Data from the American Medical Association details the costs of medical billing complexity on patients and physicians, who are put "in the awkward situation of having to ask patients for money," says an AMA board member.
Barbara L. McAneny, MD
Higher co-pays, deductibles and other fees have held patients responsible for nearly 25% of their medical bills and forced physicians to become reluctant bill collectors, a new study from the American Medical Association shows.
For the first time in its six year history the AMA's National Health Insurer Report Card [PDF] examined the portion of medical bills that patients are responsible for through co-pays, deductibles and coinsurance. In February and March this year patients paid an average 23.6% of the amount that health insurers set for paying physicians, the report found.
"The patient isn't always aware of what they signed up for and physicians don't like being the bearers of bad news to these patients," says AMA board member Barbara L. McAneny, MD, a board certified medical oncologist/hematologist from Albuquerque, NM.
"As we have more and more third-party administrator types of insurance claims, and there are more and more payers out there, each of whom has their own rules on how they are going to pay you, it gets more complicated," McAneny said in an interview.
"Physicians now are concerned with having to collect a significant amount of the money they're contracted to be paid from the patients who are often unaware that they are going to have to pay part of the fee. It puts physicians in the awkward situation of having to ask patients for money and doctors don't like doing that. We're not very good at that."
Also new this year, the AMA unveiled its Administrative Burden Index [PDF], which ranks commercial plans according to the unnecessary cost they add to the billing and payment of medical claims. The AMA said that red tape associated with avoidable errors, inefficiency and waste in the medical claims process resulted in an average ABI cost per claim of $2.36 for physicians and insurers.
Cigna had the best ABI cost per claim of $1.25, or 47% below the commercial insurer average. Health Care Services Corporation had the worst ABI cost per claim of $3.32, or 41% above the commercial insurer average. McAneny says the ABI is a simple and accurate way to show physicians the cost of administrative burdens.
"We are trying with this report to quantify this so that when a physician practice looks at options for contracts with payers, they will know early into the process that they may be bargaining for $100 but it is going to cost me $14 to pay for that so what I am really asking for is $86," McAneny says.
"Physicians are going to have to use tools like this and a lot of other tools the AMA provides because if you are not an efficient physician practice in this market you are going to have a hard time surviving. And we need every physician we possibly have in this country to be able to continue with their practice of medicine and continue taking care of patients, especially as we have all of these new patients who are on insurance plans either through Medicaid expansion or from the exchange-based plans."
The AMA estimates that $12 billion a year could be saved if insurers eliminated unnecessary administrative tasks with automated systems for processing and paying medical claims. This savings represents 21% of total administrative costs that physicians spend to ensure accurate payments from insurers.
"In this day and age when healthcare costs are so high the AMA is focused on the idea that we need to lower the costs of healthcare without harming patients," McAneny says. "One of the ways that we can lower the cost of healthcare and actually do a better job for patients and for doctors is to eliminate this huge amount of money that goes into the administrative burden that we are trying to quantify with this index."
McAneny says that the Health Insurer Report Card since it was first published in 2008 has provided an influential and reliable measure of payers' denials, timeliness, accuracy and transparency, and has prompted insurers to clean up their acts and honor the wording of their own contracts.
"That's a huge benefit for physicians that I don't think a lot of physicians are even aware of. They just think their billing department is doing better at collecting claims," she says. "The fact that a lot of the insurance companies now have gone from under 80% accuracy to upward of 95% accuracy in paying claims is a huge benefit."
Other key findings highlighted in the report card:
Accuracy: Error rates for commercial health insurers on paid medical claims have dropped from nearly 20% in 2010 to 7.1% in 2013. While dramatic improvements have been made in accuracy during the last three years, the AMA estimates that more than $43 billion could have been saved if commercial insurers consistently paid claims correctly since 2010. UnitedHealthcare led commercial plans with an accuracy rating of 97.5%. Regence trailed all plans with an accuracy rating of 85%. Medicare led all insurers with an accuracy rating of 98%.
Denials: Medical claim denials dropped 47% in 2013 after a sharp spike in 2012 among most commercial plans. The overall denial rate for commercial plans went from 3.5% in 2012 to 1.8% in 2013. Among all insurers this year, Cigna had the lowest denial rate at .54%, while Medicare had the highest denial rate at 4.9%. AMA officials have no explanation for the 2012 spike in claims denials.
Timeliness: Plans have improved response times to medical claims by 17% from 2008 to 2013. Humana had the fastest median response time of six days, while Aetna was the slowest with a median response time of 14 days. Medicare's median response time of 14 days has gone unchanged since 2008.
Transparency: Plans have improved the transparency of rules used to edit medical claims by 37% from 2008 to 2013. AMA says reducing the use of undisclosed payer-specific edits unlocks the flow of transparent information to physicians and reduces the administrative costs of reconciling medical claims. .
Robert Zirkelbach, spokesman for America's Health Insurance Companies, did not dispute the accuracy of the AMA report card, but says improving the accuracy and efficiency of claims payments is a responsibility that must be shared by providers and plans.
"Health plans are doing their part to streamline health care administration to reduce paperwork, improve efficiency, and bring down costs," Zirkelbach said in an email exchange. "A recent AHIP survey found that health plans processed 98% of all claims within 30 days. The AMA report card also found 'dramatic improvements in accuracy,' a 47% drop in claim denials, and improved transparency and response times."
"At the same time, more work needs to be done to increase electronic submission of claims and to reduce the number of claims submitted to health plans that are duplicative, inaccurate, or delayed. For example, AHIP's survey found that 16% of electronic claims and 54% of paper claims were received from health care providers more than 30 days after the service date."
"Importantly, government data show that rising healthcare costs are driven primarily by rising prices for medical services, not health plan administrative costs," Zirkelbach says. "In fact, the most recent National Health Expenditure data found that the portion of premiums allocated to health plans' administrative costs in 2011 was among the lowest in recent years, despite the fact that health plans have been incurring new compliance and regulatory costs related to the health care reform law."
