View
0
Download
0
Category
Preview:
Citation preview
Deloitte Center for Health Solutions
February 6, 2012
Monday memo
Health reform update
My take
From Paul Keckley, Executive Director, Deloitte Center for Health Solutions
Last week was a numbers week: election returns in Florida and Nevada, the Super Bowl,
speculation about Facebook’s initial public offering (IPO) valuation, the Dow at its peak
since 2008, and others, but the numbers that caught my attention most came from the
Congressional Budget Office (CBO) last Tuesday:
For fiscal year (FY) 2012 ending September 30, the U.S. deficit will be $1.079 trillion—the
fourth consecutive year of trillion-plus deficits. Just last August, the FY12 forecast had
been a $953 billion deficit but the CBO update accounted a tepid economic recovery and
less than optimal gross domestic product (GDP) growth.
The Politico headline Wednesday summed it up well: “Deficit forecast gloomy for years”.
In its 147-page report, the CBO says the GDP for FY12 will be 2.0% versus its August
estimate at 2.7%, unemployment at 8.7% versus its earlier prediction of 8.5%, and $4.7
trillion additional deficit continuing through 2017 with interest expense at decade-end of
$600 billion—more than the federal government spends on Medicaid.
February 13, the President will present his budget for FY13. It will then begin its journey
through the legislative processes of Congress and no doubt will be a target for political
punditry.
Regardless of party stripe or philosophical bent, the facts are clear: the U.S. economy has
been struggling. And health costs are a contributing factor.
Last month, the Centers for Medicare & Medicaid Services (CMS) Office of the Actuary
released its analysis of 2010 National Health Expenditures noting that spending increased
3.9%—lowest annual increase in 30 years. It attributed the slowdown from double digits
two decades earlier to a sluggish economy with lower utilization as consumers succumb
to pocketbook pressures, plus lower insurance premiums and lower costs for technologies
and therapies (medical inflation). But it warned costs would likely uptick again regardless
of economic recovery.
Seems to me the number one agenda item in discussing the U.S. health system is cost
containment: the status quo is not sustainable, not just for those lacking insurance or
small businesses, but for everyone.
In May of 2009, the Deloitte Center for Health Solutions hosted a series of meetings in
Washington with leading trade association representatives and the White House Office of
Health Reform. The goal: to find $2 trillion in cost reductions that would simultaneously
improve population-based health and safety. I reviewed the file this weekend; it’s time to
reconsider some suggestions posed in that series of meetings:
Could health plans, Medicare and Medicaid leverage ICD-10 investments, and
accelerate administrative simplification to reduce paperwork and waste?
Could employers be given wider latitude to reward healthy behaviors and aggressively
address irresponsible behavior by employees/retirees/enrollees?
Could e-prescribing be significantly accelerated to reduce medication error and
avoidable admissions and re-admissions to hospitals?
Could the medical home methods be accelerated by states to manage dual eligibles?
Could incentives for physicians and hospitals be changed from volume to value-based
on demonstrated appropriateness for diagnostic testing and surgery?
Could frivolous lawsuits against physicians, hospitals, long term care providers, and
plans be eliminated through a streamlined medical court system?
Could funds from the Troubled Asset Relief Program (TARP) be used to reduce
unnecessary acute capacity in over-bedded markets?
Could fraud be more aggressively detected and prosecuted?
Could Medicare and Medicaid be structured as managed care programs to reward
coordination, efficiency, and quality?
Could “health” and “human services” services programs in local communities be
merged to provide a seamless, comprehensive preventive health program?
Could the education of health professionals in the U.S. be streamlined to produce
qualified individuals faster and reward competence from demonstrated lifelong
learning?
Could patent laws be re-structured to get promising therapies and companion
diagnostics to the market faster as generics while rewarding inventors?
Could primary care services be expanded and compensation increased to
aggressively arrest increased prevalence of chronic diseases and costs associated
with non-intervention?
Could elimination of the tax credit for employer sponsored coverage level force active
consumerism into the system?
And could the U.S. public education system at all levels increase education about
health and the health system in its core curriculum to combat widespread consumer
ignorance and irresponsible behavior?
These are bold ideas: they involve risk. Some found their way into the Affordable Care Act
(ACA), some did not.
Regardless of the outcome of the ACA’s constitutional challenges this year, the U.S.
health system must face its cost spiral as its number one aim. Solutions must be
developed based on facts and political brinksmanship set aside for the greater good.
This week marks the start of the 4th year I’ve written this Memo. On February 2, 2009 as
the American Recovery and Reconstruction Act (ARRA) was passing, I wrote: “The
stimulus program is only Chapter One of health reform. Chapter Two will be about the
more substantive health reforms likely to include tricky issues like individual mandates,
employer pay or play, comparative effectiveness implementation, insurance market
reform, and costs.”
