February 7, 2005

MHA's Monday Executive Briefing
February 7, 2005

In this week's edition...
State News
1. 'DNC Howard Dean' works for most Miss. Democrats
2. Veteran trial judge Prisock to step down June 30
3. Barbour appoints judge in south Mississippi
4. PLAD deadline extended again, but program still dollar-poor
National News
5. CMS Issues Proposed Rule On Increased Payment Rates For LTCHs
6. OIG issues supplemental voluntary compliance program guidance for hospitals
7. CMS releases preliminary information on president’s Medicaid proposals
8. AHA unveils goals for improving U.S. health system; urges stakeholder support
9. U.S. Senate Judiciary Committee Approves Class-Action Bill
10. President, in State of the Union Address, Urges Congress to Act on Health Care
11. Subscription Billing for JCAHO
12. Legislation would restore cost-based payment for CAH laboratory service
13. Sen. Clinton Says Bush Plans Endanger Medicaid
14. Sen. Kerry Fulfills Campaign Pledge by Introducing Bill to Cover All Kids
15. A Remedy For Malpractice Malaise
16. Commentary: What Dr. Bush Ought to Prescribe
17. Leavitt rejects block grants but backs Medicaid reform
18. Judges dismiss suits in Minnesota, Arkansas and South Dakota
19. Congressional sneak preview: Coming health care attractions
State News 

1. 'DNC Howard Dean' works for most Miss. Democrats
   Mississippi Democrats reaffirmed their support for Howard Dean on Feb. 2, as the former presidential candidate gained momentum in his bid to become chairman of the national Democratic party.
   The only prominent Mississippi Democrat without praise for Dean was Rep. Gene Taylor, who said, "I regret" the state delegation's spurning of moderate former Indiana Rep. Tim Roemer.
   Second District Rep. Bennie Thompson endorsed Dean's 2004 presidential bid, which gained a rapid grassroots following before stalling in the Iowa caucuses.
   Dean already has amassed significant backing from the state delegations, which will vote Feb. 12 for a new Democratic National Committee chairman. The DNC chairman is considered the party's leading spokesman, fund-raiser and coordinator of national activities.
   Dean will have another shot at winning over Mississippi Democrats on March 1 when he addresses a state party gathering emceed by Thompson. 

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2. Veteran trial judge Prisock to step down June 30
   Chancery Judge Edward Prisock, who has been on the bench since 1975, will retire June 30. Prisock, 64, serves as judge in the Sixth Chancery Court District, which includes Neshoba, Attala, Carroll, Kemper and Choctaw counties.
   Before being elected to the court, Prisock practiced law in Louisville, where he served as city attorney. Gov. Haley Barbour will appoint someone to serve the remainder of Prisock's term. The next judicial elections are 2006.
   Prisock said he will take senior status upon retirement and will hear cases on a limited basis assigned to him by the Mississippi Supreme Court.

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3. Barbour appoints judge in south Mississippi
   Brookhaven attorney Michael M. Taylor has been appointed to a circuit judgeship in Lincoln, Pike and Walthall counties, the governor's office announced Feb. 3.
   Taylor will serve the unexpired term of Judge Keith Starrett, who resigned Dec. 31 to take a federal judgeship. Taylor has practiced law for 18 years and received his law degree from the University of Mississippi. Starrett was appointed U.S. Southern District judge in November and assumed his new duties on Jan. 1 at the federal courthouse in Hattiesburg.

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4. PLAD deadline extended again, but program still dollar-poor
   Poverty-Level, Aged and Disabled (PLAD) Medicaid beneficiaries cannot be targeted for cuts for the rest of February, but agency director Dr. Warren Jones says the entire program will run out of money by then unless lawmakers approve more funding.
   U.S. District Judge Henry T. Wingate last week extended a deadline that expired Jan. 31 until the end of February through a court order, giving lawmakers more time to provide the funding. 
   To receive daily updates on Medicaid issues, join the Medicare/Medicaid Community at MyMHA.

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National News

5. CMS Issues Proposed Rule On Increased Payment Rates For LTCHs
   CMS published in the February 2 Federal Register (70 Fed. Reg. 5724) a proposed rule that would increase Medicare payment rates for long term care hospitals (LTCHs) by 3.1% for discharges on or after July 1, 2005 through June 30, 2006. CMS said it is also proposing to adopt new labor market area definitions for the purpose of geographic classification and wage indexing based upon the Core-Based Statistical Areas designated by the Office of Management and Budget using the 2000 Census Data. Comments on the proposed rule are due by March 29, 2004, and CMS said it expects to publish the final rule later this spring.
   To read the proposed rule in the Federal Register, click here (PDF file).
   To receive daily updates on Medicare issues, join the Medicare/Medicaid Community at MyMHA.

