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CMS Announces Five More Settlements Under Self-Referral Disclosure Protocol

May 22, 2013 by Leave a Comment

CMS has announced five settlements with hospitals resolving alleged violations of the self-referral law. The hospitals disclosed the arrangements under the agency’s self-referral disclosure protocol (SRDP), created pursuant to section 6409 of the Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) .

On March 29, 2013, CMS settled violations disclosed by an acute care hospital in Louisiana for about $317,600. The hospital’s arrangements with individual physicians, physician practice groups, and staffing organizations did not qualify for the exceptions for personal services or isolated transactions.

A February 2013, settlement with a South Carolina general acute care hospital involved arrangements with physicians and physician group practices that did not meet the requirements for exceptions for fair market value, office space rental, and personal service arrangements. The hospital agreed to pay $256,000 to resolve the violations.

On March 7, 2013, CMS settled violations disclosed by a Massachusetts acute care hospital for $199,400. The hospital’s arrangements violated the requirements concerning the definition of “entity,” office rental, and services of physicians and professional staff, including the interpretation of electrocardiograms.

CMS also announced two May 7, 2013, settlements of self-referral violations. The first involved a rehabilitation hospital that violated the ownership requirements and failed to satisfy the “whole hospital” exception. The Texas facility agreed to pay about $23,700. A Minnesota also settled recruitment violations for $760.

Filed Under: Centers for Medicare and Medicaid, HHS, Medicare, News, Patient Protection & Affordable Care Act

Economic Slowdown Responsible for Delayed Decrease in Health Care Spending

May 22, 2013 by Leave a Comment

What causes health care spending to go up and down?  A recent study by the Kaiser Family Foundation has found that the economy has a dramatic effect on the changes in health care spending.  Health care spending is very comparable to any other consumer good:  when the economy is good, we spend more on health care; when it is poor we spend less.  The study found, however, that those changes in health care spending are not immediate and lag behind the economy by as much as six years.

Changes in Rate of Increase

Policy analysts have been perplexed at the reduced rate of  increase in health care spending  in recent years.  CMS’ Office of the Actuary has reported the decline in health care spending to be about 3.9 precent per year since 2009.  The Congressional Budget Office has lowered its forecast of future spending by Medicare and Medicaid in future years based on this recent reduction in the increase in health care spending.  In 2012, national health expenditures amounted to an estimated $2.8 trillion.   Because this number is so large, a small change in the growth rate can result in a savings of hundreds of millions of dollars. The Kaiser Family Foundation pointed this out by saying a “lowering of the growth rate by one percentage point on average over the next decade means that total health spending would be almost half a trillion dollars lower than expected 10 years from now.”

Economy Predicts

From 2001 to 2003, health care spending peaked at an average annual increase  of 8.8 percent.  Since that date, the rate of health care spending has decreased. The Kaiser Family Foundation research found that “inflation in the current year, as measured by the Gross Domestic Product (GDP) deflator, as well as inflation in the prior two years” and “the growth in real GDP in the current year as well as the GDP growth in prior five years” was a way to predict the rate of increase in health care spending.  Its analysis found that these factors accounted for 85 percent of the variation in health care spending from 1965 to 2011.

Time Lag

“More surprising” writes the Kaiser Family Foundation is that these effects can take up to 6 years before they start influencing the rate of health care spending. The researchers speculated that the causes for this delay might include: (1) the use of insurance which protects people from the full cost of health care for a period of time; (2) consumers cutting back on health care spending only after they have cut back on spending on other items and services; (3) employers delaying  immediate changes to their health care policies for a year or two after economic changes; (4) the inability of hospitals, which account for a large percentage of health care spending, to address changes in their spending for a while after the economy changes; and (5) legislated changes as a result of economic changes may not be implemented for a number of years.

The analysis indicated that the health care spending should have decreased by 3.6 percentage points from the peak. In reality, the average decrease in health care spending was 4.2 percent during that time period, 2008 to 2012.  From these figure it can be surmised that the economic downturn was responsible for 77 percent of the decrease in health care spending.  What accounted for the other 23 percent? Kaiser attributes changes to the health care system, like higher deductibles and other cost sharing mechanisms to slow the use of services, as well as increased use of managed care and delivery system changes.

