April 8, 2010

April 7: Health Care Reform News


Top stories


Sebelius Remarks: Health Reform and You: How the New Law Will Increase Your Health Security

Department of Health and Human Services

April 6, 2010


Yesterday, U.S. Department of Health and Human Services Secretary Kathleen Sebelius delivered a speech entitled, “Health Reform and You: How the New Law Will Increase Your Health Security” at the National Press Club. In her remarks, Secretary Sebelius said that Americans can expect help from her department as health reform is implemented. Click the link to read Secretary Sebelius' remarks as prepared for delivery.


In Medicine, the Power of No
The New York Times

April 7, 2010


The federal government is now starting to build the institutions that will try to reduce the soaring growth of healthcare costs. But all these groups will face the same basic problem: Deep down, Americans tend to believe that more care is better care, and recoil from efforts to restrict care.



Reforming Health Care Delivery Through Payment Change and Transparency: Minnesota's Innovations

The Commonwealth Fund

March 25, 2010


The landmark health reform legislation that Minnesota enacted in 2008 includes a number of provisions to make health care delivery more efficient and reduce costs. In a new report from The Commonwealth Fund and the National Academy for State Health Policy (NASHP), researchers provide a window into the state's efforts to transform care delivery and offer insights for other states contemplating similar changes and for federal officials charged with implementing national health reform. As demonstrations of accountable care organizations and other payment reforms proceed under the federal Patient Protection and Affordable Care Act, Minnesota, the authors say, will serve as an "excellent testing ground."




Virginia Gov. Signs Bill Requiring Insurers To Cover Telemedicine


April 6, 2010


On Monday, Virginia Gov. Bob McDonnell signed a bill requiring the state's health insurers to cover telemedicine services. The law's passage makes Virginia the 12th state in the nation to have such a mandate.




Study: Riskier Surgeries for Back Pain Raise Costs

AP/The Boston Globe

April 7, 2010


A study of Medicare patients shows that costlier, more complex spinal fusion surgeries are on the rise -- and sometimes done unnecessarily -- for a common lower back condition caused by aging and arthritis.


Docs/Owners at Surgery Centers Operate More Often, Says Study

HealthLeaders Media

April 7, 2010


Doctors invested in outpatient surgery centers perform about twice as many surgeries as doctors with no such financial stake, according to a new study. The study looked at all patients in Florida who underwent one of five common outpatient procedures.


Wellness/Chronic Care


Obese Patients Aren't Left Out of Preventive Care

USA Today
April 7, 2010


Obese and overweight patients are just as likely to get recommended preventive medical care as normal-weight patients, and in some cases, treatment of the heavyset is more likely to meet standard guidelines for care, a new study shows.


State news


MA: Insurers Call Halt, Get State Warning

The Boston Globe

April 7, 2010


The standoff between Massachusetts regulators and health insurance companies intensified yesterday, as most insurers stopped offering new coverage to small businesses and individuals, and state officials demanded that the insurers post updated rates online and resume offering policies by Friday.


Pawlenty Eschews AG, Will Join Health Suit

The Hill

April 7, 2010


Minnesota Gov. Tim Pawlenty (R) is joining a lawsuit challenging the constitutionality of the new health law over the recommendation of the state's top law enforcement official.


AZ, NV to Join Suit Over Federal Health Care Bill

AP/Google News
April 7, 2010


The governors of Arizona and Nevada say their states will join 14 others suing the federal government over health care reform. Related: Nevada Officials at Odds Over Healthcare Law, Los Angeles Times

Wisconsin's Existing High-Risk Pool Will Benefit From Health Care Law

The Milwaukee Journal Sentinel

April 7, 2010


The health law will allocated $5 billion to help establish a federal high-risk insurance pool to help tide over people with preexisting conditions until 2014 when broader parts of the law kick in. The plan could even benefit states like Wisconsin, which already have high-risk pools at the state level.


