Tenet, Community Health Systems, and Mercy Health have individually finalized separate deals to build, operate, and merge healthcare organizations from Pennsylvania to Florida.
Tenet Healthcare Corp. has won the latest round in a twisting eight-year battle to build a hospital in burgeoning Fort Mill, SC.
A South Carolina Administration Law Court overturned an earlier state ruling and awarded a certificate of need to Tenet-owned Piedmont Medical Center, which plans to build a 100-bed, $120 million Fort Mills Medical Center.
"We celebrate today with the community of Fort Mill as they are one step closer to getting the high-quality hospital that they have deserved for years," Bill Masterton, CEO of Piedmont Medical Center, said in prepared remarks. "Fort Mill Medical Center will deliver trusted healthcare services in the heart of town as we extend the quality programs that residents have come to expect from Piedmont Medical Center."
The ruling released last week is the latest wrinkle in a case that dates back to 2006. Piedmont had originally been awarded the CON by the South Carolina Department of Health and Environmental Control. Carolinas HealthCare System successfully appealed the ruling in September, 2011. Piedmont appealed that ruling and the case was heard in April 2013 by Administrative Law Judge S. Phillip Lenski, who overturned the DHEC ruling in his decision last week.
"This court concludes that the establishment of the (Fort Mills Medical Center) will best serve the public needs by reducing the outmigration of York County residents to North Carolina hospitals and, in so doing, will strengthen the existing healthcare system in York County that consists largely of Piedmont Medical Center and independent physicians on the Piedmont medical staff," Lenksi wrote.
"Approval of Piedmont's application will help stem outmigration, while approval of CHS's will escalate it, especially for specialty services. Furthermore, CHS's proposed hospital site presents traffic and safety concerns. For all these reasons, FMMC will better serve public needs than (Carolinas Medical Center – Fort Mills)."
Lenski also wrote that granting the CON to CHS "would have the effect of causing the erosion of quality of care at Piedmont and among specialists practicing there as a result of the diminution in the volume of patients and the degradation of the payer mix of the patients who would continue to be seen at Piedmont.
Consequently, there would be no hospital in York County providing many of the high quality and tertiary services that Piedmont has added. Alternatively, the establishment of FMMC will ensure that high quality services continue to be added and provided within York County."
It is not clear if CHS will appeal the ruling. Calls to the health system's media relations office were not returned.
Once built, Tenet said, FMMC will offer an array of specialized services, including a 24-hour emergency department, comprehensive women's health services, advanced cardiac services, and an intensive care unit.
CHS Finalizes Hospital Deals in FL, PA
Community Health Systems, Inc. says it is finalizing new operations agreements with hospitals in Pennsylvania and Florida.
In Pennsylvania, CHS has completed "the acquisition of substantially all of the assets of Sharon Regional Medical Center. The acquisition includes the 251-bed Sharon Regional Medical Center, outpatient centers and affiliated physician practices. Pennsylvania is CHS's second largest state as measured by number of affiliated hospitals, and in close proximity to ValleyCare Health System of Ohio, an affiliated health system that includes two acute care facilities and a rehabilitation hospital.
CHS has expanded its presence in Florida with the finalization a 40-year prepaid lease on Munroe Regional Medical Center, a 421-bed hospital in Ocala. The deal also creates a clinical affiliation between Munroe Regional and UF Health Shands. CHS affiliates now own or operate 26 hospitals in Florida.
Mercy Health Transfers Hot Springs (AR) to CHI
Mercy Health has transferred ownership of Mercy Hot (AR) Springs hospital and physician clinic to St. Vincent Health System in Little Rock, an affiliate of Catholic Health Initiatives. Mercy Hot Springs will be operated as part of a regional network with SVHS and the new name is St. Vincent Hot Springs.
Financial terms of the transfer were not disclosed.
"Our agreement with CHI provides assurance that Catholic health care has a strong, sustainable future in Hot Springs," Mercy President and CEO Lynn Britton said in prepared remarks. "The affiliation with SVHS provides the opportunity to strengthen health services locally as well as across the entire region, and enables our co-workers and physicians to continue to do what they love – provide exceptional care and service to their community in a faith-based environment."
Mercy Hospital Hot Springs is a 282-bed acute-care hospital with a Level 2 Trauma Center designation, a 90-physician clinic organization and a range of medical services
Medical staff privileges of the physicians at Mercy Hot Springs are not expected to be affected by the transfer. Physicians and staff employed by Mercy Hot Springs as of April 1 will continue their employment with the hospital.
SVHS also intends to retain the core healthcare services and charity care currently provided by Mercy in the Hot Springs community, which will be overseen by a local board of community and physician leaders, the hospital systems said in a joint media release.
Mercy will still have a presence in Hot Springs through its sponsorship of the Cooper Anthony Mercy Child Advocacy Center.
Thomas Fitz was named interim president of St. Vincent Hot Springs. He has previously worked with CHI in Kansas and Morrilton in supporting sponsorship transfers and serving as an interim leader.
The new law delays both the implementation of the ICD-10 code set and the so-called two-midnight rule, which affects hospital reimbursements. The law also includes critical funding extensions for rural hospitals.
President Barack Obama late Tuesday night quietly signed a bill rushed through Congress in the last five days. It delays for one year a 24% cut in Medicare reimbursements mandated under the Sustainable Growth Rate funding formula. It also delays for one year the ICD-10 coding set implementation deadline and the so-called two-midnights rule.
There was no signing ceremony and the president offered no comments for or against theProtecting Access to Medicare Act of 2014(H.R.4302).
Instead, the White House press office issued a terse statement noting that the bill delays mandated SGR cuts until April 1, 2015, the 17th such delay in the past 11 years. The White House also acknowledged that the bill's intent is to "extend other health-related provisions set to expire, and to make other changes to current-law health provisions."
