Undeterred by the results of the midterm elections, the American Medical Association is urging states that have rejected Medicaid expansion programs "to develop expansion waivers that help increase coverage options for their low income adult residents."
David O. Barbe, MD
AMA Immediate Past Board Chair
The American Medical Association is calling for expansion of health insurance coverage for adults in states that rejected Medicaid expansion under the Patient Protection and Affordable Care Act, and renewing the call for repeal of the sustainable growth rate formula.
The policy statement emerged this week from the AMA's annual House of Delegates meeting in Dallas, TX just days after Republican victories in the Nov. 4 midterm elections. Republicans flogged Obamacare for months on end during the campaign season, and many elected officials and pundits believe the PPACA may be in for more turbulence now that Republicans control the House and Senate.
Still, the nation's largest, oldest physicians association was undeterred.
"The AMA is sensitive to state concerns about expanding Medicaid in a traditional manner, but we believe they must find ways to expand health insurance coverage to their uninsured populations, especially as coverage disparities continue to grow between expansion and non-expansion states," AMA Immediate Past Board Chair, David O. Barbe, MD, said in prepared remarks.
"We encourage states that would otherwise reject the opportunity to expand their Medicaid programs to develop expansion waivers that help increase coverage options for their low income adult residents."
In his Saturday address to the House of Delegates, AMA President Robert Wah, MD, spoke with zeal about renewing efforts to repeal the SGR:
"Last spring we made another run… and achieved what we didn't have before—a framework to end the SGR, with bipartisan and bicameral support, backed by more than 600 physician groups. We're now delivering this message: Congress must eliminate the SGR in the lame duck session. Why? Because it's essential to sustainable practice and preserving access… It might not happen during this lame duck session, but the end of SGR is not a matter of if, but when."
The AMA also called on the Centers for Medicare & Medicaid Services to "approve waivers that are consistent with the goals and spirit of expanding insurance coverage. The policy also urges that states use a transparent process for evaluating the success of their efforts to expand access to care and to report the results annually on their Medicaid websites."
In other action this week, the AMA House of Delegates:
Urged that health insurance companies strengthen privacy policies to prevent the potential disclosure of sensitive medical information outside of the confidential patient-physician relationship.
Called for CMS to discontinue assessing penalties in the Meaningful Use program. While supporting interoperability, the AMA says attestation numbers show only 2% of physicians have demonstrated Stage 2 Meaningful Use.
Called on calls for insurers to make any provider terminationswithout cause prior to the enrollment period so patients can select health plans that will cover care provided by their existing physicians. Currently, AMA says, inaccurate or late revised provider directories are leaving patients stuck with plans that dropped their physicians after they enrolled.
Wah also spoke of the need for "coverage and reimbursement of telemedicine services and fewer restrictions in Medicare." CMS's final physician fee schedule which is effective January 1, 2015, includes provisions that will pay physicians for remote chronic care management.
Withholding as much as 3% of Medicare reimbursements for hospitals with higher 30-day readmissions will penalize many hospitals that are serving a disproportionate share of poor patients.
We would be hard pressed to find anyone in medicine or academia or walking down a street chewing gum who believes that socio-demographic data such as income, education, age, and Zip code don't factor into health outcomes.
Money matters in everything else we do. Why should healthcare be exempted?
The fact is, data shows that it's tough to be poor and stay healthy in the United States. It's tough to follow a physician's guidelines if you can't afford the medication, or if English is not your first language.
It's tough to take that recommended daily walkabout in a neighborhood with no streetlights or sidewalks. It's tough to recover from a respiratory ailment in a moldy apartment. It's tough to eat right when the only store in your neighborhood sells Lotto tickets, Doritos, and dusty cans of Vienna sausages.
And yet, the Centers for Medicare & Medicaid Services is ignoring reams of data and defying common sense when it mandates that many hospitals serving low-income areas must be held to the same standards on 30-day readmissions as hospitals in more affluent areas.
On its face, there is admirable altruism in the federal government's insistence that health outcomes should not depend upon a patient's income or neighborhood. CMS has a legitimate concern that creating different expectations for health outcomes based on socio-demographics will create a tiered delivery system that holds hospitals serving the poor to a lower standard of care.
Unfortunately, withholding as much as 3% of Medicare reimbursements for hospitals with higher 30-day readmissions, which CMS did with more than 2,600 hospitals this past year, will penalize many hospitals that are serving a disproportionate share of poor patients.
The policy also is countervailing to the federal government's acknowledgement that safety-net hospitals have special dispensation for their mission and the marginalized patients they serve.
Researchers evaluated three years of readmissions data on 3,018 hospitals that cared for patients with COPD and found that teaching hospitals and safety-net hospitals will be penalized more frequently, in large part because of their patient mix.
Michael Sjoding, MD
Study author Michael Sjoding, MD, a pulmonary and critical care fellow in the University of Michigan Medical School, says he understands what CMS wants, but fears the strategy could do more harm than good. "Some people think it's a backwards approach," Sjoding says. "Depending upon your perspective, some people would say you've identified hospitals that are struggling. We need to put more resources in these hospitals to help them get better."
