Physicians added their voices on Wednesday to the intractable task of finding an informed solution to the sustainable growth rate. Sen. Max Baucus (D-MT), chair of the Senate Finance Committee, hosted five physician group representatives, part of a series of roundtables about Medicare payments. Previous roundtables featured former administrators of the Centers for Medicare & Medicaid Services and private payers.
"Every year, the flawed sustainable growth rate, or SGR, leads physicians to fear dramatic reductions in their Medicare payments," Baucus stated in his opening remarks. "Next year physicians will face a 27% cut if we don't act. While Congress has intervened to prevent these cuts each year, it is time we develop a permanent solution.
"We need to repeal SGR and end the annual ‘doc fix' ritual. The year-in and year-out uncertainty is not fair to physicians or the Medicare beneficiaries who need access to their doctors."
The discussion covered a wide range of topics, including models of care, specialty reimbursements, and quality and efficiency.
Sen. Baucus noted that physicians seem caught in what he described as "stove pipes of care. How do we get rid of some of these pipes?"
Speaking for the American Medical Association, Ardis D. Hoven, MD, said that a variety of new models of care coordination and payment such as medical homes and bundled payments hold promise of a more flexible system and will help. "We have to be accountable as physicians to make sure we are getting the job done and producing outcomes and quality in our work. These new models that are being tested now are going to give us that information, which we have never had before," she said.
There was general acceptance among the five speakers that while the SGR should be repealed, no single payment replacement system would suffice. Glen Stream, MD, president of the American Academy of Family Physicians, described a blended payment system—common among patient-centered medical homes—that includes a combination of fee-for-service (FFS), care management fee, and quality improvement payments.
FFS would cover procedures, treatments, and services; the care management fee would pay for continuity of care within the care coordination team, and quality improvement payments would reward physicians who use patient data to improve care.
The physicians at the roundtable emphasized rewarding quality and efficiency, and the difficulty of measuring those elements across the care continuum. "It isn't about how well I took someone's colon cancer out," explained Frank Opelka, MD, who represented the American College of Surgeons. "It's more about how well the 18 months of critical cancer care drove the best outcome for that quality."
Opelka called for a business model balanced "so everyone is aligned and we all have shared incentives."
Stream noted that the measures of quality outcomes should be different for specialists and primary care physicians because much of that care involves the treatment of chronic illness, where the payback for good outcomes might take years. For his diabetic patients, for example, treatment goals include keeping them off dialysis years down the road.
"We use proxy, short-term measures like blood sugar control," he said. "They aren't really outcome measures but the timeline is too long" to measure outcomes like avoiding amputations, which can be a threat to a diabetic.
With science and physician practice standards quickly evolving, "a Medicare payment system that truly rewards quality and efficiency must be nimble enough to reflect" those changes, cautioned Barbara McAneny, MD, who spoke on behalf of the American Society of Clinical Oncology. That will require "a robust infrastructure, including measure development and a system for detailed clinical data submission, reporting, and analysis."
After more than an hour of discussion, Sen. John Kyl (R-AZ) asked the question that everyone had been skirting. "What should Congress do in January 2013? As the experts, are you ready to present to us a process for a payment methodology that we could institute on January 1 and that would meet the objectives that we all agree on here?" He asked if an update of 1% or 2% next year with some reporting requirements and phased-in pilot programs would enable Congress to delay making specific changes across the board until 2014.
If Sen. Kyl was hoping for a magic bullet he didn't get it from the panel. "We're not going to be able to fix it by Jan. 1, 2013," stated Dr. McAneny. Referring to the reimbursement cut slated to go into effect in 2013, McAneny said it could put "many physician practices and hospitals out of business."
She added that physicians "need a time of stability where we can depend on Medicare not to pull the rug out from under our practices."
At the end of the roundtable, Sen. Baucus asked the physician groups assembled to create specific short-term and long-term SGR fixes for the committee to consider, saying, "We really need your help."
So far, a handful of Republican governors have announced via various media outlets their intention not to have their states participate in the Medicaid expansion program that is part of the Patient Protection and Affordable Care Act.
I tried to find out if any of these governors actually contacted the federal Department of Health and Human Services to officially opt out of the Medicaid program, but received no responses. It ends up that PPACA doesn't have a statutory deadline related to the Medicaid expansion so no official word is necessary.
