Payers & Providers Midwest Edition – Issue of February 14, 2012

8/3/2019 Payers & Providers Midwest Edition Issue of February 14, 2012

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Hospitals and physicians in Illinois arealarmed by the latest prediction from thegovernors ofce that the state may have to cutMedicaid funding by another $2 billion, or

13%, in the next scal year. Medicaid inIllinois is already a low payer and isdelinquent on paying itsbills.

As far as I can seein the proposal, if thereare across the boardcuts, that budget putsthose institutionsalready on the precipiceof disaster, it puts themover the edge, saidDennis Ryan, vicepresident for community

and external affairs atHoly Cross Hospital onChicagos southwest side.The states Medicaidbudget is about $15billion in the current scal year.

Gov. Pat Quinn is scheduled to deliver hisbudget message to the legislature on Feb. 22.On Feb. 7 during a speech at the City Club ofChicago, Quinn said: Were going to have toreduce the amount of money we spend onMedicaid by probably over $2 billion thisyear. Its going to be very difcult. Providers

of healthcare services, he added, are going tohave to take a haircut. They arent going to getscalped. but everybody will get a haircut.

Providers, however, have been feeling

scalped for years. Legislators have fallen intothe habit of underfunding the program and

letting the bills pile up,said Thomas Anderson,M.D., a diagnosticradiologist at MercyHospital on the SouthSide and president of theChicago Medical Society.Medicaid runs out ofmoney for that year. Theyjust stop processingclaims, but keep track ofthem, wait until next July

1, then start playingcatch-up, he said.

Gradually they falbehind. Not only is therevery delayed payment for

services, but sometimes there is no payment atall.By the end ofscal 2012, the state will haveaccumulated $1.7 billion in unpaid Medicaidbills. That gure is predicted to rise to $21

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In Brief

Sparrow, Hayes GreenBeach Agree To An

Affiliation

Sparrow Health System in Lansing,Mich., has signed an agreement to

afliate with Hayes Green BeachMemorial Hospital of Charlotte, Mich.

The hospitals dont intend to merge butrather to jointly develop operational,clinical, and programmatic services,they said in a news release.

We value the relationship thatalready exists between the twoorganizations, and we expect todeepen the current programs andservices were working on together,and create new ones to furtherenhance the care provided for patientsin our community, said Matt Rush,president and CEO of Hayes Green.

The hospitals said their goal wasto improve quality of care and forge

greater clinical integration.The hospitals cited the uncertainty ofhealthcare reform and the demandsof ongoing economic challenges asreasons to work together.

Sparrow operates four hospitals incentral Michigan, including SparrowClinton Memorial, Sparrow IoniaHospital, two campuses in Lansing,and an afliate, Carson City Hospital.

UnitedHealth AcquiresMedicare Advantage

Insurer

XL Health Corp., a sponsor ofMedicare Advantage plans in 12 states,has been acquired by Minnetonka,Minn.,-based UnitedHealthcare, thecountrys largest insurer.

XL Health specializes in plans forbeneciaries with special needs andhas 117,000 members, including somein Illinois, Indiana, Iowa, Missouri, andWisconsin.

XL Healths operations focus onMedicare beneciaries with special

Continued on Page 3

NEWS

Illinois Medicaid (Continued from Page One)

billion in ve years without a comprehensiveoverhaul of Medicaid.

About 2.7 million state residents depend

on Medicaid for health insurance. Already,some providers have stopped acceptingMedicaid patients. Howard Axe, M.D., aninternist with the Medical Care Group inArlington Heights, said his 20-physicianpractice has never taken Medicaid.

The reimbursement isnt adequate tomeet our expenses, he said. I dont knowanybody intheir rightmind whowould wantto acceptMedicaid

reimbursementrates, headded. If youwere running abusiness andhad the choicebetween retailcustomers andwholesale customers, of courseyoud choose retail.

Illinois ranks 44thth in thecountry in per capita Medicaid spending, inno small part because providers agree toaccept such low payments and to allow thestate to pay late.

The Affordable Care Act envisions aheightened role for Medicaid as insurer ofpossibly the majority of those newly covered.In 2014, when the health reform law fullykicks in, about another 800,000 are expectedto join the Medicaid rolls in Illinois. Thus theprograms current scal condition is a negativebellwether of its longterm health in Illinois, asin many other states that arent sure they willbe able to afford the additional coverage andattendant costs.

Illinoiss budgetary problems have earnational notoriety. The legislature hasntfunded the public pension programs

adequately for years and the state rankssecond to California as the scally mostmismanaged in the country. Even a 50%increase in the personal income tax last yehasnt begun to pull the state out of thenancial miasma its mired in.

Of the $15 billion in Medicaid spendihospitals account for about $5 billion. To

reduce that b13% wouldmean cuts ofroughly $650million.

