The federal government has proposed new rules outlining what states may do to get a State Innovation Waiver under the Affordable Care Act.
Departments of Health and Human Services Secretary Kathleen Sebelius said the new guidelines “demonstrate the flexibility available to states as they continue to move forward on fixing our broken health insurance marketplace.”
Under ACA, State Innovation Waivers are available in 2017. However, the Obama administration said it supports legislation that would make waivers available to states beginning in 2014, so long as they:
Provide coverage that is as comprehensive as the coverage offered through Health Insurance Exchanges.
Make coverage as affordable as it would have been through the exchanges.
Provide coverage to as many residents as otherwise would have been covered under ACA.
Do not increase the federal deficit.
The enhanced flexibility for waivers comes as Republicans in Congress ramp up attacks on the more than 1,000 waivers issued under the ACA. The Hill newspaper reported Friday that the waivers have become a political liability for the Obama administration. Approval of waiver requests has jumped from 222 to almost 730 in December, and another 300 have been approved since then. The Department of Health and Human Services says waiver requests have slowed during the past two months, but that hasn't quelled the GOP outcry.
The Obama administration has said that states have significant flexibility in implementing ACA , from how they design exchanges to cracking down on insurance company abuses. States also have new resources to improve and lower costs in their Medicaid programs. For example, if states choose to operate their own exchange, they are eligible for grants to help design them and determine the rules, including whether to allow all companies to offer insurance in the exchange or to select only plans that improve the quality and affordability of the choices.
States could also provide tax credits that link small business tax credits to the tax credits for moderate-income families. Or they could change the benefit levels or add new benefit levels for health plans offered in the exchanges, HHS said in a media release.
The proposed regulation describes the content of the waiver application and how such proposals may be disclosed to the public, monitored, and evaluated. The Obama administration said it wants suggestions for improving this process from states, patients, providers, and the public.
Aetna and Roanoke, VA-based not-for-profit Carilion Clinic said this week they are collaborating to build an accountable care organization in southwest Virginia that will feature co-branded insurance plans for individuals and businesses.
Carilion CEO Edward G. Murphy, MD, told HealthLeaders Media Thursday that the collaboration was the logical next step for the health system because "we realized there was only so far you could go being a provider alone and deliver the kind of value that you want for the community."
"It became increasingly apparent to us that you needed a fundamentally different relationship with payersand be a partner in this regard," he says. "You have to think about what you and they bring to the table as being complementary and not adversarial and trying to jointly provide services and value to patients in common."
The Aetna-Carilion collaboration is expected to include co-branded commercial healthcare plans for businesses and individuals later this year, and new payment models that encourage providers to share accountability to improve patients' health, including rewards for meeting quality targets and shared costs savings, Aetna and Carilion said in a joint statement.
Carilion Clinic will continue to offer Medicare Advantage products and will buy administrative services through Hartford, CT-based Aetna to lower administrative costs. Aetna will become the administrator of Carilion's health benefits plan for its employees.
"Carilion Clinic would be the ACO, but the ACO needs a contracting vehicle and an insurance payment vehicle and that would be Aetna," Murphy says. "You will see co-branded insurance products with Aetna so we can bring insurance product to commercial market here that would carry Aetna's name and Carilion's name."
Murphy says Aetna would likely "begin taking over the back room management" for Medicare Advantage next month, and begin an open enrollment on July 1 for Carilion's 17,000 or so employees and dependents. Phase in for the commercial market and Medicaid are targeted for completion by the end of the year.
Charles Saunders, MD, president of Strategic Diversification at Aetna, said in a statement that the "collaboration is designed to bring new models of healthcare delivery, advanced technology and payment reform to the market that creates improvements in both quality and affordability of care. By bringing the best capabilities of each organization and aligning incentives across all stakeholders, we can create real value."
ACOs are a high priority for healthcare leaders. Seventy-four percent of hospital chief executives surveyed for the HealthLeaders Media Industry Survey 2011said they either already have the components in place to be considered an accountable care organization or that they will within the next five years.
Carilion's ACO features an integrated electronic medical record to support information sharing and a network of primary care physicians, specialists, hospitals and outpatient facilities.Aetna members using Carilion can access Aetna's online resources including pricing and quality, and wellness tools
"Aetna is exploring new ways to work with healthcare providers, and we've found that these discussions are positively received as we collectively seek to improve the healthcare system," said Thomas Grote, president of Aetna's Maryland, Virginia and Washington, D.C., markets. "Our arrangement with Carilion will provide a foundation to grow these new models of care."