That didn't stop Gov. Rick Perry (R-TX) from dashing off a letter on Monday to HHS Secretary Kathleen Sebelius explaining that he stands "proudly with the growing chorus of governors who reject the PPACA power grab….Neither a state exchange nor the expansion of Medicaid under the Orwellian named PPACA would result in better patient protection or in more affordable care."
He asked the secretary to let President Obama know that "I oppose both the expansion of Medicaid….and the creation of a so called state insurance exchange because both represent brazen intrusions into the sovereignty of our state." As he notes as the end of the letter, expanding Medicaid "would threaten even Texas with financial ruin."
I laughed out loud the first time I read Perry's letter. It seemed calculated to appeal to the anti-big government crowd. But as I write this, I wonder if Perry didn't make a brilliant political move.
Is Secretary Sebelius really going shrug her shoulders and let Texas off the Medicaid hook? Is Perry really going to walk away from an estimated $70 billion in federal money? It's doubtful.
With 6.2 million uninsured individuals in Texas, the state has some clout in terms of negotiating with the federal government. In his letter, Perry says he "looks forward to implementing healthcare solutions that are right for the people of Texas" and asks Sebelius to support him in that effort.
On the flip side, Perry and the Texas legislature face a $6 billion shortfall in the state's current Medicaid program. That bill comes due in 2013. The legislature has never been shy about reducing Medicaid benefits. Only pregnant women, children, and disabled adults quality for the program now, so there's not much that can be cut there.
Texas just trimmed physician reimbursements by 2%, which reduced the number of physicians willing to take on new Medicaid patients.
Remember, the PPACA goal is to get more people under the insurance umbrella. A little give and take could be all the Perry needs to jump into the Medicaid expansion fold.
The press release announcing Gov. Perry's position on Medicaid expansion provided some clues into the system he would like to see implemented in Texas. It would have reasonable benefits tailored to individual needs and stress personal accountability. It would also allow copayments or cost sharing.
In my conversations with stakeholder groups in Texas it's apparent that they are disappointed in Gov. Perry's stand on the Medicaid expansion. The lack of a state-run health insurance exchange is not quite as pressing of a problem because the federal government will step in to develop and run the online market for health insurance.
But the statistics are compelling. About 20% of the state's adults live in poverty; 17% of children and 33% of adults are uninsured. The uninsured turn to the hospital emergency department for their healthcare needs. Their expenses are shouldered by others in the form of higher insurance premiums and higher taxes.
In a statement, Parkland Health & Hospital System in Dallas noted that in 2011 it provided $605 million in uncompensated care. "Those patients will still need healthcare and they will still come to safety net hospitals like Parkland for treatment. If our state is going to turn away hundreds of millions in federal funds, we are eager to see what our leaders will propose to replace them."
Steve Love, CEO of the Dallas-Fort Worth Hospital Council, which represents 75 hospitals, noted that Perry's actions are a double whammy to hospitals, which as part of the PPACA negotiations agreed to cuts in their DSH or disproportionate share hospital payments in exchange for an expanded Medicaid program.
Hospitals now face having fewer resources to offset the costs of uncompensated care.
Love sees the Medicaid expansion with its federal backing as a way for Texas to get a sustainable Medicaid plan in place. "It gives us time to plan."
For now Michael Speer, MD, president of the Texas Medical Association, holds out hope that the Medicaid expansion will progress along the same lines as the federal CHIP (Children's health Insurance Plan) did when it was first introduced. "A lot of states said no at first but then they began to see the results. Within a few years every state was participating."
The California Department of Insurance and Blue Shield of California are at odds over the insurer's efforts to close 23 health plans and transfer those members to other products. Blue Shield contends that it is following the law, while the CDI has ruled that it has "disapproved" the block of business closures. That means Blue Shield can't proceed "with the block closures period," a CDI spokesperson told HealthLeaders Media in an e-mail exchange.
The potential block closures affect an estimated 250,000 members. At issue, according to a CDI press release is Blue Shield's "notice of intention to close most of its individual market block of business regulated by the CDI on July 2, 2012."
