WEEKLY E-BULLETIN


Consumer Reports Releases Hospital Surgery Rankings

Consumer Reports magazine released ratings of 2,463 U.S. hospitals, based on the quality of surgical care, in all 50 states last week. One result: having a popular hospital brand doesn’t mean the surgical care provided at a facility is the best. “Your safer-surgery survival guide” says Greater Baltimore Medical Center earned higher surgery ratings than the Johns Hopkins Bayview Medical Center. Mount Sinai Hospital in New York City and University Hospital Case Medical Center in Cleveland are two urban hospitals that excelled despite serving sicker, poorer patients. However, rural hospitals did better than urban hospitals in many cases. Click here for more. There is a fee to get the hospital-by-hospital results.

Under Final CMS Rule, Hospitals Get 0.7% Medicare Increase, LTCHs Get 1.3%

The final FY 2014 Hospital Inpatient Prospective Payment System (IPPS) rule was released by CMS Friday afternoon and it increases overall hospital payments (capital and operating) by $1.2 billion or 0.7 percent starting October 1. Long Term Care Hospital PPS payments would increase by 1.3 percent, or approximately $72 million, in FY 2014. Click here for the 2,225 pages of regulations. Our policy team will finalize a summary for our clients later this week. Click here for a more detailed CMS fact sheet.

Other Major Regulatory Changes:

  • Hospital-Acquired Conditions.Beginning in October of 2014, hospitals that are in the lowest quartile for medical errors or serious infections that patients contract while in the hospital will be paid 99 percent of what they otherwise would have been paid under the IPPS. The new rule finalizes the criteria to rank hospitals with a high rate of hospital-acquired conditions.
  • Readmissions Reduction Program. Starting October 1, 2013, this new rule increases the maximum reduction of payments up to two percent (an increase of one percent from last year) for hospitals with excessive readmissions. Starting in October of 2014, it adds hip and knee surgery and chronic obstructive pulmonary disease to the list of conditions used to determine the reduction. CMS has also increased the number and types of planned readmissions that no longer count against a hospital’s readmission rate.
  • Two-Midnight Inpatient Rule. The final rule provides some clarity regarding when inpatient hospital admissions are generally appropriate for Medicare Part A payment. Under the rule, if a physician expects a beneficiary’s surgical procedure, diagnostic test or other treatment to require a stay in the hospital lasting at least two midnights, and admits the beneficiary to the hospital based on that expectation, it is presumed to be appropriate that the hospital receive Medicare Part A payment. The final rule emphasizes the need for a formal order of inpatient admission to begin inpatient status, but permits the physician to consider all time a patient has already spent in the hospital as an outpatient receiving observation services, or in the emergency department, operating room, or other treatment area in guiding th eir two-midnight expectation.
  • Medicare Disproportionate Share Hospitals (DSH). The Affordable Care Act directs CMS to revise the methodology used to recalculate the additional amount Medicare pays hospitals that serve a disproportionate share of low-income patients. Under the new rules, part of those payments will be distributed to hospitals based on an estimate of how much uncompensated care they provide relative to other hospitals. The final rule determines the total amount of money available as uncompensated care payments based on a federal fiscal year determination of the uninsured.
  • New Quality Measures. The rule finalizes new measures for the Hospital Inpatient Quality Reporting Program, the Hospital Value-Based Purchasing program, and quality reporting programs for LTCHs, PPS-Exempt Cancer Hospitals, and Inpatient Psychiatric Facilities. Click here for a detailed CMS fact sheet.

Hospice Payments to Increase 1%

Late last week, CMS issued its final regulations impacting hospices – they will see an estimated one percent ($160 million) increase in their payments starting October 1, 2013. As clarified under this rule, hospices that fail to meet quality reporting requirements will receive a two percentage point reduction to their market basket update beginning in FY2014. Hospices began reporting quality data in 2013. Click here for more details on the rules impacting hospice.

