9 October 2012

Midwest Edition
Calendar
November 15-16
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IHA Targets Readmisson Penalties
Wants Member Hospitals to Avoid Costly Dings
The Illinois Hospital Association recently increased its focus on helping hospitals reduce readmission rates in anticipation of penalties to be handed down by the Centers for Medicare & Medicaid Services. On Oct. 1, CMS began implementation of a penalty program passed in the Affordable Care Act. The program focused on hospitals that have high rates of readmission for heart attacks, heart failure and pneumonia, based on national benchmarks. The penalties are based on Medicare readmissions for these three conditions between July 2008 and June 2011. Hospitals with above-average readmissions will now have their Medicare reimbursements reduced by up to 1% per claim. This equals approximately $280 million during the rst year – about 0.3% of what Medicare pays overall to hospitals. More than 2,200 hospitals (about twothirds of U.S. hospitals) will be penalized this year. According to an analysis by Kaiser Health News, 278 hospitals will lose the maximum amount of 1%. The penalties will increase to 2% in October 2013 and 3% in October 2014. Illinois is one of the states that will be hardest hit by the penalties with 128 paying an average of 0.45%. It ranks at the top, just behind New York, Pennsylvania, Florida, Ohio, Texas and California. To help reduce the number of readmissions, the Illinois Hospital Association’s Institute for Innovations in Care and Quality is providing learning collaboratives, education, best practices, tools and data resources for its 200 member hospitals. The institute will offer an interactive tool for hospitals to evaluate readmission rates. “These are unprecedented times in health care and our ambitions have to be bold,” said IHA President and CEO Maryjane A. Wurth. “Hospitals are facing tremendous challenges in a rapidly changing environment. The Institute is helping hospitals develop and implement solutions to bridge to the new, transformed healthcare system that focuses on better care, better health, and lower costs.” The Institute also helps members adopt evidence-based practices to reduce readmissions through the Illinois Partnership for Patients Hospital Engagement Network (HEN) and IHA’s collaboration with Blue Cross Blue Shield of Illinois, Preventing Readmissions through Effective Partnerships (PREP). HEN’s goal is to reduce 30-day readmission rates by 20% before the end of 2013.

December 4-5
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December 13
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WEBINAR
E-Mail info@payersandproviders.com with the details of your event, or call (877) 248-2360, ext. 3. It will be published in the Calendar section, space permitting.

Thursday, October 25, 2012

Noon, CDT

MEDICAID EXPANSION: 2014 AND BEYOND
Please join Lucien Wulsin, Executive Director of the Insure the Uninsured Project, and Elizabeth Benson Forer, CEO of the Venice Family Clinic, to discuss the challenges of Medi-Cal expansion under the ACA.

http://www.healthwebsummit.com/pp102512.htm a HealthcareWebSummit Event co-sponsored by PAYERS & PROVIDERS

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NEWS
Readmissions (Continued from Page One)
Most hospitals agree that penalties for excessive readmission rates are fair, but groups like the American Hospital Association and the American Association of Medical Colleges contend CMS should consider factors like a hospital’s demographics that might factor into its rates. Issues like lack of primary care providers, high numbers of Medicaid patients and

Page 2

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In Brief
United Physicians, Beaumont Physicians Organization Plan To Merge
Two Michigan-based medical groups have announced their intention to merge. The fusion of United Physicians Inc., the Wolverine State’s largest medical group and the Beaumont Physician Organization, the affiliated medical group of Beaumont Health System, is expected to be completed by the end of the year. The merged group will operate as United Physicians, Inc. “The combined organization will help with development of a clinical integration program where Beaumont and its private practice and employed physicians work together to control costs and improve the quality of health care services in the population that it serves,” said Ananias Diokno, M.D., Beaumont’s chief medical officer.

unaffordable medication are often out of the scope of hospitals’ reach. The national average for hospital readmissions within 30 days of discharge is 19.9% for heart attacks, 24.8% for heart failure and 18.4% for pneumonia. Studies have estimated that unplanned readmissions cost Medicare about $17.4 billion annually. – TAMMY WORTH

