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Hidden Healthcare Tax Leads to Higher Insurance Costs
Inadequate Medicare and Medicaid reimbursements to hospitals and physicians lead to significantly higher health insurance costs for consumers and employers, according to a study conducted by Milliman, Inc. The study—Hospital & Physician Costs Shift: Payment Comparison of Medicare, Medicaid and Commercial Payers—found that annual healthcare spending for an average family of four is $1,788 higher than it would be if public programs paid hospitals and physicians adequate rates. The report revealed that the payment discrepency has widened in recent years as Medicare and Medicaid hospital payments have not kept pace with cost and Medicare physician payment levels have remained flat.
Underpayments like those referenced in the study create a payment gap to hospitals and physicians that businesses, health plans and consumers end up closing through a “cost shift” or “hidden tax.” This means that purchasers of private health insurance effectively pay a “tax” in order to finance the care of patients who are covered by public insurance programs such as Medicare or Medicaid or are uninsured. The study found that for a family of four, the hidden healthcare tax:
- adds an estimated $1,512 (10.6 percent) to the average premium with employers paying approximately $1,115 and employees paying $397; and
- increases a family’s coinsurance and deductibles by more than $276 a year.
Hospital findings are based on analysis of the 2006 AHA Survey data, which includes data on the 4,927 short-term, community hospitals in the U.S. The data represent each hospital’s fiscal year 2006 results. The physician findings are based on 2007 fee schedule levels for Medicare, Medicaid and commercial payers.
A recent independent study, also conducted by Milliman Inc. for the Arizona Health Care Cost Containment System (AHCCCS), concludes that AHCCCS paid Arizona’s hospitals 85 percent of hospitals’ costs to care for AHCCCS patients. The Arizona Hospital and Healthcare Association (AzHHA) estimates that the 2008 decision by the legislature to freeze AHCCCS rates at 2008 levels, decreases AHCCCS payment rates to hospitals even further to 82 percent of hospitals’ cost to provide care.
Milliman is an independent consulting firm engaged by America’s Health Insurance Plans (AHIP), American Hospital Association (AHA), Blue Cross Blue Shield Association and Premera Blue Cross to develop a best estimate of the impact of the hidden healthcare tax in the United States.
For a copy of the Milliman report, visit http://www.bcbs.com/news/bluetvradio/cost-shift-study-2008/us-cost-shift-20081208.pdf.
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Amicus Brief Update: AZ Supreme Court Hears Oral Arguments
The Arizona Supreme Court heard oral arguments Dec. 9 on the appeal of an Arizona Appeals Court decision that effectively nullified statutory provisions governing expert witnesses enacted in 2005 under SB1036. SB1036 contained several key components including:
- requiring expert witnesses to be currently practicing or teaching in the same specialty or area of medicine as the physician on trial;
- stipulating that witnesses shall not be permitted to testify if their respective fees are in any way contingent on the outcome of the case;
- allowing a judge to disqualify witnesses if they fail to meet the criteria; and
- not allowing expressions of sympathy and condolence to be used against a physician in a medical malpractice suit.
AzHHA, the Arizona Medical Association and 11 other medical and healthcare organizations filed an amicus brief in support of the legislation, urging the Arizona Supreme Court to review and overturn the appellate decision. Time constraints prevented the amicus partners from presenting oral argument at the hearing. The case has attracted national interest as an indicator of how courts may interpret legislative attempts at judicial reform within the tort medical liability system.
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AHRQ Reports Ineffective Use of Error-Reporting Systems
Only 21 percent of hospitals that have adverse-event reporting systems are using them to distribute error reports throughout their organizations. This is according to a report by the Agency for Healthcare Research and Quality (AHRQ) published in the Dec. 8 issue of Quality and Safety in Health Care. While approximately 96 percent of hospitals surveyed said they have centralized adverse-event reporting systems, only small percentages of respondents had established systems with effective reporting components. The AHRQ, working in conjunction with researchers from the RAND Corp. and The Joint Commission, determined that effective reporting systems need:
- a supportive environment to protect staff;
- broad reporting from a range of staff;
- timely distribution of summary reports; and
- senior-level review and discussion of summary reports.
The AHRQ surveyed risk managers at 2,050 non-federal hospitals from September 2005 to January 2006, with 1,652 hospitals, or 81 percent responding. The AHRQ stated it will use the results to form baseline data on the characteristics of hospital reporting systems as it continues to assess their effectiveness for improving healthcare.
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Study: Fraying Link Between Work and Health Insurance
Most non-elderly Americans still obtain health insurance coverage through an employer, but the percentage with employer-sponsored insurance coverage has declined steadily since 2000. This is according to a new study—The Fraying Link Between Work and Health Insurance: Trends in Employer-Sponsored Insurance for Employees, 2000-2007—published recently by the Kaiser Family Foundation. The research was conducted by the Center for Studying Health System Change. The following is a summary of the study’s key findings.
- Employer-sponsored insurance coverage declined steadily from 80.4 percent in 2000-01 to 75.7 percent in 2007. Low-income employees (those earning less than 200 percent of the federal poverty line) experienced the greatest decline in employer-sponsored insurance coverage falling from 53 percent to 40.8 percent.
- Between 2000-01 and 2007, the rate of uninsured employees increased from 12.8 percent to 14.9 percent, as employer-sponsored insurance declines were not fully offset by increases in other types of coverage. Even when considering those employees who were able to obtain Medicaid coverage, the uninsured rate among low-income employees increased substantially from 33.5 percent in 2000-01 to 41.3 percent in 2007.