CDI initially disapproved the block closure in March but requested additional information from Blue Shield. The March disapproval was sustained because "the pooling plan submitted to the department does not comply with the requirements" of the state insurance code. The CDI contends that the "size of the remaining open block is inadequate for pooling based on consideration of the accumulative recent and expected future experience of the closed forms and the open block."
In addition, CDI states that inadequate provision was made by Blue Shield for the "more than 20,000 consumers in the Vital Shield 2900 Plan, as they have no transfer right without underwriting."
Blue Shield doesn't see things that way, however. "Blue Shield is complying with all applicable laws. The law describes exactly what we have to do if we stop selling plans to new people, and we are doing it," Steve Shivinsky, a Blue Shield spokesperson, said in an e-mail response to questions from HealthLeaders Media.
"Everyone can stay in the plans they're in, if they want. No one is being forced to change plans." The insurer contends that since it is permitting members to "move into open blocks providing comparable benefits with no additional underwriting, there is no statutory pooling requirement."
The Blue Shield e-mail states that although the CDI can provide an opinion "as to whether the pooling plan complies with the block closure statute. That statute does not state that disapproval of a pooling plan prohibits Blue Shield from proceeding with its block closure."
Shivinsky says Blue Shield's pooling plan is sound, but that the insurer is working with the CDI "to see whether we can alleviate the department's concerns and agree on a mutually acceptable pooling plan."
It may take some time to establish a common ground. Among the CDI concerns is that without new members, a policy block will become more and more expensive for those who remain, a so-called "death spiral" of mounting costs."
No so, counters Shivinsky. "Not selling certain plans to new people won't have a dramatic increase on rates for the people who stay in their plans. There was no major impact on rates the last time we stopped selling plans to new people in 2010."
An unrelated lawsuit filed by Consumer Watchdog, an advocacy group, in June in San Francisco County Superior Court contends that Blue Shield "manipulates the closure of blocks of health insurance business with the apparent intention of illegally decreasing policy benefits to enrollees while escalating the premiums they must pay."
The latest effort by the Department of Health and Human Services to establish requirements for essential health benefits drew fewer than 30 comments from interested parties during the proposed rule's 30-day comment period, which ended July 4.
The Patient Protection and Affordable Care Act requires HHS to define EHBs. These are 10 categories of service that must be offered beginning in 2014 by health insurance exchanges, as well as individual and small group health insurance policies.
According to the proposed rule, HHS wants each state to use the small group market plan and product with the largest enrollment as the default benchmark plan if a state doesn't select its own benchmark plan.
It would tag two familiar organizations, the National Committee for Quality Assurance and the non-profit URAC, as the interim accrediting organizations for health plans that want to be part of the state health insurance exchanges. The NCQA and URAC are already responsible for most health plan accreditations.
In soliciting comments, HHS asked what other data elements might be helpful to collect and requested input on whether closed block products or association products should play a role in defining a benchmark plan.
Public comments touched on several common themes: allowing each state to identify EHB will lead to a patchwork of benefits, the lack of information available on the limits in potential benchmark plans that could impede access to EHB, arbitrary limits will be used to restrict care, and the need for detailed information on prescription drug coverage.
AARP, an interest group with 40 million members, is concerned that the state-by-state approach to identifying EHB will lead to "significant variability" in benefits among states. It wants data to be collected that includes the percentage of available drug products on a formulary, as well as the drugs subject to prior authorization, step therapy, or quantity limits. While it agrees with the decision to allow plans that meet NCQA or URAC standards to participate, the AARP wants assurances that the two organizations are "equally rigorous" to prevent health plans from venue shopping "for the easiest path to accreditation. To our knowledge, the processes of NCQA and URAC are not comparable."
The group also is concerned about making network adequacy a part of the accreditation process. AARP views that as a regulatory function. "No plan should be allowed to participate in the exchange with an inadequate network, regardless of how well it does on other aspects of accreditation."
The Cancer Action Network, the advocacy arm of the American Cancer Society, argues that "arbitrary and unreasonable limits (in [potential benchmark plans) could be used to restrict needed care" and may be inconsistent with healthcare reform's "clear intention to guarantee that at least the 10 benefit categories are covered." The group is concerned that the medical benefits template for individual family plans included a question about diabetes wellness plans. "We want to ensure that wellness programs, which are not actually benefits, are not included in the EHB."
