2011 December

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12 Challenges and Opportunities for Hospitals in 2012

12 Challenges and Opportunities for Hospitals in 2012 Written by Molly Gamble | December 13, 2011

It may be difficult to believe, but 2012 means hospitals are only in the second year of healthcare reform. Many call this time one of uncertainty, which is true, but it also presents great opportunity for innovation, change and growth. Some concepts of healthcare reform that once seemed novel or troublesome are now beginning to mature, and the industry is becoming more sophisticated in its approach and implementation of the law.

The year ahead brings a presidential election, a change in leadership for CMS, value-based purchasing and other scheduled changes. Then, of course, there are the forces that ebb and flow, such as consolidation and market competition. All together, here are 12 for ’12 — a dozen challenges, changes and opportunities facing hospitals this year.

1. Uncertainty surrounding healthcare reform. The 2012 election is one hurdle for President Obama’s Patient Protection and Affordable Care Act. One of the greatest differentiators between the Democrat and Republican parties is whether or not they support the repeal of healthcare reform law. Eyeing the chance that Pres. Obama may not see a second term, many GOP activists are already laying the groundwork to slash PPACA if a Republican makes it to the Oval Office.

Apart from the risk of full-on repeal, the public still saw PPACA wobble in 2011. In early October, the Obama administration scrapped the Community Living Assistance Services and Supports Act, a long-term care insurance program created by PPACA. The CLASS Act, which had been championed by the late Senator Edward M. Kennedy (D-Mass.), would have been financed with premiums paid by workers through voluntary payroll deductions, but it was deemed financially unsustainable.

The decision to repeal the CLASS Act may not directly affect hospitals, but it’s symbolic of the uncertainty clouding healthcare reform. “This was the first indication from the government that it might have bitten off more than it can chew,” says Scott Becker, JD, CPA, partner with McGuireWoods in Chicago. “The administration axing a program shows things aren’t as definitive as they might seem.”

Twenty-six states have challenged the constitutionality of PPACA, particularly the individual insurance mandate. The Supreme Court will take up the question of the statute’s constitutionality in 2012. If justices agree with the lower court and strike the mandate, the rest of the law may still be able to function and remain intact.

Still, officials from the Obama administration and insurance companies say removal of the mandate would severely tangle other provisions in the law. America’s Health Insurance Plans, representing nearly 1,300 member companies, wrote a Supreme Court brief in which it said “the difference between developing measures to implement a mandate-less [Affordable Care Act] (1) with market reforms intact and (2) without some or many of those market reforms is night and day.”

2. Preparing for value-based care and fee-for-performance mindsets. The concepts of value-based care and fee-for-performance payments are more than operational models. They’ve become philosophies in the industry, requiring deep-rooted change in the way providers think about healthcare. Some experts have explained the change by comparing it to American taxes — if the traditional, income-based approach was suddenly swapped and Americans were instead taxed based on their personal character.

Hospitals are facing a similar scenario with Medicare and Medicaid payments as CMS rolls out its value-based purchasing program in Oct. 2012. Under VBP, hospitals will be evaluated on 17 process of care measures, claims-based measures, structural measures and patient experience measures as indicated by the Hospital Consumer Assessment of Healthcare Providers and Systems survey. It will provide hospitals with a direct financial incentive to promote patient satisfaction — apart from the perennial motivation to beat out competition — and many organizations are exerting intense effort to nudge survey scores to their highest.

While hospitals strive for happier patients, they’re also preparing to see less of them. Under healthcare reform, a hospital is evolving from a place people go when they’re sick to a place that helps people maintain wellness. Hospitals are continuing to reduce unnecessary readmissions, and a financial incentive for it will go into place this year. The Hospital Readmission Reduction Program, part of CMS’ Inpatient Prospective Payment System, is slated to begin in the 2013 fiscal year. Beginning Oct. 1, 2012, HRRP will lower payment rates for Medicare discharges if hospitals see a higher-than-average readmission rate for certain conditions, including heart failure, pneumonia and acute myocardial infarction.

Specific programs aside, the point of patient-centered medical homes, accountable care organizations and bundled payments is to streamline patient care and cut out unnecessary tests and readmissions. Many hospital providers have indicated that even if their hospital operations do not fall under one of these umbrella titles — PCMH or ACO, for instance — they will still need to transition toward that philosophy of care to survive.