- Employer-sponsored insurance rates also fell among children of employees, decreasing from 73.4 percent in 2000-01 to 65.9 percent in 2007, with even sharper declines for low-income children.
The report is available at http://www.kff.org/uninsured/upload/7840.pdf.
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Valley Hospitals Recognized as Best Places to Work
Five Valley hospitals/healthcare systems have been selected for the Phoenix Business Journal's 2008 Best Places to Work competition based on surveys submitted by their employees.
- Extra Large Category (3,000+ employees)--St. Joseph's Hospital and Medical Center was the winner in this category and Banner Health as well as John C. Lincoln Health Network also were named.
- Large Category (250-2,999 employees)--Chandler Regional Medical Center and Mercy Gilbert Medical Center were recognized.
Launched in 2003, the Best Places to Work program ranks Valley companies on various elements of employee life, including:
- workplace environment;
- leadership direction;
- culture; and
- management practice.
Rankings were based on employee opinion surveys analyzed by Quantum Market Research of Omaha, Neb., the research partner for Best Place to Work competitions in 40 U.S. cities. Winners were announced Thursday, Dec. 11 at a luncheon at the Arizona Biltmore Resort & Spa in Phoenix. The complete list of companies recognized is available at www.bestcompaniesaz.com. To request a copy of the Best Places to Work supplement with profiles of the winning companies, contact the Business Journal’s circulation department at 602-230-8400. For more information, visit www.bizjournals.com/phoenix.
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VVMC Receives Quality Award
Verde Valley Medical Center (VVMC) has received the Arizona Quality Alliance (AQA) Showcase in Excellence Award. This recognition is presented to organizations that demonstrate innovation, cutting-edge approach, excellence in comparison to competitors or peers and overall exceptional performance.
AQA recognized VVMC for its Joint Replacement Program, which was developed by members of the hospital’s medical and nursing staffs in 2001 to address the high volume of patients requiring joint replacement surgery in Verde Valley. Since then, the program has gained a national reputation for its high success rate, including:
- decreased length of hospital stay;
- low complication rates;
- speed of rehabilitation; and
- improved range of motion.
Patients involved in the program also have shown improvement in walking distance and decrease in pain in as little as six weeks after surgery.
The awards will be presented on Tuesday, Feb. 10, 2009 at the Chaparral Suites Resort in Scottsdale. Applications for the 2009 program will be available in February 2009. For more information, visit www.arizona-excellence.com.
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Hotel Reservation Deadline: Rural Healthcare Conference
Make your hotel reservations now, if you plan on traveling to Phoenix to attend the 22nd Annual Rural Healthcare Leadership Conference, which takes place at the Pointe Hilton Squaw Peak Resort, Jan. 18-21, 2009. The deadline for the special room rate of $199 per night is Monday, Dec. 22.
The conference will explore proven strategies for accelerating performance excellence and improving the sustainability of rural hospitals. Session topics include:
- workplace productivity and employee loyalty;
- influential leadership; and
- transforming care at the bedside.
To register or for more information, visit http://www.hilton.com/en/hi/groups/personalized/PHXSPPR-ARH-20090117/index.jhtml or call 1-800-876-4683. When making a reservation by phone, cite group code ARH to receive the special rate.
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Save the Date: Western Regional Trustee Symposium
The 13th Annual Western Regional Trustee Symposium, Managing the Winds of Change, takes place June 10-12 in Albuquerque, N.M. The program is designed for hospital and healthcare system trustees and executive staff. The program will offer strategies to achieve the following objectives:
- enhanced leadership and consensus building skills;
- broaden attendees' awareness of current healthcare trends that affect trustees and how they serve their boards and communities;
- examine "best practices" of successful healthcare governance and healthcare business strategies for practical application in the boardroom;
- provide networking opportunities for trustees and leaders from hospitals of varying size and scope; and
- challenge conventional thinking with fresh approaches to standard healthcare governance concerns and business practices.
For more information, visit http://www.trusteesymposium.org/.
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Scottsdale Healthcare Executive Named to ACCME Board
The American Hospital Association’s (AHA’s) board of trustees has nominated James F. Burke, MD, senior vice president for Medical Affairs, Scottsdale Healthcare, to the Accreditation Council for Continuing Medical Education (ACCME) board. In this role, Dr. Burke will lend his experience, expertise and perspective on issues of major importance concerning AHA. His three-year term begins Jan. 1, 2009. In addition to serving on the ACCME board, Dr. Burke also will serve on the Committee on Health Professions, a board committee that addresses issues in clinical education and workforce issues.
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Insider Debuts in January
AzHHA members and Weekly recipients will begin receiving the Association’s new publication, AzHHA Insider, beginning Jan. 9, 2009. This electronic newsletter will replace the Weekly and will still include the same timely information and articles, but will be issued every other Friday, as opposed to every Friday. A series of telephone interviews and a readership survey of Weekly recipients revealed that members value the publication, but they recognize there are other AzHHA communications vehicles, such as the daily publication, Health-E-News, that keep them informed of healthcare news. For more information, contact AzHHA’s Allyson McCormley at 602-445-4300, ext.4334.
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AzHHA’s Upcoming Events
What’s happening at AzHHA? Visit http://www.azhha.org/about_azhha/calendar.aspx for more information about the latest upcoming events at AzHHA. Make sure to bookmark AzHHA’s calendar and check back frequently for the latest updates on AzHHA meetings, educational programs, hospital events and important dates on the legislative calendar.
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