2011 September

Archive for September 2011

Arizona Court of Appeals to Consider Appeal of Reductions in State Medicaid Program

Arizona Court of Appeals to Consider Appeal of Reductions in State Medicaid Program Written by Bob Herman | September 15, 2011

The Arizona Court of Appeals will consider the appeal of a judge’s ruling that the state can legally shrink the enrollment in the Arizona Health Care Cost Containment System, the state’s Medicaid program, to balance its budget, according to an Associated Press/Washington Post report.

Arizona recently placed new enrollment caps for people, such as childless adults, enrolling in the AHCCCS for the first time or for people re-enrolling in the program.

According to the report, public interest law firms said the limits violated state constitutional protections for voter-approved laws. In 2000, a ballot measure that increased eligibility for the Medicaid program was passed.

However, last month a trial judge said the state does not have an “enforceable duty” to fund the ballot measure that passed.

http://www.beckershospitalreview.com/racs-/-icd-9-/-icd-10/arizona-court-of-appeals-to-consider-appeal-of-reductions-in-state-medicaid-program.html

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HHS Releases Final Rule for Medicaid RAC Program

This article highlights some of the aspects of the PPACA that will lead to increased fraud, such as the self attestation.

R&B Solutions’ RAMP software automates the Medicaid eligibility process and provides the user with all the forms in electronic format required to complete the application for whichever program the patient qualifies for, whether that be Medicaid, Crime Victims, or the hospital’s own Charity Care program.

HHS Releases Final Rule for Medicaid RAC Program Written by Bob Herman | September 14, 2011

The Department of Health and Human Services released its final rule for the Medicaid Recovery Audit Contractor program, which is expected to save taxpayers $2.1 billion over the next five years, of which $900 million will go back to states, according to an HHS news release.

The new Medicaid RAC program, part of the Patient Protection and Affordable Care Act, is based off the Medicare RAC program, which has recovered nearly $670 million in overpayments so far in 2011.

Provisions of the Medicaid RAC program’s final regulations include the following:

• States may exclude Medicaid managed care claims from review by Medicaid RACs. • States must coordinate the recovery audit efforts of their Medicaid RACs with other auditing entities. • States must set limits on the number and frequency of medical records to be reviewed by the Medicaid RACs subject to requests for exceptions made by the RACs. • Medicaid RACs cannot review claims that are older than three years from the date of the claim, unless it receives approval from the state.

Today’s announcement regarding the Medicaid RACs also comes as Vice President Joe Biden summoned a cabinet meeting to discuss waste reduction at federal agencies.

http://www.beckershospitalreview.com/racs-/-icd-9-/-icd-10/hhs-releases-final-rule-for-medicaid-rac-program.html

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Obama’s Plan to Cut Medicare, Medicaid to Close Deficit Draws Criticism From Democrats, Reform Supporters

The fact that the government keeps wanting to cut from Medicaid payments, yet have increased the number of eligible people by 16 million, demonstrates how severely they are undercutting the hospitals.

Obama’s Plan to Cut Medicare, Medicaid to Close Deficit Draws Criticism From Democrats, Reform Supporters Written by Jaimie Oh | September 15, 2011 President Obama’s proposal for potential cuts to Medicare and Medicaid as a means of paying for his recent jobs plan and paring down the deficit have drawn ire from fellow Democrats and the hospital industry, according to a New York Times report.

Last week, President Obama said he would use a variety of measures to pay for his new $450 billion jobs plan, including trimming Medicare and Medicaid and deepening cuts in long-term spending that would be chosen by the debt reduction Congressional committee.

President Obama has yet to set forth details of his proposal for deficit reduction, which he already confirmed would include additional healthcare cuts in some form. The plan is expected to be presented next week to the debt reduction committee.

The discussion of even more cuts to federal healthcare programs is worrisome for hospitals, which have already agreed to $155 billion in Medicare reimbursement cuts over 10 years under President Obama’s healthcare reform law.

Paul Levy, former president and CEO of Beth Israel Deaconess Medical Center in Boston, calls into question the true impact of decreased spending in healthcare programs on the country’s deficit crisis, reiterating, as he has done once before on his blog, “reductions in appropriations might reduce costs to the federal government, but they do not reduce the underlying costs of care,” he says.

Mr. Levy highlighted the irony of President Obama’s push for both Medicare and Medicaid cuts and his jobs creation proposal.

