A per-capita system would shift costs and financial risks to the states and could force them to cut benefits or eligibility.

This article first appeared March 20, 2017 on Kaiser Health News.

By Phil Galewitz

New England's bucolic countryside looks much the same on either side of the Connecticut River separating Vermont from New Hampshire.

But Medicaid beneficiaries are far better off in Vermont.

Vermont generously funds its Medicaid program. It provides better benefits, such as dental care, and pays doctors more than New Hampshire's program does. That brings more doctors into the program, giving enrollees more access to care.

New Hampshire has twice Vermont's population, but Vermont spends almost as much on Medicaid and covers more enrollees. Under the complicated formulas that set federal funding, Vermont's substantial investment helps it capture nearly as much aid from the government as New Hampshire gets.

States' policies differ about who or what to cover in Medicaid, and those decisions have led to historical variances in how much federal money they receive. House Republicans' effort to shrink federal Medicaid spending would lock in the differences in a way that favors those already spending high amounts per enrollee.

"Republicans are finding out why changing Medicaid is so hard and why the easiest thing to do is to do nothing given the substantial variation in federal spending across states," said John Holahan, a health policy expert with the nonpartisan Urban Institute.

Here's why.

Medicaid, the national health program for low-income people that covers about 1 in 5 Americans, is 60 percent funded by the federal government and 40 percent by states. Total spending in 2015 was about $532 billion, according to the latest official data.

Federal funding is open-ended, which means the government guarantees states it will pay a fixed rate of their Medicaid expenses as spending rises.

Those matching rates are tied to average personal incomes and favor the lowest-income states. Mississippi has the highest Federal Matching Assistance Percentage—76—while 14 wealthy states, including New York and California, get the minimum 50 percent from the federal government.

But state Medicaid spending varies significantly, too, and that influences how much federal money each receives to fund its program. State policies about how generous benefits should be and how much to pay doctors and hospitals account for those differences.

GOP leaders want to give states a set amount of money each year based on the number of Medicaid enrollees they had in 2016, a formula known as per-capita caps.

A per-capita system would benefit high-spending states already receiving relatively rich allotments from the government, the Urban Institute said in a paper last September.

According to its estimates, if the system were in effect this year, Vermont would receive $6,067 per enrollee—one of the highest allotments in the country—while New Hampshire would get the least, just $3,084 per enrollee.

Per-capita caps would limit the government's Medicaid spending because it would no longer be on the hook to help cover states' rising costs. But caps also would shift costs and financial risks to the states and could force them to cut benefits or eligibility to manage their budgets.

"It would present a huge problem," said Adam Fox, a spokesman for the Colorado Consumer Health Initiative, an advocacy group.

Under the GOP bill, federal Medicaid funding to states would be adjusted annually based on a state's enrollment and medical inflation. But that would not be enough to keep up with rising Medicaid spending per enrollee, which would force states to put up more of their money or scale back the program, the nonpartisan Congressional Budget Office said March 13.

Other analyses of the GOP plan have reached the same conclusion.

Since 1999, however, the average annual growth rate in Medicaid spending per enrollee has risen more slowly than medical inflation, according to MACPAC, the Medicaid and CHIP Payment and Access Commission, which advises Congress.

Republicans argue that overhauling federal Medicaid spending as they propose would hold down federal costs while giving states more leeway to run their programs as they see fit. "This incentive would help encourage efficiencies and accountability with taxpayer funds," House Speaker Paul Ryan wrote last June in his white paper, A Better Way.

Rep. Greg Walden (R-Ore.), chairman of the powerful House Energy and Commerce Committee, which has oversight of health care matters, sounded a similar note at a press conference in Washington, D.C., when the GOP plan was announced. "I think it's really important to empower states and to put Medicaid on a budget," he said.

But Fox argued the opposite would happen under a per-capita system — instead of gaining more control over their Medicaid programs, states would not be able to meet their needs because they'd have fewer dollars to decide how to spend, he said.

Bill Hammond, director of health policy for the nonpartisan Empire Center for Public Policy in New York, said House leaders' decision to tie future Medicaid funding to medical inflation could help mute concerns that funding wouldn't keep up with rising costs, but would not address the fairness issue of giving some states higher per-capita amounts than others.

"If a low-spending state decides it wants to spend more money on paying hospitals and doctors or adding more benefits, they would have a harder time doing that without breaking the federal cap," he said.

