USRC, a privately held company based in Plano, TX, will open a tender offer for all outstanding common shares of Linthicum, MD-based DCA for $11.25 per share in cash, followed by a merger to acquire all remaining outstanding DCA shares at the same cash price, which represents a premium of 72% over Tuesday's closing stock price, the two companies said in a joint media release.
"For shareholders, the transaction provides a compelling opportunity to realize the value DCA has created," said Thomas K. Langbein, chairman of the board at DCA, which unanimously approved the deal.
Directors and executives at DCA hold approximately 23% of DCA's common stock and will tender their shares into the tender offer. USRC expects the transaction to close in May.
"USRC and DCA each have built strong regional operations and this transaction permits us to build a more efficient and stronger national operation," said Chris Brengard, chairman/CEO of USRC. "DCA, like USRC, has a commitment to building joint ventures with nephrologists."
When the deal is finalized, USRC will provide dialysis services to approximately 5,500 patients through 84 outpatient dialysis facilities in nine states, more than 12 home dialysis programs, and 24 dialysis programs within acute and specialty hospital facilities. USRC now operates 47 dialysis clinics in Texas and Arkansas.
A leading primary care physicians association is warning its members that Congress, bogged down by partisan squabbling, may not be able to delay the 21.2% cuts to Medicare reimbursements that go into effect Thursday.
"The physician payment extension has been caught up in much larger issues of unemployment insurance and the federal deficit," Kevin Burke, lead lobbyist for the American Academy of Family Physicians, said in a media release. "But while Congress is mired in its partisan battles, family physicians are faced with drastically reduced payments now and administrative nightmares in the near future."
The Senate today passed a procedural hurdle on a bill that would provide a Medicare payment extension through April 30, reversing the 21.2% reduction that took effect on April 1 under the sustainable growth rate formula.
Now, Senators will begin consideration of the bill reversing the payment reduction. If Senators don't agree to shorten the allocated debate time, however, they may not vote on final passage of the bill until after Thursday's deadline, Burke said.
The physician pay cut has been an ongoing drama on Capitol Hill. The House passed the Medicare extension bill on March 17. However, the Senate failed to act on it before a two-week spring break recess on March 26. The reimbursement cut went into effect on April 1, but CMS ordered contractors to hold payments delivered after April 1 for 10 business days, or April 14, anticipating that Congress would act on the cuts before they took effect.
Burke says the bill providing the payment patch through April 30 is expected to pass, perhaps by Friday, after which Congress will debate a bill to extend the current payment rate until Oct. 1. Both the House and the Senate have passed separate extension bills, but are negotiating how to pay for it.
If Congress doesn't approve the Medicare patch until after the April 15 deadline, physicians would see one or two days of claims processed at the reduced rate. AAFP has asked CMS if it will pay the difference between the reduced claims rate and the restored rate automatically or if physicians will have to resubmit their claims. AAFP also asked for guidance on how physicians should handle copayments they may have collected since April 1.
AAFP has additionally asked CMS if the deadline for physician nonparticipation in Medicare for 2010 has passed, AAFP said.
Whistleblower lawsuits and multimillion dollar Medicare fraud settlements involving otherwise reputable hospitals and health systems are becoming standard media fodder on the Department of Justice Web site.
As is almost always the case, the accused providers that are often paying millions of dollars to the federal government to settle whistleblower suits for self-referrals, or inflated outlier charges, or whatever the gist of the suit may be, are also claiming that the settlement is not an admission of guilt.
Most claim they are paying the fines to avoid costly and interminable litigation. "The lesson to be learned really in all of these similar cases is that the government is looking for fraud and will go after providers if they think there is a problem," says Anna Grizzle, an attorney with Nashville-based Bass, Berry & Sims, PLC.
She says there will be even more enforcement actions against healthcare providers in the coming months and years because the federal government believes it can pay for some of the health reform by cracking down on fraud.