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6. OIG issues supplemental voluntary compliance program guidance for hospitals
   On January 27, 2005, the Department of Health and Human Services (DHHS) Office of Inspector General (OIG) issued the document "Supplemental Voluntary Compliance Program Guidance for Hospitals" which reflects recent changes to hospital payment systems and changing industry practices. The OIG said that the original guidance, which was published in 1998, focused on how hospitals could design effective voluntary compliance programs, while the updated guidance focuses on measuring and improving the effectiveness of existing compliance efforts.
   "While the original guidance focused on how hospitals could design effective voluntary compliance programs, the supplemental guidance focuses on measuring and improving the effectiveness of existing compliance efforts and identifies additional fraud and abuse risk areas for hospitals.
   Risk areas discussed in the supplement include: billing under the outpatient prospective payment system, the physician self- referral law, the Federal anti-kickback statute, relationships between hospitals and physicians, relationships between hospitals and other providers, joint ventures, practitioner recruitment, and the furnishing of substandard care. The guidance also identifies practical measures hospitals can use to gauge the effectiveness of their compliance programs."
   To read the updated guidance, click here. For the full press release, click here.
   To receive daily updates on compliance issues, join the Compliance Community at MyMHA.

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7. CMS releases preliminary information on president’s Medicaid proposals
   Centers for Medicare & Medicaid Services Administrator Mark McClellan on Feb. 4 released “preliminary information" on Medicaid proposals that will be included in the president’s fiscal year 2006 budget proposal. CMS said new spending and reductions from the president’s “program integrity” proposals together would save the federal budget an estimated $45 billion over 10 years. The agency said proposed new spending would include $125.7 billion over 10 years to expand health coverage through tax credits, purchasing pools, Health Savings Accounts and community health centers; and $16.5 billion over 10 years for Medicaid and State Children’s Health Insurance coverage initiatives. The “program integrity” proposals are expected to reduce federal spending for intergovernmental transfers and other payments by $60 billion over 10 years, CMS said. The president also proposes to give states more flexibility to increase coverage for the same federal dollars by providing flexibility in acute care coverage for optional families and children, long-term care services for the elderly and disabled, and new options for the funding of uncompensated care to support more coordinated approaches to care and coverage for the uninsured, CMS said.
   To receive daily updates on Medicare issues, join the Medicare/Medicaid Community at MyMHA.

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8. AHA unveils goals for improving U.S. health system; urges stakeholder support
   The AHA on Feb. 4 unveiled its members’ advocacy agenda for 2005, as well as six goals for strengthening the nation’s health care system by 2010. The association said top priorities include protecting the health care “safety net,” increasing affordability of care, improving the quality of health care, and expanding health care coverage to help more Americans get the care they need. By 2010, the goals call for public quality reporting by every hospital; national information technology standards to achieve "interoperability" among hospitals and other health care settings; 300,000 new health care professionals in hospitals; the staff, equipment and training for every hospital to be self-sufficient for 48 hours following a mass casualty incident; access to affordable coverage for 25 million more Americans; and every hospital to be a key partner in managing community services to improve the quality, coordination and efficiency of care to the chronically ill. “To move forward, we need a shared vision of the desired future of our health care system,” said AHA President Dick Davidson. “We call on national policymakers to embrace these goals and help us strengthen our health care system."

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9. U.S. Senate Judiciary Committee Approves Class-Action Bill
   The U.S. Senate Judiciary Committee, chaired by Senator Arlen Specter (R-PA), last week approved a bill that would move class-action lawsuits from state to federal courts. The measure was passed by the committee 13–5 and is expected to be debated by the full Senate starting today. An identical bill died last year—despite having the support of 60 Senators—because party leaders could not come to a compromise on offering amendments during full Senate debate.

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10. President, in State of the Union Address, Urges Congress to Act on Health Care
   President George W. Bush last week delivered his State of the Union address to a joint session of Congress. While the President focused on foreign policy, homeland security and Social Security reform, he also pushed Congress to act on key health care issues. Bush said, “To make our economy stronger and more productive, we must make health care more affordable, and give families greater access to good coverage, and more control over their health decisions. I ask Congress to move forward on a comprehensive health care agenda—with tax credits to help low-income workers buy insurance, a community health center in every poor county, improved information technology to prevent medical errors and needless costs, association health plans for small businesses and their employees, expanded health savings accounts, and medical liability reform that will reduce health care costs and make sure patients have the doctors and care they need.” 