Those changes include two other controversial and costly provisions stuck inside the 121-page bill. They delay by one year both the implementation of the ICD-10 medical coding set and the two-midnights rule.
H.R.4302 passed the House last Thursday in just 25 seconds during a hastily convened voice vote. There was no debate and there is no record of how the votes were cast.
The Senate followed suit on Monday night after brief but fierce debate, and easily passed the bill on a bipartisan 64-35 vote.
The new law has broad implications for just about everyone in the healthcare sector, from patients to providers to vendors, and the passage of the bill and its railroading through Congress left stakeholders sharply divided.
Even though the law delays for one year potentially devastating reimbursement cuts for physicians, the legislation was bitterly opposed by the American Medical Association, which had made finding a permanent fix for the SGR its top legislative priority this session.
AMA, CHIME Disappointed
AMA President Ardis Dee Hoven, MD, says Congress "failed to seize a historic opportunity" to find a permanent fix, even as physicians were led to believe up as late as this week that some sort of deal was at hand.
"Up until the final hour, multiple members of Congress spoke publicly about the need for reform, and several bills that used the agreed-upon SGR repeal policy were put forth," Hoven said in a letter to AMA members.
"The problem was that the bipartisan collaboration that had characterized the policy development phase collapsed when it came to paying for the legislation. The various funding sources brought forth were so politically polarizing that some of the proposals never even made it to a vote. We continued to urge Congress to resume bipartisan, bicameral collaboration to reach agreement on an acceptable way to pay for repeal. But this step appears to be one they were unwilling to take, letting their political interests trump good policy choices."
The College of Healthcare Information Management Executives was stunned by the delay in ICD-10, which they said was slipped into the bill to appease specialty physician associations. CHIME is still assessing the affect and cost of the one-year delay and it called on the Centers for Medicare and Medicaid Services to "provide new guidance to the industry on what the delay means for providers, vendors, clearinghouses and other concerned parties."
"The delay leaves numerous unanswered questions from testing, training, and revamping the agency's education resources, such as the CMS eHealth University, designed to help providers understand, implement, and successfully participate in the conversion process," CHIME said in a statement.
"The ICD-10 delay comes at a critical time just as providers are implementing new care models that would benefit from greater coding accuracy and specificity, such as patient-centered medical homes and value-based purchasing."
In sharp contrast, the American Hospital Association cheered after it successfully lobbied to attach the delay of the two-midnight rule and to extend the suspension of recovery audits for another year.
Effect on Rural Hospitals
The new law also includes critical funding extensions for rural hospitals, "including the Medicare Dependent Hospital program and the low-volume adjustment, eliminates cuts in 2016 to the Medicaid Disproportionate Share Hospital program, and delays for an additional six months the ill-advised two-midnight policy, while precluding recovery audit contractors from second guessing decisions made by physicians related to this policy," AHA said in a statement.
"The offsets to pay for this package include a variety of different provisions that impact various sectors of the healthcare field, while the hospital provisions basically represent a continuation of current policies 10 years from now rather than any new cuts."
AHA says it did not get everything it wanted. "We are disappointed that certain provisions for rural hospitals were not included in the legislation, such as relief from both the so-called 96-hour rule for critical access hospitals, and enforcement of the direct supervision requirement for rural hospitals. In addition, relief from cuts to Medicare (disproportionate share) payments were not included, and need to be revisited by the Congress."
The vote marks the 17th time that Congress has provided a short-term fix for the formula that sets Medicare pay rates for physicians. Included in the bill are two controversial provisions to delay implementation of the ICD-10 medical coding set and the so-called two-midnights rule.
On a bipartisan 64-35 vote, the Senate on Monday evening easily passed an 11th-hour bill to delay by one year a 24% cut in Medicare reimbursements for physicians that would have kicked in at midnight if the Sustainable Growth Rate funding scheme had been allowed to expire.
Monday's vote marks the 17th time that Congress has provided a short-term fix for the SGR since it was enacted in 1997. The controversial bill to extend the patch, which was make public only last week, sparked brief but fierce criticism before the Senate vote.
Sen. Tom Coburn, (R-OK), a physician, scolded his colleagues for their support of the Protecting Access to Medicare Act of 2014 (H.R.4302), which he said "totally ignored" the legislative process.
"The bill we have on the floor is one of the reasons why I am leaving Congress at the end of this year, because here's why the American people are disgusted with us. We are going to put off until tomorrow what we should be doing today," Coburn said at the start of a sharp and lengthy critique on the Senate floor.
"Voting for this bill doesn't fix anything except a little heat in the kitchen, and when we come back the next time the heat is going to be hotter, and hotter, and hotter," he said. "This bill is a cowardly response to the real problem that we have. It is time we stopped being cowards."
Senate Majority Leader Harry Reid, (D-NV), said the last-minute stop-gap was needed because "unfortunately the parties could not come together on what a permanent fix would be. We need to restore sanity to the Medicare system."
The bill now heads to President Obama's desk. The White House and the Department of Health and Human Services have not issued any statements about the bill.
Stuck inside the 121-page bill are two other controversial and costly provisions to delay by one year both the implementation of the ICD-10 medical coding set and the so-called two-midnights rule. With little fanfare and no speeches, H.R.4302 passed the House on Thursday in just 25 seconds during a hastily convened voice vote. There was no debate and there is no record of how the votes were cast.
More Uncertainty for Physicians
The Senate vote came with little suspense, the outcome already predicted. Passage of the bill, however, prompted another frustrated rebuke from American Medical Association President Ardis Dee Hoven, MD, who had made a permanent fix to the SGR a top priority in this session.
"This bill perpetuates an environment of uncertainty for physicians, making it harder for them to implement new innovative systems to better coordinate care and improve quality of care for patients," Hoven said in a statement.
