The Daily Briefing

News for Health Care Executives

Trustees: Without changes, Medicare will run out in 2024

Projection remains unchanged because of provider cuts from debt deal

April 24, 2012

Medicare's hospital insurance fund is expected to run out in 2024, a projection unchanged from last year, according to a report released Monday by the board of trustees for Medicare and Social Security.

Unlike last year's trustees' report, which predicted that the Medicare fund would become insolvent five years ahead of schedule, this year's report focuses on concerns about Social Security's trust funds, which the trustees predicted would run out of money in 2033, three years earlier than projected last year.

"Both programs took a turn for the worse this year," said trustee and George Mason University senior research fellow Charles Blahous.

Report: Medicare will be unable to pay out full benefits by 2024
In 2011 alone, Medicare redeemed $27.7 billion in trust fund assets to cover hospital insurance expenses.  

Over the next 10 years, the trustees predict that the hospital fund's expenditures will grow by an annual average of 5.3%. Meanwhile, they predict that the fund's income will grow by an annual average of 6%.

Nonetheless, the trustees predict that Medicare's hospital insurance fund will no longer be able to pay for beneficiaries' full hospital benefits by 2024. Instead, the trustees predict that in 2024 the fund will only be able to pay out 87% of the projected benefits for that year and 67% of the projected benefits in 2050.

• Are you prepared to survive on Medicare margins? Learn how Scripps Health restructured to face the rapidly changing environment.

According to Modern Healthcare, the insolvency date did not change despite growing Medicare costs in part because of a 2% cut in provider payments that began in January. The report said the solvency date would have accelerated without the reduction, which was part of a deficit reduction deal reached last summer.  

In addition, a senior government official said the insolvency date remained stable because hospital expenditures were lower than anticipated in 2011, with fewer inpatient admissions. Although the cause of the decrease is unclear, the official says more patients may have received procedures in outpatient settings.  

According to the report, Medicare's hospital insurance has been paying out more than it has received since 2008. Moreover, it notes that Medicare's hospital insurance trust fund has failed to meet the trustees' formal test of short-range financial adequacy every year since 2003.

Trustees: Report highlights need for reform
Acting CMS Administrator and Secretary of the Board Marilyn Tavenner said, "The trustees' report tells us that while Medicare is stable for now, we have a lot of work ahead of us to guarantee its future."

She noted that the federal health reform law "is giving CMS the ability to do this work, with tools to lower costs, fight fraud, and change incentives so that Medicare pays for coordinated, quality care and not the number of services."

Both sides of aisle say findings support their policies
According to CQ Today, both Democrats and Republicans on Monday said the report supports their policies on entitlement spending.

Democrats said the report confirms that the federal health reform law has slowed Medicare spending and extended the program's solvency. Moreover, Rep. Sander Levin (D-Mich.) said that the report indicates that the health reform law's provisions could produce even greater savings. He called on Republicans to "stop their efforts to end the Medicare guarantee, which would only place enormous additional costs on the backs of seniors and send our nation's health care costs dramatically higher."

Meanwhile, Republicans said the report indicates the need for immediate entitlement reform. Sen. Orrin Hatch (R-Utah), ranking member of the Finance Committee, said that allowing Medicare spending to continue to grow "is no longer an option." He called on President Obama to stop "pushing politically motivated policies" and "step up to the plate and lead" to find a way to fix the program.

Experts: Report makes uncertain assumptions
Some experts and officials questioned the report, saying it is based on a number of financial and political assumptions that could prove unrealistic, Reuters reports.

The trustees are required to base their projections of Medicare costs on current law, according to the Wall Street Journal's "Washington Wire." For example, the report assumes that a scheduled 31% pay cut to physicians will take place in 2013. However, it "is a virtual certainty that lawmakers" will override the cut, the report noted.

The report also assumes that the deficit-reduction agreement to reduce Medicare spending by 2% annually will hold over the next 10 years and that the Supreme Court will uphold the health reform law, both of which could prove untrue (AP/Washington Post, 4/23; Crittenden/Morath, Wall Street Journal, 4/23; Daly, Modern Healthcare, 4/23 [subscription required]; Zigmond, Modern Healthcare, 4/23 [subscription required]; Baker, "Healthwatch," The Hill, 4/23; Walker, MedPage Today, 4/23; Werber Serafini/Galewitz, Kaiser Health News, 4/23; Harrison, CQ Today, 4/23 [subscription required]; Sanger-Katz/McCarthy, National Journal, 4/23; Norman, CQ HealthBeat, 4/23 [subscription required]; Morgan, Reuters, 4/23; Radnofsky, "Washington Wire," Wall Street Journal, 4/23).

BMJ: Men are more likely to be readmitted than women

Researchers say social isolation may contribute to ED visits, hospitalization

April 24, 2012

Men are much more likely to return to the hospital within 30 days of discharge than women, and the risk further increases if they are retired or unmarried, according to a study in BMJ Open.