The head of the New York Hospital Association explains [in the New York Times piece]:

Further cuts in the growth of Medicare and Medicaid would not only impair access to care, but also lead to job loss in the health care industry, directly contravening the president’s goal of job creation.

I have made this point, too:

With 50% of American hospitals operating at a deficit right now, it is hard to imagine how a reduction in federal payments . . . deals with the cost problem.

http://www.beckershospitalreview.com/news-analysis/obamas-plan-to-cut-medicare-medicaid-to-close-deficit-draws-criticism-from-democrats-reform-supporters.html

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Negotiating Premiums Doesn’t Lower The Cost Of Healthcare

This article highlights the difference between Utah and Massachusettes, both of which have a Health Insurance Exchange, but they set it up differently: in a sense, Massachusettes became the purchaser and negotiated rates whereas Utah did not and simply allowed all insurance companies licensed in the state to come aboard. The latter of which may prove to be the more efficient system.

The most important sentence of this piece is this:

“But although health insurance premiums are the most obvious target, they’re really just a symptom of the real problem, which is the rising cost of healthcare and the increasing utilization of healthcare.”

Negotiating Premiums Doesn’t Lower The Cost Of Healthcare

By Louise on September 14th, 2011

A recent Colorado Springs Gazette article about the health insurance exchange development process includes a mention of Colorado’s AARP chapter being unhappy that neither the exchange board nor the exchange’s legislative oversight committee has the power to negotiate with health insurance carriers to reduce health insurance premiums. At first glance, that sounds like a legitimate complaint, and one might wonder if it would be in the public’s best interest to have the health insurance exchange committees be able to negotiate prices with the carriers.

But I have to wonder, would it really do any good? Or would it just end up being a “negotiation” in name only?

Health insurance prices keep climbing, and people keep increasing their deductibles and out-of-pocket exposure in order to keep their premiums affordable (we raised our family’s HSA-qualified plan’s deductible to $7000 earlier this year, in order to lower our premiums, and many of our clients are opting for higher deductibles too). But although health insurance premiums are the most obvious target, they’re really just a symptom of the real problem, which is the rising cost of healthcare and the increasing utilization of healthcare.

Much of the focus during the last few years of “healthcare reform” has actually been on health insurance reform. This is unfortunate, because there are many other aspects of our healthcare system that are badly in need of reform. The health insurance industry isn’t as profitable as people tend to think, and the bulk of our premium dollars are spent on medical claims. It’s true that health insurance premiums increase each year, but the Colorado Division of Insurance has an extensive process that they use to make sure that the rate increases are justified. And despite that comprehensive review process to make sure that there are no errors or unjustified rate increases, the premiums continue to increase. Because the cost of healthcare continues to increase.

The MLR rules that went into effect at the beginning of 2011 require health insurance carriers to spend at least 80 cents of every premium dollar on medical claims (85 cents for group plans that cover at least 50 people). Many carriers were already at or near that level anyway, but the implementation of that rule has guaranteed that most of our premiums are being spent on medical care. I contend that the rest of the healthcare industry could also use similar guidelines in order to keep costs in check.

How would it help to have health insurance exchange boards negotiating with health insurance carriers to try to lower premiums – without addressing the root problem, which is the ever-increasing cost of healthcare? If the carriers were to agree to lower premiums, they would have to cut back on how much they spend in claims, since that’s where most of the premium dollars go (you can only trim admin costs so much). That would mean either cutting back on benefits or paying providers less money for the work they do. Neither of those options are just between the carriers and the exchange board. Cutting back on benefits directly impacts the insureds, and cutting back on reimbursements directly impacts providers. Either way, it’s not something that can be realistically “negotiated” between health insurance carriers and health insurance exchange boards. The other major players in the healthcare industry (Pharma, hospitals, doctors, device makers, etc.) have to get involved too.

Much of the focus of the healthcare reform rhetoric has been on health insurance (availability, premiums, etc.), and some important issues have been addressed in the process. But we cannot continue to focus primarily on the cost of health insurance (or try to artificially lower it) without reducing the cost of healthcare.

http://www.healthinsurancecolorado.net/blog1/2011/09/14/negotiating-premiums-doesnt-lower-the-cost-of-healthcare/

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RAND Study: Rising Healthcare Costs Negates Americans’ Income Gains

This study reflects two things:

1) the government may not have solved the health care problem but may in fact have added to it, and

2) it seems rising costs is likely the problem, not a lack of coverage.