"Remarkable progress was made this past year in reaching a bipartisan, bicameral agreement on policy to repeal the SGR, and the AMA encourages Congress to continue its work and resolve outstanding issues. On behalf of Medicare patients and physicians across the country, it is critical that we achieve permanent Medicare physician payment reform. We will continue our efforts to secure a permanent SGR repeal this year."
Just before Monday's vote Senate Republicans rejected a proposal by Finance Committee Chairman Ron Wyden, (D-OR), to create a "permanent fix" for the SGR by paying for the $138 billion hole it would create in the budget with Overseas Contingency Operations funds.
"When the SGR isn't met, Congress says 'That's OK! We will just apply a patch and punt.' Patch it up and let that SGR limp along just as it has year after year after year," Wyden said on the floor. "The cost of the patches now resembles the cost of the full repeal."
The temporary fix has been estimated to cost about $20 billion, although the Congressional Budget Office has yet to score it.
Safety Net Hospitals Respond
The AMA's stance notwithstanding, some other hospitals associations have quietly cheered the bill, which delays implementation of the so-called two-midnights rule, suspends recovery audits until March 31, 2015, and preserves disproportionate share payments for safety-net hospitals.
"We are pleased Congress wisely chose to put off damaging cuts to Medicaid disproportionate share hospital payments another year," Bruce Siegel, MD, president/CEO of America's Essential Hospitals, said in prepared remarks. "This will afford needed time to revisit the cuts in light of Medicaid coverage still short of the full expansion envisioned under the ACA."
"We're also glad to see delayed enforcement of Medicare's two-midnight rule. It's critical we get this policy right so that we don't inadvertently destabilize hospitals that care for the vulnerable."
ICD-10 Stunner
The delay of the ICD-10 implementation until Oct. 1, 2015, which was only made public less than one day before the House vote, stunned stakeholders in the healthcare IT sector.
"This pause in momentum discredits the significant work our industry has spent training staff, conducting testing, and converting systems; not to mention the hold on improving care quality and accuracy, advancing clinical reporting and research, and patient safety outcomes," said Russell P. Branzell, president and CEO of the College of Healthcare Information Management Executives.
"Assuming Presidential signature on the legislation, CMS must now provide new guidance to the industry on what the delay means for providers, vendors, clearinghouses and other concerned parties. The delay leaves numerous unanswered questions from testing, training and revamping the agency's education resources, such as the CMS eHealth University, designed to help providers understand, implement, and successfully participate in the conversion process."
Lynne Thomas Gordon, CEO of the American Health Information Management Association, said the transition to ICD-10 "remains inevitable" and that her organization would "seek immediate clarification on a number of technical issues such as the exact length of the delay."
The original compliance date for ICD-10 was Oct. 1, 2013, but that date was pushed back for a year when provider groups complained that they weren't ready.
A bill that delays Medicare payment cuts to physicians for another year contains two controversial and costly provisions that would delay both the implementation of the ICD-10 medical coding set and the so-called two-midnights rule.
The Senate Monday is expected today to take up a bill that would delay by one year a 24% cut in Medicare reimbursements for physicians mandated that otherwise takes effect on April 1 under the Sustainable Growth Rate funding formula.
The 121-page Protecting Access to Medicare Act of 2014 (H.R.4302) was rushed through the House in 25 seconds Thursday with no debate on an unrecorded voice vote, despite the strong objections of the American Medical Association, the American College of Surgeons, and other leading physicians' associations, which have been calling for a permanent fix.
Senate Majority Leader Harry Reid told The Hill that he would bring the bill to a vote Monday. "The patch that we have is imperfect, but it is something that will take care of things," Reid said. "I am disappointed we didn't get a permanent fix, but we should be very happy about what we have done."
Included in the bill, which was only made public last Wednesday afternoon, are two controversial provisions with great financial ramifications for providers. The compliance date for the ICD-10 medical coding set would be delayed to Oct. 1 2015 and the so-called two-midnights rule would be delayed until March 2015. The ICD-10 deadline has been extended once already.
The White House has not commented on the bill and whether or not President Obama would sign it or veto it. An official at the Centers for Medicare & Medicaid Services said the agency does not comment on pending legislation.
John Showalter, MD, Chief Health Information Officer at the University of Mississippi Medical Center in Jackson, expressed the frustration of many proponents of ICD-10 when he talked about the loss of credibility that would come with pushing back the implementation date until Oct. 1, 2015.
"I saw CMS had a really broad estimate of $1 billion to $6 billion in expense from delaying ICD-10. I think what's going to multiply that is the loss of engagement, so because CMS has been messaging so firmly," Showalter said in an interview Sunday.
"We've finally picked up the physician and coder engagement, so I now have all 17 of my department heads meeting with me monthly on how we're going to execute ICD-10, and if they delay it for a year, next year when I try to get those meetings, I won't get them, because they'll be waiting for Congress to delay again another year. They're going to think there's a pop-off valve. My biggest concern, although a billion dollars is a lot of money, is the provider and [engagement] that's been garnered in the last several weeks that's just going to go away."
If the Senate passes the bill and President Obama signs it into law, Showalter says physicians at the UM Medical Center will know who to blame. "I don't think they're going to blame us, but I think they're going to move into the thought process of once bitten, twice shy," he said.
"Now they're going to have been revved up and prepared for it twice, and they're really going to think it's never going to happen, and then when it does happen, it's going to be a big shock, and we're not going to be prepared for it because we're going to wait for that last-minute reprieve from now until eternity."
The bill, which passed the House Thursday, includes two controversial provisions. The Senate must take up the bill by Monday, the day the SGR deadline expires, to avoid the mandatory and perennially delayed cuts to Medicare payments to physicians.
