Archives for May 2012

Changes to COPs Will Result in Savings for Hospitals and Other Providers

Hospitals could save $4.6 billion over five years as a result of changes made to the conditions of participation (COPs) announced by CMS in a Final rule published in the Federal Register on May 16th, 2012.  A second Final rule, issued on the same day, making changes to the COPs of other Medicare providers, could save those providers $630 million over five years according to CMS estimates. 

These changes remove primarily redundant and obsolete provisions from the COPs.  These two final rules making changes to the COPs were in response to Executive Order 13563 entitled “Improving Regulations and Regulatory Review.”  In this Executive Order, the President directed each executive agency to establish a plan for ongoing retrospective review of existing significant regulations to identify those rules that can be eliminated as obsolete, unnecessary, burdensome or counterproductive or that can be modified to be more effective, efficient, flexible, and streamlined. 


The most significant change for hospitals is that non-physician providers can be granted medical staff positions.  CMS estimates that this change alone will save hospitals $1.6 billion over five years.  Allowing non-physician providers medical staff positions will free up doctors to spend more time with patients and will give hospitals flexibility to administer care in the most cost-effective way. 

Hospitals will also no longer be required to have one person, an outpatient director, who is responsible for outpatient services. Under the Final rule, hospitals will be allowed to assign one or more individuals to be responsible for outpatient services. CMS estimates that this will save $1.5 billion over five years. 

The other changes affecting hospital would (1) allow one governing body for a multi-hospital system that must include at least one member from the medical staff; (2) allow hospitals to establish protocols for the self-administration of medication by patients in certain circumstances; (3) allow the use of standing orders, and the inclusion of nursing plans in interdisciplinary care plans; (4) allow non-physician practitioners to authenticate verbal orders and not require that these authentications occur within 48 hours; (5) eliminate the logging of incidents relating to infection and communicable disease; (6) remove the requirement that a transplant team verify the blood type before organ recovery; and (7) relax reporting requirements for patients who die as a result of the use of a two point soft restraint applied while the patient is not in seclusion. 

Other Providers

A number of changes applied to multiple types of providers and suppliers. The one to three year enrollment bar for suppliers who fail to timely respond for information requests in regards to a revalidation of enrollment is removed. In addition, Medicare billing privileges for a provider or supplier who fails to submit complete and accurate documentation within 90 days of a request to submit an enrollment application, resubmit an application, or verify their enrollment information will be deactivated as opposed to being revoked.  This will allow for easier reinstatement. 

The requirement that ambulatory surgical centers have specific types of emergency equipment in their operating room is removed, and the requirement that end stage renal disease facilities be in compliance with Chapters 20 and 21 of the Life Safety Code are also removed as those same requirements are in most state and local fire safety codes. 

Intermediate care facilities for individuals with intellectual disabilities (ICF/IID) (up until this regulation, known as intermediate care facilities for individuals with mental retardation ICF/MR) will no longer have an open-ended provider agreement and they will be surveyed at least once every 15 months and on average every 12 months. ICF/IID will now be on the same survey schedule as skilled nursing facilities. 

The phrase “mentally retarded” will be replaced with the phrase “individuals with intellectual disabilities” throughout the regulations. The term “recipient,” which is used to describe individuals who receive Medicaid, will be replaced by the word “beneficiary” throughout the regulations. 

CMS indicated in both Final rules that it will continue to look at removing other redundant, outdated and obsolete regulations and welcomes suggestions from providers and the general public.

Massachusetts’ Health Reform Successfully Expands Coverage/Access to Care

“Given the parallels between Massachusetts’ health reform and federal reform, the state’s experience can provide valuable insights into the future of [Patient Protection and Affordable Care Act (PPACA)(P.L. 111-148)] implementation,” according to a brief issued by the Kaiser Family Foundation (Kaiser). The Massachusetts comprehensive health reform, which was signed into law in 2006 by then Governor Mitt Romney, was designed to provide near-universal health insurance coverage for state residents with a plan to promote shared individual, employer, and government responsibility. Kaiser found that Massachusetts succeeded in expanding coverage to nearly all state residents through a series of reforms, including the expansion of public programs and the creation of a health insurance exchange.  Kaiser’s brief examined the state’s experience with coverage and access to care over the last six years and ongoing efforts to deal with high health care costs.

