.
The 2013 survey identified 570 locally-developed, patient-centered care programs in 48 states, Washington D.C. and Puerto Rico, up from 350 such programs in 2012. Combined, the Blues contract with more than 228,000 physicians and 1,500 hospitals to expand value based care. More than 25 million BCBS customers are enrolled in some sort of value-based plan that include accountable care organizations, patient-centered medical homes, pay-for-performance programs and episode-based payment programs.
"The acceleration is tremendous," Handelman says. "We've got more than one-in-five medical claims dollars. That is growing. We are excited that the government is moving in the direction of working to align with what is already working in the private sector. We have the results and the acceleration as you see Medicare coming online with what we are already doing and what is working. We will see it accelerate even more."
"In five years we are really going to see a transformed delivery system with the Blues leading the way," Handelman says. "The way we are using data and technology is really going to explode over the coming years. We are going to be in a truly value-based system."
Performance improvements are attributed in part to tying physicians' performance bonuses to actionable patient data. But "not all medical home interventions are alike," one researcher notes.
A medical home model in Pennsylvania that provided timely and pertinent patient data to physicians and paid bonuses for the resulting improved care showed significant improvements over comparison practices, a RAND study shows.
The study analyzed data from 17,363 patients from 27 pilot and 29 comparison practices in the northeast region of the Pennsylvania Chronic Care Initiative from 2009–2012. The pilot practices were recognized by the National Committee for Quality Assurance as medical homes, but did not receive payment for the designation.
By year three, the pilot practices had achieved statistically significantly better changes in performance on four measures of diabetes care and breast cancer screening. In addition, as measured per 1,000 patients per month, the pilot practices saw:
1.7 fewer hospitalizations
4.7 fewer emergency department visits
A 3.2% lower rate of ambulatory care-sensitive emergency department visits
Specialty care visits declined by 17.3 visits per month
Mark W. Friedberg, MD, the study's lead author and a senior natural scientist at RAND, says a key component of the success for the northeast region pilot medical homes was tying the performance bonuses with actionable patient data.
"The health plans that were participating in the northeast region in this paper also gave timely data to the participating practices on whether their patients were going to see their partners at hospitals and which ones they were going to, and which patients were going," he says.
"That was not part of the intervention in the southeast region, nor in a lot of the other medical home interventions. That may have had something to do with the effect we saw. That can be just as important as financial incentives. It's one thing to give more incentives and another to help them achieve those incentives, and they did both here."
Friedberg says it's too early to determine if the northeast pilot could provide a standard roadmap for successful medical homes.
"It's hard to make that kind of a big statement based on just one study, but this suggests features of medical home interventions that others may want to replicate," he says.
"When you create a medical home initiative to produce changes in utilization of care it makes sense to both give providers an incentive to control utilization and also to give them the means and ability to control the utilization, not just in the primary care practice but also in hospitals and emergency departments and unless you know where your patients are at all times that is very hard to do."
Friedberg says it's important to remember that the medical home is an evolving model.
"We and other researchers are continuing to evaluate different medical home pilots with different ingredients and different settings," he says. "The next big task—and we aren't ready to do this study yet—is to put all of those evaluations together and start to look at the differences in the results and see what seems to be the ideal way to construct a medical home intervention."
"The big take-away here is that not all medical home interventions are alike," he says. "As with any new attempt to try to improve the healthcare system, the first few attempts out of the starting blocks will include some experiences that we can learn from to make them more effective later. We are starting to see the second generation of these interventions. It seems so far to be potentially more effective than the earliest iterations.
Simply stated, the rule would better align Medicaid and Children's Health Insurance Program regulations to make them more consistent with the federal rule governing commercial, marketplace, and Medicare Advantage plans.
For the first time in more than a decade the federal government is proposing sweeping changes to the rule governing managed care programs under Medicaid and the Children's Health Insurance Program known as CHIP.
Late Tuesday afternoon the Centers for Medicare & Medicaid Services rolled out the 700-page tome for public view.
Simply stated, the rule would better align Medicaid and CHIP regulations to make them more consistent with the rule governing commercial, marketplace, and Medicare Advantage plans.
"A lot has changed in terms of best practices and the delivery of important health services in the managed care field over the last decade," Andy Slavitt, Acting Administrator of CMS, said in remarks accompanying the report.
"This proposal will better align regulations and best practices to other health insurance programs, including the private market and Medicare Advantage plans, to strengthen federal and state efforts at providing quality, coordinated care to millions of Americans with Medicaid or CHIP insurance coverage."
Medicaid managed care rules were last updated in 2002 and 2003, even as growth in Medicaid managed plans has flourished in the last two decades. In 1992 only 8% of Medicaid beneficiaries were in capitated health plans. Most recent data from 2011 show that 58% of all Medicaid beneficiaries in 39 states and the District of Columbia access some of their care in capitated plans.
