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Payers & Providers Midwest Edition – Issue of October 23, 2012

Payers & Providers Midwest Edition – Issue of October 23, 2012

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Published by PayersandProviders
Payers & Providers is the Midwest's premier healthcare business journal.
Payers & Providers is the Midwest's premier healthcare business journal.

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Published by: PayersandProviders on Oct 23, 2012
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December 4-5
Calendar 
23 October 2012
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Midwest Edition
E-Mailinfo@payersandproviders.comwiththe details of your event, or call(877) 248-2360, ext. 3. It will bepublished in the Calendar section,space permitting.
Michigan Has A $1 Billion Question
It Could Save Millions Per Year Expanding Medicaid
In the months since the U.S. Supreme Courtruled that states have the option of participating in Medicaid expansion as part of the Affordable Care Act, think tanks andconsultants have been providing numbers andrecommendations to assistlawmakersin theirdecision.One of the most recent tools is a newreport from the
Center for HealthcareResearch & Transformation from theUniversity of Michigan
that found the statewould save almost $1 billion through 2023 if it fully expanded Medicaid coverage per theACA provisions.“We thought at the outset that it would bea good value because the federal governmentis picking up so much of cost,” said
MarianneUdow-Phillips
, CHRT’s director. “But wedidn’t know that it would produce this muchsavings.”Almost 2 million Michigan residents arecurrently enrolled in Medicaid, according tothe report. Another 1.2 million would beeligible in 2014 – approximately half of whomare now uninsured. But not everyone who iseligible will apply for coverage. The study’sauthors estimated that 289,000 people wouldbe covered in 2014 and 620,000 more thanare currently enrolled by 2020.The group began working on the reportafter the Supreme Court’s decision to helppolicymakers use facts to make theirdecisions, Udow-Phillips said. In order totabulate the cost or savings from expansion,Udow-Phillips said they had to know ahandful of things, (some of which remainprojections).First, researchers had to
gure how manywould be enrolled in the program – thisincludes assumptions about who would beeligible, how many are currently eligible butnot enrolled, and how many might enroll in2014.They also had to calculate what the costswould be. While many may focus on grosscost, Udow-Phillips said it’s more important tolook at the net cost of expansion, whichincludes new revenue generated for the state.Almost 2 million Michigan residents arecurrently enrolled in Medicaid, according tothe report. Another 1.2 million would beeligible in 2014; approximately half of whomare now uninsured. But not everyone who iseligible applies for coverage. The study authorsestimated that 289,000 people would becovered in 2014 and 620,000 more than arecurrently enrolled by 2020.Medicaid currently matches fundsdifferently in each state based on a formulausing the state’s per capita income. Thatranges from 50% to 73%. Michigan’s federalmatch is 66%. Under the ACA, the federal
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Continued on Next Page
 
WEBINAR Thursday, October 25, 2012 Noon, CDT
MEDICAID EXPANSION: 2014 AND BEYOND
Please join
Lucien Wulsin
, Executive Director of the Insure the Uninsured Project, and ElizabethBenson Forer,
CEO of the Venice Family Clinic
, to discuss the challenges of Medi-Cal expansionunder the ACA.
a HealthcareWebSummit Event
co-sponsored by
PAYERS & PROVIDERS
 