Medicaid advocates in New Hampshire are worried because their state has few alternatives to make up for a loss in federal funding. New Hampshire lacks an income or sales tax.

"There is a tremendous amount of fear among families here as Republicans try to dismantle the ACA," said Martha-Jean Madison, co-director of New Hampshire Family Voices.

Requiring a "community health needs assessment" was part of a package of rules included in the ACA to ensure that nonprofit hospitals justify the tax exemption they receive.

This article first appeared March 16, 2017 on Kaiser Health News.

By Shefali Luthra

For the past six years, Mardi Chadwick has run a violence prevention program at Boston's Brigham and Women's Hospital. The program's goal is to address broader, community-based health issues and social problems that make people ill or prone to repeated injury from gunshots, stabbings or environmental causes.

In Chadwick's view, this endeavor — almost from its inception — made a big difference in nearby neighborhoods. But its profile in the eyes of hospital administrators got a boost from an Affordable Care Act provision that required nonprofit hospitals to conduct triennial assessments of local health needs and devise strategies, updated yearly, to address them. Falling short would trigger a financial penalty.

"Everyone, all of a sudden, cares about the social determinants of health," she said. "Our expertise is being brought in. … We have a bigger seat at the table."

But will programs like this one continue to get such attention? As the GOP-controlled Congress works to scrap Obamacare, the answer is uncertain.

Requiring this "community health needs assessment" was part of a broader package of rules included in the health law to ensure that nonprofit hospitals justify the tax exemption they receive. Another directive was that these facilities establish public, written policies about financial assistance available for medically necessary and emergency care and that they comply with limits on what patients who qualify for the aid can be charged.

These requirements add to the ongoing controversy about whether all nonprofit hospitals do enough to deserve a tax break. People on one side of the issue view the assessment rule, for instance, as an undue, unfunded burden while others say it doesn't do enough. So far, though, the community health assessment requirement hasn't exactly been a hot topic in the repeal-and-replace debate and was not addressed by the House Republicans' health plan unveiled March 6.

Sen. Chuck Grassley (R-Iowa), who has long urged that more scrutiny be applied to nonprofit hospitals' tax status, championed the provision. His spokeswoman said he will continue to advocate that it remains in effect in whatever new health policy plans emerge. Regardless, the financial uncertainty of any overhaul of the health law could undermine some hospitals' efforts.

The decades-old nonprofit tax status, granted by the Internal Revenue Service to institutions that meet the "community benefit" standard, spares hospitals from paying federal taxes and is collectively worth billions of dollars. Nonprofit hospitals have generally cited the uncompensated or "charity" care they provide, as well as initiatives they undertake to promote public health, as sufficient proof that they earn their tax exemption. But for-profit hospitals, which do pay taxes, cry foul, saying they make similar contributions.

The new requirements overall were meant to hold nonprofits to a higher standard — and penalize those that didn't deliver. Under the law, hospitals that fail to complete the assessment and implementation strategy face a $50,000 fine — which can seem small next to their overall operating budgets. But down the line, the penalties can accumulate and ultimately could jeopardize their valuable tax exemption.

Meanwhile, federal data show that as recently as 2011 nonprofit hospitals targeted less than 10 percent of their operating expenses to benefit the community — this includes charity care, unreimbursed costs from Medicaid and other government programs and medical research and education. Less than 1 percent went to community health improvement services like Chadwick's.

Advocates hoped the health law would change this. The idea was to push nonprofit hospitals to invest more in public health initiatives that do not directly earn them money — giving such programs more value on the balance sheet. But it's hard to gauge whether that's happened.

"You can find hospitals that have done this. But … are we seeing a real shift in the hospital community? Or are these a few hospitals that are outliers?" said Gary Young, director of the Center for Health Policy and Healthcare Research at Northeastern University. "We've asked them to make a sea change in how they're doing things. And that can't happen overnight."

Part of the problem, analysts say, is that the underlying idea — reaching into the community to help people navigate the social and economic factors that can influence health — goes beyond what hospitals have traditionally viewed as their mission. Despite the potential for long-term payoff, administrators tend to focus on the immediate questions: How many beds are full? What medical services are being provided? How are they doing with their operating budget?

"It's a new world out there in terms of the hospital not being the center of the universe," said Lawrence Massa, president of the Minnesota Hospital Association, the state's hospital trade group, which has been tracking hospital response to the health assessment requirement.