The AMA said the findings from the 2013 report card are based on a random sampling of approximately 2.6 million electronic claims for approximately 4.7 million medical services submitted in February and March of 2013 to Aetna, Anthem Blue Cross Blue Shield, Cigna, Health Care Service Corporation, Humana, Regence, UnitedHealthcare and Medicare. Claims were accumulated from more than 450 physician practices in 80 medical specialties providing care in 41 states.
Most of the proposal focuses on program integrity for state marketplaces and insurance companies offering coverage in the federally facilitated exchanges. The rule intends to safeguard federal money and consumers.
The Centers for Medicare and Medicaid Services has unveiled its proposed rules governing the operation of health insurance exchanges [PDF] which aim to facilitate and regulate the sale of private coverage to millions of people beginning Jan. 1, 2014, under the Patient Protection and Affordable Care Act.
CMS released the 253-page proposal on Friday afternoon with little fanfare or notice. The agency said most of the proposal focuses on program integrity for state marketplaces and insurance companies offering coverage in the federally facilitated exchanges, advance payments of the premium tax credit and cost-sharing reductions, and premium stabilization programs.
The proposed rule intends to safeguard federal money and consumers by ensuring that insurance companies and marketplaces actually provide consumers with access to affordable health insurance with reasonable benefits. Consumers in every state will be able to buy insurance from qualified health plans directly through these marketplaces and may be eligible for tax credits to lower the cost of their health insurance.
A public comment period for the proposed rule extends for 90 days.
"In just a few months, consumers across the country will have access to a new Marketplace in their state where they can easily shop for health insurance that meets their needs and the needs of their families," CMS Administrator Marilyn Tavenner said in prepared remarks. "The release of these guidelines signals that we're ready to build on our ongoing efforts and ensure that the new systems are fiscally sound."
The rule also proposes establishing standards for Department of Health and Human Services-approved enrollee satisfaction survey vendors, standards for the handling of consumer complaints, and other provisions to ensure smooth operation of the marketplaces, protect consumers, and give flexibility to states, CMS said in a media release.
A marketplace consumer call center will soon offer program information and then help consumers with open enrollment and plan selection on Oct. 1. CMS will also begin consumer assistance training this summer to help consumers find the right plan.
State-operated premium stabilization programs
HHS proposes standards for the oversight of states that operate either risk adjustment or reinsurance programs. The rule would require that states keep an accurate accounting for the programs, submit to HHS and make public reports on operations, and take other steps to ensure the soundness and transparency of the programs.
Advance payments of the premium tax credit and cost-sharing reductions
HHS proposes timeframes for refunds to eligible enrollees and providers, as applicable, when an issuer incorrectly applies the advance payment of the premium tax credit or cost-sharing reductions, or incorrectly assigns an individual to a plan variation (or a standard plan without cost-sharing reductions).
HHS also proposes general standards necessary for the oversight of these payments, including the maintenance of records, annual reporting of summary level statistics, and audits.
State marketplaces
State marketplace oversight mechanisms would assure that consumers are properly given their choices of coverage available, that consumers correctly receive advance payments of the premium tax credit or cost-sharing reductions if they qualify, and that marketplaces meet PPACA standards.
Flexibility for states
HHS is proposing additional state flexibility by permitting state-based Small Business Health Options Programs (SHOP) while HHS would operate an individual market federally-facilitated marketplace in that state.
Consumer protections for enrollment assistance
This rule clarifies the ways that agents and brokers will help consumers and small businesses in federally facilitated marketplaces.
Establishment of standards for HHS-approved enrollee satisfaction survey vendors
PPACA calls for an enrollee satisfaction survey that will allow the public to compare enrollee satisfaction among comparable plans in the marketplace. This rule sets forth a process for approving and overseeing survey vendors to administer the survey on behalf of qualified health plan issuers in the marketplace.
Primary care physicians have 3% of their total compensation based on quality measures, but doctors will increasingly be tied to these metrics as reimbursement aligns more closely with quality and cost measures, Medical Group Management Association data suggests.
Quality measures are emerging as components in physicians' compensation, a trend is expected to grow as value-based reimbursements gradually supplant fee-for-service, volume-based models, a new survey from the Medical Group Management Association shows.
ThePhysician Compensation and Production Survey: 2013 Report Based on 2012 Data examined data on more than 60,100 physicians, and found that primary care physicians and specialists reported that 3% and 2%, respectively, of their total compensation was based on quality measures.
Although the percentages are small, MGMA's Todd Evenson says physician compensation will increasingly be tied to these metrics as reimbursement aligns more closely with quality and cost measures.
"Really what we are seeing is the very front end for many organizations as they start to address under the Affordable Care Act and the commercial environment value based reimbursement. Ultimately those components of quality and satisfaction will become an ever-emerging component of reimbursement," says Evenson, MGMA's director of data solutions."
Actually, Evenson says the survey is low-balling the extent of quality measures in compensation packages for some healthcare organizations.
"Clearly there are some groups that are much more dynamic in the way they have been able to apply that. It's not uncommon in the industry and in many of the large organizations or health systems for that number to be somewhat higher. I have talked to many colleagues in the industry and figures anywhere from 10% to 30% aren't that uncommon for those larger institutions," Evenson says.
"As we look toward large healthcare institutions, the likelihood that they have decoupled compensation from collections is very high. And as a function of that in order to promote the behaviors around quality and satisfaction that they would like to see they want to incentivize their physicians in the appropriate ways to compensate them for those behaviors or activities. But overall, when we are looking at smaller organizations or medium-sized organizations then it is much more likely that there is that direct linkage."
Evenson says it's not necessarily a bad idea for some healthcare organizations to wait and watch before launching a quality component in their compensation packages.