The network recommends that each health plan submit its definition of medical necessity, which it says can vary widely among plans.
The American Federation of State, County & Municipal Employees, which represents 1.6 million members and retirees, wants HHS to collect data on rider policies made available by a health plan. "High enrollment in a plan can be attributed, at least in part, to the availability of rider policies" and is information HHS needs to develop policy that reflects the ACA requirement that EHB reflect a typical employer plan.
The Federation of American Hospitals which represents more than 1,000 investor-owned or managed community hospitals and health systems, wants the Centers for Medicare & Medicaid Services to clarify "the specific language related to measures that are developed or adopted by a voluntary consensus standards setting body." FAH notes that the National Quality Forum is the designated consensus-based entity under contract with HHS to endorse clinical quality measures and wants to specify that measure sets used for quality health plan accreditation include measures that are endorsed by the NQF.
Cigna, a provider of health insurance and related services, wants a consistent definition of habilitative services to be applied across all health plans. "We do not support the option of allowing plans to decide which habilitative services to cover." Cigna proposes that habilitative services be "covered in parity with rehabilitative services." It want coverage for both to be limited to care with "quantifiable, measureable, and attainable treatment goals."
It doesn't support the inclusion of block or association products in defining benchmark plans. "Closed blocks are intended to be retired and no longer offered to new purchasers."
Bayer Healthcare, a specialty pharmaceutical and medical device company, expressed concern that some state policymakers could try to limit coverage for contraceptives by selecting benchmark plans that offer less favorable coverage. Bayer wants health plans to be required to provide information about how contraceptive drugs are covered under preventive services benefits, including any required cost sharing.
Hospitals are facing a showdown with state officials over the U.S. Supreme Court's decision on the expansion of Medicaid under the Patient Protection and Affordable Care Act.
Last week the court ruled that states couldn't be coerced into agreeing to the expansion, which would have added an estimated 17 million to the Medicaid rolls. Instead, states may simply decide not to participate in the expansion, which is 100% financed with federal funds for the first three years and then 90% covered for the next seven.
Almost immediately after the release of the Supreme Court decision Republican-led states began announcing that they would not participate in the expansion. In Florida, which was behind the legal challenge to the Medicaid expansion and where four million people are uninsured, Gov. Rick Scott (R) at first suggested that he might be amenable to the expansion, but by Monday stood firmly opposed to it.
Officials at the Florida Hospital Association are now in the process of sorting out their options, Bruce Rueben, FHA president told HealthLeaders Media. "We want to see the coverage extended because that's the only way that the benefits of the law are going to be realized."
He noted that hospitals are contributing billions of dollars toward the coverage through cuts to hospital payments in Medicare and Medicaid. "We want to see people in Florida get the benefit of all that. Otherwise hospitals are simply going to have fewer resources to provide the same amount of uncompensated care that they have been providing."
Among the issues to be reviewed is how much power the Florida legislature will have to influence Gov. Scott's decision. "Nobody is going to change their mind before Nov. 6. Everyone is going to hold their position until we know the outcome of the elections. Then we'll sit down and begin to work with everybody."
For now, Reuben says the FHA will begin to build an economic and social case for extending Medicaid coverage. That means telling the story of Florida uninsured. According to the Urban Institute, about 1.6 million uninsured Floridian adults would be eligible for Medicaid if eligibility was expanded to 138% of the federal poverty level.
Because the premium tax credit schedule for health insurance exchanges begins at 100%, Florida's decision not to expand its Medicaid program will leave an estimated 995,000 eligibles, whose incomes are less than 100% FPL, with no access to either tax credits or subsidies.
Nationally 11.5 million adults will find themselves in the same boat because their income is less than 100% of the FPL.
Reuben's group will also keep a close eye on efforts by the Centers for Medicare & Medicaid Services to encourage states to increase Medicaid coverage. "What kind of give and take is there between the federal government and state governments that would make it more interesting for states to expand Medicaid coverage?"
He points to Florida's Medicaid program, which currently operates under a CMS waiver. The state has asked CMS for a waiver to treat all Medicaid recipients under a managed care program. "That's an opportunity for some give and take."
DSH payments may present another opportunity for give and take. Disproportionate share hospital programs for facilities that treat a large number of indigent patients are embedded in the ACA, which provides the Department of Health and Human Services with the discretion to allocate the cuts.