While the emphasis on reducing readmissions over the past three years is prompting some hospitals to improve care coordination post-discharge, Sjoding says "it's hard to say what is going to happen in three or five years to these hospitals that are getting penalized 3% of their Medicare reimbursement every year. I worry that those hospitals aren't going to have the resources to provide good care to all of their patients, not just the patients with these conditions."
Sjoding says CMS should compare 30-day readmission rates at "peer hospitals" when determining readmissions penalties, rather than attempting to risk-adjust a patient base.
"The focus should be on highlighting hospitals in certain areas of the country that are providing exceptional care compared to their peers in inner cities or among large academic medical centers," he says. "It is an unfortunate reality that, especially in the case of readmissions, so many of the factors that drive readmissions are related to these social determinants of health that patients who come from advantaged backgrounds don't have a problem with. The unfortunate reality is we have to be realistic about this."
The reality right now, is that CMS's readmissions penalties take funding from hospitals that need it the most, further harming their ability to lower readmissions, and subjecting them to additional funding penalties.
"Until we figure it out, these hospitals are really suffering the brunt of this," Sjoding says. "I don't have the answer myself, but in the short term what is happening seems a little unfair."
The office of the Massachusetts Attorney General says it will investigate the closure of a 196-bed acute care hospital owned by Steward "in the context of [its] legal obligations."
Three years after Steward Health Care System bought the bankrupt Quincy Medical Center and agreed to keep it open for 10 years, the for-profit health system has announced that it will shutter the 196-bed hospital on Dec. 31.
The announcement by Steward last Thursday prompted Massachusetts Attorney General Martha Coakley to announce that her office will investigate the closure, which would leave the city of 93,000 people just south of Boston without an acute care hospital.
"We have just been notified about this decision and are currently reviewing it in the context of Steward's legal obligations," Coakley said in a brief media statement.
Steward's purchase of QMC in September 2011 was approved by Coakley's office but came with many strings attached. At the time, her office said in a media release that: "The Attorney General's approval of the Quincy Medical Center transaction will ensure that the hospital emerges from bankruptcy in the best position to provide Quincy's 92,000 residents with access to a full service acute care hospital and maintain key jobs…"
A key stipulation was that Steward would "maintain an acute care hospital in Quincy that provides at least the same scope of services during a 10-Year No Close period." Steward also agreed to maintain 22 inpatient geriatric psychiatric beds at QMC, along with significant capital upgrades.
In addition to the AG's agreement, a separate Massachusetts state law requires hospitals that are closing to provide a 90-day notice window and to submit to a public hearing, neither of which Steward appears to be doing with QMC.
In a lengthy media release posted on its QMC website, Steward Hospitals President Mark Girard, MD, did not address the apparent discrepancies with the AG's agreement from 2011. Calls to Steward for comment Friday were not returned.
Girard blamed the closure on low volumes, declining reimbursements from Medicare, and underfunding from Medicaid. He noted that in the past 20 years QMC has needed more than $100 million in city and state bailouts before falling into bankruptcy.
He also said that Steward has dropped an additional $100 million into the hospital since its purchase in 2011, but that the hospital continues to lose about $20 million a year.
"On an average day, only one-fifth of all beds are occupied and it has become abundantly clear that local residents no longer seek inpatient services from Quincy Medical Center," Girard said.
Steward said the closure shouldn't greatly affect patient access because there are 15 acute care hospitals located within 10 miles of QMC in the hospital-saturated Boston area. There are also 12 surgery centers, 21 urgent care centers, more than 150 nursing homes, 130 outpatient behavioral health sites, and more than 500 physicians within that radius, Steward says.
Instead of an acute care hospital, the shuttered QMC will be replaced "with a more sustainable healthcare system to meet the community's needs," Steward said. That network will include:
24-hour emergency room access
Separately sited, urgent care centers
A multi-specialty clinic in Quincy
Radiological services including X-Ray, mammography, CT, and ultrasound
Steward PCPs and specialist physicians in Quincy
Continued access to 15 hospitals within 10 miles of QMC, including a Steward hospital four miles away
Transportation links to other community health access points
Adam Powell, a healthcare economist and president of Boston-based Payer+Provider consultants, says Steward knew it was gambling when it purchased several financially struggling not-for-profit hospitals in eastern Massachusetts, "but as a result of that, they have a substantial network that was built quickly in this market."
"What Steward has learned over the past several years is that there has not been substantial demand for commercial inpatient services at QMC," Powell says. "QMC is roughly a half-hour drive from the more-famous hospitals in downtown Boston and as a result the patients who have the finances and the transportation have elective inpatient procedures performed downtown or at competing institutions."
"As a result, says Powell, "QMC has been left mostly with outpatient procedures and inpatient procedures performed on Medicare and Medicaid patients. It's been a tough financial slog for Steward and 2014 was looking worse than 2013."
Volumes are down because the region is over-bedded, Powell says. "That was the problem to begin with. The government poured money into it and then Steward poured money into it," he says. "First you think maybe more money or different management would solve the problem, but it appears that neither has solved the problem. The problem may be that there is no need."