3. Changes upon Dr. Donald Berwick’s departure from CMS. Dr. Berwick’s tenure as CMS administrator came to an end Dec. 2. Marilyn B. Tavenner, RN, is now the acting administrator and COO of CMS. She is a former Virginia Secretary of Health and Human Resources and spent more than 20 years with Hospital Corporation of America, serving as a hospital executive and president of the company’s outpatient group.

Ms. Tavenner’s combination of private sector and public policy experience may bring a different leadership style into CMS. Some media outlets and analysts have emphasized her experience in management rather than policy. The Washington Post, for instance, has even nicknamed her Medicare’s new “pragmatist-in-chief.”

Rather than focus on the leadership style coming into office, many healthcare and policy experts are still mourning what has left. Some in the medical community have called Dr. Berwick’s departure a loss for integrative medicine, as he started his career as a pediatrician and healthcare researcher at Harvard School of Public Health. He was also an outspoken supporter for the Patient Protection and Affordable Care Act, acting as one of its most durable cheerleaders by constantly reiterating the altruistic virtues behind the law.

4. Decreased cardiology procedures. Research has shown that heart failure-related hospitalization rates dropped nearly 30 percent from 1998-2008. Some experts have attributed the reduction to improved preventive care and disease management. Today’s population is also more informed about health, such as the effects of tobacco.

The decline is certainly a stride in clinical outcomes, but hospitals’ bottom lines may take a hit from such a large shift in volume. This is particularly a concern for organizations that rely heavily on revenue from the cardiology service line.

“Hospitals can endure hits that are small profit issues and rebound without much of a problem,” says Mr. Becker. “It’s when you’re heavily reliant on a [specialty] that it becomes hard to adjust.” Academic medical centers, for instance, are likely to struggle less with this change in patient volume since they have extremely diverse revenues. Community hospitals, however, may have a more strenuous time adjusting. Also, while inpatient cardiology procedures are down, many experts believe that decrease is partially offset by other types of cardiology admissions.

5. More competition for particular physicians. Most independent hospitals rely heavily upon their top 25 admitting physicians. Hospitals seeking top-tier, productive talent may experience a more rigorous recruitment process than previous years. Approximately 75 percent of physicians are already in financial relationships with hospitals, according to a recent Pricewaterhouse Coopers survey, and more than half indicated the desire to move financially closer. “More physicians will already be tied to a hospital or another organization,” says Mr. Becker. “There are only so many physicians who have proven to be productive.”

This trend exacerbates an already pressing issue facing not only hospitals but the entire healthcare industry: physician shortages. By 2020, a shortage of 91,500 physicians is expected in the U.S. This is due to the culmination of a number of factors, including an aging physician workforce, increased demand for services due to more people having health insurance and desired work/life balance. Primary care physicians are in especially high demand, given the heightened role they play in accountable and preventive care.

Competing hospitals are no longer the only organizations acquiring physicians, though. Payors are beginning to buy practices and hospitals in an attempt to reign in costs. Experts say this strategy can be expected to emerge more prominently in the next couple of years as deals between payors and providers grow in size and frequency.

For instance, in September, UnitedHealth Group acquired 2,300 physicians through its purchase of Monarch Healthcare — the largest medical group in California’s Orange County. There’s also the deal in Pittsburgh: insurer Highmark is acquiring cash-strapped West Penn Allegheny Health System and financially reviving it to better compete with University of Pittsburgh Medical Center.

Hospitals are also acquiring physician practices that traditionally held affiliations with multiple hospitals in the area. Nearly every day, there is another news story about a physician practice that picked one hospital out of numerous suitors located in the same city. Physicians who were once “team-players” to several hospitals are becoming employed by one, cutting off a large amount of referrals. This means hospitals are not only losing physicians from the recruitment pool, but may see patients referred into competitor’s hospital beds.

6. Questions over tax-exempt status. Non-profit hospitals have another issue on their radar: their tax-exempt status. Congress has started to question the IRS’ policing of non-profit organizations across sectors, including hospitals. Non-profit hospitals are required to fill out certain forms detailing their charity care, complaints from the American Hospital Association and certain aspects of PPACA have prompted the IRS to delay requiring hospitals to fill out that portion of the form, according to a New York Times report.