Initially, they found the money nonprofit hospitals put toward "community needs" went up after the assessment requirement: from about $355 million in 2011 to $459 million in 2013, according to an analysis by the association. (The needs assessment requirement took effect in between, for the tax year starting after March 2012.) But the increase leveled off in 2014 — the most recent year for which data are available.

Massa's conclusion: Caring for the health of people before they come into the hospital is unfamiliar territory. Not everyone took naturally to it. "We saw some communities that embraced this, and did a nice job. … In other communities, there's been friction between public health and the acute setting — and lack of understanding."

With continued time and sustained emphasis, that could have changed, said Sara Rosenbaum, a professor of health law and policy at George Washington University.

But now? Even if the community benefit requirements remain intact, she and others fear this accountability effort could take a hit. Repeal of the health care law is likely to create fresh financial challenges for hospitals. For instance, although the House GOP's American Health Care Act would restore some of the uncompensated-care funding cuts hospitals absorbed under the ACA, the coverage changes proposed in Republicans' plan could mean tens of millions more uninsured people.

That scenario, policy experts and trade groups say, would increase the amount of free care nonprofit hospitals provide, creating new budget pressures that could lead them to tamp down on efforts to promote community health work.

"We could be right back in a situation where there is a fair amount of charity care, and that could become a large component of how hospitals are justifying their nonprofit status," said Ken Fawcett, a physician who runs a community health worker initiative at Spectrum Health in Grand Rapids, Mich.

Meanwhile, the health assessment's impact has been evident at Boston-based Massachusetts General Hospital. There, administrators used it to devise an intervention strategy around drug abuse — partnering, for instance, with local schools and community organizations, and hiring former addicts to help patients navigate recovery.

"There's no question the Affordable Care Act required us to bump up our game," said Joan Quinlan, its vice president for community health. If people lose coverage, she added, hospitals will increasingly argue that's enough reason for a tax break. It could stifle efforts to promote more substantial community benefit.

"If the ranks of the uninsured or underinsured grow, then charity care will increase. And the ability to do some of these more creative downstream efforts will be hampered," she said. "There might be heightened awareness. But if there aren't resources to address them, it's going to be hard."

Programs to circumvent litigation by offering prompt disclosure, apology and compensation for mistakes as an alternative to malpractice suits are becoming more popular.

This article first appeared March 15, 2017 on Kaiser Health News.

By Sandra G. Boodman

When Donna Helen Crisp, a 59-year-old nursing professor, entered a North Carolina teaching hospital for a routine hysterectomy in 2007, she expected to come home the next day.

Instead, Crisp spent weeks in a coma and underwent five surgeries to correct a near-fatal cascade of medical errors that left her with permanent injuries. Desperate for an explanation, Crisp, who is also a lawyer, said she repeatedly encountered a white wall of silence: The hospital and her surgeon refused to say little more than "things didn't go well." Crisp spent years piecing together what happened. "I decided I was going to find out even if it takes the rest of my life," she said.

Jack Gentry said he "went into the hospital a patient and came out a victim." In 2013, the retired Baltimore police officer suffered a catastrophic spinal cord injury during disk replacement surgery at MedStar Union Memorial Hospital that left him a quadriplegic.

But unlike Crisp, Gentry and his wife, a nurse, were immediately told what had gone wrong by his surgeon, who apologized for the error. The hospital covered Gentry's rehabilitation and other major expenses and paid an undisclosed amount in compensation, all without litigation.

"When hospitals mess up, they need to do the right thing," Gentry said. "MedStar did."

For patients and their families killed or maimed by medical errors, Crisp's experience — in which doctors clam up and hospitals deny wrongdoing and aggressively defend their care — remains standard operating procedure in most institutions.

But spurred by concerns about the "deny and defend" model — including its cost, lack of transparency and the perpetuation of errors — programs to circumvent litigation by offering prompt disclosure, apology and compensation for mistakes as an alternative to malpractice suits are becoming more popular. Researchers at Johns Hopkins University in Baltimore recently estimated that medical mistakes kill 251,000 Americans annually, which would make them the third-leading cause of death. Traditionally, the only way for patients to find out what went wrong has been to sue.

