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Health Care Reform Memo:
April 22, 2013

Deloitte Center for Health Solutions publication


The health care reform memos are issued on a weekly basis, highlighting news from the previous week's activities in the administration and implications for the C-suite and various stakeholder groups.

My take: Hospitals: a balancing act between expectations, regulations, and finances 

From Paul Keckley, Executive Director, Deloitte Center for Health Solutions

Last Monday, the Boston marathon was rattled at 2:50pm by two explosions 12 seconds apart that sent approximately 170 people to ten area hospitals, killed three, and caused several people to lose limbs.

Wednesday at 7:50pm in West, Texas, a tiny town was rocked by a fertilizer plant explosion that sent 200 to six area hospitals killing 14, mostly first responders.

I had intended to focus my comments this week on last week’s Supreme Court arguments about ownership of genes. That can wait, though incredibly important to our developing journey toward personalized medicine.

There are 4,973 community hospitals in the U.S: 1,984 are rural, and 3,007 are affiliated with a multi-hospital system, either investor owned, private or otherwise.1

Unlike any other sector in the health system, the majority of hospitals are required to treat patients without regard to their ability to pay. It’s fundamental to understanding this sector, and why Moody’s, among others, has issued five consecutive negative outlooks for not-for-profit hospitals, noting the combination of sequestration and declining reimbursement will result in an $11 billion cut to the industry in 2013.

“Hospital” traces its origin to the Latin word “hospes” meaning “stranger, foreigner, or guest”. It shares the same root with “host, hotel, hospice, hospitality” –an irony in that most are not inclined to think of themselves as “guests” in today’s hospitals.

They’ve been around since the Middle Ages, first appearing in the Americas in Santo Domingo (1503), then Mexico (1639), and William Penn’s hospital in Philadelphia (1713). In those days, and for the next 100 years in the U.S., the hospital was a dispensary, often associated with care for the poor (almshouses) for those unable to afford care at home.

Today, hospitals are a big business in the U.S.: more than $800 billion of the U.S. $2.7 trillion health spend is in hospitals.2 The acute sector is, by far, the industry’s most capital intense, labor intense, and regulated, further complicated by fast-changing clinical innovations requiring new approaches to diagnosis and treatment, and the shift away from fee-for-service (FFS) to value-based incentives requiring risk sharing with physicians, post-acute, and ancillary business partners. And utilization rates are soaring as numbers of seniors grow, especially in areas where utilization rates are highest (Louisiana, West Virginia and others), forcing investments in added capacity.3

The combination of higher operating costs, lower reimbursement from Medicare and Medicaid, increased numbers of older, sicker patients, and increased state and federal regulation is a perfect storm: nonetheless, it’s the sector in health care that’s expected, in spite of these, to be ready for anything…like West, Texas and Boston!

There’s no doubt hospitals need to become more efficient, operating at Medicare rates or better. And there’s no question transparency about pricing, outcomes and safety need attention. In all likelihood, one in four will not survive the sector’s shakeout, and business pressures will mount.

But last week, the unsung heroes were the doctors, nurses, administrators, emergency services professionals, fire rescue, clerks, patient transport, grief counselors, home aides, social workers, clergy, pharmacists, IT staff, and teams of caregivers who stopped everything to take care of their almost 400 unexpected guests. And no one was denied care based on income, or color, nation of origin, or circumstance.

Paul Keckely

Paul Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions

1American Hospital Association, Fast Facts on U.S. Hospitals, 2011
2“U.S. Not-for-Profit Healthcare Outlook Remains Negative for 2013," Moody’s Investor Services
3The Dartmouth Atlas of Health Care, “Inpatient Days per Medicare Enrollees, by Gender and Type of Admission,” 2013

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Study: 25.7 million eligible for Affordable Care Act insurance subsidies 

Per a Families USA report released last week, 25,722,200 people who have incomes between 0 percent and 400 percent of the federal poverty level (FPL) will be eligible for a premium tax credit to lower the cost of health insurance coverage purchased on a public health insurance exchange (HIX) beginning in 2014. Forty-four percent of individuals between 0 percent and 199 percent will be eligible for premium tax credits and 56 percent of individuals between 200 percent and 399 percent FPL. Note: premium tax credits are projected to cost $350 billion 2014-2019 per the U.S. Congressional Budget Office.

