Same Care, Higher Bill

Medicare Patients Hospitalized but not "Admitted" Can Face Higher Costs

The front page of the Boston Globe yesterday detailed how some hospitals charge Medicare patients different prices depending upon how the hospital classifies their care.  For instance, a patient admitted for "medical observation" receives a much larger bill than one whose stay is classified as "inpatient."  This is true even though the observation patient "usually share rooms with regular inpatients and receive care from the same doctors and nurses, making their status invisible to them."

[voxxi.com]

Although hospitals do not accept blame for these classification differences, the Globe's article showed that hospitals increasingly keep patients in "observation" status longer than the typical 24 to 48 hours.  This can have a startling effect on Medicare billing.

Medicare covers the cost of rehabilitation care in a nursing home if the patient was admitted to a hospital for at least three days of inpatient care.  However, the days that a patient under "observation" do not count toward the three-day minimum needed for Medicare coverage.  As a result, Medicare patients are getting stuck with bills in the thousands, forcing some seniors to file for bankruptcy.

Out of concern for this, Medicare issued regulations this summer they believe will help hospitals clarify this issue. But others, like Toby Edelman, senior policy attorney at the Center for Medicare Advocacy in Washington D.C., believe the regulations do not provide any clarity.  Edleman believes hospitals may be trying to avoid readmission penalties under the ACA for patients readmitted within 30 days of discharge.

Demystifying Hospital Bills

A new price transparency law in North Carolina now requires hospital bills to be "in plain, easy-to-understand language without obscure codes and medical jargon." (Raleigh News & Observer.)  

Beginning next June, North Carolina hospitals must post pricing and payments for their most common admissions, surgeries, and imaging procedures.  Hospitals must also list prices and reimbursement rates for Medicare, Medicaid, large private insurers, and uninsured patients.

The bill also provides increased patient protection from bill-collecting, requiring hospitals to provide written notice to patients before sending the patient's bill to a collection agency, and to not refer unpaid bills to collection agencies while a patient request for charity care is pending.  Finally, the bill prevents hospitals from collecting unpaid bills from pateints' state tax return or lottery winnings.

"Financially speaking, patients soon will find visits to North Carolina hospitals to be a less painful and less mystifying experience." (Raleigh News & Observer.)

Read more here: http://www.newsobserver.com/2013/07/28/3064787/under-new-law-patients-hospital.html#storylink=cpy

Read more here: http://www.newsobserver.com/2013/07/28/3064787/under-new-law-patients-hospital.html#storylink=cpy

Friday Variety: Anthem Rate Hikes, Gene Patenting, & Arizona Medicaid Bill

Anthem Blue Cross To Raise Small Business Premiums
California Insurance Commissioner Dave Jones has intensified his campaign against rising health insurance rates by asking officials working with Covered California to bar Anthem Blue Cross from it's state health exchange. Jones stated that Anthem's intends to increase small business health insurance premiums (businesses with 50 or fewer workers) by 11%.  He called this rate hike "unreasonable" and accused the company of overstating its projected medical costs and improperly adding fees related to federal healthcare law.

Under state law, Jones can assess rate hikes and request to exclude them, but he lacks the authority to block Anthem's rate increase from taking effect this month (Terhune, Los Angeles Times, 6/13).

Anthem spokesman Daryl Lang says that Anthem's rate hikes are consistent with the economic reality of rising healthcare costs, and that its exclusion from the exchange would hinder competition.

Nonetheless, Anthem has actually imposed three rate hikes for small businesses over a seven-month period:

• 10.6% rate hike announced in January;
• 10.5% rate hike announced in March; and
• 7.6% rate hike scheduled to take place July 1 (Robertson, Sacramento Business Journal, 6/13)

(Read more: http://www.californiahealthline.org/articles/2013/6/14/jones-wants-anthem-excluded-from-small-business-exchange.aspx#ixzz2WCmqnuKy)

Meanwhile, Jones has praised UnitedHealth Group Inc. for cutting worker premiums for such small businesses.

Covered California will announce final health plans and rates for small businesses this August.

Supreme Court Rules Human Genes May Not Be Patented

The Supreme Court announced a unanimous ruling Thursday that naturally occurring human genes may not be patented. As a result, the costs of of getting gene tests are likely to drop as other companies can now compete with Utah-based Myriad Genetics, against whom the claims in this case were brought.

Synthetically produced genetic material, however, may still receive patent protection.

Arizona "Sweet Victory:" Medicaid Expansion Bill Passed

Thursday afternoon, the Arizona legislature approved a Medicaid expansion bill after a three-day special session.  This approval comes five months after Arizona Gov. Jan Brewer vowed to pass Medicaid expansion in her state. The bill, part of the state budget, must clear a final vote in each chamber before it goes to Brewer for her signature.