In the meantime, Massachusetts Nurses Association spokesman David Schildmeier says the union is "working closely" with Steward to find jobs for the more than 200 registered nurses who will be displaced by the closure.
"Steward has frozen all open positions throughout the 10 remaining hospitals in Massachusetts," Schildmeier says. "We are hoping the 221 nurses we represent get preference on positions that are open so that they don't lose employment and they get all the benefits and pay that under the law they are owed."
The hospital employs 680 people, all of whom will be paid for the next 60 days, Steward said.
Among the new rules are provisions that will pay for remote chronic care management. "The combination of the chronic care management code and being able to use it in conjunction with monitoring of those chronic conditions is a big step forward," says the American Telemedicine Association.
Gary Capistrant
Senior Director of Public Policy at ATA
New rules from the Centers for Medicare & Medicaid Services significantly broaden coverage for chronic care telehealth services.
The rulemaking changes are inside the 1,185-page document detailing Medicare payments to physicians and other providers.
The American Telemedicine Association, which had sought the expanded coverage for five years, notes that among the rules are provisions that will pay for remote chronic care management using the new current procedural terminology (CPT) code 99490, with a monthly unadjusted, non-facility fee of $42.60.
"For us, it was more important to begin to specifically address chronic care," says Gary Capistrant, senior director of public policy at ATA. "The combination of the chronic care management code and being able to use it in conjunction with monitoring of those chronic conditions is a big step forward and a very substantial change for Medicare."
Capistrant says the new rules also represent an acknowledgement by CMS that reimbursing for chronic care could prove to be cost effective.
"It's an important policy move. Whether it is sufficient, time will tell, but it is certainly a step in the right direction and an important initiative," he says. "There has been a lot of focus on primary care, even with the Medicare population. That may be the 80% of the people but it is only 20% of the problem. There's an increasing emphasis on looking at the 80% of the problem that is 20% of the people, and that is chronic and specialty care. They understand that the government is spending a huge amount for chronic care conditions and that there is a value managing those to reduce the overall expenditures."
As a practical matter, Capistrant says, the new evaluation management code for chronic care management will be a much more commonly used because "it's a better fit between management and monitoring."
As for the reimbursements, Capistrant says "only time will tell whether those amounts are sufficient to get physicians to focus on chronic care management and monitoring. I think it will be attractive to physician community, geriatricians and others who deal with these chronic conditions."
"First, they'll have to see what is involved in being a chronic care manager and to what extent you want to add that to your practice. It may involve some internal staff changes," he says. "There are services required that a lot of physicians just don't do right now, in part because they are not paid for it. This is probably the kind of thing that physicians may not be too interested in doing for one or two patients, but if they can get 100 or 200 patients then they've got the economies of scale going to make it work right."
Hospitals might also take a greater interest in chronic care management if only to avoid readmissions penalties. "More than 2,000 hospitals have a penalty this year in their Medicare rates because of readmissions," Capistrant says. "There is an increasing demand for this kind of service and it fits together."
The new rules also include seven new covered procedure codes for telehealth, including annual wellness visits, psychotherapy services, and prolonged services at physicians' offices.
Key stakeholders say the results of a federal report are "disappointing, yet predictable" and call once again for the Centers for Medicare & Medicaid Services to shorten the 2015 reporting period.
News Tuesday from the federal government that less than 17% of the nation's hospitals have reached Stage 2 capabilities under Meaningful Use requirements was met with consternation but not surprise from a coalition of provider associations.
The news came Tuesday during a briefing by the Department of Health and Human Services' HIT Policy Committee, which also reported that less than 38% of eligible hospitals and critical access hospitals have met either stage of Meaningful Use so far in 2014.
The same report also showed that only 2% of eligible professionals, including physicians, dentists, optometrists, and certified midwives, have met MU Stage 2, although they have until the end of February, 2015 to meet that benchmark.
The news prompted key stakeholders to issue a joint statement calling the results "disappointing, yet predictable" and to renew calls for the Centers for Medicare & Medicaid Services to shorten the 2015 reporting period.
"The low number of EP attestations to date is clear evidence that physician practices and their vendor partners have faced significant challenges in meeting the more onerous Stage 2 requirements of meaningful use," said Anders M. Gilberg, senior vice president, government affairs, with the Medical Group Management Association.
"Shortening the reporting period in 2015 is a much needed change if the program is to remain viable and is a critical step if the nation is to continue making progress toward the goal of interoperability," he added.
Russell P. Branzell
CMS data shows that more than 3,900 hospitals must meet Stage 2 measures and objectives in 2015 and more than 260,000 eligible professionals will need to be similarly positioned by Jan. 1, 2015.
Given the low attestations for 2014 and the large number of providers likely unable to fulfill Stage 2 for a full 365-days in 2015, providers have pressed for a shortened reporting period in 2015, mirroring the policy of 2014.
Russell P. Branzell, president/CRO of the College of Healthcare Information Management Executives, says the government's own data validates the concerns of providers and IT specialists who've called for "a sensible glide-path into 2015."