AZ: Hospital Group Withdraws Tax Hike Proposal

MSN Money
April 7, 2010

Arizona’s hospital industry has decided not to push for an income tax increase on the state’s wealthy to help the Arizona Health Care Cost Containment System, the state’s Medicaid program.

FL: House Wants Medicaid Do-Over

HealthNews Florida

April 7, 2010’


Seeking dramatic changes in Florida's Medicaid program, House leaders late Monday released a proposal that would require almost all beneficiaries statewide to enroll in managed-care plans --- including seniors who need long-term care. The proposal would take years to carry out, but Medicaid managed care would become mandatory in 2011 in Miami-Dade County. The state's most-populous county would join five other counties in a controversial pilot program formerly known as 'Medicaid Reform.'




More Medicaid Pay For Some Doctors, But Will It Last?
April 6, 2010

To ease the worries of already strained primary care doctors, the new health law includes an increase in Medicaid payment rates, bringing them up to the same level as those from Medicare. That bump is is expected to be pretty helpful when a huge chunk of the increase in insurance coverage under the law comes from expanding Medicaid. The problem? Under the new law, the Medicaid raise may only last two years.

Implementing the Legislation


Taking the Reins of Health Care Reform (registration required; full text below)

The Advisory Board
April 6, 2010

While questions abound with regards to the Obama Administration’s road map for rule-making and implementation of the Patient Protection and Affordable Care Act (PPACA), the details of the final health care reform bill reinforce our core belief that providers—those on the front-lines of care delivery—will deliver on the real promise of reform: health care services and support for patients and their families that is more accessible, more affordable and more reliably high quality.

Six Ways Future Healthcare Will Emphasize Individualized Care
HealthLeaders Media

April 7, 2010

For the next phase of healthcare reform in the United States, leaders will place more emphasis on individualized care—people keeping themselves healthier and out of hospitals, and finding ways to help themselves better manage their own health, according to a new PricewaterhouseCoopers' (PwC) HealthCast survey report.

Transcript: Health On The Hill - Early Implementation Challenges To Health Law

Kaiser Health News

April 6, 2010


Kaiser Health News staff writers Julie Appleby and Mary Agnes Carey talk with KFF's Jackie Judd about what is next for health reform.




UAW Sues GM Over Delphi Pact Stipulation

The Detroit Free Press

April 7, 2010


The UAW filed a lawsuit Tuesday against General Motors, claiming the automaker owes the union $450 million as part of a 3-year-old contract with its former parts division, Delphi.


Health Information Technology


HHS Announces $267 Million in Recovery Act Funds for New Health IT Regional Extension Centers
Department of Health and Human Services

April 6, 2010


U.S. Department of Health and Human Services Secretary Kathleen Sebelius announced today that more than $267 million has been awarded to 28 additional non-profit organizations to establish Health Information Technology Regional Extension Centers (RECs).


The Value From Investments In Health Information Technology At The U.S. Department Of Veterans Affairs

Health Affairs

April 7, 2010


The authors compare health information technology (IT) in the Department of Veterans Affairs (VA) to norms in the private sector, and estimate the costs and benefits of selected VA health IT systems. The VA spent proportionately more on IT than the private health care sector spent, but it achieved higher levels of IT adoption and quality of care.




Kroger Shuts 20 Little Clinic Locations

The Tennessean

April 7, 2010


Nearly two months after being acquired by Kroger supermarkets, The Little Clinic has closed 20 locations.




Taking the Reins of Health Care Reform

By Chas Roades, Chief Research Officer, The Advisory Board
April 6, 2010

While questions abound with regards to the Obama Administration’s road map for rule-making and implementation of the Patient Protection and Affordable Care Act (PPACA), the details of the final health care reform bill reinforce our core belief that providers—those on the front-lines of care delivery—will deliver on the real promise of reform: health care services and support for patients and their families that is more accessible, more affordable and more reliably high quality.

Succeeding as an engine of reform in our communities will require a robust understanding of just how the new legislation changes the rules of play in the market; a defensible forecast of new demand scenarios, customized to your market and region; and a framework for proactively transitioning your enterprise to take advantage of new incentives and expectations with respect to delivery system change.

