The federal government issued $47.9 billion in improper payments to Medicare fee-for-service and Medicare Advantage in fiscal 2010, and Thursday officials from the Office of Inspector General, the Centers for Medicare & Medicaid Services, and the Government Accounting Office went before a House subcommittee to explain why. The House Subcommittee on Government Organization, Efficiency, and Financial Management heard testimony attributing the improper payments to a number of causes, primarily improper documentation.
"Some but not all improper payments are the result of fraud," Daniel R. Levinson, OIG's Inspector General told the subcommittee, in prepared remarks.
Levinson said improper payments can result from:
Unnecessary claims
Miscoded claims
Eligibility errors
Insufficient documentation
"Examples of improper payments include payments made to an ineligible recipient, duplicate payments, or payment for services not received," he added. "For example, my office recently identified $3.6 million in improper Medicare Part D payments on behalf of deceased beneficiaries."
Of the total $47.9 billion in improper payments identified, $34.3 billion were attributed to Medicare fee-for-service, representing a 10.5% error rate. The remaining $13.6 billion was attributed to Medicare Advantage, representing a 14% error rate, Levinson told the committee.
Overall, Medicare paid $516 billion in 2010 for medical services for 47 million Americans, according to government estimates.
Michelle Snyder, deputy COO at the Centers for Medicare & Medicaid Services, told the subcommittee that "like other large and complex Federal programs, Medicare is susceptible to payment, billing, and coding errors."
"It is important to clarify what these billing anomalies are – and are not," she said in prepared remarks.
Snyder said circumstances that lead to billing and coding errors can result from:
Services with insufficient documentation,
Provided services that are not determined to bereasonable and necessary
Incorrectly coded claims
Services with no documentation
"Further, improper payments do not mean an item or service was not needed. These payments are not necessarily fraudulent; rather, they tend to be an indication of errors made by the provider in filing a claim or inappropriately billing for a service," Snyder told the committee.
Kay L. Daly, director of Financial Management and Assurance at the Government Accountability Office told the subcommittee that the estimate for improper payments was "incomplete" because it has yet to provide an improper payment estimate for Medicare prescription drug payments, which totaled $59 billion in fiscal year 2010.
Daly said her office has identified five strategies to help reduce fraud, waste, and abuse, and halt improper Medicare payments. Not all have yet been acted upon:
1.)Strengthen provider enrollment standards and procedures. Strong standards and procedures can help reduce the risk of enrolling sham providers. CMS has implemented provisions of the Patient Protection and Affordable Care Act that screen providers by levels of risk and provide a stringent review of high-risk providers, but has yet to implement certain GAO recommendations in this area.
2.)Improve prepayment reviews. Prepayment reviews of claims help ensure that Medicare pays correctly the first time. As of July 1, 2011, CMS has begun applying predictive modeling analysis to claims and plans to expand Medicare prepayment controls. CMS has not implemented GAO's recommendation to improve prepayment reviews.
3.)Focus post-payment reviews on vulnerable areas. Post-payment reviews are critical to identifying payment errors and recouping overpayments. In March 2009, CMS began instituting a national recovery audit contractor program to help the agency supplement its post-payment reviews. CMS has also developed information technology to help it better identify claims paid in error, but GAO recently reported that the systems are not being used to the extent originally planned and made several recommendations to address the issues.
4.)Improve oversight of contractors. CMS has taken action to improve oversight of prescription drug plan sponsors' fraud and abuse programs, which addresses GAO's recommendation, but is still developing specific performance statistics.
5.)Develop process to address identified vulnerabilities. CMS has not developed a robust corrective action process for vulnerabilities identified by Medicare RACs as GAO recommended.
Community Health Systems, Inc. said late Thursday that it will buy "substantially all of the assets" of Tomball Regional Medical Center, in Tomball, TX.
CHS did not provide the financial terms of the deal, which is the second hospital acquisition for the Franklin, TN-based for-profit hospital chain in 10 days.
The 358-bed TRMC is located 30 miles northwest of Houston and sits on a 155-acre campus, with services that include a cancer center, heart center, women's health center, outpatient surgery centers, and sports medicine center.
Calls Thursday evening to TRMC officials were not immediately returned.
However, Wayne T. Smith, CEO/president/chairman of CHS, said he was "delighted" with the acquisition, which remains subject to regulatory approvals.