The U.S. Senate is about to take up potentially the most sweeping piece of healthcare legislation since the passage of Obamacare. The Senate is expected to vote Monday on a stop-gap measure that will place year-long delays on three critical, contentious, and costly federal mandates affecting a wide swath of providers and vendors.
The House passed the measure Thursday.
The Protecting Access to Medicare Act of 2014 (H.R.4302) would temporarily delay for the 17th time reimbursement cuts to the Medicare Sustainable Growth Rate funding formula that are scheduled to take effect on April 1.
Stuck inside the 121-page bill, which emerged for public view on Wednesday, are two other controversial and costly provisions to delay by one year both the implementation of the ICD-10 medical coding set and the so-called two-midnights rule. With little fanfare and no speeches, H.R.4302 passed the House on Thursday during a hastily convened voice vote, with no debate and no record of how votes were cast.
The Senate must take up the bill by Monday, March 31, the day the SGR deadline expires, to avoid the mandatory and perennially delayed cuts to physician reimbursements, which have grown over the decade to represent a 24% reduction in Medicare payments to physicians.
It's not clear how the bill will fare in the Senate. Calls Thursday to the media office of Senate Majority Leader Harry Reid, (D-NV), were not returned. House Speaker John Boehner, (R-OH), said at a media availability on Wednesday that Reid had agreed on the bill.
So far, the bill has drawn no public response or veto threats from the White House or comments from the Department of Health and Human Services. Centers for Medicare & Medicaid Services Administrator Marilyn Tavenner has repeatedly and firmly said that the Oct. 1, 2014 start-up date for ICD-10 will be met. CMS officials said Thursday that they do not comment on pending legislation.
The House vote for a temporary fix for the reviled SGR came as no surprise. It became apparent earlier this month that another Band-Aid would be applied to the SGR when House Republicans insisted that plugging the then-estimated $122 billion cost of a permanent fix be paid for by delaying for five years the implementation of the individual mandate under the Patient Protection and Affordable Care Act. Senate Democrats rejected the proposal and everyone braced for another last-minute fix.
The American Medical Association has for months been calling for a delay and even a rescinding of ICD-10 implementation, but even the inclusion of a one-year delay on the mandate until Oct. 1, 2015 did not mollify AMA President Ardis Dee Hoven, MD, who had made a full repeal of the SGR the association's top priority.
"The American Medical Association is extremely disappointed in (Thursday's) House action to give up on SGR repeal," Hoven said in prepared remarks. "There was bipartisan, bicameral support for reform this year, yet too many in Congress lacked the courage and wherewithal to permanently fix Medicare to improve care for patients and provide greater certainty for physician practices. Congressional leadership had to resort to trickery to pass an SGR patch that was opposed by physicians."
ICD-10
Even though the stop-gap fix for SGR was widely expected, the 11th hour inclusion of the delays to the two-midnights rule and ICD-10 stunned even seasoned Congress-watchers.
"They had been working on this total reform package of SGR for over a year with a lot of parties from the physician community and then this blows up at the last minute," saidSharon F. Canner, Senior Director of Public Policy at the College of Healthcare Information Management Executives. "I heard the press accounts about rural hospitals that weren't ready. Well, it's never going to be perfect. Perfect is the enemy of the good. The cost of this is enormous in terms of systems that hospitals have ordered and trained staff."
Canner says the ICD-10 delay was put in the bill as a sop to specialty physicians' groups who were angry because Congress had squandered another opportunity to find a permanent fix for the SGR. "It was something they were unhappy with and so they came to the leadership and asked them to pull this," Canner says.
"The leadership said 'no we can't do this. There is money attached, but is there something else that you want?' and they wanted a delay in ICD-10. Meanwhile, the AMA which has been strongly pushing for a delay on ICD-10 decided that they did not want this SGR patch. They said there has been a lot of good bicameral bipartisan work done to finally get rid of this SGR so that we don't have to come back every year with the same fire drill. AMA is on our side for a little while, but we don't know for how long."
The ICD-10 deadline had already been pushed back one year to 2014, and CMS has estimated that the cost of delaying it another year could range from $1 billion to $6 billion.
Two-Midnights Rule, and RAC
The provision to delay implementation of the two-midnights rule until March 31, 2015 was greeted with cheers at the American Hospital Association, which made no bones about its lobbying efforts on H.R.4302. "The AHA worked to ensure that there would be relief on the two midnight policy and we are pleased it was included in the bill," the association said in response to a query
However, the provision left a government watchdog group howling. The Council for Citizens against Government Waste says CMS had already suspended recovery audit contractor post-payment reviews for the past six months. A year-long extension of the suspension provided in H.R.4302 means that the RAC program would be on hiatus for 18 months, costing taxpayers billions of dollars in undetected overcharges to hospitals and other providers.
"The inclusion of the RAC suspension language is ironic given that the CMS finally released its overdue FY 2012 Annual Recovery Audit Contractor Report to Congress, which documents the RACs' monumental record of success in recovering billions in improper payments," CCGW said in a media release. "Auditors recovered $2.3 billion in erroneous Medicare payments in FY 2012, up from $797.4 million in FY 2011, and the contractors had accuracy scores of between 92% and 97%."
CCGW noted that the RAC program has "clawed back" more than $7 billion in improper payments since 2009. The watchdog group cited a Department of Health and Human Services report last December showing that since CMS began meddling with the RAC program, improper payments in Medicare rose by 12.7%, from $44.3 billion in FY 2012 to $49.9 billion in FY 2013.
'Really Bad Governance'
"This must-pass patch that has to be done once every whenever is another opportunity for bad language to be grafted onto this must-pass bill at the 11th hour, which is exactly what we saw today," says Leslie K. Paige, vice president, policy & communication at CCGW. "It is really bad governance. I can't say it any other way. It doesn't matter if it is Republicans or Democrats. This is dysfunctional government at its worst and we saw it today."