"Providers have struggled mightily in 2014, in many instances for reasons beyond their control," Branzell said. "If nothing is done to help them get back on track in 2015, we will continue to see growing dissatisfaction with EHRs and disenchantment with Meaningful Use."
When CMS issued its final rule in September, provider groups sent a letter to Health and Human Service Secretary Sylvia M. Burwellrequesting additional time for hundreds of thousands of providers meet Stage 2 requirements. Provider groups have said that a shortened reporting period will positively affect program participation and policy outcomes.
American Medical Association President-elect Steven J. Stack, MD, also called on CMS to eliminate its "one-size-fits-all" approach to meeting MU goals.
"The AMA recently released a blueprint to outline ways to improve the Meaningful Use program, as well as a framework outlining eight priorities for more usable EHRs," Stack said.
"We believe the stringent pass/fail requirements for meeting Meaningful Use, combined with a tsunami of other overlapping regulations, are keeping physicians from participating in the Meaningful Use program."
The evidence supporting differences in health outcomes between high-income and low-income populations is "indisputable," says Steven H. Lipstein, president and CEO of BJC Healthcare. Using non-risk adjusted outcomes to calculate performance measures disproportionately punishes providers who care for disadvantaged populations, he says.
A National Quality Forum panel wants the federal government to take into account socio-demographic factors for patient population health outcomes when risk adjusting pay-for-performance performance measures.
Steven H. Lipstein
President and CEO,
BJC Healthcare
Steven H. Lipstein, president and CEO of St. Louis-based BJC Healthcare, was a member of the NQF panel that issued the report in October. Lipstein says numerous studies have shown that patients from less-affluent communities have poorer health outcomes, even though the care they receive in the hospital is the same as people from wealthier communities. As a result, he says, hospitals that serve predominantly poorer communities will be unfairly penalized.
Lipstein spoke with HealthLeaders Media about the panel's report. The following is an edited transcript.
HLM: Why does socio-economic status affect health outcomes?
Lipstein: In St Louis, mainly [in] the neighborhoods north of the city, you go into communities that are characterized by low household income, high poverty rates, high housing unit vacancy rates, high unemployment rates, and a high percentage of the population that didn't complete high school.
When you look at those five indicators you are looking at a community that is lacking social and economic infrastructure. When you live in a community without grocery stores, drugs stores, without transportation, with high crime rates, the health outcomes in that neighborhood are much worse than you would experience in neighborhoods that are characterized by a more-affluent population.
The evidence supporting the difference in health outcomes is indisputable. What is challenging right now is that the healthcare policy makers, specifically CMS (the Centers for Medicare & Medicaid Services), believe that health systems, doctors, hospitals, nurses, and other healthcare professionals, can overcome those disparities and produce the same outcomes at the same cost as compared with more affluent communities.
That is just not true. There is no evidence to support that finding.
HLM: CMS raises concerns that adjusting for socio-demographics will create tiered care standards that will adversely affect the poor. Is that a legitimate concern?
Lipstein: What people are concerned about is that if you risk-adjust for socio-demographic status, you will somehow cover up poor quality provided to patients of lower socio-economic status.
Nobody is advocating for covering up anything. In fact, after we do the risk adjustments, you will see in the recommendations that were proposed by the expert panels that the National Quality Forum convened, the performance measures would include specifications for stratification of the clinically adjusted version of the measure based on the socio-economic factors used in the risk adjustment.
That means you would actually display the results of all hospitals' performances according to different socio-demographic variables. You would see if there were better outcomes for poorer patients than for more-affluent patients. All of that would be transparent and visible so there would be no obscuring examples of poor quality.
Socio-demographic risk adjustment, if you're going to use those measures solely for quality assessment and improvement, then it is important to highlight differences among socio-demographic groups. But when you are using these measures as part of a pay-for-performance system, as CMS is doing, what you end up doing is punishing disproportionately the providers who care for disadvantaged populations.
You punish them in one of two ways: either their outcomes are not as good as hospitals that serve patients from more-affluent communities, or if their outcomes are the same and it just costs more to produce the same outcomes for a vulnerable patient as it does for an affluent patient, then CMS calls the provider who produced that same outcome a low-value provider because the quality is the same, but the cost was higher and CMS equates that to lower value.
HLM: Doesn't CMS take socioeconomic status into consideration when it designates critical access, low-volume and safety net hospitals?
Lipstein: They are not. The federal government looks at safety net hospitals as if they are all the same, and they are not. There are safety net hospitals in some jurisdictions that are able and willing to tax themselves to support safety net care.
If you were to look at the tax base that supports Denver Health, or Cook County Medical Center or Grady Memorial Hospital, or Parkland in Dallas, and then look at the taxing jurisdictions that support rural communities or the boot heel of Missouri, or East Baltimore, or North Philadelphia, you would find the local jurisdictions are very different.
There are 51 different state Medicaid programs. That means eligibility for Medicaid is variable across the United States. When CMS says we are going to look at dual-eligibility as an indicator of a person's poverty or life circumstances, think about that.
A childless adult in Missouri is not eligible for Medicaid, but in 27 other states that childless adult is eligible up to 138% of federal poverty, or an income of $32,000 a year for a family of four. So, the individual life circumstances of people who are ineligible for Medicaid are highly variable across the United States.