For the study, researchers at Boston University School of Medicine analyzed 2006 and 2007 data from 737 adults participating in the Project Re-Engineered Discharge (Project RED) clinical trial.

Project RED: Three hospitals share secrets to reducing readmissions

Altogether, the 30-day return rate—which researchers said included readmissions and ED visits—was 47 events per 100 men and  29 events per 100 women. The researchers note that men were two times more likely than women to visit the ED within 30 days of discharge, accounting for most of the difference in post-discharge hospital use.

The researchers attributed much of the difference in hospital use to follow-up care. Based on phone interviews, the researchers found that only 49% of men visited their primary care provider within 30 days of discharge, compared to 57% of women. In addition, they found that fewer men understood their follow-up appointments.

In addition, the researchers identified several risk factors that increase a man's risk of returning to the hospital, including being retired, being unmarried, or having symptoms of depression. Those risk factors did not impact women's post-discharge hospital use.  

• From the Health Care Advisory Board: Three specialized strategies to manage care for complex, elderly patients.

According to the study, the "findings raise the possibility that social isolation—as illustrated by the positive association with being retired, unmarried, and symptoms of depression—may be important factors to target for intervention" (Hand, Medscape Medical News, 4/19, Boston University release, 4/19).

CMS actuary: Health law will save $200B through 2016

Most savings expected to come from payment policy changes

April 24, 2012

Federal health reform law provisions that curb excessive payments to private insurers and implement new anti-fraud policies will help save Medicare more than $200 billion through 2016, according to a report released from CMS's Office of the Actuary.

In addition, the report predicts that Medicare beneficiaries will save about $59.4 billion by 2016 through reduced cost-sharing and premiums.

Savings estimates
The bulk of the savings for Medicare—about $150 billion—is expected to come from payment policy changes that would lower reimbursements to health care providers and private insurers.

Specifically, the report predicts savings through 2016 of:

• About $7.8 billion, by launching antifraud initiatives;
• About $68 billion, by reducing excessive payments to Medicare Advantage plans;
• About $85 billion, by changing provider payments to boost productivity; and
• About $41 billion, by expanding benefits, reducing payments for hospital-acquired conditions, reducing readmissions, and lowering premium subsidies.

In addition, the report outlines savings of about $10 billion through 2013, from efforts to improve patient safety.

The report notes that additional savings would be generated as the health reform law gradually closes the Medicare prescription drug "doughnut hole," expands access to certain preventive services without co-pays, and implements payment reform (Zigmond, Modern Healthcare, 4/23 [subscription required]; Baker, "Healthwatch," The Hill, 4/23; Bristol, CQ HealthBeat, 4/23 [subscription required]; Fox, National Journal, 4/23).

Medical students flock to dual-degree programs

Dual-degree enrollment increased by 36% over past 10 years

April 24, 2012

Medical student enrollment in dual-degree programs has surged over the past 10 years as physicians-to-be prepare for a rapidly changing health care landscape that demands new expertise, American Medical News reports.

According to Association of American Medical Colleges (AAMC) data:

• 3,921 students were enrolled in MD/PhD, MD/JD, and MD/MBA programs in 2002; and
• 5,349 students were enrolled in those programs in 2011, a 36% increase.

The AAMC says that about 5,000 students were in MD/PhD programs in 2011, but "suspects its MD/JD and MD/MBA tallies are undercounted." 

• Build new bonds with your medical staff. Learn about the Advisory Board's physician collaboration partnerships.

To meet the growing demand, AAMC's Henry Sondheimer says that more schools are offering dual degree or certificate programs. For example, Association of MD/MBA Programs data show that at least 65 medical schools nationwide now offer MD/MBA programs, up from just six schools in 1993 and 33 schools in 2001.

Some medical schools also are partnering with nearby institutes. For example, the Mayo Medical School in 2007 partnered with Arizona State University to offer new programs in business, law, biomedical informatics, biomedical engineering, mass communication, and clinical science.

"Our reason for providing dual-degree programs stems from the realization that the standard medical school curriculum will not adequately prepare all students for medicine as it will be practiced over the next 30 years," according to Joseph Grande, Mayo Clinic's associate dean for academic affairs.

However, dual-degree programs are not suitable for all medical students, said Stan Kozakowski, the American Academy of Family Physicians' director of medical education. Depending on the degree or program, medical students may need to absorb additional costs and undergo several more years of training (Krupa, American Medical News, 4/23). 

GAO: Cancel Medicare Advantage demo

Program's quality bonuses went to 'average-performing plans'

April 24, 2012

A demonstration program that provides quality bonus payments to Medicare Advantage (MA) plans is unlikely to "produce meaningful results" and should be canceled, according to a Government Accountability Office (GAO) report.

The federal health reform law reduced payments to MA plans, while also authorizing bonus payments to plans that provide high-quality care. The Obama administration in November 2010 expanded those bonus payments to MA plans that receive three out of five stars for care quality. Previously, MA insurers were required to receive four stars to receive the extra payments.