Premium Increases Are Moderating
Both Aon, Segal Project Relatively Calm 2013
Two new surveys by national healthcare benet companies concluded that premium increases are at their most moderate levels in years, but they have differing conclusions about trends for 2013 and beyond. Although the surveys conducted by the New York-based Segal Co. and Illinois-based Aon Hewitt both agree that health plan premiums will see mid to high single-digit increases in 2013, there was some variance in how their data was interpreted. Segal’s data forecasts that health plan premiums will increase an unweighted average 8.7% in 2013, with increases ranging from 7.9% for health maintenance organizations to 10% for fee-for-service indemnity plans. Preferred provider organizations, one of the most popular plans, forecast an 8.3% increase. According to Aon Hewitt, premiums are forecast to increase 6.3% in 2013. That is up from the 4.9% increase reported in 2012, but signicantly lower than Segal’s numbers. The average healthcare cost per employee was $10,522 per employee in 2012, up from $10,034 in 2011. Both Aon Hewitt and Segal ofcials attributed a combination of the economic climate, extremely conservative budgeting for healthcare expenditures and cost-shifting for the relatively low premium increases. “As actual results materialized, employers have seen some stabilization in employment levels, less severe impact of high cost claims, a general movement towards consumer-driven plans and greater clarity around the average cost impact associated with healthcare reform,” said Tim Nimmer, Aon Hewitt’s chief healthcare actuary. “As a result, 2012 premiums were offset to reect the better than expected historical experience.” Segal mostly concurred with Aon Hewitt’s ndings. According to its survey, 86% of its respondents said that implementing Affordable Care Act requirements in 2012 – primarily mandatory preventative care coverage – had a cost impact of 2% or less. And while Segal projected 2013 increases that are higher than Aon Hewitt’s, company ofcials believe it is part of a trend toward cost deceleration. It projects that premium increases for most health plans will be about one percentage point lower than what was experienced in 2012.

Kaiser’s Halvorson Announces Retirement
George Halvorson, the longtime chief executive ofcer of Oakland, Calif.based Kaiser Permanente, announced he will retire at the end of next year. Although known as a blunt talker, Halvorson slipped his retirement announcement into the sixth paragraph of a letter to employees sent out last week. “When I joined (Kaiser), I told the Board that I would commit to serving one decade, and I said they could count on me for that time frame. I picked a decade, in part, because I thought it would take about

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Continued on Page 3

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Payers & Providers
Longer ALOS!*

NEWS
Premiums (Continued from Page One)
However, Segal was unable to afx precise drivers. “While medical and prescription drug trends are projected to decelerate in 2013, we don’t know if deceleration is a long-term trend or a temporary result of current economic

Page 3

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In Brief
that long to make the kinds of contributions that I wanted to make,” Halvorson said in the letter. “I also picked a decade because I was 55 years old at the time and I had long planned to retire at age 65. “ Halvorson spent nearly two decades as CEO of HealthPartners, the Minneapolis-based health plan, before assuming leadership of Kaiser in 2002. Kaiser offers a health plan and providers in Ohio. Besides being one of the most visible advocates of healthier lifestyles for Americans, Halvorson’s signature achievement will likely be the launching of a comprehensive and integrated electronic medical records system, which ofcials say helped it make dramatic quality gains and boosted patient satisfaction over the past decade. Kaiser completed the rollout of KP HealthConnect in early 2010. No successor to Halvorson has been named. He announced his departure with 15 months notice in order to ensure a smooth transition.

forces,” said Edward Kaplan, a Segal senior vice president and head of its healthcare practice. “We question whether medical care that is being delayed or avoided could lead to higher rates of undetected or untreated conditions in the future.”

United Grants $20M To Install EMRs
Critical Access Hospitals Recipients of Largesse
Minnesota-based insurer UnitedHealthCare is ponying up $20 million for 11 critical access hospitals to improve their healthcare information technology systems and adopt electronic medical records. The hospitals, which are all in rural and remote communities in Central and Northern California, have 25 or fewer beds and are at least 35 miles from another hospital or are in mountainous regions serviced only by secondary roads. “The interests of rural people must not be lost or dismissed because of distance, geographic isolation and lack of concentrated resources,” said California State Rural Hospital Association Executive Director Steve Barrow, whose group worked with UnitedHealth and two other organizations, the California Critical Access Hospital Network and the California Rural eHealth Information Network, to determine the needs of each hospital and the sums they required. Under the arrangement between UnitedHealth and the hospitals, the insurer will purchase $19.4 million in private placement bonds directly from the facilities. UnitedHealth is contributing another $577,000 toward additional costs associated with the nancing. The grants average just under $1.8 million per hospital, most of which are governed by quasi-public healthcare districts. The individual range in value from $800,000 to $2.5 million. The awards were announced last week at the annual Rural Healthcare Conference in Lake Tahoe, Calif. “We’re grateful to play a role in improving the health and well-being of so many communities served by critical access hospitals,” said Dan Rosenthal, chief executive ofcer of UnitedHealth’s western region. “It is important that they have access to technology that will enable them to deliver quality care to their patients.” The money is a boon for these facilities, which usually have annual operating budgets under $25 million and treat large numbers of uninsured, elderly patients, and Medicaid enrollees. And although electronic medical records and telemedicine systems can improve the quality of care for their patients, few smaller rural facilities have the nancial resources to purchase, install and maintain them. Tim McGlew, CEO of Kern Valley Healthcare District in Lake Isabella, Calif. indicated it would be unable to deploy any new technology without the grant. “We would not have been able to upgrade and implement our electronic medical records initiative, which is improving the quality of care and access to medical records to better care for our patients,” he said. UnitedHealth is based in Minnetonka, Minn. but has 2.3 million health plan enrollees in California. It has pledged $200 million over the next decade to improve rural healthcare delivery throughout the Golden State.