(Source: Families USA, “Help is at Hand: New health insurance tax credits for Americans,” April 2013).

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ACA Prevention and Public Health Fund targeted to support HIX enrollment and PCIPs 

According to Congressional Quarterly, the U.S. Department of Health and Human Services (HHS) may transfer $454 million from the Prevention and Public Health Fund to help support HIX enrollment efforts scheduled to start in October 2013. This will directly impact the U.S. Centers for Disease Control and Prevention (CDC) and the Substance Abuse and Mental Health Services Administration fiscal year (FY) 2013 prevention and public health programs. HHS will use its “transfer authority” to make these changes to the FY 2013 budget.

Related: last week, Joseph Pitts (R-PA) introduced H.R. 1549 that would transfer $4 billion from the Prevention and Public Health Fund to the Pre-existing Conditions Insurance Plans (PCIP) to help ensure its solvency and allow the program to re-open enrollment through January 2014. Federally-run and state-based PCIPs suspended enrollment earlier this year citing high costs associated with the program. A vote is scheduled in the House this Wednesday.

Background: the Prevention and Public Health Fund was allocated $1 billion per Section 4001 of the Affordable Care Act (ACA). The Fund was subject to sequestration, decreasing amount to $949 million. PCIPs were enacted by Section 1001 of the ACA as a temporary high-risk insurance program scheduled to run through January 2014, after which health insurance market reforms preventing discrimination on the basis of pre-existing conditions will go into effect. $5 billion was allocated to PCIP per the ACA in 2010. Over 100,000 individuals are currently enrolled in PCIPs.

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Analysis: 3.1 million newly covered under ACA adult-dependent mandate, 0.2 percent cost increase for employers 

The ACA (Section 1001) requires employers to extend insurance coverage for eligible dependents of employees up to the age of 26. The Employee Benefit Research Institute report found:

  • 3.1 million gained insurance coverage as a result of the provision
  • 31 percent of employers enrolled adult dependent children with larger employers being more likely to do so when compared to smaller employers
  • Health care spending increased by $2 million (0.2 percent) for large employers
  • Average spending among the young adult dependents was $2,866 (15 percent) higher than in the comparison group
  • Young adult dependents were more inclined to pursue care related to mental health, substance abuse and pregnancy; they also preferred retail pharmacies versus mail-order; there was no significant difference in prescriptions by therapeutic class

(Source: Employee Benefit Research Institute, “Mental Health, Substance Abuse, and Pregnancy: Health Spending Following the PPACA Adult-Dependent Mandate,” April 2013)

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CMS issued a notice on Early Retiree Reinsurance Program 

Last week, CMS issued a notice about the termination dates for the Early Retiree Reinsurance Program (ERRP). Per Section 1102 of the ACA, the ERRP was enacted June 21, 2010 to subsidize the cost for employers providing early retirees and their dependents health care insurance coverage until January 1, 2014.

Background: $5 billion was allocated to ERRP per the ACA; sponsors are reimbursed for claims between $15,000 and $90,000. As of February 2012, 19.1 million individuals were enrolled in ERRP.

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Major ACA provisions impacting acute hospitals 

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Legislative update 

Senators propose national drug tracking program 

Friday, Senators Tom Harkin (D-IA), Lamar Alexander (R-TN), the leaders of the Health, Education, Labor and Pensions (HELP) Committee, and Senators Michael Bennett (D-CO) and Richard Burr (R-NC) released proposed legislation “that would set up a tracking system that requires manufacturers, wholesale distributors, and others in the drug supply chain to supply transaction information when there is a change in ownership and require the [U.S. Food and Drug Administration (FDA)] to keep a public database of wholesale distributors.”

(Source: Politico Pro, “Key Senators outline drug tracking plan,” April 19, 2013).

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BPC proposes plan for $560 billion health spending cost-containment 

Thursday, the Bipartisan Policy Center (BPC) released its plan to save $560 billion in health care spending through 2022, including $300 billion from Medicare and a sustainable growth rate (SGR) fix that would freeze physician FFS payments for ten years.