The book on U.S. health reform is not yet written. ACA is a chapter. The market will write
others. What’s clear is that the affordability of health care—costs—is a theme that will run
through each. It’s time to get serious about costs. To avoid the discussion is to guarantee
the demise of the system’s strengths and the certainty of a two tiered system long-term:
one for those that can afford it, and a second for those that can’t.
return to top
This week’s headlines: My take
Implementation update - HHS requests U.S. Supreme Court to extend argument on Anti-Injunction Act on ACA
challenge - Update: essential health benefits guidance - HHS: ACA saved $2.1 billion for Medicare prescription drug costs - Bill to exclude brokers’ commissions in the medical loss ratio calculation introduced - Representative introduces bill to repeal PCORI - House votes to repeal CLASS Act
Legislative update - CBO projects $1.079 trillion deficit for FY12 - FDA improvements sought to address drug shortages - CBO: war savings calculation, target for SGR fix proponents - GOP physicians ask AARP for Medicare reform details - Rubio seeks EHB exclusion for religious organizations - Representatives introduce bill to increase health care access in rural areas - Representatives introduce legislation to amend 510(k) drug review process
State update - State round-up
Industry news - Study: insurance fee cost Medicaid $38.4 billion - HHS: Medicare Advantage premiums down 7%, enrollment up 10% - GAO: prices for medical devices vary widely, not transparent - Moody’s: rough year ahead for not-for-profit hospitals - IRS releases proposed regulations for taxable medical devices - FDA and device industry recommend $595 million in drug user fees - Medical practices: ICD-10 Version 5010 conversion creating payment glitches - National Quality Forum endorses resource use and costs quality measures - Prior authorization of power mobility devices and recovery audit prepayment review
demonstrations to start June 1, 2012 - CBO: federal worker benefits better than private employers - FDA approves “first ever” drugs for cystic fibrosis, basal skin cell cancer - Study: state nursing workload mandates reduce RN overtime slightly - HHS OIG: data inconclusive about physicians opting out of Medicare
Quotable
Fact file
National Health Reform: what now?
Subscribe to the Health Care Reform Memo
Deloitte Center for Health Solutions research and news
Deloitte contacts
Implementation update
HHS requests U.S. Supreme Court to extend argument on Anti-Injunction
Act on ACA challenge Friday, the U.S. Department of Health and Human Services (HHS) petitioned the U.S.
Supreme Court to add 30 minutes to the its scheduled one hour opening argument March
26 re: the applicability of the Anti-Injunction Act (AIA) to the ACA.
Note: AIA prevents individuals from suing over a tax until the tax has been paid. The
individual mandate is effective 2014, thus individuals would not start paying the penalty for
not obtaining health insurance until after 2015.
March 26-28, the Supreme Court has scheduled 5.5 hours of oral arguments on the four
ACA challenges: anti-injunction act applicability, individual mandate, severability, and
Medicaid expansion requirements.
return to top
Update: essential health benefits guidance
Tuesday was the last day for comments to HHS on its initial essential health benefits
(EHB) bulletin dated December 16, 2011, in which states are required to set a
“benchmark” for coverage in the EHB package based on standards that would vary in
each state. ACA Section 1302 requires EHB to include services in ten defined benefit
categories and requires coverage equivalent to a typical employer plan in a state.
Note: several health care trade organizations argue the need for uniformity across states;
others are pushing for state flexibility.
return to top
HHS: ACA saved $2.1 billion for Medicare prescription drug costs
Thursday, HHS released a report indicating 3.6 million Medicare enrollees saved $2.1
billion on their prescription drugs in 2011. The report forecasts that the average Medicare
enrollee who hits the “donut hole” will save $4,200 by 2021. Last year, 3.6 million seniors
hit the “donut hole” and saved an average of $604 on their medications.
return to top
Bill to exclude brokers’ commissions in the medical loss ratio calculation
introduced
Thursday, Senator Mary Landrieu (D-LA) introduced the “Access to Independent Health
Insurance Advisers Act of 2012” (S. 2068) that would exclude agents’ and brokers’
commissions from the medical loss ratio (MLR) calculation per Section 1001.
Note: Senate legislation re: medical loss ratio differ from the House version in three areas:
inclusion of broker commissions in MLR calculations, scope—whether applicable to other
than individual and small-group market commissions, and expansion allowances for MLR
waivers. Differences in the two will be resolved in forthcoming joint conference committee.
return to top
Representative introduces bill to repeal PCORI On January 25, Representative Brett Guthrie (R-KY) introduced a bill (H.R. 3827) that
would repeal the Patient-Centered Outcomes Research Institute (PCORI) and
comparative effectiveness research (CER).
