The Daily Briefing

News for Health Care Executives

Ryan budget would 'drastically reshape' Medicare

Budget touts Medicare premium support overhaul

March 20, 2012

House Budget Committee Chair Paul Ryan (R-Wis.) on Tuesday unveiled his fiscal year (FY) 2013 budget proposal, which would establish a "premium support model" for Medicare.

As expected, the proposal is a "less stringent version" of last year's GOP Medicare reform plan, which would have altered Medicare from a fee-for-service program into one in which all beneficiaries purchase coverage on the private market.

The new Medicare plan—which Ryan created with Sen. Ron Wyden (D-Ore.)—would give beneficiaries a fixed subsidy to purchase either traditional Medicare coverage or private health insurance coverage.

Specifically, the plan would establish a competitive Medicare Exchange beginning in 2023 that offers eligible residents a choice between a traditional, fee-for-service Medicare plan and private health plans. The government subsidy would equal the cost of the second-least expensive private plan or the traditional Medicare plan, whichever is less expensive. Beneficiaries would be required to cover any costs above the government subsidy. 

Meanwhile, Ryan's budget calls for repealing the Independent Payment Advisory Board, which was created under the federal health reform law to reduce Medicare spending. Ryan's budget notes, "The difference is that this budget proposes to use competition to control costs, while IPAB under the president's proposals would use bureaucratic benefit restrictions."

In addition, the GOP plan would convert federal contributions to Medicaid into block grants, which states could use to structure their own programs.

Republicans hope that the inclusion of the Ryan-Wyden plan will rally Democratic support for the broader budget proposal. However, the Los Angeles Times notes that Wyden likely will oppose other provisions of the GOP budget proposal, limiting the overall budget's chances of winning bipartisan support.

CBO releases budget's projected spending impact
According to a Congressional Budget Office (CBO) report, Medicare spending would increase from 3.25% of GDP in 2011 to 4.75% of GDP in 2050 under Ryan's proposal. In comparison, CBO estimates that, under current law, Medicare federal spending would reach approximately 7% of GDP by 2050.

In addition, CBO estimates that, under Ryan’s proposal, Medicaid and Children's Health Insurance Program (CHIP) spending would shrink from 2% of GDP in 2011 to 1% of GDP in 2050. Under current law, CBO projects that Medicaid and CHIP would account for more than 4% of GDP in 2050 (Modern Healthcare, 3/20 [subscription required]; Taylor, AP/U-T San Diego, 3/17; Mascaro, Los Angeles Times, 3/16; Sherman, Politico, 3/18; Werber Serafini, Kaiser Health News, 3/20; CBO report, 3/20).

Harvard Pilgrim teams up with 50+ hospitals to create low-cost network

Mass. insurer hopes to encourage high-cost hospitals to reduce their rates

March 20, 2012

Harvard Pilgrim Health Care plans to offer customers a lower-cost insurance plan that includes a "focused network" of moderately priced hospitals, in a move the insurer hopes will press higher-priced facilities to reduce their rates.

Pending Massachusetts Division of Insurance approval, the Focus Network MA will include more than 50 hospitals and 16,500 physicians that will continue to operate independently and maintain their own contracts with Harvard Pilgrim.

According to Harvard Pilgrim CEO Eric Shultz, insurance plans in the network will cost customers about 10% less than comparable policies that include all providers. The insurer hopes the plan will appeal to employers who are concerned about escalating premiums and help make health costs more understandable to consumers.

While the insurer is emphasizing the broad range of providers and services available through the network—including Tufts Medical Center, Boston Medical Center, and Beth Israel Deaconess Medical Center—some of the state’s largest health organizations, including many Partners HealthCare facilities, have been excluded.
"It's similar to other efforts in the marketplace to develop new models of care," said Partners spokesperson Rich Copp. "We're always paying attention to what's happening in the marketplace."

Will the network contain costs?
According to the Boston Globe, Harvard Pilgrim hopes to encourage high-cost facilities to cut their rates in order to compete with providers in the network, who are required to keep costs below a certain level. "It's a blunt instrument," Shultz said. "But it's getting to the point where cost is a barrier to some services, and for some patients."

However, it remains unclear whether employers will embrace the new insurance plan and whether patients will be willing to leave prestigious health care organizations to obtain lower-cost services, the Globe reports.

"What Harvard Pilgrim is basically doing is it's chopping out the top tier, but it's keeping the network very broad," said Stuart Altman, health policy professor at Brandeis University. "When you have a very broad network, the [hospitals] involved may not see a big change in their patient volume, but patients will have more choices" (Weisman, Globe, 3/17).