Jane Haderlein, senior vice president of external affairs at Huntington Memorial Hospital in Pasadena, Calif., has observed increased federal scrutiny over tax-exempt status firsthand. “It’s a rather significant process that we’re reporting that properly,” Ms. Haderlein said. “Unfortunately, I don’t think the federal government has concluded what they want from hospitals. They’ve added a section to IRS reports. There’s so much talk in Washington about what’s appropriate [charity care] and what isn’t appropriate. We’re in the crossfire right now.”

The trend is occurring at the state level, as well. In August, the Illinois Department of Revenue moved to revoke the property tax exemptions for three major non-profit hospitals based on their levels of charity care. Those hospitals were Decatur (Ill.) Memorial Hospital, Edward Hospital in Naperville and Prentice Women’s Hospital at Northwestern Memorial in Chicago.

Illinois Gov. Pat Quinn temporarily halted the revocation until state legislature defined adequate levels of charity care. That piece of legislature would require non-profit hospitals to commit 3.5 percent of their annual revenue to charity care, but it has yet to pass.

7. Heightened concerns over infection control. One of the major ways hospitals can trim spending is by flexing more control over infection rates. Assertive infection control can cut additional costs, such as unnecessary readmissions, and help hospitals avoid fines or penalties for quality problems.

With increased access to hospital infection rates data, the issue is just one more way patients will select which hospital they visit for care. Information on hospital acquired conditions is now searchable on the HHS Hospital Compare website. Also, for the first time, Hospital Compare will begin reporting data on central line infections from the CDC’s National Healthcare Safety Network. CMS is still considering a hospital acquired conditions measure for the Value Based Purchasing Program, which goes into effect Oct. 2012 and will expand with measures added each year.

8. Regulatory challenges. Several prominent health systems were fined, sued or faced other legal action over regulatory issues in the past year. In July, the University of California at Los Angeles Health System agreed to pay $865,500 in a settlement with HHS Office for Civil Rights regarding potential HIPAA violations. In August, Geisinger Medical Center in Danville, Pa., agreed to pay the federal government $1.3 million to resolve allegations of improper Medicare billing. Brentwood, Tenn.-based LifePoint Hospitals also agreed to pay a settlement of approximately $1 million in August to resolve allegations of false Medicare billing at one of its hospitals.

Those are just a few of the highly regarded and highly reputable organizations that saw regulatory problems in 2011, showing these issues aren’t solely reserved for bad actors. “There will be a continued regulatory overhang into 2012,” says Mr. Becker. “There are only so many profits in hospital systems.” This is the year most hospitals will really experience the bottom-line repercussions of healthcare reform, and a regulatory fine or lawsuit will only exacerbate any decline in revenue.

Hospitals will continue to face Recovery Audit Contractors, which continue to become more aggressive. In the entire fiscal year 2010, RACs recovered $75.4 million in overpayments. In the third quarter of fiscal year 2011 — just from March through June alone — RACs recovered $233.4 million in overpayments. Every quarter continues to bring higher RAC recoveries, and hospitals can expect continued assertiveness into 2012.

The Office of Civil Rights also piloted its HIPAA Audit Program in November. Under that initiative, OCR will perform up to 150 audits until Dec. 2012. Hospitals are required to conform to HIPAA 5010 standards by Jan. 1, 2012. These coinciding timelines may require hospitals to exert extra focus on compliance since the standards will still be relatively new at the time of the audits.

9. Fewer independent hospitals. For some, mergers and acquisitions are a strategy to expand a hospitals’ marketplace, while smaller community hospitals may resort to transactions simply to survive. With these forces combined, fewer independent hospitals will make it through 2012 without striking some type of deal with a larger healthcare system.

While some have compared hospital consolidation today to the “merger mania” of the 1990s, today’s M&A climate is really rather unexampled. “The range and magnitude of the forces confronting independent hospitals today are unprecedented and unlike those that we saw during the last major hospital consolidation wave of the 1990s,” says Jordan Shields, a vice president at Juniper Advisory in Chicago, an independent investment banking firm exclusively focused on hospital mergers and acquisitions.

“These include flat or declining volumes and reimbursement, increased quality requirements, increased clinical and operational IT spending, increased capital demands related to physician affiliations and employment, increased credit costs and increased demands on management,” says Mr. Shields.

Mr. Shields also says that traditional transaction models are gaining new traction as hospitals seek structures that suit their specific circumstances. “Steward’s success in expanding its network beyond its original Caritas Christi acquisition isn’t a ‘new’ model, but its success is absolutely notable. DukeLifePoint didn’t create the whole-hospital joint venture model, but by emphasizing reputation and quality it has had remarkable success. I think the range of deals we’re seeing is a symptom of the variety and magnitude of challenges facing independent providers, each looking for a structure that addresses its priorities,” says Mr. Shields.