"You don't want to be on the cutting edge. You want to be just behind the cutting edge as it relates to how you change your compensation strategies," he says. "It wouldn't be very effective if you were being paid 90% fee-for-service and paid 50% on quality to your teams of providers. The math wouldn't work in your favor."
Physician Compensation
The report also reaffirmed that median compensation for physicians fluctuated by specialty. Primary care physicians reported $216,462 in median compensation in 2012, and specialists reported $388,199 in median compensation. Evenson says the considerable gap in compensation could prove difficult to overcome, even with a concerted push to get more medical school students to take up primary care.
"The last data I had a chance to look at as I looked towards family practitioners just coming out of residency was something like 40% had over $200,000 in debt. And when we see that coupled with the median compensation for a family practitioner this year was right around that $205,000, it ends up being where there is definitely a constraint that is worth noting," Evenson says.
"We and others in the health industry understand the importance of this. The demand for primary care physicians is going to continue to increase but we have seen that kind of differential between primary care and specialty care compensation. We've even seen a number of advocacy efforts from a number of organizations (to improve primary care compensation) and that continues to evolve, but unfortunately it has remained at a static pace as a ratio of one related to the other. We did see some narrowing of that gap over the last few years, but I have seen that stagnate."
Evenson says the report verifies that healthcare organizations are moving toward an increasing reliance on physicians' assistants and nurse practitioners to make up for the shortage of primary care physicians. As a result, these highly specialized nurses are enjoying significant compensation hikes.
Over the past five years nurse practitioners' compensation has increased, on average about 13.4%, to the median of $92,717 in 2012. For physicians' assistances in the surgical suite that compensation increased by 9.6% over five years to a median of $112,689. For physicians' assistants in the primary care setting the compensation increased 10.4%, with a media of $96,834 in 2012, MGMA reported.
"When we look at their compensation this really underscores how the environment and the healthcare system is leveraging providers to the maximum of their license," Evenson says. "It shows how teams and organizations are dealing with that primary care shortage. They are looking towards the nurse practitioner and their role in the organization. Even if you're in a gastroenterology practice they are leaving the scope work to the physicians and the follow up visits to the practitioners. They are leveraging them to try to meet that demand."
One path toward better population health is for community and rural hospitals to create partnerships with local businesses and civic and government leaders, all of whom stand to enjoy the economic and social benefits of living in a healthier community.
Healthcare reform and the anticipated shift away from the traditional fee-for-service payment model toward a model that rewards value-based preventive care means that hospitals will have to play a greater role in managing the health of the populations they serve—even beyond hospital grounds.
And an effective way for hospitals to accomplish that goal would be to create partnerships with their local business, civic, and government leaders, all of whom stand to enjoy the economic and social benefits of living in a healthier community, says Stephen A. Martin, executive director for the Association for Community Health Improvement at the American Hospital Association.
"There is the common theme that the hospitals and the community stakeholders have to have and that is a willingness to come to the table to solve the health issues of their respective communities," Martin says. "If there is no openness from the various stakeholders, then we can't move the community toward wellness."
These partnerships are especially critical for smaller hospitals in rural areas because of the unique pressures and lack of money and other scarcer resources that they face to treat a patient mix that is generally older, less healthy, less affluent, and more prone to overweight. The good news, Martin says, is that many hospitals have been doing this sort of community outreach for years before the Patient Protection and Affordable Care Act was even drafted.
"The change, although it's new, is not new," Martin says. "Here we have an emphasis with the ACA coming on line in 2014 and the requirement of of community benefit, so you are seeing more emphasis on the fact that hospitals cannot do all of this work alone when you step out of the four walls. So we are working with our partners and stakeholders to move our communities to better health and wellness and our hospitals play a critical role in doing that very thing, not just within the hospital to make someone well but also well while they are outside of the hospital setting."
Now, the focus will be more concentrated toward prevention, disease management, and promoting wellness activities. Not all hospitals are in a position to act on these three prongs in the value-based model.
While hospitals are the logical providers of disease management, for example, it might make sense to work with the local public health agency to identify and prioritize the health threats your community faces so you can collaborate devise an effective population health improvement strategy.
Likewise, the wellness component might be best handled by gaining the active support of business leaders, such as the Chamber of Commerce, to promote workplace wellness initiatives. The local United Way or the community department of parks and recreation, or the mayor's office could be recruited to sponsor healthy activities and events promoting physical activity and good nutrition.
"It's the hospital that will play the vital role in that population health community benefit," Martin says.
"So, in one instances there could be a situation in a small rural setting that the hospital is the center and the convener of a population health benefit strategy. In other settings such as a larger metropolitan urban setting it could be various stakeholders, the local public health department, United Way, Chamber of Commerce, varying parties all coming to the table to be the integral entity that moves these initiatives forward. The critical component is the hospital either playing the role of convener or coming to the table. It's not a one-size-fits all."
What exactly that role will be can also depend upon the hospital. A larger academic medical center, or an integrated healthcare system with more resources and a larger staff might be able to take on more of the responsibility for population health than can a smaller rural hospital.
Rural and community hospital leaders looking for some help on identifying population health issues and establishing programs to address those issues may consult a new guide from the ACHI and the AHA's Hospitals in Pursuit of Excellence initiative.
"Each of these different structures and settings engage their communities in different ways," Martin says. "There is no cookie cutter way of approaching population health management because the dynamic here is the individual community, and each community is different."
Nestled in the massive immigration bill that's being debated now in Congress are a handful of provisions that could ease the process that allows foreign-born physicians to practice in underserved areas across the United States.
The sweeping Border Security, Economic Opportunity, and Immigration Modernization Act (S.744) is more than 850 pages long and covers everything from border security to passport fraud. However, the sections dealing with revisions to the Conrad State 30 Program for recruiting foreign-born, but U.S. trained physicians could be of particular interest to rural and urban hospitals and physician practices that have had little luck recruiting U.S.-born physicians for their underserved patients.