Study Has Mixed Data On Statin Use, Costs
A new study conducted by St. Paul, Minn.-based pharmacy benets manager Prime Therapeutics in conjunction with Blue Cross and Blue Shield of Minnesota concluded that the regular use of statins improved patient health but raised their overall costs. According to the study of nearly 46,000 Minnesota Blues enrollees, those who were adherent to their statins regimen were 2.6% less likely to visit the emergency room. As a result, their overall medical costs were $767 lower. However, the pharmaceutical costs of those who took their medications as prescribed were 45% higher – a difference of $1,606. Although prior studies of statin adherence had concluded they lower medical costs overall, the population differences in this study – including a relatively young population – may have played a role, according to researchers.

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Payers & Providers

OPINION

Page 4

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When Is Healthcare A Cellphone?
Our Take On Its Healthcare Is Not Always Applicable
Paul Hsieh, M.D. is a practicing diagnostic services they can afford. Largely this does not radiologist in Colorado and co-founder of happen with healthcare. Patients do not chose Freedom and Individual Rights in Medicine. the cheaper and less effective antibiotic to treat He hates both government involvement in a serious bacterial infection. Patients who are healthcare as well as the idea that funding uninsured simply put off seeking out any type of restrictions and not the free market would be medical services until they cannot survive used to control costs. without them. In a recent Op-Ed article for Forbes, Dr. One cannot simply claim that free market Hsieh argued against “rationing” in Medicare principles should work for healthcare in the and Medicaid in favor of the free same way they work for cell phones. Unlike market.“Rationing is inevitable whenever the almost all consumer products the vast number of government controls medical spending. He health care goods and services are paid for by a who pays the piper calls the tune. Under third party – either the government or private ObamaCare, government control of health insurance through an employer. Both patients, as spending will quickly expand to affect most well as medical providers, are unaware of the Americans, not only the elderly,” he actual costs associated with health care. This wrote. “Note that we don’t debate how lack of cost transparency is antithetical to ration cell phones. That’s because our to the very principles of a free market. By relatively free market has driven cell It’s like claiming that democracy can Chris phone prices so low that even many of exist without direct representation. Rangel, the poorest Americans can afford Additionally, Dr. Hsieh said one.” patients who have the costs of their M.D. Of course a coronary artery basic medical needs covered will often bypass graft is not the same as a cellphone and pay out-of-pocket for extraneous and often neither is an apple the same thing as an unnecessary medical services. Patients with orange. Healthcare is a huge and complex government health insurance often pay cash for industry with a vast array of both services and things like Botox injections and other medically products. Cellphones and cellular services are unnecessary services. To say that the free market relatively straightforward consumer products works in these circumstances and can be that are easily subject to such free market applied to the rest of the healthcare industry is a principles as standardization, mass production, ruse. There is no evidence that patients utilize and economies of scale in order to control free market principles when faced with a severe costs. or emergent health condition or the Other than food and water, almost all recommendations of their physicians enough to consumer products and services are not lower overall costs through competition while dictated by biological need. Healthcare is no remaining within a third party payer system. As among them. At some point in their lives such, it is not logical do expect that the almost everyone will seek out relief from economic behavior of individual patients within physical pain and suffering. Despite what most a third party payer health care system would be teenagers will claim, it is biologically possible the same as individual consumers of products in to live without a cellphone regardless of your a free market system just because they are the economic station. same individual. And rationing does occur at the To sum up: A cellphone is not the same as a consumer level. Notwithstanding the relative coronary artery bypass graft. low cost of a cellular phone, up to 30 million Americans do not own one – interestingly Chris Rangel is a member of the El Paso similar to the number who lack health Hospitalist Group and writes at insurance – likely because of the expense of RangelMD.com, where this post originally the phone and cellular service. Additionally appeared. and unlike almost all of healthcare, most consumer products scale based on quality and cost. Consumers “ration” their purchases based Op-ed submissions of up to 600 words are on what type and what quality of goods and welcomed. Please e-mail proposals to
editor@payersandproviders.com

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MARKETPLACE/EMPLOYMENT

Page 5

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