In a blog for the National Association of Public Hospitals and Health Systems, Bruce Siegel, MD, the group's president and CEO, noted that DSH cuts were "written into the law on the assumption that states would be required to expand Medicaid, leading to fewer uninsured patients landing in the safety net…Without the financial help of an expanded Medicaid program, safety net hospitals absolutely cannot bear further cuts to DSH payments. In an earlier press statement Siegel asked that "policymakers and regulators wade through the Court's decision and clarify the gray areas left in the law, we implore them to revisit the DSH cuts and other hospital-based reductions."
For states that are so far declining to participate in the Medicaid expansion, the reasons for the decision are primarily financial. Although the federal government is committed to picking up the lion's share of the costs for 10 years, states are still cautious.
Anthony Wright, executive director of Health Access, a California advocacy group, says he doesn't understand that stance. "This is a great opportunity for states. There are very few investments that a state might make that could provide a 9:1 return to bolster its health system and economy. There is no tax cut or infrastructure project that provides a 9:1 bang for the buck."
Lost in the shuffle amid last week’s U.S. Supreme Court decision is proposed legislation and a proposed regulation that each seek to address the issue of aggressive hospital debt collection.
Sen. Al Franken (D-MN) introduced the End Debt Collector Abuse Act of 2012 last Wednesday. The act would amend the federal Fair Debt Collection Practices Act to include medical debt and would set limits on the access that debt collectors can have to hospital patients.
Meanwhile, the U.S. Department of the Treasury released proposed regulations on policies for patient financial assistance and emergency medical care that hospitals must develop as a condition of receiving or maintaining tax-exempt status. The regulations are required by the Patient Protection and Affordable Care Act.
Franken’s proposed bill reflects the findings of hearings he held on the hospital debt collection practices of Chicago-based Accretive Health, Inc. Those hearings followed a report from Minnesota Attorney General Lori Swanson alleging that Accretive's debt collection and patient privacy practices violated federal health, debt collection, and privacy laws.
The proposed Treasury regulations would require charitable hospitals to establish and publicize financial assistance programs (FAP), establish billing and collections protections for patients eligible for the assistance programs, and develop a written policy for emergency medical care. The hospitals would also be prohibited from taking "extraordinary collection actions" against FAP-eligible individuals.
"In recent months, we have heard concerns about aggressive hospital debt collection activities, including allowing debt collectors to pursue collections in emergency rooms. These practices jeopardize patient care, and our proposed rules will help ensure they don’t happen in charitable hospitals," Emily McMahon, acting assistant secretary for tax policy in the Treasury Department, said in a press statement.
Among the prohibited practices are aggressive third-party actions, foreclosures and liens, garnished wages, and the sale of an individual's debt to another party. The regulation notes that "after a hospital facility has sold a debt, it may have a more limited ability to control the purchaser's actions to collect the debt." The proposed regulations still allow debt to be contracted to a collections agent because a hospital facility "can presumably maintain greater control over its third-party agent."
The general requirements for an FAP include eligibility standards, description of the assistance in terms of free or discounted care, the basis for calculating charges, and a description of what steps the hospital will take in case of nonpayment.
The emergency medical care policy requires hospitals to provide care for emergency medical conditions as defined by the Emergency Medical Treatment and Active Labor Act (EMTALA). The care must be provided regardless of a patient’s FAP eligibility.
In addition, the proposed regulation would limit the hospital charges to FAP eligibles to the "amount generally billed (AGB)" for a patient with health insurance coverage. The AGB could be calculated by a "look-back" method based on actual past claims paid to the hospital facility by either Medicare fee-for-service or a combination of Medicare FFS and private health insurance claims. AGB can also be calculated based on estimates of what Medicare would pay if the FAP-eligible patient was a Medicare FFS beneficiary.
Comments and requests for a public hearing on the Treasury regulations must be received by September 24. The American Hospital Association is expected tp oppose the proposal. In an e-mail exchange with HealthLeaders Media, an AHA spokesperson described the proposed rules as "overly prescriptive" and stated that they "could discourage hospitals’ innovations and best practices."
The ink had barely dried on Thursday's U.S. Supreme Court decision to uphold the individual mandate when Republican Congressional leaders announced that they had scheduled a July 11 vote to once again repeal the entire Patient Protection and Affordable Care Act.