Murphy says Carilion physicians and facilities will continue to participate in existing health plan provider networks and will accept members from Aetna and other private plans.
He says the relationship with Aetna should not hinder business with other health plans. "Certainly we will continue to contract with other insurance companies, and we need to, but our relationship with Aetna will allow us to provider broader array of services at lower costs," he says.
He says the collaborative won't stifle access for other insurers. "This was not an exclusive contract. We talked with other insurers about doing this but we got to the finish line with Aetna," he says. "It's another layer of competition that brings new products to the market that are in everybody's interest."
"If we were to tell all the other insurance companies that now we only deal exclusively with our own insurance product and that we would not be willing to continue having a contract with United or BlueCross that might be a different story," he says. "But we are not going to allow these contracts to get between us and our patients. Patient choice prevails and we are here to take care of our patients.
As many as 100 million Americans may be misclassified as having abnormal blood pressure, and it may time to reassess what constitutes "normal" blood pressure, the authors of a new study assert.
The study published in the current edition of the Journal of General Internal Medicine found that those people are not actually more likely to die prematurely than those with "normal" blood pressure, which is now considered below 120/80.
Lead researcher Brent Taylor, MD, from the Veterans Affairs Health Care System in Minneapolis and the University of Minnesota, and his colleagues, found that for people younger than 50, diastolic blood pressure is the more important predictor of mortality. For people over 50, systolic blood pressure is the stronger predictor.
"Our findings highlight that the choice of approach used to define normal blood pressure will impact literally millions of Americans," Taylor said. "If we cannot reliably see an effect on mortality in a large group of individuals followed for nearly 20 years, should we define the condition as abnormal? We believe considering this kind of approach represents a critical step in ensuring that diagnoses are given only to those with a meaningful elevation in risk, and targeted towards individuals most likely to benefit."
The study examined the independent contribution of diastolic blood pressure and systolic blood pressure on mortality, as well as how these relationships might affect the number of Americans currently labeled as having abnormal blood pressure.
Researchers looked at data for 13,792 people from the National Health and Nutrition Examination Survey, which enrolled participants in 1971-76 and followed them up for two decades. They studied DBP, SBP and long-term survival data specifically.
To assess the underlying distribution of untreated blood pressure in American adults by age, Taylor and team also looked at data for 6,672 adults from the first National Health Examination Survey carried out between 1959 and 1962.
They found that in people aged over 50, those with SBPs above 140, independent of DBP, were significantly more likely to die prematurely. In those aged 50 or less, DBPs above 100 were linked to significant increases in premature death. The authors' analysis offers alternative cut-off points for the definition of "normal."
HCA Inc. late Wednesday sold 126.2 million shares at $30 a share in an initial public offering that raised $3.79 billion – nearly $200 million more than projected by analysts for the third IPO in the history of the Nashville-based hospital chain.
HCA sold 87 million shares, and shareholders sold 38.4 million shares, HCA said. In addition, underwriters have been granted a 30-day option to buy an additional 18.9 million shares from shareholders. The shares are expected to begin trading on the New York Stock Exchange Thursday morning under the ticker symbol "HCA" and the offering is expected to close on March 15, HCA said in a statement.
HCA will use the IPO net proceeds to temporarily reduce its asset-based revolving credit facility and its senior secured revolving credit facility. The hospital chain said it will not get any of the proceeds from the sale of shares of common stock by the shareholders.
HCA has been privately held since November 2006 in a $33 billion leveraged buyout that required about $27 billion in debt to finance the deal.
HCA is the nation's largest for-profit hospital chain, with 154 hospitals and 96 freestanding surgery centersin 20 states and the United Kingdom. HCA reported more than $30 billion in revenues for the 12 months in fiscal 2010.
Standard & Poor's Rating Services said Wednesday that HCA's rating outlook is not expected to be altered by the IPO. "Still, financial sponsors of the largest U.S. hospital company, who have received dividends totaling over $4 billion since its $33 billion buyout in 2006, will continue to dictate a financial risk policy that we believe will be highly leveraged," S&P said. "That means that, in our opinion, debt to EBITDA may average around five times as shareholder-oriented investment and dividend activity consumes much of its cash flow from operations, which was $3 billion in 2010.
Six health plans in New York State funded incentives worth $1.5 million to establish patient-centered medical homes that will serve nearly 500,000 people in the Hudson River Valley region, program coordinator Taconic Health Information Network and Community announced Wednesday.