Future Growth

In the future, the Kaiser Family Foundation’s analysis predicts that a health care spending increase of 3.5 percent by 2019 can be expected due to growth in the economy.  Adding in other factors, the analysis predicts that the increase in health care spending could remain relatively flat for the next couple of years and then grow by 7.1 percent at the end of the decade. It is unlikely that double-digit increase in health care spending is likely to return, writes the Kaiser Family Foundation.

“There is a very strong statistical link between business cycles and inflation and health spending,” said the Kaiser Family Foundation.  The analysis warns though that, “because the effect of economic activity on health prices and utilization is gradual and highly lagged,  it is not always easy to discern the relationship just by looking at a single year.”

Filed Under: Centers for Medicare and Medicaid, Congressional Budget Office, Government Document, Health care spending, HHS

States’ Debate on PPACA Implementation Puts Politics Above Practicality

May 21, 2013 by Leave a Comment

The debate over Medicaid expansion and cooperation with the health insurance marketplaces continues. These two provisions are key to the successful implementation of health insurance reform under the  Patient Protection and Affordable Care Act (PPACA) (P.L. 111-148) and the Health Care and Education Reconciliation Act (HCERA) (P.L. 111-152).  Although some Republican governors reluctantly decided that Medicaid expansion was in their states’ best interests, other members of their own party are determined to see PPACA fail regardless of cost.

Republican Arizona Governor Jan Brewer has campaigned for expansion for months with little success. As the legislature debated on May 16, 2013, two leaders from her party legislators brought up competing proposals. Senate President Andy Biggs’ bill would direct  the state’s Medicaid agency, the Arizona Health Care Cost Containment System (AHCCCS) to apply for an extension of its existing waiver, which provides coverage to a limited number of adults with incomes at or below the federal poverty level (FPL). It also would appropriate about $135 million for services to childless adults. If the waiver extension is not approved, Biggs suggests funding care for the existing number of childless adults, but not expanding it, and paying for it with the state’s rainy day fund. Brewer, on the other hand, says that fund should be saved for a rainy day.

House Speaker Andy Tobin would put the question to the voters. It is reported that his bill would require a constitutional amendment to implement Medicaid expansion and stop the expansion if either federal  funding or state revenue is insufficient. Yet another proposal would simply drop the existing benefits for childless adults, causing about 60,000 people to lose their coverage. Brewer calls that alternative “morally repugnant.” The debate is expected to be contentious. And Arizona can’t pass a budget until it is resolved.

The Florida legislature ended the session without passing any legislation on the Medicaid expansion. So the debate there is over for the year unless Governor Scott calls a special session. One interesting wrinkle in the argument might be worthy of attention. The House Republicans proposed, as an alternative to the Medicaid expansion, a bill that would have provided for a subsidy for the purchase of limited coverage from a state-operated marketplace for a premium of $25 per month. But the House members are eligible for comprehensive health insurance available to all state employees, for which they pay $8.34 per month for individual coverage, or $30 for family coverage. In 2012, they voted to keep this privilege.  It is reported that the Senate voluntarily gave  up the discount; now they pay the same premium as rank-and-file state employees: $50 per month for individual coverage or $180 per month for family coverage.

About half the states chose not to establish their own health insurance exchange, now called marketplace, under PPACA. A few have gone even farther down the road of resistance. In Missouri, voters passed a ballot measure that bars the establishment of a state exchange unless either the legislature or the voters have passed a law authorizing it. What’s more, no state employee may “provide resources or assistance of any kind” to the establishment of an exchange by the federal government without statutory authorization unless specifically required to do so under federal law. And any taxpayer has standing to sue to enforce the law.

Filed Under: Health care spending, Health Insurance Exchange, Legislation, Medicaid, Medicaid, News, State Level, Uninsured
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