Note: PCORI per Section 6301 of ACA is responsible for implementing the CER program
that will provide industry stakeholders and the public readily accessible information about
the evidence supporting the full range of diagnostic and treatment options. Physicians are
concerned it will infringe on their clinical autonomy. Other critics argue it will lead to
government control of treatment decisions including end of life acre and rationing.
For more information on CER, see Deloitte Center for Health Solutions’ study,
“Comparative Effectiveness Research in the United States: Update and implications,”
June 27, 2011, www.deloitte.com/us/cerupdate2011.
return to top
House votes to repeal CLASS Act Wednesday, the U.S. House of Representatives voted (267-159) to repeal the Community
Living Assistance Services and Support (CLASS) program, per ACA Section 8002.
Republican members were joined by 28 Democrats in the majority vote.
Note: CMS announced last year that it would halt implementation of the CLASS program
because actuaries found that it is not actuarially sound. The CBO indicates it will reduce
revenues in ACA funding $75 billion over ten years.
The bill now goes to the Senate where it is expected to pass.
return to top
Legislative update
CBO projects $1.079 trillion deficit for FY12 Tuesday, the CBO released its budget projections for FY12 through FY22, projecting a
$1.079 trillion deficit for FY12 (year ending September 30, 2012). Measured as a share of
the nation’s GDP, a shortfall of 7% is projected, 2% below the FY11 deficit. Per the CBO
baseline projection, deficits will decline to $200 billion averaging 1.5% of GDP over the
2013–2022 period, assuming the 2001 and 2003 tax cuts and the payroll tax holiday
expire in 2013, spending cuts per the Budget Control Act of 2011 (averaging $109
billion/year including a 2% Medicare cut) are implemented, and physician pay is cut per
the sustainable growth rate (SGR) formula (27.4% scheduled March 1, 2012). If these
three assumptions are not included in the baseline budget, the CBO estimates deficits
would average 5.4% of GDP from 2013 to 2022 and public debt would increase to 94% of
GDP in 2022—the highest since 1946.
Key assumptions in CBO projections:
Focus CBO projections
Overall
economy
The economy will recover slowly, with real GDP growing 2% this year
and 1.1% next year.
Economic activity will quicken after 2013 but remain below the
economy’s potential until 2018.
The unemployment rate will remain above 8% in 2012 and next year,
due to weakness in demand for goods and services. As economic
growth picks up after 2013, the unemployment rate will gradually
decline to around 7% by the end of 2015, before dropping to near
5.5% by the end of 2017.
Affordable
Care Act
The ACA will cost $54 billion more than expected between 2012 and
2021, the result of repeal of the CLASS Act (reducing $76 billion in
premiums) and correction of the modified adjusted gross income
formula used to calculate Medicaid eligibility (the Medicaid glitch)
netting revenue increase of $22 billion).
Medicare If physician payment rates remain at current levels through 2022,
Medicare spending (net of premiums) will be $9 billion higher in 2012
and $316 billion (or about 5%) higher from 2013 to 2022.
Medicare’s Hospital Insurance Trust Fund (hospitals and post-
treatment care service providers paid under Medicare Part A) will be
insolvent in 2022 vs. 2024 in its August projection.
Medicare spending (excluding receipts from premiums) increased 8%
in 2011 and are projected to be about 8% in 2012.
Federal
spending on
Medicaid
(does not
include state
matching
funds)
The Federal Medicaid spending match will be $605 billion in 2022—2.5
% of GDP, compared with 1.7% in FY12.
Federal Medicaid spending will increase by $24 billion from 2012 to
2021 due to medical inflation and higher enrollment.
The Federal spending match will decrease 5% in 2012 as states
become responsible for a higher share of total costs than in recent
years.
Total Medicaid spending will increase in 2013 and increase rapidly in
2014, 2015, and 2016 due to ACA.
Source: CBO, “The Budget and Economic Outlook: Fiscal Years 2012 to 2022,” January
2012.
return to top
FDA improvements sought to address drug shortages Tuesday, legislation was introduced in the House to expedite the U.S. Food and Drug
Administration (FDA) review of medications, improve communication within the agency
and with stakeholders about possible shortages, and increase Drug Enforcement
Administration quotas for medications in short supply.
return to top
CBO: war savings calculation, target for SGR fix proponents
Tuesday, the CBO released its budget outlook for 2012 noting savings of $838 billion over
ten years for planned reductions in defense spending. SGR fix advocates estimate a
permanent fix would cost $316 billion and are pushing administration officials to earmark
war savings to the SGR. Last week, several hospital trade groups sent a letter to
Congress suggesting a permanent fix to the SGR necessary and encouraging further cuts
to hospitals would hurt job growth and debilitate hospitals. In their letter Wednesday, the
groups said, “H.R. 3630 as passed by the House in December jeopardizes access to care
for all patients by cutting more than $20 billion in hospital payments. Cuts of this
magnitude will mean fewer nurses, longer waits for emergency care and decreased
access to new treatments… America's hospitals encourage you to look elsewhere to pay
for changes to the sustainable growth rate.”