"With the expansion of the False Claims Act and the enhanced penalties under the new health reform laws, the government has demonstrated that it is serious about tracking down healthcare fraud, and with increased funding under the health reform legislation will have the money to be able to do it," Grizzle says.
Health reform requires healthcare organizations to have compliance programs. Grizzle says these programs must proactively find problems before the government or contract auditors.
"It's much better for the organization to find it, fix it, and repay any money it shouldn't have received, rather than have the government find it. And in today's era of heightened scrutiny, healthcare organizations should assume that if there is a problem the government will find it," Grizzle says.
Strong compliance programs should include robust internal and external audits, with healthcare organizations conducting their own data mining to identify systemic problems that they can correct internally.
"A good compliance program should have a strong internal audit function, where you are looking over your own claims. It also should consider periodic external audits as well on risk areas," Grizzle says.
There are several sources for finding risk areas. HHS' Office of Inspector General issues fraud alerts about potential risk areas, and other sources include RAC audits, and detailed readings of whistleblower settlements.
A good compliance program starts with strong policies and procedures and a well-trained staff that understands appropriate billing and compliance with state and federal regulations.
"As you do your own internal audits, are you seeing a pattern of mistakes being made to indicate there is vulnerability in your systems? Through your employee hotline or other complaint reporting mechanisms, are you seeing the same complaints being made?" Grizzle says. "That could be a red flag for a potential issue you might want to explore to determine if any corrective action is necessary."
Even if a hospital is guilty of an honest mistake, Grizzle says they still have to be ready to defend against allegations that the mistake is potential healthcare fraud, and defending is expensive.
"With some of the proactive data mining and analysis, the government contractors are identifying outliers in a particular geographic area," she says. "Sometimes, there are good reasons why someone is an outlier. You can defend it. But if you are identified as a target because you seem to have a high utilization rate for a particular situation, then you have to be prepared to defend why you are an outlier."
Bell, an internist, and most recently the senior vice president of HIT Services at Masspro, replaces retiring chair Mark Leavitt, MD, who led CCHIT since its inception in 2004.
"The commission has a trusted name and processes and is already well respected for its nimbleness, creativity, transparency, and inclusiveness," Bell said in a media release. "I look forward to working with the commission's staff and volunteers to build on that foundation to meet the needs of healthcare providers and consumers in this rapidly evolving health IT environment."
Before leading Masspro, the federally-contracted quality improvement organization in Massachusetts, Bell was director of the Office of HIT Adoption and acting deputy in the Office of the National Coordinator at HHS. She was ONC's representative on CCHIT's board of commissioners from 2006 to 2008. She has also served as division director for the quality improvement group, office of standards and quality at CMS, and was medical director of Blue Cross Blue Shield of Rhode Island.
"[Dr. Bell's] background as a practicing physician, as an expert in health information technology, and in quality assurance efforts in both the public and private sectors makes her uniquely qualified to head the Certification Commission," said Frank Trembulak, COO of Geisinger Health System, and chair of the CCHIT board of trustees.
For decades, not-for-profit hospitals and health systems have used defined benefits pension plans as a recruiting tool to attract quality staff, and as a means of fulfilling their stewardship role with their employees and the communities where they live.
A new report from Standard & Poor's Rating Services, Pension Funding Woes Escalate for U.S. Not-for-Profit Hospitals and Health Systems, shows that those defined-benefits plans may come under increased financial pressure in the coming years, as hospitals adjust to softer patient volumes and lower cash reserves.
"A lot of hospitals are very concerned about it because they are starting to see the volatility that you can experience with a defined benefit plan, compared with a defined contribution plan," says S&P analyst Liz Sweeney. "They are seeing that more clearly now because of what happened in the investment markets in the last 18 months."