HLM: What do you want?
Lipstein: We want CMS and all payers, in their pay-for-performance programs, to risk-adjust health outcomes, to risk-adjust costs to produce those outcomes, and to risk-adjust premiums payments if we got to that for the socio-demographic characteristics of the community in which the patient lives; not the community where the hospital or the patient resides, but the community where the patient lives.
The risk-adjustment methodology that we use at BJC Healthcare looks at the socio-demographic characteristics of individual census tracts. Ascribing them to each individual patient, we can then calculate a discharge-weighted poverty rate for each hospital in our state. That means it's the poverty rate not of the hospital or where it resides, but the poverty rate of where the patients live who use that hospital.
In our report, hospitals with the highest discharge-weighted poverty rates by census tracts are the same hospitals with the highest all-cause readmission rates in our system. In order not to penalize doctors and hospitals under pay-for-performance of value-based purchasing or risk-based contracting, you need to adjust their outcomes, costs, and premiums to account for the degree of difficulty associated with serving vulnerable populations. By doing that we will encourage hospitals, doctors, nurses, healthcare professionals to invest future capital in serving disadvantaged patients.
Right now what I am concerned about is that CMS is presiding over a pay-for-performance environment in which they are rewarding the provider community for investing its future capital in serving more-affluent populations. The market already provides the rewards for serving more-affluent populations. CMS doesn't have to help them do that.
Right now, the fact that there are health systems in Detroit, Michigan paying the maximum penalty for readmission rates, while hospitals in Scottsdale, Arizona pay no penalty for readmission rates, is a re-direction of federal resources from a poorer community to a more affluent community, and I don't understand why our government thinks that is good public policy
HLM: Is a price tag attached to this risk adjustment?
Lipstein: It would be neutral. The penalties could still be assessed but they would begin to fall on different providers. The federal government could save the same amount of money but it would end up assessing penalties on hospitals in more-affluent communities at a higher rate than it does today.
HLM: Does your proposal create the tiered standards of care that CMS is concerned about?
Lipstein: If CMS were correct, then we may have hospitals in our health system or hospitals nationwide that are not paying penalties for readmission rates because they've served patients who are discharged into home environments or communities that can support their recovery and convalesce more easily than they could in more-disadvantaged communities.
Why would CMS disproportionately favor those hospitals even though they are doing no better at managing the experience of care when the patients are in the hospital or the transition of care to the patient in the home environment?
The key point is we are trying to be fair to providers who serve vulnerable patients and we are trying to encourage them to continue to provide services to vulnerable patients or even expand those services in the future. But if they are disproportionately affected by the federal government's pay-for-performance and value-based purchasing program, that will be a contributing factor to their financial challenges.
If you lose your ability to meet your financial challenges by shifting costs to more-affluent patient populations, you go out of business.
The number of hospitals that have failed in the St Louis-metro area—and we presented almost 40 years of data—are all hospitals that lost the ability to address their financial challenges and they disproportionately served vulnerable communities.
Completion of the deal would unify the two Philadelphia-area health systems, creating a system with a combined 18,000 employees under a shared governance model.
Abington Health and Jefferson Health System plan to merge into a single system that would be the second-largest in the Philadelphia area.
Stephen Klasko, MD, MBA
President and CEO
Thomas Jefferson University
and TJUH System
Senior leaders at both health systems made the joint announcement Tuesday afternoon after their respective boards approved a letter of intent to move toward a merger, which would create a system with a combined 18,000 employees, second only in size to Penn Medicine.
The deal is expected to be completed in the first half of 2015.
"These are two incredibly strong, clinically and financially, healthcare systems that are merging not because they need to, but because we believe that Philadelphia and the Abington community deserve the best," Stephen Klasko, MD, president/CEO of Jefferson said in an interview with HealthLeaders Media.
Laurence Merlis, president and CEO of Abington Health, said the two health systems are going forward with the aim of a full merger after weeks of close negotiations.
"We looked at this market and also looked at what was occurring across the country in healthcare," he said. "We recognized that we needed to look for other strong players in this market to be bold and innovative and begin to transform healthcare from volume and sickness to one based on value and wellness. We think creating a unique partnership in a fully merged organization allows us to provide value in a large metropolitan area."
Klasko says both systems see a full merger as the best relationship.
Laurence Merlis
President and CEO
Abington Health
"The whole key in the new wave of things is going to be close enough to where you can create a model that helps you achieve the triple aim," he said. "The problem with some of the other relationships that have happened is they are almost countercultural to that. 'I am getting together with you, but I am still going to keep my board as my board and your board is your board so I can't reduce beds here and add beds there.'"
Merlis calls the model "unique in that it will be attractive to others who have the same philosophy and culture that we have seen between Abington and Jefferson."
A key component of the merger would be a shared governance model and a "hub-and-hub" structure for the new health system, as opposed to the more common hub-and-spoke models. Jefferson and Abington would have equal representation on a combined board, along with a few independent trustees.
No money would be exchanged to complete the merger.