At the Health Care Advisory Board, we are prepared to support you on every level as you take the reins on reforming health care in your own market. Here are three ways we can help accelerate your efforts right now:

I. Understanding the Legislation’s New Rules of Engagement

It is an understatement to describe this legislation as complex—third-party analysis and last-minute tweaks made it even more difficult to follow all the moving pieces in the final bill with respect to coverage expansion, financing deals, and insurance market reforms. Regardless, member executives must provide Board members and senior leaders across their organizations with a thorough education on the bill’s near term and long term implications.

To assist in boiling down the moving pieces to first principles, the Health Care Advisory Board has organized a series of teleconferences to lay out the strategic implications our members face with respect to three aspects of the legislation:

Assessing Coverage Expansion’s Impact on Demand for Health Care Services


  • March 30
  • Key Imperatives for Discussion

    1. Think Beyond “Correcting for the Market” on Primary Care Strategy
    The area where demand will be most sensitive to the newly insured population will likely be primary care and that is where labor shortage is most acute. Hospitals and health systems must create a three track approach to ensure supply meets demand: improved productivity through maximizing clinicians’ leverage, alternative access points for delivery of primary care, and effective recruitment and retention of PCPs and physician extenders based on market-leading practice environments.

    2. The Game is Productivity
    Due to continued tightness in the capital markets and enduring shortage in the labor market hospitals and health systems must have a plan for servicing additional demand through greater productivity of current capacity—the classic “more with the same” imperative. Management will need to create more flexible staffing models and adapt existing facilities to deliver different levels of care before falling back to a build-out strategy.

    3. Unpaid Patient Obligation to Remain a Crucial Payer Category
    The fastest growing category of hospital bad debt write-offs currently stems from non-payment of patient obligations from INSURED patients; as pressure increases from employers and state and federal regulators to keep premium increases in check, patients (insured or otherwise) will continue to see growing self-pay balances associated with the care they receive. Federal subsidies for out-of-pocket expense will likely have a modest, but not entirely ameliorating, effect. Hardwiring patient-friendly, yet effective self-pay collections operations will become a difference maker between average and best-in-class revenue cycle operations.

Financial Implications of Coverage Expansion for Hospitals, Physicians and Other Providers

  • April 23, 3 p.m. -4 p.m. ET
  • Key Imperatives for Discussion

    4.Accountable Payment Starts with Value-Based Purchasing
    This legislation defines the first generation of accountable payment through the lens of payment withholds. While CMS will experiment with incentives for total cost management through ACO pilots, the urgent objective for hospitals and health systems must be to demonstrate reliability when it comes to core measures, hospital-acquired infections, and readmissions to “earn” full payments going forward.

    5. Adapt to Payment Reforms through Homegrown Pilots
    Sustaining Medicare and subsidy levels for individuals through the exchanges will require the government to move beyond withholds to more fundamental payment reforms. Providers need to embrace adaptability today by seeking opportunities that hedge the downside risk of demand destruction with upside opportunity in the form of reduced benefits costs for their employees or through small scale initiatives in the commercial market.

    6. Manage Patient Mix to Maximize Profitability
    Health care reform will add 16 million new Medicaid beneficiaries, over 50 percent of total expected coverage expansion. Given the cross-subsidy economics between most Medicaid and commercial payers as well as the decrease in disproportionate share payments, hospitals will want to invest in marketing and program development strategies that ensure financial sustainability as they reach out to the newly insured.

Delivery System Reform and Accountable Care

  • April 27, 3 p.m. -4 p.m. ET
  • Key Imperatives for Discussion

    7. All Hands on Deck to Drop “Breakeven” Operating Cost Level
    With the challenging cross-subsidy economics of a growing public payer mix (Medicaid expansion and baby boomers aging into Medicare) looming over the next decade combined with price pressure from value-based purchasing programs, a top priority for all management teams needs to be lowering the operating cost structure of the acute care enterprise. This will rely on more productive use of resources as well as lowering structural costs by developing lower-overhead cost care models.