Unlike most other sector of the economy, Sweeney says nearly all of the 615 not-for-profit hospitals and health systems that S&P speaks with offer their employees defined benefits plans. "We only identified 40 that have defined contribution only, so the vast majority are doing defined benefit plans still," she says. "Some of those plans were frozen years ago and are essentially in run off now. But they are still out there. I've been surprised through all this recessionary pressure and what happened in the investment market that more hospitals haven't abandoned their defined benefits pensions, but most of them are sticking with it."
Nevertheless, Sweeney says many hospitals also are reassessing pension plan designs and figuring out if they should make changes. "Whether that is a one-year freeze in benefit accruals or a total freeze, or do they stop allowing new employees in the defined benefits plans?" Sweeney says. "Most of them have stuck with their plans but they are all examining it and making their individual decisions."
The recession has hammered pension funds. Funding status for defined benefits plans of not-for-profit hospitals and health systems in S&P's sample fell to a median 68.6% in fiscal 2009, from 82.9% in fiscal 2008 and 90.4% in fiscal 2007. (To find that median, S&P divides the market value of a health system's assets by the projected benefit obligation, which includes actuarial calculations about length of employee service, salaries, raises, turnover, age at retirement, etc. S&P then calculates the plan sponsor's discount rate for the liability back to the present.)
Sweeney says those valuations--based on audited financial statements from June 2009–will likely improve with the economy. "The majority of the December year-ends have not completed their audits. So we expect to see a rebound as we start to see those late 2009 audits and the fiscal 2010 audits," she says. "We do think the valuations have already rebounded. You won't see them in our numbers yet, but we think they already have to some extent. We clearly aren't back to peak level, and everybody understands that."
S&P doesn't believe fluctuations in the value of pension plans significantly impact credit ratings. "It's a long-term obligation so in a lot of cases it's a drop in the bucket," Sweeney says. "The net periodic benefit cost for these plans, our median showed, was 1.1% of total expenses for a sample of 250 hospitals."
Using that 1.1% median, if a hospital's pension costs went up 20%, that would still represent only 1.3% of total expenses, Sweeney says. That's not a big number, and it probably explains why not-for-profit hospitals and health systems are sticking with defined benefits pensions.
But, it is one more cost to worry about, and Sweeney predicts a gradual move away from defined benefits. "You will see more freezes where hospitals will say: ‘No new entrants to the plan. Anyone hired after today goes into a defined contribution plan,'" she says. "We will see hospitals looking more at their asset allocations for the plans, trying to reduce volatility."
Readers, I've got a few questions for you. What adjustments, if any, have you made to your defined benefits plans to account for the recession? How important is the defined benefits plan for recruiting and retaining quality staff? Will your hospital move away from defined benefits plans and into defined contribution plans? Why are defined benefits plans so deeply entrenched with not-for-profit hospitals when they've been phased out in most other sectors of the economy?
Note: You can sign up to receive HealthLeaders Media HR, a free weekly e-newsletter that provides up-to-date information on effective HR strategies, recruitment and compensation, physician staffing, and ongoing organizational development.
The theft of 57 hard drives from a BlueCross BlueShield of Tennessee training facility last fall has put at risk the private information of nearly one million customers in least 32 states, the insurer said this week in an investigative update.
So far, there has been no documented identity theft or credit fraud affecting BlueCross members as a result of this incident, BCBS of Tennessee said in a media release.
"As of April 2, 2010, a total of 998,422 current and former members have been identified at being at risk," said BCBS of Tennessee spokeswoman Mary Thompson, adding that the total figure includes 447,549 current and former members identified in the lowest-risk Tier 1 category.
"These newly-identified members in Tier 1 began receiving their notification letters the week of April 5. To date, a total of 550,873 notifications have been sent to members indicating that their personal information was included on the stolen hard drives," Thompson said.
The hard drives containing 1.3 million audio files and 300,000 video files related to coordination of care and eligibility telephone calls from providers and members were reportedly stolen from a leased office in a Chattanooga strip mall that once housed a BCBS of TN call center. The video files were images from computer screens of customer service representatives and the audio files were recorded phone conversations from Jan. 1, 2007 to Oct. 2, 2009. The files contained customers' personal data and protected health information that was encoded but not encrypted.