Political junkies may recall that when the new Congress convened in 2011, one of the first votes by the Republican-dominated House of Representatives was to pass a full repeal of the act. The Democrat-controlled Senate never considered a similar bill. The same fate is expected for the July 11 vote.
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Over the past 18 months, House committees have held a series of hearings on various PPACA provisions such as the medical loss ratio (MLR), health insurance exchanges, medical device taxes, and the Independent Payment Advisory Board (IPAB). Some items such as the repeal of IPAB have actually come to a House vote (it passed) and have Senate support. Others like the MLR debate haven't advanced beyond committee discussions.
With the Supreme Court decision, the question of the hour is whether stakeholders such as hospitals, health plans, and physicians groups, which have invested valuable financial and human resources in meeting PPACA requirements, will rally around a full repeal.
The answer seems to be no. However, the door is definitely open to tweaking the law. "Our membership is looking ahead now. We want more people to be covered," Mary R. Grealy, president of the Healthcare Leadership Council, told HealthLeaders Media. The council represents a coalition of CEOs of diverse healthcare companies and organizations, including McKesson and Walgreens.
While Grealy says council members intend to focus "a laser-like beam on reducing healthcare costs," she explains that the group has concerns about the existing law. "We're worried that the [individual mandate] penalty isn't high enough and that people will still make the decision not to get coverage." The council wants to see IPAB repealed and changes made to the medical device tax.
The medical loss ratio provision, which requires health plans to limit administrative expenses to between 15% and 20% of premiums, is unpopular with America's Health Insurance Plans, which contends that the MLR does nothing to address the real driver of premium increases: the underlying cost of medical care.
But there are parts of PPACA that health plans support and intend to continue, with or without the individual mandate, such as coverage of dependents up to age 26 and the elimination of lifetime policy limits. A full repeal of PPACA would eliminate these provisions, which are popular with policyholders and voters.
At issue in this election year is whether the law could be amended by this Congress to address industry concerns. Will the House continue with the theater of the repeal, which has no support in the Senate and essentially leaves PPACA intact? Or is there an opportunity to take more meaningful action and repeal provisions such as IPAB, a move that has bipartisan support in both the Senate and the House?
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Probably the former.
Chris Condeluci, an attorney with law firm Venable in Washington, D.C., says that "between now and the November elections, nothing will be done to the law because the politics aren't there." He adds that the timing of any potential action will be critical.
Condeluci, who served as tax counsel for the Senate Finance Committee when the healthcare reform law was being crafted, outlines possible three scenarios:
President Obama is re-elected. "The law is not going anywhere. We may see some improvements here and there, which I think the administration recognizes needs to be done," he says.
Mitt Romney is elected. While Romney is on record as supporting repeal, Condeluci notes that it's difficult to get things done inside the Beltway. "We could still say that the law won't be entirely repealed, maybe some sections would be repealed but probably not the entire law. There probably won't be a consensus even if Romney is in the White House."
The healthcare industry speaks. Regardless of the election results, as 2014 nears, when much of PPACA goes into effect, the healthcare industry is likely to say at some point, "We don't want Congress to mess with this law because we've spent so much money to get our systems changed to comply with the law." The timing of that tipping point is critical. "Is it August 2013," asks Condeluci? "Is it January 2014, or is it earlier than that?"
While he expects the decision to be a topic of conversation for months to come, he says "The law is here to stay for the meantime. That means that the regulators will continue to push out regulations implementing the law and that stakeholders now have some sense of certainty on whether they need to comply with the law or not."
Condeluci notes that through the regulatory process, stakeholders will still have opportunities to influence the law to make it flexible for their needs.
The U.S. Supreme Court ruled Thursday that states can opt out of the expansion of the Medicaid program without facing the loss of their existing funding. The ruling provides cash-strapped states with an easy way to avoid adding additional members to their Medicaid rolls and could have a chilling effect on the interest among health plans in the Medicaid market.
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In a victory for the 26 states that filed suit against Patient Protection and Affordable Care Act, the high court called unduly coercive the provision to allow the Secretary of Health and Human Services to cut all Medicaid funding for states that choose not to participate in the Medicaid expansion under the PPACA.