The health plans--Aetna, CDPHP, Hudson Health Plan, MVP Health Care, UnitedHealthcare, and Empire BlueCross Blue Shield--represent 65% of the commercial insurance market in the Hudson Valley and 43% of Medicaid managed care. THINC said the plans set aside competition in favor of cooperation, and paid the incentives to 236 primary care physicians in 11 practices that achieved patient-centered medical home recognition from the National Committee for Quality Assurance.
The PCMH transformation project was managed over one year by not-for-profit THINC.
"This success of this project means we've reached critical mass for the medical home in the Hudson Valley," said Susan Stuard, THINC's executive director. "A majority of the commercial and public program insurance plans serving the Hudson Valley worked together to support the foundation of primary care -- bring better preventive care, improved chronic condition care, and better access to coordinated care. Ultimately, this project shows that those caring for the people of the Hudson Valley can move beyond competition to enhance quality."
Along with the promise of incentive payment once NCQA recognition was achieved, the health plans provided data which will be used to evaluate the project's outcomes, part of a five-year commitment from the plans to help practices delivery enhanced care.
"The project evaluation will go beyond what the national demonstration project was able to measure, giving us information about physician satisfaction, patient satisfaction, and improvements in quality of care, which we can report in 2011," Stuard said. "For the first time, the data set will allow us to benchmark this quality data and then look at those issues over time."
Moving forward, Stuard said THINC wants care management within NCQA Level 3 patient-centered medical homes to improve efficiency and quality. Borrowing technical support from Geisinger Health System’s ProvenHealth Navigator program, THINC will create a small pilot at several sites before rolling out to medical home recognized primary care providers across the region. Stuard said the program will serve as a national model operating outside of an integrated health system.
Patients have a 46% lower risk of experiencing a safety incident at a top-rated hospital compared to a poorly rated hospital, HealthGrades reports this week.
The findings are from the annual HealthGrades Patient Safety in American Hospitals study, released Wednesday, which analyzed 40 million Medicare patient records, from 2007 to 2009. HealthGrades used 13 patient safety indicators published by the Agency for Healthcare Research and Quality to identify preventable medical mistakes that occurred during patients' hospitalizations.
"HealthGrades commends the efforts of those hospitals that are focused on providing consistent, safe and effective medical care," said Rick May, MD, vice president of clinical quality services at Denver-based HealthGrades, and co-author of the study. "But the fact remains that there are huge, life-and-death consequences associated with where a patient chooses to seek hospital care. Until we bridge that gap, HealthGrades urges patients to research the patient safety ratings of hospitals in their community and know what steps they can take to protect themselves from error before being admitted."
The HealthGrades study also found that:
Four patient safety indicators (death among surgical inpatients with serious treatable complications, pressure ulcer, post-operative respiratory failure, and post-operative sepsis) accounted for 68.51% of all patient safety events during the three years analyzed.
The 13 patient safety events studied were associated with $7.3 billion of excess cost, which equates to an additional $181.17 per Medicare patient hospitalization.
Preventable medical errors are so pervasive and costly that the federal government has proposed linking incentive-based hospital compensation to four of the AHRQ Patient Safety Indicators, starting in 2014. In addition, the Centers for Medicare and Medicaid Services are currently developing a 10-year, $70 billion plan aimed at reducing hospital-acquired infections.
Even with encouraging research from the Centers for Disease Control and Prevention showing reductions in hospital-acquired bloodstreaminfections, that progress is inconsistent. Some hospitals have made rapid progress in reducing infection rates, but hospitals continue to show wide variations.
HealthGrades found that patients treated at the top 5% of hospitals for patient safety were 52% less likely to contract a hospital-acquired bloodstream infection or to suffer from post-surgical sepsis than those treated at poor-performing hospitals. Nearly one in six patients who acquired a bloodstream infection while in the hospital died, the study found.
HealthGrades used the AHRQ's 13 patient safety indicators – which include foreign objects left in a body following a procedure, excessive bruising or bleeding as a result of surgery, bloodstream infections from catheters, and bedsores – to identify those hospitals performing in the top 5%, naming them Patient Safety Excellence Award recipients. The list of these hospitals, along with clinical quality ratings for all of the nation's nearly 5,000 hospitals, can be found at HealthGrades.com.