"The hospital has earned numerous clinical distinctions and we believe it will complement our ongoing commitment to deliver quality healthcare to Texas communities," Smith said in a media release. "We look forward to deploying our resources and operating strategies as we join with the hospital's medical staff and employees to serve the future healthcare needs of this growing region."
When the acquisition is complete, TRMC will become the 19th CHS-affiliated hospital in Texas. On July 19, CHS bought a majority stake in Moses Taylor Health Care System, the Scranton, PA-based health system that includes 217-bed Moses Taylor Hospital in Scranton and 25-bed Mid-Valley Hospital in Peckville.
CHS is one of the largest publicly-traded hospital companies in the nation and operates general acute care hospitals in non-urban and mid-size markets throughout the country. CHS owns, leases or operates 133 hospitals in 29 states.
A Maryland cardiologist was convicted of fraud after federal prosecutors showed that he inserted unnecessary cardiac stents into more than 100 patients as part of a scheme to defraud government and private insurers of more than $700,000.
A U.S. District Court jury in Baltimore on Tuesday also convicted John R. McLean, MD, of Salisbury of ordering needless tests and falsifying medical records as part of the six-count fraud scheme, the U.S. Attorneys' Office in Maryland said.
McLean, 59, could receive up to 35 years in prison when he is sentenced on Nov. 10. Prosecutors want to recover $711,583 that they believe McLean garnered in the scheme, but U.S. District Judge William D. Quarles, Jr. will determine the exact amount of forfeiture at the sentencing.
The evidence presented at the two-week trial showed that from at least 2003 to May 2007 McLean performed cardiac catheterizations and implanted unnecessary cardiac stents in more than 100 patients at Peninsula Regional Medical Center in Salisbury, MD.
McLean, federal prosecutors said, falsely recorded in the patients' medical records the existence or extent of coronary artery blockage to justify the stents and the claims to health insurers, including Medicare and Medicaid.
"The evidence shows that Dr. McLean egregiously violated the trust of his patients and made false entries in their medical records to justify implanting unneeded cardiac stents and billing for the surgery and follow-up care," U.S. Attorney Rod J. Rosenstein said in prepared remarks. "We do not bring federal prosecutions based on discretionary judgments that might be disputed by reasonable medical professionals."
Evidence also showed that McLean ordered his cardiac patients to undergo medically unnecessary follow-up tests such as Cardiolite stress tests, echocardiograms, and EKGs. He then submitted claims for the unnecessary tests and stents to insurers, including Medicare and Medicaid, prosecutors said.
McLean resigned his medical privileges at PRMC in March, 2007 after a hospital internal investigation uncovered the irregularities.
Earlier this month, in an unrelated case, the Maryland Board of Physicians stripped the medical license of Towson, MD cardiologist Mark G. Medei after determining that he falsified patients' records to validate unnecessary stent insertions in five patients.
National healthcare spending is expected to grow by an average of 5.8% a year through 2020 as the economic recovery spurs higher utilization, the population grows, and an estimated 30 million people receive health insurance coverage under the Affordable Care Act, according to a study in Health Affairs.
Under that rate of growth, the percentage of gross domestic product spent on health expenditures is projected to increase from 17.6% in 2010, to 19.8% in 2020. The Health Affairs study also projects that the average annual per capita national healthcare expenditure will increase from $8,327 in 2010 to $13,708 by 2020, representing an annual average growth of 4.9%.
In 2014, healthcare cost growth is expected to surge by 8.3% because of implementation of major components of the ACA, according to the study: National Health Spending Projections Through 2020: Economic Recovery And Reform Drive Faster Spending Growth.
If the ACA were not in place, however, the study projected that the pace of healthcare cost growth would decrease by only .1% from the projected 5.8% rate of growth. Basically, the ACA's cost savings and expenditures would balance out, the study projected.
Hospitals that spend more money on emergency department care for cardiac patients have lower mortality rates for those patients, a Massachusetts Institute of Technology study has found.
"More intensive and expensive treatment leads to better outcomes," Joseph Doyle, the Alfred Henry and Jean Morrison Hayes Career Development Associate Professor of Applied Economics at the MIT Sloan School of Management, said in a statement.
In a paper published in the July issue of the American Economic Journal: Applied Economics, Doyle examined tens of thousands of cases in which out-of-state visitors were admitted to emergency rooms in Florida hospitals from 1996-2003. He discovered that an increase of about $4,000 per patient in hospital expenditures led to a 1.4 percentage-point decrease in the mortality rate. Overall, a 50% increase in what Doyle calls a hospital's "spending intensity" allows it to reduce mortality rates due to heart problems to about 26% below the mean, the study found.