Key recommendations in the plan:

  • Improve and enhance Medicare to incent quality and care coordination including limitations on MediGap coverage, creation of a Medicare Network program (improved ACO framework), expansion of the bundled payment and durable medical equipment competitive bidding programs, reduction of waste and fraud in traditional Medicare FFS, and reductions and repurposing of indirect medical education payments. Note: BPC recommends an annual per capita cap on Medicare payments at gross domestic product (GDP) plus 0.5 percent beginning in 2020 and by 2016 a structure applicable to 17 percent of enrollees whose premiums would be tied directly to their income.
  • Reform tax policy and clarify consolidation rules to encourage greater efficiency and competition by placing a limit on the employer tax exemption (replacing the “Cadillac” tax), elimination of the fully insured health plan tax with a paid claims tax, and regulatory changes that encourage development of integrated delivery systems by reducing federal anti-trust barriers.
  • Prioritize quality, prevention, and wellness including improvements to the quality reporting system.
  • Incentivize and empower states to improve care and constrain costs through delivery, payment, workforce, and liability reform.

(Source: BPC, “A Bipartisan Rx for Patient-Centered Care and System-Wide Cost Containment”, April 2013)

My take: the BPC’s recommendations are a bold move toward structural reforms of Medicare. Missing are similarly bold recommendations about Medicaid, the role of consumers in becoming more accountable for their own health and health costs, and provider adherence to evidence-based practices that account for 20 percent of avoidable costs per the Institute of Medicine (IOM) and Dartmouth Atlas. Policymakers are keen to reform Medicare—that’s understandable and appropriate, but the rest of health care market and its financial pressures require consideration beyond changes to structural changes to employer-sponsored coverage.

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Final mental health parity regulations to be released in 2013 

Last week in testimony before the U.S. House Energy and Commerce health subcommittee, HHS Secretary Sebelius said the final mental health parity regulations would be released before the end of 2013.

Background: Mental Health Parity and Addiction Equity Act of 2008 requires medical and mental health benefits to be provided at parity―requiring insurance plans to cover physical and mental health benefits at the same level. To date, HHS has not issued a final regulation, but has issued interim guidance to support implementation.

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GOP senators challenge health IT implementation efforts 

Last week, GOP senators released a 27-page white paper citing concerns with the Administration’s implementation of health information technologies (IT) stating “while promoting the use of health IT is a laudable goal, a growing body of objective analysis and empirical data suggests the program needs to be recalibrated to be effective. Congress and the administration need to work together to ‘reboot’ the program to accomplish the aims of meaningful use and interoperability and ensure appropriate stewardship of taxpayer dollars in the process.” Key areas of concern noted in the paper:

  • No clear guidelines toward interoperability
  • Health IT increasing health care costs and not helping to control costs
  • No program oversight
  • Patient privacy and security risks
  • Concerns about cost in the long run, specifically federally incentivized health care technology

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Health IT workgroup to recommend innovation and regulatory efficiency improvements 

Last week, HHS and the Federal Communications Commission (FCC) announced their appointees to a new workgroup that will focus on innovation in health IT, including mobile medical applications. The workgroup’s first meeting is April 29 and its recommendations to the Health IT Policy Committee, which advises the Office of the National Coordinator for Health IT (ONC), are expected this summer.

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Highlights: new health care legislation introduced last week 

  • Senator Charles Schumer (D-NY) introduced legislation (S.728) to extend employer-sponsored health insurance tax benefits applicable to employees’ spouses and dependents to other eligible beneficiaries of employees.
  • Senator Tom Coburn (R-OK) introduced a resolution (S. Res 97) stating that the FDA should encourage the use of abuse-deterrent formulations of drugs.
  • Representative Bill Huizenga (R-MI) introduced H.R. 1552 to allow the transfer of required minimum distributions from a retirement plan to a health savings account.
  • Representative Chris Collins (R-NY) introduced H.R. 1558 to lower health premiums and increase choice for small businesses.
  • Representative Henry Waxman (D-CA) introduced H.R. 1588 to require drug manufacturers to provide drug rebates for drugs dispensed to low-income individuals under the Medicare prescription drug benefit program.
  • Senator Jay Rockefeller (D-WV) introduced the Medicare Drugs Savings Act (S 740).
  • Senator Barbara Boxer (D-CA) introduced S. 739 to establish direct care registered nurse-to-patient staffing ratio requirements in hospitals.
  • Senator Kirsten Gillibrand (D-NY) introduced S.723 to revise the medical and evaluation criteria for determining disability in a person diagnosed with Huntington's disease and to waive the 24-month waiting period for Medicare eligibility for individuals disabled by the disease.