"That is what is unique about this. It is a 100% equal merger," Klasko says. "Combined university and health system Jefferson is about $2.3 billion and Abington is about $800 million. We will be reporting to a single board that will govern these combined assets without dealing with any money transfers."
"There are only a few of health systems who've been able to maintain our ratings in this difficult time and are still profitable. The fact that our boards were wise enough to do this at a time when we are at our highest strength, both of us, as opposed to waiting until we had to do something, differentiates us from the way most boards have thought about it."
Jefferson, the larger of the two health systems, includes flagship Thomas Jefferson University Hospitals, the largest freestanding academic medical center in Philadelphia. Services are provided at five locations: Thomas Jefferson University Hospital and Jefferson Hospital for Neuroscience in Center City Philadelphia; Methodist Hospital in South Philadelphia; Jefferson at the Navy Yard; and Jefferson at Voorhees in South Jersey.
Abington Health, with more than 6,000 employees, includes flagship Abington Memorial Hospital, in Abington and Lansdale Hospital in Hatfield Township, and five outpatient facilities that combined serve more than 39,000 inpatients, 134,000 emergency patients and more than 653,000 outpatient visits each year, Abington said in a media release.
More than 1,400 physicians are on staff at both Abington Memorial Hospital and Lansdale Hospital. Abington Health Physicians is an employed network of primary care physicians and specialists, the health system said.
The two systems began intense negotiations in late September that culminated in the letter of intent approved by both boards and. They have 120 days to reach a definitive agreement and Merlis and Klasko say they expect it to finalize the merger early next year.
If the deal goes through, Klasko will lead the new health system. "We put this organization together with the best interests of the organization and our community. Dr. Klasko will be the president and CEO of this new enterprise," Merlis said. "He brings a tremendous vision and background to lead an organization that includes the university and two large health systems and other components."
Merlis says his own role in the new system has yet to be determined.
"We are looking at what the management structure should be for an organization with this complexity and we will figure that out as we move forward and I look forward to participating at that system level," he says.
Klasko says he's "excited about the leadership that Larry brings" into the merger.
"And not just Larry, but his senior management team. Larry and I and our teams will be sitting down over the next 30–45 days to look at what is now a very large system and finding the best roles for everybody."
The name of the merged system will include the names of Jefferson and Abington. "We are going to embark on a branding strategy and it will include the great brands of both," Merlis says. "Jefferson has a 109-year history as an innovative academic medical center and university and Abington Health Network has enjoyed the top brand in this area. Both of us want both of our names on this."
Wednesday's announcement marks Abington Health's second attempt in two years to find a partner. In 2012 the health system ended talks to merge with Holy Redeemer Health System when concerns were raised about Abington Memorial's plans to stop providing abortions.
In March, Jefferson Health parted ways with Main Line Health. Klasko said at the time: "We collectively realized that the existing corporate structure needs to be changed to allow us to be more entrepreneurial, nimble, and responsive. Jefferson looks forward to an increasingly vibrant clinical and academic relationship with Main Line Health."
The outcome of a case before the Supreme Court has the potential to extend far beyond teeth whitening and mall kiosks to state regulatory boards governing the actions of physicians, says a healthcare antitrust lawyer observing the case.
It's always risky to predict how the U.S. Supreme Court will rule on a case simply by interpreting a transcript of the oral arguments.
The eight-member North Carolina board, which includes six dentists elected by other dentists, had been the subject of a complaint by the FTC in 2010 for violations of the FTC Act after the board banned non-dentists operating in mall kiosks from performing discount teeth-whitening procedures.
Jay L. Levine, a Washington, D.C.-based healthcare antitrust lawyer and disinterested observer of the case, says the high court's ruling is expected early next year, and the implications of the ruling extend far beyond teeth whitening and mall kiosks.
"If the FTC wins and this board is considered a private actor and you'll always need state supervision for such boards, then obviously a lot of regulatory boards that are made up of practitioners of that industry, doctors, lawyers, etc., will need to have active supervision," he says.
"There will need to be some state entity that regulates their activity and that is not made up of people from the industry itself. Does that necessarily mean that a non-neurologist is going to tell a neurologist how to perform a surgery? I highly doubt that. But it may well mean that a non-neurologist, a bureaucrat, or an agency is going to be ruling on a recommendation, let's say, of how many years you need to be in practice to be state certified."
"I don't think it is going to be so terrible because I presume they will take the input of the people in the industry, but that is the logical conclusion if the FTC wins."
If the North Carolina Dental Board prevails, Levine says we can expect that many states will chose to maintain the status quo. "As long as there is a clearly articulated state policy to displace competition, they will be able to do pretty much whatever they want, whether or not that is what the state intended or not, until the state legislature either changes that policy to displace competition or the governor disbands the board."
Dental Board v. FTC
In a lively hour-long discussion, the justices grilled dental board attorney Hashim M. Moopan and FTC attorney Malcolm L. Stewart, deputy solicitor general with the U.S. Department of Justice.
Justice Stephen Breyer told Moopan that "the object of the antitrust laws is to prevent private individuals who compete with each other in business from getting together and making agreements. That kind of interest seems present here."