However, the report found that most of the bonuses paid in the demonstration project went to "average-performing plans."

Moreover, it notes that researchers were unable to tell whether the increased payments led to improved care. "The design of the demonstration precludes a credible evaluation of its effectiveness in achieving (the administration's) stated research goal," the report states.

GAO said the program is expected to cost $8.3 billion over 10 years, with 80% of that cost occurring in the first three years.

MedPAC also criticizes program

Meanwhile, officials from the Medicare Payment Advisory Commission (MedPAC) also criticized the bonus payment program, saying that it increases "spending at a time when Medicare already faces serious problems with cost control and long-term financing."

MedPAC officials also condemned Medicare's "overly broad use of demonstration authority," adding that "limited Medicare dollars should go to truly high-performing plans." Furthermore, by providing bonuses to average-scoring plans, "the demonstration lessens the incentive to achieve the highest level of performance," MedPAC officials said.

Report raises 'serious questions' about motive for program

GAO's report also questions federal officials' motives for the program, National Journal reports. The findings raise "serious questions about whether the purpose of this demonstration was to mask the [federal health reform law's] cuts to seniors' Medicare benefits for political purposes," the report states.

Sen. Orrin Hatch (R-Utah) and Rep. Dave Camp (R-Mich.) said the report suggests that Medicare officials abused their authority. Hatch and Camp in a statement said they were concerned that the government could be "using taxpayer dollars for political purposes, to mask the impact of cuts in the MA program" under the overhaul.

Obama administration disputes report

The Obama administration disputed the GAO report and said the bonus program will help Medicare improve care quality. HHS in a statement said the project "supports our national strategy to improve the delivery of health care services, patient health outcomes and population health" (Pear,  New York Times, 4/22; Alonso-Zaldivar, AP/San Francisco Chronicle, 4/22; National Journal, 4/23).

Researchers say they've solved 'brain freeze'

Study links brain blood flow to the headaches

April 24, 2012

An experimental study on "brain freeze" could lead to new treatments for other headaches including migraines.

Researchers—who presented their findings at the Experimental Biology meeting in San Diego on Sunday—monitored 13 patients who drank ice water through a straw pressed against the upper palate to provoke brain freeze.

The study found that "brain freeze" headaches were triggered by a rapid increase in blood flow in the anterior cerebral artery and they disappeared when the artery contracts.

If the study's findings bear out, drugs that prevent rapid arterial dilation could be a potential remedy for brain freeze.

Why do we get brain freeze?
Jorge Serrador of Harvard Medical School and the War Related Illness and Injury Study Center of the Veterans Affairs New Jersey Health Care System said the reaction could be a form of self-defense for the brain.

The brain is "fairly sensitive to temperature," Serrador said, adding, "vasodilation [expansion of blood vessels] might be moving warm blood inside tissue to make sure the brain stays warm." He also said the response could be a way to reduce pressure in the brain.

Serrador said similar blood flow changes could be associated with migraines and other headaches, and finding ways to control brain blood flow could offer new treatments for headaches (Preidt, HealthDay, 4/22; Carollo, ABC News, 4/23).

Reducing prescription expenses by 10%–20%

April 24, 2012

Learn about one Midwestern hospital’s experience with our PBM Compass and their success with integrating an in-house pharmacy in an employee population management program. Learn more.

Daily roundup: April 24, 2012

Bite-sized hospital and health industry

April 24, 2012

• California: Lawmakers this week are scheduled to vote on legislation (SB 1285) intended to prevent hospitals from "capturing" out-of-network, privately insured patients to increase payments. Sen. Ed Hernandez (D-West Covina) in a statement said he introduced the bill after his office heard about "a growing business practice in the hospital world where unscrupulous hospitals avoid contracts with health plans, filter patients with commercial insurance through their ER and bill higher 'out-of-network' charges to maximize profits" (Jewett, California Watch, 4/23).

• North Dakota: Sanford Health has signed a nonbinding letter of intent to fold 16-bed Hillsboro Medical Center in North Dakota into its network. The 20-hospital system has been managing the medical center since 2000. Officials hope to complete the deal by the end of the year (Robeznieks, Modern Healthcare, 4/22 [subscription required]).

• Pennsylvania: The Philadelphia Inquirer over the weekend outlined Temple University Health System CEO Larry Kaiser's "bold plan to steer the organization out of the financial morass of being Philadelphia's unofficial public hospital for the poor." For example, the Inquirer notes his acquisition of the Fox Chase Cancer Center and the opening of a new outpatient facility in the suburbs (Brubaker, Philadelphia Inquirer, 4/22).

• Texas: Primary care physicians in Hidalgo County received $64 million in overpayments from 2003 to 2011, according to a Houston Chronicle investigation. The overpayments occurred because the physicians were incorrectly classified as working in a Health Professional Shortage Area because the Health Resources and Service Administration did not update its qualification list from 2003 to November of last year (Langford, Houston Chronicle, 4/23).