"The threatened loss of over 10% of a state's overall budget is economic dragooning that leaves the states with no real option but to acquiesce in the Medicaid expansion," Justice John Roberts wrote.
"The government claims that the expansion is properly viewed as only a modification of the existing program, and that this modification is permissible because Congress reserved the 'right to alter, amend, or repeal any provision' of Medicaid. But the expansion accomplishes a shift in kind, not merely degree."
The ruling wasn't entirely surprising to stakeholders who follow the Medicaid market. The initial policy, which denied even their existing Medicaid funding to state's that declined to expand their program "always seemed like overreach," Mary R. Grealy, president of the Healthcare Leadership Council, told HealthLeadersMedia.
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Stakeholders reached by HealthLeaders Media in the immediate aftermath of the Supreme Court decision were split as to whether most states will eventually sign on to the expansion. The PPACA sweetens the participation pot with a guarantee that the federal government will pay 100% of the cost of the Medicaid expansion for the first three years and at least 90% after that.
That should be enough to get states interested, says Donald Fisher, PhD, president and CEO of the American Medical Group Association.
However, if the early reaction by governors like Scott Walker (R-WI) is any indication, pushback against anything related to PPACA will reign for a while longer. "Wisconsin will not take any action to implement ObamaCare," said Walker in a press statement.
Mark Lutes, an attorney at Epstein Becker Green in Washington, DC, said that even with the 100% sweetener and the elimination of the penalty, participation in Medicaid expansion is not to be taken lightly. "What happens when federal funding drops to 90%? A state that's already struggling with its existing Medicaid budget may not be able to take the risk."
There are a number of items besides federal funding that states will need to consider in making their expansion decision. The Supreme Court ruling doesn't address other Medicaid provisions in the ACA beyond the expansion penalty, so those provisions, including a mandated increase in primary care reimbursement rates and mandated decreases in disproportionate share hospital (DSH) funding, would continue to apply according to Matt Salo, executive director of the National Association of Medicaid Directors.
"Since all these other things will apply, states will have to consider if they will change their decision." Salo added that states will also have to determine how their decision to expand or not will play into the establishment of the health insurance exchanges.
Health plans will be keeping a watchful eye on state decisions. There has been growing interest among insurers in the potential expansions, which would add an estimated 13 million to the Medicaid rolls. Without the penalty to promote that expansion the potential market may be much smaller and not as financially lucrative.
The annual conference of America's Health Insurance Plans last week had something that healthcare industry conferences are rarely able to muster: Suspense.
Against a backdrop of an imminent, historic Supreme Court ruling on the Patient Protection and Affordable Care Act, the mood at the Salt Palace Conference Center in Salt Lake City was laced with anticipation.
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Thursday morning a packed house at the Conference Center sat and waited for Karen Ignagni, AHIP's CEO, to open the conference. It was 8 a.m. in the mountains and 10 a.m. on the east coast, where the Supreme Court was announcing its decisions for the day.
The room was silent as Ignagni crossed the stage about 10 minutes late, took her place at the podium, and announced that she had no news about the Supreme Court ruling on the Affordable Care Act. She was well into her prepared remarks when a staffer approached the rostrum and handed Ignagni a note. "What a wonderful dramatic moment," she said as she opened the note. The she announced, "there is no decision today."
While the ACA was definitely the elephant in the room throughout AHIP, there was also the sense that no matter what the Supreme Court outcome, the delivery of healthcare has forever changed. Attendees and presenters at the conference frequently credited healthcare reform with accelerating conversations that the healthcare industry should have been having years, and maybe even decades, ago.
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AHIP featured three days of workshops, networking breakfasts, and more than 30 sessions devoted to the intricacies of the healthcare industry. Along the way, attendees were treated to presentations by Paul Begala, Deepak Chopra, Atul Gawande, Malcolm Gladwell, and Ari Fleischer.
For those of you who weren't lucky enough to be there, here is my impression of some of the big ideas presented at AHIP 2012:
Consumer engagement (Part 1). You know an idea is big when every tech vendor has a product that addresses it. The buzz is that the consumer experience with health plans and providers needs to improve. It starts with enrollment, extends to outreach and educational efforts, and ends with brand loyalty. In between, there are all types of vendor products that can help health plans get closer to the members they love to hate—the individuals.