Moopan had said that the "fundamental key" to the dental board's argument was "not just that they're designated as state officials, but they are charged with a state law duty to enforce state law. They are not acting pursuant to their unfettered private discretion to choose whatever choices maximize their personal profit."
"The fundamental question here is whether federal courts need to second guess these state administrative questions."
Justice Ruth Bader Ginsburg noted that antitrust exemptions fall under federal law, not state law. "The federal law sets the dimensions of what fits within the state action. It's not up to the state to create the state action exemption. It's federal law and what its metes and bounds are are also federal law.
Moopan agreed, but noted that the Supreme Court's previous rulings on the Sherman Antitrust Act "do not apply to the acts of states or their officials when implementing laws directed by the legislature. And absent extraordinary circumstances, I would think that Congress did not intend for federal courts to second-guess whether a public entity is really private."
Breyer asked Stewart if a ruling in favor of the FTC would create a scenario where bureaucrats could overrule brain surgeons on professional credentialing.
"What the state says is, 'We would like this group of brain surgeons to decide who can practice brain surgery in this state. I don't want a group or bureaucrats deciding that," Breyer said.
Stewart acknowledged that "what is true of the Dental Board of North Carolina could also be true of the neurology or the more general medical board in another state."
That prompted Justice Antonin Scalia to interject: "Really? Really? You are going to have a review board composed of non-neurologists deciding de novo whether a particular person should be admitted or a particular rule should be adopted? I don't want that. I want a neurologist to decide it."
Misgivings on Display
Levine says the justices displayed misgivings with both sides of the argument.
"They have no desire to give carte blanche to state boards that are comprised of private actors and have them run amok without any active state supervision to fix prices," he says.
"At the same time, Justice Scalia specifically said that he does not want a non-neurologist deciding who can and cannot practice neurology. That analogy got picked up by a number of justices."
"My suspicion is they may split the baby here," Levine says. "It will be interesting to see how they come down as to what determines a private actor or not. They may very well try to articulate a line that whether you're a private actor will depend upon the type of activity you are asked to rule upon."
Levine says the justices may try to articulate a fine point "where you're a private actor if the board's activities essentially rule on what would otherwise be run-of-the-mill competitive activity."
"But if what the board is inherently supervising is something that is not the hallmark of competitive activity, but is really something that is relegated to the states in terms of safety and the like, then I can see the justices articulating a rule that they are not going to second-guess the state legislature's delegation of power to that board."
A ruling on the case is not expected until early 2015.
CareNow specializes in urgent care, family practice, and occupational health services. In 2013, its 24 locations served approximately 9% of the Dallas-Fort Worth population.
HCA has purchased CareNow, a privately held chain of 24 urgent care centers serving Dallas-Fort Worth. Financial terms were not disclosed.
When the deal is finalized, CareNow will become a division of HCA, which already operates 11 hospitals and more than 50 ambulatory care sites in the Dallas-Fort Worth Metroplex.
The deal is expected to be completed before the end of 2014.
"CareNow has a strong brand and will add an exceptional network of urgent care centers and 130 physicians that complement our hospital, emergency, and outpatient services in Dallas-Fort Worth," Sam Hazen, president of operations for HCA, said in prepared remarks. "This transaction represents two trusted providers coming together to deliver a broader and more integrated level of quality healthcare services."
CareNow was founded in 1993 and specializes in urgent care, family practice, and occupational health services. In 2013, CareNow centers served approximately 9% of the Dallas-Fort Worth population.
HCA is the nation's largest for-profit hospital chain and operates 165 hospitals and 113 freestanding surgery centers in 20 states and England. HCA North Texas network includes 5,500 physicians and 12,000 employees in Dallas-Fort Worth.
"If you look at the lay of the land in Dallas-Fort Worth, the two biggest players are Baylor Scott & White Health, and Texas Health Resources. There is Methodist Health System, but they are a smaller player and HCA is in the Methodist range," says John G. Self, founder and president of John G. Self Associates, a consultant and veteran observer of the Dallas-Fort Worth healthcare sector.
'A Play for Population Health'
"This is an acquisition designed to enhance HCA's market position for population health management," he says. "CareNow is an interesting company. They are a patient-centric, Web-based company, which means that if you aren't feeling well and you don't have a primary care physician you can make an appointment on line so you don't have to sit and wait at the clinic. That's kind of a sexy little change."
Self says the acquisition "makes sense for HCA" because it gives them market reach and a bigger footprint and it's not a huge risk for them in this market.
"They bought a company with an apparent good reputation and a little bit of an innovative approach to accessing their care," he says. "This is a play for population health. We know they have to have some level of size to compete effectively for patients who will use your facility and essentially commit to you as a beneficiary. That's what it's all going to be about."
A 9% Revenue Increasein Q3
Also Tuesday, HCA released third-quarter financial results, and announced that the board of directors had authorized the repurchase of up to $1 billion in outstanding common stock.
"Results for the Company's third quarter reflect a continuation of solid volume trends and improving payer and service mix," HCA President and CEO R. Milton Johnson said in prepared remarks.