A Regulatory Minefield
The regulatory boundaries between the federal government and the states' various Medicaid programs and waivers is a minefield, and the National Association of Medicaid Directors is urging the federal government to tread lightly.
"It will be important for the rules to balance the needs for stewardship of the taxpayer dollar with state flexibility to design programs that can reflect local health care conditions," NAMD said in prepared remarks.
Medicaid is one of the largest items in state budgets, and any overly burdensome rule change could be viewed as a hated "unfunded federal mandate" in state Capitols. NAMD warned that a new rule must not become "overly prescriptive" in areas such as administration, rate setting, network adequacy, and program integrity.
"The rules must help, not hinder, the outpouring of innovation that states are driving in how to improve the health and well-being of traditionally hard-to-serve populations, such as those needing long-term services and supports, those dually eligible for both Medicare and Medicaid, and individuals with multiple chronic conditions," NAMD said.
The health insurance industry cast a wary eye on a provision in the rule that attaches medical loss ratios to Medicaid managed care plans.
"An arbitrary cap on health plans' administrative costs could undermine many of the critical services—beyond medical care—that make a difference in improving health outcomes for beneficiaries, such as transportation to and from appointments, social services, and more," Dan Durham, interim CEO for America's Health Insurance Plans said in prepared remarks.
That concern was echoed in remarks from Jeff M. Myers, president and CEO of the Medicaid Health Plans of America, the advocacy arm for 124 plans in 33 states.
"We urge CMS to rethink standards for a federal minimum medical loss ratio given that MLR is already built into health plans' contracts with the states," Myers said.
On the other hand, Myers said he was "encouraged to see CHIP included in the proposed rule given the fact that half of US births are covered by Medicaid. We're also glad that the rule seems to cover long-term care, actuarial soundness and rate-setting, and quality ratings of health."
Comments to Come
Other key lobbies that undoubtedly will have something to day over the 60-day comment period are holding back on any detailed critiques until they can pore through the fine print.
Jeff Goldman, vice president of coverage policy at the American Hospital Association, offered guarded support: "We believe the proposals strengthen Medicaid and Children's Health Insurance Program managed care regulations by aligning them with Qualified Health Plans and Medicare Advantage plans.
We look forward to providing feedback to CMS after consultation with our members."
The American Medical Association says it's reviewing the rule and isn't ready to talk, yet.
The comment period ends on July 27. We'll be hearing more detailed comments from these lobbies in the coming weeks.
"We were looking for a strong partner, but we were also looking for a good fit," says West Georgia Health's CEO. "Culturally, I believe this is a very good marriage."
LaGrange, GA-based West Georgia Health has signed a letter of intent to join Marietta, GA-based WellStar Health System, the largest not-for-profit community health system in Georgia.
"We were looking for a strong partner, but we were also looking for a good fit—the right fit. WellStar is that fit," Jerry Fulks, president and CEO of West Georgia Health, said in a media release. "They've amassed the size and financial muscle you need to succeed in today's healthcare world, and they've done that while keeping a sharp focus on patient care and employee satisfaction—and the relationship between those two. Culturally, I believe this is a very good marriage."
Jerry Fulks
West Georgia Health includes flagship West Georgia Medical Center, two skilled nursing facilities, a cancer clinic, heart clinic, women's center, occupational health clinic, outpatient lab and rehabilitation services, a wound care clinic, home care services, and 21 primary care and specialty practices operating in two counties.
WellStar serves more than 1.4 million residents in five counties. The system includes WellStar Kennestone Regional Medical Center, and WellStar Cobb, Douglas, Paulding and Windy Hill hospitals; WellStar Medical Group; urgent care centers and various outpatient clinics and services.
"As not-for-profits, WellStar and West Georgia Health have similar missions and commitments to our communities," WellStar CEO Reynold Jennings said in prepared remarks. "WellStar was formed 20 years ago when five hospitals came together to create a new health system. By bringing West Georgia Health into the regional system, we are continuing our commitment to deliver world-class healthcare to the communities we serve."
LifePoint will own 80% of the joint venture with Wisconsin's Watertown Regional Medical Center, which will retain a 20% ownership stake in the hospital if the deal is approved by regulators.
Wisconsin's Watertown Regional Medical Center,has signed a definitive agreement to partner with Brentwood, TN-based LifePoint Health.
Subject to regulatory approval, LifePoint will own 80% of the joint venture, while WRMC will retain a 20% ownership stake in the hospital, which will transition to for-profit tax status.
Governance will be shared equally through a board with equal representation from WRMC and LifePoint.
Financial terms of the deal were not disclosed, but the joint venture will invest $100 million in WRMC over the next 10 years for projects that include a wellness initiative and various capital improvements.
Proceeds from the joint venture transaction will be used to pay off WRMC's existing financial obligations, and the remaining assets will be used to create a substantial charitable foundation focused on community health.
John Kosanovich, president and CEO of WRMC, says the deal caps months of negotiations.