"I am excited about this bill for many reasons, but the section on physicians is particularly good," says Carl Shusterman, a long-serving immigration attorney based in Los Angeles. "We've had the Conrad program since 1994 which allows each state to sponsor 30 foreign physicians each year to go to rural and urban medically underserved areas where they can't get Americans to practice."
"All in all it is a good program and over 1,000 physicians a year do get placed in these underserved areas," he says, "but like any program there are a bunch of flaws that we have being trying to correct for 20 years and this bill would correct most of them."
Shusterman says it's hard to predict if the bill will pass in the hyper-partisan Congress, where immigration is a divisive issue. The bill recently passed the Senate Judiciary Committee on a 13-5 vote and floor debate could begin this week.
"The Senate introduced over 300 amendments to the bill but I don't think any of them were concerning the physicians' part of the bill. That is relatively non-controversial," he says.
"What is controversial is it legalizes 11 million people that are undocumented. That's where the problem is as far as this passing. In the Senate I can almost guarantee it will get one pass by the end of the month. The big debate is will it get 60 votes or 70 votes. There are about five Republicans who are definitely on board and pretty much all the Democrats but if they can get 70 they figure that will have an influence on the House. If they can get about 30-40 Republicans in the House to sign on it's going to be a done deal, but that is the big 'if' now in the House of Representatives.'"
Shusterman provided a synopsis of the reforms proposed in the immigration bill.
Proposed Changes to the J Visas and Waivers:
The pending legislation would make the Conrad program a permanent part of the immigration law. J status for foreign-born physicians completing medical residencies/fellowships would be classified as a "dual intent" status, similar to H-1B and L-1s.
A physician could no longer be denied J status on the ground that he or she did not intend to return to his country of origin. Spouses and children of J-1 physicians would no longer be subject to the two-year home residency requirement.
The number of Conrad waivers available to a state could be raised in increments of five depending on the usage of waivers in various states during the previous year. In addition, the number of J waivers available to physicians working in academic medical centers outside of medically underserved areas could be raised by three per year under certain conditions.
Physicians who received J waivers would no longer be required to work in H-1B status, but could work in any immigration status for which employment is authorized. To prevent foreign-born physicians from being exploited, J waivers would not be granted unless the physician's employment contract contained the following clauses:
1. The amount of "on-call hours" per week and the compensation for such;
2. The amount of malpractice insurance provided to the physician and whether the employer will pay for this;
3. All work locations, and a statement that the employer will not add work locations without the approval of the state or federal agency requesting the waiver;
4. The contract may not contain a "non-compete" clause.
If a physician's J waiver were denied under the Conrad program because the state had used up all of its slots for the year, the physician could obtain a six-month work permit if he or she agreed to seek a J waiver from a state which has not used all of its J waivers. After that, the physician could extend his or her work permit from the time that the employer in the new state filed a Conrad waiver until the DHS either granted a change of status or denied the waiver application.
The proposed law also provides that when the U.S. Citizenship and Immigration Service determines that "extenuating circumstances" exist, the physician could change employers during the three-year required period of employment in an underserved area.
"This is important because some employers have taken unfair advantage of physicians who they have sponsored for J waivers," Shusterman says. "For example, some employers have failed to pay a physician at the prevailing wage or have insisted that a physician work outside of the designated medically-underserved area for 40 hours per week. If the physician does not claim 'extenuating circumstances,' he or she needs not only to complete the 3-year period in a medically underserved area, but also an extra year for each termination."
The proposed law would also do away with an impractical requirement that the physician begin working within 90 days of receiving the J waiver. Instead, the proposed law would require physicians to start working in 90 days only after the latter of the following three dates: 1) After the J waiver is approved; 2) After completion of graduate medical education or training; or 3) After receiving nonimmigrant status or an Employment Authorization Document.
Proposed Changes to H-1Bs and Green Cards
When a physician completes his or her residency/fellowship in cap-exempt H-1B status, and an employer has submitted a cap-subject H-1B petition on his behalf, his H-1B status would automatically be extended to Oct. 1st so that the physician does not become out-of-status or unemployable between July and October. However, if the physician's H-1B petition is rejected, denied or revoked, his or her status and employment authorization would terminate after 30 days, Shusterman said.
Physicians who qualify for National Interest Waivers by completing the five-year service requirement in a medically-underserved area or for the Veterans Administration would be granted green cards without regard to numerical limitations. This would occur whether a physician completed the five-year requirement before or after the enactment of the (Comprehensive Immigration Reform) bill.
The spouse and children of a physician would also be exempt from numerical caps whether the physician obtains a green card through an NIW or through Program Electronic Review Management, Shusterman said.
Per-country limitations would be eliminated for the employment-based green card categories, which would dramatically reduce the time that it now takes physicians born in India to qualify for green cards.
"All of these changes would make it considerably easier for internationally trained physicians to work and live in the United States, enhancing the overall number of physicians at a time when doctors are in short supply," Shusterman says.
By opting not to expand Medicaid, Texas is passing up an estimated $90 billion in federal funds over the coming decade, leaving its healthcare providers, especially hospitals, in a tough financial spot. Rural care facilities are especially vulnerable.
The Medicaid enrollment expansions that take effect on Jan. 1, 2014 under the Patient Protection and Affordable Care Act are expected to extend health insurance coverage to as many as 17 million Americans, depending upon who's doing the calculations and how many states eventually sign on.
For healthcare providers in most states, the expansion represents a windfall of billions of dollars. The federal government will pay for the entire cost of the expansion through 2016. After that, the cost will gradually shift toward the states, but the feds will still pay 90% of the cost after 2020.
The expansion offers coverage to people who earn as much as 138% of the federal poverty level, which is $15,400 for one person and $31,800 for a family of four.