SNF Payments to Increase 1.3%; Inpatient Rehab Increases 2.3%; Psych to Increase 2.3%

CMS estimates that aggregate payments to skilled nursing facilities will increase by $470 million nationwide, or 1.3 percent, starting October 1, 2013. This estimated increase is attributable to the 2.3 percent market basket increase, reduced by the 0.5 percentage point forecast error correction and further reduced by the 0.5 percentage point multifactor productivity adjustment required by law. CMS is rebasing and revising the SNF market basket for FY2014 and subsequent years to reflect more recent data. The current SNF market basket reflects data from FY 2004 and CMS is updating the SNF market basket using data from FY2010. Click here for details from CMS. Medicare payment increases for inpatient rehab will also take effect in October, an overall increase of $170 million. Click here for the rule. Payment rates will increase for hospital-based and freestanding Medicare inpatient psychiatric facilities by an average 2.3% beginning October 1. Click here for the rules.

Ways and Means Bill Would Create Post Acute Care Bundling

On Friday, the House Ways and Means Committee released for public comment, a draft legislation to reduce Medicare reimbursement for post-acute care providers, based on proposals included in the president’s FY2014 budget. The draft legislation would reduce market basket updates for home health agencies, skilled nursing facilities, inpatient rehabilitation facilities and long-term care hospitals; create site-neutral payments between IRFs and SNFs for certain procedures; modify the criteria required for IRF status (or 75% Rule); establish a SNF readmissions program; and create post acute care bundled payments. Click here for their announcement. This is the second draft bill in two weeks issued by Ways and Means that would codify portions of the Administration’s FY2014 budget relating to health care.

Senators Express Support For “10-Mile” Critical Access Hospitals

A bipartisan group of 11 U.S. senators, led by Sens. Baldwin (D-WI) and Crapo (R-ID), has already signed on to a letter opposing changes in the President’s FY2014 budget that would eliminate the Critical Access Hospital designation for those hospitals that are within 10 miles of any other hospital. According to the group, another 10 senators have expressed interest in supporting the letter. Senate offices have until the end of this week to sign on. Click here for a copy of their letter. More than two dozen House members signed a similar letter last month.

GAO Raising Issues with Self-Referring IMRT Docs; Legislation Introduced

A government watchdog agency last week called into question agaian self-referring physicians — this time for prostate cancer radiation therapy. The GAO said in a report to Congress that the use of the pricey intensity-modulated radiation therapy (IMRT) to treat prostate cancer nearly doubled among physicians who began to self-refer from 2006 to 2010, while modestly increasing in groups that don’t self-refer. Click here for the detailed 50-page GAO report. Also, three House Democrats introduced legislation the same day, that would ban self-referral for advanced imaging, anatomic pathology, radiation therapy, and physical therapy services. Click here for details.

Grassley Attacks Walgreens Over 340B Program

U.S. Senator Chuck Grassley (R-IA) stepped up his attacks on the 340B drug discount program last week by sending a letter to Walgreens asking for answers about its 5,400 pharmacies that have contracts to provide safety net providers with discounted drugs. According to Grassley, one analyst says Walgreens could make $250 million from the program over the next five years. Click here to read Grassley’s letter.

Hospital System Sponsors “Hunger Summit” in D.C.

The Alliance to End Hunger and ProMedica – an Ohio-based health system – is hosting a hunger summit in Washington, D.C., on October 10. The event on Capitol Hill is expected to draw healthcare leaders from across the country, members of the House and Senate, and Obama Administration officials. The summit is designed to encourage health care organizations to focus on hunger as a health issue. For more information click here. Click here to register.

Hospital Employment Numbers May Be Good News for Economy

Employment at the nation’s hospitals fell by 0.09% in July to a seasonally adjusted 4,825,100 people, the Bureau of Labor Statistics reported Friday. That’s 4,400 fewer people than in June but 36,400 more than a year ago. Declining hospital employment may be forecasting good economic news ahead, according to a news report out last week. Click here for the interesting perspective from the Washington Post.