10. Questions over “appropriate” care. Policy experts, lawmakers and consumers continue to blame the healthcare industry for profuse spending in an unsteady economy. As a result, the price tag of services has come under extreme scrutiny. Physicians may find themselves caught in a double-bind between delivering high-quality care that is also cost-effective — a battle that may not be new but is certainly more exacerbated.

The ignorance over price has left many providers frustrated, as these figures are often concealed by private payors or may vary depending on the plan. David A. Rivera, MD, FACOG, an obstetrician from Rockford, Ill., recalls his personal experience with the opaqueness of healthcare prices. “I had a cardiac scan/stress test a few years ago and tried to find out how much it would cost. Someone in the cardiology department said, ‘I don’t know, but I think it is around $500.’ The actual bill was $4,000. A lot of it went for the radioactive tracer they use for the scan,” he says.

While he says it is possible for physicians to learn more about insurers’ pricing, it is still time-consuming and rigorous. “Given time, a physician can figure out what an insurance company pays for any given CPT or evaluation and management code. Add multiple insurers or multiple plans from one insurer, and it becomes a great time waster,” says Dr. Rivera.

An increasing number of hospital leaders and physicians are fighting this practice and trying to reverse the secrecy of health prices. For example, Beth Israel Deaconess Medical Center in Boston designed a 56-item price list to help physicians better understand links between price and value. While 56 items out of thousands may be a small start, trends such as this may indicate a movement to boost transparency — and one that will likely gain more traction and energy in 2012.

11. Relationships with other healthcare providers and community organizations. As “collaborative care” becomes less of a catchphrase and more of a reality, hospitals are refining strategies to build relationships with community organizations to form a continuum of care. Some hospitals are even moving beyond traditional relationships with providers to keep community members healthy. For instance, Huntington Memorial struck a partnership with its local library system — a strategy moving out of the traditional provider-provider relationship.

Ms. Haderlein says Huntington Memorial is trying to keep people well in the community by aligning them with primary care physicians. Since patients can sometimes perceive hospitals as threatening or feel extremely anxious about visiting physicians, Huntington Memorial formed a partnership with its local libraries and stationed nurses in these facilities throughout the week. “It helps patients to be in a neutral place. This also extends our educational efforts and helps patients build relationships with the nurses,” says Ms. Haderlein.

Aside from innovative relationships with community centers, more hospitals are strengthening their ties to post-acute care providers as health systems take on the risk for managing the health of entire population. Major parts of post-acute care include rehabilitation facilities, nursing homes, long-term acute-care hospitals and home care. Ties with these facilities can help manage patients’ post-discharge care and avoid unnecessary readmissions, among other benefits.

12. ICD-10 adoption. ICD-10 gained national attention this year when roughly 140,000 of its highly-specific and peculiar diagnosis codes were revealed, including “bitten by an orca at oil rig” or “burn due to water-skis on fire.” Jokes aside, implementation of the new coding sets has proven to be rigorous. All healthcare providers are scheduled to operate under ICD-10 by Oct. 1, 2013, but progress has looked dismal throughout 2011.

Hospital executives have agreed that conversion to ICD-10 will have negative repercussions on hospital productivity at first. St. Louis-based SSM Health Care estimated that its health system would need approximately 110,000 hours of ICD-10 education just to make the transition properly. Other healthcare organizations have said hiring and staffing are the biggest barriers to the transition.

A survey released in Nov. 2011 showed less than 10 percent of healthcare providers were more than halfway ready for ICD-10, meaning most organizations were still in the strategy and planning phases of implementation. Judging by this statistic, some organizations may find themselves pressed for time in 2012 — an extremely stressful situation for healthcare leaders. Some have expressed actual terror over ICD-10. At a meeting of the Medical Group Management Association, one healthcare attorney said the 2013 deadline sends “shivers up peoples’ spines.”

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Florida Unveils $2B in Medicaid Cuts, Hospitals Say Plan Will Devastate Healthcare

Written by Bob Herman | December 09, 2011

Florida Gov. Rick Scott, the former CEO of Columbia/HCA Corp, unveiled the state’s budget for the 2012-13 fiscal year, and it will include roughly $2 billion in Medicaid cuts, according to a Palm Beach Post report.