Medicare Staying Power

One of the biggest concerns stemming from the exponentially rising cost of health care has been the long term funding for Medicare.  Many have predicted that if U.S. health care spending continues to rise, Medicare may not be around when the children of the Baby Boomer generation reach the age of eligibility (65 years old).

To understand the budget concerns surrounding Medicare, it is important to understand how Medicare receives its funding.  Medicare is funded primarily from three sources: general revenues (40%), payroll tax contributions, (38%), and beneficiary premiums (13%).  In particular, Part A, Hospital Insurance, is mostly funded by tax dollars of working Americans.  At the time of its inception, a 2.9% on all wage earners was used to fund the entitlement program. Now, the ACA calls for a 3.8% tax on all dollars made over $250,000 per family.  Solvency of this program will be greatly affected by the state of the economy -- meaning, the number of working Americans and their salaries.

The problem is that between now and 2024, the Baby Boomer generation is going to become eligible for Medicare, which means that the ratio of workers per beneficiary making payroll contributions will decline. However, over the weekend, the biggest health care story was that due to our improving economy and slowed health cost growth, projections for the depletion of Medicare's trust fund have already been extended by two years to 2026.  It doesn't curb all worries for the program's sustainability, but after only a few short years since the enactment of the ACA, it's a step in the right direction.

Here are the changes that have been made so far to help lower Medicare spending and increase its staying power:

• The creation of the Independent Advisory Board: a 15-member U.S. Government agency specifically tasked with achieving specified savings without affecting coverage or quality of care. Congress can, however, override the Board's decisions, but otherwise all Board savings decisions receive fast-track implementation.
• Hospitals will no longer receive Medicare reimbursement payments for the readmission of patients for the same ailment that landed them in the hospital in the first place.
• The Medicare Shared Savings Program: like Accountable Care Organizations (ACOs), these programs strive to coordinate care and encourage investment in infrastructure and redesigning of care with the aim of lowering overall costs.

Numerous other improvements can be made to slow the growth of health care costs:

• Means testing for benefits
• Palliative care mandates
• Prohibitions on certain types of new entrants to Medicare 
• Mandates on drug price negotiation and utilization of generics
• Outcome-based reimbursement for providers (hospitals, physicians, & nurse practitioners)
• Changing the age of Medicare eligibility by two years
• Changing the way cost of living adjustments are made

Shopping Without Price Tags

Imagine walking into a department store to buy a pair of shoes, only this time there are no price tags and many of the shoes look identical.  Welcome to the healthcare market.

Three months ago, Steven Brill's article in Time Magazine sparked a lot of discussion around this already heated topic -- the lack of price transparency in healthcare billing.  From the extreme variability of procedure costs, even within the same county, to the sheer incomprehensibility of one's own medical bill, the cost of medical care continues to be a mystery to consumers.

In an effort to make health costs more transparent, the U.S. Department of Health and Human Services (HHS) released a list of what hospitals across the country charge for their 100 most common in-patient procedures.  This list for each hospital is known as a chargemaster. While hospitals are required to list the official value of their procedures on the chargemaster, private insurance carriers, as well as Medicare and Medicaid, all negotiate their own reimbursement rates. So even though the public has this newfound access to the chargemasters, the amount each insured individual ends up paying is subject to a private negotiation between that hospital and the insurance company -- and those figures remain a secret.

Yesterday, the Obama Administration released a memo stating that exchanges set up under the ACA will offer the consumer more choices, thereby spurring on competition and potentially lowering the cost of healthcare overall.  The goal is to increase the options for insurance coverage, particularly in those states dominated by one insurance carrier.



So far, only four states have confirmed the carriers that will be competing on their exchanges: California will have 13 carriers competing, Washington state will have nine, Maryland five, and Rhode Island just two.

While we wait for more states to lock in their insurers, here are some important takeaways from the White House memo promising more consumer choice will create more competition:

• The data in the memo comes only from states in which the Federal government will run the exchanges, coupled with the states running their own exchanges that have already released the relevant information (California, Washington, Maryland, and Rhode Island). 

•  The majority of states will have new health insurance choices that are not available today. 

•  In 75% of federally-run exchanges, at least one new insurance company intends to enter the market. 

•  About 90% of Americans buying individual insurance from the state exchanges will have at least five companies to choose from.

The effects of these new insurance choices, however, won't be clear until the country goes shopping for health insurance beginning October 1, when open enrollment begins on the state exchanges.