RAND Study: Rising Healthcare Costs Negates Americans’ Income Gains Written by Bob Herman | September 08, 2011

Rising healthcare costs over the past decade are leaving median-income American families of four with only $95 per month in extra income, after accounting for taxes and price increases, according to a RAND Corporation study.

Between 1999 and 2009, total spending on healthcare in the United States jumped from $1.3 trillion to $2.5 trillion. Annual healthcare spending per person grew from $4,600 to roughly $8,000, the study said.

The study noted healthcare costs are visible to American families in two ways: through monthly premiums for private insurance and through out-of-pocket costs associated with co-payments, deductibles, medications and other items. However, there are two other ways healthcare costs affect families that are not as visible: the employer’s share of the family’s premium for private health insurance (effectively reducing an employee’s compensation) and federal and state taxes that go toward Medicare, Medicaid and the military healthcare system.

“Accelerating healthcare costs are a primary reason that the so many American families feel like they are just treading water financially,” said David Auerbach, the study’s lead author and an economist at the RAND Corporation, in a release. “Unless we reverse the trend, Americans increasingly will notice that health costs compromise their other spending options.”

http://www.beckershospitalreview.com/news-analysis/rand-study-rising-healthcare-costs-negates-americans-income-gains.html

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Recognizing Excellence

June 20, 2011

Recognizing Excellence By Elizabeth S. Roop For The Record Vol. 23 No. 12 P. 10

HFMA’s MAP Award winners chart a course toward revenue cycle nirvana.

Faced with declining reimbursement levels, new payment models, and multiple unfunded mandates, hospital finance departments are under tremendous pressure to maximize revenue cycle performance. At the same time, they are being asked to scrutinize processes to identify ways to streamline operations to reduce costs and improve efficiencies.

Until 2009, most finance departments labored in relative anonymity as other hospital personnel received industry accolades for everything from innovation and quality to performance. That all changed when the Healthcare Financial Management Association (HFMA) introduced the MAP (Measure. Apply. Perform.) Award recognizing excellence in revenue cycle management.

Finance is “always doing more with less, but compliance and regulations must still be followed. They also have the ability to set the tone for the customer experience in addition to ensuring positive financial outcomes,” says Suzanne Lestina, FHFMA, CPC, HFMA’s director of revenue cycle MAP. “There has never really been anything in the industry that identified hospitals that have been able to create high-performing revenue cycles while maintaining high patient satisfaction outcomes.”

Spotlighting Revenue Cycle Performance The HFMA’s MAP program is an offshoot of the organization’s Patient Friendly Billing project, launched to promote clear, concise, correct, and patient-friendly financial communications. It started when the HFMA identified hospitals that performed exceptionally well on the core competencies necessary for patient-friendly billing protocols to be sustainable and drive real value.

At the same time, the organization formed the key performance indicators task force, consisting of chief financial officers (CFOs) and revenue cycle leaders, to create standard metrics, or keys, to measure revenue cycle performance. In all, 19 keys have been published, with six more slated for release at ANI: The Healthcare Finance Conference this month. These keys enable consistent reporting and peer-to-peer comparison of metrics across the revenue cycle.

The decision was then made to recognize 14 high-performing hospitals at the 2009 ANI conference, and the MAP Award was born.

“We had no idea, really, that we were opening Pandora’s box,” says Lestina. “Providers became very excited at the opportunity to achieve the [MAP] designation. Many wanted to apply immediately. One CFO said he had incorporated MAP into the revenue cycle goals for 2010.”

The HFMA received applications from approximately 150 hospitals for the 2011 award program. According to Lestina, the 12 winners shared four common themes, including a significant focus on top-down collaboration through shared accountability for revenue cycle performance. Also prominent were a focus on cost reductions and a shared understanding that the revenue cycle needed to succeed for the facility to achieve its operational and clinical goals.

“We found that high-performing hospitals have a much better culture of collaboration where they elevate the revenue cycle. … We’re seeing the integration of the revenue cycle outcomes into goals and objectives, even compensation, of the entire organization from the top down,” Lestina says. “There is also a significant focus on improving patient satisfaction with their experience. … That’s a significant cut point [in the evaluation process]. Hospitals need to not only do well financially, but patients have to have a high satisfaction level.”

In fact, to even be considered for the MAP Award, a hospital must have a patient satisfaction rating of at least 75%. Winning hospitals also share a low number of days in accounts receivable (AR), an accelerated billing cycle, and high point-of-service cash collections.