return to top
GOP physicians ask AARP for Medicare reform details
In a letter Wednesday, GOP physicians Rep. Phil Gingrey (R-Ga.) and Sen. Tom Coburn
(R-Okla.), reached out to the AARP requesting “concrete details” for re-structuring
Medicare to achieve fiscal solvency.
return to top
Rubio seeks EHB exclusion for religious organizations
Sen. Marco Rubio (R-FL) introduced the “Religious Freedom Restoration Act of 2012” last
week to exclude provisions in the August 1, 2011 HHS directive that EHB must include
free sterilization and all FDA-approved contraceptives, including drugs that many believe
induce abortions. His bill calls for an exemption for those religious organizations including
charities, hospitals, schools, or soup kitchens that hire or serve individuals who do not
share their religious tenets.
return to top
Representatives introduce bill to increase health care access in rural areas
Wednesday, Representatives Cathy McMorris Rodgers (R-WA) and Mike Thompson (D-
CA) introduced the “Rural Hospital and Provider Equity Act (R-HOPE) of 2012” to protect
and expand access to high quality health care in rural communities. The legislation would
increase Medicare and Medicaid disproportionate hospital payments to rural hospitals,
improve lab services payments in rural hospitals, continue geographic reclassification for
specific hospitals in less populated states, ensure adequate representation of rural
communities on the Medicare Payment Advisory Commission (MedPAC), increase rural
health clinic reimbursements, and extend several expiring Medicare incentive payments
for rural hospitals.
Note: 75 million (25%) Americans live in rural areas; 10% of physicians practice in rural
settings.
return to top
Representatives introduce legislation to amend 510(k) drug review process
Tuesday, Representative Edward Markey (D-MA) introduced the “Safety of Untested and
New Devices Act (SOUND Act)” to disallow the FDA rejection of new devices through the
510(k) device pathway to “ensure that a medical device is not marketed based on a
determination that the device is substantially equivalent to a predicate device that has
been recalled, corrected, or removed from the market because of an intrinsic flaw in
technology or design that adversely affects safety, and for other purposes.”
Note: the 510K process in the FDA is drawing increased scrutiny from legislators who
argue it has been lax in reviewing submissions resulting in safety issues with certain
medical devices that should not have been approved.
return to top
State update
State round-up Wednesday, a federal judge in California issued an injunction blocking a 10% reduction
in Medicaid reimbursements to doctors. California sought and received CMS permission
for the reimbursement cuts to help fill its budget deficit that stands at $9 billion. CMS
projected that the 10% Medicaid payment cuts would save California $623 million.
California’s governor is seeking approval to reduce Medicaid payments by almost an
additional $850 million.
Connecticut is projected to need 9,000 additional home care workers by 2016 to
provide long-term care at home or in the community: Connecticut’s population age 65 and
over will increase 64% while the population under age 65 will decrease.
Monday, a Florida state Senate committee voted against the Health Care Consumer
Protection bill that would require ambulatory care centers, diagnostic-imaging centers,
and physicians to publish out-of-pocket prices for commonly provided health care services
(already required for urgent care centers). This bill was previously passed by a Florida
state House committee.
Wednesday, Louisiana implemented the Bayou Health initiative that transitions 180,000
residents in the southeast region of the state from the state Medicaid program to
managed care, including a shared savings and enhanced primary care case management
model. When implemented statewide, the program will cover 800,000 and cost $2.2 billion
annually.
Utah State Representative Paul Ray (R) proposed a bill to allow Medicaid to charge
higher copayments for Medicaid enrollees who use tobacco. Per Ray, Medicaid enrollees
who smoke increase health care costs in Utah by $104 million each year. Note: Medicaid
enrollees have a 60% on average higher smoking rate than the general population
(American Lung Association).
return to top
Industry news
Study: insurance fee cost Medicaid $38.4 billion Last week, Medicaid health insurance companies released a study by Milliman concluding
the fee levied against insurance companies starting in 2014 in the ACA (Section 9009) will
cost state Medicaid programs $38.4 billion ($13.6 billion for states and $28.4 billion for the
federal government) over ten years as a result of the state’s shared funding responsibility
with federal funds.
