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Issues & Legislative Committee Report

September 14, 2006

JCAHO/Gainsharing Update

Gainsharing Agreements

A recent American Society of Health Economists (ASHE) presentation was given by Jonathon Ketcham on the influence of physicians by financial incentives. The paper leading to the presentation was authored by Ketcham and Michael Furukawa.

Their paper provides empirical evidence about the impact of gainsharing from ongoing programs and uses data from Goodroe Healthcare Solutions from 2000-2005 for both gainsharing and non-gainsharing hospitals. In Ketcham’s report, he stated “We find evidence of significant cost savings due to gainsharing. One hospital reduced costs by $4.3 million and paid participating physicians $41,000. The majority of savings appears to be due to lower prices for a given device, and some due to fewer devices per patient. Treatment did not become more standardized, and neither patient outcomes nor risk factors changed.”

In their conclusions, they stated “Although preliminary results indicate large savings due to gainsharing, it has had little effect on standardization. It is unclear whether these savings are sustainable or whether they represent a onetime reduction in prices from manufacturers.”

Source: http://healtheconomics.us/conference/2006/abstracts/payments/

The Joint Commission (JCAHO)

Surveys for hospitals and critical access hospitals seeking accreditation for the first time from the Joint Commission will be conducted on an unannounced basis. Unannounced initial surveys for both will in place by January 1, 2007. According to JCAHO, the transition to unannounced initial surveys for critical access hospitals and hospitals will further strengthen the emphasis on the need to always be prepared to deliver safe, high-quality care. The Joint Commission began conducting unannounced triennial surveys in January 2006, underscoring the expectation that organizations are providing safe, high quality care at all times.

Source: www.jointcommission.org

Disaster Preparedness Issue - Funding

The recent "Twelve-Step Disaster Plan" article published in "Health and Hospitals Network" discusses major precautions that hospitals are taking to withstand natural disasters and terrorist strikes as well as to prepare for major failures of power and water as follows:

Source: Health and Hospitals Network, www.hhnmag.com, May 2006.

Consumer Driven Healthcare

Survey on Price and Quality of Physicians and Hospitals

The Opinion Research Corporation conducted a survey and asked the question:
“If you were able to obtain information on the price and quality of physicians and hospitals, how likely would you be to “shop around” for medical services?”
The results were as follows:

Source: The Advisory Board Daily Briefing, August 10, 2006.

Modest Price Reductions and Increased Utilization in Effects of Hospitals and Physician Competition

From the Center for Studying Health System Changes is a report that looks at the effect of hospital and physician competition. They note in a study of 12 metropolitan areas that there has been “modest price reductions” but increased utilization. They could not measure the effect of dispersing the volume over a greater number of providers had on quality of care. Their suggestion was for Medicare and private insurance to narrow the payment gap between profitable and unprofitable services.

Source: The Advisory Board Daily Briefing, July 25, 2006.

HSAs Lower Out-of-Pocket Healthcare Expenditures

A study from Columbia University and City University of New York looked at the cost sharing effects of traditional insurance and HSAs on total health care spending.  Their conclusions were that HSAs actually lowered out-of-pocket healthcare expenditures from $7,600 for traditional health plan to $2,500 for HSAs. They said HSAs would not be effective in curbing spending for high-utilizing patients that they say represent the largest portion of healthcare spending.

Source: The Advisory Board Daily Briefing, July 12, 2006.

Over Half of Workers Only Pay Portion of Healthcare Bills

A report from the Agency for Healthcare Research and Quality noted that in 2003 54% of workers in an employer sponsored health plan paid a portion of their hospital bill. This was an increase from the 1999 figure of 33%.

Source: The Advisory Board Daily Briefing, July 13, 2006.

"High-Deductible" Insurance Plan Coverage Triples in 2005

A report from the America’s Health Insurance Plans stated that about 3.2 million people were covered by “high-deductible” insurance plans in 2005. That is triple the number from last year. This increase is because of the increase in HAS accounts which are partnered with these insurance accounts. Of the new enrollees in these accounts, 31% did not have insurance the previous year.

Source: The Advisory Board Daily Briefing, March 10, 2006.

Health Insurance Coverage Down 7% for Large Employers

The number of workers eligible and enrolled for large employers with sponsored health insurance programs fell from 87% in 1996 to 80% in 2004 as reported by the Agency for Healthcare Research and Quality. The underlining reason for this decrease is the increase in cost shifting measures back to the employee.

Source: The Advisory Board Daily Briefing, August 25, 2006.

Senate Panel Hears Debate on Anti-trust Issues

Representatives from organized medicine and the health insurance industry debated the adequacy of federal antitrust enforcement during today's Senate Judiciary Committee hearing on "Examining Competition in Group Health Care." David Wales, deputy director of the Federal Trade Commission's Bureau of Competition, said the FTC has challenged price-fixing and boycotts by physicians. At the same time, however, Wales encouraged physician-network joint ventures that create efficiencies through financial and clinical integration.

Edward Langston, chairman-elect of the American Medical Association, said the AMA has documented the harms of consolidation in the health insurance industry in several studies. "We have watched with growing concern as large health plans pursue aggressive acquisition strategies to assume dominant positions in their markets, and we fear that this rapid consolidation will lead to a healthcare system dominated by a few publicly traded companies that operate in the interest of shareholders rather than patients," Langston said. Stephanie Kanwit, special counsel for America's Health Insurance Plans, said competition in health insurance markets has spurred new products such as high-deductible health savings accounts, and has improved quality by promoting information-sharing, clinical performance measures and greater transparency. Kanwit disputed the AMA allegations about insurer market power. "These conclusions are not supported by the data," she said.

Sen. Patrick Leahy (D-Vt.), ranking Democrat on the committee, urged the FTC and the Justice Department's Antitrust Division to pursue a policy of "vigorously enforcing the antitrust laws not just against physician groups, as it has, but against insurance companies engaging in anti-competitive behavior."

Source: Mark Taylor, www.modernhealthcare.com, September 06, 2006.

Hospitals for a Healthy Environment (H2E)

H2E provides a 10-step guide to reduce mercury, and hospitals should print the application to apply for the Mercury Free Hospital Award. H2E also has a monthly newsletter called "STAT Green". It has brief, easy-to-read articles that can keep you up to date on the latest trends and challenges in keeping your hospital environment as healthy as possible.