This year, the hospitals that rose to the top all shared innovation in their approach to financially clearing patients as quickly as possible, which Lestina suggests is related to addressing changes under healthcare reform. In all cases, hospitals had strategies in place to identify any third-party payment sources, check a patient’s propensity and ability to pay, and get those who qualified covered under charity care or other financial assistance programs.

“What they are trying to do is reduce the anxiety and confusion over the process by taking care of the financial component as quickly as possible,” Lestina says. “They are more efficient at identifying patients who have the ability to pay vs. those who don’t. While this is not necessarily unique, these hospitals have brought it to a more efficient level … the whole component of trying to create a better patient financial experience is unique with these organizations in terms of the efficiency they are able to create around that.

“The use of technology is also apparent with these high performers. They know they have limited resources, so they focus technology on those areas where it will bring most value,” she adds.

Revving the Revenue Cycle Concord Hospital, one of the 2011 MAP winners, utilizes technology to improve its revenue cycle performance. The 295-bed regional medical center is the second busiest acute care hospital in New Hampshire, recording 16,800 admissions and more than 68,000 emergency department visits in 2010.

According to Kevin Hunt, Concord’s senior director of revenue management, a combination of people and processes gets credit for the hospital’s high-performing revenue cycle. But what really sets Concord apart is the fact that 93% of payments are received electronically. This has allowed the organization to take several additional steps that have dramatically improved the claims process.

For example, the hospital has set up a database to track and analyze all claim status 4 denials. By addressing issues contributing to denials, Concord has been able to “mitigate that volume downward so that our claims became cleaner and cleaner. In 2010, we submitted a little over 900,000 claims and had only 31,000 claim status 4 rejections, resulting in just 0.38 of 1% of provider-liable adjustments. That’s remarkably low,” Hunt says.

A log of all claims is reviewed monthly, and steps are taken to resolve any issues. Currently, the facility is monitoring more than 1,200 edits, excluding correct coding initiative and outpatient code editor edits.

Concord also uses a common registration for its inpatient and outpatient services as well as across the 18 physician offices that have been brought on as hospital outpatient departments since 2005. This means there is a shared responsibility for maintaining the master patient index’s data integrity, enabling some offices to directly schedule diagnostic services for patients.

The common registration system creates a shared medical record that is available across the system, which in turn allows Concord to generate a single bill encompassing all services a patient receives regardless of where in the system those services were rendered. Billing is handled through a single office, and staff are trained to do both professional and technical billing of services.

Finally, Concord has made significant gains in managing its charity care program. In 2005, it provided approximately $5 million in charitable services. Last year, the amount totaled more than $32 million.

“The most remarkable thing about all that is that bad debt in 2005 was about $18 million. Last year, it was just over $22 million. So we’ve seen an exponential increase in what we’re doing for financial assistance, but as a percentage of gross, it went down over that same period of time, so we’re not stretching the financial resources of the organization in doing so,” says Hunt. “Part of our fiduciary responsibility in being a not-for-profit hospital is making sure we are aggressively—within the resources available—making sure that we are maximizing people’s access to medically necessary services.”

Part of Concord’s strategy for improving charity care processes was to evaluate who was accessing the program and how often. This revealed a patient population that had been using the program, which awards assistance in six-month intervals, for as long as two years.

To better care for these patients who were using Concord as an insurer of last resort, the hospital moved them into medical homes where their health could be more closely monitored. This provided an opportunity to reduce the cost of care for the minority of patients who remained on financial assistance for an extended period of time. Concord has also stepped up its evaluation of financially assisted patients’ ability to pay to involve them in the responsible use of medical care. On another front, it is working to get those who qualify enrolled in Medicaid.

“The strategy that we have employed over the past several years has really been a passion for developing a world-class revenue cycle,” Hunt says. “What really sets us apart is the whole hospital-based physician office component as well as our denial management processes. Everybody looks to leverage technology, point-of-service collections, and driving down AR days. I think those things really did make us unique and continue to do so. They also provide us with some of the greatest opportunities moving forward.”

Integration and Collaboration For Saint Francis Health System, a smooth-running revenue cycle requires the integration of and active collaboration between multiple departments, including HIM, case management, patient accounting, patient access, and managed care. In addition to monthly meetings and weekly interactions, the hospital launched a dashboard in 2009 that allows departments to track their own activities and those of their peers, analyze issues and gaps, and take corrective action before the revenue cycle is impacted.