So far, notices have been sent to all 238,589 members in the Tier 3 category, who had their name, address, BlueCross member ID number, diagnosis, Social Security number, and/or date of birth included in the stolen hard drives.
Additionally, 312,284 current and former members have been identified in the Tier 2 category, which includes name, address, BlueCross member ID number, date of birth, and/or diagnosis. So far, 146,612 Tier 2 members have received notifications.
The number of members reported in the Tier 2 category is larger because of BlueCross' decision to offer remediation services to all family members associated with the specific subscriber ID number identified during the data audit process. This decision was made to ensure all potentially at-risk members are protected.
So far, 24,780 members have contacted Equifax to begin a free credit monitoring service offered to members in Tier 3. Another 2,512 members have started LifeLock services for minors in Tier 3. All 998,422 members and former members have been enrolled in the Kroll ID Theft Smart program.
The American College of Radiology announced it will launch a Breast Magnetic Resonance Imaging Accreditation Program on May 10.
The program was developed by the ACR Committee on Breast MRI Accreditation. It will provide peer-review assessment of facilities' breast MRI services equipment, processes, and the quality of their images. For facilities that offer only breast imaging services, the accreditation program fulfills accreditation requirements under the Medicare Improvements for Patients and Providers Act of 2008.
"This program will help patients and their providers identify practices that provide high-quality breast MRI," said Constance Lehman, MD, chair of the ACR Committee on Breast MRI Accreditation, in a news release. "This accreditation program sets quality standards for breast MRI providers and helps them continuously improve patient care by evaluating the qualifications of personnel, equipment performance, effectiveness of quality control measures, and image quality,"
Facilities must submit clinical images and data for each magnet performing breast MRI examination at their site. Facilities performing breast MRI must be able to perform mammographic correlation, directed breast ultrasound, and MRI-guided intervention, or create a referral arrangement with a cooperating facility that could provide these services.
The cooperating facility must be accredited by the ACR in breast MRI, or, until May 10, 2011, has had an application for breast MRI accreditation accepted by the ACR.
ACR CEO Harvey L. Neiman said more than 200 facilities have already shown an interest in participating in the ACR Breast MRI Accreditation Program, and will receive instructions on how to get started after May 10.
Atlanta-based Saint Joseph's Health System and Piedmont Healthcare have signed a letter of intent to create a joint operating company (JOC) serving northern Georgia, the two health systems announced.
The JOC would be co-sponsored by the two nonprofit systems, which are expected to complete negotiations within a 90-day due diligence period, and have the JOC in place by the end of the year. The JOC would have separate management and a board comprised of trustees from SJHS and Piedmont, and would operate under the Ethical and Religious Directives of the Catholic Church.
Both system CEOs said the changing healthcare sector calls for creating a collaborative business model.
"In a constantly changing and complex healthcare environment, a joint operating company with Piedmont Healthcare is a smart, efficient and cost-effective way to provide the best quality of care possible for Georgians," said Kirk G. Wilson, president/CEO of Saint Joseph's, in a media release. "The JOC is a wonderful opportunity to create one of the finest healthcare delivery systems in the country, and we are very excited with the prospect of partnering with Piedmont Healthcare in this effort."
"A joint operating company between Piedmont Healthcare and Saint Joseph's would be a unique partnership between two of the most respected and longest-serving healthcare providers in Georgia," said R. Timothy Stack, president/CEO of Piedmont Healthcare.
If a JOC agreement is reached, Saint Joseph's and Piedmont must get final approval from their respective boards, and the Sisters of Mercy and Catholic Health East, the Archbishop of Atlanta, the Federal Trade Commission, and the Georgia Attorney General.
Founded by the Sisters of Mercy in 1880, Saint Joseph's Hospital of Atlanta is now a 410-bed, acute-care hospital, with a medical staff of more than 750 physicians.