    8. Tighter Physician Integration a Matter of Form, Not Function
    Successfully transitioning to delivering more integrated and reliable care will require a solid foundation of partnership with physicians. Progressive organizations will continue to invest and evolve their physician integration platforms to offer individual providers multiple types of affiliations (MSO services, co-management agreements, employment, etc.) all based on a common commitment to superior performance against shared clinical and financial risk.

    9. Demonstrating Capabilities for Treating and Managing Chronic Disease a Competitive Differentiator
    Chronic disease is a primary driver of health care inflation. New payment methodologies will reward organizations which can improve the clinical and financial outcomes associated with caring for this population. Primary care practices will have to transform themselves to achieve this task, and networks of providers will have to form to provide coordinated care across episodes and time.

    10. Clinical and Financial Success Tied to Information-Powered Care Delivery
    The belief that the delivery system is deleteriously fragmented undergirds new payment models that force groups of providers to coordinate through shared risk. To prosper in this environment, providers will have to maximize the returns on the large investments in IT they are making to meet the Meaningful Use mandate—rooting out unwarranted variation in care, breaking down silos among providers, managing population health and so on.

These in-depth presentations will unveil our latest analysis on key questions for the industry. In my ongoing communications to the membership, I will amplify and expand on the key insights from each of these teleconferences across the coming weeks.


II. Benchmark Reform’s Impact on Your Organization


The final bill’s twin goals of coverage expansion and delivery system reform demand a comprehensive analysis of the utilization, financial and strategic implications of the PPACA customized to the unique characteristics of your market. After careful review of the final legislation, we are releasing updated National Inpatient and Outpatient Models for hospital utilization and finances shortly, followed closely thereafter with updates to our customized Inpatient and Outpatient Market Forecasters and Estimators, so you can tailor your strategic plans to the impact of reform.


In addition, we will be introducing tools that will assist you in benchmarking your organization’s readiness for delivery system transformation. These tools will include impact assessment and “Playbooks” related to physician alignment models, clinical innovation, cross-continuum collaboration, IT infrastructure and so on.


III. Take the Reins of Health Care Reform

Finally, while the kinds of delivery system transformations we are discussing today may be the work of a generation, progressive hospitals and health systems are kick-starting innovation efforts in earnest today. With that in mind, our agenda remains focused on delivering the insight, support and services that will assist members in addressing the four pillars of reform: operating efficiency; physician alignment to thrive under accountable payment; improving clinical and financial outcomes of chronic care; and elevating care coordination and collaboration across the continuum.

I want to highlight here two resources that are immediately available to members. First, I am pleased to announce the launch of the Center for Care Innovation, a collaborative and practical forum through which members will work together to identify and implement best practice to the challenges and opportunities reform presents. Dedicated Advisory Board experts will support each Innovation Collaborative as its constituent members endeavor to accelerate their implementation of innovative approaches to core clinical and strategic opportunities. The initial cohort of Innovation Collaboratives will include:

  • Building the Medical Home
  • Piloting Accountable Payment Models
  • Preventing Avoidable Readmissions
  • Wiring Physician Offices
  • Improving Employee Health

Second, we have recently compiled an executive summary of best-practices and strategies aimed at taking full advantage of reform principles from our 2009-2010 Health Care Advisory Board National Meeting Series, Promise or Peril? Available now, this publication tees up our Playbooks for launching patient-centered medical homes, maximizing the returns from IT investments and creating integration “platforms” with the medical staff.


The time has come for action—health care reform’s success depends on providers taking a leading role in transforming the delivery system. At the Advisory Board, we do not underestimate the enormity of the task before you. Our aspiration is to make a contribution toward your progress. Please do not hesitate to contact me directly at roadesc@advisory.com or 202-266-5326 if we can be of assistance.

I close as always with appreciation for the privilege you afford us to be of service to you and industry.

Tags: health care reform, Health Policy, Health Policy

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