“What we find in a lot of organizations is that all these departments don’t necessarily report up through the same person, so each has different goals and strategies. They don’t have the same strategic plans,” says Eric Schick, vice president of finance for the Tulsa-based three-hospital system with multiple outpatient diagnostic and surgery centers.

For example, case management’s goals may be tied to length of stay, case mix, etc, “so resources are pulled that way instead of toward looking at denials and getting information out to payers,” Schick says.

Another example is within the HIM department. Accounting’s goal may be to reduce days in AR to fewer than 30. However, achieving that goal is impacted by HIM’s struggle to get physicians to complete the documentation they need to accurately and compliantly code for billing. Or they may be short coders for the record volume and unable to invest in outsourcing some of the work to alleviate backlogs.

“All of these things dramatically affect the revenue cycle, so you have to get in front of physicians and explain to them the importance of completing medical records and the timeliness of responding to inquiries,” Schick says.

By emphasizing a top-down collaborative approach to resolving these issues, the various departments are able to see how each impacts the revenue cycle. It facilitates a united front and instills a high level of departmental accountability.

Central to this integrative approach is the dashboard that allows each department to run performance reports on key indicators and compare the data to those produced by other departments. Schick says it started with patient accounting and quickly expanded as it became clear just how critical each individual department’s performance was to the overall revenue cycle.

“It is amazing how tuned-in management is with [the dashboards] because they can see what the revenue cycle has been able to do,” he says. “All the dashboards are public information, so each manager can look at the other departments, which keeps everyone accountable. They answer a lot of questions and give us the ability to predict what will happen to our cash flow because we know what is happening upstream.”

Each dashboard is designed to measure metrics that are specific to that department. For example, patient accounting monitors billing and collections with a goal of keeping Medicare AR over 60 days to less than 10% and credit balances over 90 days to less than 0.5%. For HIM, metrics measure the quality of coding, medical records, and transcription, while patient access monitors centralized scheduling, verification and authorization, admitting, and monthly cash collection.

Managed care’s dashboard measures the speed and accuracy of payments made by each payer and compares them with the contractual requirements. Further, the department is charged with meeting monthly with every managed care payer to go over reimbursement performance.

The dashboard “shows everyone that they have skin in the game,” Schick says.

Since focusing on a highly collaborative approach to maximizing revenue cycle performance and introducing the dashboards, Saint Francis has seen some impressive changes. Most significant is the drop in AR days to an average of between 22 and 24 compared with a benchmark from Standard & Poor’s (S&P) of between 45 and 50 days. That has earned the health system an AA+ from S&P, one of only four hospitals in the nation to earn that distinction. It has also achieved an Aa2 rating from Moody’s.

The cash collections goal was set at training 60 days net revenue, a mark that has been exceeded by 100% for the past year. That, in turn, drives down AR days. Finally, next year, bad debt as a percentage of gross charges is projected to hit its lowest point in 15 years. For 2011, it is at 2.8%.

“When you look at that in comparison to a lot other organizations, others have seen a huge increase in bad debt that we have not,” Schick says.

Achieving the level of collaboration necessary to realize the significant benefits of an efficient revenue cycle was not without its hurdles. Schick notes that the biggest challenge was simply getting to the point where departments were communicating regularly. However, the outcomes have been worth the struggle.

“It takes a lot of effort to get all the directors in a room every two weeks, to develop an agenda, and get everyone to show up at that meeting and commit to it. That’s a big piece,” he says. “But we are really learning something about each other by coming together.”

— Elizabeth S. Roop is a Tampa, Fla.-based freelance writer specializing in healthcare and HIT.

2011 MAP Award Winners • Baptist Hospital of Miami, Miami, Fla.

• Baylor Medical Center at Irving, Irving, Tex.

• CHRISTUS Health – St. Catherine Hospital, Katy, Tex.

• Concord Hospital, Concord, N.H.

• Geisinger Medical Center, Danville, Pa.

• Legacy Good Samaritan Medical Center, Portland, Ore.

• Lynchburg General Hospital, Lynchburg, Va.

• Princeton Baptist Medical Center, Birmingham, Ala.

• Saint Francis Hospital, Tulsa, Okla.

• Sharp Grossmont Hospital, La Mesa, Calif.