A blueprint for the approach used in Gentry's case is being promoted by the federal Agency for Healthcare Research and Quality. Called CANDOR, an acronym for Communication and Optimal Resolution, the approach is modeled on a long-standing program pioneered at the University of Michigan. It was tested in 14 hospitals around the country, including MedStar's Washington Hospital Center and Georgetown University Hospital.

Although they differ, these programs — which typically feature prompt investigation of errors whose findings are shared with the victims, as well as an apology and compensation for injuries — are operating at the University of Illinois at Chicago, Stanford and eight hospitals and outpatient groups in Massachusetts. Despite fears that the new approach would encourage lawsuits, the opposite has proved true. In Michigan, the number of lawsuits was cut nearly in half, and the hospital system saved about $2 million in litigation costs in the first year after the new model was adopted in 2001.

"The whole point of this isn't to drop malpractice costs, it's to drive patient safety," said Richard Boothman, the University of Michigan Health System's executive director of clinical safety and chief risk officer, who launched the program after a career defending doctors and hospitals. "We need to hard-wire as quickly as possible the lessons of these cases."

In most hospitals, Boothman said, patient safety experts do not routinely talk to risk managers who handle malpractice claims. As a result, valuable information about preventing errors is lost.

In The Dark
Most patients never learn they are victims of a medical error. A landmark 1991 Harvard study found that only 2 percent of people harmed by errors file a lawsuit. Those who do face daunting odds: Patients lose 80 percent of malpractice cases. Huge litigation costs, combined with laws that have reduced damage awards in many states, have left many unable to find an attorney because plaintiffs' lawyers are paid on contingency. Malpractice cases typically take three or more years to resolve. In the interim, many injured people struggle to pay for care.

Litigation "is a tortuous process for patients and health care workers," said Beth Daley Ullem, who spent five years seeking answers about the 2003 death of her newborn son from a Chicago hospital that denied any wrongdoing.

"We later learned that this had happened to a family before us and another seven months after," said Daley Ullem, a former McKinsey & Co. consultant whose ruptured uterus went untreated for an hour. She said she received a $4 million settlement before trial, which she offered to give back to the hospital to fund safety improvements. The hospital refused.

Disclosure efforts also face stiff resistance from doctors, insurers and lawyers, including defense attorneys for whom speedier resolution means fewer billable hours.

Despite laws in most states that prevent apologies from being used against doctors in lawsuits, many worry that it will make patients more likely to file suit, said Thomas Gallagher, a University of Washington professor of medicine who has written extensively about disclosure. A recent study found that 77 percent of 300 primary-care doctors would not fully disclose a delayed breast cancer diagnosis to a patient.

Doug Wojcieszak — who founded an Illinois-based disclosure advocacy group called "Sorry Works!" — said one Iowa doctor told him that if he started apologizing when things went wrong, "he'd be doing nothing else all day long."

Insurers are also leery, said Brian Atchinson, president of Physician Insurers Association of America, the trade association for liability insurers, which was involved in the development of CANDOR. "Some states are more conducive to this than others," he said. "But there are those who don't believe the benefits outweigh the risks."

Lawyer Joanne Doroshow, director of the Center for Justice & Democracy at New York Law School, expressed worry that disclosure programs may take advantage of vulnerable patients who are not represented by a lawyer. "The hospitals are in control of it, and it's still in their interest to try and limit compensation to patients," she said.

Jeffrey Catalano, a Massachusetts plaintiffs' lawyer who is president of the state bar and a participant in that state's disclosure program, says that patients should be represented early in the process. "I think if there's a good attorney present, there's no way a client is going to be shortchanged," he said. "Good attorneys know this: Medical malpractice cases are hard to take to trial. If a client can get $1 now rather than risking getting nothing [at trial] for the prospect of $1.50 later, it may be better to take the $1 now."

Doing The Right Thing
The country's first disclosure program began 30 years ago with a doctor's desire to do the right thing.

Pulmonologist Steve Kraman, newly named as chief of staff for what is now the Lexington Veterans Affairs Medical Center in Kentucky, said he faced a problem in 1987: how to handle the death of a middle-aged woman caused by an "undeniable error," a massive overdose of potassium.

"If we had said nothing, [the family] never would have known a thing," said Kraman, who was also the hospital's risk manager. "We never would have gotten sued. But I just didn't feel that was right." So he suggested to the hospital's lawyer that they come clean to the patient's two adult daughters, from whom she was estranged.