That

of a reductiowould bedevastating tmany hospitasaid JohnBomher, senvice presidenfor policy at t

Illinois Hospital Association,especially to those in the innerand rural critical-access areas.

About 30% of the states hospitals are alrealosing money.

For some hospitals, I expect you wousee reductions in services: laying off staff,deferring investment in new equipment,renovating of facilities, Bomher said.These cuts would come on top of reductioin Medicare payments under health reformamounting to $8.4 billion over 10 years toIllinois hospitals, the association said. In thcurrent scal year $80 million in cuts are

Holy Cross Hospital

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NEWS

In Brief

needs, such as people with chronicillness. Doing business as CareImprovement Plus, it also offers plansin Arkansas, Georgia, Maryland, NewMexico, New York, South Carolina,and Texas. XL Healths model of care willenable UnitedHealthcare to better

serve chronically ill and dual-eligibleMedicare beneciaries across thecountry, said Tom Paul, chiefexecutive of UnitedHealthcareMedicare and Retirement.

The purchase will contributeabout $2 billion to parent companyUnitedHealth Groups 2012 revenuesand 5 cents to earnings per share, afterexpenses. UnitedHealth Group isexpecting net earnings of $4.60 to$4.80 per share in 2012.

A Flusher MichiganMay Boost Healthcare

Spending

Michigans improving economicprospects have prompted Gov. RickSnyder to propose a budget thatincludes $600 million of new fundingfor healthcare.

The governors budget proposalwould cut funding for graduatemedical education by $17.1 million,however, on top of a reduction of$14.7 million in scal year 2012. Thebudget also doesnt renew a specialfund of $29.5 million for small andrural hospitals.

On a positive note, Medicaidprovider rates would be spared afurther trim. The Healthy Kids Dental

program would be expanded, to serveapproximately 180,000 children. Thegovernor also suggested coveringautism spectrum disorder servicesthough Medicaid and the MIChildprogram. The governor wants to use$281 million in funding from theAffordable Care Act to help increaserates for primary-care providers.

The Michigan HospitalAssociation expressed greatdisappointment in the Republicangovernors proposed cuts to GME andrural hospital funding, which thelobbying group had identied as toppriorities for the membership. The

taking effect; in scal 2013 it will be $190million.

The only way hospitals and physicians cantake Medicaid patients is to cost-shift thelosses onto commercial payers or to build aphilanthropic base that helps subsidize losseson operations. For those organizations thathave only a small commercial base, the goingis increasingly tough.

At Mount Sinai Hospital in Chicago, forexample, 60% of the payer base is Medicaid,20% Medicare, and 15% is self-pay, whichoften is no-pay, said Chuck Weis, chiefnancial ofcer of Sinai Health System. Thehospital has 5% commercial insurance.

For any organization that has a payerbase thats 60% Medicaid, a signicant level ofcuts is bound to have an impact, he said.It may be even worse for physicians, especiallythose in localities with high unemployment orlots of chronic disease.

A doctor cannot afford to have a largepercentage of patients on Medicaid, if hehopes to keep his staff paid, his supplies in thedrawer, and the lights of his ofce turned on,Anderson said.

A study published last June in the NewEngland Journal of Medicine documented thatchildren in the Chicago region on Medicaid orthe state Childrens Health Insurance Program

were less likely to get appointments withspecialists or had to wait longer to be seen.Two-thirds of those paying through CHIP

were denied appointments, while only 11% those with private insurance couldnt get onIn 2010, 65% of all Medicaid recipients werchildren and they consumed 30% of spendinaccording to state data. In July 2012, theeligibility cuts enacted last year will remove3,500 children as beneciaries.

Sick children will have feweropportunities to receive quality specialtycare, said Childrens Memorial Hospital in statement. The cuts disproportionately impacare for children and, in the case of ChildrenMemorial, care for the most medicallycomplex and chronically ill children.

Hospitals that serve a large population othe uninsured, or not Medicaid qualied, gesubstantially less in terms of totalreimbursements already, so there is very littway to cost shift, Ryan said.

At Holy Cross the number of patientslacking any insurance at all who presented ithe emergency room went up 167% in thescal year that ended June 30, 2011, headded.

We treat people. Holy Cross is amission-based hospital, sponsored by theSisters of St. Casimir, he said. We areabsolutely dependent on the payments fromMedicaid and Medicare. We have sleeplessnights over trying to gure out how this wou

work. The unintended consequences might bthat a hospital such as Holy Cross would notbe able to sustain operations.

Michigan CON rules dont allow hospitto move beds more than two miles. The newsite is 9.4 miles from McLaren-Oakland.McLaren tried to change CON regulations l

year but was not successful.The CON commission needs to

recognize that changes need to be made withe geographic limitation for a new hospitalIncarnati told Crains Detroit Business.