• Spectrum Health Grand Rapids Hospital, Grand Rapids, Mich.

• Texas Health Presbyterian Hospital Plano, Plano, Tex.

http://www.fortherecordmag.com/archives/062011p10.shtml

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Colorado to Reduce Medicaid After Underestimating Impact of Expansion

Colorado to Reduce Medicaid After Underestimating Impact of Expansion Written by Bob Herman

August 31, 2011

The state of Colorado plans to scale back its Medicaid program just two years after lawmakers expanded it, according to a Denver Post report.

According to the report, lawmakers passed healthcare legislation in 2009 that allowed the state to impose a fee on hospitals while using the additional matching federal money to expand Medicaid coverage. The legislation was expected to produce roughly $1.2 billion for the programs and help cover childless adults who have historically been ineligible for Medicaid.

The original estimates showed the Medicaid program would cost $197.4 million per year for 49,200 adults without dependents currently living at or below the federal poverty level in Colorado. However, recent studies showed there are an estimated 143,000 eligible people, and covering all of those individuals would cost roughly $1.75 billion.

The report said Colorado’s Department of Health Care Policy and Financing now plans to reduce eligibility to only 10 percent of the poverty level, which only covers childless adults who earn less than $91 per month. Estimated costs would still be around $770 million.

Because of this, the department will also cap the number of childless adults covered by Medicaid to 10,000, resulting in a first-come, first-serve basis with others being put on a waiting list, the report said.

http://www.beckershospitalreview.com/racs-/-icd-9-/-icd-10/colorado-to-reduce-medicaid-after-underestimating-impact-of-expansion.html

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Health care expansion to cost Illinois, study finds

This is very important information to public services in light of recent budget woes. The PPACA is expected to cost the State of Illinois $1.3 Billion a year from 2020 and beyond. It is obvious any form of reform must include an efficient automated management system familiar with the various forms of assistance, both public and private.

Please review the article and tell us your thoughts.

Health care expansion to cost Illinois, study finds

// BY DEAN OLSEN THE STATE JOURNAL-REGISTER Published Sept. 04, 2011 @ 6 a.m.

Expanding Illinois’ Medicaid program under the federal health-care reform law will cost the state $1.3 billion a year in 2020 and beyond, according to an analysis by the nonpartisan Rand Corp.

The annual cost is at least six times higher than what state officials have estimated since the federal Affordable Care Act became law in March 2010.

Until now, officials at Gov. Pat Quinn’s Illinois Department of Healthcare and Family Services have said the expansion of eligibility standards for the public insurance program, scheduled to take effect in 2014, would be financed almost entirely by the federal government.

HFS officials had said the expansion would cost Illinois almost nothing initially, and only about $200 million per year in 2020 and beyond.

But the study by Rand, a respected not-for-profit research institute based in California, indicates that Illinois will incur about $700 million in new Medicaid costs not covered by the federal government in 2016. The cost to Illinois taxpayers would ramp up to $1.3 billion annually by 2020 and total $6.2 billion between now and 2020.

The nonpartisan Council of State Governments commissioned the Rand study – which analyzed Medicaid expansion costs for Illinois, California, Texas, Connecticut and Montana – to provide more perspective than what had been available through the Congressional Budget Office, according to Chris Whatley, director of the council’s office in Washington, D.C.

Disputed costs

Even though the Quinn administration says Rand overestimates the potential new costs for Illinois, Rand’s numbers are sure to provide fuel for critics of the Affordable Care Act, because of the financial pressure Medicaid already puts on state budgets -especially in deficit-ridden Illinois.

“The theme of the Affordable Care Act is, ‘We can cover everyone, and it doesn’t cost more,’” said state Sen. Dale Righter, R-Mattoon. “If you can’t pay for it, it doesn’t matter if it’s worth it.”

Righter said Illinois “absolutely cannot” afford to add $1.3 billion to a Medicaid program that currently costs the state $14 billion a year and covers 2.8 million Illinoisans. Half of the current cost – $7 billion – is reimbursed by the federal government, with the rest coming from state coffers.

Some states, depending on their political leadership, are resisting the reform law’s implementation, challenging it in court or hoping the law will be repealed after the November 2012 elections. But in Illinois – the home of President Barack Obama and where Democrats control the legislative and executive branches – state officials are working to set up a health-insurance exchange that would route the uninsured and small businesses to affordable private insurance or Medicaid.