Given that hospitals and healthcare are huge economic drivers, those new Medicaid dollars could prove to be as valuable for economic activity and job growth as they are for improving population health. The Medicaid money will also free up local property and sales taxes that would otherwise be used to prop up charity care.
Under such circumstances, expanding the Medicaid rolls would seem like a no brainer. After all, the need is already there. People are going to get sick and need medical care regardless of whether or not they are insured. That care is going to cost money. Medicaid expansion simply answers the question of who is going to pay for it.
However, as we have seen over the last three years, the politics of "Obamacare" are so toxic that at least 14 states have said they will not expand coverage. "If the discussion is purely about money, it's hard to just walk away," says Matt Salo, executive director of the National Association of Medicaid Directors. "But this is not just about money. This is very much about politics and ideology."
More than any other state, Texas has come to represent "not just 'no' but 'hell no'" opposition to Obamacare, even though the Lone Star State has the highest percentage of uninsured citizens in the United States. It has been estimated that as many as 1.7 million Texans could gain coverage with the expansion, which would also funnel about $90 billion in federal dollars into the state over the next decade.
Governor Rick Perry and other key Republican leaders, however, have led the opposition, with Perry calling the expansion plan "a misguided, and ultimately doomed, attempt to mask the shortcomings of Obamacare. It would benefit no one in our state to see their taxes skyrocket and our economy crushed as our budget crumbled under the weight of oppressive Medicaid costs."
Instead of another federal mandate, Perry has called for "the flexibility to care for our own in a manner that makes sense both effectively and financially."
The problem is that the Texas legislature, which meets once every two years, adjourned this spring without taking any action on an alternative to the federal expansion plan. They could call a special legislative session to address the expansion, or it could be done administratively through the Perry administration, but those options appear unlikely right now.
As a result, when Jan. 1, 2014 rolls up, "the poorest Texans will be left out," says Anne Dunkelberg, associate director of the nonprofit Center for Public Policy Priorities.
"If they live in a big city they might be able to get some help from their local hospital district and what group gets served depends on what city they live in. That is going to be funded by 100% local property tax dollars instead of 100% federal funds. And if they live in a more rural county they may have no options. There may be no public program that is going to help them."
Dunkelberg says various studies have estimated that Texas will lose about $6 billion [PDF] a year over the next decade and beyond in federal subsidies because it won't expand the Medicaid rolls. "The funds would have created hundreds of thousands of jobs, the estimates ranged from between 215,000 to 300,000 jobs a year," Dunkelberg says.
"The amounts of money that are potentially going through communities—urban and rural—are fairly staggering and potentially having a big boost in terms of economic development in some parts of the state and certainly offsetting large amounts of uncompensated care that is currently funded with local property tax dollars. We are leaving that money on the table."
Left holding the bag, of course, will be healthcare providers, especially hospitals. They get the worst of both ends. They don't reap the benefit of seeing more insured patients, and their reimbursements for Medicare and Medicaid are being cut through the federal budget process and sequestration mandates.
"It's a difficult financial model," says John Hawkins, senior vice president for government relations at the Texas Hospital Association. "Trying to balance those cuts without being able to expand coverage is going to be difficult going forward."
In all likelihood, dwindling funding could mean that some smaller or financially strained hospitals will close. "For rural hospitals that is probably more the reality. In other areas you will see hospitals limit services which can be equally as challenging for their communities," Hawkins says.
"You are going to have worse health outcomes, particularly in areas where facilities have to limit services. Folks will have to drive farther. Your workforce isn't going to be as productive because of lack of coverage. The bigger impact will be poorer health outcomes and less-productive state."
It's not just the usual public advocacy groups who are calling for expanding the Medicaid rolls. Leading business groups in Texas have called for some sort of action. Hawkins says there has been a "continued drum beat" for expanding the rolls from a wide swath of special interest groups that recognize what is at stake.
"Certainly folks are concerned about the level of uninsured. They are concerned about the cost of healthcare. They understand the cost shift to taxpayers and the private market. There is a lot of discussion about it, but the general political headwind in this state against Obamacare is difficult to overcome," he says.
Perhaps the best hope for states that are ideological entrenched against Obamacare lies with the so-called Arkansas Medicaid Model, which would use Medicaid expansion money to subsidize premiums for commercial plans purchased through health insurance exchanges. That proposal is still being vetted by the Centers for Medicare & Medicaid Services.
It's not clear if Texas would adopt a similar plan. Even if it did it's not clear if the state could expand its rolls by Jan. 1, 2014 deadline.
Hawkins remains optimistic that some sort of solution will be reached.
"Actually, in retrospect, we are pleased the debate got as far as it did where we were actually talking about alternatives because early on it looked like folks were being reticent even to have that discussion given the will of the leadership," he says. "But we did advance the discussion even to the point where if things in other states continue to move forward we may have a chance to revisit this administratively."
The volume of mergers and acquisitions in healthcare is "consistent with efforts to try to achieve economies of scale… and changes in demand and particularly to realign and enhance services," says a report from the American Hospital Association.
The American Hospital Association contends that "the overwhelming majority" of hospital consolidations are "pro-competitive," improve quality and access to healthcare at a lower cost for the communities they serve.
And despite the seemingly daily accounts of mergers and acquisitions in the hospital sector, an AHA-commissioned report from FTI Consulting found that only 551 community hospitals—about 10% of all community hospitals—were involved in consolidations from 2007-2012 with an average of one or two hospitals acquired in most transactions. The report (PDF) was published Monday.
"It's a very dynamic industry with a large range of pressures in efforts to really realign care in the best site, with the best quality and most efficient cost of care delivery," Meg Guerin-Calvert, senior managing director at FTI, told reporters at a press conference Monday.