End-runs past the CON process to thestate legislature have become common instates with weak or declining CONprotections, such as Illinois and Missouri.(Payers & Providers, May 31, 2011) Michigahas been viewed as having one of the mosthighly functioning CON standards in thecountry.

McClaren To Challenge CON RulesSystem Fears Challenge in Moving Hospital Beds

Illinois Medicaid (Continued from Page Two)

McLaren Health Care, the giant hospitalsystem in eastern Michigan, announced that itwould challenge the states certicate of needrules governing where new health facilities

may be located.Early this month McLaren applied for two

CONs to build a hospital in IndependenceTownship, and transfer 200 unused beds fromMcLaren Oakland in Pontiac, formerly knownas POH Regional Medical Center. Theapplications are expected to be heard in July.Phil Incarnati, McLarens CEO, said if theCONs are denied, the system would go to thestate legislature to request legislation to permitit to construct a building on 80 acres that ispart ofMcLaren Health Care Village ofClarkston.


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The Feb. 8 issue of theJournal of the AmericanMedical Association (JAMA) published alengthy conict of interest correction byEugene Braunwald, M.D., editor of one of theiconic textbooks of cardiology and author ofover 1,000 peer-reviewed cardiovascularpublications: To the Editor: It has been brought to myattention that there were differences in mynancial disclosures in a number of articlesrecently published in JAMA, and this warrantsexplanation.

Dr. Braunwald explained the variousrelationships involved in discussing virtually

any drug in our cardiovasculararmamentarium. I encourage you to read thefull text.

In reply to the correction,JAMA realized it,too, had erred: We appreciate Dr. Braunwald providing hisprofessional and transparent explanation toclarify the differences in the reportednancialdisclosures among several of his recentpublications in JAMA. We fully recognize thatdetermining relevantnancial relationshipsinvolves judgment and thatreporting ofnancial disclosureinformation certainly is not an

exact science. In fact, in one ofthe Commentaries that Dr.Braunwald mentions, his co-author, Dr.Gheorghiade, had reported to JAMA that hehad received consulting fees from Bayer,Novartis, Sigma Tau, Johnson & Johnson,Takeda, Otsuka, andMedtronic. However,these disclosures inadvertently were omittedfrom the published article. The editorsapologize for this oversight and regret this error.

With the depth and breadth ofpharmaceutical and medical device companyfunding of academe, journals, and doctors is sopervasive and the disclosures so inclusive, what

are readers to think?In my view, these doctor-pharma

relationships are part of the reason we haveenjoyed so many advances in medicine.Without these dollars to academics and theirprograms, there would be no researchprograms and little to no innovation. Theresimply is not enough money to support thecosts of doing the work from independentsources, especially in todays highly regulatedresearch environment. Companies vested inbringing a new drug to market must do clinical

trials to prove safety and efcacy before the dare sold in the U.S. So companies bring their to well-respected doctors who see qualiedpatients.

In turn, these doctors present the protocotheir institutional review boards, process thereams of paperwork, ultimately decide whichpatient(s) might be appropriate candidates fornew medication, prescribe the drug, watch (arecord) it's side effects and benets, treatcomplications (if they occur), collect and anathe data (often with research technicians andnurses who help with blood tests and datacollection), and publish the papers with the

results. And yes, they collect a paycheck eachmonth.

It's what must happen to approve any druSo why all the fuss about a prominent academcardiologist updating his conicts in this momof revelation?

I think in part its because our drugs (andhealthcare in general) have gotten so expensivinnovative chemotherapeutic drug regimenswerent going into the tens of thousands of do(in some cases), we (as the consumers of these

drugs) probably wouldnt caBut when we see the costs othese new drugs impact hea

insurance premiums and wadirectly, we look for people

blame.And doctors, the intermediaries between

pharmaceutical companies and patients, are teasy target, especially when so many researchdoctors later morph into highly-paid marketinspokespersons once the research drug is apprfor sale.

Doctors are starting to understand this. Bwe now see doctors disclosing everything toeverybody so often that few are listeninganymore. Disclosure slides last a tenth of asecond before a talk. Most doctors dont mind

Thats because doctors know these conicinherent to the research process have notchanged.

Any research takes money -- tons of moneWhen it works, the collaboration betweendoctor-researcher and industry can actuallybecome a net positive for all of us.

OPINION

The Conflicted Conflicts Of DoctorsRelationship With Pharma is Important, But Troubled

Westby G. Fisher, M.D., is an internist and

cardiac electrophysiologist at NorthShore

University Health System in Evanston, Ill.

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By Westby G. Fisher,

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Payers & Providers Midwest Edition – Issue of February 14, 2012