HFS Director Julie Hamos told The State Journal-Register in July that the expansion of Medicaid, which would add an estimated 600,000 to 700,000 people to the program, would lead to more timely health care, before diseases become advanced and more costly. She said the expansion also would mean less unpaid medical costs shifted to the rates paid by the insured.

“There will be a cost,” she said, “but it depends on whether we believe, and we do, that when people have access to health care, that ultimately saves money for society.”

Eligible, but not enrolled

Of the 32 million uninsured Americans expected to gain coverage through the Affordable Care Act by 2019, half of them – of 16 million – would be covered through Medicaid.

Medicaid eligibility will be expanded in 2014 to include non-disabled, childless adults with incomes below 138 percent of the federal poverty level, or less than $15,152 for an individual and $30,843 for a family of four.

But not all of the 16 million will be added in the new eligibility category. Some who will join the program are eligible now, but haven’t applied for some reason, according to David Auerbach, a Rand health economist and author of the five-state report.

These previously eligible individuals, both adults and children, are expected to be enrolled in Medicaid when they contact their state’s health-insurance exchange or apply because of the federal law’s mandate to get insurance, Auerbach said.

Rand’s study took this phenomenon into account, and for Illinois, Rand believes that 56 percent, or 428,000 of the 767,000 people who will be added to the Medicaid program, will have been previously eligible but not enrolled.

Even after 2014, the federal reimbursement for the 428,000 previously eligible people will cover 50 percent of their medical costs, not the 100 percent reimbursement that will be available for the other 339,000 in 2014. The federal reimbursement will gradually drop to 90 percent for the newly eligible in 2020 and beyond.

The 50 percent reimbursement for a majority of Illinois’ new Medicaid enrollees additional state costs that officials in many states worry about but couldn’t pinpoint until the Rand study was released in April, Whatley said.

Critics of the federal law can complain about the additional costs, he said, but the law’s supporters can highlight the “relatively modest” additional expense to the state for each of the 1.3 million uninsured Illinoisans who will gain health insurance coverage as a result of the federal law – either from Medicaid or from private insurance sold through the exchange.

Rand estimated Illinois’ per-person cost at $540 in 2016.

Economic security?

Michael Gelder, Quinn’s senior health policy adviser, told the newspaper in a written statement that based on a new, “Illinois-specific study” released Friday, “we believe the Rand study overestimates both the number of people who will be newly eligible for Medicaid as a result of federal health-care reform, as well as those that are currently eligible but have not enrolled in Medicaid.”

“In addition,” Gelder said, “as the ACA insures more people, we expect to see individuals move off Medicaid, as well as savings to the state and businesses from better overall health because of greater access to insurance.”

Jim Duffett, executive director of the Champaign-based Campaign for Better Health Care, said the additional cost to Illinois associated with the reform law is worth it and “not a major amount of money. Health care is economic security for people.”

The Rand analysis says the number of Illinoisans without health insurance would drop from 1.7 million currently, or 15 percent of the non-elderly population, to 390,000, or 3.5 percent, under the Affordable Care Act.

***

Some findings of the Rand Corp. report

* The proportion of Illinois residents with health insurance will increase from 85 percent currently to 97 percent, or by almost 1.3 million people.

* There will be little change in the number of people offered coverage through their employers, but about 90,000 employees will be covered through the exchange.

* By 2016, about 1.1 million people will have private coverage through the state’s health-insurance exchange, and about 686,000 of them will receive federal subsidies to buy coverage.

* Total state government spending on health care will be 10 percent higher for the combined 2011-2020 period because of the ACA – mostly because of increases in Medicaid costs. In 2020, state spending will be $1.3 billion higher than it would have been without the ACA.

More information

Reports produced by Rand Corp. on Illinois and four other states are available online.

http://www.sj-r.com/state/x1413009256/Health-care-expansion-to-cost-Illinois-study-finds

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“Fighting to save fees”

Click here to read the article, “Fighting to save fees,” from the July 11, 2011 issue of Crain’s Chicago Business in PDF format.

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Federal Lawsuit Challenging Constitutionality of Illinois Statute is Filed

There is currently a lawsuit over a balance billing provision. The new Illinois Statute shifts billing costs on to certain doctors, like those in the ER, who patients do not select.