"They ended up doing a voice vote, which is the least accountable way to pass a very significant piece of legislation which had a lot of moving parts and a lot of other provisions included in it which no one fully understands what the implications are and the costs associated with them. But once again a lot of members of Congress crowded around a bill they know they had to pass and they're sticking a lot of stuff into it and then they have the temerity to take a voice vote on it a few days before the deadline arrives. It's insane."
Contending that hospitals taking advantage of mandated lower drug prices should be held accountable for the levels of charity care they provide, a group funded by the pharmaceutical industry is getting pushback from two major hospital associations.
A group funded by the pharmaceutical industry wants Congress to review the 340B outpatient drug discount program to ensure that hospitals aren't gaming the system.
The Alliance for Integrity and Reform of 340B says in a report out this week that "a substantial portion" of hospitals that have enrolled in the 340B program don't provide enough charity care to justify their discounts and may not be living up the spirit and intent of what Congress envisioned when the program was created in 1992.
AIR 340B spokesperson Stephanie Silverman says her group does not want to see the 340B program abolished, but does believe that hospitals taking advantage of the mandated lower drug prices should be held accountable for the levels of charity care they provide.
"When a program expands well beyond its original intent, there are legitimate questions about sustainability. For hospitals that are doing the right thing, we don't want to jeopardize their program," Silverman said.
"The concern is for those that don't want to be on the hook for colleagues in the industry who are not deploying the resources appropriately. There is always a threat, which we are not advocating, of throwing the baby out with the bathwater. We are trying to define where the bathwater is."
The AIR 340B study found that:
More than two-thirds of hospitals that receive 340B drug discounts provide less charity care as a percentage of patient costs than the national average for all hospitals, including for-profit hospitals which do not qualify for 340B.
For 24% of 340B hospitals charity care represents 1% or less of the hospitals' total patient costs.
Only 22% of 340B hospitals provide 80% of all charity care delivered by 340B DSH (disproportionate share) hospitals.
Drug purchases through the 340B program will almost double, from $6 billion in 2010 to $13.4 billion by 2016, a cost which will be borne by drug makers.
Silverman says the 340B program lowers outpatient drug costs for participating hospitals on the presumption that they will help vulnerable, uninsured patients but that there are no restrictions on how hospitals spend the revenues generated if they charge both insured and uninsured patients higher prices than the 340B discount.
That contrasts with requirements on other providers in the 340B program who must show that they provide services to vulnerable populations and that they reinvest the revenues into specific services for their vulnerable populations.
"What we would like to see done is for Congress to do a full examination of appropriate eligibility criteria," Silverman says. "We want to be partners in that conversation with other stakeholders. We also believe there needs to be substantially more oversight by regulators and more requirements for accountability among hospital participants on how the funds are deployed and whether or not they are reaching their intended beneficiaries."
Hospitals Push Back
AIM 340B's claims have been hotly disputed by the hospital lobby.
Linda Fishman, the American Hospital Association's senior vice president for public policy analysis and development, told me in an email exchange that the AIM 340B report "ignores the fact that the 340B program enables hospitals to provide essential healthcare services to the nation's most vulnerable populations."
"This vital role 340B hospitals play in their communities cannot be boiled down into a few data points derived from publicly reported information such as the Medicare's Cost Report S-10 worksheet; it is found in the programs and services these 340B hospitals provide every week, every day, every hour. Charity care alone does not account for the myriad programs and services that hospitals provide, which are tailored to the needs of their own unique community," Fishman wrote.
"The more important fact is that 62% of all uncompensated care provided by our nation's hospitals is provided by 340B hospitals. Uncompensated care for these hospitals includes sponsored charity care programs to assist patients seeking care, as well the unreimbursed care provided to patients after care is rendered. Half of all 340B hospitals provide care in rural areas with more than 41% designated as Critical Access Hospitals."
Beth Feldpush
Senior Vice President, Policy and Advocacy, for America's Essential Hospitals
"The 340B program generates valuable savings on outpatient drugs for these eligible hospitals to reinvest in community programs such as free vaccines, mental health clinics, community dialysis programs or free or reduced priced prescription drugs. To qualify for the 340B Drug Pricing Program, hospitals must serve a disproportionate share of low-income and uninsured people in their communities or be critical access hospitals providing essential services to their rural communities. In addition, these hospitals must provide services to low income populations that do not qualify for Medicaid or Medicare."
'Consider the Source'
Beth Feldpush, senior vice president, policy and advocacy, for America's Essential Hospitals, says anyone reading the AIM 340B report should "consider the source behind it."
Feldpush says a 2011 report by the Government Accountability Office found that that 340B program was fulfilling the program obligations. "To me that says the program really is benefitting patients and giving hospitals and providers the ability to provide drug and other services to patients that they otherwise would not be able to do if the 340B program was not in place."
However, the GAO report also validates concerns raised by AIM 340B. Federal auditors called the Health Resources and Services Administration's oversight of the 340B program "inadequate" and overly reliant on "self policing to ensure compliance."
"For example, the agency does not periodically confirm eligibility for all covered entity types, and has never conducted an audit to determine whether program violations have occurred," the GAO report said. "Moreover, the 340B program has increasingly been used in settings, such as hospitals, where the risk of improper purchase of 340B drugs is greater, in part because they serve both 340B and non-340B eligible patients."
The report continues, "This further heightens concerns about HRSA's current approach to oversight. With the number of hospitals in the 340B program increasing significantly in recent years—from 591 in 2005 to 1,673 in 2011—and nearly a third of all hospitals in the U.S. currently participating, some stakeholders, such as drug manufacturers, have questioned whether all of these hospitals are in need of a discount drug program."
Feldpush concedes that safety net hospitals are frustrated by the relatively "informal" administration of the program.