According to the brief, Massachusetts experienced an unprecedented drop in the number of uninsured within a year of implementation and continues to retain the lowest rate of uninsured residents in the country. While the state has sustained gains in coverage, the rate of uninsured has continued to climb nationally. Kaiser noted that the gains in coverage since health reform have been most notable for nonelderly adults through the state’s health plans, Commonwealth Care and Commonwealth Choice Health Care Insurance Programs. The subsidized coverage is offered through the Commonwealth Care Health Insurance Program and nonsubsidized coverage is offered through the Commonwealth Choice Health Insurance Program. Employer-sponsored insurance, however, remains the dominant source of coverage for Massachusetts residents, Kaiser noted.

Kaiser reported that between 2006 and 2010, more adults received preventive care services and reported a usual source of care than before health reform. In addition, the number of unnecessary emergency department visits and hospital inpatient stays fell, suggesting improvements in health care delivery. In the same period, fewer adults reported high out-of-pocket spending and unmet needs for care because of costs. The demand for health care, particularly in underserved communities, however, has increased with more residents gaining insurance coverage. According to the brief, the state continues to improve residents’ access to care by increasing primary care recruitment programs, increasing medical school enrollment for students committed to primary care, and creating public-private loan repayment for physicians and nurses who agree to practice in underserved areas.

Massachusetts has utilized broad networks of community partners successfully for outreach and enrollment awarding $11.5 million in grants to community health centers, hospitals, and nonprofits to assist residents in obtaining coverage during the first four years of reform, according to the brief. Although the state did not include additional appropriations for outreach in the 2012 budget, private foundations continue to provide funding for outreach and enrollment programs. Six in ten families have enrolled in public coverage with the assistance of a community-based partner or provider. In addition, early enrollment in Commonwealth Care was jumpstarted by the state automatically enrolling residents who had received uncompensated care at hospitals or community health centers, Kaiser said.  Massachusetts has continued to adopt enrollment simplifications and make greater use of technology, which state officials report was critical for keeping pace with applications since health reform.

Affordability continues to be an issue with nearly half of the uninsured reporting having access to employer coverage but not enrolling due to costs, Kaiser said, noting that “[p]er capita health spending is 15 percent higher than the national average and although premium growth has slowed in recent years, the state has the highest individual market premiums in the country.” The state has addressed cost containment through provider payment reform including additional health reform legislation to initiate cost containment and delivery system improvements as well as to create a Special Commission on the Health Care Payment System. In 2009, the Commission released final recommendations on the development of a transparent payment methodology and endorsed a shift away from a fee-for-service system to a global payment system where providers work together to share the responsibility for the patient’s care. Since the recommendation, the Governor and legislature have proposed such cost containment legislation.

Although federal reform was modeled after Massachusetts’ health reform, there are key differences that the state will be required to address including “significant interagency coordination, the potential shifting of existing programs, and the creation of new information technology systems,” Kaiser concluded.


Health Care Expenditures Rise Despite Drop in Utilization

According to the Health Care Cost Institute (HCCI), a nonpartisan research center, the growth in health care spending from 2009 to 2010 was primarily the result of higher prices rather than increases in utilization or intensity of health care services. HCCI released its first report on May 21, 2012, an analysis of data on 3 billion claims processed by carriers of employer-sponsored insurance (ESI) for beneficiaries under age 65. The carriers, who insured 33 million ESI beneficiaries in 2010, gave HCCI access to de-identified claims information so that researchers could study expenditures for privately insured patients. Most previous research on health care spending has been based on expenditures of government programs such as Medicare and Medicaid.

The study compares spending and utilization on four types of services: inpatient admissions, outpatient visits, procedures performed and prescription drugs. The drugs were classified by therapeutic class. The insurers’ expenditures were measured in payments per beneficiary, while utilization was measured in services per 1,000 beneficiaries. The beneficiaries’ expenditures were measured in absolute dollars, as a percentage of the total cost, and per capita. Spending for premiums was not addressed.

Key findings:

Health care prices continued to rise faster than inflation. The average total spending per beneficiary was $4,255 in 2010, an increase of 3.3 percent over the previous year—and more than twice the 1.6 percent increase in the consumer price index. Both insurers and beneficiaries paid more for each service.

Spending in every category of service rose between 2009 and 2010. As a result, total spending by the insurers grew even though the number of insured beneficiaries declined 0.8 percent, from 157.8 million to 156.5 million between 2009 and 2010.

Prices rose even when utilization fell. Beneficiaries of ESI used fewer inpatient hospitalizations in 2010 (60.9) than in 2009 (63.0). This 3.3 percent decline was consistent with the previous three years. Inpatient admissions of ESI beneficiaries have dropped nearly 7 percent since 2007 (65.4 per 1,000 insured persons). But average spending per capita on inpatient admissions grew from $13,954 to $14,662. Outpatient facility visits per 1,000 beneficiaries also fell from 321 in 2009 to 311 in 2010 (a 3 percent decrease), but the average cost per visit rose 10 percent.