This article addresses the adoption of a new Illinois statute that will have a negative and unfair impact on certain health care providers, including critical emergency care physicians who are the front line of critical response to health care emergencies. Lawsuits are already being filed by the affected health care groups. This bill will have a great financial impact on the health care groups as they struggle to treat patients in need of critical emergency medical services. It serves as another example of the gross incomptence of Illinois legislature.”

Note the Crain’s article that predicts these types of suits are going to proliferate once PPACA moves forward.

July 2011 McDonald Hopkins files federal lawsuit challenging constitutionality of Illinois statute Hospital-based physicians seek to invalidate law Hospital-based pathology groups and physicians in Illinois filed a federal lawsuit on June 24, 2011, seeking to invalidate, on constitutional grounds, Illinois legislation designed to shift the burden of absorbing certain patient-related costs from insurers to practitioners of only a few specifically-enumerated medical specialties. The Statute: Illinois Public Act 96-1523

Illinois Public Act 96-1523, took effect June 1, 2011. It amended portions of the Illinois Insurance Act (changing 215 ILCS 5/356z.3 and adding 215 ILCS 5/356z.3a) in such a way as to fundamentally alter the relationships between certain physicians, their patients, and third-party payors such as insurers.

The statute prohibits an inexplicably singled-out group of out-of-network physician-providers from billing insured patients for anything other than the applicable deductible/co-pay that would apply if the provider were an in-network provider for that patient. According to the statute, the provider must seek any remaining amount due from the patient’s insurer. In the event of a dispute as to the amount the insurer will pay, the statute mandates binding arbitration at the election of either the insurer or the physician. By its terms, the statute applies to only those physicians or other providers who provide radiology, anesthesiology, pathology, neonatology or emergency department services to insureds, beneficiaries, or enrollees in a participating facility or participating ambulatory surgical treatment center.

The statute originated as Illinois House Bill 5085, a bill intended to require certain insurance policies to provide coverage for certain oral cancer treatment drugs, and for qualified individuals to participate in clinical cancer trials, as well as addressing other related issues. The bill was eventually passed out of both houses without substantial discussion, following a single amendment on the floor of the Senate that entirely altered the bill to its present form. The statute, which after amendment was touted as an effort to relieve patients of the perceived administrative and financial burden of balance billing, actually does no such thing. Regulations already in place had accomplished this goal some three years earlier. Rather, legislative history suggests that the statute actually acts to shift the economic burden from insurers, as set forth in these prior regulations, to a limited group of physicians.

The Case: Peoria Tazewell Pathology Group S.C. v. Messmore

A group of hospital-based pathology groups and physicians filed suit on Friday, June 24, 2011, seeking to overturn the statute as unconstitutional under both the United States and Illinois constitutions. Plaintiffs, Peoria Tazewell Pathology Group, Consultants in Clinical Pathology, Ltd., Consultants in Laboratory Medicine and Pathology, Ltd., Dr. Ronald Champagne and Dr. R. Glenn Hessel, also seek to enjoin the state from enforcing the statute pending a final determination in the litigation.

Plaintiffs challenge the statute as arbitrarily, unfairly and irrationally depriving their practice groups and physicians, as well as thousands of physicians like them across Illinois and elsewhere, of their rights to carry on their profession, make contracts and earn a living as they choose. Among other concerns, Plaintiffs argue that the statute infringes their rights to jury trial and access to the courts; denies them the benefit of their pre-existing freely negotiated contracts with hospitals and other similar facilities; eviscerates their rights to professionally engage with whom and how they choose, and otherwise prohibits them from pursuing their rights to earn their livelihoods as they choose, without any assurance of reasonable compensation in exchange for their services. Because of this unconstitutional deprivation of rights, Plaintiffs argue, the statute must be declared unconstitutional.

The lawsuit, (Peoria Tazewell Pathology Group, S.C. et al v. Messmore et al, Case Number 1:11-CV-04317 (N.D. Ill. 2011).), was filed in the United States District Court for the Northern District of Illinois on Friday, June 24, 2011, followed shortly thereafter by a motion for preliminary injunction, which was filed on Monday, June 27, 2011. The case has been assigned to the Honorable John W. Darrah.

The court has set a briefing schedule on the motion for preliminary injunction, with Defendants to respond to the motion for preliminary injunction on or before July 26, 2011, and Plaintiffs to file and serve their reply, if any, on or before August 10, 2011. A hearing before Judge Darrah will follow.

http://www.mcdonaldhopkins.com/alerts/alert.aspx?id=rQpLZr9nZEOHEYiOhuCYtg

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