Medicaid beneficiaries report higher ED use, more barriers to care

Study: About 40% of Medicaid patients visited an ED in the last year

March 20, 2012

Medicaid beneficiaries are nearly twice as likely to face barriers to primary health care and visit hospital EDs as privately insured individuals, according to a study in the Annals of Emergency Medicine.

For the study, researchers at the University of Colorado School of Medicine analyzed the responses of 230,258 patients who participated in the National Health Interview Surveys from 1999 to 2009.

The study considered five barriers to primary care, including not being able to reach a physician by phone, not being able to obtain a timely appointment, facing a long wait in a physician's office, lacking transportation, and confronting limited clinic hours.

  • Learn what Health Care Advisory Board experts are saying about one innovative approach to Medicaid primary care shortfalls: the Medicaid Health Home.

They found that 16.3% of Medicaid beneficiaries reported facing at least one barrier to primary care, compared with 8.9% of privately insured individuals. In addition, the study showed that 40% of Medicaid beneficiaries visited an ED within the last 12 months, compared with 17.7% of individuals with private insurance.

Commenting on the findings, David Seaberg, president of the American College of Emergency Physicians, noted that "efforts by some states to keep Medicaid patients out of the ED do not take this lack of access to primary care into account."

Seaberg added, "It puts both patients and providers into an impossible position that will only get worse as more people enroll in Medicaid." Approximately 16 million individuals are expected to enroll in Medicaid across the next 10 years, researchers said (UPI, 3/18; Smith, MedPage Today, 3/16).

CMS allows RACs to request more medical records from hospitals

AHA continues to push agency to streamline payment audits

March 20, 2012

CMS last week upped the number of medical records Recovery Audit Contractors (RACs) may request from hospitals.

As AHA News reports, the annual limit for most providers will go from 0.125% of all claims submitted the prior calendar year to 0.25%.

In addition, RACs now may not request more than 400 medical records from any hospital in a 45-day period, up from 300 previously. Larger hospitals with more than $100 million in annual Medicare billings saw their 45-day cap increase from 500 to 600.

Even these limits aren’t absolute. According to CMS, RACs may receive permission to exceed the stated documentation request caps, at which point providers will be notified in writing.

The American Hospital Association (AHA) says it opposes increases in medical records request limits and that it continues to urge CMS to streamline its payment auditing programs.

"Hospitals strive for payment accuracy and are committed to working with CMS to ensure the accuracy of Medicare and Medicaid payments," said Elizabeth Baskett, senior associate director of policy at AHA. "[H]owever, the flood of new auditing programs has saddled hospitals with duplicative audits, unmanageable medical record requests, and inappropriate payment denials" (CMS notice, 3/15; AHA News, 3/16).

Study: Physician wages unaffected by expanded nurse roles

Incomes similar in states with liberal, restrictive scope of practice laws

March 20, 2012

Expanding the scope of practice for advanced practice nurses (APNs) does not lead to reduced wages for primary care physicians, according to a study in Nursing Research and Practice.

In 2010, the Institute of Medicine urged states and the federal government to eliminate "regulatory and institutional obstacles" that narrow APNs' scope of practice. While elevating nurses' responsibilities could help allay primary care shortages, some physicians expressed concern that allowing nurses to practice more independently could jeopardize physician incomes.

For the study, George Washington (GW) University School of Public Health and Health Services researchers used Bureau of Labor Statistics wage data to compare physician incomes between states with restrictive scope of practice laws and those with more liberal policies. Sixteen states and the District of Columbia have policies permitting APNs to treat patients without physician oversight or under a one-time collaboration agreement with a physician or the state board of nursing.

The study found that primary care physician wages were not significantly different in states with more liberal scope of practice laws, compared with states that have restrictive laws. According to lead researcher Patricia Pittman, the study uncovered "no evidence of negative economic impact on family physicians and internists in states that have already implemented reforms."

Commenting on the study, Jean Johnson, dean of the GW School of Nursing, said, "Health reform will require a dramatic increase in the level of primary care services. Well-trained nurse practitioners have a critical role to play in meeting the nation's health care needs, both in working alongside and, in some cases, independent of their physician counterparts" (Medical News Today, 3/16;, 3/15).

Match Day 2012: Primary care residency assignments level off

Med school seniors paired with residency programs at record rate

March 20, 2012

Although the number of primary care positions and program applicants in 2012 increased slightly over last year, the proportion of residency slots dedicated to primary care specialties remained roughly the same as it was in 2011.