Hospitals in the Piedmont Healthcare system include: Piedmont Hospital, a 481-bed acute tertiary care hospital in the north Atlanta community of Buckhead; Piedmont Fayette Hospital, a 143-bed, acute-care community hospital in Fayetteville; Piedmont Mountainside Hospital, a 42-bed community hospital in Jasper; and Piedmont Newnan Hospital, a 143-bed, acute-care community hospital in Newnan.
Piedmont Healthcare is the parent company of the Piedmont Heart Institute, which has more than 85 cardiovascular specialists at Piedmont Heart Institute Physicians, with more than 30 locations in north Georgia and North Carolina; the Piedmont Physicians Group, with more than 100 primary care physicians in more than 30 offices throughout metro Atlanta; the Piedmont Clinic, a 600-member physician network; and Piedmont Philanthropy, the philanthropic entity for private fundraising initiatives.
Health insurance plans that colleges, universities, and trade schools endorse or mandate for students cost too much for the coverage provided, and are running afoul of federal protections recently signed into law, according to a report released today by the New York Attorney General's Office.
"Many of the sponsored healthcare plans looked at during our investigation leave students at risk while providing massive profits for insurance companies," Attorney General Andrew M. Cuomo said in a media release. "It is important for students to have adequate healthcare coverage to protect themselves during times of illness or injury, but a bad health insurance plan can have catastrophic and long-lasting effects on a young person's life."
In a letter to more than 300 colleges, universities, professional schools, and trade schools, Cuomo urged schools to review their student health insurance plans and fix problems that add needless costs and put students at risk. The letter was sent to schools in New York and about 30 out-of-state schools nationwide that are attended by New York residents.
Cuomo's letter also noted that students who purchase insurance are a generally healthy population, so schools can bargain with health plans to provide sufficient, fairly-priced coverage.
"By being informed of the problematic practices that currently exist in the industry, schools can negotiate for better health plans, and students and their families can be better equipped to select the coverage that is best for them," Cuomo said.
The AGs report said that the school-sponsored student health insurance industry generates more than $1 billion in revenue each year, and provides coverage for about one million college students nationwide. The students pay annual premiums that can range from $100 to more than $2,500.
More than two-thirds of private colleges and universities and almost one-quarter of public colleges and universities require their students to either purchase the school-sponsored plan or have their own "comparable" health insurance.
The AG's report found that many school-sponsored student health plans have limits and exclusions that put students and their families at risk of facing catastrophic costs for medical care. Some plans have exclusions for pre-existing conditions, leaving many students with such conditions completely uncovered for any related treatments.
Some plans require students with pre-existing conditions that are not covered to purchase the plan at its full price. Many plans also have extremely low coverage limits. For example, some plans cap all coverage at less than $25,000, while others have per-illness caps of as low as $700. Additionally, many plans either fail to include prescription drug coverage or limit such coverage to an inadequate level.
In addition to providing limited coverage, the AG's investigation found that many school-sponsored plans are unnecessarily costly. In many cases, the amount of claims paid out by the insurance company is only a fraction of the premiums students pay, resulting in excessive profits for the insurance companies, according to the AG.
Cuomo's office issued subpoenas to some of the nation's largest insurers of students, including Aetna Inc.; UnitedHealthcare Insurance Co.; Gerber Life Insurance Co.; Markel Insurance Co.; Beech Street Corp.; United States Fire Insurance Co.; Combined Life Insurance Co. of New York; National Union Fire Insurance Co. of Pittsburgh, PA; Security Mutual Life Insurance Co. of NY; and Commercial Travelers Mutual Insurance Co..
In response, UnitedHealthcare said, "We continually strive to improve access to quality, effective health care for all Americans, including students. We have been actively working with the New York Attorney General on this issue and remain committed to providing colleges and universities with affordable coverage that gives students meaningful access to healthcare services."