"We look at Medicare and Medicaid and those programs are run by the agency giving guidance to hospitals through formal rule making processes and through codified regulations. The 340B program has been largely run through informal guidance. HRSA has used things like—and I am not making this up, 'frequently asked questions' posted on its Web site to provide official guidance on the program."
"That has been a challenge for hospitals," she said, "because they are by their nature highly regulated and they do want to make sure that they are following the program in the right way. So, it's very hard to make sure that if you are following the program guidance to a 'T' without that formal rulemaking process."
HRSA is now reforming its rulemaking process to include formal notice and comment periods and those reforms should be made public this summer, which Feldpush says "is very much a good step forward."
Lobbying efforts by community hospital chain Steward and a labor union take on the Boston-based teaching hospitals.
A new report out this week details a "vicious cycle" of inequality in healthcare financing in Massachusetts that has created a "rich get richer" caste of prosperous Boston-based teaching hospitals that drive up costs at the expense of community hospitals and low- and middle-income families.
The report, Healthcare inequality in Massachusetts: Breaking the Vicious Cycle, was commissioned bySteward Health Care System LLC, which operates 11 community hospitals in Massachusetts, and 1199 SEIU United Healthcare Workers East. The labor-management pair founded a lobbying organization, Healthcare Equality and Affordability League (HEAL), to press their argument.
"There tends to be a fairly high usage of teaching hospitals for more routine services in Massachusetts than in other states. That is partly one of the reasons why the costs are fairly high in Massachusetts," says lead author David E. Williams, a consultant with Health Business Group.
"We have some world-famous and renowned hospitals and physicians in Massachusetts and they are rightly seen as key economic drivers for the whole state economy. Patients like to go to these providers, and traditionally the health plans have supported that. It's just a matter of those larger famous institutions using their brand to be able to do the kind of business they want and people wanting to go there."
Williams says many of his findings have already been well-documented by state government and the news media. He says the fact that the points raised in the report support the views of Steward and other community hospitals does not invalidate the findings.
"What the report really does in terms of new ground is ask 'what are the real implications of this for the Commonwealth?' If you look at from the hospitals' and hospital workers' standpoint, it relates to them. But also we are focusing now in Massachusetts on the idea of cost containment and trying to grow the costs at the rate of the overall growth of the economy. This starts toward forming the debate about how you do that. Do you just accept the status quo or is there a change in the mix that needs to be considered?"
The report found that:
"The rich get richer"because the highest-cost hospitals attract a greater proportion of patients with commercial insurance and the higher reimbursement rates than Medicare and Medicaid.
Medicaid managed care organizations that contract with the state are perpetuating the hospital reimbursement inequities seen with commercial payers. Public data show that Medicaid MCOs reimbursements for Boston teaching hospitals are more than 40% higher than for community hospitals.
"Patient migration"for routine care from community hospitals to high-cost Boston teaching hospitals increases total medical costs and contributes to higher premiums for all people with commercial plans.
"The poor get poorer" as community-based hospitals are disadvantaged by larger numbers of inadequately reimbursed Medicaid patients and lower commercial payment rates for their remaining commercially insured patients.
Middle- and low-income communities subsidize the healthcare of people in wealthier towns. Higher-income communities generate greater medical expenses per person than lower-income communities but these costs are spread across geographies in the form of higher premiums for everyone.
Adam Powell, a healthcare economist and president of Boston-based Payer+Provider Syndicate, says the report's findings are "unsurprising" considering who paid for it. Nonetheless, he says community hospitals have a legitimate beef.
"Teaching hospitals and community hospitals have different cost structures, as teaching hospitals engage in activities which are not revenue-generating, which they must fund through both higher payments and grants," he says. "That being said, Chapter 224 does lock in maximum growth rates for institutions, reducing the ability of community hospitals to grow their reimbursement rates faster than teaching hospitals. Teaching hospitals are able to negotiate higher rates with insurers because patients often prefer them, and it can be difficult to sell a health plan without including them. In 2000, Tufts Health Plan attempted to discontinue providing access to Partners hospitals, and ultimately reversed its decision after a negative consumer reaction."
The report recommends:
Reducing disparities in hospital reimbursement. The state's cost growth benchmark should be adjusted to account for providers' relative price differentials, requiring high-cost providers to hold cost growth below the benchmark as a first step in addressing the wide variation in reimbursement.
Consider providers' payer mixes when setting Medicaid and commercial insurance reimbursement Rates. Healthcare providers that care for a high percentage of Medicaid patients should be compensated for Medicaid underpayment through higher Medicaid and/or commercial insurer reimbursement rates.
Implement a Medicaid accountable care organization. The state should use its $13 billion purchasing power to immediately implement a Medicaid ACO program, similar to the Medicare Pioneer ACO program, which rewards quality and cost containment.
Encourage insurance companies to design plans that reward using lower-cost community hospitals.
Powell says some of these recommendations may not be feasible. "Payers negotiate to serve their members' interests. It is unclear why a commercial payer would voluntarily increase reimbursement rates for institutions with many Medicaid patients unless compelled to do so," he says. "Furthermore, these rate increases would likely result in higher premiums for members of the health plan in question."
Other aims of the report and study sponsors may already be happening, however. "Health plans are already designing narrow network plans that offer limited provider choice in exchange for lower premiums. For instance, Fallon Community Health Plan offers a narrow network plan focused on Steward providers," Powell says. "As these plans are already on the market without additional government encouragement, I do not see an additional reason to advocate for them."
Healthcare leaders and community leaders who aren't actively working to shore up funding for community health centers stand to damage a valuable primary care resource and the vulnerable population it serves.
Community hospitals, critical access hospitals and other safety net and primary care providers are challenged enough just keeping the doors open and the lights on in this era of reduced reimbursements and narrowing bottom lines. These providers could be excused if they were to adopt an "everyone for themselves" attitude when it comes to pleas for more funding.