Note: per ACA, health insurance companies will pay an annual fee starting calendar year
2014 as follows: $8 billion (2014), $11.3 billion (2015), $11.3 billion (2016), $13.9 billion
(2017), $14.3 billion (2018) and thereafter indexed to the rate of premium growth for the
prior year.
return to top
HHS: Medicare Advantage premiums down 7%, enrollment up 10% HHS Secretary Sebelius announced Wednesday that Medicare Advantage average
premiums fell $33.97 in 2011, to $31.54 in 2012, and enrollment increased 11.7 million in
2011 to 12.8 million in 2012. Her report also noted that the average Medicare beneficiary
has 26 Medicare Advantage plan choices. Part C premiums fell by 16% and enrollment
increased 17% since passage of the ACA in March 2010.
return to top
GAO: prices for medical devices vary widely, not transparent Friday, the Government Accountability Office (GAO) released its analysis of device pricing
variation in 31 hospitals done at the request of Sen. Max Baucus (D-MT), Chairman of the
Senate Finance Committee. The key finding: prices for the same device vary widely and
are not transparent to physicians, employers, or consumers. The report noted that
contracts between hospitals and manufacturers and/or group purchasing organizations
often preclude disclosure of terms and limit transparency. It also noted that as hospitals
employ more physicians, they would be in a stronger position to engage employed
physicians in gainsharing arrangements to encourage use of cheaper but equally effective
devices.
return to top
Moody’s: rough year ahead for not-for-profit hospitals Last week, Moody’s released its outlook for non-profit hospitals, remaining negative for
four reasons:
1. Downward pressures on hospital revenue. Payments by Medicare, Medicaid and
commercial payers will cut margins.
2. Uncertainty as a result of health reform. “Fiscal year 2013, which starts October 1,
2012, will be a telling year of the health care reform law, assuming it stands in the
Supreme Court. FY13 is when several new aspects of the healthcare reform law will
begin, including bundled payment programs and penalties for hospitals that have high
30-day readmission rates for acute myocardial infarction, heart failure, and
pneumonia. Additionally, hospitals have to gear up further for ICD-10 by October 1,
2013, and the potential of tens of millions of people that could be added to insurance
rolls by January 1, 2014, if the individual mandate passes.”
3. Sluggish economic recovery. “The sluggish economy means spending will not
increase dramatically and bad debt is likely to increase as employment stagnates,
consumers delay care and out-of-pocket responsibilities for consumers increase.”
4. Liquidity, balance sheet challenges. “Pressure on not-for-profit balance sheets is
high compared with historical levels due to investment volatility, growing pension
obligations, more exposure to non-cancellable operating leases, an increase of capital
spending funded with cash reserves.”
Note: not mentioned by Moody’s but relevant to hospital sustainability, three additional
factors: (1) as hospitals employ more physicians, capital & operating resources will be
deployed to support clinical integration and cut/delay other revenue producing
investments, (2) unrestricted gifts to NFP hospitals have slowed due to the economic
downturn, and (3) supply chain costs are increasing.
Later this month, the Deloitte Center for Health Solutions will release a summary of
interviews with 24 major health system CEOs, addressing their plans for the “new normal”.
Findings of these interviews are consistent with Moody’s forecast. Top concerns for health
system CEOs (number of mentions in 24 interviews):
Physician alignment and integration into leadership roles (23)
Reduction in operating costs to respond to cuts from payers (21)
Integration of non-acute services to become a system of care (20)
Management in uncertainty as a result of health reform, payer consolidation, fiscal
constraints (20)
Implementation of health information technologies and integration into evidence-
based care (13)
Building new/non-conventional relationships with commercial health plans to share
risk and savings (12)
More directly engagement with employers and consumers (8)
Re-design of current acute clinical programs to be responsive to innovation in
diagnostics and therapeutics (8)
Engagement with consumers in wellness, preventive health, and personal
accountability (8)
Protection or enhancement of the brand and reputation of the system (7)
The bottom line: health system CEOs believe market pressures inclusive of but not limited
to requirements of the ACA threaten their solvency and sustainability. While
acknowledging unknowns in the ACA, they are seemingly more vexed by increased
pressures on revenues and operating margins—the result of many factors.
return to top
IRS releases proposed regulations for taxable medical devices February 3, 2012, the Internal Revenue Service (IRS) issued proposed regulations
addressing the Medical Device Excise Tax enacted in ACA Section 9009 as amended by
Section 1405. This provision adds a 2.3% excise tax on medical devices beginning
January 1, 2013, designed to raise up to $20 billion in revenues over ten years. The
proposed rules propose to define taxable devices as all devices listed under a single
product code listing in conjunction with the FDA device listing requirement. Exempt
products include exports, components for further manufacture, eyeglasses, contact
lenses, hearing aids, and other medical devices generally purchased by the general public
at retail for individual use (the “retail exemption”) as prescribed by the Secretary (of the
Treasury). Comments on the rule will be accepted until May 7, 2012. The IRS is also
accepting outlines of related topics to be potentially discussed at a public hearing on the
topic that will occur May 16, 2012.