In a news release, Gov. Scott said, “No program has grown as fast and as much as Medicaid, and we must find a way to control the cost. If we do nothing, this program will bankrupt our state.” The governor’s budget proposes paying similar rates for the same procedures in similar hospitals with a flat rate based on average cost data, according to the release.

The Safety Net Hospital Alliance of Florida released a fact sheet (pdf) saying Medicaid reimbursement cuts would devastate vital health programs, specifically at 15 safety-net hospital systems. Some of the safety-net hospital systems that stand to lose the most include the following:

• Jackson Health System in Miami: $177.5 million • Orlando Health: $75.6 million • Broward Health in Fort Lauderdale: $73.3 million • Tampa General: $65.2 million • Shands at the University of Florida in Gainesville: $63.4 million

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New York Medicaid Work Group Recommends Coverage Cuts

New York Medicaid Work Group Recommends Coverage Cuts Written by Lindsey Dunn | December 14, 2011

A work group tasked with redesigning benefits under New York State’s Medicaid program has recommended the program stop reimbursing treatments which lack evidence supporting their efficacy, according to a Crain’s New York Business report.

The Medicaid Redesign Team yesterday recommended the coverage changes for 10 current covered treatments — ranging from knee arthroscopies to elective percutaneous coronary interventions and elective C-sections for women who are less than 39 weeks pregnant.

The recommendations will be sent to the Gov. Andrew Cuomo for consideration later this month.

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Bill Would Extend Prompt Medicaid Payment to Hospitals

Bill Would Extend Prompt Medicaid Payment to Hospitals Written by Bob Herman | December 13, 2011

U.S. Reps. Brian Bilbray (R-Calif.) and Anna Eshoo (D-Calif.) have introduced the Fair Pay to Medicaid Providers Act, which would require Medicaid to reimburse all providers — including hospitals, community health centers and nursing facilities — in a timely manner, according to a news release from the office of Anna Eshoo.

Current law only requires prompt Medicaid payments be made to physicians. The Fair Pay to Medicaid Providers Act (pdf) would require that states pay 90 percent of Medicaid claims to all providers within 30 days of receiving the claim and 99 percent of claims within 90 days of receiving the claim, according to the news release.

The bill was referred to the Committee on Energy and Commerce.

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10 States With the Most and Least “Generous” Children’s Health Insurance Programs

10 States With the Most and Least “Generous” Children’s Health Insurance Programs Written by Bob Herman | December 13, 2011

Roughly one in six children in the United States are uninsured, and where someone lives could make a big difference in the level of health coverage children can receive from government-sponsored programs, according to a report from the Foundation for Health Coverage Education (pdf).

By law, every state must have a Children’s Health Insurance Program, but the maximum income limit of families that would allow their children to be eligible for coverage differs from state to state.

The FHCE identified the maximum annual income limit a family of four can make and still quality for free or low-cost CHIP coverage for all 50 states. The following 10 states had the highest and lowest income limits for CHIP eligibility:

Five states with highest income limit for CHIP: • New York: up to $89,400 • New Jersey: up to $78,225 • Hawaii: up to $77,148 • Vermont: up to $67,350 • Oregon: up to $67,248

Five states with lowest income limit for CHIP: • North Dakota: up to $35,760 • Maine: up to $40,008 • Oklahoma: up to $41,348 • Idaho: up to $41,352 • Arizona: up to $44,100

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A scramble to shape the new health insurance

A scramble to shape the new health insurance exchanges By Sarah Kliff Published in The Washington Post: November 5

From insurance companies to drug stores to doctors, just about any industry that touches the health care system has a different opinion on how the Obama administration should shape the new insurance markets at the heart of the health-care reform law.

But they all agree on one thing: now is the time to weigh in. Health and Human Services has received thousands of comments on preliminary exchange regulations issued earlier this year, which laid some ground rules for what the new marketplace would look like.

Under the health overhaul, every state will have a new health insurance marketplace called an “exchange,” which launch in 2014. Often described as state-based “Expedias” for health insurance, the exchanges will serve as online hubs for individuals and small businesses to compare and purchase health insurance plans. Low- and middle-income Americans will also be able to use new tax subsidies on the exchange, meant to make health coverage more affordable.

Approximately 24 million Americans will eventually purchase their health insurance through these new exchanges, according to estimates from the non-partisan Congressional Budget Office. If a state does not set up its own exchange, the federal government will step in and do the job, ensuring each state has its own market.

