WEEKLY E-BULLETIN


Jan. 16, 2012


MedPAC Deals Payment Blow to Hospitals

Congress could cut hospital payments as part of the physician payment fix deal under discussion, thanks to recommendations late last week by MedPAC.  MedPAC voted to recommend to Congress that it equalize evaluation and management services provided by hospital outpatient departments with fees paid for the same services provided in physician offices — in other words, reduce the fee to HOPDs — over a three-year phase in.  Examples of an E&M service include when a doctor takes a patient history, makes a referral or orders a test. MedPAC estimates this payment reduction will save the government between $1 billion and $5 billion over the next five years.

MedPAC also recommended that hospitals receive a 1 percent payment update in FY 2013. The MedPAC analysis also projects profit margins hospitals have on Medicare patients will drop from a negative 4.5 percent in 2010 to negative seven percent in 2012. Click here to review MedPAC’s 13-slide presentation on hospitals.

Other MedPAC Developments (all presentations contain excellent updated data)

Ambulatory Surgery Centers:  update payment rates by 0.5 percent in calendar year 2013. The commission also voted to recommend that Congress direct HHS to establish a “value-based purchasing” program for ambulatory surgical centers by 2016. Click here for the 8-slide ASC analysis.

Outpatient Dialysis:  MedPAC recommends increasing outpatient dialysis payment rates by one percent in CY2013. Click here for the commission’s 7-slide dialysis presentation.

Hospice:  MedPAC recommends increasing hospice payment rates by .5 percent in  FY2013. Click here for the 11-slide hospice analysis.  At about the same time, the National Hospice and Palliative Care Organization issued an 18-page report, click here, that the average length of a hospice stay in 2010 dropped.

Long Term Care Hospitals:  LTCHs had an average 6.4 percent Medicare margin in 2010, according to MedPAC, with a 4.8 percent margin projected for 2012. Click here for the commission’s 11-slide LTCH summary.

Inpatient Rehab Facilities:  IRFs had an 8.8 percent Medicare margin in 2010, says MedPAC, with an expected 8 percent margin in 2012. Click here for MedPAC’s 11-slide summary.

Skilled Nursing Facilities:  SNF Medicare margins were 18.5 percent in 2010, according to MedPAC, and those margins are expected to drop to 14.6 percent this year. Click here for the 17-slide analysis.

CMS Rule Provides New Payment for Low Income, Uninsured

In a move that helps hospitals treating low-income and underinsured patients, CMS last week released a proposed rule that allows providers to get reimbursed for delivering care that isn’t covered by insurance — not just for treating patients who have no insurance at all.  Under the proposal, providers could count patients who have spotty coverage — or who have reached or exceeded annual insurance caps — toward their disproportionate share calculations. Click here for see the 29-page rule.

HHS Slams Health Insurer for Excessive Rate Increases

HHS last week came after a health insurer, Trustmark, for “excessive” rate increases. The premium increases would affect about 10,000 customers in Alabama, Arizona, Pennsylvania, Virginia and Wyoming.  The Administration called on Trustmark to rescind its rate and issue refunds or explain its reasons for not doing so. Trustmark officials disagreed with the Administration’s analysis.  HHS’ rate review authority is part of the health care reform law.  In addition to the review of rate increases, many states have the authority to reject unreasonable premium increases. Since the passage of the health care reform law, the number of states with this authority increased from 30 to 37, with several states extending existing “prior authority” to new markets. Click here for the NYTimes story. Click here to see the HHS analysis of rate review actions to date.

GOP Hits HHS’ Essential Health Benefits Bulletin

Congressional GOP leaders are harshly criticizing HHS recent issuance of a “bulletin” on Essential Health Benefits. In a letter (click here to see) to Secretary Sebelius, members of Congress said HHS “sidestepped the requirement to publish a cost benefit analysis estimating the impact these mandates” will have on insurance premiums and the federal government.

Massive Hip Implant Failure Results in Lawsuits, Complaints

In what could become the most widespread medical implant failure in decades — involving thousands of all-metal artificial hips that need to be replaced prematurely – lawsuits and complaints against makers of all-metal replacement hips passed the 5,000 mark, according to report in the New York Times (click here).  Insurers are alerting patients that they plan to recover their expenses from any settlement money that patients receive. Medicare is also expected to try to recover its costs.

CMS Study: US Health Spending Continues Slowdown

U.S. health spending continued to grow at a historically low rate in 2010 because of the economic slump, according to an analysis by CMS’ Office of the Actuary released last week. Health spending grew just 3.9 percent in 2010 — just slightly faster than the 3.8 rate of growth in 2009 — reaching a total of $2.6 trillion, according to the estimates published in Health Affairs. These were the slowest rates of growth in the 51 years that CMS has published these official estimates of national health spending. Click here for more.

1 in 5 Over 50 Skip Doc Appointments to Save Money

According to more research out last week, more than 1 in 5 (21.5 percent) of those aged 50 or above made prescription drug changes such as switching to cheaper generic drugs, getting free samples, stopping pills or reducing dosages, and nearly as many (19.4 percent) skipped or postponed doctor appointments to save money. Click here for the Employee Benefit Research Institute analysis.


New AHRQ Study:  20% of Health Costs Attributed to 1% of Us

Only 10 percent of the U.S. population accounted for nearly two-thirds of all health care costs in 2008 and 1 percent accounted for 20.2 percent of total health care expenditures, according to a report released last week from the Agency for Healthcare Research and Quality (click here for more). The average annual cost for each of these individuals totaled almost $24,000, which includes costs covered by insurance and paid out of pocket. Approximately 45 percent of these individuals remained in this 10 percent of the population in 2009, based on their health expenses that year. The federal agency’s analysis of the 10 percent of patients with the highest health care expenses in both 2008 and 2009 also found that:

  • Nearly 60 percent of these patients were women.
  • More than 40 percent of patients were age 65 or older, while those age 18 to 29 made up just 3 percent.
  • More than 80 percent of patients were white, while Asians were the smallest segment at 2 percent.


Individual Mandate Elimination Analyzed in New Study

And what if the individual mandate were eliminated, as the US Supreme Court is weighing right now?  According to a new study from the Urban Institute, cost could be lower but premiums could be higher (maybe a lot higher). Click here to see the 9-page study.

Record Number of Pharmacy Robberies, Killings Reported

If your pharmacist seems a little nervous behind the counter these days, it may be because the incidence of armed robberies for narcotics is on the rise. According to the DEA, there were 688 armed pharmacy robberies involving controlled substances in the United States in 2010, a 79 percent increase from 2006.  Click here for the NY Times story.