Fortunately, most of the frontline providers I've spoken with over the years understand that no successful provider is simply an island of care cut off from the other providers in the community. There has to be coordination and cooperation among providers to improve community health.
That emphasis will only intensify in the coming years with the evolution of population health, the continuing shortage of skilled clinicians, and the expectation that providers will have to do more with fewer resources.
With this in mind, hospital leadership would be well advised to reexamine their relationships with and support for their local community health centers.
Specifically, Federally Qualified Health Centers face a 70% reduction in mandatory funding along with potentially other discretionary cuts as an election-year Congress thumbs through the budget. Funding reductions of that magnitude would shutter many health centers, or at least force staff layoffs and reduce services at a time when demand for care is growing.
Dan Hawkins, senior vice president for policy and research at the National Association of Community Health Centers, believes that when community health centers provide effective and coordinated primary care everybody wins:
Patients get better care
Private practice physicians aren't constantly pressed to provide charity care or extended on-call hours
Hospitals' uncompensated care caseloads are reduced and they don't get dinged for readmissions
The public sees lower healthcare costs
"For all of those reasons health centers are good partners to other healthcare providers in their communities. They can help them better organize care and control costs and improve health outcomes," Hawkins says.
Hawkins says the Patient Protection and Affordable Care Act will extend healthcare coverage to millions of people. However, he says that the PPACA by itself will not address the challenges that tens of millions of people in this country have when they attempt to access healthcare. A report released this week by NACHC estimates that 62 million people nationwide have no access to primary care because of a shortage of such physicians.
Some basic stats on those affected:
43% are low-income
28% live in rural areas
38% are racial/ethnic minorities
The vast majority of these medically disenfranchised Americans actually have insurance coverage; 22% rely on Medicaid and 58% have other insurance.
NACHC, which represents more than 1,200 FQHCs in every state and the territories, holds its national conference this week in Washington, DC. Their priorities are to call on President Obama and Congress to fix the "primary care cliff" and to extend mandatory health center funding for another five years, enabling health centers to reach 35 million patients by 2020.
FQHCs now serve about 22 million people at more than 9,000 sites and NACHC says the centers save $1,263 per patient per year because patients have access to timely and appropriate care. When the expected upsurge in demand for primary care kicks in NACHC says health centers could generate up to $24 billion a year in savings.
But to generate that savings and provide the access, Hawkins says, health centers have to be properly funded and they have to be fairly reimbursed by third-party payers.
Hawkins says community health centers would greatly appreciate any help that local providers can give in making the case for continued funding of FQHCs. "As civic and community leaders many in hospital leadership can speak to their elected officials and encourage them to support the continuation of funding for health centers," he says.
"That is what is going to keep those health centers functioning well in their community, and even allow them to reach and serve more of the population, among those who will be gaining coverage and who don't have a regular source of care today, and for those who will be left behind for whatever reason."
"We know that the majority of the 30 million Americans who will remain uninsured even after reforms are fully implemented are folks who by and large will be uninsured simply because they cannot afford the premium costs of insurance coverage. Only a small portion will be uninsured because they are undocumented. The vast proportion will be too poor to afford insurance coverage."
We all know what will happen if funding dries up for community health centers. They will close, and access to primary care will get that much harder, especially for the poor and most fragile people in our poorest and most isolated communities. These people will delay care until it becomes so serious that they'll have to use the emergency room for episodic relief.
They'll get their care in the most expensive setting, and then get discharged back into their environment with no one coordinating their recovery or ongoing care, or creating any sort of sustained prevention or disease management plan. These people will almost assuredly end up back in the emergency room, assuming they don't die first.
It's time for providers everywhere to speak in support of community health centers. Their work is too important. They need your help and you need theirs.
In our November Intelligence Report, 88% of healthcare leaders indicated that their organization's executive compensation structure needs enhancement to attract, retain, and engage leaders. What are some changes your organization has implemented recently or is exploring along these lines?
Michael D. Williams
President and CEO
Community Hospital Corp.
Plano, TX
On incentive compensation. The compensation committee of the board adopted a philosophy two years ago that says we will target the 50th percentile for executive compensation cash and, more important, the 75th percentile for total cash compensation. Inherent in that is an expectation that there is going to be at least a 25% cash incentive compensation payment. That is not just for the executives or the CEO; that is across the managerial staff of both the corporate and the hospital offices.
On competitive recruiting. Boards in the not-for-profit world have to understand that, while their compensation structures can't necessarily be the same as [those] with the investor-owned segment, there still has to be some ability to be competitive to recruit. We are seeing more individuals recruited with business acumen coming from the investor-owned sector to the not-for-profit sector. About 70% of our executive team has worked in the investor-owned sector. What we are finding is, to recruit the executive talent that we need ... we are looking into the investor-owned sector for those individuals who want to marry mission and margin, and we are having much success in bringing them over in competitive pay fashions, but out from under the pressure of quarterly performance.
On retaining talent. Compensation is but one factor in addressing turnover. Much more important than compensation is culture. One of the reasons we are seeing individuals jump from organizations is that, although the compensation package is attractive, the culture is not where they want to find themselves.
Kenneth S. Lewis, MD, JD
President and CEO
Union Hospital
Elkton, MD
We are one of 10 hospitals in Maryland that are under a unique reimbursement model called Total Patient Revenue. This reimbursement model rewards the transition to value-based care delivery. Our board of directors has established goals for the management team that support the transition to this new model.
Also, our board has been more than comfortable allocating financial resources for coaching and development of the talent we have here. That is not just for programs to develop traditional areas of expertise but to improve our ability to develop the relationships and skills needed to function in a new environment.
