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Medicaid Providers Could Lose Billions if Supreme Court Tosses Health Overhaul Law

Mar 14, 2012• 1

By Matt Barry

On March 26, the U.S. Supreme Court will begin three days of oral arguments on the constitutionality of President Barack Obama’s health-care overhaul law which was signed into law on March 23, 2010.

Most of the attention has been focused on whether the court will reject the individual mandate, a provision that requires individuals to obtain health insurance, and less attention has been paid to the possibility that the entire law could be overturned. If the entire rule is overturned there will be consequences for Medicaid and it will affect health-care providers that do business with state Medicaid programs.

Bloomberg Government released a study today which examines the size and scope of the projected revenue that the Medicaid program will direct to companies doing business in the 27 states that have filed suit over the constitutionality of the overhaul law. It looks at the impact a ruling against the law would have on managed care plans, nursing homes and inpatient hospitals, the top recipients of Medicaid spending, over a five year period, from 2014 to 2018.

The study takes a specific look at the potential impact on health-care providers in Florida and Virginia, the two lead litigant states. The study finds:

Gingrich Adviser Urges States to Implement ObamaCare

Mar 14, 2012• 2

By Michael F. Cannon

State after state is refusing to implement ObamaCare’s health insurance Exchanges. Republican David Merritt hopes they will “grudgingly decide” to change their minds.

Merritt is a health care adviser to Newt Gingrich. He is also a senior adviser at Leavitt Partners. Leavitt Partners is a consulting firm that makes money by helping states implement ObamaCare. In the Daily Caller, Merritt tries to persuade state officials to help implement a law they oppose.

Merritt begins his pro-Exchange argument like so: “Imagine that you’re being required to buy a car.” Would you rather choose that car yourself, he asks, or would you rather the dealer choose the car? Hmm, good question. I choose Option C: wring the neck of whoever is requiring me to buy a car. Not Merritt, though. He counsels states to choose their own “car.”

There are so many problems with this analogy that it’s hard to list them all. First, as Merritt essentially admits, states would be able to choose from such a narrow range of “cars” that it scarcely makes a difference whether they pick their own or let the feds do it. Second, states would only have to pay for their “car” if they pick it out themselves; otherwise, the feds pay for it. So Merritt is literally urging states to volunteer to pay for a “car” when the feds would otherwise hand them one for free. Finally, he says states should select their own “car” even though “no one knows what a federal [car] would look like.” How can Merritt counsel states to choose Option A if he admits he doesn’t even know what Option B is? Wouldn’t the prudent course be to wait and see? Especially since the Obama administration admits it doesn’t have the money to create Exchanges itself?

Merritt’s hypotheticals don’t make his point, either:

The Nonprofit Question

Mar 14, 2012• 4

By David Dranove

I am getting caught up on the news after a couple of weeks away and two stories caught my attention. The first is the ongoing debate about the tax exempt status of Illinois nonprofit hospitals, which has received extensive coverage in the Chicago Tribune. Nonprofits avoid paying most state taxes, notably property taxes. For some nonprofit, the tax exemption could be worth tens of millions of dollars annually.

The question before the state is what they should expect of nonprofits in exchange for tax exemption. The current law requires nonprofits to provide “community benefits” commensurate with their tax savings. The state and the Illinois Hospital Association have been unable to find mutually acceptable language to replace this vague standard. The most draconian approach limits community benefits to charity care. At the other extreme, the IHA (and the Chicago Tribune) largely back a proposal by the Civic Federation that defines community benefits broadly to include losses incurred on Medicare, Medicare, bad debt, and community outreach programs.

A few years ago, I advised the state Attorney General’s office on this issue. I argued for the following conceptual approach: In exchange for tax exemption, nonprofit hospitals should be required to perform a commensurate level of “charitable acts,” which I defined as services and programs for which the hospital expects to lose money. Alternatively, charitable acts are those that investor-owned hospitals would not undertake.

Will Payers be the Business Intelligence Services of the Future?

Mar 14, 2012• 5

By JOHN HALAMKA, MD

What is a payer/insurer?