Each year, the National Resident Matching Program (NRMP) uses a computerized algorithm to align the preferences of residency applicants and program directors to fill available slots at U.S. teaching hospitals. Overall, 38,377 applicants—which included current and former allopathic and osteopathic medical students—vied for 26,722 residency positions, an increase of 614 slots over 2011.

According to NRMP data, internal medicine positions accounted for 22% of positions in 2012, up slightly from 21.9% in 2011. Meanwhile, family medicine residencies accounted for 11.4% of positions this year—down from 11.6% in 2011—and pediatrics slots accounted for 10.3% of positions in 2012, down from 10.6% last year.

Medical school seniors matched at record rate
NRMP matched more than 95% of medical school seniors with residency positions—the highest rate in 30 years.

In 2012, 15,712 of the 16,527 medical school seniors who applied to residency programs were successfully matched. About 56% of medical school seniors were matched with their first-choice program, and more than 80% were matched with one of their top three choices.

According to NRMP, dermatology, orthopedic surgery, otolaryngology, plastic surgery, radiation oncology, thoracic surgery, and vascular surgery were among the most competitive fields (AHA News, 3/16; Fiore, MedPage Today, 3/16; Bunis, CQ HealthBeat, 3/16 [subscription required]).

It’s time to evolve your development program

March 20, 2012

During our upcoming call, Martha Davis, an Advisory Board Talent Development member and executive at the 2009 Baldrige Award Recipient Heartland Health, will offer her perspective and experiences on how to successfully construct a comprehensive leadership development franchise.

Learn more.

Daily roundup: March 20, 2012

Bite-sized hospital and health industry news

March 20, 2012

  • California: Members of the California Nurses Association-National Nurses United last week approved a new contract with six Tenet Healthcare hospitals that gives the nurses a 13.5% pay hike over four years. The contract applies to about 2,700 RNs employed at the hospitals. According to the union, the four-year contract includes a 3% retroactive pay increase for 2011 and a 10.5% increase over the next three years. In a statement, Tenet said, "After a long process, we're pleased to have an agreement with the California Nurses Association and believe we reached a good outcome for our nurses and our hospitals" (Rauber, San Francisco Business Times, 3/14).
  • Maryland: Faculty, staff, and students at Johns Hopkins University are evaluating the effectiveness of various mobile health applications as part of the institution's Global mHealth Initiative. According to Alain Labrique—director of the initiative and an assistant professor at Johns Hopkins—the studies already have found value in mobile health apps that help patients adhere to medication regimens through regular reminders, help patients change harmful behaviors through various messages, and help with weight loss through texts about specific behaviors and goals (Cohn, Baltimore Sun, 3/14).
  • Massachusetts: The New York Times last week highlighted Boston-area hospitals that use art to facilitate healing among young patients, including Children's Hospital Boston, Massachusetts General Hospital, and Dana-Farber Cancer Institute. According to the Times, research has shown that "artful healing" programs decrease patient stress and improve quality of life (Bidgood, New York Times, 3/14).
  • Missouri and New Jersey: St. Louis-based Ascension Health Care Network—a private-equity joint venture between Ascension Health and Oak Hill Capital Partners—has begun exclusive negotiations to acquire New Jersey-based St. Clare's Health System, which operates three acute-care hospitals. According to a news release, a definitive acquisition agreement is expected by the end of June, pending approval from the Catholic Church and federal and state regulators (Evans, Modern Healthcare, 3/16 [subscription required]).


Women continue to pay more than men for health coverage

Health insurers continue to charge women more than men for the same coverage, according to new analyses and data from online insurance brokers, the New York Times reports.

Insurers justify charging women higher premiums because women ages 19 through 55 use more health care services than men.

Beginning in 2014, the federal health reform law will prohibit "gender rating." According to the Times, 14 states already have policies to ban or limit gender rating in individual health plans. In states that do not prohibit the practice, more than 90% of the top-selling health plans continue to charge women more than men, according to a report to be released this week by the National Women's Law Center.

For example, in Chicago, a 30-year-old woman covered by a popular Blue Cross Blue Shield plan pays $375 monthly, or 31% more than a man of the same age for the same coverage, according to, a popular online insurance source. also found that a non-smoking, 40-year-old woman with HumanaOne health insurance in Louisville, Ky., pays $196 monthly, compared with $172 charged to a 40-year-old man who reported using tobacco in the previous year.

Insurance companies could lessen the impact of the 2014 requirement by beginning to adjust rates now, said Mary Beth Senkewicz, who served as the deputy insurance commissioner in Florida from 2007 through 2011 (Pear, Times, 3/19).