The findings are sure to prompt more debate about the linkage between cost and quality care.
Some previous studies have shown that patients who receive more-expensive care do not necessarily have a lower mortality rates. Other studies, however, have shown that additional spending makes a difference, or that hospitals that spend more money with similar outcomes may be treating sicker patients.
In an attempt to reduce the impact of local patient variations on medical spending, Doyle's study examined nearly 37,000 hospitalizations in Florida from 1996 to 2003, using patient-discharge data available through the Florida Agency for Healthcare Administration.
Doyle analyzed the patient data by ZIP code, age, and even season of the year to make sure that he was studying demographically similar tourists being treated throughout Florida.
Doyle said Florida is a microcosm of the nation, because the state has significant variations from place to place in how patients are treated for heart attacks, and per capita income for a particular area does not correlate with hospital spending.
As a result, the variations Doyle found do not stem from the prior health of patients, but from the level of care itself. Specifically, the greater expenses — and benefits — in heart treatment seem to come from a broader application of ICU tools and having more medical personnel on hand. "The higher-spending hospitals use more ICU services, and they have higher staff-to-patient ratios, so they use more labor. And that's expensive," Doyle said.
Doyle said he has yet to identify the precise medical technologies that provide the greatest additional benefit per dollar spent. "There are smart ways to spend money and ineffective ways to spend money, and we're still trying to figure out which are which, as much as possible," he said.
An Orange County, CA oncologist was sentenced to 18 months in federal prison Monday for bilking Medicare and other public and private health insurance providers for up to $1 million for injectable cancer medications that were never provided, the Department of Justice said.
Glen R. Justice, MD, who ran Pacific Coast Hematology/Oncology Medical Group in Fountain Valley, CA, pleaded guilty in May 2010 to five counts of healthcare fraud, DOJ said in a media release.
When patients did receive medications, Justice "upcoded" claims made to health insurance providers by falsely claiming that he administered more expensive injectable medications than were actually given to patients, DOJ said.
The medications involved in the scheme included Neulasta, Neupogen, Procrit/Epogen/Aranesp, and Neumega. Justice's scheme ran from at least 2004 through October 2009, despite being told by staff about the improper billing and the execution of a search warrant at his practice in 2006, DOJ said.
In a plea agreement Justice, 66, acknowledged that the public and private health insurance providers – including Medicare, Tricare, carriers contracted with the federal government through the Federal Employee Health Benefit Program, and Blue Cross and Blue Shield of California – suffered losses of between $400,000 and $1 million, DOJ said.
At Monday's sentencing hearing, Justice did not contest government claims that he violated his plea agreement by continuing to submit fraudulent bills after he signed the agreement in March 2010.
In addition to the prison term, Justice was ordered to pay $1,004,689 in restitution.
Median compensation for practice administrators in 2010 showed little change from 2009, according to the Medical Group Management Association's Management Compensation Survey: 2011 Report Based on 2010 Data.
Administrators in practices with six or fewer full-time-equivalent physicians earned median compensation of $86,459, a slight decrease from 2009. Administrators in practices with seven to 25 FTE physicians reported median compensation of $115,000—an increase of only 0.28% from 2009. In groups with 26 or more FTE physicians, administrators reported median compensation of $150,756, the MGMA report said.
Some medical practice management professionals reported slight increases in compensation, likely in recognition of expanded responsibilities. Business service directors, for example, reported a 5.7% increase in median compensation to $88,540. Branch/satellite clinic managers also saw a modest increase in median compensation to $57,510, up 2.57%. Marketing/communications specialists earned median compensation of $49,262, up 0.74 percent since last year, the report said.
"The generally static compensation of practice management professionals reflects the difficult economic environment faced by medical practices," MGMA President/CEO William F. Jessee, MD, said in a media release detailing the report. "Flat or declining revenues in the face of continuing increases in operating costs are forcing many practices to sell or close. For those that are able to survive, compensation levels are generally flat or declining."
MGMA's Management Compensation Survey: 2011 Report Based on 2010 Data includes data on 7,240 managers in 1,287 medical practices.
Duke LifePoint Healthcare and the board of directors at Maria Parham Medical Center on Monday signed a joint operating agreement for the 102-bed community hospital in Henderson, NC.
