WEEKLY E-BULLETIN


Moody’s Issues Negative 2014 Outlook for Not-for-Profit Hospitals

The 2014 outlook for the not-for-profit hospital sector will remain negative, Moody’s Investors Service said last week. Moody’s expects margins to continue to tighten as expenses for hospitals grow faster than their revenues. The pace of revenue growth will continue to decline. Specifically, Moody’s expects median revenue growth to fall to a range of 3% to 3.5% in fiscal year 2013, which is much lower than fiscal year 2012′s growth rate of 5.2%. Moody’s expects revenue growth in 2014 to also remain low. Click here for more.

Report: State’s Medicaid Expansion Decisions Are Hurting Some Hospitals

Some hospitals in states that failed to expand Medicaid are closing their doors or laying off employees, leaving remaining hospitals with less staff and patients with fewer treatment options, forcing them to travel farther for care, according to published reports. Hospitals across the country dismissed approximately 5,000 employees since June. Among them are Vanderbilt University Medical Center in Tennessee, Indiana University Health, and other hospitals in states that haven’t expanded the joint state-federal Medicaid health program under the Affordable Care Act. Click here for the story.

HOPD Rates to Increase 1.7 Percent; ASCs Up 1.2 Percent: CMS

CMS last week released a final calendar year 2014 (effective January 1) hospital outpatient and ambulatory surgical center payment rule with an overall payment increase of an estimated 1.7 percent. Among other changes, CMS will replace the current five levels of hospital clinic visit codes with a single code describing all outpatient clinic visits. ASCs will see an increase of 1.2 percent. The rule also updates partial hospitalization payment rates for hospitals and community mental health centers.

  • In a further sign that outpatient services are continuing to increase, total CY14 OPPS payments are projected to increase by $4.4 billion or 9.5 percent, and CY14 Medicare payments to ASCs are projected to increase by approximately $143 million or 5.3 percent as compared to CY 2013.
  • The rule also establishes an encounter-based or “comprehensive” payment for certain device-related procedures like cardiac stents and defibrillators, but in a change from the proposed rule, delays its effective date to 2015.

Click here for an executive 3-page summary from our policy team. Click here for the summary from CMS. Click here to review the 1,281 page rule.

CMS Issues Final CY14 Physician Payment Rule with Many Changes

CMS last week finalized physician Medicare payment rates and policies for 2014, including a major proposal to support care management outside the routine office interaction. CMS says its care coordination policy “demonstrates Medicare’s recognition of the importance of care that occurs outside of a face-to-face visit for a wide range of beneficiaries beginning in 2015.” The final rule sets payment rates for physicians and non-physician practitioners paid under the Medicare Physician Fee Schedule. Click here for our 3-page executive summary. Click here for the CMS summary. Click here to read the 1,369 page rule.

  • Unless Congress acts by January 1, physicians will see an average 20.1 percent Medicare payment reduction. Congress could let that date slip, but fix the formula retroactively, as it has done several times before.

Final CMS Rule Modifies PQRS, Details Value Modifier

The CMS rule also finalizes changes to several of the quality reporting initiatives that are associated with physician fee schedule payments, including the Physician Quality Reporting System (PQRS), as well as changes to the Physician Compare tool on the Medicare.gov website. The final rule also includes provisions for implementing the value-based payment modifier (Value Modifier) required by the Affordable Care Act that will affect payments to certain groups of physicians based on the quality and cost of care they furnish to beneficiaries enrolled in the traditional Medicare Fee-for-Service program. Click here for a very good CMS summary.

Study: 2-Midnight Rule Continues to Confuse

CMS’ 2-Midnight Rule continues to roil hospitals and physicians. A new study suggests that the reality of observation status is quite different from CMS’ definition of “a well-defined set of specific appropriate services” that usually last less than 24 hours. Patients in the study had an average of 1,141 diagnoses–leading to a greater number of services–and an average stay length of 33.3 hours.  Additionally, the study says hospitals continue to lose money caring for observation patients. For example, the 566-bed University of Wisconsin Hospital and Clinics in Madison, Wisconsin loses an average of $331 for every patient in observation care compared to a net of $2,163 for patients who are admitted, according to the JAMA study. Click here for more.

Obamacare Small Business Requirement Delayed 1-Year

The Obama administration last week announced a one-year delay in a major element of the new health care law that would allow small businesses to buy insurance online for their employees through the new federal marketplace. Administration officials said they had to focus on the basic functions of the website, so that individuals could shop for insurance, before offering online enrollment for small businesses. Click here for the NY Times story.

HealthCare.gov Significantly Improved by Deadline: CMS

Administration officials announced yesterday they had met their Saturday deadline for improving HealthCare.gov after completing a series of hardware upgrades and software fixes to the troubled Web site. CMS released a formal progress report. Click here to see the 1-pager. Click here for the Washington Post story.

Final Rules Released Detailing Insurance Tax

CMS last week issued a final rule on the Affordable Care Act’s health insurance premium fee which is strongly opposed by insurers as well as many small business groups, including the Chamber of Commerce, who argue that the fee will be passed down to consumers in the form of increased premiums. The final rule affirms that the fee, which applies to most commercial plans including Medicaid managed care, Part D and Medicare Advantage, will be $8 billion in 2014 and will rise to $14.3 billion by 2018. The final rule also affirms that insurers will receive their final tax calculations from the IRS no later than Aug. 31 of each year, and must remit payment by Sept. 30. Click here for our 2-page executive summary. Click here to read the 68-page rule.