When compared with the third quarter of 2013, HCA third quarter 2014 saw:
Revenues increase 9% to $9.220 billion
Net income total $518 million, or $1.16 per diluted share
Adjusted EBITDA increase 14% to $1.8 billion
Cash flow from operations increased 25.3% to $1.1 billion
The third-quarter results for HCA suggest that for-profit healthcare systems are continuing to enjoy a windfall in revenues in 2014 with the advent of Medicaid expansion under the Affordable Care Act.
Industry-wide, a recent PwC Health Research Institute analysis found that the nation's five largest for-profit hospital companies were seeing a stark contrast with their combined 538 hospitals in expansion and non-expansion states.
For example:
Hospitals in the 24 states that have rejected expansion continued to see flat or sagging admissions and little if any reduction in the numbers of uninsured and non-paying patients.
Hospitals in the 26 states and the District of Columbia that expanded their Medicaid coverage to include an additional 7.2 million people, and accepted the billions in federal dollars that accompanied it, saw a significant rise in Medicaid inpatient admission and a concurrent decline in self-pay and charity care.
Earlier this year HCA revised its earnings outlook to account for better-than-expected revenue. The company hospitals in five expansion states saw Medicaid admissions grow 32% with a corresponding 48% drop in uninsured admissions through the first half of the year. Uninsured volume also declined 2% in non-expansion states.
Reacting to the departure of two more ONC leaders, the head of the AMA calls for more flexibility with meaningful use certification requirements "so that vendors have more freedom to innovate and tailor their products to meet physicians' needs."
UPDATE: On Tuesday the Department of Health and Human Services clarified that Karen DeSalvo, MD, was not leaving the Office of the National Coordinator, but was stepping aside temporarily to help coordinate the federal government’s Ebola response. In response to the clarification, AMA President-elect Steven J. Stack, MD issued this statement: "The American Medical Association is pleased to learn that Karen DeSalvo will remain involved in the Office of the National Coordinator for Health Information Technology. We look forward to continuing to work with her to fix the Meaningful Use program and achieve an interoperable technology infrastructure."
The second leadership shuffle in less than one year at the Office of the National Coordinator for Health Information Technology could "jeopardize the growing momentum around [Meaningful Use] interoperability," the American Medical Association said.
AMA President Robert M. Wah, MD, in remarks released by his office Monday, said the announced departures last week of ONC Director Karen DeSalvo, MD, and Deputy Director Jacob Reider, MD, "leaves a significant leadership gap" at the office charged with overseeing and coordinating the nation's adaptation of interoperable electronic health records.
Lisa A. Lewis
DeSalvo was named national coordinator for HIT in December 2013, replacing Farzad Mostashari, MD. Last week, DeSalvo stepped down temporarily from the job to become the Acting Assistant Secretary for Health at the U.S. Department of Health and Human Services, where she will concentrate primarily on the Ebola response.
Reider said he was leaving ONC to practice medicine closer to his family in Albany, NY. Lisa A. Lewis has been named acting national coordinator.
Wah renewed the AMA's call for ONC to be more flexible with MU certification requirements "so that vendors have more freedom to innovate and tailor their products to meet physicians' needs."
"Interoperability and data portability are critical components for transforming clinical practice and improving health outcomes," Wah said. "Unfortunately, physicians have been facing challenges with several poor performing EHRs that are not interoperable. Without widespread interoperability, the value proposition of EHRs has not been realized and the adoption of new innovative models of care has been hindered."
Earlier this month AMA released a blueprint to improve MU Stages 1 and 2 and provide suggestions for Stage 3, as well as a framework outlining eight priorities for more usable EHRs.
The AMA, the American Academy of Family Physicians, and several other professional organizations and health systems earlier this month asked HHS Secretary Sylvia M. Burwell to address systemic snags and glitches around the interoperability of electronic health records that they say are frustrating providers and doing little if anything to improve patient care or reduce costs.
"Currently, health information stored in most EHRs/EMRs and other HIT systems and devices do not facilitate data exchange but 'lock-in' important patient data and other information that is needed to improve care," the letter says.
Citing data from the Office of the National Coordinator for HIT, the letter notes that only 14% of physicians can electronically transmit health information outside of their organizations. The main barriers to data exchange continue to be "strict MU requirements and deadlines that do not provide sufficient time to focus on achieving interoperability."
The eight co-signers recommend a handful of changes that they say could improve the meaningful use process, including:
Streamline and focus meaningful use certification requirements on interoperability, quality measure reporting, and privacy/security.
Remove certification mandates and instead allow for a flexible and scalable standard based on open system architectural features such as application program interfaces. This will allow data to move more freely across the healthcare system, reducing data lock-in and promoting more usable systems.
Foster stakeholder collaboration to promote new HIT that is focused on clinical care needs.
Remove restrictive MU policies that stifle HIT innovation.
Allow vendors and providers adequate time to develop, implement, and use newly deployed technology and systems before continuing on with subsequent stages of the MU program. Testing and achievement of specific performance benchmarks should occur before providers are held accountable for any new MU requirements.
The ONC's push for MU has been riddled with delays and criticism from providers and vendors.