Typically, payer organizations collect premiums from employers and individuals, process claims, and engage in a variety of case management/disease management activities to encourage the appropriate use of medical resources. If they collect more premiums than claims paid, their medical loss ratio is less than 100% and they earn a profit.

In a world of accountable care organizations and healthcare reform, new reimbursement methods will include global payments to providers, which implies the risk of loss will shift from the payer to hospitals and clinicians. Payers will no longer need their large claims processing staff, nor create complex actuarial models. They’ll become very different organizations.

How different?

My prediction is that payers will become the health information exchange and analytics organizations that help hospitals and clinicians manage risk in a world of capitation.

I’ve said before that ACO=HIE+Analytics.

The payers are already making strategic acquisitions to build these new business models

Aetna acquired Medicity to gain expertise in healthcare information exchange. Aetna had already acquired Active Health to gain access to its CareEngine analytics platform.

The Effect Of Physicians’ Electronic Access To Tests: A Response To Farzad Mostashari

Mar 13, 2012• 17

By Danny McCormick, David Bor, Stephanie Woolhandler
and David Himmelstein

Our recent Health Affairs article linking increased test ordering to electronic access to results has elicited heated responses, including a blog post by Farzad Mostashari, National Coordinator for Health IT. Some of the assertions in his blog post are mistaken. Some take us to task for claims we never made, or for studying only some of the myriad issues relevant to medical computing. And many reflect wishful thinking regarding health IT; an acceptance of deeply flawed evidence of its benefit, and skepticism about solid data that leads to unwelcome conclusions.

Dr. Mostashari’s critique of our paper, will, we hope, open a fruitful dialogue. We trust that in the interest of fairness he will direct readers to our response on his agency’s site.

Our study analyzed government survey data on a nationally representative sample of 28,741 patient visits to 1187 office-based physicians. We found that electronic access to computerized imaging results (either the report or the actual image) was associated with a 40% -70% increase in imaging tests, including sharp increases in expensive tests like MRIs and CT scans; the findings for blood tests were similar. Although the survey did not collect data on payments for the tests, it’s hard to imagine how a 40% to 70% increase in testing could fail to increase imaging costs.

Dr. Mostashari’s statement that “reducing test orders is not the way that health IT is meant to reduce costs” is surprising, and contradicts statements by his predecessor as National Coordinator that electronic access to a previous CT scan helped him to avoid ordering a duplicate and “saved a whole bunch of money.” A Rand study, widely cited by health IT advocates including President Obama, estimated that health IT would save $6.6 billion annually on outpatient imaging and lab testing. Another frequently quoted estimate of HIT-based savings projected annual cost reductions of $8.3 billion on imaging and $8.1 billion on lab testing.

We focused on electronic access to results because the common understanding of how health IT might decrease test ordering is that it would facilitate retrieval of previous results, avoiding duplicate tests. Indeed, it’s clear from the extensive press coverage that our study was seen as contravening this “conventional wisdom”.

Engaging “The” Patient

Mar 13, 2012• 2

By Adrian Gropper

The digital identity of patients will come to the fore as the nationwide health information network (NwHIN) takes practical steps to support care coordination, patient engagement and quality transparency. These changes in health care delivery are the essential foundation for cost containment and arguably the essence of Meaningful Use.

Stage 2, as proposed, is a giant step toward care coordination and patient engagement. The focus on Direct and meeting the patient and doctor where they are – on the Internet – rather than where they might be (HIEs and PHRs) is both practical and empowering. But, what does “the patient” mean in a digital, networked system where patient identity is not always based on face-to-face encounters and snail-mail?

I doubt that anyone is arguing for biometric patient passports as a prerequisite for medical consultation.

The practical aspects of identifying the patient online can be seen in light of the Stage 2 mandate for Direct messaging across institutions and with the patient. Let’s imagine a paperless, NwHIN, version of today’s Release Of Information (ROI) request that enables one doctor to send records to an unaffiliated doctor under HIPAA and with informed patient consent.

How Many More Dead Patients?