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State update 

State round-up: HIX 

Seventeen states—12 led by Democratic Governors, four led by Republicans, and one Independent—and the Democratic mayor of D.C. have announced plans to operate state-based exchanges. Seven states—five led by Democratic Governors and two led by Republicans—will participate in state-partnership exchanges. The remaining 26 states will default to a federally-facilitated exchange.

State-based exchange State-partnership exchange Federally-facilitated exchange

Democratic Governor Republican Governor  ■ Independent Governor

Source: HHS

Recent HIX announcements:

  • To date, CMS has spent $393.7 million on federally-facilitated exchange establishment and the federal data services hub. In FY 2010: $4.2 million; FY 2011: $112.7 million; FY 2012: $248.4 million; and FY 2013: $28.4 million.
  • Maryland will delay the Small Business Health Options Program (SHOP) – the small group market for small employers on the HIX – open enrollment from October 1, 2013 to January 1, 2014.

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Medicaid expansion update 

Medicaid expansion is projected to cost the federal government $952 billion between 2013 and 2022 and states $76 billion. (Source: JAMA, “Medicaid expansion under the Affordable Care Act,” March 27, 2012). To date, 25 states and D.C. have said they will or are in support of expanding their Medicaid programs; 17 states have indicated they are highly unlikely to expand their programs:

Announced or Governor in support of expansion Not participating or highly unlikely to participate Undecided or undeclared

Democratic Governor  Republican Governor  ■ Independent Governor

Source: Kaiser Family Foundation; PoliticoPro, Statereforum

Note: states do not have a deadline to make a decision on Medicaid expansion and may opt in or out of participation at any time. This chart was compiled using publicly available information (as of April 21, 2013) and is subject to change.

Recent Medicaid announcements:

  • A Florida House panel approved a Medicaid expansion plan that would cost $237 million annually to provide health insurance coverage to 115,700 low-income residents. Parents, caretakers, and disabled adults below 100 percent of FPL would receive $2,000 per year to purchase health insurance coverage and would be required to pay a $25 per month deductible.
  • A Louisiana House bill (532) that would allow hospitals to deposit money into a "stabilization fund" to increase the state’s federal Medicaid matching funds without using tax dollars advanced last week. The fund is expected to provide $170 million in additional Medicaid dollars for participating hospitals. The bill will need a two-thirds vote by the legislature, followed by a majority during the general election on November 4, 2014 before it can be enacted. Thirty-nine other states have similar funding programs.
  • Legislators in Arkansas have approved the Medicaid expansion alternative plan, which intends to utilize federal funding to purchase private insurance for low-income residents. Governor Mike Beebe (D-AR) and Republicans who are in control of the Legislature provided support for the plans. Final approval will need to be obtained from the White House in order to move forward. If the plan is approved, Arkansas would be given the funds for Medicaid expansion; the state would use the money to purchase private insurance for 250,000 low-income residents earning less than $15,415 per year.
  • Last week, legislation was introduced in the Nebraska legislature to expand Medicaid. The proposed legislation includes a sunset provision that would allow lawmakers to reevaluate expansion when the federal match decreases to 90 percent -- this amendment was approved (30-12). It’s still unclear as to whether the state will expand.

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Industry news 

Diagnostics and therapeutics: 

FDA to take closer look at compounders

In a hearing before the U.S. House Energy and Commerce Committee last Tuesday, FDA Commissioner Margaret Hamburg said the agency had been constrained in its oversight of compounding pharmacies fearing litigation and asked for stronger legal authority to intensify its efforts. She testified there are 28,000 compounders in the U.S. including 3,000 that produce injectables—the source of the tainted injections that killed 50 people and infected 680 with spinal meningitis.