"I sat down and told them exactly what happened, that we were responsible for it, that they should hire a lawyer and we were going to negotiate a payment," he recalled. Two months later, the family was paid $250,000.

From then on, Kraman said, all cases involving errors were handled similarly. "We paid out for things that nobody could have sued for in their wildest dreams," said Kraman, who is now a professor at the University of Kentucky. Some patients declined the cash, he said, because they feared it would "ruin their relationship with the doctor." Kraman said he refused to pay a dime in cases where no injury could be proved. "That just alienates doctors and nurses who feel like you're throwing them under the bus."

Kraman said he had several advantages: Doctors were employed and insured by the VA system. Payments, which averaged $16,000, were made from the U.S. Treasury, not the hospital coffers. And the program had the support of the hospital's director and lawyer as well as the U.S. attorney for Kentucky.

"This has to be done from the top down" or it won't work, Kraman said. "The message has to be 'This is how we do business.'"

When Boothman arrived at the University of Michigan in 2001 — after two decades defending doctors, including an orthopedic surgeon who had been sued 21 times — he decided to try a similar approach. That included encouraging staff to report errors and bad outcomes; reports jumped from 2,400 a year to more than 34,000.

"You have to normalize honesty," Boothman said, "to create a culture of continuous improvement." Applying the lessons gleaned from those errors, he said, has helped make care safer.

"Litigating a case for three years and telling everybody, 'Don't talk about it and don't change anything,' is immoral and counterproductive," he added. "I don't serve my organization well by defending care we shouldn't be defending."

"Today we're often at the bedside as soon as things happen," he said. Patients and their families are interviewed as part of the hospital's investigation of the facts, something that does not happen in traditional litigation.

Like Kraman, Boothman said he worries that some hospitals are using disclosure to cherry-pick small or unwinnable cases, not as a standard approach.

A Test Case
Orthopedic surgeon P. Justin Tortolani remembers with sickening clarity the moment he realized that a device he was installing had gone too far, penetrating Jack Gentry's spine. The 60-year-old retired police officer, who once had hiked the entire Appalachian Trail, was instantly paralyzed from the neck down.

"You can't really believe it's happening," said Tortolani, Union Memorial's director of spine surgery. Summoning his years of training, the surgeon formulated a plan and steeled himself to tell Teresa Gentry what had happened. It was the first of many conversations about the accident that he would have with the family.

"We didn't want to go through litigation, we didn't need to go through litigation," said Larry Smith, MedStar's vice president for risk management. MedStar uses CANDOR in about a dozen cases with substantial damages annually.

MedStar executives "told me what had happened, why it happened, that it was directly or indirectly their fault and that whatever I needed I should ask for," Gentry recalled. MedStar paid for five months of inpatient rehab — Gentry's insurance would have covered only two weeks — modifications to the couple's home, a $45,000 wheelchair and a new wheelchair-accessible van. It provided a case manager, a home-care nurse and $15,000 for incidental medical expenses.

"Because of the nature of Jack's injury, we would have had to mortgage everything to pay for his care" otherwise, Teresa Gentry said.

Early on, Gentry said, his older brother, a Baltimore malpractice lawyer, expressed bafflement at MedStar's approach. "He said as long as we were getting what we needed, to just go with it," Gentry recalled.

At the end of two years, the case was settled with a confidential payment negotiated by lawyers for the couple, MedStar and the device manufacturer.

"I felt like it would take care of Jack for the rest of his life," said Teresa Gentry, adding that the couple had been prepared to file a lawsuit if an agreement could not be reached. "Did I get enough to pay for everybody's pain and suffering and trauma? No."

"I was very skeptical in the beginning of this whole process," she recalled, but she said she believes it has worked well, as does her husband.

Tortolani said he feels "remorse, guilt and sorrow for Jack and his family. This shakes you to your core," he said. MedStar officials have been "unbelievably supportive," Tortolani said, and he remains deeply grateful to the Gentrys. "My relationship with Jack has never been stronger."

Donna Helen Crisp says she thinks she would have been less traumatized had the North Carolina hospital and her surgeon not stonewalled her. "I would have been deeply depressed that I had such a bad experience, but I could have moved on with my life," said Crisp, who has written a book about her experience entitled "Anatomy of Medical Errors: the Patient in Room 2." Being denied the truth left her with "no way to put it into perspective."