Note: the Advanced Medical Technology Association (AdvaMed) has asked for this
medical device tax to be repealed and predicted a 43,000 job loss to occur if this provision
is implemented. For more information on the medical device tax, see the attached
document.
return to top
FDA and device industry recommend $595 million in drug user fees Wednesday, the FDA announced it reached an agreement with the medical device
industry to collect $595 million in prescription drug user fees over five years, plus
adjustments for inflation.
Note: Congress established the drug user fee program ten years ago to collect fees from
life science companies to fund the FDA’s drug and device approval process. The program
was reauthorized with the Medical Device User Fee Act of 2007 (MDUFA II) and will
expire on September 30, 2012. Some of the FDA’s funding is through the annual
appropriations process and is therefore subject to annual cuts. As a result, the FDA is
expected to increase industry user fees, thus forcing increased costs for device and drug
manufacturers that are passed through in supply chain costs to providers and consumers.
return to top
Medical practices: ICD-10 Version 5010 conversion creating payment
glitches Wednesday, the Medical Group Management Association (MGMA) and the American
College of Medical Practice Executives (ACMPE) sent a letter to HHS asking the
administration to correct payment disruptions that medical practices are experiencing due
to the transition to electronic claims processing system known as Version 5010. The
groups requested that the compliance deadline be extended from January 1, 2012 to June 30, 2012.
return to top
National Quality Forum endorses resource use and costs quality measures Tuesday, the National Quality Forum (NQF) endorsed four measures on health care
resource use and costs that are expected to be used broadly in the industry:
1. 1557: Relative Resource Use for People with Diabetes (National Committee for
Quality Assurance)
2. 1558: Relative Resource Use for People with Cardiovascular Conditions (National
Committee for Quality Assurance)
3. 1598: Total Resource Use Population-based per member per month Index
(HealthPartners)
4. 1604: Total Cost of Population-based per member per month Index (HealthPartners)
Note: NQF is an important NGO (non-government organization) in that its determination
and validation of quality measures is usually incorporated into legislation. These
measures indicate cost and resource efficiency will be a focus of measures going forward
in addition to measures of safety, outcomes, and patient experiences.
return to top
Prior authorization of power mobility devices and recovery audit
prepayment review demonstrations to start June 1, 2012 Friday, CMS announced that the Prior Authorization of Power Mobility Devices (PMDs)
Demonstration and the Recovery Audit Prepayment Review Demonstration, which were
delayed from their initial January 1, 2012 start date, are expected to be implemented on
June 1, 2012.
return to top
CBO: federal worker benefits better than private employers A CBO report released Monday concluded that average benefits (e.g., health insurance,
retirement benefits, paid vacation) for federal workers with no more than a high school
diploma were 72% higher than their private-sector counterparts. Average benefits for
bachelor's degree were 46% higher, and workers with a professional degree/doctorate
received roughly the same level of average benefits in both sectors. On average, the
benefits earned by federal civilian employees cost 48% more than the benefits earned by
private sector employees with certain similar observable characteristics. (Source: CBO,
“How does the compensation of federal civilian employees compare with that of
employees in the private sector?” January 2012)
return to top
FDA approves “first ever” drugs for cystic fibrosis, basal skin cell cancer Last week, the FDA announced approvals of two drugs first in their therapeutic
application: a new drug approved through the FDA’s expedited review process that treats
basal cell skin cancer that has spread to other parts of the body, and a new biologic that
treats cystic fibrosis by targeting the genetic mutation in a small minority of cystic fibrosis patients who have breathing disorders.
return to top
Study: state nursing workload mandates reduce RN overtime slightly State-mandated caps on nurses' mandatory overtime hours have reduced overtime hours
for new registered nurses (RN), per the RN Work Project, a ten-year longitudinal study of
newly licensed RNs in 34 states funded by the Robert Wood Johnson Foundation. Key
finding: in 2010, in the 16 states that had rules restricting mandatory overtime hours for
nurses (Arkansas, California, Connecticut, Illinois, Maryland, Minnesota, Missouri, New
Jersey, New Hampshire, New York, Oregon, Pennsylvania, Rhode Island, Texas,
Washington, West Virginia), RNs were 59% less likely to work mandatory overtime than
their colleagues in unregulated states. Overall, 11.6% of nurses worked mandatory
overtime in a typical work week, averaging 6.1 hours. In the states regulating overtime,
RNs worked an average of 50 fewer minutes per week than their colleagues in states
without overtime regulations.
return to top
HHS OIG: data inconclusive about physicians opting out of Medicare The HHS Office of Inspector General (OIG) study of 7,900 physicians who opted out of
Medicare between 1998 and 2011 sought to analyze why physicians dropped Medicare in
their practices. It concluded the data was inconclusive to determine a cause: “Specifically,
we cannot determine the characteristics of physicians who opt out of Medicare, the trend
in the number of opted-out physicians, and why physicians choose to opt out of Medicare.