When utilization or intensity increased, prices increased faster. The researchers measured both the raw number of visits or procedures and the complexity or intensity, and they considered the extent to which changes in the intensity of services, or case mix, affected payments. Measuring the intensity or complexity of services using relative weights, they found that the intensity of some services, such as outpatient procedures and professional procedures, actually had declined by 2.3 percent and 0.5 percent, respectively. But the prices for the services continued to grow; what the researchers called the “intensity-adjusted price” actually rose.

And when the intensity of services increased because the services had become more complex, expenditures for each service rose faster. The intensity of inpatient hospital admissions grew 0.7 percent, but the price per service grew by 4.6 percent in 2010. HCCI found that even after adjusting for increased complexity of services, the prices of several services rose significantly—emergency room services by 7.1 percent, administered drugs by 7.6 percent, and radiology services by 8.5 percent.

Out-of-pocket costs rose more than insurers’ payments. Beneficiaries’ share grew both absolutely and as a percentage of the total cost of services. Insurers’ per capita payments rose 2.6 percent in 2010.The average out-of-pocket cost for inpatient admission was $700 in 2010, an increase of 10.7 percent over 2009. Beneficiaries’ spending for outpatient facility visits rose by the same percentage. And their out-of-pocket costs for procedures rose 8.3 percent for outpatient services, 7.8 percent for professionals’ fees. Overall, the amount of total spending paid by beneficiaries grew 3.7 percent in 2010.

Beneficiaries paid a larger percentage of costs for services in 2010. In 2009, insurers paid 84.4 percent of covered costs for ESI beneficiaries, while the beneficiaries themselves paid 15.6 percent. In 2010, however, the insurers’ share was 83.8 percent, while the beneficiaries paid 16.2 percent.

HCCI’s report says clearly that more of the increase in health care spending for individuals with ESI results from higher prices rather than increased utilization or intensity of services. What it doesn’t tell us is why. There is no information about providers’ costs, so we don’t know whether the higher prices result from, for example, increased malpractice or casualty insurance premiums, high costs of investing in electronic record systems, or compensation for executives and consultants.

HCCI’s use of a per capita measure of beneficiaries’ share of spending doesn’t reflect anyone’s reality. Especially not Amber Cooper’s.

Advisory Panel Recommends Against Anticoagulant Drug Approval

On May 23, 2012, an FDA advisory panel narrowly recommended against expanding the use of the Johnson & Johnson drug Xarelto on Wednesday, citing concerns that bleeding outweighed evidence that the drug helped reduce the risk of blood clots in patients with serious heart problems.  Xarelto is an anticoagulant drug that was approved in 2011 to prevent blood clots in patients undergoing knee or hip replacement surgery and for people with atrial fibrillation.  Johnson & Johnson is seeking to expand the use of the drug to patients with acute coronary syndrome (ACS).  Current treatments for the condition include use of aspirin plus clopidogrel (Plavix).

Several members of the advisory panel were concerned about the idea of adding a third drug to the standard treatments, and said the benefits of doing so did not outweigh the risks.  More than 15 percent of the study’s participants had dropped out, calling into the question the breadth of the data acquired.  As reported in the media, in a clinical trial of ACS, people who took a 2.5 milligram dose of Xarelto in addition to an aspirin and another anti-platelet medication had a 15 percent lower risk of having a stroke or dying from a heart attack than people just taking the other medicines.  However, the patients taking Xarelto had twice as much risk for a major fatal bleeding compared to the older drugs, while other kinds of bleeding were three times higher with Xarelto.  The overall rates were still low – only 0.1 percent of patients had fatal bleeding while taking the drug and 2 percent had some kind of bleeding.

Xarelto would join a slate of other drugs that prevent strokes and other dangerous conditions caused by blood clots, in a market worth up to $10 billion in annual sales, according to Wall Street forecasts.  Investors have tried to bet on which of the three will become the dominant player in a race between Xarelto, Eliquis from Pfizer Inc and Bristol-Myers Squibb Co, and Boehringer Ingelheim’s Pradaxa.

Xarelto’s rivals failed in treating patients with ACS, giving Johnson & Johnson a potentially distinct market – although stroke prevention in atrial fibrillation is seen as the most lucrative use for the new drugs.