States Have Largely Different Experiences with Exchange Sign Up Efforts

We’re about 60 days away from state health exchanges going live across the country. In those states mostly with Democratic governors supporting Obamacare, the push is on to get maximum enrollment. Click here for a good story on what’s happening in Colorado. In those states mostly with GOP governors that have federal exchanges, it is en entirely different story. Click here for a status report in Missouri.

House Votes To Keep IRS From Implementing Obamacare

Voting along party lines, the House of Representatives voted Friday to ban the IRS’ involvement in implementing Obamacare. The Democratic senate will not likely take up the measure. The president is opposed. Click here for the story.

Health Insurance Association Campaigns Against Tax

The trade association representing health insurance plans is stepping up its campaign against the tax on health plans that is part of the Affordable Care Act and takes effect in January. Most health plans will have to pay a combined $8 billion in new taxes next year. Legislation to repeal the tax has more than half the House of Representatives signed on as cosponsors. A similar bill passed the senate in its FY2014 budget resolution (mostly a symbolic vote.) Click here to see their new materials and call to action.

Senate Bill Tries to Account for Savings from Preventative Care

In what would like result in huge budgetary changes in the way the government calculates the impact of health care legislation, Senators Mike Crapo (R-ID) and Ben Cardin (D-MD) introduced a bill last week that would direct the Congressional Budget Office to more accurately reflect the cost saving of preventative health care, including screenings. The CBO is currently prohibited from this “dynamic scoring.” Click here for details.

Other Senators Want Delivery System Changes Counted As Budget Savings

In a similar effort, a group of 15 senators sent a letter to President Obama last week urging the Administration to set a health care cost-savings target – even if a hard CBO score is not obtainable for health policy changes. Members of Congress are increasingly interested in making policy changes that would impact the delivery system; however, the lack of a formal governmental system to determine the budgetary impact of those changes, i.e. ACOs, slows the pace of change, according to the office holders. Click here to read their two-page letter and see if one of your senators signed it.

Uwe Reinhardt Says Reference Pricing May Be the Answer to Lower Health Care Costs

One way to get lower health care prices in the United States is by using “reference pricing,” according to noted health economist Uwe Rheinhardt in a NY Times article last week. Reference pricing has been around for decades, he says, but it has been strongly resisted in the U.S. by providers. It is basically requiring consumers to pay the difference between the lowest acceptable price for a good or service and the one they actually want. Click here for the story.

Medical Tourism for Joints Is on the Rise

The number of knee and hip replacements in the United States continues to rise significantly, as it has over the past 15 years, as has the cost. According to a long and detailed report over the weekend, more Americans are seeking their new joint replacements outside the U.S. where they can get them for a fraction of the cost. Much of this “medical tourism” is happening in Europe, where orthopedists tend to make about half as much as their American counterparts. Click here for this excellent NY Times story.

Report Identifies Worst Counties for Health Care in the U.S.
Who needs Obamacare? Well, according to a new report out last week, dozens of counties in the U.S. – mostly in the south – that are the worst for health care. The Center for American Progress issued the report that identifies America’s worst counties when it comes to the availability of health care. Click here for their 28-page report.

$21 Million to Aid Health Centers IT

The Health Resources and Services Administration announced new grants last week designed to improve the quality of care at community health centers through implementation and adoption of health information technology. A total of $3 million will support six health center networks that reach more than 100 health centers nationwide. These grants are in addition to the $18 million awarded to 37 health center networks in December 2012. Click here for specific state details.

Poor Dental Hygiene May Lead to Nursing Home Deaths

New studies are suggesting that the leading cause of death in nursing homes, pneumonia, is in part caused by poor dental hygiene, according to reports out last week. The lack of daily oral care is an epidemic in nursing facilities. Click here for the NY Times report.

FDA Issues Caution for Acetaminophen Use

The FDA is requiring all medicines that contain the painkiller acetaminophen, among the most widely used painkillers in the United States, to add a warning about risks of very serious — and very rare — side effects. Acetaminophen, which is the active ingredient in Tylenol, can potentially trigger three serious skin diseases whose symptoms can include rash, blisters and, in the worst cases, damage to the skin all over the body. Click here for the FDA announcement.