The deal, first announced Jan. 31, is expected to close within the next three months pending regulatory approval.
Duke LifePoint will own 80% of the hospital, while the retained assets and the proceeds from the deal will eliminate MPMC's debt. The remaining assets, approximately $30 million, will be used to create a locally governed charitable foundation that will fund new programs and services in the community. Duke LifePoint also will invest $45 million in capital improvements at the hospital over the next 10 years, the partners said.
David Ruggles, a spokesman for the private, nonprofit Maria Parham, said specific financial terms of the deal would not be made public until it is approved by the North Carolina Attorney General's Office.
"The MPMC board of directors evaluated potential partnerships for a year before selecting Duke LifePoint as our partner of choice," said Bev Tucker, MD, chairman of the MPMC Board of Directors. "Throughout our due diligence process, we have grown even more enthusiastic about this collaboration. Duke LifePoint brings unparalleled clinical and operational support to this community and can give MPMC the resources and expertise it needs to transform healthcare in Henderson and strengthen and grow our hospital."
To retain community control of the hospital, a 10-member board will be equally represented by Duke LifePoint and MPMC appointees. A separate hospital advisory board of physicians, community leaders, MPMC President/CEO Robert Singletary, and a representative from Duke LifePoint also will be established.
The deal marks the second affiliation with North Carolina hospitals for Duke Life Point. In June, the 110-bedPerson Memorial Hospital in Roxboro announced a similar affiliation agreement.
Duke LifePoint said the collaboration provides the affiliated community hospitals with LifePoint's operational resources and experience in managing community-based hospitals, and Duke's clinical services and quality leadership.
"We are delighted about the opportunity to welcome Maria Parham Medical Center as the first hospital in the Duke LifePoint system," said William J. Fulkerson, Jr., MD, executive vice president of Duke University Health System. "As part of Duke LifePoint, the hospital will have access to the support it needs to better serve its community and prosper in the future."
Located 50 miles north of Raleigh, MPMC serves north central North Carolina and parts of southern Virginia.
Brentwood, TN-based LifePoint Hospitals operates 52 hospitals in 17 states, and specializes in community hospitals in non-urban markets where the hospital is the sole provider in most of the communities it serves.
Duke University Health System has inpatient and ambulatory locations across North Carolina and surrounding areas, and has partnered with hospitals in its region to establish specialized medical services in their communities.
A couple of months back I noted in this column that the American Society for Healthcare Human Resources Administration was conducting its 2011 Healthcare HR Initiatives Survey to discern the priorities of healthcare human resources executives.
The results are in and they mostly confirm what we already know: Healthcare HR executives are focused on retaining talent, and improving employee engagement as a means to enhance safety and patient satisfaction. These executives are doing all of this with an eye toward healthcare reform, and its impact on care delivery and reimbursement.
To me, even more telling is the nature of the questions themselves. They demonstrate that HR executives at successful healthcare organizations are still involved in the critical daily tactical operations that make complex healthcare organizations function. But the questions also show that those same executives have made the leap from tactical tasking to strategic thinking.
More than any other area of healthcare leadership, HR straddles a unique position between the strategic long view, and the rubber-hits-the-road tactical implementation. At the strategic level, it's about matching the employee with the mission. At the tactical level, it's about giving the employees the tools, training, and support they need to prosper.
Before we go on, let's look at some of the findings from the ASHHRA survey. Respondents were asked:
What are your HR initiatives to cut costs?
Streamline HR Processes (69% of respondents chose this)
Improve retention rates (66%)
Reduce reliance on agencies and temporary workers (34%)
Redesign compensation and benefits plans (32%)
What are your HR initiatives to improve patient satisfaction?
Align our workforce with our organization's mission and core values (64%)
What are your HR initiatives to improve patient safety?
Improve workforce education and development (67%)
Improve employee satisfaction (60%)
Identify and manage out low performers (59%)
Improve retention rates (49%)
Biggest challenges with achieving your HR initiatives?
Not enough time to focus on the important projects (62%)
Too many competing initiatives (56%)
No budget to implement programs (47%)
Inefficient systems, inadequate technology (43%)
What new technology are you planning to adopt to achieve your HR initiatives?