 
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Payers & Providers
Page 2
Top Placement...Bottomless Potential
Advertise Here
(877) 248-2360, ext. 2
In Brief 
Trinity, CatholicHealthcare EastAnnounce PreliminaryMerger Plans
Michigan-based
Trinity Health
hassigned a letter of intent to mergewith Pennsylvania-based
CatholicHealthcare East
, potentiallycreating a powerhouse of aCatholic hospital network.Under the terms of thecurrently non-binding deal, TrinityCEO
Joseph R. Swedish
wouldbecome chief of the mergedorganization. CHE Chief ExecutiveOfficer would serve as executivevice president.Consolidating the two systemswould create an entity operating 82hospitals in 21 states with 87,000employees, inrcluding more than4,000 physicians. Annual revenuewould be more than $13 billion ayear.“Trinity Health and CatholicHealth East are strong Catholichealth care systems that share aGospel-based mission and anunyielding commitment to care forpeople who are poor andunderserved," said Trinity HealthChair Sister
MaryMollison
. “This consolidationadvances the vision of congregations of Sisters thatfounded these health careministries, addresses the changinghealth care environment and takesa bold next step for Catholichealthcare."Both sides noted that themerger is preliminary, and that adefinitive agreement andcompletion date would beannounced during the first quarterof 2013.“To serve people best intoday's healthcare environment,health systems must have ready
Continued on Page 3
NEWS
MEET YOUR FELLOW READERS
Need to promote a conference? Or your brand?
Payers &Provider 
!   
e-mail list for all editions is available for yourmarketing needs. Reach out to more than 12,000healthcare professionals who read our publications. Callour advertising director
Claire Thayer
at (503) 226-9850,or e-mail her atclairet@mcol.com.
Michigan Medicaid
(Continued from Page One)
government will begin with a 100% match fornew enrollees for three years. That numberwill drop to 90% in 2020 and beyond.The report found that the state would savemoney through 2020 (a total of $1.17 billion).In 2020, when the federal match is 90%, thestate would see a net annual cost growing to$52 million by 2023.The state will save money throughprovider taxes, eliminating the adult bene
twaiver program; reduction in non-Medicaidmental health bene
ts; reductions in prisonerinpatient medicalservices; and savingin state employeehealthcare costs.These costs andsavings among to$983 millionthrough 2023.“I hope peopleget that there istremendous value inseveral ways,”Udow-Phillips said.She added thereis the
nancial valuebecause the statenow pays forservices that wouldbe covered under federal dollars. Moreover,having more people covered will reduceuncompensated care, which trickles down toemployers and people paying for privateinsurance.Udow-Phillips also noted the value of thecoverage. In 2020, when the federal coverageis reduced, it will still only cost the state $83per person, per year for Medicaid coverage.Udow-Phillips said she thinks other stateswould see similar numbers if they looked at allcosts and savings related to the expansion,particular during the 10-year period theyanalyzed.“Even when it moves down to 90-10, wethink it will be a good deal for the states evenif they have a slightly different picture,” shesaid. “We published this to help our state, butwe also want others to look at ourmethodology.”At this point, however, the numbers onthe cost of expansion vary so broadly that itmay be dif 
cult of policymakers to determinewhat it will really look like for their respectivestates.
Milliman Inc.
has been hired by a handfulof states to try and determine the cost of expansion. A report for the state of Indianafound that should the statenot expand through 2020,it would incur $611.7million in expense throughenrollment of those alreadyeligible and other factors;if it expands to 100% of the federal poverty level, itwould cost $1.7 billion;and if it fully expands, itwould cost $2.5 billion.Studies from Millimanand The Center for
HealthPolicy at University of Nebraska Medical Center
 have shown that costs willrange from $140 million to$766 million should tehCornhusker State expand its program.The
Congressional Budget Of 
ce
hasestimated that states will only increase costsby about 3% from what they would have paidwithout expansion. And the Urban Instituteestimates that states will save somewherebetween $26 billion and $52 billion through2019.
Jeremy Engdahl-Johnson
, spokespersonfor Milliman, said the issue really should belooked at on a state-by-state basis. He saidthere are so many differences, includingcoverage levels and underwriting, for eachstate that it’s almost impossible to make asweeping statement that expansion would begood or bad overall.
– TAMMY WORTH
 