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Health plans and coverage: 

OIG: pre-paying Part D drug plans costs Medicare $111 million annually

Last week, the HHS Office of Inspector General (OIG) released a report analyzing 52 Medicare Part D plans and 706 Medicare Advantage (MA) plans in calendar year 2009. Key findings:

Medicare loses $111 million a year by pre-paying Part D and MA health plans and could have saved an $5.3 million by requiring Part D plans to reduce their revenue requirements in their bid proposals to account for anticipated investment income that the plans earned over the same 20 days.

OIG recommendations: CMS should pursue legislation to adjust the timing of Medicare’s prepayments to Part D plans to account for the time that these plans invest Medicare funds before paying pharmacy claims, or adopt regulations requiring Part D plans to reduce their revenue requirements in their bid proposals to consider anticipated investment income.

Background: under the Medicare Prescription Drug, Improvement, and Modernization Act of 2003, CMS makes advance capitated payments (prepayments) to Part D plans for each enrollee at the beginning of each month. Part D plans may invest these Medicare funds in interest-accumulating ways until the funds are needed to pay for drug costs and administrative services. Currently, no law prohibits the plans from keeping the additional revenue from the interest earned on Federal funds. Part D plans are required to submit bid proposals annually containing their anticipated revenue requirements for providing drug coverage under each of their plans for the upcoming year.

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Delivery system (hospitals, post-acute, physicians, ancillaries, retail health): 

Hospital groups to discuss coding using EHRs with ONC

On May 3, CMS and the ONC for Health Information Technology will hold a meeting with the American Hospital Association, National Association of Public Hospitals and Health Systems, Federation of American Hospitals, and the American Medical Association to discuss appropriate coding when using electronic health records (EHRs).

Background: in September 2012, HHS Secretary Kathleen Sebelius and U.S. Attorney General Eric Holder issued a letter to major hospital associations, calling attention to the use of electronic systems to duplicate records in order to increase payments. The letter warned that early reports have indicated that providers may be committing fraud by “upcoding” the severity of patients’ conditions for their own profit.

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Study: health status in assisted living population

A new report from the National Center for Health Statistics found 733,000 people currently reside in assisted living facilities. 82 percent of these have one or more of three conditions: dementia, heart disease or elevated blood pressure, and 9 percent have all three.

(Source: The New York Times, “For the Elderly, Diseases that Overlap,” April 15, 2013)

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Physician-owned hospitals performing well under ACA quality programs

122 of 161 (76 percent) physician-owned hospitals are receiving Medicare reimbursement bonuses, while 74 percent of non-physician-owned hospitals are paying fines due to quality requirements established by the ACA (e.g., the value based purchasing program). Physician-owned hospitals will receive 0.21 percent more per Medicare patient through September 2013; non-physician-owned hospitals will lose 0.3 percent per Medicare patient on average. Furthermore, 90 percent of the hospitals receiving the largest bonuses are physician-owned. Note: Section 6001 of the ACA prohibits new physician owned hospitals from being constructed or expanded unless extenuating circumstances apply.

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HITRUST outlines priorities in fight against cyber threats

The HITRUST Cybersecurity Working Group security alliance released a five page proposed guidance outlining the 50 highest cyber security priorities for protecting the health care industry from cyber-attacks. Top priorities include: access control policies, cryptography, isolating sensitive material, and developing a reporting system for breaches.

Background: HITRUST’s Cybersecurity Working Group was established after an Executive Order issued by President Obama in February 2013 outlined a framework to increase national efforts fighting cyber threats. Public comments will be accepted until May 15, and final guidelines will be discussed at the HITRUST annual meeting on May 22.

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340B challenge issued to Georgia hospital

Last Thursday, Senate Judiciary Ranking Member Chuck Grassley (R-IA) and Representative Bill Cassidy (R-LA) asked Columbus Regional Healthcare System for information about its use of the 340B federal discount prescription drug program. The issue: are hospitals obtaining drugs under the discount program to reduce their drug supply chain costs?

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@Regulatory update: preparing for 340B drug discount audits

Note: @Regulatory is a feature in the Monday Memo, providing the latest regulatory developments affecting life sciences and health care organizations. To access the @Regulatory newsletter, visit the website here.

The 340B Drug Discount Program has experienced significant growth and increased usage by both hospitals and contract pharmacies. Following the Government Accountability Office’s (GAO) first report on 340B, issued in September 2011 and mandated by the ACA, the Health Resources and Services Administration (HRSA) has taken a more active oversight role in determining program integrity. This issue of @Regulatory presents important considerations and next steps for compliance with 340B program requirements.