"While it is diverse, the common theme I would point to is that many of the acquired hospitals are smaller and they are standalone[s], suggesting that this structural change is consistent with efforts to try to achieve economies of scale and scope to try to respond to excess capacity and changes in demand and particularly to realign and enhance services. It's also consistent with the fact that the vast majority of transactions that have occurred in the last six years really have not received very intense antitrust scrutiny and the vast majority have been approved."
Monday's report may have been the AHA's attempt to change the media narrative of late. The nation's hospitals have taken it on the chin in the last several weeks, starting with the mid-May disclosures by the Centers for Medicare & Medicaid Services that showed huge and seemingly inexplicable variations in what hospitals charge for the same inpatient procedures.
On Sunday, The New York Times ran a front page story comparing the significantly higher price of medical carein the United States when compared with other countries. And on Monday CMS released for the first time hospital pricing data for 30 types of hospital outpatient procedures.
The health insurance industry has long taken a dramatically different view of hospital consolidations and says several studies have shown that it drives down competition and increases the cost of care while not necessarily improving access.
"The evidence clearly demonstrates that increasing provider consolidation is leading to higher prices for medical services and higher health care costs for consumers and employers," Robert Zirkelbach, spokesman for America's Health Insurance Plans, said in an email exchange.
Melinda Hatton, AHA senior vice president and general counsel, told the media that the report was needed because "there has been a lot of misinformation about what is going on in the hospital field particularly around mergers and acquisitions. This really fills a gap."
"You hear a lot about consolidation but you don't ever really see the facts of consolidation and this sums it up in a compelling way," Hatton says. "For the last six years there have only been 20 mergers or acquisitions (in service areas) where they started with fewer than five hospitals. In every other area there were more than five hospitals and plenty of competition. We looked at the 20 hospitals… and there were real tangible benefits to having to hospitals that are relatively close together come together for the community. When you hear people talk about consolidation, you need to talk about the particular hospital transaction to determine how it benefits the community… even though the community may be losing some putative competition."
AHA Executive Vice President Rick Pollack says the movement toward hospital consolidation "is all a part of trying to transform the whole delivery system to make it more efficient and improve care to get access to capital to keep struggling entities open so they can provide access."
"Sometimes hospitals would go bankrupt if you didn't have these kinds of arrangements. Another reason they are occurring is because we need to reconfigure services to reduce overlap and duplication that is necessary to help rationalized the delivery system."
"We need to achieve economies of scale for purchasing. A big reason is people need to come together to access capital to be able to invest in new technology and upgrade facilities and buy electronic medical record systems. It's not really about pricing all the time at all."
For the second time in three months, Bronx-based Montefiore Medical Center has announced it will buy a financially troubled suburban hospital. This time it is Sound Shore Health System, which operates two hospitals in New York.
Financially troubled Sound Shore Health System was thrown a lifeline last week when Montefiore Medical Center petitioned a federal bankruptcy court for permission to buy the two-hospital system. Terms of the deal were not disclosed.
Sound Shore Health System includes the 252-bed Sound Shore Medical Center of New Rochelle, and the 196-bed Mount Vernon Hospital. Montefiore said in a media release that it plans to keep open both hospitals and a skilled nursing facility. Sound Shore filed for Chapter 11 protection last week, just hours before Montefiore petitioned the court.
"Providing ongoing jobs and supporting the local economy are important benefits of a vital healthcare system," Steven M. Safyer, MD, president/CEO of Montefiore Medical Center, said in a media release."We are making a long-term commitment to lower Westchester to support and improve the health of area residents as well as the health of the local economy."
John Spicer, president of Sound Shore, told WVOX in Westchester that Montefiore has agreed to invest "a minimum" of $60 million for renovations.
"(A) new patient care unit, a number of infrastructure improvements, meaning new boilers, new roofs. So they're committing a significant amount of resources to upgrade facilities—both at Mt. Vernon and Sound Shore," Spicer said. "We are going to go through a restructuring process and they're putting significant resources behind that, in the $60 million-plus range. So they're committing a lot of money."
Spicer told the radio station that Sound Shores physicians would warm to the plan as they learned the details. "The more they are finding out… and we've become a little more public with everything, the comfort level is increasing," Spicer said.
"Montefiore has said out loud that they are committed to the private practice of medicine and our voluntary attending physicians, Montefiore has a couple of mechanisms within their structure, meaning the Montefiore IPA – which is an Independent Practice Association – which helps doctors improve their rates with insurers. And I think more and more our physicians are very comfortable with the entire process."
With the promise that both hospitals would remain open, the deal appears to have the support of the heavily unionized workforce at Sound Shore. The combined new system will include about 8,500 unionized staff. "Patients in Mount Vernon and New Rochelle deserve access to hospitals where they live," said Jill Furillo, RN, executive director of the New York State Nurses Association, which represents nurses at Sound Shore.
"Montefiore has committed to keeping Mount Vernon and Sound Shore hospitals open for care. We look forward to working with Montefiore, patients, and community leaders to preserve and expand healthcare access in our communities."
Adam Powell, a healthcare economist, says he thinks the deal will be approved by a federal bankruptcy judge because the acquisition is a good fit.
"Montefiore Medical Center has a large unionized staff, and may have the competencies necessary to manage the many unionized employees at the former Sound Shore Health System. Secondly, Montefiore may have been willing to take this risk it is rumored to have received the hospitals for a fractional of the value of their physical assets," says Powell, president of the Boston-based consulting firm Payer+Provider Syndicate.
"The push towards value-based care may have also played a role. While the hospitals are not exactly overlapping, they are potential substitutes for people with access to a car. In the long-run, the combined health system may be able to push patients towards lower cost facilities within it to reduce costs. Some types of shared overhead may also be reducible in the long-run."
The deal marks the second time in three months that Bronx-based Montefiore has picked up a suburban hospital at bargain basement prices. In March Montefiore finalized its $15.3 million acquisition of Westchester Square Medical Center, a community hospital in the Bronx that had operated under bankruptcy court protection for nearly seven years.