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Page 3
Payers & Providers
Longer ALOS!*
Advertise Here
(877)248-2360, ext. 2
*For our ads, not your hospital
NEWS
In Brief 
access to resources and ideasacross the broad spectrum of care,and this consolidation would helpus achieve that goal with anexceptional national network,”Swedish said. “We are excitedabout the benefits our combinedorganizations will bring to peopleand communities nationwide.”
UnitedHealth,Nebraska 4-H EnterInto Alliance ToPromote HealthierEating
Minnesota-based
UnitedHealthcare
 has entered into an alliance with theNebraska
4-H
to help adolescents
ndrising rates of obesity.The partnership, called Eat4-Health, will send out 4-H members as“youth ambassadors” to spread themessage of healthy living and eatingto other young Nebraskans.The program is beingadministered by the
University of Nebraska-Lincoln Extension Service
,which provides 4-H programs to all 93of Nebraska’s counties.UnitedHealth has launchedsimilar programs in Florida,Mississippi and Texas. It has presented$30,000 in seed money to start eachprogram, including the new one inNebraska.About one-third of the nation’steenagers are considered overweightor obese. According to data from the
U.S. Centers for Disease Control andPrevention
, about 28% of Nebraskansare at least overweight.“We are fortunate to be able to join with the young people of 4-H inthe Eat4-Health program to help makea difference in the lives of so manyfamilies in Nebraska,” said
KathyMallatt
, president of UnitedHealthcare Community Plan of Nebraska.
Ascension Health Forms A GPO
Part of a Trend Toward Hospital-Based Suppliers
St. Louis-based
Ascension Health Alliance
 has become one of the most recent providerorganizations to create its own grouppurchasing organization. Though providersstill hold a small share of the GPO market,consolidation in general may be the directionthe industry is heading.
Resource and Supply ManagementGroup
, the supply-chain operation forAscension’s wholly-owned subsidiary, willoffer the service. The GPO will provideservices to Health Ministries of Ascension aswell as other health systems.The purpose of a GPO is to use purchasevolume and commitment of sales to negotiatediscounts from manufacturers, distributorsand other vendors. Membership in a GPO isvoluntary, but most hospitals participate in atleast one.
Curtis Rooney
, president of the
HealthIndustry Group Purchasing Association
, saidthat most hospitals belong to two to fourGPOs on average and many still negotiate“off contract” with suppliers. Rooney saidGPOs yield savings of approximately $36 to$38 billion annually.Rooney said GPOs also provide a host of other services like custom contracting,clinical evaluation and standardization,technology assessment, data benchmarkingand market research.GPOs make money by charging vendorsan administrative fee. Some also chargehospitals a participation fee and/oradministrative fees that are placed into anaccount each time they purchase through acontract. Once administrative costs arecovered, what remains in the account isreturned to the providers.“As participants of the GPO, theministries of Ascension Health will seeimmediate bene
ts such as lower costs onpurchased services, capital and professionalservices,” said
Robert J. Henkel
, presidentand CEO of Ascension Health, said in aprepared statement. “Longer term, the GPOdemonstrates our commitment to transformhealthcare by 2020.”Hospital-owned GPOs have begunpopping up around the country, said
LarryMcComber
, senior vice president of strategicservices at
Novation
, an Irving, Texas-baseGPO that provides services to more than65,000 members including
VHA Inc.
,
UnitedHealthcare
and
Provista, LLC.
This is likelyhappening because they want more directcontrol over their purchasing activity, he said.National organizations like Novation havevoluntary participation in their contracts. Toattract hospitals to the contracts, they have toprovide the greatest value. They are able to dothis because of the sheer volume of participants, McComber said.Hospital-owned GPOs are able to gleansavings by making a commitment to asupplier. Their volume may be smaller, butthey are able to commit to a supplier that thegroup will use their products or services, hesaid.“I think it will happen here and there, butI don’t think it will be a mass movement,”McComber said of hospital-owned GPOs.He added that hospitals would have toseriously look at the costs of creating a GPO.They will often
nd that it’s more economicalto take part in a national one instead of creating their own infrastructure.But he does contend that there is a strongmovement for consolidation in the industry asa result of the Affordable Care Act.In the past
ve years or so, he said he hasseen local systems work together, even withina national GPO, to negotiate deals. Theseregional supply networks might work togetherto standardize some of their supplies, then goto their GPO and request they negotiatecontracts for that group.
 – TAMMY WORTH
Contexo Media is an independent provider of revenue-enhancing solutions for medical practices to maximize their coding, reimbursement and compliance efforts. Thousands of health careprofessionals rely on Contexo Media’s coding books, software, eLearning and educational workshops to stay on top of critical updates across the fast-changing medical landscape.
 To learn more about our products and services, visit our website atwww.contexomedia.com
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