Consumer engagement (Part2). Last year at AHIP there was a lot of talk about the healthcare industry shifting from a wholesale (group) to a retail (individual) business. There was some anxious wringing of hands as health plans looked for ways to appeal to this new and important market.
Fast forward to 2012 and the conference talk has shifted to consumer responsibility. As in "how do we engage the consumer and make them more responsible for their care." There was a lot of talk about consumer empowerment, especially in terms of benefit selection and financial obligations. Be sure and consider the flip side: engaged consumers will require more attention and demand more services
The payer-physician relationship is still in transition. For all the talk about the care continuum and everyone working together for the good of the patient, there are still huge gaps between health plans and docs. Vendors told me stories about having to act as the middle man between physicians and health plans. Physicians complained about receiving out-of-date and inaccurate data about their patients from health plans. For their part, insurers complained that physicians don't know how to use the patient data they provide and don't want to learn.
Learn from other industries. A few years ago IDEO, a San Francisco design firm, developed a user-friendly shopping cart design that was featured on the TV show Nightline. Watching the show was the CEO of a Missouri hospital system, who asked IDEO to develop ideas to improve that hospital's emergency room experience.
IDEO focused on the need for patient information about what happens during an ER wait. Among IDEO's suggestions: add monitors to the ER so patients know their rank on the waiting list; staff information booths 24-7 or not at all; add valet parking to the ER; and provide patients with Velcro patches that tell hospital employees where the patient is in the treatment process. The point is that as the healthcare industry evolves, health plans need to be open to different ideas and new ways of looking at their business.
Saint Catherine Regional Hospital in Charlestown, IN has filed for Chapter 11. A request to incur secured debt of $1.5 million from a credit corporation to continue hospital operations notes that a potential buyer has been identified for the 60-bed hospital, which will be sold as a going concern.
The Indiana hospital is the sister facility to Saint Catherine Medical Center in Ashland, PA, which closed and filed for Chapter 7 bankruptcy in April 2012. Both hospitals are operated by Saint Catherine Healthcare, LLC.
The financial petition was filed last week in US Bankruptcy Court for the Southern District of Indiana. According to court documents, the hospital owes an estimated $8.3 million in unsecured claims to its 20 largest creditors, including:
$2.5 million to Saint Catherine Healthcare LLC
$771,816 to Capital Blue Cross
$399,833 to Indiana Emergency Physicians
$186,650 to Sefton Anesthesia Service
$105,856 to the IRS
Court documents state that the between May 2011 and April 2012, the hospital, which has around 280 employees, posted a net operating loss of $1.3 million.
The Chapter 11 filing is the latest in a series of court petitions that bear some relationship to the two hospitals.
In May, Merlyn Knapp, the current CEO of the Indiana facility and former CEO of the Pennsylvania facility, was named a co-defendant in a suit filed by the Chapter 7 trustee. The suit charges Knapp and the hospital’s management company, Specialty Health LLC, with "breach of fiduciary duty of care."
A transfer of $300,000 from the Pennsylvania medical center to the Indiana hospital has come under scrutiny. The suit contends that Knapp, who is employed by Specialty Health, "knew or reasonably should have known" that the medical center was "insolvent or on the verge of insolvency."
The lawsuit asks for several claims of relief suggesting that Knapp "acted with a purpose other than advancing" the (Pennsylvania) medical center's best interests. "In fact, Knapp's actions were for the benefit of the Indiana hospital" and "operated to the detriment" of the Pennsylvania medical center, the suit alleges.
The Chapter 7 trustee filed in May an "adversary proceeding" against Saint Catherine Regional Hospital to recover the $300,000. In court documents the regional hospital contends that "this action, combined with the debtor’s previous operational losses, forced the debtor to seek Chapter 11 relief."
Court papers list Specialty Health LLC, Saint Catherine Hospital of Pennsylvania, and Saint Catherine Hospital of Indiana LLC as unsecured creditors but attach no dollar amounts to the claims.
Saint Catherine Regional Hospital remains a fully licensed and operating hospital facility. The state hasn’t imposed any restrictions on the hospital, Terry Whitson, an assistant commissioner in the Indiana Department of Health told HealthLeaders Media in an e-mail exchange.