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Public health and disease surveillance: 

CDC: contaminated food infections increasing

The CDC concluded that bacterial infections from contaminated food increased 3 percent in 2012 including 25 percent increase in Vibrio bacteria found in raw oysters and undercooked shellfish. Forty-eight million people get sick from contaminated food annually.

(Source: The Wall Street Journal, “Food linked infections rose last year,” April 18, 2013)

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Pandemic detection

In 1996, early detection took 167 days; in 2009, 23 days. (Source: CNN, “Ending pandemics: how close are we?” April 2013)

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Research file 

Costs or profitability of hospital complications vary by payer 

Citation: “Relationship Between Occurrence of Surgical Complications and Hospital Finances” Sunil Eappen, MD; Bennett H. Lane, MS; Barry Rosenberg, MD, MBA; Stuart A. Lipsitz, ScD; David Sadoff, BA; Dave Matheson, JD, MBA; William R. Berry, MD, MPA, MPH; Mark Lester, MD, MBA; Atul A. Gawande, MD, MPH JAMA. 2013;309(15):1599-1606. doi:10.1001/jama.2013.2773.

Objective: “to determine the relationship between major surgical complications and per-encounter hospital costs and revenues by payer type.”

Methodology: “retrospective analysis of administrative data for all inpatient surgical discharges during 2010 from Texas Health Resources (THR) (12-hospital system) categorized by principal procedure and occurrence of one or more postsurgical complications, using International Classification of Diseases, Ninth Revision, diagnosis and procedure codes. Nine common surgical procedures and ten major complications across four payer types were analyzed. Hospital costs and revenue at discharge were obtained from hospital accounting systems and classified by payer type. Hospital costs, revenues, and contribution margin were compared for patients with and without surgical complications according to payer type.”

Results: “of 34,256 surgical discharges, 1,820 patients experienced one or more postsurgical complications. Compared with absence of complications, complications were associated with a $39,017 higher contribution margin per patient with private insurance ($55,953 vs. $16,936) and a $1,749 higher contribution margin per patient with Medicare ($3,629 vs. $1,880). For this hospital system in which private insurers covered 40 percent of patients (13,544), Medicare covered 45 percent (15,406), Medicaid covered 4 percent (1,336), and self-payment covered 6 percent (2,202), occurrence of complications was associated with an $8,084 higher contribution margin per patient ($15,726 vs. $7,642) and with a $7,435 lower per-patient total margin ($1,013 vs. −$6,422).”

My take: first, kudos to THR leaders for participating in this study. It’s exactly the right thing to do for this industry. That the occurrence of postsurgical complications was associated with a hospital contribution margin for Medicare and commercially insured and lower for Medicaid and who self-paid is not a surprise… Depending on payer mix, many hospitals have the potential for adverse near-term financial consequences for decreasing postsurgical complications. And every hospital recovers higher reimbursement from commercially insured patients to offset lower, below cost reimbursement from Medicaid and the uninsured.

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Outcomes improve when physicians understand patient perspective 

Citation: “Patient-Centered Decision Making and Health Care Outcomes: An Observational Study” Saul J. Weiner, MD; Alan Schwartz, PhD; Gunjan Sharma, PhD; Amy Binns-Calvey, BA; Naomi Ashley, BA; Brendan Kelly, BA; Amit Dayal, MD; Sonal Patel, MD; Frances M. Weaver, PhD; and Ilene Harris, PhD Ann Intern Med. 16 April 2013;158(8):573-579

Objective: patient-centered decision making (PCDM) involves a clinician’s purposeful capture of clinically relevant information about a patient’s circumstances as a basis for formulating a contextually appropriate care plan. This study sought to measure whether “encounters in which PCDM occurs are followed by improved health care outcomes compared with encounters where there is inattention to patient context.”
Methodology: “774 patient encounters with 139 residents” in “internal medicine clinics and two Veterans Affairs facilities” were recorded, then “medical records of these encounters screened for “contextual red flags,” such as deteriorating self-management of a chronic condition, that could reflect such underlying contextual factors as competing responsibilities or loss of social support. When a contextual factor was identified, either as a result of physician questioning or because a patient volunteered information, physicians were scored on the basis of whether they adapted the care plan to it."