Robert Zirkelbach, spokesman for America's Health Insurance Plans, says college health plans aren't like the regular commercial market.
"First of all, colleges and universities have a great deal of flexibility in determining the type of insurance they are going to offer students," he says. "These are highly customized to meet the unique and varying needs of colleges and are oftentimes designed to compliment existing health resources on campuses such as health clinics. The insurance is supplementing what is already being provided to students."
Zirkelbach says premiums for student coverage are "quite affordable," especially considering the cost structure associated with the coverage.
"There is a lot of turnover, they are highly customized, and they have higher structural costs than other insurance products," he says.
The AG also issued subpoenas to insurance brokers, agents, and consultants, including University Health Plans, Inc.; Niagara National Inc.; Haylor, Freyer & Coon, Inc.; The Bailey Agencies; and Mercer Health & Benefits LLC.
James C. Turner, MD, president of the American College Health Association, says he isn't surprised by the AG's findings, because his organization has been pointing out the shortcomings of many college health insurance plans for years.
Turner, an internist who is also the director of the Department of Student Health at the University of Virginia, said the AG's letter to college presidents borrows heavily from the ACHA's recommendations that were issued in 2008.
The Ambulatory Surgery Center Advocacy Committee, which represents ASC operators, state associations, and the ASC Association, said the report in the April issue of Health Affairs made "incorrect assumptions" about the industry.
"The study authors make inaccurate statements about the relationship between physician ownership of ASCs and higher surgical volume, inferring that physician owners are driven to refer patients to their facility by financial incentives," the ASCAC said in a media release. "While the study authors recognize limitations with their methodology, the ASCAC is particularly concerned with their sole reliance on surgical volume as a proxy for ASC ownership. Volume is not a valid method for identifying which physicians have ownership interests in ASCs. In fact, many non-owners practice at ASCs."
The University of Michigan Medical School study in Health Affairs looked at Florida patients who underwent one of five common outpatient procedures: carpal tunnel release, cataract excision, colonoscopy, knee arthroscopy, and myringotomy with tympanostomy tube placement in the ear.
The researchers determined which doctors were owners of a surgery center. They then compared surgery use among owners in two time periods—before and after they acquired ownership—with that of physicians who remained non-owners.
The study found that while caseloads increased overall between the earlier and later time periods for all physicians—regardless of whether or not they had a financial stake in the surgery center—the increases were more rapid and dramatic among owners.
"Our data suggest that physician behavior changes after investment in an outpatient facility," said study author John Hollingsworth, MD, a Robert Wood Johnson Clinical Scholar at U-M Medical School, in Ann Arbor.
"Through what some have labeled the 'triple dip,' physician owners of surgery centers not only collect a professional fee for the services provided, but also share in their facility's profits and the increased value of their investment," Hollingsworth said. "This creates a potential conflict of interest. To the extent that owners are motivated by profit, one potential explanation for our findings is that these physicians may be lowering their thresholds for treating patients with these common outpatient procedures."
Far from being a driver in rising healthcare costs, ASCAC said the U-M study failed to recognize the lower cost to patients and payers when identical procedures are performed in an ASC as opposed to the hospital outpatient setting. The trade group said Medicare patients save more than 50% on out-of-pocket cost and that ASCs save Medicare approximately 40% annually. By shifting just half of all eligible outpatient surgeries to the ASC setting, Medicare could save an additional $2.3 billion annually, the ASCAC claimed.
The U-M study showed that number of surgery centers has increased nearly 50% over the last decade, largely driven by the investment of physicians, who had a stake in 83% of these facilities. Investment gives doctors more control over their practice, from scheduling to purchasing equipment. For patients, these centers often have shorter wait times than hospitals, according to the report.
The ASCAC pointed to a 2009 study by KNG Health Consulting that showed that 70% of ASC volume growth between 2000 and 2007 was because of migration from hospitals to ASCs.