(Source: HHS OIG, “Lack of Data Regarding Physicians Opting Out of Medicare”, Report
OEI-07-11-00340, January 26, 2012)
return to top
Quotable “During the coming decade and over the longer term, the aging of the population and
rising costs for health care will continue to exert significant pressure on the federal
budget. The number of people age 65 or older will increase by about one-third between
2012 and 2022—from 14 percent of the population to 17 percent—substantially raising the
cost of Social Security, Medicare, and Medicaid. In addition, the Affordable Care Act,
enacted in 2010, will significantly increase the number of nonelderly people receiving
assistance through federal health care programs. Of the total federal outlays for Medicare,
Medicaid, the subsidies offered through new health insurance exchanges, and related
programs that CBO projects for 2022, about half will go to benefits for people over age 65,
about a quarter will go to benefits for blind and disabled people, and about a quarter will
go to benefits for nonelderly people who are not blind or disabled. CBO projects that the
costs per enrollee for Social Security and the major health care programs also will
continue to rise, albeit at different rates because of differences in the laws that govern
them. Altogether, spending on those programs will increase at an average annual rate of
nearly 7 percent between 2013 and 2022, a pace that will outstrip growth in nominal GDP.
Combined outlays for all of those programs, which will account for 45 percent of
noninterest outlays in 2012, will constitute 60 percent of noninterest outlays in 2022, CBO
projects. Moreover, those trends will persist after 2022. Because of the aging of the
population and rising costs for health care, the set of budget policies that were in effect in
the past cannot be maintained in the future.” —CBO, “The Budget and Economic Outlook:
Fiscal Years 2012 to 2022,” January 31, 2012
“For the fourth year in a row, Washington faces a $1 trillion-plus deficit and just servicing
the debt will soon cost as much as paying for Medicaid, the federal-state program for the
poor and disabled. Those were two grim predictions in a 147-page report from the
Congressional Budget Office, which Tuesday stepped into the 2012 campaign like some
stern Aunt Cassandra—coming down from the attic to lecture the protagonists. ‘It’s not just the economy stupid, it’s the debt.’” —Politico, “Congressional Budget Office reports
another $1 trillion deficit”, originally published January 31, 2012, updated February 1,
2012
“The CBO’s latest alarm bell couldn’t be more ominous. For years, politicians from both
political parties have failed to be honest with the American people about the size and
scope of the debt threat. The CBO’s report today confirms that it is past time for serious leaders to put aside politics and start forging solutions.” —Congressman Paul Ryan (R-
WI) Tuesday, January 31, 2012
“Biopharmaceutical development, which has led to more than 300 new medicines in the
last decade, requires significant investment – an average new medicine can exceed $1
billion and take 12 to 15 years to develop. Advancements in regulatory science, greater
predictability, and communication, and a commitment to single-cycle review all represent
incentives that can help spur that investment. We urge Congress to pass PDUFA-V
legislation that reflects the performance goals letter in order to preserve those provisions
that would boost innovation while promoting patient access and allowing FDA to continue
its essential mission.” —PhRMA, statement regarding the reauthorization of the
Prescription Drug User Fee Act (PDUFA), February 1, 2012
return to top
Fact file
January 2012 unemployment: 8.3% from 8.5% in December 2011; health care
industry job growth—31,000; the industry will add additional 5.6 million jobs by 2020.