Mar 10, 2012• 1

By Michael Millenson

Here’s a quiz for Patient Safety Awareness Week (and after): The number of Americans who die annually from preventable medical errors is:
.
A) 44,000-98,000, according to the Institute of Medicine

B) None, thanks to the Institute for Healthcare Improvement’s “100,000 Lives Campaign”

C) 90,000

D) No one’s really counting

The correct answer is, “D,” but I confess it’s a trick question. With a slight twist in wording, the right answer could also be “C,” from an as-yet-unpublished new estimate with a unique methodology. (More below.) The main point of this quiz, however, is to explore what we actually know about the toll taken by medical mistakes and to dispel some of the confusion about the magnitude of harm.

Answer “A” refers to a figure in the oft-quoted (and often incorrectly quoted) 1999 IOM report, To Err is Human. The IOM estimate of 44,000-98,000 deaths and more than 1 million injuries each year refers only to preventable errors, and then just in hospitals. The quiz asked about all preventable harm. As the sophistication and intensity of outpatient care has increased, so, too, have the potential dangers.

For example, the Centers for Disease Control and Prevention (CDC) reported in 2011 that the majority of central-line associated bloodstream infections (CLABSIs) “are now occurring outside of ICUs, many outside of hospitals altogether, especially in outpatient dialysis clinics.” CLABSIs are both highly expensive and kill up to 25 percent of those who get them. Even in garden-variety primary care, one analysis found a harm rate of one per 35 consultations, with medication errors the most common problem. To Err is Human was silent about those types of hazards.

It’s NOT the Economy, Stupid!

Mar 8, 2012• 51

By J.D. Kleinke

With the US economy dragging itself to its feet, the housing and stock markets crawling back, and the Republican presidential candidates (and their nationally syndicated Falstaff) doing everything imaginable to alienate most American women, President Obama has been having quite a run of good luck. But there is one piece of good news clearly not welcome around the White House: new data showing that health care costs are stabilizing.

I know, I know – this is health care, costs are always out of control, and the sky is always falling. What could I possibly be talking about?

I’m talking about the actual numbers. The accompanying graphs reveal that health spending has actually been stabilizing for several years, and the system we all love to hate is finally re-entering the economy’s normal orbit after three decades of skyrocketing growth.

This of course is hardly a cause for celebration around the Obama Administration, for obvious political reasons. Why else would economists from the same department tasked with implementing health reform choose to tell us that this long-awaited good news is actually – well – bad news.

Huh? In both graphs below, newly released data through 2010 show that health spending over the past several years has been normalizing to the rate of overall inflation rather than outpacing it – or grossly outpacing it – as has been the case, nearly without interruption, since the 1970s.

Pharma: Beatings to Continue Until Morale Improves?

Mar 8, 2012

By David Shaywitz

For the last decade, as the biopharmaceutical industry has struggled — largely unsuccessfully — to live up to its anticipated potential, a litany of experts, analysts, participants, and commentators have offered up their diagnosis and treatment for pharma’s productivity problem.

The basic question they’re all trying to solve: how can it be that despite profound improvements in many aspects of drug discovery, actual productivity – measured by cost per new NME – seems to be declining?

That’s the problem that Jack Scannell (an industry analyst at Bernstein & Co.) and colleagues tackle in the latest issue of NRDD (here – abstract only), expanding upon a nice piece of work they did on this subject last year to now offer an even more comprehensive and thoughtful review of this important subject. While painfully depressing, the article is worth reading, as it cogently summarizes many years worth of hand-wringing and angst.

Having spent much of the last decade wrestling with many of the same issues (his topics will be familiar to regular readers of this column), I was perhaps most struck by the rather dismal take-away: there isn’t a clear unifying explanation for the R&D productivity problem; perhaps if each company examined its internal failures rigorously, new insight might emerge, but meanwhile, essentially, beatings will continue until morale improves.

More specifically: the payor environment is likely to make reimbursement increasingly difficult; regulators will always have an easier time tightening screws than loosening them; each success raises the bar higher; and the only immediate solution is likely to be continued R&D cuts.