The Affordable Care Act, passed last March, laid out some basic exchange guidelines, which detailed who would be eligible to use the marketplace and what type of coverage insurance companies would be required to sell.

But it also left many questions: who will be authorized to sell health insurance on the exchange? What benefits will health plans have to cover? And, if states don’t set up their own marketplace, what would a federally run exchange look like?

“If we don’t get this right, we could mess up the insurance market rather than improve it,” said Judy Waxman, vice president for health at the National Women’s Law Center, a consumer advocacy group. “We really feel this is so new to most people, it’s worth laying the right ground rules.”

America’s Health Insurance Plans, which lobbies for the insurance industry, has pushed the Obama administration to leave much of the regulation to the states, which have traditionally overseen insurance market functions. More than anything though, AHIP wants more final rules from the administration, so its members can know what to plan for.

“We need to understand what the rules are,” AHIP President Karen Ignagni said in a recent interview. “It takes a great deal to make sure you’re ready. That’s one of the reasons we’ve telegraphed such a sense of urgency in our comments.”

Less obvious health industry groups also have a big interest in how the Obama administration sets the rules.

That includes pharmacy chain CVS Caremark, which has 7,200 drug stores across the country. The company has petitioned the Obama administration for rules that would allow its employees, such as pharmacists and nurse practitioners, help consumers navigate the exchange and purchase health insurance.

Part of it, the company explains, has to do with its history: when Medicare’s prescription drug benefit came online in 2006, CVS assisted seniors with enrollment through a program called “Medicare Tuesdays.” Pharmacists would set up laptops and, using a senior’s prescription history, help them pick the appropriate plan.

But it’s not just goodwill that has gotten CVS interested: the pharmacy chain believes it will increase consumer trust, leading to stronger sales in drug stores.

“We very much see ourselves playing in that space,” said Helena Foulkes, CVS’s chief health care strategy and marketing officer. “There’s a business value to it: If we’re seen as a helpful partner, we can drive more business to our stores.”

Other groups have focused on making the health exchange accessible to specific populations. Young Invincibles, which advocates for young adults, is pushing the administration to allow individuals to access the exchange through mobile devices, like smartphones and iPads. Nearly half of 18-to-29-year-olds use a smartphone as a primary source for Internet access, according to the Pew Research Center.

“Young people are obviously much more uninsured than older people,” said Jen Mishory, deputy director for Young Invincibles. “They have less access to employer-sponsored insurance. It’s important that the exchanges meet them where they are, and that’s often with a smartphone.”

The National Association of Insurance Commissioners, a group that represents each state’s top insurance regulator, discussed the issue Saturday at their fall meeting, at the National Harbor in Maryland. While the Obama administration will write the regulations for exchanges, these regulators will use those rules to set up the new marketplaces.

A half-dozen groups testified before the insurance commissioners, each running through a regulatory wish list. They ranged from the Center on Budget Policies and Priorities, a Washington-based think tank, to the Illinois Chamber of Commerce.

Laura Minzer, speaking on behalf of the Illinois Chamber of Commerce, described herself as a “relative newcomer” to the world of insurance regulation. But with exchanges online, she said it’s more important than ever for groups such as hers to get involved.

Even “small players want to be engaged in [this] process,” she told the group.

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Supreme Court Agrees to Hear Challenge to Health Reform Law

Supreme Court Agrees to Hear Challenge to Health Reform Law Written by Jaimie Oh | Monday, 14 November 2011 10:58

The Supreme Court has agreed to hear a challenge to the healthcare reform law that was heard by Atlanta’s 11th Circuit Court of Appeals, the only federal court to strike down the insurance mandate portion of the healthcare reform law, according to a New York Times report.

The challenge was filed by 26 states, led by Florida. Paul D. Clement, a former United States solicitor general, represented the states in their challenge. In August, a panel of three judges in the Atlanta federal appeals court ruled 2-1 that Congress overreached its authority to regulate commerce and therefore cannot require Americans to buy health insurance. The court ruled the rest of the healthcare law constitutional.

That ruling will now come before a Supreme Court review amid the 2012 presidential campaign. In addition to the insurance mandate, the Supreme Court has agreed to hear arguments over the reform law’s expanded Medicaid eligibility and coverage thresholds, according to the report.