As one of the few remaining independent community hospitals in our region, we have had many conversations about affiliations or mergers. For the time being we believe that we are best off with an affiliation model that maintains our independence. A severance package was developed for change and control for almost all executives on the senior executive team. That also provides some degree of reassurance. The package encourages leadership continuity if there is a merger. Eligibility for payment and the severance model would occur if an executive experiences significant change in the scope of his or her responsibilities or compensation. It has worked out well in promoting some degree of comfort.
Denny DeNarvaez
President and CEO
Wellmont Health System
Kingsport, TN
There is an interest in creating more at-risk compensation than there has been in past years. It's not that we haven't had strong at-risk compensation, but it wasn't necessarily tied directly to the idea that if you create something that is helping physicians and the facility fiscally and qualitatively that you should be rewarded.
This industry now is every bit as complex as any entrepreneurial industry. So how do you attract talent? We have just started to have that conversation. The other issue we have talked about is, how do you retain talent at a time when there is so much unknown?
We use three different surveys to peg our compensation and make sure it is market driven. It is a very defendable position.
We have to run our facilities with strong folks. We have always been proud of when you get the best and brightest talent, you don't need 10 of them. You can take one good executive and do what others do with four and five of them. That we have proven in our cost of care. It's not so much per se what we are paying one individual but what is our cost of compensation in total and how are we managing that. And when we hit on those markers, we hit best practice.
Joseph Pepe, MD
President and CEO
Catholic Medical Center
Manchester, NH
The incentives were once based on personal goals, and we felt that the best way to get a team approach and everyone rowing in the same direction would be that everyone has to be responsible for team goals. Those team goals used to be a small percentage. Now we have flipped that and the team goals are 75% and the individual goals are only 25%. So even though you may be in finance, that quality goal is very important to you because that is part of your incentives, and vice versa.
Because of this, we have seen the silos coming down and now when you go into interdepartmental meetings, you see people from five or six different departments all working together. Everyone is pulling and pushing for everyone else because if one person fails, we all fail, and if one person does well, we all do well.
We are focusing on the value metrics that we are going to be penalized on with CMS—readmissions and certain outcomes along with patient satisfaction—rather than some other value metrics that we are not getting penalized on. This change is going to take place; some quickly, some moderate, and some will be a little bit more long term. The trick is to know which is which.
Two advocates for public health want healthcare workers trained to be "structurally competent" in basic economics, urban infrastructure, and other societal factors that can negatively impact patients' health.
Jonathan Metzl, MD
UPMC/Director of Vanderbilt University's Center for Medicine, Health and Society
Physicians must become vocal and assertive political advocates for their patients and possess "structural competence" to identify and address social ills that harm public health. Teaching that structural competence should be part of pre-med and medical school curriculum, two public health advocates say.
In an essay published this month Social Science and Medicine, psychiatrists Jonathan Metzl, MD, director of Vanderbilt University's Center for Medicine, Health and Society and Helena Hansen, MD, of New York University, say it's clear that people's health and wellness can be linked to their zip codes as much as their genetic codes. As a result, they say, physicians need to understand and identify the "social factors" that can make their patients sick.
"The impetus behind this project is that the voice of medicine in standing up for better infrastructure for people has been absent," Metzl said in a telephone interview. "We are not asking anyone to advocate any particular position. We are saying that since we know that social factors can cause illnesses, medicine needs to be more vocal and using its moral voice to stand up for improving social infrastructure factors."
Metzl and Hansen want healthcare workers trained to be "structurally competent" in basic economics, urban infrastructure, and other societal factors that can harm health. They two psychiatrists say that training could be part of pre-med undergraduate curriculum or included in employee orientations at hospitals and clinics.
Helena Hansen, MD
New York University
"Doctors are well trained to address the individual needs of patients. We train doctors about communication with patients, diagnosing the individual patient in front of them in the exam room," Metzl says.
"But increasingly we know there are medical conditions that are caused by a host of social and economic problems. We know that growing up in a poor area is bad for someone's brain development. It causes a host of psychiatric and other mental conditions. We know that dietary factors are linked to diabetes that is worse off in low-income areas where there are no grocery stores. The evidence mounts every day that infrastructures, economic issues, [and] wealth imbalances are all causing medical conditions. The point we are trying to make is that doctors need to be aware of the ways these social factors can impact people's lives and livelihoods."
To gain structural competency, Metzl says physicians must first adopt an attitude of "structural humility" and accept that they may not understand many of the issues confronting their patients and must therefore be willing to collaborate with community activists, local political leaders and the patients themselves.
Metzl says the idea of adopting structural competency courses as part of medical school or pre-med education is growing in popularity among medical students.
"Medical students are seeking us out for this particular kind of stuff. We are seeing a lot of desire among socially active medical students for this kind of training. They are frustrated they're not getting it," he says. "It is incumbent upon medical schools to listen to that. Curriculum is very tight but medical students are demonstrating that there is a need for this kind of training. The market bears that out. When medical students graduate and enter the real world, training in health economics are pretty important for the careers they are pursuing."
Metzl says becoming a political advocate on behalf of patients does not mean that a doctor has to adopt a particular political philosophy such as liberal or conservative or Democrat or Republican.
"Caring about the infrastructure and the health of people in relation to the health of their communities, it is sad for me that that would be a liberal or a conservative issue. If we really care about health, the data is pretty clear about what sorts of things people need to do to live healthy lives," he says.
"Any responsible democracy should advocate for those positions no matter what side you're aligned with. Whether or not this curriculum gets picked up by every medical school medicine itself needs to be making that argument much more loudly. Medicine needs a vocabulary for saying that infrastructure and access to healthcare are not a liberal or conservative issue. It's a societal issue. Part of what we are trying to do through this is develop a new language for medicine itself to take up some of these issues. Medicine has been far too quiet."