The HealthGrades study also found regional variation in the prevalence of medical errors and preventable deaths and complications. The 10 cities with the fewest patient safety incidents are: Minneapolis-St. Paul; Wichita, KS; Cleveland; Wilkes-Barre, PA; Toledo, OH; Boston; Greenville, SC; Honolulu; Charlotte, NC; and Oklahoma City.
HealthGrades independently and objectively analyzed approximately 40 million Medicare patient records from fiscal years 2007 through 2009. To be included in the analysis, hospitals must have met minimum thresholds in terms of patient volumes, quality ratings, and the range of services provided.
In the HealthLeaders Media Industry Survey 2011, ninety-one percent of healthcare leaders specializing in quality improvement said compliance with government regulations in the next three years will be challenging or very challenging.
Texas Children's Hospital has opened its first suburban hospital in the Barker Cypress area of West Houston. The $220 million, 48-bed, Texas Children's Hospital West Campus will serve one of the nation's fastest growing pediatric populations—the area from Sugar Land to Bryan-College Station, TX, THC said.
The five-story, 515,000 square-foot West Campus hospital has about 370 physicians, nurses, and staff. It sits on 55 acres and features the only 24/7 pediatric emergency room in the Greater West Houston area, two operating rooms, 48 intermediate and acute-care patient beds, advanced imaging, a sleep lab, a pathology lab and a pharmacy.
The hospital can expand to accommodate an additional 48 beds. An attached outpatient clinic, which opened in December, has 15 pediatric subspecialty practices including physical/occupational and speech therapy, cardiology, and oncology, and houses a Texas Children's Pediatric Associates primary care practice.
West Campus is a part of the hospital's $1.5 billion expansion, Vision 2010, which also includes the Jan and Dan Duncan Neurological Research Institute, the nation's first multi-disciplinary research institute for childhood neurological disorders, and the Texas Children's Pavilion for Women, an obstetrics hospital focusing on high-risk births.
“The opening of this new community hospital exemplifies Texas Children's 50-year commitment to the health and wellbeing of children and families by providing them with expanded access to the highest quality family-centered pediatric care,” said Mark A. Wallace, president/CEO of TCH. “Our new community hospital complements the services we provide at our Main Campus in the Texas Medical Center and is a key component of our vision for the future.”
For-profit hospitals will continue to see revenues stressed by soft volumes and pricing pressures over the next 12 to 18 months but profitability should remain healthy thanks to cost containment efforts, Moody's Investor Services said.
The credit outlook for the sector remains stable through mid-2012, but growing uncertainty surrounding pricing and demand prompted a negative bias on the outlook, Moody's said in its report: For Profit Hospitals: Profitability to Remain Healthy Despite Pressures.
"Moody's negative bias on the stable outlook for the for-profit hospital sector stems from our belief that these headwinds and additional investment in growth initiatives may make it difficult for hospitals to maintain their current margins," said Dean Diaz, a Moody's senior credit officer.
The expectation that weak hospital admissions trends will not worsen over the next 18 months provides some stability to for-profit hospitals, Diaz said.
Also tempering Moody's stable sector outlooks is its belief that consumers' overall use of medical services will be lower than otherwise would have been expected due to changes in health benefit plans and greater cost shifting to employees.
Longer term, however, demographics, healthcare reform legislation and the introduction of new technologies will help drive growth in demand for both hospital services and medical devices.
Moody's rated the median profit margin of for-profit hospitals at about 15%.
The report said that:
Investments that hospitals are making to foster future growth could also compress margins in the near term. These include upgrading information technology and aligning with physicians in a bid to boost patient referrals.
Growth in adjusted admissions will likely remain weak as the uninsured or people whose premiums and co-pays have risen continue to defer non-urgent care. Birth rates, and related hospital admissions, have also declined amid high unemployment and economic sluggishness. This trend will likely continue constraining volume growth.
Pressure on pricing should continue as commercial insurers resist payment increases and Medicare reimbursements fall.
Longer-term factors should support demand for hospital services, including the aging baby boomers and consumers' increased access to healthcare through the 2010 industry reform package.
House Democrats want a formal review of Medicare Part D after a federal audit found the program's "sponsors" may have overcharged policyholders by underestimating by billions of dollars the value of drug manufacturers' rebates in nearly 70% of their bids for plan year 2008.