The justices’ ruling on the constitutionality of the highly contentious insurance mandate could affect the survival of other reform law provisions that are intimately tied to it. The notable provisions in question include one prohibiting insurers from turning away applicants and one prohibiting insurers from excluding consumers with pre-existing conditions.

In a statement, the White House reiterated its confidence in the healthcare reform law’s constitutionality. Oral arguments could be heard as early as this spring with a final ruling scheduled before the high court’s session expires in June.

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Senate Approves Change to Definition of “Modified Adjusted Gross Income” Under ACA

Senate Approves Change to Definition of “Modified Adjusted Gross Income” Under ACA Written by Jaimie Oh | Friday, 11 November 2011 11:27

The Senate has approved a House bill that would change the definition of modified adjusted gross income under the healthcare reform law, according to an AHA News Now report.

Under the healthcare reform law, modified adjusted gross income will be used to determine financial eligibility for Medicaid and the State Children’s Health Insurance Program beginning in 2014.

The House bill would reform the definition of modified adjusted gross income to include both taxable and nontaxable Social Security benefits. It would also repeal the 3 percent withholding provision on some payments made to government contractors.

The bill is largely expected to be signed by President Obama.

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Supreme Court Picks Florida Case for Health Reform Ruling

Joseph Goedert HDM Breaking News, November 14, 2011

The Supreme Court has officially announced it will consider the constitutionality of the health care reform law during its current term, with an opinion expected in May or June 2012.

The court has selected to review the Florida Court of Appeals ruling that the individual mandate in the reform law is unconstitutional and cannot be separated from the rest of the law, and therefore the entire law is void.

Judge Roger Vinson, senior judge in the Northern District of Florida, Pensacola Division, with reluctance, ruled the mandate was not severable from the rest of the law because while the mandate was “necessary and essential” to the law as written, it is not “necessary and essential” to health care reform in general.

“Because the individual mandate is unconstitutional and not severable, the entire Act must be declared void,” according to Vinson’s ruling. “This has been a difficult decision to reach, and I am aware that it will have indeterminable implications. At a time when there is virtually unanimous agreement that health care reform is needed in this country, it is hard to invalidate and strike down a statute titled, “The Patient Protection and Affordable Care Act.’”

Vinson made clear that his ruling was based on constitutionality issues and not the merits of the reform law itself. “I emphasized once before, but it bears repeating again: this case is not about whether the Act is wise or unwise legislation, or whether it will solve or exacerbate the myriad problems in our health care system. In fact, it is not really about our health care system at all. It is principally about our federalist system, and it raises very important issues regarding the Constitutional role of the federal government.”

There are multiple ways the Supreme Court could rule, including among others: The individual mandate is constitutional so the law stands as is; the individual mandate is unconstitutional but everything else in the law is constitutional; or the individual mandate is unconstitutional and renders the entire law unconstitutional.

Information technology provisions in the reform law that would be affected by a Supreme Court ruling include:

* New “operating rules” to further standardize HIPAA transactions;

* Two new HIPAA transactions–electronic funds transfer and claims attachments–and the long-delayed health plan identifier;

* State insurance exchanges to ease consumer comparison and purchase of coverage;

* Availability of Medicare claims data for research and analysis;

* Electronic enrollment for public health and human services programs; and

* A new tax on medical devices including devices that collect and/or transmit data, such as patient monitors.

Also in limbo are Medicare and Medicaid accountable care organization programs, which would rely heavily on I.T. to improve coordination across the continuum of care.

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Arizona Appeals Court Upholds Medicaid Cuts

Written by Lindsey Dunn | December 07, 2011 A three-judge panel for the Arizona Court of Appeals yesterday upheld a lower court’s decision to not block cuts to the state’s Medicaid program in a case filed by several public interest groups, according to an Arizona Republic report.

In July, state officials announced they would freeze enrollment for childless adults in the Arizona Health Care Cost Containment System in order to balance the budget. The move went against a voter-approved ballot measure in 2000 that expanded Medicaid enrollment to all residents living below the poverty level. The proposition called for the use of tobacco settlement funds to pay for the expansion, but the funds fell short of the financing needed for the program, and the legislature determined there were no other available funds to continue to provide coverage beyond what is required by the federal government.

In the panel’s ruling, Judge Patricia K. Norris wrote that while the proposition does call for the state to provide additional funds to expand enrollment if the tobacco settlement funds fall short, it does not specify a certain amount, making it impossible for the court to determine if the legislature violated the law.

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