Manufacturing is predicted to lose 73,000 jobs by 2020. (Source: U.S. Department of
Labor)
Heart disease and strokes account for $1 out of every $6 spent in the U.S. health care system. (Source: HHS)
From 1993 to 2005, in communities where health department funding increased, for
every $10 increase in local health department spending there was a 7% decrease in
deaths from infectious disease. (Source: Robert Wood Johnson, Public Health
Services and Systems Research Service)
In 2010, inappropriate medical care contributed to the deaths of 15,000 Medicare enrollees. (Source: Bara Vaida, “Doctor, Did You Check Your Checklist?” Kaiser
Health News and Washingtonian, January 30, 2012)
Hospital errors affect 1 in 7 hospitalized. (Source: HHS, OIG)
Health data breaches in the U.S. increased 97% in 2011. (Source: Redspin, “Breach
Report 2011, Protected Health Information,” February 2012)
Not-for-profit hospitals spend 11.3% of total expenses on benefits to their community:
5.7% for direct benefits to patients in financial need through free care, financial assistance, and spending to fill in the gaps from Medicare underpayments. (Source:
Ernst & Young and The American Hospital Association)
Since 1948, every President with an approval rating above 50% was re-elected. President Obama’s current approval: 51%. (Gallup, New York Times/CBS Poll
January 30, 2012)
return to top
National health reform: what now? National health reform is here. The health reform bills (HR3590 and
HR4872) are law and triggering sweeping changes and disruptions – some
rather quickly and some over many years. The industry is asking, “What
now?” At Deloitte, we continue to explore and debate the key questions
facing the industry, and we look forward to helping our clients find and
implement the right answers for their organizations. To learn more, visit
www.deloitte.com/us/healthreform/whatnow today. return to top
Subscribe to the Health Care Reform Memo
Health Care Reform Memo —The weekly Health Care Reform Memo is available for
subscription. Please visit www.deloitte.com/us/healthmemos/subscribe. First, confirm
your sector(s) of interest. Then, select the Health Care Reform Memo as one of your
Email Newsletters (under Health Sciences and Government). return to top
Modern Healthcare’s 50 Most Influential Physician Executives Readers are encouraged to vote for Modern Healthcare’s 50 Most Influential Physician
Executives. Nominees include many of our clients and friends, including our own Senior
Advisor on Health Care Transformation and Technology, Dr. Harry Greenspun. Click here to vote: www.modernphysician.com/section/50mostinfluential-about.
return to top
Deloitte Center for Health Solutions research
Coming soon: Issue Brief: The Voice of the Hospital C-Suite: Responding to the “New Normal”
Issue Brief: Supervisory care
Issue Brief: Physician perspectives about health information technology
Issue Brief: Engaging consumers through health information technology
Currently available: “Physician Perspectives about Health Care Reform and the Future of the Medical
Profession” —December 2011. Available online at
www.deloitte.com/us/physiciansurvey.
“2011 Global Survey of Health Care Consumers” – U.S. and country specific reports
and fact sheet library —2011. Available online at
www.deloitte.com/us/2011consumerism.
“Issue Brief: The fiscal impact to states of the Affordable Care Act (ACA):
Comprehensive analysis” —October 2011. Available online at
www.deloitte.com/us/acafiscalimpactstates.
return to top
Deloitte contacts Paul H. Keckley, Ph.D., Executive Director, Deloitte Center for Health Solutions
(pkeckley@deloitte.com)
Harry Greenspun, M.D., Senior Advisor, Health Care Transformation and Technology,
Deloitte Center for Health Solutions (hgreenspun@deloitte.com)
Jessica Blume, U.S. Public Sector National Industry Leader, Deloitte LLP
(jblume@deloitte.com)
Bill Copeland, U.S. Life Sciences and Health Care National Industry Leader, Deloitte LLP
(bcopeland@deloitte.com)
Steve Kraus, Principal, Human Capital, Deloitte Consulting LLP (stkraus@deloitte.com)
Mitch Morris, M.D., National Leader, Health Information Technology, Deloitte Consulting
LLP (mitchmorris@deloitte.com)
Clint Stretch, Managing Principal, Tax Policy, Deloitte Tax LLP (cstretch@deloitte.com)
Andrew Vaz, National Managing Director, Life Sciences & Health Care, Deloitte
Consulting LLP (anvaz@deloitte.com)
To receive email alerts when new research is published by the Deloitte Center for Health
Solutions, please register at www.deloitte.com/centerforhealthsolutions/subscribe.
To access Center research online, please visit
www.deloitte.com/centerforhealthsolutions.
To arrange a briefing for your team, contact Jennifer Bohn (jebohn@deloitte.com).
return to top
Deloitte.com | Security | Legal | Privacy
1633 Broadway New York, NY 10019-6754 United States
About Deloitte Deloitte refers to one or more of Deloitte Touche Tohmatsu Limited, a UK private company limited by guarantee, and its network of member firms, each of which is a legally separate and independent entity. Please see www.deloitte.com/about for a detailed description of the legal structure of Deloitte Touche Tohmatsu Limited and its member firms. Please see www.deloitte.com/us/about for a detailed description of the legal structure of Deloitte LLP and its subsidiaries.
Disclaimer This publication contains general information only and Deloitte is not, by means of this publication, rendering accounting, business, financial, investment, legal, tax, or other professional advice or services. This publication is not a substitute for such professional advice or services, nor should it be used as a basis for any decision or action that may affect your business. Before making any decision or taking any action that may affect your business, you should consult a qualified professional advisor.
Deloitte shall not be responsible for any loss sustained by any person who relies on this publication.
Copyright © 2012 Deloitte Development LLC. All rights reserved. Member of Deloitte Touche Tohmatsu Limited
To unsubscribe, reply to this message and add “Unsubscribe” in the subject line.
Deloitte RSS feeds
Recommended