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11. Subscription Billing for JCAHO
   Periodically throughout the past decade, accredited organizations have requested that the Joint Commission change its pricing structure to comport with billing approaches used by other accrediting bodies, which spread survey fees over the entire accreditation cycle. Unfortunately, the accreditation process that the Joint Commission had in place during this period did not support such a change. However, beginning in January 2006 – after which all regular accreditation surveys will be conducted on an unannounced basis – the use of an annual subscription approach for the payment of accreditation fees will become fully consistent with the substantially continuous nature of the new accreditation process.
   For all accreditation programs, the new fee structure will involve an annual base fee, which recognizes that significant accreditation-related services are now provided on a more continuous basis between on-site surveys, and a separate fee to cover the direct costs of the on-site survey in the year(s) in which it occurs. Although the specifics of the new fee structure will not be finalized until April 2005, the annual fee for most organizations will range from 15 to 25% of the current triennial (or biennial) survey fee. The new pricing model is explicitly designed to be revenue-neutral to the Joint Commission over a running three-year period.
   Although the Joint Commission believes that the move to a subscription billing methodology will be well received by most accredited organizations over time, making their way through the transition process will not be without its challenges. Financial modeling of different methods to transitioning to the new billing approach makes it clear that the Joint Commission’s only realistic alternative is to convert all accredited organizations to the new model on January 1, 2006. This means that all accredited organizations will be asked to pay their first annual accreditation participation fee under the new fee structure in January 2006.
   During the second quarter of 2005, the Joint Commission intends to enter into new accreditation contracts with all accredited organizations. This contract will generally describe the services that the Joint Commission plans to provide to the health care organization each year. In addition, to assist accredited organizations in the preparation of their 2006 budgets, this contract will also provide an estimate of the organization’s fees under the new subscription billing model.
   If you have any questions before you receive your accreditation contract, call Paige Rodgers, chief financial officer of the Joint Commission, at 630-792-5685.
   To receive daily updates on JCAHO issues, join the Accreditation Community at MyMHA.

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12. Legislation would restore cost-based payment for CAH laboratory service
   Sens. Ben Nelson, D-NE, and Susan Collins, R-ME, have introduced legislation that would assure cost-based Medicare reimbursement for critical access hospital laboratory services, regardless of where a laboratory specimen is collected. The legislation, introduced Feb. 1, is designed to ensure Medicare patients in rural communities continue to have access to needed laboratory services. Although CAH services by law are reimbursed at cost, the Centers for Medicare & Medicaid Services in October 2003 began requiring Medicare beneficiaries to be physically present in a CAH when a laboratory specimen is collected for the hospital to receive cost-based reimbursement. The policy change requires Medicare beneficiaries to physically travel to a CAH to have laboratory specimens drawn, needlessly burdening the frail elderly when most CAHs are willing and able to provide the service in neighboring, smaller communities. Co-sponsors of the Critical Access to Clinical Lab Services Act include Sens. Patty Murray, D-WA; Kent Conrad, D-ND; and Maria Cantwell, D-WA.
   To receive daily updates on rural health issues, join the Rural Health Community at MyMHA.

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13. Sen. Clinton Says Bush Plans Endanger Medicaid
   Democratic Senator Hillary Rodham Clinton of New York said the Bush administration was planning an "aggressive assault" on Medicaid that would "leave the public health safety net in tatters," reports Reuters. "These are perilous times for America's health care infrastructure," Clinton said, and argued that the nation has a moral obligation to care for the sick, poor and vulnerable. She said that Bush's "market-based or tax-inspired" solutions would leave the poor, sick and frail unprotected. She also said that Medicaid block grants, which the Bush administration may endorse in the coming budget, are "a bad idea from nearly every angle," because they shift spending to the states when the economy weakens, and contribute to increases in the uninsured. White House spokesperson Trent Duffy said that the administration was "fully committed to Medicaid, but not necessarily in its current configuration," reports Newsday.
   To receive daily updates on Medicaid issues, join the Medicare/Medicaid Community at MyMHA.

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14. Sen. Kerry Fulfills Campaign Pledge by Introducing Bill to Cover All Kids
   In his first major speech since losing the presidential election, Kerry gave "a stinging indictment" of the Bush administration's health policies, saying the president "is embracing the wrong values by leaving millions of Americans without health insurance," reports the Washington Post. After the election, Kerry had "signaled ... that health care -- especially for children -- would be a priority issue" for him. Speaking to a group of health care advocates in Washington, Kerry said, "In a city where politicians like to use the word 'values,' insuring kids is really a test of who just talks about family values and who actually values families."
   Kerry's proposed "Kids First" legislation would cover all of America's 11 million uninsured kids at an estimated cost of $2 billion a year, to be paid for by eliminating "a small portion" of the Bush administration’s tax cuts for those earning more than $300,000 a year. Kerry said his plan would eventually pay for itself by reducing hospitalizations by 22 percent and "replacing expensive critical care with inexpensive preventive care."
   Kerry's "sweeping plan" would have the federal government pay all the costs of covering children under age 21 at or below the poverty line, with the states expanding the Children's Health Insurance Program to cover the children of the working poor, reports the Boston Globe. "This has got to be priority number one," Kerry said in an interview with the Globe. Kerry said the bill he is introducing fulfills a campaign pledge to make such legislation the first he would enact as president. He plans to introduce a broader coverage plan that reaches beyond children later in his Senate term.
   Kerry's speech on health care was "combative," according to the Los Angeles Times. He accused Bush of failing "to deal with the real and present healthcare crisis of our nation, even as he seeks to hype a phony crisis in Social Security." However, his plan to provide health care to all children by expanding Medicaid "has little chance of passage in a Congress controlled by Republicans." Kerry promised to "reach across the aisle" to Republicans who favor expanded health care, according to the Globe. Republican Senator John McCain of Arizona said that while covering more children is popular in the Senate, budget constraints make it difficult. McCain noted that Kerry's "elevated reputation" in the Senate following his presidential bid will "increase his influence."
   Kerry's plans "drew derision" from Bush and other Republicans. Bush "mocked Kerry's calls for universal coverage" as "creeping toward Hillary-care," according to the Globe. Kerry "dismissed" the attack, saying his plan was based on employer incentives and tax credits, and that it was not "government-run healthcare."