Results: “among 548 contextual red flags, 208 contextual factors were confirmed, either when physicians probed or patients volunteered information. Physician attention to contextual factors (both probing for them and addressing them in care plans) varied according to the presenting contextual red flags. Outcome data were available for 157 contextual factors, of which PCDM was found to address 96. Of these, health care outcomes improved in 68 (71 percent), compared with 28 (46 percent) of the 61 that were not addressed by PCDM.”

Conclusion: attention to patient needs and circumstances when planning care is associated with improved health care outcomes.

My take: physicians will say they lack the time to adequately listen to patients, but that’s no excuse. Purposeful efforts by care teams, including physicians, to capture the most salient dimensions of a person’s (not “patient”) circumstance using communication techniques and online tools in advance or and after visits is necessary to more accuracy in diagnosis, appropriateness in treatment plans, outcomes and safety. As individuals become more directly responsible for their care and its costs, they will seek providers who use these tools and techniques.

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Tests ordered in hospitals less when costs known to clinician 

Citation: “Impact of Providing Fee Data on Laboratory Test Ordering A Controlled Clinical Trial”, Leonard S. Feldman, MD; Hasan M. Shihab, MBChB, MPH; David Thiemann, MD; Hsin-Chieh Yeh, PhD; Margaret Ardolino, RN, MS; Steven Mandell, MS; Daniel J. Brotman, MD; JAMA Intern Med. 2013;():1-6.

Objective: to determine whether making a clinician aware of the cost of a diagnostic test before ordering might change ordering patterns.

Methodology: a controlled clinical trial using the “computerized provider order entry system at The Johns Hopkins Hospital... 61 diagnostic laboratory tests were randomly assigned to an “active” arm (fee displayed) or to a control arm (fee not displayed). Metrics analyzed were changes in the total number of orders placed, the frequency of ordered tests (per patient-day), and total charges associated with the orders according to the time period (baseline vs. intervention period) and by study group (active test vs. control).”

Results: “rates of test ordering were reduced from 3.72 tests per patient-day in the baseline period to 3.40 tests per patient-day in the intervention period (8.59 percent decrease). For control arm tests, ordering increased from 1.15 to 1.22 tests per patient-day from the baseline period to the intervention period… Presenting fee data to providers at the time of order entry resulted in a modest decrease in test ordering. Adoption of this intervention may reduce the number of inappropriately ordered diagnostic tests.”

My take: to reduce costs without compromising outcomes and safety, it is necessary that clinicians have access to information about costs that their patients will bear in following recommended treatments. Heretofore, clinicians have been trained to think only of clinical implications; they must now include costs in their professional role.

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“If the administration implements it correctly, millions more Americans will gain access to health care next year as a result of the law…I am concerned that not every state, including Montana, will have an insurance marketplace established in time. I want to hear how the money requested in the budget would be used to ensure these marketplaces will be ready to go on day one.”

—Senator Max Baucus (D-MT), Senate Finance Committee Hearing, April 17, 2013

“WSJ Question: How much do doctors still rely on paper?
Jonathan Bush: It’s 2013 and the average doctor is getting 1100 faxes a month.”

— “Updating Doctors’ Offices via Cloud Services” Wall Street Journal Interview with Jonathan Bush, CEO, AthenaHealth April 17, 2013

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Fact file 

  • Medicare per capita inpatient utilization: 1.58 admissions per capita U.S. average; 0.85 (Hawaii) to 2.07 (West Virginia)
    (Source: The Dartmouth Atlas of Health Care, “Inpatient Days per Medicare Enrollees, by Gender and Type of Admission,” 2013)
  • Medicare utilization: days per 1,000 enrollees: U.S. average: 315.9 days, lowest: 135.4 (Hawaii) vs. highest 400.8 (Kentucky)
    (Source: The Dartmouth Atlas of Health Care, “Inpatient Days per Medicare Enrollees, by Gender and Type of Admission,” 2013)
  • Consumer views of hospitals by generation (Deloitte Center for Health Solutions’ 2012 Survey of US Health Consumers)