"According to the Inspector General, the private health insurers providing the drug benefit are commonly underreporting drug manufacturer rebates, resulting in billions of dollars of profits at the expense of taxpayers and Medicare beneficiaries," Democrats on the House Energy & Commerce Committee said in a letter to Joseph R. Pitts, R-PA, the chairman of the Subcommittee on Health, and Cliff Stearns, R-FL, the chairman of the Subcommittee on Oversight and Investigations. "The Inspector General's report reveals severe problems with the structure of the Part D program and the behavior of the private insurers that administer the drug benefit. These failures present a severe risk to program integrity, reduce beneficiaries access to important drugs, increase drug costs for seniors, and cause billions of dollars in wasted taxpayer funds," the Democrats said in their letter.
The Office of Inspector General for the Department of Health and Human Services conducted the audit and examined six Medicare Part D sponsors, and found that some "may deliberately underestimate their rebates to increase profits."
In addition, the audit determined that the sponsors had "commonly had complex relationships with their pharmacy benefit managers, and in some cases, these relationships lacked transparency. This lack of transparency raises concerns that sponsors may not always have enough information to oversee the services and information provided by pharmacy benefit managers." The audit found that some sponsors passed the fees that their pharmacy benefit managers received from manufacturers on to the program, while others did not.
OIG did not identify the six sponsors it audited.
The Plan D sponsors reported receiving $6.5 billion in drug manufacturer rebates in 2008, which represents approximately 10% of total gross Part D drug costs. "Rebates can substantially reduce the cost of the Part D program; however, sponsors must accurately report these rebates to the government in order for the government and beneficiaries to receive any cost savings," OIG said.
In a list of recommendations, OIG urged the Centers for Medicare and Medicaid Services to: (1) take steps to ensure that sponsors more accurately include their expected rebates in their bids, (2) require sponsors to use methods CMS deems reasonable to allocate rebates across plans, (3) ensure that sponsors have sufficient audit rights and access to rebate information, and (4) ensure that sponsors appropriately report the fees that pharmacy benefit managers collect from manufacturers.
The industry group America’s Health Insurance Plans sees it this way: The Part D program is highly competitive so plans have an incentive to offer the lowest bids and, therefore, the most affordable premiums to attract beneficiaries. As a result, AHIP spokesperson Robert Zirkelbach explains, overall cost of the Part D program is far below original projections – saving money for seniors and taxpayers. According to CMS, the average Part D premium in 2011 is about $30, only a $1 increase from 2010 and well below estimates when the Part D program was enacted.
It is also important to keep in mind, Zirkelbach says, that Part D bids are based on projections of future costs, which are inherently uncertain. As the report notes, he continues, Part D plans reconcile rebates estimated in their bids with the amounts actually collected from pharmaceutical manufacturers to ensure the taxpayer continues to share in any additional savings the plan may be able to generate.
The American Medical Association Monday applauded a federal appeals court's ruling that physicians who bill patients after providing services are not subject to Federal Trade Commission so-called red flag rules that apply to creditors.
AMA President Cecil B. Wilson, MD, said the ruling Friday by the U.S. Court of Appeals in Washington, DC, validates the AMA's long-standing argument with the Federal Trade Commission about the red flag rules' application to physicians.
The appeals court, ruling on a lawsuit filed by the American Bar Association that challenged the application of the red flags rule to attorneys, said the FTC's regulations were made invalid because Congress passed the Red Flag Program Clarification Act of 2010 in December to better define who is considered a creditor under the rule.
"The court's decision reinforces the intent of a new law clarifying the scope of the red flag rule and helps eliminate any further confusion about the rule's application to physicians," Wilson said in a statement. "The AMA will remain vigilant that the FTC respects the meaning and intent of the Clarification Act."
The AMA and other physicians' groups objected to the FTC's requirement for physicians to verify the identity of their patients before agreeing to treat them if the patients are not paying in full at the time of the visit.
The intention of the requirement is to prevent potential cases of identity theft. If a patient says he or she is someone else, the wrong person or entity would be billed for that individual's care. But doctors complained that requiring such proof of identity is time-consuming, awkward, and may delay care if the patient didn't bring proper documents.
On Friday, the three-judge appeals panel wrote that "the Clarification Act makes it plain that the granting of a right to 'purchase property or services and defer payment therefore' is no longer enough to make a person or firm subject to the FTC's red flags rule -- there must now be an explicit advancement of funds. In other words, the FTC's assertion that the term 'creditor,' as used in the red flags rule and the FACT Act, includes 'all entities that regularly permit deferred payments for goods or services,' including professionals 'such as lawyers or health care providers, who bill their clients after services are rendered,'…is no longer viable."
The appeals court ruling may be viewed here. The Red Flag Program Clarification Act of 2010 may be viewed here.