Earlier this year nearby Westchester Medical Center announced that it had ended six months of negotiations to acquire Sound Shore, claiming in a media release at the time that "Sound Shore appears to have a dramatically different view than WMC about how to best balance resources between investment in improving the Sound Shore/Mount Vernon facilities and the obligations that the Sound Shore System has accumulated over the years."
Spicer assured WVOX that this time the deal with Montefiore would go through. "This deal is done," he said. "It's a merger of the two facilities but when the dust clears, we are a part of Montefiore. We will be part of the Montefiore Medical Center Health System and frankly, they're the lead character here."
In a media release announcing the deal last week, South Shore said the "transaction will not impact the day-to-day operation and our nationally recognized doctors, nurses and staff will continue to serve our patients and provide quality, uninterrupted healthcare. This transition will not change SSHS's status as a not-for-profit hospital system and we will continue to treat all patients regardless of their ability to pay. In the long term, we believe that this acquisition will ultimately strengthen SSHS, leading to growth and enabling us to better serve the southern Westchester communities."
Montefiore operates nine clinics in Westchester and provides specialty care in cardiology, neurology and women's health, such as obstetrics and gynecology, fertility and reproductive medicine, fetal medicine and reproductive genetics. The transaction is subject to regulatory approval and could be completed by the end of the year, Montefiore said.
Advocate Health Care (IL) Finalizes Sherman Health Acquisition
Advocate Health Care on Sunday finalized its acquisition of Elgin-based Sherman Health Systems, which will now be known as Advocate Sherman Hospital.
Based in Bolingbrook, Advocate is the largest health system in Illinois.
Sherman's six other facilities in the Fox Valley will also take the Advocate name. Full integration of the two systems is expected to take about two years, Advocate said in a media release.
During its search for a buyer Sherman met with more than a dozen potential partners and began the due diligence process with Advocate in October, 2012. The deal was approved by state regulators in May.
"From the inception of our partnership discussions, our respect for the Sherman team and their accomplishments and capabilities has only increased," Jim Skogsbergh, Advocate's president/CEO said in a media release. "We share numerous core values; including a commitment to health outcomes and patient safety and a commitment to the communities we are privileged to serve."
Advocate operates 10 acute care hospitals, Illinois' largest integrated children's network, five Level I trauma centers, two Level II trauma centers, the state's largest home healthcare company and more than affiliated 6,000 physicians. Sherman will add seven sites, including a skilled nursing and inpatient rehabilitation facility, approximately 2,200 associates and 600 physicians to the Advocate system.
Advocate said it will not assume liability for Sherman's outstanding debt.
The federal agency's findings, other data, and practical experience suggest that hospitals should brace for a pronounced increase in ED use in 2014 when the ranks of the insured are expected to expand, says a board member of the American College of Emergency Physicians.
Andrew I. Bern, MD, FACEP (Photo Credit: ACEP)
One in five adults visited the emergency room at least once in 2011 and 7% reported two or more visits for the year, the Centers for Disease Control and Prevention reports.
The CDC's 36th annual Health, United States, 2012 report also found that in the decade from 2001 to 2011 both children and adults on Medicaid were more likely than the uninsured and people with private insurance to have at least one emergency room visit in the past year.
Andrew I. Bern, MD, an emergency physician in Florida and a board member with the American College of Emergency Physicians, says much of the CDC report "absolutely validates" what his organization has long been saying.
"The data is debunking the myth that only the uninsured go to the ED," Bern says. "We’ve been saying that for a while but it has not been carried well by the media."
Bern says the CDC data, other reports, and practical experience suggest that hospitals should brace for a pronounced increase in ED use in 2014 when the ranks of the insured are expected to expand by about 30 million people under the Patient Protection and Affordable Care Act.
"If you look at the Massachusetts, which is the basis for the Affordable Care Act, they found their volume of ED visits increased about 9% a year. When Canada instituted similar sorts of coverage their visits went up as well," Bern says. "Wherever this has been attempted to provide universal coverage or near-universal coverage utilization increases unless you provide an infrastructure alternative, such as increasing the primary care physician access."
Bern says it’s becoming apparent that sufficient ED alternatives will not be in place in many parts of the U.S. in 2014 when the ranks of the insured expand.
"You have alternative sites of care being developed but there is not good information on what impact that will have," he says. "Those alternative sites of care include the retail clinics run by nurse practitioners, urgent care centers, and free-standing emergency departments that are popping up in different states. These may ultimately provide different sites of care when people are looking for care urgently but there is no consistent basis. If a patient wants to be sure that they are not going to be turned away the only sure bet they have is the emergency physicians who are under federal law to treat everybody regardless of their ability to pay."
The CDC report also noted that:
In 2009–2010, cold symptoms were the most common reason for emergency room visits by children (27%) and injuries were the most common reason for visits by adults (14%.)
Between 2000 and 2010, 35% of emergency room visits included an x-ray, and the use of CT or MRI scans increased from 5% to 17% of visits.
In 2009–2010, 81% of ED visits were discharged for follow-up care, 16% ended with the patient being admitted to the hospital, 2% ended with the patient leaving without completing the visit, and less than 1% ended in the patient’s death.
In 2009–2010, 59% of ED visits (excluding hospital admissions) included at least one drug prescribed at discharge.
During 2001-2011, the percentage of persons with at least one ED visit in the past year was stable at 20-22%, and the percentage of persons reporting two or more visits was stable at 7-8%.
Bern says the CDC findings are consistent with a RAND Corporation study commissioned by the Emergency Physician Action Fund which shows that emergency physicians are key decision makers for nearly half of all hospital admissions.
RAND found that hospital admissions from the ED increased 17% over seven years, accounting for nearly all the growth in hospital admissions between 2003 and 2009, offset by a 10% drop in admissions from primary care physicians and clinical referrals. Nearly all of the increase was from "non-elective" admissions from the ED—a rate 3.8 times the rate of population growth.