Performance management (appraisal) software (36%)
Social Media for recruiting (32%)
Time and Attendance/Workforce Scheduling Absence (24%)
Behavioral Assessments (24%)
It is heartening and reaffirming to see that HR understands – and is embracing -- its dual strategic and tactical roles in improving patient satisfaction and safety through employee engagement. Common sense -- and a growing body of practical experience -- tell us that neither of those critical quality benchmarks can be improved upon unless employees are happy and buy into the healing mission.
That engagement starts with HR's role in shaping the healing mission at the strategic level. On the tactical side, it is HR's job to help new employees during the recruiting and orientation process, using that introductory period to affirm the organization's mission. Good HR executives understand the need to developing tools, benefits, training programs, favorable scheduling options, and other processes that demonstrate management's commitment to staff, actions that help the employee grow with the organization
The "challenges" with the job that are detailed in the survey also point to the inherent frictions in HR's dual role. It's difficult to articulate long-range strategic HR goals when there isn't enough time, or there are too many competing initiatives clouding the picture, or the budget is too small, and the technology is antiquated.
No doubt these are frustrating practical problems that should be addressed. But they should not distract us from the fact that healthcare HR has gone strategic.
The Federal Trade Commission has ordered Cardinal Health, Inc. to sell nuclear pharmacies it bought two years ago from Biotech in Las Vegas, NV, Albuquerque, NM, and El Paso, TX. In a proposed settlement order this week, the FTC said the deal reduced competition for low-energy radiopharmaceuticals in the three southwestern cities.
In an e-mail to HealthLeaders, a Dublin, OH-based Cardinal Health representative said: "After our acquisition of Biotech, the Federal Trade Commission (FTC) began an inquiry into the effect that the acquisition may have had on nuclear pharmacy competition in El Paso, Albuquerque and Las Vegas. We cooperated fully with the FTC inquiry and have voluntarily agreed to sell our three former nuclear pharmacies located in El Paso, Albuquerque and Las Vegas."
Before the July 2009 purchase, Cardinal and Biotech both operated nuclear pharmacies that produced, sold, and distributed low-energy radiopharmaceuticals in the three cities. After the acquisition, Cardinal relocated its nuclear pharmacy businesses to the former Biotech nuclear pharmacies and closed its own, FTC said.
Cardinal now holds a low-energy radiopharmaceuticals monopoly in Albuquerque. In El Paso, Cardinal held a monopoly until November 2010, when another nuclear pharmacy opened in the city. Cardinal still holds a large market share in El Paso. In Las Vegas, there were three competitors before the acquisition, and Cardinal and Biotech were the two leading providers. As a result of the acquisition, Cardinal obtained, and has since held, a large market share, FTC said.
The FTC order requires Cardinal to:
Reconstitute the three nuclear pharmacies it had operated in these markets prior to the acquisition, and sell each one to an FTC-approved buyer;
Divest to each buyer the intellectual property related to the nuclear pharmacies that Biotech owned before the acquisition;
Obtain, maintain, and transfer all regulatory approvals, licenses, permits, clearances, and other assets needed to operate the pharmacies being acquired;
Demonstrate to the FTC that each buyer has a supply of two vital low-energy radiopharmaceutical inputs, the radioisotope technetium 99 and a heart-perfusion agent;
Grant customers in Las Vegas, Albuquerque, and El Paso a two-year right to terminate – without penalty or charge – their existing contracts with Cardinal to buy low-energy radiopharmaceuticals. This will ensure that the new buyers can compete with Cardinal for business. Cardinal must notify customers of their right to terminate existing contracts;
Facilitate and not interfere with the new buyers' recruitment of former Biotech employees and current Cardinal nuclear pharmacy employees in the three cities, and releases employees from restrictions on their ability to work for the new buyers.
If new buyers are not found within six months, FTC said it may appoint a divestiture trustee to carry out the sale.
The FTC appointed Katherine L. Seifert, of Seifert and Associates, Inc., to serve as an independent monitor.
Following a 30-day public comment period that ends Aug. 22, the FTC will decide whether to make permanent the proposed order.
A consent order is for settlement purposes only and does not constitute an admission of a law violation.
Cardinal Health's statement to HealthLeaders further said: We will continue to operate our current nuclear pharmacies located in El Paso, Albuquerque and Las Vegas. Through the Biotech acquisition, Cardinal Health expanded our presence in PET manufacturing by adding additional cyclotrons to our network. These cyclotrons are not part of the sale offering. We intend to complete the sale of our three former nuclear pharmacies later this year. The sale of these nuclear pharmacies will not have a significant impact on Cardinal Health's financial performance.