  • Operating costs for community hospitals:
      1980 2000 2011
    Private insurance 41.8% 38.7% 34.6%
    Medicare 34.6% 38.3% 39.3%
    Medicaid 9.6% 12.8% 16.3%
    Other government 6.1% 1.4% 1.8%
    Uncompensated care 5.1% 6.0% 5.9%
    Non patient care costs 2.7% 2.8% 2.1%
    (Source: Avalere analysis for American Hospital Association Annual Survey data 2011, for community hospitals, Chart 4.5)
  • Leading Top 100 Hospital Report Cards
    Top 100 Hospital Source Methodology # of Hospitals

    Truven Health Analytics

    Note: Solucient used to put out the 100 top hospitals list – this is now done by Truven, formerly the Healthcare Business of Thompson Reuters

    • Utilizes the 100 Top Hospitals National Balanced Scorecard: consists of 10 measures, distributed across four domains — quality, efficiency, finance, and consumer assessment of care — and uses only publicly available data
    • Hospitals are measured against peers of similar size and teaching status
    • A database of short-term, acute-care, nonfederal U.S. hospitals that treat a broad spectrum of patients. The primary data sources are the Medicare Provider Analysis and Review (MedPAR) dataset and the Medicare Cost Report. We use the five most recent years of data available — for this year’s studies, federal fiscal years 2006–2010.
    Database study group of nearly 3,000 hospitals
    U.S. News Best Hospitals
    • U.S News ranks the top hospitals in 16 different specialties from Cancer to Urology. For 12 of the 16 specialties, the rankings are based on an extensive analysis that combines measures of performance in three primary dimensions of health care: structure, process, and outcomes. Rankings in the other four specialties are based on hospital reputation as determined by a physician survey
    • All community hospitals included in the AHA universe are automatically considered for ranking
    • Outcomes performance relies mostly on survival, i.e. risk-adjusted mortality. These data come from the Medicare Provider Analysis and Review (MedPAR) database maintained by CMS
    • To be eligible initially, hospitals must meet at least one of the following requirements: to be a teaching hospital, to be affiliated with a medical school, to have at least 200 beds, or to have at least 100 beds plus four or more of eight key medical technologies
    4,793 hospitals that ranked in at least one of 16 specialties
    Becker's Hospital Review
    • To develop this list, the Becker's Hospital Review editorial team accepted nominations, conducted research and considered other reputable hospital ranking sources such as U.S. News & World Report, Thomson Reuters 100 Top Hospitals, HealthGrades, Magnet Recognition by the American Nurses Credentialing Center and Malcolm Baldrige National Quality Award recipients
    Not listed
    • Using 12 years of Medicare data and 150 million patient hospitalization records, for 26 different diagnoses and procedures, HealthGrades has identified America’s 50 and 100 Best Hospitals based on their consistent clinical outcomes over time.
    • Quality measures were based on risk‐adjusted mortality and inhospital complications across 26 of the most common diagnoses and procedures in the Medicare population
    • America’s 50 and 100 Best Hospitals are located in 88 cities in 25 states. The majority of America’s 50 and 100 Best Hospitals are non‐profit (87%), 7% are for profit, and 6% are government owned. America’s 50 and 100 Best Hospitals range from 100 beds to more than 500, with 45% having less than 350 beds and 55% having more than 350 beds.
  • Uncompensated care: increased by 82 percent ($21.6 to $39.3 billion) from 2000 to 2010. (Source: AHA, “Prepared to care “Annual Survey, 1990-2010 data for community hospitals)
  • Emergency room visits: 43 percent urgent (should be seen in 15-20 minutes); 32 percent semi-urgent (should be seen in 61-120 minutes); 10 percent emergent (should be seen less than 15 minutes); 7 percent non-urgent (should be seen in 121 minutes to 24 hours); 5.6 percent no triage/unknown; 1 percent immediate. (Source: The Centers for Disease Control and Prevention, “National Hospital Ambulatory Medicare Care Survey: 2010 Emergency Department Summary”)
  • Teaching hospitals: admissions increased 50 percent in twenty years (1990 to 2010); doctors in training increased by 10 percent over the same time period. (Source: The New York Times, “The impossible workload for doctors in training,” April 18, 2013)

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