High-Income Medicare Tax Rules Released

The IRS also released additional regulations pertaining to the ACA’s increase in the Medicare payroll tax for wealthier individuals. Specifically, the rule provides guidance to employers and individuals on regarding the tax withholds, reporting requirements and how to adjust for over or underpayments. The Additional Medicare Tax increases Medicare contributions from people who make more than $200,000 annually by 0.9 percent on income above that amount. The cut off is $250,000 for a married couple filing jointly. That tax took effect in 2013. Click here for the 42-page rule.

Study: Insurers May Increase Costs for Some Medicare Enrollees

Insurers squeezed by the health law could be increasing costs for Medicare enrollees who get their coverage through private plans, said a new study released last week. But many beneficiaries in the Medicare Advantage program can avoid cost increases by switching plans, says the report by the non-partisan Kaiser Family Foundation. The law calls for reductions in payments to Medicare Advantage plans and for the addition of new taxes on insurance plans in 2014. Click here for the Kaiser study.

IRS Could Be the Key to a Successful Obamacare

The IRS could be the agency that determines whether the new health care law succeeds. Click here for the story. The IRS has put together a webpage that provides a very good summary of all the tax provisions in the Affordable Care Act. Click here.

Hospitals Changing Care Delivery Methods Because of the Affordable Care Act

The news media is beginning to develop stories on how hospitals are changing the way care is delivered – because of the Affordable Care Act. Click here for a simple, but interesting, NPR report on one hospital in Ohio.

Report: Megatrends Forcing the Re-invention of Health Care

A new report from Mannett Health Solutions identifies ten “megatrends” forcing the re-invention of health care. Among their findings:

  • Patients take control of their care…Expect explosions in the growth in self-monitoring technologies.
  • Billing moves from volume to value…Bundling agreements, risk-sharing and capitation arrangements.
  • Tech shifts care settings…Healthcare will be everywhere.
  • Health systems super-size…To lower costs, increase efficiency and improve quality, payers, hospitals, health systems, pharmaceutical suppliers and other healthcare organizations will consolidate in the next ten years. These mega-sized entities will cause the demise of independent practitioners and stand-alone hospitals, according to the report. Click here to read the report.

Seniors Saving Big on Their Rx

Seniors have saved $8.9 billion on their prescription drugs because of the Affordable Care Act, according to new data released last week by CMS. That’s an average of $1,209 per person since the program began. During the first 10 months of 2013, nearly 3.4 million people nationwide who reached the coverage gap — known as the “donut hole” — this year have saved $2.9 billion, an average of $866 per beneficiary. Click here to see a state-by-state summary of savings.

Gallop: Most Americans Not Impacted by Health Law

Most Americans say they haven’t been directly affected by the health care law. When asked in a new Gallup poll about the law’s effects on them, 69 percent said it hasn’t affected them, while 19 percent say it’s hurt them and nine percent say it’s helped them. Far more are pessimistic about their future under the law; 41 percent said it will worsen their situation while 20 percent said their situation will be improved. Click here to see the Gallup poll.

HHS Issues Rule on Benefit and Payment Parameters

HHS last week issued its 2015 Notice of Benefit and Payment Parameters Proposed Rule. The 255-page rule is a regulation that HHS must publish each fall describing the payment parameters of the premium stabilization (risk adjustment, reinsurance, and risk corridor) and cost-sharing reduction programs, as well as the federal exchange user fees for the following year. The notice is also an opportunity to tweak other aspects of the ACA health insurance programs. Click here for an excellent summary. Click here for the rule.

Study: Telemedicine Making a Difference in Rural EDs

Telemedicine may reduce errors in rural emergency departments, a new study published last week in the Annals of Internal Medicine found. Researchers from various campuses of the University of California found that rural ER doctors made errors in administering medication only three percent of the time when they took part in a telemedicine consultation. Medication errors for patients who had either telephone consultations or no consultation were higher than for those patients who received telemedicine consults–about three percent for those who had telemedicine, vs. 10.8 percent for having a telephone consult and 12.5 percent for having no consultation. Click here for the study.

National Health Service Corps Made 4,500 Awards in FY13

The National Health Service Corps made more than 4,500 loan repayment and scholarship awards to clinicians and students in fiscal 2013 thanks to more than $284 million from the Affordable Care Act, according to a new HHS report released last week. Grants were also made to 32 states to support state loan repayment programs. Click here for the 4-page report, which includes a state-by-state summary.

OBGyn Board Reverses Directive

The American Board of Obstetrics and Gynecology reversed an earlier directive and said last week that its members were permitted to treat male patients for sexually transmitted infections and to screen men for anal cancer. Click here for the report.

More GOP Docs Running for Senate

Hoping to take advantage of public sentiment against Obamacare, 11 Republican doctors are running for the Senate, hoping that voters will see their medical expertise as an asset. There are three physicians in the Senate today. Click here for details.

FDA Orders Company to Stop DNA Tests

The FDA last week ordered the startup genetic testing company 23andMe to stop DNA tests for potential patient safety risks, saying the results may mislead customers. The company’s Personal Genome Service takes consumer’s saliva and sequences samples in its CLIA-certified labs, and provides customers with information on gene mutations, health risks and drug responses. Click here for the FDA report.