"The board determined that finding a partner was the move that made the most sense going into the future, given all the change that was happening in the healthcare environment, just the whole notion that the stand alone community hospital wasn't the best model for sustainability and viability in the future," Kosanovich says.
"Through that process we selected LifePoint. It was their track record of successfully managing and growing community hospitals and their proposal that included a joint venture structure that allowed for continued community involvement, including a 50−50 board and governance structure. The board really felt it was important that the community continue to be involved and not only contribute to, but benefit from the success of WRMC."
Kosanovich says the hospital's changing tax status "really doesn't matter anymore. Whether you are nonprofit or for profit you are making a profit to stay in business. The one difference we see, obviously, is payment of taxes and the city and the school board are pretty positive to see some more dollars added to the tax rolls."
UW Health was one of seven suitors in the deal before LifePoint was selected. Kosanovich says the relationship will likely change now that WRMC is with LifePoint, but that the hospital will retain some clinical affiliations with UW Health.
"We've worked with UW for a number of years in a clinical affiliation to enhance services that were available here, and look to continue to work with them in the provision of specialty services where it makes sense for both organizations," he says.
LifePoint Health, which this monthchanged its name from LifePoint Hospitals, owns and operates more than 60 community hospitals, regional health systems, physician practices, outpatient centers, and post-acute facilities in 20 states.
WRMC will update its brand and logo on July 1.
Allan Baumgarten is a veteran hospital and health system analyst who tracks hospital mergers and acquisitions throughout the Midwest. He notes that LifePoint gained a toehold in the Upper Peninsula of Michigan two years ago when it acquired Marquette General Health System.
"I assume that if they are entering Wisconsin with one acquisition [or] joint venture that others will follow," Baumgarten says.
Under the joint venture finalized this week, WMC has taken 60% ownership of the system and controls day-to-day operations. Marriottsville, MD-based corporate parent Bon Secours Health System has retained 40% interest. The Sisters of Charity of St. Elizabeth, which has co-sponsored Bon Secours Charity Health System since 2000, will remain canonical cosponsors of the system, but will not retain a financial stake.
The three hospitals in Bon Secours Charity Health System: Good Samaritan Hospital in Suffern, St. Anthony Community Hospital in Warwick, and Bon Secours Community Hospital in Port Jervis, will keep their names and remain Catholic providers.
Michael D. Israel, president and CEO of Westchester Medical Center, declined to attach a dollar figure to the value of the deal when he spokes with HealthLeaders Media.
Michael D. Israel
"It's a very complicated deal. It is not a straight purchase," Israel says. "The only thing I can tell you is that Bon Secours Charity Health System issued the other day $122 million in bonds. If for some reason that entity cannot pay the debt service, we have guaranteed the yearly debt service, so the $122 million was issued by Bon Secours Charity using our credit rating."
WMC has three hospitals on its main campus: a 415-bed adult hospital, a 136-bed children's hospital, and a 101-bed behavioral health center. Israel says the joint venture allows WMC to "better fulfill our mission, which is to keep this campus an advanced care campus and continue to work with community hospitals, these ones we happen to have an ownership interest in."
"Our traditional model here has been working with community hospitals in the region. We don't do primary and secondary care here. We only do tertiary and quaternary care," he says. "We have, if not the highest, one of the highest case mix indexes in the U.S. given that we don't do primary and secondary. We are to a large extent a receiving hospital. We do 24,000 to 25,000 admissions a year and we have more than 7,000 transfers. That's about 20 a day… Bottom line is we are the tertiary referral center in the Hudson Valley."
"It also allows us to better develop tertiary services that are closer to where people live," he says. "We believe the relationship we have, both the ownership and the management of the Bon Secours Charity Health, will allow us to expand our reach and to work with them to expand services and improve service delivery to the communities they serve. We are just reacting to the changes in the healthcare system the way everybody else is."
With the majority stake, Israel says WMC's service area now includes about three million people living in eight counties in the Hudson Valley.
Last year, WMC purchased the financially struggling St. Francis Hospital in Poughkeepsie and placed it under WMC license as a second campus 53 miles to the north.
"Three years ago, every community hospital in the region was independent," Israel says. "Within the next three years there will be no independent community hospitals in the region. They will be either owned or affiliated by larger systems. What is happening nationally is happening in New York in a very compacted period of time. So, we obviously have to change with the changing times."
Israel says WMC's three Valhalla hospitals are operating at near capacity, so gaining more regional referrals is not a primary driver in the joint venture.
"We're really not focused on the traditional development of branches to refer patients in here," he says. "One of the purposes of the relationship with Bon Secours is the development of more and better services in Rockland and Orange Counties. Of course, the high-end tertiary and quaternary cases that they can't do there, we obviously would like to see those cases come here. But the goal of this is not strictly 'let's go out and control some community hospitals so we can shift the high-end business here.' That is not what we are about."