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15. A Remedy For Malpractice Malaise
   Doctors and hospitals have been in a squeeze for some time, of course, as malpractice premiums have soared. Now they're also getting inventive. To keep more physicians from bailing out, hospitals are increasingly offering doctors malpractice insurance through not-for-profit entities known as "captives." To read the full story in BusinessWeek, click here.

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16. Commentary: What Dr. Bush Ought to Prescribe
   During his State of the Union message, Dr. Bush will say he's got a plan for treating America's healthcare disease, but his prescription is driven more by market ideology than logic and experience. And, at best, it will yield small results. While malpractice reform may deal with one reason docs and hospitals practice "defensive" medicine, it won't change the fact that they also make more money practicing medicine that way. And then there is Dr. Bush's welcome push for computerized medical records. Everyone agrees this is the single most important step toward reducing costs and improving quality. But if it's so crucial, why has the administration decided to invest so little money, take a decade to implement it and promise never to use regulation to require doctors and hospitals and nursing homes to use it? For the full story, click here.

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17. Leavitt rejects block grants but backs Medicaid reform
   Newly installed HHS Secretary Mike Leavitt dispelled "the myth" that he would propose a block-grant system for Medicaid but did suggest it was time for hard and frank discussions with states, which administer the program and co-fund it with the federal government. In a speech Feb. 1 at the World Health Care Congress, his first major policy address as HHS secretary, Leavitt said it was time "to stop harmful" state habits. "We must stop rewarding higher spending and start rewarding better performance," he said. The secretary also suggested changing Medicaid law so states pay less for prescription drugs and closing loopholes that allow the program to become "an inheritance-protection plan" for seniors in need of long-term care. In terms of "opportunities," Leavitt proposed reforms like those he initiated while governor of Utah that would reduce benefits for Medicaid's healthiest populations but expand coverage to more people. "We can transform our healthcare system so informed consumers own their health records, own their health savings and own their own health insurance," he said.

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18. Judges dismiss suits in Minnesota, Arkansas and South Dakota
   Judge Ann Montgomery of the U.S. District Court for Minnesota on Feb. 1 dismissed cases against Fairview Health Services and Allina Health System, for which arguments were held in December 2004. The judge dismissed all of the federal claims related to tax-exemption, and declined to exercise jurisdiction over the state claims, dismissing them as well.
   "The plaintiffs' case attempts to build on a flawed foundation," Judge Montgomery said in referring specifically to the breach of contract claim in the suit. On the plaintiffs' EMTALA claim, Montgomery calls their complaints "deficient" and dismissed it without prejudice.
   The plaintiffs do have the option to pursue claims in the state court, and they could re-file an EMTALA claim if they could assert sufficient facts to establish an EMTALA violation. Next, the court will consider the AHA's motion to dismiss the claims against it.
   Also, Judge George Howard of the U.S. District Court for the eastern district of Arkansas dismissed the case against Baptist Health of Little Rock, and the AHA. Federal claims were dismissed with prejudice while state claims were dismissed without prejudice, allowing plaintiffs to file those claims in state court. In issuing his decision, Judge Howard quoted extensively from the court decisions in the cases against Sutter Health of California and William Beaumont Hospital of Michigan - cases that also were dismissed.
   Plaintiffs on Feb. 4 voluntarily dismissed not-for-profit billing and collection lawsuits filed in federal court against Sioux Valley Hospitals and Health System, Rapid City Regional Hospital, Inc., and Avera Health. The AHA was named in all three cases, and also was dismissed. Following dismissal, however, a complaint against Sioux Valley Hospitals and Health System was filed in state court.

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19. Congressional sneak preview: Coming health care attractions
   Lawmakers in the 109th Congress face many of the same health issues as their predecessors, but with a few plot twists. For the full story, click here. 

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