Hospital inpatient care is a key driver of healthcare costs, accounting for 31% of the nation's healthcare expenses. Because of that, the role emergency physicians play in deciding who to admit to the hospital is critical to hospital cost savings, since the average cost of an inpatient stay ($9,200) is roughly 10 times the average cost of a comprehensive emergency visit ($922), RAND said.
"When you look at the overall $2.7 trillion healthcare system and that 31% of that expense is in the hospital and we are integrally involved in 50% of those admissions decisions it points to the value of the emergency physicians in the entire system," he says.
"The things we are proposing in terms of costs savings and integration are important points and our role in the entire healthcare context is one that is very very important to the bulk of that."
A program at the University of Alabama helps students prepare for the rigors of medical school—and careers as primary care physicians.
Mark Christensen, MD, knew he wanted a career in medicine ever since he served as an emergency medical technician with the volunteer fire department while still in high school at his tiny hometown of Toney in northern Alabama.
"I always thought it would be interesting to go the extra step and become a physician," Christensen says. "I enjoyed going into people's houses and taking care of them there and going all the way up to the hospital doors. But I wanted to see that other side of the doors as well and continue that care from inside the hospital throughout their stay."
Now a third-year resident in family practice at the University of Alabama School of Medicine, Christensen plans to return to rural Alabama when he finishes his residency in 2014. In large part, Christensen credits the University of Alabama's Rural Medical Scholars Program with helping him realize his dream of becoming a doctor. Christensen completed the scholars program during his senior year at the University of Alabama at Birmingham and it helped to prepare him for the rigors of medical school.
"They were able to help me because with the rural background and that kind of education I was at a disadvantage compared to some of the students going to bigger schools where they're doing calculus in the 8th grade it seems like," Christensen says. "We just didn't have those resources growing up and I didn't even know what I needed to know. This program definitely helps with that. They saw the potential in me and it turns out, I guess they were right."
Christensen says the tutoring and counseling he received from the program proved to be invaluable. "Coming into college was a rude awakening about how much you needed to study. I had no preparation for that coming in. They really helped you," he says.
"It takes a lot of things to get into med school, MCATs and GPA. A lot of people getting into the program have low MCATs. My MCATS were fine. I probably could have gotten in the regular way, but they help make you a better overall applicant. They understand you have a true desire to do this and they advocate for you to get in."
On Thursday, dozens of recent college graduates and college seniors from across rural Alabama will be interviewed and 24 of them will be selected to become Rural Health Scholars for the coming year. They will spend the time prepping for medical school and shadowing rural providers.
Susan Guin, RN, the associate director the Rural Scholars Program and a nurse practitioner, has been with the program for 17 years. She says interviewers try to find that mix of medical school candidates who can combine solid academics with the relationship-building and communication skills needed to thrive in rural environments.
"The common theme is that they come from a rural area so our selection criteria require that you have spent at least eight years of your life in a rural community. We try to select the student who has the desire to go back for the community and has a sense of family and home and wanting to be involved and immersed in the local community," Guin says.
"We are not necessarily looking for a GPA of 4.0 and an MCAT of 30. That is a great student and a smart person but there are also smart people who may have a 3.3 or 3.4 GPA, but they still do well and can sit down and carry on a conversation. They understand local culture and how to communicate with different people. There is value beyond the typical standardized testing idea."
While the rural scholars are not required to sign any sort of contract, Guin says there is "more of a handshake agreement" that they will commit to rural medicine when they graduate from medical school. The program appears to be working.
"[Within] general regular medical school admissions you are looking at maybe 10% of med students [who] end up going into family medicine/primary care. For us, we've got at least 60%—70% ending up in primary care, which would include family medicine and internal medicine and pediatrics and 90% that are staying in Alabama as practicing physicians. Some are cardiologist and radiologists, but they are still coming through our program and staying in the state. So we are not training physicians and seeing them go to another state. Those numbers alone are way outside the box for the norm."
The Rural Scholars program has proven so successful that it has morphed into a Rural Health Leaders Pipeline with six distinct programs that involve about 150 students of various ages at any given time, and even identifies and recruits 10th graders who've shown an interest in pursuing careers in healthcare.
"We work with them for the nine-month school year, at least having monthly meetings with them. College students, medicals students, and residents interact with the 10th graders to be mentors for students who might be interested in some sort of health profession," Guin says.
A separate program for 25 eleventh graders includes a five-week summer program with courses in chemistry, creating writing, and visits to hospitals and physicians offices. There is also a Rural Minorities Health Scholars program that provides first-year college students with preparatory classes in biology and shadowing healthcare providers.
Although he is committed to practicing in rural Alabama, Christensen says he understands the challenges that come with living in the country.
"It's hard because as we go through medical school we accumulate so much debt. The bill I just got the other day was $187,000. I can defer that because I am in residency for another year, but after that I have to start paying $187,000," he says.
"I don't know what $187,000 is! The most we had in the bank account growing up was $26,000 a year combined. In a rural area, you feel like you want to make up what you are in debt for and then some and so rural areas might not make as much money or you might go into a specialty and they are usually in bigger cities."
"Also as you go through medicine, you decide education is important and you look back at think, 'I was in a rural area and I didn't get a good education and I want my kids to have a better education so I am going to go to a large city where they will get a better education, better cultural opportunities and all that.' So it is hard balancing all of that."
Even with those challenges, Christensen says he's excited about his career path. "The more rural you are, the more skills are in need for all aspects of family medicine, which includes taking care of a kid on the pediatrics floor and then walking over to the ICU to take care of an adult in critical condition and bring them back to life and then you go to your office and treat a family," he says.
"I love that you can practice to your maximum ability. And as long as you are good and passionate about those areas, you will do fine. I put myself against any of those specialists any day."